From the outset of the innovation journey, companies should set innovation goals focused on solving social or environmental problems. Importantly, this includes anticipating and addressing the full range of impacts that new technologies, products, services, and business models create. In addition to adopting a human-centric approach to innovation, projects should have to meet ambitious social and environmental targets as well as financial ones.
Looking across our transformation pathways, we identify four critical areas of interaction between companies and the outside world: areas where business influence can significantly help to create and shape markets, norms and values, drive behavioral, and realize systemic change. These areas are: innovation & technology; finance & investment; individuals & consumption and policy & regulation. Historically, business has often treated these as areas it is influenced by, rather than acknowledging extensive and often active interdependence. The transitions and actions within our nine pathways will only be achieved if business uses its assets, capabilities, creativity, reach and voice to influence these four enabling areas in support of Vision 2050.
INNOVATION & TECHNOLOGY
Innovation is vital to the achievement of our vision, not only across products, but also processes, management and business models and in finance, policy and society as a whole. Innovative ideas and technologies are desperately needed to tackle our most pressing challenges. How do we decarbonize our society? How do we shift to a circular economy? How do we tackle mounting inequality? How can business engage? Innovation processes that set goals around social and environmental impact but also anticipate and avoid negative unintended consequences will not only be good for society, but will lead to more resilient and sustainable business models. How can companies harness this type of innovation?
Collaboration and sharing across companies, value chains, industries, countries, and society – with customers, suppliers, start-ups, and civil society groups – can help companies identify opportunities for innovation, develop and test solutions and nudge them into the mainstream in a resilient, sustainable, or even regenerative way. Greater collaboration with government will help to set and align on societally positive innovation agendas.
Companies must establish and join industry-wide efforts to set guidelines around new technologies and their consequences, understand what is happening in real time, and course-correct as needed, all in consultation with a full range of stakeholders. By contributing to governance efforts, businesses can preempt future risks and challenges, build strong stakeholder relationships and open doors to new collaborations.
Upskilling people is essential to ensure equitable outcomes of current and future technological disruption. Businesses are uniquely placed to provide much of the new skills and training that societies need. They must invest in giving their workers and customers the knowledge and skills to apply new technologies in ways that will unleash the benefits while avoiding harms. This extends to being transparent about the challenges, opportunities, roles and possibilities linked to new technologies.
FINANCE & INVESTMENT
Making progress along our Vision 2050 pathways will require significant levels of investment. The global financial system is more than adequately positioned to finance all of the changes required, but we need a fundamental shift away from financing activities that do not contribute to a sustainable and equitable future, and towards those that do. How can business engage? Finding ways for companies to direct investment towards socially, environmentally and financially sustainable outcomes will be essential to achieving Vision 2050. What can companies do differently in the way they approach finance and investment?
Businesses should seek out suitable sustainable financial instruments to fund their ambitions and objectives. Existing products include green, social and SDG bonds, transition bonds, and revolving loan/credit facilities that tie borrowing terms to environmental outcomes, or provide tax incentives for verified green projects. Collaboration with both capital providers and governments will lead to new sustainability-linked offerings that can meet growing funding needs and opportunities.
Businesses can provide insight for investors on how they approach and manage sustainability, and how they expect this to shape long-term success. This data needs to be standardized, and should include perspectives on: strategic resilience; development and planning; risk management and response; governance; and performance metrics and measures including financial disclosures associated with sustainable products and services.
Businesses should work with policymakers, regulators and industry to advocate for policies that will level the playing field in favor of sustainable investments, such as carbon pricing schemes, standardized ESG disclosure requirements, reconsideration of incentives and subsidies, and updated approaches to fiduciary duty, which mandate the consideration of all stakeholders. Accounting rules must be updated to place more importance on long-term viability and resilience of projects.
