How industries can collaborate to put stakeholder capitalism into practice

More than 400 participants from the World Economic Forum's communities of Industry Strategy Officers, as well as senior deputies to the CEO Industry Action Groups, came together this week for the Industry Strategy Meeting 2021.

The aim? To look at where sectors can collaborate so industries can drive growth and put stakeholder capitalism into practice.

With the COVID-19 pandemic still occupying attention globally, a year after the Industry Strategy Meeting 2020, conversations looked at its impact and a pathway to recovery. This article looks at just 3 of these sessions.

Speakers: Moderated by Pilita Clark, Associate Editor and Business Columnist at Financial Times, this plenary featured opening remarks by Jeremy Jurgens, Managing Director & Head of the World Economic Forum's Centre for the Fourth Industrial Revolution. Panellists included: Dimitri de Vreeze, Co-Chief Executive Officer and Chief Operating Officer Royal DSM; Thierry Delaporte, CEO and MD at Wipro and Julie Sweet, CEO at Accenture.

In the run-up to COP26 this year and beyond, what are the implications the net-zero agenda has for business strategies, business models, and on partnerships with governments and other institutions?

Clark said the good news is there has been a "huge amount of change and action at the corporate level", but some companies are failing to make progress on climate pledges.

Accenture has set a net-zero target for 2025. Sweet said integration at the leadership table and structural changes have been key: "Pre-COVID, we said we're going to make a structural commitment to reducing travel, then we are we're using technology to help drive down some of our emissions. We are still using some credits until technology catches up... and then we continue to look at other structural ways to operate differently."

de Vreeze said Royal DSM has transitioned from being a mining company to a nutrition and health company: "We said if we will not become a People, Planet and Profit company, we will be the dinosaurs of the future." They set a clear roadmap for Scope 1, 2, and 3 emissions for 2030 and have shifted their shareholder base to long-term shareholders.

"It's key that you stick to your story, you say, 'maybe I'm not going to hit my numbers every quarter, maybe not every year, but this is where I'm targeting for. Be with me on that journey. If you don't believe in that journey, then it's your choice to invest in our company, but then, most probably you're not the shareholder which fits DSM'.

"I'm looking into the long-term strategy if I can show progress on that strategy for people planet and profit, it's a bit more stable going forward. I think it's important for every stock listed company to have the shareholders who fit your strategy."

Wipro is a founding member, alongside Microsoft, Unilever and others, of the Transform to Net Zero coalition, which aims to accelerate the transition to a net-zero emissions global economy by 2050. Delaporte said: "Everyone is clear on the fact that climate crisis is real, it's urgent, it's complex. But what we see also is that if 86% of the top 500 companies in the world are committing this target of carbon neutrality by 2050, 30% feel they're on track, the reality is that most of the companies are behind and that's why we really need to accelerate the pace and the awareness."

He added that companies are on a journey, just five years ago board and investors paid little attention to environmental topics - and now they're more of a priority, but shareholders assume performance will continue. "We must create the environment for a virtuous and consistent combination of driving transformation and performance." The next generation of talent will never want to work for a company that doesn't take its responsibility regarding the environment seriously. "It is one of the big drivers for change."

Accenture research has found nearly two thirds of consumers say they're going to make more sustainable choices in terms of where they buy from in the next six months, while one-in-two employees say they want to work for a company that takes a larger leadership role.

Sweet said: "Sustainability is a part of our core business strategy... we're embedding sustainability into the work and that's resonating with our clients. In my view, there isn't a choice, at the end of the day, you have to do it, you have to drive business results as a part of it, and also as part of funding.

"We have to look at every industry differently... Every industry is having to make different choices that reflect the balance of what investments are needed, what technology is available and that's part of what we help our clients think about as they set their goals."

Delaporte said technology can be part of the solution: "By leveraging data, by leveraging the cloud, you're creating the environment for flexibility for only consuming what you need. Artificial intelligence is also a driver to help you reduce consumption. All these aspects are positive, but with lack of awareness, you may only see the negative aspects of technology."

Speakers: Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, was in conversation with Maha Eltobgy, the Forum's Head of Shaping the Future of Investing; Member of the Executive Committee.

On the COVID-19 crisis and its impact:

Prof Schwab: "There is still a lot of uncertainty, but the good news is the vaccines. We probably will move out of this third phase which we face in many countries, and we will have a kind of coming back to normal in the summer months. We are planning the first big global summit of leaders in Singapore, and we are very confident we will have a great meeting. I'm a little bit more careful in my forecast for what's happening in autumn, because we don't know yet how much vaccines protect against, for example, the Brazilian variant, so we could move into a new phase. So summer is a good moment for coming together in Singapore."

