Klaus Schwab discusses the urgent need for stakeholders to collaborate to combat the climate emergency, cope with technological change and address skills gaps in an interview with Jean-François Manzoni, President of IMD...
Klaus Schwab believes shifting consumer preferences and a desire by talented staff to work at responsible firms means serving all stakeholders is in the self-interest of companies if they want to boost their bottom line.
The founder of the World Economic Forum (WEF) first wrote about stakeholder capitalism — a decision by companies to not only maximise short-term profit but to invest in their staff and communities to succeed in the long run — half a century ago.
But he believes the age of stakeholder capitalism is finally dawning with companies realising it can increase long-terms profits, as consumers shop more sustainably, skilled workers seek out jobs at responsible corporations and investors pour money into firms who take care of their people and the planet.
“For a sophisticated company, a forward-looking company, I would say it is a must to move from shareholder prioritization to an integrated concept of stakeholder capitalism,” says Schwab, who founded the European Management Forum, which later became the WEF, in 1971 as a place where stakeholders ranging from business leaders and politicians to environmentalists and trade unionists could convene to help solve complex problems.
With governments consumed by short-term crises failing to address long-term challenges, employees and customers are now assuming the role of substitute regulators by influencing corporate behaviour, Schwab says.
He cites the example of Danish shipping giant Maersk which last month ordered eight vessels that will be powered by carbon-neutral methanol, at a price premium of 15%, in response to customer demands for greener transportation to cut emissions in their supply chain. The move will help Maersk save CO2 emissions of around 1 million tonnes per year.
One challenge is the lack of universal measurement systems for environmental, social, and governance (ESG) reporting which makes it hard to compare compliance across companies. The WEF sought to address this by teaming up with the Bank of America and the Big Four audit firms in 2020 to create a set of universal ESG metrics to align standards and make cases of greenwashing easier to spot.
Just as it took time to develop a financial standard to compare the profitability of corporations, Schwab believes it will take a similar process to integrate ESG metrics into company reporting.
No more free articles.