Aliging Profit with Purpose - Global Goals Yearbook 2019

GLOBAL GOALS 

GLOBAL GOALS 

YEARBOOK 

YEARBOOK 

2019 

Aligning 

Profit with 

Purpose

This publication is kindly supported by: 

Arab African International Bank 

Audi 

BASF 

Bayer 

Beaulieu International Group 

Bergen Plastics 

Bosch 

Cargolux 

Casinos Austria and Austrian Lotteries Group 

CEMEX 

Deloitte 

Deutsche Telekom 

EDF Group 

Elsewedy Electric / Iskraemeco 

Green Delta Insurance 

ING 

iPoint-systems 

KYOCERA 

MAN 

Manila Doctors Hospital 

Mazars 

MediaMarktSaturn 

Merck 

METRO 

Moelven 

Nomura 

Olam International 

Pernod Ricard 

Philia Earth 

Philip Morris International 

PUMA 

Sakhalin Energy 

Symrise 

The University of Manchester 

The Global Goals Yearbook is a product of macondo publishing GmbH in support of the Sustainable Development Goals, and the advancement of 

corporate sustainability globally. This publication is intended strictly for learning purposes. The inclusion of company names and / or examples 

does not constitute an endorsement of the individual companies by the United Nations. 

2 Global Goals Yearbook 2019

H.E. António Guterres 

We have global warming, but we have 

UN Secretary-General 

also global political warming, and 

“ 

this can be seen in relation to trade 

Opening remarks at press conference 

at the G20 Summit in Osaka, 

and technology conflicts, it can be 

June 28, 2019, Japan 

seen in relation to situations in several 

parts of the world, namely the Gulf. 

And it is also a moment in which there are uncertainties 

about the global economy – uncertainties due to trade 

conflicts, but also uncertainties related to high levels of 

debt, to potential instability in financial markets, the 

risk of slowdown in global growth... 

And then in relation to the Agenda 2030, it is clear that 

we are lagging behind. If we project the different Sustainable 

Development Goals, the evolution since the beginning 

until now to 2030, we will be more or less at midway of 

what the international community has determined when 

the Agenda 2030 was approved, which means that we 

need to accelerate, accelerate the mobilization of resources, 

natural resources, countries need to do more, mobilizing 

their own internal resources, improving their governance, 

reducing corruption, implementing the rule of law. 

At the same time, we need to do more in mobilizing the 

private sector. Without the private sector, it would be 

impossible to achieve these Goals. And a lot needs to be 

done in order to raise awareness and to show the opportunities 

that exist and to create mechanism to reduce risks. 

Global Goals Yearbook 2019 

3

QUOTE 

3 H.E. António Guterres, 

United Nations 

Secretary-General 

EXECUTIVE SUMMARY 

6 Profit and Purpose – 

An (Im)perfect Match? 

Elmer Lenzen 

40 FINANCING COMMON 

PROSPERITY 

42 The Curse of the Carbon Bubble: 

How to Really Exit the Fossil Age 

Stefan Brunnhuber 

52 Profits, Purpose, and the Planet 

Sheila Bonini 

58 Stronger Profit Potential for 

Companies That Serve Society 

Alex Edmans 

166 GLOBAL GOALS 

EDITORIAL BOARD 

10 PROFIT & PURPOSE 

12 Tomorrow’s Capitalism: The 

Leadership Agenda for the 2020s 

John Elkington and 

Richard Roberts 

18 Reconceptualizing Business for 

the 21st Century: The Future of 

the Corporation 

Professor Colin Mayer 

22 Get C-level Executives to 

Understand It Is “Crunch Time” 

for Sustainability Initiatives 

Paul Marushka 

25 Women’s Empowerment 

“Essential to Global Progress” 

Says Guterres 

26 Why Collaboration Isn’t Just a 

Sustainability Buzzword 

Sunny Verghese 

28 QUEST FOR TALENTS 

30 Thank God It’s Monday 

Jean-Noel Chaintreuil 

34 The Future of Business: What 

Matters Most to the Millennial 

Workforce 

38 Migration-led Innovation 

Alice Barbe, Guillaume Capelle, 

and Camille Soulier 

60 No Sustainable Development 

Without Tax Transparency 

63 The Grand Theft 

66 DISTRIBUTION OF 

PROSPERITY 

66 Whose Prosperity Are We 

Talking About? 

70 Chris Martin: Harvest for the 

World 

Danny Bowman 

74 Basic Welfare State Models 

Frank Oschmiansky and 

Jürgen Kühl 

78 The Rise and Fall of Prosperity 

Around the Globe 

Faiq Lodhi 

 

12 

Tomorrow’s Capitalism: 

The Leadership Agenda for 

the 2020s

GOOD PRACTICE 

40 

Financing Common 

Prosperity 

 

28 

Quest for Talents 

66 

Distribution of Prosperity 

86 

88 

90 

92 

94 

96 

98 

100 

102 

104 

106 

108 

110 

112 

116 

118 

120 

124 

126 

128 

130 

134 

136 

138 

142 

144 

146 

150 

152 

154 

158 

160 

162 

164 


Audi 

BASF 

Bayer 



Bosch 

Cargolux 


CEMEX 

Deloitte 


EDF Group 



ING 


KYOCERA 

MAN 


Mazars 


Merck 

METRO 

Moelven 

Nomura 


Pernod Ricard 

Philia Earth 


PUMA 


Symrise 

The University of Manchester

Profit 

and 

An (Im)perfect 

Match? 

Purpose 



The rules for companies have changed. The focus is increasingly 

on their sustainable, social, and ecological impacts. The 

strategic orientation toward the so-called corporate purpose is 

decisive for profitable growth in the future. 

Dr. Elmer Lenzen 

Publisher 

Global Goals Yearbook 

This currently results in a large number 

of questions for businesses: How do you 

find an inspiring and future-oriented 

corporate purpose, and how can it be 

aligned in such a way that it brings profitable 

growth and social responsibility 

in concert? This edition of the Global 

Goals Yearbook offers answers to these 

crucial questions thanks to its consistent 

orientation toward the UN Sustainable 

Development Goals and a competent 

editorial board and author pool. 

The driver of development is to a large 

extent competition for the best minds. 

“When everyone is competing for the 

same kind of talent, you need a much 

clearer way of explaining how you will 

attract those people to your organization,” 

says Jeff Joerres, Chairman and 

Chief Executive Officer of Manpower- 

Group. But it is not only the human 

resources departments that are pushing 

the topic. Experts speak instead of 

“inclusive capitalism” and urge that all 

stakeholders be taken along, including 

boards of management, customers, and 

even fund managers. Responsible businesses 

have governance structures that 

monitor and advise on environmental, 

social, as well as financial issues. When 

leaders understand and thrive within the 

broader social and environmental contexts 

in which their businesses operate, 

it signals to employees, investors, and 

key stakeholders just how important 

purpose really is. 

