Das internationale Unternehmens-Forschungsnetzwerk GEM hat sich am 16. Februar 2022 in Freiburg an der Fachhochschule für Wirtschaft getroffen. Über 40 Nationen mit über 120 Vertreterinnen und Vertretern waren zugegen und ich durfte die Konferenz mit einer Rede eröffnen.
Can we trust business to fix the world’s problems?
Dear business leaders, academics, students and guests at today’s conference. This question, which has been put to me, which I ask myself from time to time and which many people out there would probably answer in the negative, is of course something that I have to deal with first and foremost on a personal level. After all, over the past two decades I have co-founded and helped to build the digital agency Liip that now employs over 200 people at six locations in Switzerland. Of course, it’s not up to me to judge my own and my company’s trustworthiness. And we can reflect on the trustworthiness of individual CEOs and board members. It simply doesn’t make much difference to the debate about the trustworthiness especially of large companies or entire industries in general. Ultimately, business leaders and companies are only as trustworthy as our economic system allows and encourages them to be.
But why is trust in companies and corporate leaders up for debate at all? After all, economic prosperity has been unparalleled since the post-war era. The improvement in the quality of life for so many people on this planet is breathtaking when you look in the rear-view mirror. More people than ever have access to clean water, access to healthy food, to education, to energy and much more. But the downside of the economic miracle of the century is a battered planet on a catastrophic warming path. More and more carbon dioxide is being pumped into the atmosphere, more and more arable land is being sealed and biodiversity is disappearing forever. The immense loss of species is now classified as the sixth mass extinction in Earth’s history, as confirmed by various scientific studies. And all these negative impacts are mainly due to a phase in human evolution that began with the Industrial Revolution. The modern market economy has clearly failed to make ecologically and socially sustainable business models the norm. And politicians have failed to demand them.
With all due respect, I don’t trust “this buisness” to solve the world’s problems. It needs an upgrade first.
But why is humanity in a situation that threatens its very existence, and what role does the economy play in this? The short answer: the tragedy of the commons. The external costs of economic activity have been ignored and passed on to taxpayers, other countries, future generations and nature itself. Sometimes through a lack of understanding of second-order effects, but often through deliberate political interference by entire industries. A truly liberal market would have to include all costs of economic activity in the price of its products. Markets that do not have to include the costs of pollution or the social consequences of precarious wages in their products and services are protected and better placed than those that do not receive these “de facto subsidies”. The actors who benefit are usually those who are well installed in the market and who have established political influence to maintain the status quo. The latter in particular is my daily routine in our national parliament.
Don’t get me wrong: I’m not all that interested in finding the culprits. Our current situation is due to a failure of society as a whole. A failure from which we can and must learn.
What gets measured gets improved
Today, we know much more about complex physical, ecological and social interrelationships, and if we use this knowledge wisely, we can turn this human crisis, which will lead to an economic crisis in the medium term anyway, into an opportunity. Trust through transparency of impacts is the currency for this. Those who succeed in implementing trust in a systemically binding way will one day reap the benefits and assume a leading role. Be it as a company or as an entire country. There are already countless efforts underway to systematize the impact of economic activity on people and nature. And this is a good thing. But because this is often done all too casually and often without due diligence, people are led around by the nose with green and social washing. The financial market in particular is currently exposed to this accusation, especially as various studies prove the ineffectiveness or even the harmfulness of supposedly sustainable financial products. This in turn undermines trust. And it also shows that this initiatives cannot, and probably should not, be invented by every company on its own. And without public legitimization, it is unlikely to have a broad impact.
Fortunately, today we now have a common understanding in the form of the UN Sustainable Development Goals. With these globally recognized and well-balanced objectives, we have a great foundation on which to build. And it is not only large companies that are now challenged, but especially small and medium-sized enterprises, which are the backbone of the economy. Ladies and gentlemen, I therefore call for an evidence-based and transparent «impact accounting.» Similar to what we are used to in finance, companies, but also the public sector, should report systematically and comparably on their impact on people and the planet. A company that can demonstrate a positive impact will have a competitive advantage. And those whose sustainability accounts are too far in the red will have to deposit the balance sheet. This is a logical consequence of serious social responsibility.
In our company Liip, we have started to measure the impact of our customer projects on people and the environment along these 17 UN sustainable development goals. Because we want to know if and how we are making the world a tick better and where we are still doing harm. For me personally, but also for the whole company, the confrontation with this was an incredibly motivating experience. I feel a great desire among my colleagues to take a closer look and methodically develop a view of the impact of our company’s activities. Because the urge to be able to do something within one’s own sphere of influence to overcome the crises of the century is becoming increasingly strong among many people.
I believe in the power of business to transform the fossil-fueled, one-way economy into a renewable, circular economy. For that we need to agree on the quality of economic impact on people and the planet. So that companies can agree on what actually makes the world a better place. Then it will also become easier to trust CEOs, board members, companies and entire industries.
Thank yo so much for your attention.
Have a great conference.