For those of us who believe that capitalism is a force for good, these are challenging times.
Governments and business find themselves on the receiving end of blame from the public for the Western world’s current financial predicaments. Neither appear to be on the side of the everyday citizen.
Capitalism is in crisis. And it is demonstrated by a sharp fall in public trust of business and government. The 2012 Edelman Trust Barometer shows an unprecedented global decline of trust in both government and business leaders – faith in the former has fallen by 14% and CEO credibility has nose dived by 12 points from 50% to 38%. NGOs, however, top the trust polls with people largely confident that they ‘will do what is right’. The legitimacy of these civil organisations is seen to be based on strong values and a clear pursuit of social objectives.
In an age of economic uncertainty, it is only human nature that individuals, worried about their families and their futures, seek protective policies that they believe will bring them greater personal security. The danger with this is that silos between business, government and civil society may become far more entrenched and governments will retreat into new populist forms of protectionism. These will not only hamper longer-term growth and affect living standards — particularly for the world’s poorest communities — but will also weaken our ability to respond to pressing global issues such as climate change and the availability of fresh water.
For those who passionately believe that capitalism is the engine to reduce growing global inequalities, regaining public trust is crucial. Business has to be seen as part of “us”, and not “them”. The advocates of capitalism as a force for good — have been let down by many within the business community in the recent past. Their practice has no place in a sustainable future.
We have to rewire our companies and redesign the way that capitalism works by connecting it to communities and the values of its employees, building new alliances with civil society and governments to address the challenges we face.
The global issues we seek to combat are so complex and inter-related that no sector can tackle these effectively on their own. NGOs can affect change but they cannot do enough, fast enough. Effective action requires collaborative partnerships across civil society, industry and government. It is only through this ‘triangle of sustainability’ that it is possible for NGOs to create scale and gain the multiplier effect required to address these challenges.
All too often, in the past, NGOs and business operated in parallel universes. Business needs consumers but it also needs society. Corporate social responsibility and corporate giving programmes that are ‘nice to have’ are vulnerable in economic downturns. As such it is for companies to move beyond philanthropy and CSR programmes to link sustainability to the core of their businesses and strategically align it, giving it “line of sight” to the entire business. By doing this, sustainability is given legitimacy across businesses – for employees, managers and shareholders alike.
Sustainable cross-sector partnerships bring the varied skillsets needed to address complex issues and create realistic solutions. The relationships that work are testing yet invigorating and move well beyond the scope of polite conversations on reaching shared goals. They shift business from merely measuring its footprint to creating an actual blueprint for change. In turn, they give NGOs the opportunity to use the power of business to significantly scale up their activities for ‘change for good’ in an unprecedented fashion.
Take WWF for example. It is working with companies that recognise that sustainability is a pre-competitive issue, and have identified 100 companies that control 25% of the trade of 15 of the world’s most significant commodities. Getting these companies to collaborate to demand sustainable products would pull 40-50% of products towards the sustainable end of the market and give us a better chance of feeding the world without destroying the planet.
Forty years ago, the silos between business and NGOs appeared impenetrable. Over time, a huge amount of work has been done to break these down. Milton Friedman’s dictum that there is only one social responsibility of business which is to make profits was made history and far greater recognition was given to the connections between business and improving society.
However, we now urgently need collective action to combat populist protectionism. NGOs and business must embrace new forms of collaboration that tackle the global challenges that threaten civil society and business alike. Where they lead, governments must follow.
Originally published on Guardian Sustainable Business.
By Clare Melford CEO of the International Business Leaders Forum (IBLF) and Neville Isdell, former Chairman of IBLF and CEO, Coca-Cola.