What is business for? What role does 

and should business play in society? To 

what extent should it perform a public 

purpose alongside its commercial activities? 

How should the aspirations of 

humanity, as set out in the Sustainable 

Development Goals, be reflected in the 

objectives of business? 

Oxford university professor Colin Meyer 

argues: “Corporate purpose is distinct 

from the consequential implications 

of the corporation’s profitability and 

shareholder returns. The purpose of 

corporations is not to produce profits. 

The purpose of corporations is to produce 

profitable solutions for the problems of 

people and the planet. In the process it 

produces profits, but profits are not per 

se the purpose of corporations.” 

How, then, does a company 

become an effective agent of 

systems change? 

As part of the Tomorrow’s Capitalism 

Inquiry, John Elkington, doyen of the 

sustainability community, together 

with Richard Roberts write: “Being a 

little more ‘sustainable’ than your >> 


7

“Only those 

businesses that 

strategically align 

their company 

correctly will continue 

to be successful. 

peers will do little to insulate a company 

from external shocks caused by extreme 

weather or extreme politics. When the 

risks are systemic and the failures are at 

a market level rather than an individual 

business level, a response that focuses 

exclusively on improving individual business 

performance will prove inadequate. 

So companies are going to have to step 

up to become much more active and effective 

agents of systems change, unless 

they are content simply to be passengers 

on a voyage captained by the ghost of 

Milton Friedman, which appears to be 

headed toward the mother of all icebergs.” 

Unpredictability – A world in a vacuum 

This realignment is taking place in turbulent 

times. Planning was yesterday. 

Today we are constantly exposed to new 

surprises, and the biggest uncertainty 

factor is politics. Is an era of instability 

beginning? Uncertainty is not good. 

It disturbs our planning. That is a significant 

problem for the economy, for 

entire societies, and for each individual. 

Growing levels of uncertainty mean that 

our picture of the future is becoming increasingly 

blurred, which has an impact 

on economic development. Citizens and 

businesses are holding back, purchases 

are being postponed, and investment 

plans are being cut back. 

There are also new cracks opening up. 

Confidence levels in state institutions 

and companies have declined, and 

science is no longer necessarily reliable. 

Journalism is no better off: Many citizens 

say they can no longer distinguish 

between real news and fake news. Societies 

are at risk of losing their common 

knowledge base. 

Worse still is if untested technologies 

begin to upset the balance. Whether 

it is artificial intelligence or cyber war: 

What managers call “game changers” 

in strategy jargon are instruments that 

transcend experience and control. New 

technologies demand new strategies. This 

can also be seen as an opportunity, for 

example by using the UN Global Goals 

as a moral compass. Corporate purpose 

can also function as a guideline and 

yardstick for correct action. 

Therefore, in our chapter about the distribution 

of prosperity, we ask “Whose 

prosperity are we talking about?” How 

can we conserve – and even improve 

– the model of the welfare state in a 

fragmented, globalized, and highly 

competitive world? Finally, an international 

study shows that prosperity 

is more than just money. Wealth has 

many expressions. 

Climate change and poverty – What 

if the real question is not the impact 

on GDP? What if it is the impact on 

poverty? 

Climate change will have the greatest 

impact on those living in poverty, but 

it also threatens democracy and human 

rights, according to an UN expert. “Even 

if current targets are met, tens of millions 

will be impoverished, leading to widespread 

displacement and hunger,” says 

the UN Special Rapporteur on extreme 



to protect themselves,” Alston says. “We 

risk a ‘climate apartheid’ scenario, where 

the wealthy pay to escape overheating, 

hunger, and conflict while the rest of 

the world is left to suffer.” 

Climate change has immense, but largely 

neglected, implications for human rights. 

The rights to life, food, housing, and 

water will be dramatically affected. But 

equally important will be the impact 

on democracy as governments struggle 

to cope with the consequences. What 

will also be important is persuading 

people to accept the major social and 

economic transformations required. “In 

such a setting, civil and political rights 

will be highly vulnerable,” the Special 

Rapporteur says. 

poverty and human rights, Philip Alston, 

in a report released in June 2019. 

The best-case scenario of 1.5°C of warming 

by 2100 will see extreme temperatures 

in many regions and leave disadvantaged 

populations with food insecurity, 

lost incomes, and in worse health. Many 

will have to choose between starvation 

and migration. 

“Perversely, while people in poverty are 

responsible for just a fraction of global 

emissions, they will bear the brunt of climate 

change, and have the least capacity 

It will also have a tremendous impact on 

biodiversity: The rapid loss of biodiversity 

threatens the $125 trillion per year in services 

that nature provides – from clean 

air to clean water, food, fuel, medicine, 

and more. “Most human rights bodies 

have barely begun to grapple with what 

climate change means, and it remains 

one on a long laundry list of ‘issues,’ 

despite the extraordinarily short time 

to avoid catastrophic consequences,” 

Alston explains. 

In our chapter “Financing common prosperity,” 

Club of Rome member Stefan 

Brunnhuber draws a holistic arc from 

decarbonization and the curse of carbon 

bubble over taxation, impact funding, 

and ex-swap strategies to solutions in 

partnerships and perhaps even sustainable 

parallel currencies. 


9

“PROFIT & PURPOSE 

Purpose is not the sole pursuit of profits 

but the animating force for achieving them. 

Profits are in no way inconsistent with 

purpose – in fact, profits and purpose 

are inextricably linked. Profits are essential 

if a company is to effectively serve all of its stakeholders 

over time – not only shareholders, but also employees, 

customers, and communities. Similarly, when a company 

truly understands and expresses its purpose, it functions 

with the focus and strategic discipline that drive long-term 

profitability. Purpose unifies management, employees, and 

communities. It drives ethical behavior and creates an 

essential check on actions that go against the best interests of 

stakeholders. Purpose guides culture, provides a framework for 

consistent decision-making, and, ultimately, helps sustain longterm 

financial returns for the shareholders of your company.” 

Larry Fink, Founder, Chair, and CEO of BlackRock 

10 

Global Goals Yearbook 2019

Global Goals Yearbook 2019 11

Tomorrow’s Capitalism: 

The Leadership 

Agenda for the 

2020s 


PROFIT & PURPOSE 

John Elkington 

Founder and CEO 

Volans 

Today, globalized capitalism is being contested in a way that it 

has not been since the end of the Cold War. Even arch-capitalists 

such as Ray Dalio, founder of Bridgewater, a hedge fund, and 

Larry Fink of BlackRock, the world’s largest asset management 

firm, have issued stark warnings that capitalism-as-usual is no 

longer fit for purpose. 

