Our moment to choose a fairer, more sustainable world

A cartoon from The New Yorker magazine last November depicts a caveman and cavewoman crouched in the opening of their dark cave. The woman is hard at work rubbing sticks to make fire while her man, sitting idly by, remarks: “Stop saying everything is ‘unprecedented’.”

Yet, as 2021 gathers pace, we find ourselves in the grip of two crises of global and unprecedented proportions. Climate change and the fallout from COVID-19 are very different crises, but with striking similarities and overlaps. Both are wreaking terrible consequences on communities around the world. Yet, both offer opportunities for new ways of organizing human affairs for the better.

COVID-19 exploded with such velocity that it rapidly threatened to overwhelm global health systems as well as the ability of politicians to take the right decisions quickly enough to make a difference. Like climate change, the pandemic is a systemic crisis. Its capacity to inflict damage is amplified by our hyper-networked world. As with the collapse of an ice shelf, its devastation can accelerate exponentially and unpredictably through tipping points of no return.

The pandemic raises a pressing question, on which our collective future might depend. Can we take the opportunity it has presented us with to turn our backs on unbridled consumption and inequality and, instead, reimagine a world in ways that bring people together, rebuild decent livelihoods, respect the limits of our planet and make us more resilient for the crises to come? This moment we now collectively face is our own tipping point – and the way we choose to go could have the profoundest consequences.

COVID-19 has sent shockwaves through every nation, enterprise and household on the planet. Like an earthquake, but with an epicentre wherever people gather in numbers, it is invisible, unpredictable and deadly. As with any disaster, it has hit the most vulnerable hardest, exposing and widening the fault lines in our social, political and economic landscape.

Its impact on both individuals and nations has been deeply unequal. “Frontline” workers such as nurses, carers, drivers, machine operators and security guards – among the poorest paid in society – suffered significantly elevated death rates. Anthony S. Fauci, Director of the US’s National Institute of Allergy and Infectious Diseases, revealed that the US saw “a vastly disproportionate amount of suffering among our brown and black people,” with incidents of infection, hospitalization and death all “significantly higher”. Even before the pandemic, these populations displayed much higher levels of obesity, high blood pressure and diabetes.

The pandemic magnified social inequalities and revealed shocking disparities of risk. Three-quarters of all Americans in high-paid finance and insurance sectors could continue working remotely, while home-schooling children, yet just 3% of low-paid workers in the food industry could do so, exposing them to potential infection.

Global labour income suffered a “massive” drop of $3.5 trillion in the first three quarters of 2020, according to the International Labour Organization, with Q4 working-hour losses projected at the equivalent of 245 million full-time jobs lost. The biggest drops are in lower-middle income countries. This, combined with lower fiscal stimulus packages in those countries, will lead to greater disparities between the world’s rich and poor.

As the numbers of unemployed, poor, migrants and homeless swell, “one of the most profound dangers facing the post-pandemic era is social unrest, [which] in some extreme cases could lead to societal disintegration and political collapse,” write World Economic Forum Founder and Executive Chairman Klaus Schwab and French writer Thierry Malleret in their book, COVID-19: The Great Reset.

Countries that fared better during the pandemic shared some common attributes, according to Schwab and Malleret. These countries were better prepared for what was coming, they made rapid and effective decisions, their healthcare systems were inclusive, their citizens trusted political leaders and the information they provided, and they displayed a “sense of solidarity, favouring the common good over individual aspirations and needs”. The authors point to core societal values of inclusivity, solidarity and trust as vital elements central to rebuilding a better post-COVID-19 world.

Values alone, however, won’t keep us fed and warm. They need to be clothed and nourished with the right policies and actions. Inclusivity demands that all people share in the same opportunities to grow, learn, work and thrive regardless of their nation or ethnicity or gender. Would a truly inclusive society tolerate the idea that a nurse who puts her life on the line day-in, day-out should earn a fraction the salary of a banker or hedge-fund manager?

If the effects of COVID-19 have taught us anything, it is that we depend on each other for our safety and well-being. Trust is perhaps the trickiest of all – quick to lose, slow to grow. We need leaders we can trust. Political leaders with the courage to shrug off expediency and take tough decisions in the long-term interest – and then do what they say they’ll do. Business leaders who put the interests of all stakeholders at the heart of their value creation – not just shareholder returns.

Is there a common framework or model that all society – politicians, businesspeople, civil society leaders and the rest of us – can embrace to craft a cohesive, sustainable and resilient recovery from the pandemic? One that embraces inclusivity, solidarity and trust to heal the wounds of inequality and repair the torn fabric of our planet?

In April 2020, Amsterdam became the first city in the world to embrace doughnut economics, expounded by UK economist Kate Raworth, as the model for its post-COVID recovery. The inner ring of the doughnut is a social foundation of well-being below which no one should fall. The outer ring is an ecological ceiling of planetary health beyond which we venture at our peril. “Between the two,” she writes, “lies a safe and just space for all.”

The doughnut framework questions whether our collective addiction to GDP is really the best metric for sustainable growth. Rather than relying on the hypothesis that generating ever greater economic returns will somehow even out inequalities of income or clean up the mess we have made of our soils, forests, air and water, Raworth calls for a new economic system that is distributive and regenerative by design.

