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The Sustainability Imperative

As business leaders assemble in Davos to discuss economic and social issues, it may be instructive to explore what the rest of the business world has been doing when it comes to sustainability

As business leaders assemble in Davos to discuss economic and social issues, it may be instructive to explore what the rest of the business world has been doing when it comes to sustainability. All the work that goes into creating a healthy long-term future for the planet — all the innovation and performance — is really happening at the ground level. Who is doing this work, and how are they aligned in this purpose?

Modern companies work with (and for) different stakeholders to succeed, but they also pay attention to new performance data. Profit and loss are primal, but what actually drives profit and loss? If you ask companies, many are saying that climate performance is a key indicator.

These companies are acting as responsible corporate citizens, but they’re also not spending money frivolously in an attempt to simply court public favor or burnish their brand. Their operations are dependent on the cost-effective supply of key resources — energy, water, manufacturing materials, affordable labor — so they take a broader view of their responsibilities. That broader view extends to aspects of sustainability that are not necessarily tied to climate.

Competitors are working together to solve shared problems in their industries. When the Business Roundtable (BRT) publicly changed its definition of stakeholders last year, upending decades of rote allegiance to shareholder primacy, nearly 200 prominent companies were finally able to acknowledge something obvious: We’re all in this together.

The Responsible Business Alliance (RBA), for example, unites more than 150 electronics, retail, and auto companies in a common fight for socially responsible supply chains.

"The well-being of workers has always been a top priority for the RBA," said Executive Director Rob Lederer last year. Its most recent industry initiative leverages "industry best practices, scientific data, and worker and stakeholder input to further improve the health and wellness of workers in global supply chains."

The Sustainable Apparel Coalition actively promotes a production standard that "produces no unnecessary environmental harm and has a positive impact on the people and communities associated with its activities."

Nasdaq’s participation in stock exchange working groups (at the United Nations, within its own trade association) also reflects this dynamic. The effort to create awareness and transparency around sustainable business performance does not help one company or even one exchange, but rather helps a capital market system flourish over the long term. That’s likely why most of the stock exchanges on the planet are now deeply involved in sustainability; a broader view of market efficiency prevails over short-term gains.

The Davos theme this year is about moving to a different type of capitalism, what the organizers are calling "stakeholder capitalism." The global crises we face (environmental, social, political) were not created by one stakeholder group or one company or even one nation; overcoming them will require collaboration on an unprecedented level. Economic success is driven by multiple forces, as the BRT letter affirms, and many different stakeholders must share in the quest for sustainable value.

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