Richard Roberts 

Inquiry Lead 

Volans 

Serious reform is needed to deal with the 

systemic challenges currently roiling the 

global economy. The climate, biodiversity, 

society, politics: All are in crisis, and increasing 

numbers of people are pointing 

the finger of blame at capitalism – or, 

rather, the version of capitalism that 

has reigned supreme across much of 

the world for the last 25 years. 

The age of hyper-globalization and 

shareholder value maximization has 

led businesses to create negative social 

and environmental externalities like 

never before. From spiraling greenhouse 

gas emissions to the hollowing out of 

local communities as jobs and tax revenues 

disappear – the costs to society 

of corporations’ single-minded pursuit 

of profits are adding up. 

Whose job is it to address these systemic 

flaws in the way contemporary capitalism 

operates? Many business leaders 

would say: not theirs. These are political 

challenges, and politics is not – to 

adapt a familiar adage – the business of 

business. Or at least that is what many 

CEOs continue to believe. That does not 

mean that corporate leaders are blind to 

the problems that business-as-usual is 

creating for society. Far from it, in fact. 

An awareness of the unsustainability 

of many current business practices has, 

over the last 25 years, led thousands 

of companies to adopt corporate social 

responsibility or sustainability programs, 

often built around concepts such as the 

“triple bottom line” – a term coined by 

one of us (John) in 1994. 

Last year, we issued a “product recall” 

of the triple bottom line concept via 

Harvard Business Review on the grounds 

that 25 years of well-intentioned efforts 

by companies have not halted – let 

alone reversed – the undermining of 

social and environmental systems on >> 


13

which we all rely. That does not mean that nothing worthwhile 

has been achieved: Thousands of companies have reduced 

their negative impacts and increased their positive impacts on 

society as a result of concerted efforts to integrate sustainability 

into corporate decision-making. But anyone who believes that 

a few more companies trying a little bit harder to do what 

we call “sustainability-as-usual” will eventually add up to a 

sustainable global economy is deluding himself or herself. 

The defining characteristic of sustainability-as-usual is that 

it tries to create change within businesses and across value 

chains without challenging contemporary capitalism’s operating 

system. Companies may talk about purpose, shared 

value, or stakeholder value, but they operate within markets 

that reward them principally for their financial performance. 

Hence, as we wrote in the HBR piece, “whereas CEOs, CFOs, 

and other corporate leaders move heaven and earth to ensure 

that they hit their profit targets, the same is very rarely true 

of their people and planet targets.” 

Rewiring capitalism’s operating system 

Since announcing the triple bottom line “recall” in 2018, 

Volans – alongside a select group of corporate and noncorporate 

partners – has embarked on an in-depth inquiry 

into what the corporate leadership agenda for the 2020s will 

need to look like in order to address the interlinked climate, 

biodiversity, social, and political crises we now face. We call 

this the Tomorrow’s Capitalism Inquiry. 

People in the corporate sustainability field have talked about 

the need for “systems change” for a long time now. The 2020s 

are going to have to be the decade when we finally learn how 

to do systems change. This starts from a recognition that there 

is no such thing as a sustainable company in an unsustainable 

economy. Again, this is not a new idea, but the truth of 

this statement will be brought home forcefully to companies 

over the next decade as their bottom lines are negatively 

impacted by climate and social breakdown – symptoms of 

an unsustainable economy. 

Being a little more “sustainable” than your peers will do 

little to insulate a company from external shocks caused 

by extreme weather or extreme politics. When the risks are 

systemic and the failures are at a market level rather than an 

individual business level, a response that focuses exclusively 

on improving individual business performance will prove 

inadequate. So companies are going to have to step up to 

become much more active and effective agents of systems 

change, unless they are content simply to be passengers on 

a voyage captained by the ghost of Milton Friedman, which 

appears to be headed toward the mother of all icebergs. 

How, then, does a company become an effective agent of systems 

change? As part of the Tomorrow’s Capitalism Inquiry, 

we are working to distil the best available thinking on this 

question into actionable guidance for corporate leadership 

teams. The Inquiry is still ongoing, but what follows is a 

preview of our emergent conclusions. 

Firstly, companies interact with other stakeholders in the 

markets, economies, and societies in which they participate 

in a number of ways. They act as citizens, buyers, investors, 

employers, and producers. The way in which a company 



How, then, 

does a 

company 

become an 

effective 

agent of 

systems 

change? 

performs these functions determines 

its effectiveness as an agent of systems 

change. Let us look, briefly, at each in 

turn. 

1. Citizen: Whether we like it or not, 

companies are powerful political actors. 

They may not vote in elections, 

but many are nonetheless extremely 

effective at ensuring their voices are 

heard by legislators and regulators. 

Typically, though, corporate lobbying 

is primarily defensive: It seeks to halt 

or slow down the implementation 

of rules that will make business-asusual 

more costly. But imagine if the 

substantial political influence wielded 

by companies was targeted instead 

toward achieving market reforms that 

ensure social and environmental value 

creation is properly incentivized. This 

may sound far-fetched, but remember 

that thousands of companies already 

go beyond regulatory compliance in 

some aspect or other of their sustainability 

performance. In advocating for 

regulation that would compel their 

competitors to meet the same standards 

that they have already chosen to 

meet voluntarily, these companies are 

merely pursuing their own enlightened 

self-interest. 

2. Buyer: Companies spend trillions of 

dollars a year on procuring goods and 

services from other companies. SAP 

Ariba, the world’s largest procurement 

platform, processes more than $2 trillion 

worth of transactions each year 

– more than Amazon, Alibaba, and 

eBay combined. Today, most procurement 

teams are incentivized to do one 

thing and one thing only: minimize 

costs. But imagine if companies started 

to treat procurement not just as a 

cost center, but as an engine of social, 

environmental, and economic value 

creation. By integrating extra-financial 

outcomes into purchasing decisions, 

companies can create real demand for 

products and services that contribute 

toward the sustainability of the overall 

economy. This is already happening in 

places as companies commit to source 

energy from renewables or work with 

suppliers that create good jobs at fair 

wages in poor communities. 

3. Investor: It is not only investment 

firms that manage financial assets. 

