Business: an essential partner for creating an inclusive economy

When the post-war global movers and shakers came together almost 70 years ago, on a piece of philanthropically-gifted real estate in New York, they were driven to act to save the planet from war and other challenges. The then 58 members of the United Nations absorbed the International Labour Organisation, agreed a global statement on human rights, set up the World Health Organisation and started to plan how to deal with future conflict and peacekeeping.

Those were innocent days. The 1939-45 war cast a long shadow, not least in facing the challenges posed by mass migration – not solely a 21^st century phenomenon, by any means.

The world moved on. In the 1980s the term ‘globalisation’ came into common use and the first UN Convention on climate change happened in Rio, 1992. In 2000 the Millennium Development Goals, an agenda for change for governments everywhere, were launched. Then came a sea change as the UN aimed its 2015 Sustainable Development Goals at a subtly different audience. Business was now included, to the extent that some of these Goals are unachievable without the active involvement of global corporations.

Why the change of course?

Because if we invited the 100 largest economies of the world to convene today, as a network powerful enough to shape the world, there’d still only be 60 countries there: the other 40 would be companies. If we assume that GDP and company turnover are roughly equivalent measures of wealth and power then that figure’s growing. If more evidence were needed, look at business’ involvement with, and response to, the Paris climate change conference: 195 countries were there but so were leading global businesses and investors, too, triggering a $3 trillion disinvestment from coal and oil to date.

Besides climate change, today’s main global challenges are resource depletion and the triumvirate of hunger, poverty and inequality.

We can argue about how these challenges came about or who allowed them. The fact is that we need global business both to let democratic governments get on with their jobs, without obstruction or delay, but also to be active participants themselves. The good news is that there’s a strong conventional business case for them to do so.

On climate change, not only has business focused on the solution, low carbon energy production, but the market is working to bring solar and wind technology prices down and prompting improvements to battery technology, too. The response of American businesses – especially investors – to Trump’s move to leave the Paris Accord was impressive and, working alongside civil authorities at state and city level, the USA will continue its purposeful march towards a low carbon economy. This drive is powered by a need to innovate, to make inclusive energy affordable, sustainable and also – let’s not be ashamed to admit – profitable.

Resource depletion might sound like a wholly business issue. Shortages of some raw materials are reaching crisis level – not least in those needed to build our ubiquitous mobile phones. Yet within five years the term ‘circular economy’ has become commonplace as the war on waste and pollution grows with every passing documentary. And it’s worth noting that for the last five years access to clean water has been rated as a top risk to global trade (and to society) by business’ global think-fest, the World Economic Forum.

President Kennedy was right, we do have the ability to cure hunger within a decade: we’ve just lacked the will. Arguments about the intellectual property of seed genomes do not dignify the hunger debate and countries in possession of the soil and climate that could feed Africa remain woefully short of investment and infrastructure. The economic damage caused by inequality, which renders citizens unable to function as consumers, is now better understood. The idea of an inclusive economy, which empowers the poor, is gaining traction as companies change marketing practices in order to develop new markets in fair and inclusive ways.

Just as the role of corporations can be positive globally, so the argument works at national level and even within communities. Academic studies consistently show that engaged businesses are more profitable over ten years than their more fly by night competitors. They see themselves as part of society and not as vultures; they adopt a sustainable approach to energy and other resources; engage with their workforce rather than treat them as a commodity; whilst thinking, planning and acting long-term.

Such engagement pays. For example, in Britain mental health problems cause more loss of business productivity than disease, injury and industrial action combined, whilst we have a problem meeting the demand for mental health services. It makes business sense to reduce unreasonable demands on workers, learn how to engage them better, help imbue them with a sense of purpose and mission – in order to reduce absence through stress, anxiety and depression. People who enjoy their work are less likely to suffer from mental health problems. We can no longer pretend that they don’t exist in the workplace and it’s in business’ interests to cope with them better. In particular, rehabilitation after an absence due to mental health problems is often the most dysfunctional part of this journey and must be addressed.

If Britain’s businesses can raise productivity in this way, up from its current dire levels, they could afford better pay, including the Living Wage where appropriate, make more profits and contribute more to the economy – whilst reducing the demand on a critical part of an overstretched health service. Win-win.

There are many other examples where business doesn’t require a quantum leap in enlightenment to recognise the case for behaving with dignity. I explore them in my book, ‘The Company Citizen’.

So much has happened in the last 70 years: the pace of change is tumultuous and exciting. The next step is more inspiring still: for it to become commonplace for business to regard itself not as a way of extracting profit, divorced from society, but as a way of creating wealth within and as part of society. That requires few real changes other than new ways of thinking coupled with a lifting of the head to give a higher priority to longer term horizons.

Tom Levitt was Member of Parliament for High Peak from the 1997 to 2010.  He is a science graduate, former school teacher and a serial charity chair, with extensive experience of working in community and international development. In 2011, Tom was awarded an Honorary Doctorate by the University of Derby.

Tom’s book, The Company Citizen, is available from Routledge.