Restoring the Compact between Business and Society

Business leaders at the World Economic Forum Annual Meeting agreed that there is an urgent need to restore the compact between business and society, ensuring that companies are responsive and responsible to all their stakeholders. There is a crisis of confidence in leadership, said Jim Hagemann Snabe, Member of the Board of Trustees, World Economic Forum. “We have an opportunity to reinvent how we do business, to refocus our efforts towards ensuring long-term sustainability,” he added.

To restore trust, we need a consistent North Star, stressed Frans van Houten, President and Chief Executive Officer, Royal Philips, Netherlands, and a Co-Chair of the World Economic Forum Annual Meeting 2017. “Global companies need to rally around a multistakeholder approach to doing business,” he added. At Royal Philips, an internal values system is focused on shared responsibilities to investors, employees, suppliers and broader society. The company actively pursues a life-cycle concept for its products and has committed to achieve carbon neutrality in its global operations by 2020.

The Fourth Industrial Revolution is putting lower- and medium-skilled jobs at risk. More than 60% of jobs and 30% of activities can be automated today, said Dominic Barton, Global Managing Partner of McKinsey & Company, USA. “We can’t rely on government to reskill people in the face of rapid technological change and automation; business will have to drive this,” he added. In this regard, McKinsey & Co has announced the Generation Initiative, a philanthropic commitment of $75 million across five countries to develop an approach to getting unemployed and unskilled youth into jobs.

Lubna S. Olayan, Chief Executive Officer and Deputy Chairperson, Olayan Financing Company, Saudi Arabia, stressed the dangers of short-termism. “Social responsibility and philanthropy must be at the core; it’s the only way to be sustainable,” she said. Olayan was one of the first private-sector companies to employ women in Saudi Arabia 15 years ago. This decision, although difficult in the short-term, has delivered enormous long-term benefits.

Collaboration is key, said Hiroaki Nakanishi, Executive Chairman, Hitachi, Japan. Challenges such as climate change, inequality and social cohesion are global in nature and need a joint effort between business and government. “Sustainability is the overarching goal for us; we want to be a solution-based business,” he added.

At the Annual Meeting, The Compact for Responsive and Responsible Leadership, sponsored by the International Business Council of the World Economic Forum, is being proposed for signature to all participants of the Annual Meeting 2017. These leaders include chief executive officers, chairs and members of corporate boards, as well as leading investors and asset managers. The goal is to create a corporate governance framework with a focus on the long-term sustainability of corporations and the long-term goals of society.

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