Many non-financial companies have 

very significant investments, too – 

stretching into the hundreds of billions 

of dollars in the case of large 

multinationals such as Apple and >> 


15

FEATURES AND FUNCTIONS OF TOMORROW’S CORPORATE LEADERS 

Features 

Five characteristics that determine how a company behaves 

Functions 

Five roles that every company plays 

Ownership 

From… models that privilege uncommitted owners and shortterm 

value extraction 

To… owners committed for the long term, empowering the 

company to pursue social and environmental value creation 

Citizen 

From… passive, defensive engagement in politics and social 

movements 

To… being an activist voice for political reforms needed to 

make markets sustainable 

Purpose 

From… no matter what it says on our website, our actual 

lived purpose is to make as much money as possible for our 

shareholders 

To… our purpose is genuinely about making a positive contribution 

to society 

Buyer 

From… the goal of procurement is to minimize costs 

To… we use our purchasing power to create market demand 

for socially and environmentally beneficial enterprises 

Management 

From… the incentives and KPIs that drive our business are 

purely about financial performance 

To… the incentives and KPIs that drive our business incorporate 

social and environmental performance on a par with 

financials 

Investor 

From… corporate investments managed purely to maximize 

financial returns 

To… we invest in assets that generate positive outcomes for 

people and planet 

Data 

From… the way we track social and environmental impact is 

largely qualitative and the data is patchy and out of date 

To… we track social and environmental impact rigorously and 

benchmark our performance against what science and ethics 

tell us is necessary for a sustainable society to flourish 

Employer 

From… labor is a cost; we will replace our workers with robots 

as soon as the robots are cheaper and, until then, we’ll treat 

the humans like robots 

To… creating good jobs that pay a decent wage and allow 

humans to flourish is part of how we create value for society 

Culture 

From… creating positive social and environmental impact is 

not as highly valued as generating financial returns 

To… our commitment to creating positive social and environmental 

impact is strong enough that it doesn’t disappear 

when the going gets tough 

Producer 

From… we make and sell stuff that is harmful to people and/ 

or the planet 

To… our products and services directly contribute to ecosystem 

restoration and social inclusion 



Alphabet. How these assets are managed is a critical element 

of how companies engage with the wider market. Do they 

focus on financial returns exclusively? Do they screen out 

certain investments that have a negative environmental or 

social impact? Or do they actively seek out investments that 

create positive impacts for people and the planet? 

4. Employer: Just as supply chains are often treated simply as 

a cost to be squeezed, so too workers – in the shareholder 

value-maximization paradigm – are seen primarily as 

an expense. Over the last few decades, the social contract 

between workers and employers has been eroded. In a less 

globalized, less digitally connected age, companies faced 

an imperative to invest in creating good jobs. Maintaining 

a loyal workforce was crucial for business success back 

when jobs could not so easily be outsourced to somewhere 

halfway around the globe with lower labor costs, or to a gig 

economy worker who receives none of the benefits of being 

an employee, or, indeed, to a robot. Now companies must 

learn once again what it means to create good jobs that 

allow prosperity to be shared, and to provide people of all 

genders, sexual orientations, ethnicities, and backgrounds 

with opportunities for advancement. 

5. Producer: Companies exist to produce goods and services. 

But are the goods and services they are producing – and 

the business model that wraps around them – good for 

society and the planet? Given that studies have shown that 

– in a world where all negative externalities were internalized 

– almost every industry would today be unprofitable, 

most companies will need to radically rethink their products 

and business models to thrive in a more sustainable 

capitalist system. 

Curing corporate schizophrenia 

Digging a layer deeper, a company cannot act sustainably 

over the long term unless its ownership structure, purpose, 

management practices, data systems, and culture are properly 

aligned to enable this. Many companies today suffer from 

a form of what Kate Raworth, author of Doughnut Economics, 

calls “corporate schizophrenia” – a condition brought on 

by a fundamental misalignment between these different 

elements of a company’s DNA. Many companies today have 

lofty purpose statements proclaiming their commitment to 

making the world a better place. But too often, there is a 

world of difference between a company’s stated purpose and 

its lived purpose as expressed by the day-to-day actions of its 

employees and executives. 

One common cause of this disconnect is the way ownership 

is structured. To quote Martin Wolf of the Financial Times, a 

publicly listed company in today’s world is required “to serve 

the interests of those least committed to it, while control is 

also entrusted to those least knowledgeable about its activities 

and at least risk of damage by its failure.” The traditional PLC 

model may be failing, but there are lots of alternative models 

that provide more fertile ground for sustainability: employee 

ownership; private or family ownership; state ownership; 

industrial foundations; and, perhaps especially, hybrid models 

that combine elements of these (by giving an industrial 

foundation a controlling stake in the business, for example) 

with the access to liquidity provided by having some shares 

publicly traded. None of these forms of ownership guarantees 

a specific set of outcomes, but at least they make it possible 

for companies to seriously pursue outcomes other than shortterm 

profit maximization. 

Management, too, must evolve in order to deliver on a sustainability 

agenda that is about more than incremental harm deduction. 

Generations of corporate executives have been trained to 

maximize shareholder value. Now, as the shareholder value 

paradigm disintegrates, they are having to learn a new game: 

how to manage and incentivize extra-financial value creation. 

To do this, corporate decision-makers require access to the 

right data at the right time. Extra-financial impacts need to 

be tracked in real time and assessed in relation to science- and 

ethics-based thresholds so that companies can use this data 

to inform their decision-making and steer a course toward 

genuine positive social and environmental impact. 

Last but not least, nurturing and sustaining a corporate culture 

that empowers all employees to access and act on their innate 

human desire to make a positive contribution to the world 

is essential. Companies have sometimes relied too heavily 

on culture to be the carrier of corporate values. When these 

values are at odds with the way formal incentives are structured, 

culture alone is rarely strong enough. But without the 

thousands of individual choices and behaviors that make up 

an organization’s culture being aligned to the vision of creating 

a sustainable business within a sustainable economy, very 

little can be achieved. 

Pockets of the future 

This essay has only skimmed the surface of the transformative 

leadership agenda we see emerging over the next decade. We 

have not yet encountered a single organization that successfully 

combines all of the elements summarized in the table 

below. But we have uncovered many “pockets of the future” 

within companies all over the world where the future-fit version 

of one or more of these functions and features is already 

in play. None of the ideas presented in this essay is based 

simply on wishful thinking: All we have done is extrapolate 

from and synthesize the best, most hope-inspiring aspects of 

the contemporary corporate landscape. 

As the science fiction author William Gibson famously said, 

“The future is already here – it’s just not evenly distributed.” 

Yet. 


