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The threats of climate change and the depletion of natural resources, combined with financial crises and fluctuations in the global economy, all point to social change. Green growth, clean energy, cleantech and Energiewende are all words that aim at making economics and sustainable development work towards a common goal. Saving the world must be made into a good business proposition, as outlined in the workshops of the Sitra Environmental Programme a few years back.
Advancing ecological and social sustainability has been difficult and slow for decades, and was once again proven so by the recent Doha Climate Change Conference. Powerful nations and large economies such as the United States, China and Russia are not eager to commit to climate change mitigation agreements. The change cannot gather speed when supported by only two types of sustainability; it lacks the necessary balance between economics, ecology and social sustainability. Capitalistic systems still seek growth through sustainable models, and one of the leaders in this search is Al Gore, former Vice President of the United States and a widely recognised climate fighter.
Al Gore’s white paper Sustainable Capitalism, published in 2012, aims to maximise financial value beyond interim reports and quarterly reviews. Financial mechanisms and companies should seek growth through visionary commitment to sustainable development. Al Gore’s new capitalism wants to adjust markets so that they focus on the real needs of mankind, and to integrate economies into the decision-making processes of ecological and social sustainability in a measurable way. The aim is to let go of quarterly thinking, the belief in the all-powerful GDP, and the world of finance which has little to do with the real world.
Gore lists five areas that need attention: reinforcing sustainability as a fiduciary issue; creating advisory services for sustainable asset management; expanding the range and depth of sustainable investment products; reconsidering the appropriate definition for growth beyond GDP; and integrating sustainability into business education at all levels.
Gore makes a strong case for long-term business development, integration of financial and ESG reporting, finding incentives for sustainable investment operations, and making changes in the financial market. Climate change and the increasing volatility and inequality of markets call for structural changes. According to Gore, sustainable capitalism is more than corporate social responsibility or impact investing.
The change towards sustainability offers strategic benefits for companies through a stronger brand, increased reliability, profitability, and achieving a rewarding position in developing markets. In practice, it may also mean increased efficiency and savings that are based on more efficient use of resources and creating less waste. Gore’s sustainable capitalism also improves risk management.
According to Gore, neglecting social responsibility can seriously damage business in a variety of ways and lead to boycotts, loss of the best staff as good subcontractors move on, and finally, a decline in the valuation of the company. Multiyear change programmes towards sustainability are necessary to manage the situation; the executive team cannot achieve it alone.
Al Gore’s white paper demands that analysts look at the big picture, beyond today’s short-term financial indicators. The Doha conference at least established the will to create a universally-binding emission agreement in three years’ time. To achieve this goal, we need sustainable capitalism.