Make no mistake: the purpose of business is to serve society

This article was originally published in Portuguese by Folha de São Paulo on 15 October 2019.

In advance of the UN Climate Summit in September, 87 large companies from around the world ­– including three Brazilian companies – committed to reducing their greenhouse gas emissions in line with the Paris Agreement.

They did not do this because they’re good Samaritans. Leaders in their respective industries, these companies understand that only a small fraction of the companies that led the global economy a generation ago remain leaders today.

If you want to remain relevant, especially for the “Greta Thunberg generation,” you must continually transform your business model to have a far more positive impact on the environment and society.

In this respect, Brazilian businesses – operating in a country with enormous social challenges and an inherent reliance on natural resources – have much to gain and to lose over the next 20 years.

Brazilian companies can avoid the risk of becoming mere marginal players in their home market – but not for the lack of strong global competitors. The world's most innovative and bold companies are embracing the sustainability challenge as a central strategic opportunity – and they are operating in Brazil and worldwide. Visionary boards of directors have been incorporating sustainability into their corporate governance for several years.

In Brazil, there are a few examples of companies with an unwavering commitment to improving society – but far from the need and potential of our country.

In any free society, companies exist to fulfill a concrete need. They make a profit and remunerate the capital of their investors. They require sound financial health in order to grow and continue to invest in innovation. And companies must ultimately be profitable to be part of the solution to the challenges.

But make no mistake: the purpose of business is to serve society. The only way to overcome such complex and structural challenges as minimizing the impact of climate change, reducing social inequality and improving education and health is to transform companies so they can continue to be the engine of development.

And for companies, sustainability is not just about improving their environmental practices. The real strategic challenge is how companies can quickly adapt to societal changes that demand better environmental and social performance from large corporations. Business leaders cannot afford to simply react to the movements of the most innovative competitors. They must lead the transformation of their own companies, preparing them for an increasingly challenging future.

In a few decades, the world will have 10 billion people. Currently, we consume in just seven months the resources the planet can sustainably supply for a whole year. And social tensions are increasingly present in every human’s life.

In the face of these challenges, we need the innovation and execution only public-private partnerships can deliver. To achieve this, we need business leaders with ambitious vision beyond accumulating capital. We need entrepreneurs who can use their privileged position to inspire millions of people – in Brazil, and worldwide – by doing the right thing, the right way.