17

Reconceptualizing Business for the 21st Century: 

The Future of the Corporation 

What is the role of business in contemporary 

society? Corporations were originally 

established with clear public purposes. It is 

only over the last half century that corporate 

purpose has come to be equated solely with 

profit. This has been damaging for corporations’ 

role in society, trust in business, and the impact 

that business has had on the environment, 

inequality, and social cohesion. In addition, 

globalization and technological advances risk 

exacerbating problems of regulatory lag. 

What is business for? What role does and should business play 

in society? To what extent should it perform a public purpose 

alongside its commercial activities? How should the aspirations 

of humanity, as set out in the Sustainable Development 

Goals, be reflected in the objectives of business? 

These are critical questions that are increasingly being asked 

of business as its role in exacerbating human, social, and 

environmental problems as well as its remarkable contribution 

in promoting growth, development, and the alleviation 

of poverty are being emphasized. 

The bond between the corporation and its public purpose has 

waxed and waned since corporations were first established 

nearly two centuries ago. This has happened in response to 

socioeconomic and geopolitical shifts, but the corporations’ 



Professor Colin Mayer 

Peter Moores Professor of 

Management Studies 

Said Business School, 

University of Oxford 

foundations remained embedded in 

delivering a public purpose alongside 

commercial functions. It is only over the 

last half-century that the sharp intensification 

of the profit motive has occurred. 

It came as markets for corporate control 

emerged to fill the vacuum in corporate 

governance created by a growing dispersion 

of ownership. 

In 1962, Milton Friedman set out a framework 

for business in which he described 

the social responsibility of businesses as 

being to increase profits so long as they 

stay within the rules of the game. It was 

a powerful and influential proposition 

that established the conventional framework 

for business around the world. 

However, it has serious deficiencies and 

is no longer tenable as a framework for 

business in the 21st century. It has been 

the source of growing disaffection with 

business, its environmental, social, and 

political problems, and the erosion of 

trust in it. Those problems will intensify 

in the future as technological advances 

risk exacerbating social detriments as 

well as the benefits of corporations, and 

public policy responses lag increasingly 

further behind innovations. 

The case for change 

There is a strong and growing ambition 

to reconsider and reinterpret the nature 

of the corporation, especially in terms 

of enabling better alignment between 

business and public interests. History 

tells us there is nothing radical in this 

and demonstrates that it has been commonplace 

in many manifestations of the 

corporate form. 

Tensions caused by technology and evolving 

corporate forms are not new either. 

Technology is once again the driving 

force behind the need for an evolution 

in the corporate form. Increasing levels 

of technological change are pushing 

corporations to adapt business models 

and management practices in order to 

survive. But institutions and regulations 

are adapting too slowly, and the situation 

calls for a robust new framework for 

business that recognizes the importance 

of both corporate and public interests. 

Accelerating and disruptive technological 

change 

Disruptive innovation has always been 

part of the corporate landscape. The 

Industrial Revolution marked the demise 

of many institutions, corporate 

structures, labor practices, social and 

political norms, and laws, but the birth 

of others. That continuing process of 

renewal raises complex and inter-linked 

economic, social, and political questions. 

Technological innovation has, in large 

part, driven globalization, prompting 

growing tensions between digitally 

skilled, location-agnostic commercial corporations 

and the constraints of nationbased 

political and legal systems. More 

specifically, the digital age is bypassing 

traditional authorities and changing 

the world of work. Smart technologies 

are global, networked, intuitive, learning, 

and automated. They rely heavily 

on the trust and trustworthiness of all 

participants and transform how people 

and corporations relate to each other. 

Among the most disruptive innovations 

are artificial intelligence (AI), blockchain, 

quantum computing, and 3-D printing, 

but there are others not yet formed or 

publicized. Such technologies – many 

based on data mining and manipulation 

– are already impacting economic 

activity, from new “clean” energy to 

personal communications, medicine, 

and bioengineering. 

>> 


19

Recent analysis suggests that technological 

innovation may increase incremental 

profits for first movers but also reduce 

innovation incentives for laggards. What 

is already clear is that the world’s highestvalued 

corporations are based around 

digital ecosystems. Cloud-based platform 

businesses rely on global networks of 

connectivity of both producers and consumers 

rather than the single-location, 

hierarchical, linear structures of the 

past. The CEOs and board members of 

the future may have to be as adept at 

the selection of high-quality algorithms 

as they are with the management of 

staff. The rate of technological change 

appears to be increasing over time and 

becoming less predictable. The pace of 

change exceeds the ability of policymakers 

and regulators to respond to it. 

Instead, business itself needs to be better 

placed to manage it with a greater clarity 

of purpose and an enabling culture to 

accommodate it. 

There is an urgent need for reform 

In response, the British Academy has 

brought together leading academics 

and business stakeholders under an 

ambitious program to redefine the future 

of business in the 21st century. 

The synthesis covered by our research 

has brought out three principles that 

could help in the development of a 

new framework for the future of the 

corporation: corporate purpose, trust, 

and culture. 

The first principle is well-defined and 

aligned purposes. Profit is a product 

of the corporate purpose. It is not the 

corporate purpose. In some – but by no 

means all – cases, corporate purposes 

should include public purposes that 

relate to the firm’s broader contribution 

to public interests and societal goals. 

The second principle is a commitment 

to trustworthiness. When corporations 

commit to purposes, they commit to the 

various parties that are involved in the 

The 

purpose of 

corporations 

is not to 

produce 

profits. The 

purpose of 

corporations 

is to produce 

profitable 

solutions. 

delivery of those purposes and vice versa. 

This creates reciprocal benefits for the 

firm, its stakeholders, and society. These 

arrangements rely on relations of trust. 

The third principle is embedding an 

enabling culture. The trustworthiness 

of an organization is reliant on clearly 

articulated values that are adopted consistently 

in the culture of the corporation. 

Purpose means more than profit 

Corporate purpose is the reason a corporation 

is created and exists, what it seeks 

to do, and what it aspires to become. It 

reflects the contribution it wishes to 

make in furthering the interests of its 

customers, communities, and societies 

and is the basis on which relations of 

trust are created in business. 

Corporate purpose is distinct from the 

consequential implications of the corporation’s 

profitability and shareholder 

returns. The purpose of corporations is 

not to produce profits. The purpose of 

corporations is to produce profitable 

solutions for the problems of people and 

the planet. In the process it produces 

profits, but profits are not per se the 

purpose of corporations. 

That distinction is fundamental, and its 

confusion in the Friedman Doctrine has 

been the source of many of the defects 

of current business practice and policy. 

All corporate purposes should be intrinsic, 

in the sense that they are core 

to the businesses and not just driven by 

shareholder interests. 

