All eyes are on London this week for the G20 Summit. In a column that ran in 27 countries on Monday, U.S. President Obama has called for "a new kind of global economic cooperation." Unfortunately, last week’s comments from Czech Prime Minister Topolanek on U.S. policy being the "way to hell," and from Brazilian President Lula on white, blue-eyed bankers” as the source of our current problems don’t sound like global cooperation to me.
Divisive comments like these should give way to more politic sentiments and actions. The expectations for this summit are immense. But then again so are the challenges we’re facing.
For business, the best outcome would be coordinated international action that helps to create conditions in which sustainable business can thrive. In addition to the far-from-insignificant task of stabilizing the world economy, there are several steps that would help business come out of the deep recession on a more sustainable footing:
First, commit to a global deal on climate change. Leading businesses are looking to governments to create a stable, global price on carbon to aid them in making investment decisions. While polls show that the public has lost its sense of urgency on climate because of a wide sense of vulnerability, the heads of state meeting in London can send a powerful message by reinforcing the need to act decisively at Copenhagen later this year. BSR, along with approximately 50 companies and 20 other organizations will be releasing a letter later this week, under the auspices of the World Economic Forum, stating exactly that.
Second, take action to maintain open trade. The draft communiqué for the Summit apparently recommits to fighting protectionism. This is essential, because even though markets are held in low esteem by many these days, the fact remains that the recent generation of greater global trade has helped to lift several hundred million people out of poverty. We’ve seen posturing from several states in recent weeks, and the WTO is forecasting a 9 percent decline in international trade this year. This means more job losses—like the 20 million migrant workers who are reported to have lost jobs in China in the past few months. That’s not good for business, or for people aching to climb out of poverty.
Third, tackle flaws in market rules that interfere with long-term thinking. There has been too much debate on whether the Anglo-Saxon model is fatally flawed, and too little consideration of how our current markets promote short-term thinking. While it is arguably true that short-termism is more rampant in the United States and United Kingdom, the fact remains that “non-financial” matters essential to business success are too often undervalued in all economic systems. Finding ways for public companies to factor social and environmental matters into their decision making—and their valuations—would help create incentives for more sustainable growth.
Fourth, use stimulus packages to spark investment in innovative technologies that will help us transfer to a low-carbon economy. Over the past 100 years, hard times have repeatedly caused governments to make or support investments that have generated leapfrog technologies. Whether we call it a Green New Deal or a Manhattan Project for the 21st century, government has a role in supporting and enabling investments that don’t have the immediate payback business often needs.
Like so many decisions taken in a world that is changing at warp speed, we won’t know the results of this week’s meeting for a long time. But part of the art of summitry is to send messages that remind people what’s important and set strategic direction. If the leaders in London are able to focus on the climate and energy, open markets that deliver wider economic opportunities, and market rules that enable sustainable investment, it will make it a lot easier for business to innovate and invest for a more sustainable brand of prosperity.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.
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