Six Global Trends in Business and Society

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People want companies to engage more – not less – with societal issues. It is according to Edelman Trust Barometer 2022which presents the results of a survey of 36,000 people in 28 countries.

According to the survey, people believe that societal leadership is at the heart of business. They also believe that business is an effective driver of positive change. And yet respondents believe companies are not doing enough to address issues such as climate change, economic inequality, retraining of the workforce and unreliable information. More than half say capitalism does more harm than good in the world.

At INSEAD, we pay close attention to trends like these, as they help inform our agenda as a global business school. We pay particular attention to six global trends impacting business and society. These trends, which present both serious risks and impactful opportunities for business, have implications for our school’s activities in 2022. Here, we offer key insights from the leaders and organizations closest to the issues.

The climate is the top priority

Today’s most serious threat to humanity is not Covid-19, despite what headlines can imply. Global leaders and experts interviewed for the World Economic Forum Global Risks Report 2022 cite environmental issues as the greatest global risks in the short, medium and long term. Extreme weather, failed climate action and threats to biodiversity are of greatest concern.

The urgency of this problem has increased over the past two years, both because the pandemic has stalled progress towards a green transition and countries have responded to the climate emergency with an inadequate response. For example, while 197 countries signed the Glasgow Climate Pact at the 2021 United Nations Climate Change Conference (COP26), their pledge is unlikely to materialize. target 1.5°C set by the 2016 Paris Climate Agreement.

Inequalities between and within countries make matters worse. OXFAM International estimates the 1 percent higher of people produce twice as much emissions as the bottom 50%. And yet, the less fortunate will suffer the consequences. By 2030, it is estimated that the climate crisis will kill around 231,000 people in poor countries each year.

Socio-economic risks are increasing

As the pandemic persists, socio-economic problems are worsening. Globally, the economic recovery is slowing due to inflation spikes, debt crises, rising commodity prices and supply chain bottlenecks. “livelihood seizuresare increasing among low-income households, a segment particularly affected by rising prices and onerous debt.

By 2024, the global economy is expected to be 2.3% smaller than it would have been without the pandemic. Labor market imbalances, protectionist policies, and education and skills disparities are expected to create further divergence in economies around the world. By 2024, economic growth in advanced economies is expected to outpace pre-pandemic growth by 0.9%. However, in developing countries (excluding China), economic growth is expected to fall 5.5% below pre-pandemic growth. Growth in Latin America and sub-Saharan Africa is expected to slow further.

Inequality is rising in most countries

Failures to equitably distribute the Covid-19 vaccine have hurt the world’s poorest countries the most. Although half of the world’s population has already received two doses of the vaccine, only 7 percent from Africa is fully vaccinated. Inequalities have also worsened in health, education, digital access and economic growth, primarily affecting the poor, women and girls and visible minorities. Since the onset of the pandemic, the timeline for achieving gender parity has moved back an entire generation, 99 to 135 years old.

Wealth inequality continues to rise. Today, the richest 10% of the world’s population own 76 percent of all wealth, while the poorest half owns only 2%. Multi-millionaires – who make up just 1% of Earth’s population – have also captured 38% of all the additional wealth accumulated since the mid-1990s.

However, data on income inequality show different trajectories. Over the past two decades, income inequality in country has increased dramatically while income inequality Between country has declined. The 2021 World Inequality Report indicates that the gap between the average incomes of the richest 10% and the poorest 50% within countries has almost doubled, from 8.5 to 15 times. Yet the gap between the average incomes of the richest 10% of countries and the poorest 50% of countries has shrunk from about 50 times to less than 40 times.

Distrust of key institutions is growing

Lack of trust in key institutions has reached critical levels. Almost 6 out of 10 people say they are instinctively suspicious of something until evidence suggests otherwise. The government and the media fuel a “cycle of distrust”, with nearly one in two people perceiving these institutions as divisive forces in society. Democratic governments are trusted even less than autocratic regimes.

Increasingly, consumers and employees are holding companies accountable for their role in society. They also want CEOs to take a stand on the issues. The Edelman survey reports that beliefs and values ​​now guide key decisions such as buying or promoting brands (58%), choosing a workplace (60%) and investing (64% ). Most institutional investors (88%) also consider an investment’s commitment to ESG as much as its operational and financial practices. Meanwhile, activists take to the streets to protest against greenwashing while litigants are sue corporate giants on failures to deliver on climate promises – putting increased pressure on companies and investors to tackle climate change in a meaningful way

Converging ESG reporting metrics

For years, ESG reporting has lacked rigor and consistency due to the lack of a single ESG accounting standard. This has created difficulties for investors seeking to compare corporate commitments and has also fueled discontent over the greenwashing of sustainable investments. However, in November the International Sustainability Standards Council (ISSB) was formed to create a formal set of accounting standards for investors and the general public.

The convergence of metrics for ESG and sustainability will help organizations make a firm commitment to these factors and to integrate as part of their business strategy. The new standards will also help monitor large-scale ambitions that have historically been difficult to measure, such as contributions to the United Nations Sustainable Development Goals.

Technology regulation is gaining importance

Our dependence on technology, coupled with the acceleration of technological innovation, has increased the need for new regulatory tools and policies. The challenge for policy makers is to develop approaches that protect consumer privacy, speech and security without stifling growth or inhibiting innovation. Governments and businesses must also work together to rebuild trust and moderate misinformation in digital spaces. This will require a agile, flexible and transparent approach governance and global cooperation and collaboration, especially to address rapidly evolving cybersecurity threats.

Overall a trend in the right direction

Because of these and other global risks, 84% of global experts and leaders in the WEF report say they are “worried” or “concerned” about the outlook for the world. We share their concerns. But we also see these risks from another angle. These are reasons to act. These are definite reminders that responsible business matters. They motivate us to work harder for people and the planet. Ultimately, this puts us all in a better position, not only to manage other risks, but also to face the next crisis that awaits us.

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