Davos 2012: Easy Decisions, Hard Decisions

January 24, 2012
  • Aron Cramer portrait

    Aron Cramer

    President and CEO, BSR

Davos 2012 opens against the backdrop of some pretty ominous numbers. European debt figures are high, and projections for growth in the mature economies are low. Income equality is declining in emerging markets like China and in the home of the 99 percent, the United States. 2011 was yet another year of record-setting warmth, with more summer melting in the Arctic. And this year’s Edelman Trust Barometer reports poor levels of trust, with faith in government tumbling to all-time lows in the West.

It is no surprise, then, that this year’s Davos theme calls for a “Great Transformation.” What may actually be surprising is that there are reasons to think that a transformation may be achievable. The urgent need in the West is to restore growth. Without that, social conflict could persist or grow even stronger.

Restoring—and redefining—growth can happen. The pathways to achieving it include some decisions that are easy, and some that are hard.

First, the easy part. Amid economic stagnation, the imperative to declare a war on waste grows even stronger. In the United States and Europe, we waste as much as one third of the energy and food that is generated for our use. This is the very definition of unsustainable.

The good news is that there is something all of us can do to turn this around. As consumers, we all have the power to make changes that reduce our footprint—and save money. Businesses can create new opportunities for themselves by helping customers achieve this goal. Marks and Spencer and Unilever are doing this by establishing product take-back programs and encouraging consumers to use their products differently. And there are untapped opportunities for companies to innovate through shared consumption models (car-share, anyone?) or new technologies that help us manage our home energy use more effectively.

These are win-win solutions that create new opportunities; they need to be expanded and taken to scale as fast as possible.

There is another set of actions needed to make a Great Transformation, and these require more trade-offs.

Short-termism and uncertainty about climate and energy policies remain two of the big barriers to a growth model that can sustain us—both in economic and environmental terms—in the 21st century.  Without broader business leadership, it is hard to see the tyranny of short-termism in public markets broken, or a framework that effectively pivots to a low-carbon growth model. Even in today’s bottom-up world, formal systems matter greatly, and our economic system presents a classic case of prizing the urgent over the important. A handful of business leaders have made their voices heard on these crucial questions, but the organized business community, acting through trade associations, is often either missing in action or stuck in lowest-common-denominator solutions.

Changing the way public markets define shareholder value, and developing more systemic policy responses to climate change don’t necessarily present win-win options. They will result in winners and losers. But failing to act on these crucial questions will also result in winners and losers. Isn’t it better to make some choices about what we want to reward?

So as Davos 2012 gets underway, there is room for optimism that the dynamic pace of change from the bottom up will generate new models that will redefine economic vitality and well-being, and help us jump-start a sustainable growth model. Equally so, top-down answers will almost certainly remain elusive. If Davos can marry the 21st century innovation models to the 20th century institutions that remain crucial to our well-being, it will prove to be a great success.

Note: This was originally published on the Guardian Sustainable Business Blog.

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