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Market economies have delivered - and continue to deliver - enormous benefits to huge swathes of the global population. It is, however, only fair to concede that the current models are now also contributing to widening unsustainable economic and social gaps. The challenge is how to harness the power of market economies to address these challenges and improve outcomes for all. To tackle inequality, business practices and models must change.
That’s the conclusion of Tackling inequality: an agenda for business action, an important report from the Business Commission to Tackle Inequality (BCTI) that was launched on May 3 2023 that PwC, along with a wide variety of other major businesses and organisations, contributed to under the auspices of the World Business Council for Sustainable Development (WBCSD). In the report, ten action areas are identified on which businesses can focus to tackle inequality - and the expectation from stakeholders for such actions to be taken is only increasing.
Too often, current business models and practices are not distinguishing between what is in the interests of individual businesses and the world’s wider interests. Indeed, they can actually reward businesses that are depleting the natural, social and human capital that underpins overall economic value creation.
At PwC, we have always believed passionately that business should be in the business of making positive change in society, driving progress and sustainability and sharing prosperity. This agenda goes hand in hand with resilient and successful businesses that are sustainable over time and command public respect.
The BCTI report identifies three fundamental objectives that all of us in the business community need to be working towards -
- Enable companies to: make better decisions; deliver the necessary product, service and business model innovations; and contribute to a flourishing and sustainable society. Companies that make better decisions, deliver the necessary product, service, business model innovations and contribute to a flourishing and sustainable society. Capital markets, meanwhile, need to properly value inclusive, sustainable business practices, rewarding the companies that make the greatest positive social and environmental impact, while also mobilising capital towards businesses, assets and solutions that create true value for society.
- A new mindset for business leaders across the board. All need to recognise that they are part of a wider system and they need to be open to adaptation, evolution and shared prosperity. The old ways of doing things in so many companies just aren’t viable any more and the term ‘status quo’ often translates as ‘the mess we are in.’ Business leaders need especially to recognise the enormous value of skilled and healthy workforces and vibrant communities. They also need to be aware of the serious reputational risks involved in not acting in their best interests.
- Embracing regeneration. Such a mindset means moving beyond a “first, do no harm” approach to one in which social and environmental systems are designed to regenerate and thrive. In the face of spiralling social tensions and ecosystem tipping points, it’s crucial to stop just trying to cling onto the old ways of doing things and embrace an approach that is regenerative. Regenerative thinking can help restore and nourish the social and environmental systems upon which business success depends.
Ultimately, sustained progress on tackling inequality will depend on the ability of companies to adequately identify, measure and understand their direct and indirect impacts and dependencies on people.
Companies will need to account for the ways in which they create, preserve or erode value for different stakeholders over time so it's imperative that they have relevant and useful information on which to make decisions. The focus on the “S” in ESG has increased dramatically in recent years - partly as a result of COVID-19 exposing a range of social vulnerabilities and risks - but also because of a fast-evolving and less forgiving regulatory framework helping to make the necessary changes happen.
To help plan this journey, the BCTI report recommends applying a sustainable business transformation framework approach as a practical way of managing the complexity ahead, while also ensuring the necessary progress can be made. More specifically, the framework includes five key steps:
- Baselining and maturity assessment
- Prioritising action areas and setting targets
- Strategic integration and implementation
- Social performance review
- Communication on progress
When the stakes are so high - not least in terms of ensuring a viable future for our planet and those that follow us - it is vitally important that we set ourselves ambitious objectives. These, as the BCTI report makes clear, make good sense not just for the planet and those who inhabit it, but also for business.
Another piece of recent work with which PwC has been involved, in collaboration with the WBCSD, looks at the need for companies, governments and other stakeholders to work together towards a just transition in the energy system - seeking to both mitigate negative impacts on people and utilise opportunities in an equitable and inclusive manner for all. Find more on our insights here: “Achieving a just transition in the energy system”.
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Global Sustainability Tax, Legal and Workforce Leader, Partner, PwC United Kingdom
Tel: +44 20 7583 5000