On the other side of the coin, corporate 

purpose is sometimes automatically 

equated with public purpose – the 

revealed preferences of societies and the 

public. There are some circumstances 

in which the purposes of corporations 

should indeed be equated with those of 

the public interest. For example, a close 

alignment and observance of public 

interests in corporate purpose is par- 



ticularly relevant to some companies that perform important 

social functions, such as utilities. However, other corporations 

should be able to pursue purposes that are not necessarily 

prescribed by public preferences. 

Embedding a commitment to trustworthiness 

Most existing business theories focus on the importance of 

respecting contractual obligations, but trust and trustworthiness 

are as important as legal obligations. Trust embodies a set 

of values, including competency, reciprocity, consistency, and 

dignity, which reduce risk, bind parties together, and build 

value. In a global, digitally connected society, where reputation 

is built via random networks over which corporations 

have little or no control, the successful corporation of the 

future will be built on trustworthiness, defined as “a robust 

disposition to fulfill given commitments.” 

Building trustworthiness through the distribution of corporate 

duties is desirable and costly, and this responsibility can and 

should be encouraged by a range of internal and external 

measures. Particularly important in this regard is the culture 

of a corporation. 

An enabling culture 

There is consensus on the importance of corporate culture 

and its integrative and holistic essence, but little on how it is 

defined, let alone measured and influenced. Culture is vital 

as a facilitator of strategy and is particularly important when 

implementing corporate changes, notably technological change. 

Several studies have demonstrated a clear correlation between 

negative business performance and cultural obstacles. 

A weak or damaging culture is recognized as a cause of excessive 

risk-aversion, thinking in silos instead of multilaterally, 

and linear rather than networked transfer of information. But, 

despite this, corporate culture is still seen as a “soft” resource, 

elusive to define and difficult to measure and manage. False 

culture can block change, defeat governance, and provoke 

financial instability. 

The levers of change 

There are a range of possible tools and levers available to business 

leaders and governments to promote change. Achieving 

a shift to this new framework will require coordinated action 

using five levers. First is ownership. Corporate ownership is 

currently equated with shareholders. Instead, it should be associated 

with defining and implementing corporate purpose. The 

rights and responsibilities associated with corporate purpose 

should replace property right views of ownership. Different 

types of owners are suited to different types of corporate 

purposes and activities. This points to the need for diversity 

in corporate ownership. 

The second lever is corporate governance. Corporate governance 

is currently associated with aligning the interests of 

management and shareholders. Instead, it should be linked 

to the implementation of corporate purposes. Boards cannot 

control some of the largest risks relating to globalization, the 

environment, and technology. New performance measures are 

needed for executives to ensure conformity of corporations’ 

activities and investments with their purposes. 

The third lever is regulation. The notion that competition, 

regulation, and taxation are sufficient to align the interests 

of business with society is no longer tenable. Technology is 

intensifying the problem of regulatory lag. One concrete proposal 

in this regard is to promote “forward compliance.” More 

generally, a fundamental overhaul of regulation is required 

that encourages companies which perform significant social 

functions to incorporate public purposes in their corporate 

purposes. 

Fourth is taxation. Globalization has eroded the corporate tax 

base by allowing corporations to arbitrage tax domiciles and 

transfer liabilities to lowest-tax jurisdictions. Our study identifies 

and debates the main reforms that are currently being 

discussed. However, none of these are without their problems, 

pointing to the need for a closer association of corporate with 

public purposes in the determination of fair levels of taxation. 

The final lever is investment. Public as well as private investment 

is required to deliver large-scale, long-term infrastructure 

investments. Attempts to achieve this through privatization, 

public–private partnerships, and private finance initiatives 

have often been disappointing. It is in precisely these areas 

where corporations perform important public and social functions. 

Private and public purposes need to be aligned through 

the adoption of public purposes in corporate charters and 

articles of association. 

Together, these levers offer the opportunity of promoting 

businesses that can be trusted to uphold their commitments 

to their corporate purposes. 

This article is based on the study “Reforming Business for the 21st 

Century. A Framework for the Future of the Corporation” which was 

published by the British Academy as part of its Future of the Corporation 

program in November 2018. 


21

Get C-level Executives to 

Understand It Is “Crunch Time” 

for Sustainability Initiatives 

When it comes to getting a buy-in for a 

sustainability project – or any other plan that 

could be perceived as low priority – you cannot 

pull any crunches. 

Number crunches, that is. It is no secret that C-level executives 

want to see solid bottom-line results from their strategic business 

decisions. Who would not? They want to ensure there is 

a solid reason to act, and that it will be financially beneficial 

to do so. When it comes to sustainability, even companies that 

make decisions for the greater good also end up benefiting 

the greater good of their budgets. 

On the surface, procuring a budget for what some consider 

“nonessential” sustainability issues might appear to be a huge 

challenge, but it really is not. A sustainability focus is a sound 

business strategy. Forward-thinking organizations understand 

the importance of being good stewards for their organizations, 



their neighbors, the environment, and future generations as 

well. The real challenge centers around appropriately justifying 

and communicating the tangible benefits of sustainability 

investments. 

In his recent commencement speech at Tulane University, 

Apple CEO Tim Cook said: “When we talk about climate 

change or any issue with human cost – and there are many 

– I challenge you to look for those who have the most to lose 

and find the real, true empathy that comes from something 

shared. That is really what we owe one another.” 

Cook gets it: It is your job to make people in your C-suite understand 

sustainability’s importance as well. Making sustainability 

part of an organization’s DNA goes a long way toward 

developing a culture of action. The first step is to educate the 

organization about the benefits of sustainability. Every year 

my company, Sphera, hosts a Sustainability Day, which gives 

our colleagues the ability to learn about the importance of 

sustainability and even a chance to volunteer for environmental 

initiatives. 

Paul Polman, Unilever’s CEO, and CB Bhattacharya, a professor 

of marketing and management at the University of Pittsburgh, 

wrote in the Stanford Social Innovation Review in 2016: “The key 

to creating a vibrant and sustainable company is to find ways 

to get all employees – from top executives to assembly-line 

workers – personally engaged in day-to-day corporate sustainability 

efforts.” 

