The Role of Business and Labour in the Social-Ecological Transition

1. ETUI The social-ecological transition: the role of business and labour Brussels, 23rd May 2014 “Corporation 2020” Transforming Business for Tomorrow’s World Pavan Sukhdev, Founder & CEO, GIST Advisory Author, “Corporation 2020”

2. Not the future we want…

3. Is a ‘Green Economy’ Possible without greening the Private Sector? (eg: USA) 2010 data. Source: U.S. Bureau of Economic Analysis

4. Sustainable Development, Green Economy, Corporation 2020… Without a “Green Economy” we cannot achieve the goals of “Sustainable Development” www.unep.org/greeneconomy Without “Corporation 2020” we cannot deliver a “Green Economy” www.corp2020.com @corp2020

5. “Corporation 1920” • Four Defining Behaviours • Pursuit of Size • Active Lobbying • Leverage without Limits • Advertising without Ethics ….

6. “Corporation 1920” • Four Defining Behaviours • Pursuit of Size • Active Lobbying • Leverage without Limits • Advertising without Ethics …. Causing “Negative Externalities”

7. “Externalities”… Global Picture • Negative externalities of top 3,000 companies estimated at US$2.15 trillion per annum Source: Trucost for UNPRI, 2010.

8. Global Picture: Planetary Boundaries…

9. Negative Corporate Externalities ….. Top 3,000 Listed Companies Source: Trucost for UNPRI, 2010.

10. ….. Are Pushing Planetary Boundaries Greenhouse Gases Greenhouse Gases Natural Resources Natural Resources Natural Resources Water Abstraction

11. “Corporation 1920” • Four Defining Behaviours • Pursuit of Size • Active Lobbying • Leverage without Limits • Advertising without Ethics ….

12. Smoke and Mirrors in 1920…

13. Fifty Years On … “You’ve come a long way, baby”

14. Accountable Advertising : PUMA

15. Key Featre of “Corporation 2020”Creating Positive Externalities, not Negative.. Evolution of the Corporation From : “Corporation 2020”

16. Why “Stakeholder Reporting?”Business today depends on, and/or has impacts on, ALL dimensions of private & public wealth… but.. * Creating community wealth and public wealth creates “shared value”

17. Why “Stakeholder Reporting?”Business today generally measures & reports only shareholder wealth impacts: private physical capital

18. Why “Stakeholder Reporting?”Business for a sustainable tomorrow – will measure & report on ALL dimensions of its impacts …

19. How Stakeholder Reporting?GIST 360™Assessment Scope Measuring “Value Addition” holistically, including all material Externalities

20. Positive Human Capital Externalities Human Capital Factory for IT Talent: INFOSYS Mysore Campus, Infosys - World-class Training for 30,000 p.a. Attrition feeds trained IT talent to the world Positive externalities over US$ 1 billion p.a.

21. What is “Human Capital”? • “Human Capital refers to the knowledge, skills, competences, and other attributes embodied in individuals that are relevant to economic activity” (OECD, 1998). • Among the most important assets and a key determinant of country’s overall economic performance • Among the most important assets for any business and a key determinant of business performance • One of the “Six Capitals” in IIRC’s recent consultation draft of their “Integrated Reporting” framework (<IR>, 2013) • Neither national accounts nor business accounts reflect human capital creation or loss, nor human capital externalities

22. Levels & Dimensions of Human Capital Level and Dimensions of Human Capital (Adapted from CEDEFOP, 2001)

23. Progress of Corporate Reporting on Human Capital: the last 50 years

24. Approaches to Valuing Human Capital

25. HCXTM Model: Results from Infosys Annual Report 2011-12

26. Positive Social Capital Externalities A Business Model delivering Social Benefits: NATURA 1.4 million housewives earn 33% sales commission Economic security improves family & social status for women Training is used to sell other companies’ goods Greater proportion of household expenditure on health & education Increased labour market flexibility and efficiency http://totallybeautyaddict.fr/mon-jolieapero-chez-natura-brasil/ Source: http://www.managementexchange.com/story/innovation-in-well-being

27. What is “Social Capital”? • Social Capital can be defined (source: IIRC) as “the institutions and relationships established within and between communities, groups of stakeholders and other networks, and the ability to share information, to enhance individual and collective well-being. Social and relationship capital includes: • Shared norms & common values and behaviours • Key relationships and the trust and loyalty that an organization has developed and strives to build and protect with customers, suppliers and business partners • An organization’s social licence to operate” • Some business models, company policies and CSR activities are designed to improve such institutions and relationships, and in doing so, will usually generate positive externalities (eg: improvements in public health, societal job creation,environmental conditions, etc.).

28. What will drive change? • Macro Issue • Micro Driver • Micro Solution

29. What will define a “Corporation 2020”? • Four Characteristics • Goal Alignment with Society • Positive Externalities • “Community” • “Institute”

30. “Corporation 2020” views of Labour and the Community • Mondragon: “Risking capital to create labour, not risking labour to create capital” • Tata: “The community is not merely a stakeholder in the business, it is its very purpose”

31. Corporation as “Community”: Natura Alessandro Carlucci Pavan Sukhdev CEO, Natura Author, “Corporacao 2020”

32. Thank You ! www.gistadvisory.com www.corp2020.com