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Transforming business for tomorrow’s world


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Sukhdev presents in his new book "Corporation 2020" a number of strategic challenges for sustainable business and recognizes the need for a fundamental transformation of the economy.

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Transforming business for tomorrow’s world

  1. 1. @corp2020 Stockholm, 28th January 2013 Can Today’s Corporation Deliver Tomorrow’s Economy? Pavan Sukhdev Founder & Author, Corporation 2020 Study Leader, TEEB, & UNEP Goodwill Ambassador
  2. 2. @corp2020 …20111989… “A Green Economy is defined as one that results in improved human well-being and social equity, whilst significantly reducing environmental risks and ecological scarcities.” Source: Towards a Green Economy, UNEP, 2011
  3. 3. @corp2020 Source : T-21 Model, Green Economy Report, 2% of GDP invested in Greening vs 2% more in BAU
  4. 4. @corp2020Is “Green Economy” possible without “greening” the Private Sector? (eg: USA) U.S. Gross Value Added, By Sector 7.1% 5.5% Private Business 12.5% Households 74.9% Nonprofit institutions serving households Government Total = GDP (US$14,526.5 billion) U.S. Nonfarm Employees 16.7% Private 83.3% Government
  5. 5. @corp2020 “Green Economy” is the right economic vehicle to achieve Sustainable Development “Corporation 2020” is the right economic agent to achieve a Green Economy @corp2020
  6. 6. @corp2020 “Corporation 1920”• Four Defining Behaviours – Pursuit of Size – Active Lobbying – Unethical Advertising – Unlimited Leverage….
  7. 7. @corp2020 Pursuit of Size…
  8. 8. @corp2020 Pursuit of Size…
  9. 9. @corp2020 …Leading to explosive growth in trade
  10. 10. @corp2020 “Corporation 1920”• Four Defining Behaviours – Pursuit of Size – Active Lobbying – Unethical Advertising – Unlimited LeverageResulting in Negative Externalities…..
  11. 11. @corp2020 Why do we need change?• Negative externalities of top 3,000 companies estimated at US$2.15 trillion per annum Source: Trucost for UNPRI, 2010.
  12. 12. @corp2020 Why do we need change?• We are approaching or have exceeded several “planetary boundaries”
  13. 13. @corp2020 What will drive change? Macro Issue Micro Driver Micro Solution Culture of Ethics & Consumerism Excessive Demand Accountability in Fuelled by Advertising Marketing/ Advtg LimitUnderpriced Supply Unlimited leverage Leverage/capital adequacy/etc. Underpriced Resource Taxes resourcesResource Depletion replace corporate (Low royalties / taxes perverse subsidies) Measure & DisclosePublic Capital Losses Externalized costs Externalities
  14. 14. @corp2020 Limiting Leverage• Tools for limiting leverage: – Capital adequacy ratios for “TBTF” corporations – Consortium banking (info sharing between banks) – Segregate lending/clearing institutions from investment/ insurance (re-visit Glass-Steagall?) – Limit tax-deductibility of interest beyond caps – Constrain leverage from M&As – Re-align performance bonus systems
  15. 15. @corp2020 Rob Walton Chairman, Walmart
  16. 16. See Interview with Rob Walton @corp2020 Limiting Leverage …to see why Wal-mart went public…
  17. 17. @corp2020 Accountable Advertising• Two principles – Treat all consumers equally, irrespective of market – Disclose advertising policies & practices, eg: • Annual “Accountable Advertising Report”• Four strategies – Disclose life span of product on packaging and in ads – Disclose countries of origin – Disclose the “footprint” of the product on its packaging (GHG emissions, freshwater, etc) – Recommend how to dispose of product
  18. 18. @corp2020 Jochen Zeitz Executive Chairman, Puma