Paul Marushka 

President and CEO 

Sphera 

That can pay big dividends. A 2018 sustainability study from 

ING Group, a Dutch banking and financial services company, 

found that 48 percent of the US companies surveyed said 

that sustainability concerns “actively influence their growth 

strategies,” and 68 percent of the companies with the most 

mature sustainability programs said their performance “has 

helped them to win new business from clients.” Additionally, 

the report explains how UPS was able to reduce CO 2 

emissions 

by 210,000 metric tons and save $400 million annually since 

2013 by employing its On Road Integrated Optimization and 

Navigation (ORION) program, which uses telematic data to 

make delivering packages more efficient. >> 


23

First 

crunch 

To make the case for sustainability, the first number that 

needs to be highlighted in an extra-large font is “1.5.” This 

refers to the increase in temperature scientists predict the 

Earth will realize (1.5°C) between 2030 and 2052 – a generation 

or less from now – if global citizens do not do anything 

to combat climate change. As the Intergovernmental Panel 

on Climate Change reported last year: With increased global 

temperatures being caused by greenhouse gases and the like, 

sea levels will continue to rise, some areas of the world will 

be affected by heavy precipitation, others will experience 

droughts, and the frequency of extreme weather events will 

likely pick up. A recent World Bank report found that some 

countries’ gross domestic products could drop 7.7 percent 

because of climate change when people “live in locations that 

could become moderate or severe hotspots by 2050 under the 

carbon-intensive scenario.” 

Second 

crunch 

After you have explained the problem and the importance of 

sustainable measures, the next number to focus on is “15.” 

In 2017, the World Economic Forum posted an article called 

“How Going Green Can Help the Planet and Your Profits.” The 

article states that companies that focus on eco-innovation 

grow at a 15 percent rate compared with a flat rate for their 

competitors. Indeed, Nielsen predicts the US sustainability 

market will reach $150 billion by 2021, and the Millennial 

generation is leading the charge. In the survey, 75 percent of 

Millennials said they are “definitely” or “probably” changing 

their buying habits to focus on sustainable products vs. 34 

percent of Baby Boomers. It is no wonder why companies such 

as Method went from a small soap business in 2000 to a $100 

million company, according to Inc. magazine, by focusing on 

sustainability. 

Third 

crunch 

Focus on the number “50.1 billion.” That is the projected 

number of Internet of Things devices expected by 2020. Why is 

that significant? Governments take environmental compliance 

seriously. The US Environmental Protection Agency in fiscal 

2018 alone enforced $69.5 million in administrative and civil 

penalties. In fiscal 2017, because of Clean Air Act violations, 

penalties almost reached $1.7 billion. 

By employing Integrated Risk Management 4.0 strategies that 

use data from Industrial Internet of Things sensors, which can 

play a key role in sustainability efforts, companies can monitor 

their environmental performance and make prescriptive and 

predictive decisions to lower their carbon footprint and their 

risk of being fined for not being in compliance. Although taking 

initiatives to lower environmental risks might not make 

breaking news, they still always trump the negative publicity 

and damage-control expenditures that come from being named 

on a news report for causing damage to the planet and not 

being a good corporate citizen. 

Fourth 

crunch 

This takes us to the final number that you should consider highlighting: 

$3.3 trillion. The CDP is a not-for-profit organization 

that helps companies manage their environmental effectiveness. 

Its 115 global members have a combined $3.3 trillion in procurement 

spending, which means they have mega purchasing 

power. Every year, the organization surveys its members on 

supply chain sustainability initiatives. The most recent report 

found that the 5,500 suppliers queried were able to collectively 

cut their CO 2 

emissions by 633 million tons (more than 1 percent 

of all global emissions). Perhaps even more compelling, 

especially from a C-suite perspective: “[T]hese were associated 

with annual monetary savings in excess of US$19.3 billion 

for those companies, highlighting the frequently compelling 

business case for taking action on climate change.” 

One more 

crunch 

The numbers add up. Sustainability initiatives promote the 

common good and are good for your budget. We just need 

to use the numbers to clearly articulate the economic case 

for the C-suite and the entire organization of the benefits of 

sustainability. After all, it is crunch time. 



Women’s Empowerment “Essential to 

Global Progress” Says Guterres 

Women’s empowerment and gender equality are “essential to global progress,” United Nations 

Secretary-General António Guterres stressed in his message for International Women’s Day, which 

this year puts “innovation by women and girls, for women and girls” at the heart of efforts to 

achieve gender equality. 

“Last year, for the first time, we achieved 

gender parity in the UN’s Senior Management 

Group and among those who lead 

UN teams around the world,” the UN 

chief said, adding that the organization 

is “working to achieve parity across the 

whole United Nations system within a 

decade.” 

The UN began celebrating the day in 

1975, which was designated International 

Women’s Year. Over the decades, it has 

morphed from recognizing the achievements 

of women to becoming a rallying 

point to build support for women’s rights 

and participation in the political and 

economic arenas. 

“Gender equality is essential to the effectiveness 

of our work, and we cannot 

afford to miss out on the contributions of 

half of the world’s population,” Deputy 

Secretary-General Amina J. Mohammed 

explained. Moreover, she continued, 

“women’s equal participation in the labor 

force would unlock trillions of dollars 

for global development.” 

“Let us be clear,” she spelled out: “We cannot 

build the future we want and achieve 

the Sustainable Development Goals (SDGs) 

without the full participation of women.” 

Achieving a gender-equal world requires 

social innovations that work for both 

women and men and leave no one behind, 

according to the overarching UN 

strategy. E-learning platforms that take 

classrooms to women and girls; affordable 

and quality childcare centers; and 

technology shaped by women are a few 

examples of the innovation needed to 

meet the deadline set out in the 2030 

Agenda for Sustainable Development. 

“And we need more women leaders 

participating in public life and taking 

decisions,” explained General Assembly 

President María Fernanda Espinosa, 

urging everyone to redouble their efforts 

“against the discrimination and violence 

women and girls face every day.” 

For her part, UN Youth Envoy Jayathma 

Wickramanayake is drawing attention 

to the millions of young girls preparing 

to start their working lives, saying that 

far too often, “they don’t get the opportunity 

to realize their dreams and 

grow into their power.” She added, “let’s 

invest in girls’ education and skills so 

they become the leaders and innovators 

they were born to be.” 

In her message for the day, Executive Director 

of UN Women Phumzile Mlambo- 

Ngcuka pointed out that “women and 

girls around the world still face many 

challenges,” arguing that changes begin 

with making sure that their needs and 

experiences are integrated and enhanced 

by new technology and innovation. “On 

International Women’s Day,” she concluded, 

“we ask all to join us to ‘Think 

equal, build smart, and innovate for 

change.’” 

Phumzile Mlambo-Ngcuka 


25

Why Collaboration Isn’t 

Just a Sustainability 

BUZZWORD 

Today’s businesses are in the 

spotlight like never before. 