On the Fourth Industrial Revolution:

Prof Schwab: "The technologies I described in The Fourth Industrial Revolution looked like science fiction and only five years afterwards they all have become, to a large degree realities, so we are living really in a time of accelerated destruction of traditional models, but also accelerated innovation, and of course COVID has even more accelerated this transformation process. We all know when we move out of a pandemic, there will be a new normal and hopefully it will be a positive new normal."

On the need for a Great Reset in the post-COVID era:

Prof Schwab: "We have to define the objectives for this Great Reset: resilience, inclusiveness, sustainability and collaboration. The virus is not the only risk we have to confront, there are imminent risks: cyber attacks and climate change. We have to integrate much better, we have to be better prepared for possible risks, and of course the cost of failure in doing so is much more difficult to explain and to define compared to the cost we have if we do not act."

He listed three dimensions of inclusiveness:

1. Social justice: "We will get social justice by providing everybody with a dignified job and for doing so [they] have to have the skills required in the Fourth Industrial Revolution."

2. Racism and diversity: "I'm most concerned about the polarization of opinions."

3. Intergenerational: "We see the mounting anger of the young generation and we may have a revolt if we are not better aware of how the present situation has an impact on young people."

"We see sustainability and everything which has to do with our environment as a cost, but if we put it in the context of the world moving from an age where we are mainly focusing on material issues, to an age where we are much more concerned with wellbeing, I see the investments into maintaining our climate, our oceans, biodiversity, I see much more as a business opportunity."

He added we are now in age of strategic competition and technology mastership will be a key issue over the next few years.

"Today, a Chief Strategy Officer does not only have to be concerned with the business model, I think [he] has to be at the same time, a Chief Risk Officer, a Chief Sustainability Officer, a Chief Society Officer, you name it. The world has become much faster-paced and much more complex."

On the relevance of stakeholder capitalism to business today

Prof Schwab: "For me it's all my heart and my soul, because I created the World Economic Forum 50 years ago as a foundation to promote stakeholder capitalism and it was an uphill fight, but I think now everybody recognizes that a corporation is not just an economic unit to produce products and services, it's a social organism being part of our society.

"When we talk about capital, we do not have only to consider financial capital, it's human capital, it's a natural capital, it's social capital and a company today in order to be successful has to care for all those different kinds of capital.

"The general public all have specific expectations towards the company, so they are stakeholders of the company. And the most precious good for a company is trust capital and trust capital comes from taking care in a balanced way of all the different expectations of the stakeholders of a corporation.

"It's in the interests of every company to adopt stakeholder capitalism. Stakeholder capitalism means also to care for shareholders long-term, to invest in the vitality of a company in such way to increase optimally the stake shareholders have in a company."

Speakers: Moderated by Hans-Paul Bürkner, Chairman at Boston Consulting Group with panellists Axel Hefer, Managing Director and Chief Executive Officer at Trivago; Malcolm Frank, President, Digital Business and Technology at Cognizant; Emma Vaz, Chief Business Officer, Europe, Middle East and Africa at Uber Technologies; Alison Martin, Chief Executive Officer, Europe, Middle East and Africa, and Bank Distribution at Zurich Insurance Group.

The pandemic has accelerated many changes, the panel agreed. From the acceleration of digital to consumer behaviours, these are unlikely to revert back to where they were.

"Digital has accelerated 5 years in the last year alone," said Frank. From the nature of work itself to the future of technology this acceleration is having an impact across multiple areas of business, he said.

There has also been a change in consumer behaviour, said Vaz. For example, the convenience and expansion of mobile ordering is likely to persist - not just for restaurant food, but groceries and beyond. She also raises the question of social safety nets and the challenges, particularly for gig workers, that the pandemic has highlighted.

Hefer flagged several changes that are already underway and are set to shape the future of the travel industry. In particular, we're likely to see a structural drop in business travel, he said. Remote working for more than a year has shown we can be productive without meeting in person. This will drive changes - and opportunities - in the overall travel ecosystem, he said.

There are pre-pandemic challenges and issues that will persist though, says Martin. There are social tensions that remain and these will need resolving she argues. Beyond this, sustainability and green targets are set to be a key factor. Investments, applied in the correct way, will fuel growth going forward.

And the role of green targets and sustainability will touch all the panellists' industries and global businesses, they agree. From regulation to the impact of entire supply and value chains, there are numerous factors that will shape different businesses and industries over the coming years.

From climate change to geopolitical challenges, understanding risk and building resilience will also play a key role in shaping the future of business.

Remote and hybrid working presents challenges for employees. From onboarding to building the social fabric that came from office life will be key issues for all organizations, says Martin. Hefer agreed - it's hard remotely to really assess how people are and their wellbeing.

The next 6 months are set to be fundamental, concludes Frank with the potential to shape the future of business over the next 3 years.