Much after spirituality became less relevant as we chased happiness through instant gratification, economics taught us that world peace can be achieved through bilateral trade. “Great Illusion”, a 1910 book by British journalist Norman Angell, which sold over a million copies, had argued that war in the modern era was an economic impossibility as commercial interdependence between countries made conflict futile.
That got tested in various geo-political fractures, starting with the two world wars. It will get tested again. Greed, lust for power and dominance have always been at the core of such flare ups. The current geo-political impasse involving Russia and Ukraine and the growing differences between China and the US will once again damage the global trading order, which has led to a sharp economic growth over the years.
The increased trade and hyper globalization has actually helped different regions of the world improve lives and create more opportunities. Restoration from the ravages of the present conflict usually takes time but a few emerging sub-texts offer hope when seen holistically – both from the lens of companies as well as countries.
Companies align with public good as geopolitics disrupt lives and livelihoods
According to a Yale School of Management study, over 1000 companies have curtailed their business in Russia post the Russia-Ukraine war. This has been done voluntarily and it’s beyond the bare minimum required by international sanctions. Interestingly, the exits were also rewarded by the financial markets.
This is perhaps unparalleled, as companies have historically chosen to view profits and returns to shareholders as the most important consideration for taking a decision on either doing business or getting out of it. But the Russia-Ukraine war showed that companies were willing to take a clear stand on issues that impact the broader stakeholder community.
Companies are now increasingly aligning their efforts on the ground with their larger purpose, which are seen from the point of view of the larger good of a community of people. This shows short termism in businesses has been replaced by a long-term approach built around being the force for good. It was a long time coming. Companies are no longer working in isolation.
This may have come out as a large trend in 2022 but in the larger sense it has been taking shape over the last few years.
Over the decades, it has played out with the realization that developing the community around you is important for a company to thrive. Companies pledged funds around Corporate Social Responsibility (CSR) as a way to address it. Overall, the efforts from companies came with the understanding that its efforts in helping the society and empowering them also helps create a market over the years to sell its products.
Additionally, seeing the impact of climate change wreaking havoc, companies sought to address that with both funds and measures to ensure sustainable growth. This is defined through a definitive set of measures that companies have taken around what’s called as Environment Social and Governance (ESG). It may take up additional resources for businesses but it is increasingly being rewarded by the markets.
Besides, companies now focus substantially more on employee engagement and their welfare, than ever before. Companies are pushing for better assimilation of women and LGBTQs in the workforce through a focused Diversity, Equity and Inclusion policy. This has ensured that a larger community of people get fair and equitable benefits at the workplace.
These efforts have come on the back of more awareness among a company’s key stakeholders – employees and consumers. While consumers want to buy products from a company which is seen as more responsible, employees also want to work in such a company. It’s good to see that the key dots are getting connected.
Sustainability may have become a buzzword already but for the first time in 2022, global businesses showed that they were willing to take a hit on profits to ensure they are seen to be responsible. What’s more important, they were also rewarded by investors for taking that stand.
The multilateral framework needs to rise to the occasion
Companies have begun to demonstrate that they are thinking for the long-term with the public good in mind. Countries need to do more. Thankfully, the multilateral framework has also stepped in lately.
At the recently concluded COP27 summit, countries agreed to set up a new fund for “loss and damage” to support recovery from climate-related damages that extend beyond what human society can easily adapt to. They realize they have both an accountability and responsibility towards protecting the climate and the environment, and above all demonstrate compassion towards the less fortunate and the low greenhouse emitting countries.
At a time when the less fortunate in the Global South are even more vulnerable to the impact of Climate Change, it becomes the moral duty of the developed nations to make generous concessions for the vulnerable sections. Besides, they also need to provide viable solutions to the food, water, and energy crisis which is expected to worsen over the years without any clear action on the ground.
Developed countries also need to extend the same largesse in the WTO framework of discussions to provide vaccine equity. This becomes more relevant as a news train of virus threatens to wreak havoc on lives and livelihoods again. The crucial issue is that the developed world has recently deferred a crucial decision on removing patent waivers for Covid-related therapeutics and diagnostics at the WTO. If accepted, the Global South would have had more access to life-saving Covid-19 drugs and thus reduced the glaring inequities.
Hopefully, here too stakeholder capitalism would reign. In a globally connected world, no one will be spared. It will boil down to equity and how the developed world shows an understanding of the word equity.
The writer is a Class 12 student who is passionate about issues around environment protection, sustainability and climate change and writes occasionally on the subject. The views expressed in the article are the writer’s own.