A Better Economy Is Possible. But We Need to Reimagine Capitalism to Do It
BY KLAUS SCHWAB
OCTOBER 22, 2020
The only immediate upside, perhaps, was the drop in greenhouse-gas emissions, which brought slight, temporary relief to the planet’s atmosphere. …
Indeed, the bad news related to COVID-19 came on top of the enormous economic, environmental, social and political challenges we were already facing before the pandemic. With every passing year, these issues, as many people have experienced directly, seem to get worse, not better. …
The same economic system that created so much prosperity in the golden age of American capitalism in the 1950s and 1960s is now creating inequality and climate change. And the same political system that enabled our global progress and democracy after World War II now contributes to societal discord and discontent. Each was well intended but had unintended negative consequences. …
Yet there are reasons to believe that a better economic system is possible—and that it could be just around the corner. As the initial shock of the COVID crisis receded, we saw a glimpse of what is possible, when stakeholders act for the public good and the well-being of all, instead of just a few.
In September, my belief that a more virtuous capitalist system is possible was reaffirmed by an initiative of the forum’s International Business Council led by Brian Moynihan of Bank of America. They released the Stakeholder Capitalism Metrics: nonfinancial metrics and disclosures that will be added (on a voluntary basis) to companies’ annual reporting in the next two to three years, making it possible to measure their progress over time.
Doing so requires answering questions such as: What is the gender pay gap in company X? How many people of diverse backgrounds were hired and promoted? What progress has the company made toward reducing its greenhouse-gas emissions? How much did the company pay in taxes globally and per jurisdiction? And what did the company do to hire and train employees?
The initial idea that companies should try and optimize for more than just short-term profits came around 2016 from a handful of business leaders who wanted the private sector to play a role in achieving the U.N. Sustainable Development Goals (SDGs). Individuals such as Moynihan, Frans van Houten of Philips and Indra Nooyi, then at PepsiCo, enlisted many of their peers in this commitment.
In the following years, pressure from social- and climate-justice movements such as Fridays for Future (inspired by Greta Thunberg), #MeToo and Black Lives Matter added to the sense of urgency. Business needed to do more than make a well-intentioned but vague pledge.