  19. 19. @corp2020 Accountable Advertising : PUMA
  20. 20. See Interview with Jochen Zeitz @corp2020 …to see why PUMA disclosed its Externalities…
  21. 21. @corp2020Disclosing Externalities : PUMA PUMA Press Release, November2011
  22. 22. TEEB for Business @corp2020 Coalition: Measuring, Valuing, Disclosing Externalities WBCSD… TEEB for GRI… Business IIRC, SASB, & CEF… Coalition Accountancy CDP, WDP… & Network Regulators Quantifying Standardizing & Disclosing Usage, Discovering Valuing Impacts in Depend-encies & Impacts “One Report” ImpactsEmissions /tCOe Economic Costs of Framework forFreshwater / CuM Emissions, Integrated ReportingForests LUC / Ha Freshwater of All Externalities…Pollution / … Use, Deforestatio incl Social & HumanWaste / … n, Capital.. Pollution, Waste …(Value Chain Impacts“Cradle to Gate”)
  23. 23. TEEB for Business @corp2020 Coalition: Measuring, Valuing, Disclosing Externalities TEEB for Business Coalition • Incorporated as a company limited by guarantee* • Incorporated in Singapore Board Advisory Group • Jochen Zeitz (Puma) • Michael Izza (ICAEW) (Company) • Juan Costa-Climent (E&Y) Board • Herman Mulder (GRI) • Peter Bakker (WBCSD) • Fernando Rodes (Havas) • Pavan Sukhdev (GIST Advisory) (Chair)Founder Member Reps - Observer Reps – organisations Ordinary Member Reps – Co-opted board members:Members of the company – for whom legal ownership is ordinary members of the 1. Pavan Sukhdev, Study Leaderknown as Founder Members - complicated but who have been Coalition elect five board TEEBand therefore its legal instrumental partners are offered members for a three year period 2. Gerard Ee (Chair) (Member ofowners, all have permanent a permanent board seat as Parliament, Singapore)board seats: observers: 3. Sanjeev Sanyal (Senior Economist1. ICAEW • CBD Deutsche Bank Singapore)2. WBCSD • UNEP3. GRI • World Bank/IFC4. WWF • Accounting for5. CI Sustainability6. IUCN • UK Government (Defra) * A company limited by guarantee is a structure that means7. IIRC • Others? European there are no shares in the company; its members are guarantors8. Global Initiatives Commission; Singapore rather than shareholders. There is therefore no need for share Economic Development transfers as members join or leave the company. Board; other donor gov’ts
  24. 24. @corp2020 What will define a “Corporation 2020”?• Four Characteristics –Goal Alignment with Society –Capital Factory –Institute –Community
  25. 25. @corp2020 Corporation as “Institute” : Infosys World-class Training for 30,000 p.a.
  26. 26. @corp2020 Infosys Externalities Disclosure Financial Statements Y/e March 2012 Source: Annual Report, 2011-12
  27. 27. @corp2020 Corporation as “Community” : Natura Greater Economic Security for Women Source:
  28. 28. @corp2020 In Summary : Reforms for “Corporation 2020” to become the DNA of Business Accountable Advertising : Making advertising responsible & accountable via norms & standards Limiting Leverage : Introducing rules & limits to govern financial leverage Resource Taxation : Replacing Corporation Tax (profits) with Taxes on Resource Use & Extraction Disclosing Externalities : Measuring & disclosing all major corporate externalities (+ve & -ve)From : Source: Why Corporation 2020?, Island Press, 2012
  29. 29. @corp2020 Planks Disclosing Resource Accountable LimitedStages Externalities Taxation Advertising LeverageResearch &Ideation GRI, IIRCOutreach GRI, IIRC,& Advocacy WBCSD, ? ? ? AFS, B4EInstitutionalChampionship ? ? ?Implement-ation ? ? ?(Funding & UK (Defra)Proj. Mngmt.) SING (EDB)
  30. 30. @corp2020 Thank You ! Pavan Sukhdev Founder, Corporation 2020& UNEP Goodwill Ambassador