I recently had the amazing honor of giving the keynote address at the Prince's Accounting for Sustainability Forum at St. James’s Palace where I spoke about the role of the finance and accounting community in future-proofing our economy. Below is an abridged version of my speech. Click here for the full document.
Sustainable development is not a new phenomenon, nor does it have a long history compared to other management issues. We have been talking about sustainable development for more than 40 years - but what progress have we made?
If we are honest we have to admit that there has been nothing like enough progress.
Poverty has not been eradicated; inequity has grown, hunger and malnutrition still kills a child every 6 seconds; 1,8 billion people don't have access to clean drinking water and sanitation; 2.3 billion people don't have access to electricity. Not to mention the growing threats of climate change. The IEA warns that if we build all planned CO2 emitting installations - currently 1.300 coal fire power plants - we will be locked a into a 5 degree warming scenario. This was confirmed in a study that the World Bank published last week. Give or take 1% this spells a catastrophic risk for humanity.
Hardly the Future we Want, I would argue.
In 2010 WBCSD presented its Vision 2050 for a sustainable world: nine plus billion people, all living well, within the boundaries of the planet.
In this vision, it was foreseen that the period until 2020 would be what we called the “turbulent teens”. All you need to do is read the newspapers to know that's the part we got right.
The Turbulent Teens are unfolding to be a society-shaping toxic mix of economic crisis, social unrest and severe climate change related events. All at a time when trust in leadership, both from politics and business, is lower than ever.
So it is not becoming an easier society in which to manage a business. We are on a path that is simply not sustainable, again not leading to a future we want.
The WBCSD believes that the need for action is more pressing than ever and that visionary leadership alone is not sufficient: action to implement business solutions and implement them at scale is what matters now.
Business as usual is not an option for a future-proofed economy. Too many business models and strategies are dependent on the notion that current economic principles and capitalism are static. This is naïve. The conventional model for capitalism is found wanting in terms of the benefits to the majority of society, the impact on the planet, and even in terms of continued economic prosperity. The call for change rings loud – capitalism requires a new operating system, and needs to be re-booted if we are to avoid the ultimate recession or worse total collapse.
Business needs to listen to what the scientists are telling us. We must incorporate the knowledge around the Planetary Boundaries in the setting of priorities for solutions. We must find or create a framework that guides us to solutions for the social tensions in societies around the world.
So we need to consider whether current company reporting provides the right information for this radical transformation. Sustainability performance needs to be integrated into strategy. In a future-proofed economy the old adage of ‘What gets measured gets managed’ still rings very true.
If we are to bring business solutions to the scale that the world needs, we must get all business involved or, said differently, we must change the (accounting) rules of the game.
If the world wants to address our many challenges, if business wants to restore societies' trust, business must become more transparent and acknowledge that externalities need to be valued, monetized and factored into day to day management. This is not a matter of incremental change, but a radical transformation and all this while time is running out.
My good friend Paul Polman, the visionary CEO of Unilever, always ends his speech with the following quote: "you may delay, but time will not .... and lost time is never found again".
As English is not my mother tongue, I have had to use the dictionary to look up what a radical transformation in a short time is called: It is a revolution, a revolution of capitalism, not with the aim to overthrow it, but to improve it in a way that balances the economic, the natural and the social dimensions as that is the only way to achieve future-proofing of our economies.Click here to watch the video.