It is a compelling thesis. The inner, social ring of the doughnut has already been defined by the UN’s Sustainable Development Goals (SDGs) and fashions the foundation blocks of a fulfilling life, from adequate food, water, health and housing to equal opportunities for education, work and political representation. The outer ring, the ecological ceiling, has been defined by the 2015 Paris Agreement on climate change but also by UN plans to slow the destruction of nature, on which more than half the global economy depends.

Reflecting these ideas, the Forum is embracing two initiatives – Net Zero Carbon Cities and BiodiverCities – to harness the potential of cities as catalysts to stimulate low-carbon, pro-biodiversity urban living. Cities accelerate biodiversity loss and account for 75% of all global CO2 emissions – to meet the Paris target, they have to achieve net-zero emissions by mid-century.

Brian Moynihan, Chairman and Chief Executive Officer of Bank of America, sees the role of all capitalists, all chief executives, as delivering on the goals and values that society values most, which he identifies as the SDGs. He points to the persistent shortfall of $2.5 trillion per year in funding the SDGs – mainly in lower income countries – and proposes that the private sector can fill the gap. “Why does capitalism have to deliver the SDGs and the progress? Well, it’s simple,” he told an audience at the 2020 CEO of the Year gathering in October. “Capitalism has the money. Capitalism has the talent. Capitalism has the innovation behind it. And, yes, it has a profit motive.” Moynihan sees his duty as driving the “genius of the ‘and’ – profits and purpose”.

Profits and purpose sound like a neat idea, but is it a little too neat, coming from one of the world’s leading capitalists? After all, isn’t it capitalism’s business model of competition and consumption that has aggravated social inequalities and pushed our planet to the brink? Businesspeople are alert to this charge and quick to point out that market economics has lifted many millions of people out of poverty, especially in China. But they sound increasingly keen to change their way of thinking – and are acting.

Moynihan, Chair of the Forum’s International Business Council (IBC), recently spearheaded a year-long effort to distil a set of Stakeholder Capitalism Metrics by which companies could demonstrate their contributions towards (and impacts on) social and environmental goals. Fired by the belief that “what gets measured gets managed”, Moynihan sees these metrics as defining the essence of stakeholder capitalism, a concept he credits Klaus Schwab with creating almost half a century ago. In January, Schwab released his new book on the subject. “Rather than chasing short-term profits or narrow self-interest,” writes Schwab, “companies could pursue the well-being of all people and the entire planet.” This does not require an about-turn, just a shift in perspective “beyond the next quarter or fiscal year to the next decade and generation”.

While rigorously-applied metrics can build trust, perhaps we won’t have to worry about whether this new social conscience of business is simply the wolf of profit dressed in the sheep’s clothing of purpose. Market interest in sustainable investment has soared in recent years, with assets under management reaching $31 trillion by 2018. Some of the world’s most hardcore moneymen are now signing up to sustainability and stakeholder capitalism as the future of business. Larry Fink, Chief Executive Officer of investment firm BlackRock, said recently: “a company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders.”

Despite these market-led moves towards making the world a safer, fairer place, it seems likely companies will have to negotiate an increased level of government policy and regulation. Even before the pandemic, the European Commission (EC) had framed a Green Deal to make Europe the first continent to go climate-neutral by 2050. Like a modern-day Leviathan – Thomas Hobbes’s model of the protective state – the EC announced €1 trillion of investment in a green economy that promises to leave no person behind. As part of this push towards protecting people and planet, the EC is strengthening its directive requiring all large companies to report against a set of defined environmental and social standards.

Unprecedented stimulus programmes announced in April 2020, amounting to several trillion dollars, have supported the basic needs of the poorest, preserved jobs where possible and helped businesses survive. Only governments had the power and capability to avert economic and social calamity.

As John Micklethwait and Adrian Wooldridge, writing in April 2020 for Bloomberg, put it: “The Covid-19 pandemic has made government important again. Not just powerful again (look at those once-mighty companies begging for help) but also vital again: It matters enormously whether your country has a good health service, competent bureaucrats and sound finances. Good government is the difference between living and dying.”

So the crafting of a cohesive, sustainable and resilient recovery from COVID-19 will fall on the shoulders of both a newly empowered public sector – in the West at least – and a repurposed private sector, with civil society helping provide direction and transparency. The world cannot afford another carbon-heavy, brown recovery like the one that followed the 2008-2009 financial crisis. We need political and business leaders whose priorities and profits are centred on the well-being of people and planet. The totem of GDP growth has ripped the fabric of nature and society. We need new metrics of success that track long-term value, that capture the evolving access to wealth and opportunities across society, and that measure how resilient our physical, social and human capital are to future shocks.

Government looks set for a bigger role in steering market economics towards more sustainable solutions to the multifaceted crises we face. A key part of this will be to renew the social contract between citizen and state, to ensure greater inclusiveness and equity for all in education, employment, reskilling and welfare. But equally, the private sector is a vital partner: without the entrepreneurship and innovation of business, we will never deliver the benefits of social development to every person on the planet at a price that the planet can afford.

A collection of initiatives relevant to the day has been created for those with access to the Forum’s online tool, TopLink.