August 7, 2013
Aron Cramer, President and CEO, BSR
In his most recent book, author and consultant Ian Bremmer argues that we are living in a "G-Zero World," in which no nation is willing or able to exert the kind of leadership needed to navigate our fast-changing world.
Now more than ever, leadership is sorely needed, but where will it come from?
Business has a crucial role to play. For all its imperfections, there are four essential truths about our world that business understands, and that much of the public debate and policy apparatus miss.
But now is the time for the business community to move from understanding to action by raising its voice about the key challenges facing our world so that we can unlock strategies to revitalize America's public debate and its economy.
Climate Change Is Happening—and It's Expensive
Climate change undeniably hurt the U.S. economy in 2012. The drought in the Midwest was estimated to have shaved up to a full percentage point off domestic GDP last year. Given the chronically slow growth that has beset America since 2008, that's a real problem for the "real" economy.
What's more, Superstorm Sandy cost an estimated US$65 billion, and while climate change may not be responsible for any particular drought or storm, it is causing an increase in the number and intensity of costly weather events.
Despite all this hard evidence of the financial costs created by inaction on climate, the House of Representatives is currently considering a proposal to cut by a third funding for the Environmental Protection Agency—one of the government institutions that can actually enforce real change on this issue.
More progressive businesses know this slash-and-burn approach is unwise, and we need corporate leaders to lobby Washington and the public to support investments in the EPA. We need forward-looking approaches that enable us to manage the unavoidable and avoid the unmanageable on climate change.
Social Mobility Is America's "Secret Sauce"
America's soft power derives from its open culture and social mobility. One of the most essential aspects of the American dream is the dictum that anybody who works hard has an opportunity to succeed.
But today, social mobility has declined to such an extent that the Brookings Institution issued a report in June stating that it is now "more myth than reality."
One reason for this is the disconnect between rising corporate profits and stagnant employment—a complicated issue with no single solution.
There are many companies that have committed to job creation, and the "reshoring" that helps to revitalize manufacturing in the U.S. may begin to address that. But we need more businesses to join the debate and start taking action.
We Need to Invest More in People and Infrastructure
One of the best ways to enhance mobility is by investing in people and the infrastructure that supports and enables American prosperity.
In my home state of California, prisons receive more funding than the proud, but now economically beleaguered, state university system. These priorities are bad for the public and bad for businesses that rely on well-educated graduates who can compete and innovate in a global economy.
The same fate has befallen our crumbling infrastructure, which needs to be rebuilt with sustainability principles in mind. Most mayors know this; most politicians in Washington don't. A stronger business voice could help to change that.
Short-Term Thinking Strangles Innovation
Business executives I speak to regularly cite the punishing short-term pressures of the public markets as one of the reasons they must run their businesses based on narrow definitions of success.
Unilever's Paul Polman and PepsiCo's Indra Nooyi have both made public arguments against existing models, and Al Gore and David Blood at Generation Investment Management, have produced a roadmap to sustainable capitalism that takes dead aim at short-term thinking. But they are the exceptions.
We need chief executives who address these pressures head on; they will be the ones who are best able to influence change. One option is to express support for reforms to corporate reporting.
The framework being developed by the International Integrated Reporting Committee could result in new models that place tangible value on both natural capital and human capital, not just financial capital. With more support from company leaders, this kind of reporting could create fundamental change.
Progressive Leaders Versus the Status Quo
While there are solutions to the difficulties we face, the unfortunate truth is that most business-led coalitions not only fail to argue these points, but deliberately undermine them.
In too many cases, business associations lobbying Washington sound like Groucho Marx in Duck Soup, gleefully singing, "Whatever it is, I'm against it." By reflexively opposing action on climate change, investments in education and infrastructure, and other initiatives, lobbying groups are preventing the forward-looking steps that business needs to thrive, and it also reinforces the sense in the public that investments are somehow a waste of precious public funds.
There are many business leaders who understand these four core truths, and operate their businesses with them very much in mind. But we need these individuals to make their voices heard more widely to ensure that America's agenda takes on the most important challenges of our time.
This article also appeared in Guardian Sustainable Business.
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