To confront global crises, we must talk about the purpose of business
The private sector must unlock its massive potential to lead the way on decarbonization, according to Forum for the Future's chief executive. Read More
This is the first in a three-part series exploring how businesses are evolving to create a just and regenerative future.
Political upheaval, extreme weather events, worsening inequality, economic volatility and geopolitical tension all mean we need to talk about the purpose of business. Why? For one simple reason: The world cannot respond to our climate, social and economic crises without the private sector stepping up.
Right now, both the scale and nature of the action needed to decarbonize our economy (without leaving millions of people behind) and adapt to a rapidly changing climate is almost beyond comprehension. Estimates suggest trillions of dollars will be needed for both decarbonization and adaptation.
Against this backdrop, heads of state, the United Nations, multilaterals and other stakeholders are facing a long overdue and stark realization that the private sector — long positioned as part of the problem — must be part of the solution.
So what could the full potential of the private sector look like?
The potential for business-led climate mitigation and adaptation is enormous. Here are six ways that the private sector can maximize that potential:
- Access: Enable access to finance, both seed finance and for scaling.
- Global reach: Leverage its complex supply chains, which often span the globe. With this reach comes access to almost everywhere — think unparallelled last-mile distribution and community resilience.
- Harness the power of consumer brands: Consumer goods and products touch billions of lives every day. How can these be leveraged to engage people, build awareness and seed advice for climate adaptation?
- Innovate: Businesses are both quick to innovate, and excellent at it. From developing technology that gives farmers access to early weather warnings to exploring infrastructure that withstands extreme weather, businesses are getting creative.
- Data: Smartly use its data, of which there is so, so much — from numbers on air quality to land use mapping. How can this be analyzed to inform climate adaptation?
- Partner for impact: The private sector is good at making partnerships work. Partnerships can take the form of pre-competitive collaborations such as the Forum for the Future-convened Climate & Health Coalition, which is focused on unlocking the full potential of private sector action at the intersection of climate and health. Or they can take the form of broader multi-stakeholder collaborations such as Growing our Future, where the private sector sits alongside others in the food and agricultural system to co-create solutions capable of delivering transformation.
How can this potential be unlocked? Elephants and economics
First, we have to deal with the proverbial elephant in the room: widespread and deep distrust of businesses. There is good reason for this — after all, companies’ industrial emissions created the current perilous nature of our climate.
But we must remember that businesses are part of a broader economic system, the goals of which were established after World War II and designed to maximize short-term profit growth. And it is governments that have created, and still perpetuate, the current rules of the game.
So, the reality is our global challenges are largely a function of an economic system that itself needs to shift. Promisingly, it is shifting — we’ve seen huge sums of capital being deployed to restore nature, to fund adaptation. But these sums are neither large enough or trickling through fast enough to support the people and ecosystems that need them most.
Realize the full potential of business in 3 steps
Step 1: Go with the momentum and help shape a new economy
The momentum toward the transition to renewable energy is almost unstoppable. Even the absence of political will in some parts of the world will not dampen market forces that will create a tipping point (which may have already been reached).
Other transitions, from food to health care, are not far behind. All of these much needed system transitions will accelerate as the global economy adopts explicit goals of economic value creation plus a broader purpose that speaks to benefiting people and our planet. Promising signs are emerging — from new circular business models to discounted finance schemes for farmers that encourage a switch to sustainable farming methods.
Momentum is building, and businesses failing to go with it will be left behind.
Step 2: Collaborate
Non-private and private sector actors should work across silos and accelerate transitions that are currently underway, particularly in how we produce and consume energy and food. Take for example, Forum’s work on the Renewable Energy Initiative, which brings together a huge range of stakeholders to ensure renewable energy in Asia creates value in ecologically safe, rights-respecting and socially just ways.
No one individual or organization working alone can shift the dial; together, we just might.
How to Stay on Track for 2030: Decarbonize Your Operations and Value Chain
Step 3: Relate as humans
“Even people that work in the private sector must have values.” I’ve heard this sentiment a few times recently. Among non-state actors and nonprofits there is a sense that people who work in business have “sold out” or “care only for money.”
Humans can be very judgmental.
Wherever you stand on this, we simply don’t have time to allow prejudice and assumptions to stop us from engaging across sectors. Yes, the private sector needs to be held accountable. The truth is there are already mechanisms that do this, and these mechanisms are getting stronger. Look at the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD), which is making progress toward establishing new rules on supply chain due diligence across environmental and human rights issues, and has real potential to shake up corporate accountability across Europe.
Taking a reductive approach that labels the private sector “bad” and citing that as a reason not to engage is to miss the opportunity of a generation.
That opportunity is shifting our mindsets in ways that encourage us to see potential, not risk. To co-create solutions, not prescribe them. To focus on interconnected issues, not single ones. To see the whole system, not just the parts that feel familiar and understandable.
What’s next?
What happens next in our shared history — whether there will be a liveable future for our children — will be a very human story. We have a time-bound window to be our best, and the challenges of 2024 demand a different purpose for all of us. That in turn means a different purpose for business.
