Why business can’t shut its eyes to global challenges

As the world’s leaders once again gather in Davos to discuss the theme of the “New Global Context”, I am taken back four years, when I became the president of the Confederation of Indian Industry. After much deliberation, we decided the theme for the year would be “Business for Livelihood”.

I believe that theme is still relevant today, here in Davos. Livelihood is defined as a means of securing the necessities of life – food, water, clothing, medicine and shelter. At first look, it seems an unlikely theme. Why should global businesses, that are trying hard to move to the next level after the rigours of the financial crisis, be concerned with securing all those necessities for a growing world population?

The reason we should be concerned by this is because in the “New Global Context” of a multistakeholder, systemic and future-oriented world, global corporations and institutions can’t afford to ignore the world’s realities.

Let’s consider just two of them:

1. Some 805 million people (one in nine people) do not have enough food to lead a healthy, active life. The vast majority of the world’s hungry live in developing countries, where 13.5% of the population is undernourished.
2. Around 85% of the world’s population live in the driest parts of the earth, where 783 million people do not have access to clean water; almost 2.5 billion do not have access to adequate sanitation.

Why businesses should be concerned about livelihoods

As the devastating effects of the financial crisis have receded from their full fury, this is the best time to rebuild trust between people and corporations. And that cannot be done unless we create the conditions that will give people a better future – a relief from the clutches of hunger, scarcity of water, poor sanitation and lack of adequate healthcare.

Business leaders have increasingly come to recognize that corporations are both social and economic entities. A clarion call of “Business for Livelihood” would be one of the most effective ways to ensure that we can creatively and effectively reimagine the future of the entire planet in this new global context. The rate of combined unemployment and underemployment in developed nations ranges between 4% to 12% and is as high as 30% for non-industrialized countries.

Youth unemployment is staggeringly high – worldwide, an estimated 73 million young people between the ages of 15 and 24 are unemployed. Some of the political and social unrest in the Arab world and parts of Europe is directly related to youth unemployment. Conversely, it is estimated that for every percentage point of youth employment, worldwide consumption increases by about $72 billion. Higher youth employment will have a far-reaching impact on economies everywhere. Such an approach also offers global policy-makers and business leaders an important strategy in the formulation of improved economic policies and institutional reforms.

The role of global business

There is another very important reason why we should consider adopting Business for Livelihood as a new mantra: as we attempt to bring in greater equality for the underprivileged of the world, doing so in a way that affords them dignity is the right way to do it. Business for Livelihood would help achieve that inclusion with dignity.

How can global business help achieve this? The focus should be on four areas that can create sustainable enterprise: education, employability, innovation and entrepreneurship. Education and employability create a qualified talent pool. Improving employability is also important. Innovation and entrepreneurship drive growth and the creation of jobs. In many developing countries, small and micro entrepreneurs account for a significant portion of jobs, but multiple issues hamper growth like little or no education and almost no vocational training. Innovation is the key to the survival of companies today.

Sustainable enterprise can create more jobs and improve the livelihood of people. Businesses are an integral part of civil society. I also strongly believe that creating jobs is the best attempt at corporate social responsibility. Higher growth will translate into improved livelihood over time.

At the corporate level, companies can put various strategies in place: they can create incentives to hire younger or female workers, or capture gains from labour mobility and establish rules on working from home and best practices.

Finally, what is relevant at a global level has to be applicable for individual nations too. Take India, as an example. The country is arguably set to take a giant leap forward and emerge as one of the world’s four largest economies by 2020. But it is still reeling from the scourges of poverty, unemployment and alarmingly high infant mortality rates. In India we have realized that businesses cannot be mere mute spectators to this reality. On the cusp of a new beginning, a national strategy embracing the idea of Business for Livelihood may well help India in its attempt to regain its rightful place at the high table of nations.

Author: Hari S. Bhartia is the Co-Chairman and Founder of Jubilant Bhartia Group. He is a Co-Chair for the World Economic Forum Annual Meeting 2015 in Davos.He is a panel member in the sessions, India’s Next Decade, on 23/1 at 11am CET and The Global Agenda 2015, on 24/1 at 4.45pm CET.

Image: City workers cross London Bridge during the evening rush-hour in the City of London October 8, 2008. REUTERS/Toby Melville