Companies should look at how they use cash. Internal allocation of capital expenditures and R&D investments should be considered using information on social and environmental costs, benefits, risks, and opportunities. Companies shold use similar criteria to ensure that investment money is utilized to advance sustainable transformation, through sustainable products, services or supporting infrastructure.
INDIVIDUALS & CONSUMPTION
Individual’s values and behaviors matter – as citizens, as consumers and as workers, individuals are the ultimate implementers of many of the solutions that will progress the transformations Vision 2050 requires. Achieving our vision will depend on the choices that are available to people, the options that they choose, and the way they are used. How can business engage? Business has a role to play in enabling individuals to be agents of positive change. Enabling people to aspire to more sustainable lifestyles and giving them the options and incentives they need to make more sustainable choices will help accelerate transformation, while opening new possibilities for more resilient business models. What can companies do differently to encourage and support better choices?
To act sustainably, individuals first need to be aware of the issues and have relevant information that they can use to make informed decisions. Companies need to provide information in a clear and honest way, and remove greenwashing. Communicating honestly will help brands build more trusting and loyal customer relationships. Information isn’t enough though. Throught their advertising, companies can shape cultural norms and aspirations, creating demand for sustainable lifestyles.
People, consumers, shouldn’t be burdened with making the “right” choice. Companies should work to ensure that all products and services meet people’s needs and wants in sustainable, affordable and accessible ways. Exploring alternatives to those long-standing business models that rely on unsustainable material consumption will be necessary to ensure competitiveness as societal rules and norms increasingly favor sustainable models.
As well as increasing the proportion of recycled materials used in products, companies can also improve longevity, design for durability, and support people’s ability to repair and reuse products. Circular business models can offer new ways to build relationships with customers and create ongoing value, but will also require new business relationships and collaborations.
To fulfill their potential as agents of positive change, whether as as citizens, consumers or employees) individuals need time, resources, and standing in their communities and societies. Companies play a role in providing these things. They can provide good working conditions and living wages, and they can also encourage and harness interest in sustainable living amongst employees treating sustainability as important in the workplace, empowering people to see it as important in their own lives too.
POLICY & REGULATION
Markets cannot, and should not, deliver transformation on their own. Policy and regulation can help unlock transformation by preventing unsustainable practices, setting minimum standards, incentivizing innovation, and by guiding investment in public goods that business growth and sustainable development depend on. Policies and regulation will be at the heart of progress towards Vision 2050. How can business engage? Policy and regulation are powerful tools to incentivize sustainable transformation. Well thought-through, evidence-based regulation can create the stable, predictable, and level playing fields that companies depend on to invest, compete, and thrive. While policies are developed and implemented by government, business clearly influences the process and the outcomes. What can business do to advance a more supportive policy environment?
While voluntary measures cannot fix all market failures, in the absence of a sufficiently ambitious policy environment, ‘private regulation’ and voluntary standards can demonstrate responsibility, get ahead of slow regulation, convince regulators to push for accelerated agreement from government, and be used as the basis for lifting standards through regulation.
Companies must review all of their efforts to influence policy, including lobbying, campaigns for or against policy proposals, political contributions, and funding for industry associations, research studies, and think tanks. They must end activities that are not aligned with their own corporate purpose statements and sustainability goals and be transparent about the positions they support, and how these contribute to the transformations required by Vision 2050.
To accelerate progress toward Vision 2050, companies must change the nature of the business-government relationship to become more strategic, and focused on how to align and fulfill business’ interests with those of society. Through open and transparent advocacy partnerships with civil society, input can be provided at all stages of the policymaking process, helping to supply the information and evidence policymakers need to craft effective new policies, building buy-in along the way.
Businesses are experts in their own industries and will often have access to unique expertise, ideas and data that can be useful inputs to the policymaking process. Businesses can contribute by: sharing their experience with existing policies and the lessons they have learned; creating public forums to explore new ideas; and undertaking policy trials to demonstrate the impacts and effectiveness of planned incentives and regulations.