Climate, social and economic crises mean we need to talk about the purpose of business

Political upheaval, extreme weather events, worsening inequality, economic volatility, 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 decarbonise our economy (without leaving millions behind) and adapt to a rapidly changing climate is almost beyond comprehension. Estimates suggest trillions of dollars will be needed for both decarbonisation and adaptation.

Against this backdrop, heads of states, the UN, multi-laterals and more are facing a long overdue and stark realisation 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?

There are at least six features that mean the potential for business-led climate mitigation and adaption is enormous. The private sector can:

1. Enable access to finance, both seed finance and for scaling.
2. 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.
3. 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?
4. 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.
5. Smartly use its data, of which there is so, so much — from numbers on air quality to land use mapping.  How can this be analysed to inform climate adaptation?
6. Partner for impact. The private sector leads the way in pre-competitive and other partnerships. These are unique in bringing together the diverse perspectives, expertise and experiences needed to co-create solutions capable of tackling multiple problems at once.

How then can this potential be unlocked? Elephants and Economics

First, we have to deal with the proverbial elephant in the room.  There can be widespread and deep distrust of businesses.  There is good reason for this — after all it is industrial emissions that have 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 laid down post World War Two and were designed to elevate the primacy of short-term profit maximisation.  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. And, 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. 

Realising the full potential of business in three steps

Step 1: Go with the momentum

Every business should embrace the transition of our economy, and the transitions that sit within this, from food to energy.

Until the global economy has explicit goals of economic value creation plus a broader purpose which speaks to benefiting people and our planet, roadblocks to the transformation needed will remain.  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 for the Future’s work on the Responsible Energy Initiative, which brings together a huge range of stakeholders to ensure renewable energy in Asia creates value in a way that is ecologically safe, rights-respecting and socially just. Or take Growing Our Future, a cross-sector collaboration accelerating the transition to a just and regenerative agriculture system. 

No one individual or organisation working alone can shift the dial; together, we just might.

Step 3: Relate as humans

‘Even people that work in the private sector must have values’. I’ve heard this a few times recently.  Among non-state actors and non-profits there is a sense that people who work in business have ‘sold out’; they ‘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 to account.  The truth is there are already mechanisms that do this, and these mechanisms are getting stronger. Look at the Corporate Sustainability Due Diligence Directive (CSDDD), which is making progress towards establishing new rules on supply chain due diligence across environmental and human rights issues, and has real potential to shakeup 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 inter-connected 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 timebound 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. 

Looking for a strategic partner to help inform how your business can respond to the world’s social and environmental challenges? Get in touch with James Payne, Global Head, Purpose of Business at Forum for the Future.