Many have had their own 

visions for sustainability 

in place for years, with 

globalization intensifying 

environmental and societal 

concerns. But now the world 

has given us a deadline – 

2030 – by which time we are 

all to have achieved the 17 

UN Sustainable Development 

Goals (SDGs). 

Sunny Verghese 

Chair, WBCSD 

Co-Founder and Group CEO 


Over the next 11 years, business success 

will be inextricably linked to solving the 

world’s big societal and environmental 

challenges. 

Magnifying the odds of success 

The ambitions of the SDGs are well beyond 

the reach of any company in isolation. 

The transformative agenda cannot 

be achieved with “business as usual,” nor 

through the singular approach of a few 

disruptive innovations here and there. 

Whole sectors need to rally around the 

challenges and think bigger in terms of 

systems transformation: To transform 

the key economic systems by 2030 that 

are needed to create a world in which 

9 billion people can all live well and 

within the boundaries of our planet. 

Crucially, this is where the bigger business 

opportunities lie. Consider a global 

food and agricultural system in line with 

the Global Goals – one that feeds the 

growing population, generates higher 

incomes, and restores natural resources 

and vital ecosystems. This would unlock 

economic value of more than $2 trillion 

by 2030 and would be much more resilient 

to climate risk. If we include the 

other economic systems – cities, energy 

and materials, and health – the opportunity 

totals $12 trillion * . This makes it 

a commercial imperative for business 

leaders to work with sector peers to drive 

systemic change. Industry needs to build 

coalitions such that each participant in 

every sector – be it food, energy, or 

transportation – can pool resources and 

map their collective route to optimize 

their contributions on the road to 2030. 

This, in turn, helps the sector to collectively 

strengthen its license to operate, 

manage operational and regulatory risks, 

and open up growth markets. 

The first Sector SDG Roadmap was developed 

last year by nine of the world’s 

leading chemical companies, who joined 

forces and worked with the World Business 

Council for Sustainable Development 

(WBCSD). The Roadmap that are 

aligned with tangible actions, through 

which they can deliver transformative 

impact in their industry. 

The forestry and Indian cement 

sectors have since followed suit with 

their respective roadmaps, and the oil 

and gas sector has one in the pipeline 

for next year. 

System transformation requires 

surprising alliances 

We also need to galvanize those beyond 

our own sectors and take action at every 

level. At Olam, as a food and agriculture 

business, we need to get others to become 

more sustainable to protect our supply 

chains – we need the energy, transport, 



and construction sectors playing their 

part to combat climate change. 

Being a member of the Climate Smart Agriculture 

project has helped our thinking 

evolve around climate change strategies 

that drive business improvements, such 

as providing weather stations right across 

the West Africa cocoa belt. For our farmers 

in Ghana, this access to weather data 

means they can time the applications of 

inputs and farm practices with the right 

conditions, which translates into higher 

yields and incomes. As for the business 

benefits for all involved, food companies 

receive higher volumes of data to 

inform trading strategies, while chemical 

companies can more efficiently meet 

demands for providing crop protection. 

Rice-growing is another example of 

where cross-sector alliances are driving 

real change at the country level. Every 

year, the production of this staple crop 

around the world emits the same amount 

of greenhouse gases as Germany, making 

it a leading contributor to climate change. 

But the Sustainable Rice Landscapes 

Initiative – led by a broad coalition 

that includes the Food and Agriculture 

Organization, UN Environment, the 

Sustainable Rice Platform, and WBCSD 

– is focussing on reducing greenhouses 

gases under the Paris agreement. The 

solution is simple: Just training farmers 

on efficient water management can cut 

methane emissions by up to 70 percent. 

Moreover, the farmers can earn up to 20 

percent more this way. The approach allows 

businesses such as Olam to develop 

replicable, scalable models to deliver 

tangible change for farmers, for businesses, 

and for governments. 

Having a voice in these alliances is also 

essential to ensure a strong degree of 

practicality and relevance regarding the 

overall focus. The very nature of whole 

system transformation means that no one 

can afford to be left behind. This is Olam’s 

rationale for joining the Food Reform 

for Sustainability and Health (FReSH) 

project – to balance the conversation 

around consumer demand with the supply 

perspective. Now that the EAT Lancet 

has defined what a sustainable diet looks 

like, we – along with manufacturers – 

need to start thinking collaboratively 

about how we produce this. 

Comparability is key 

When it comes to accounting for our 

impact, it helps to create consensus as 

a sector about what is material and the 

right methodologies. This allows for comparability, 

and where there is underperformance, 

businesses have the support 

to build corrective action plans. 

For the agriculture and forestry sectors, 

the Cocoa & Forests Initiative, Global 

Forest Watch, and Cocoa Action are 

just a few of the examples of valuable 

industry-wide alliances that offer a clear 

picture of progress. They help us develop 

the right pathways for greater impact. 

A new standard of competitiveness has 

stemmed from these reporting initiatives, 

as businesses are increasingly open 

to reporting on their SDG contributions. 

Just look at the 575 companies that 

have signed up to the Science Based 

Targets to date. 

We know that the SDGs cannot be delivered 

only through the efforts of individual 

companies. Businesses need to 

understand how they operate within 

the broader landscape and then work 

collaboratively – both within and outside 

of their sector – to achieve the 

outcomes that can deliver the necessary 

impact. 

* 

Source: Better Business, Better World, 

http://report.businesscommission.org/ 

report%23references” 


“QUEST FOR TALENTS 

people to your organization.” 

When everyone is competing for the same 

kind of talent, you need a much clearer way 

of explaining how you will attract those 

Jeff Joerres, Chair and CEO of ManpowerGroup 



29

Thank 

God 

It’s 

Monday 

How the Search for Talents Affects 

Corporate Culture, Working Concepts, and 

Business Attitudes Toward Sustainability 


QUEST FOR TALENTS 

“Talented people are vital 

to our continued success, 

and we continuously invest 

in our associates, giving 

them the tools and training 

to succeed.” – Indra Nooyi 

Nooyi, who served as CEO of PepsiCo for 12 years and made 

the company’s sales grow by 80 percent, is one of the best 

examples to open an article about understanding the importance 

of corporate culture in the war for talent – and how it 

serves the company’s longevity. But how can you build longterm 

talent management plans in a world where the median 

tenure for workers aged 25 to 34 is 3.2 years – down from 

10.3 years for employees aged 65 and over? How can you make 

sustainability part of your corporate culture in a way that will 

help you attract the best talents and create an environment 

that prevents job-hopping as much as possible? How do the 

attitudes of business leaders have to change so that company 

values are aligned with the values of its talented workers? 

Jean-Noel Chaintreuil 

Founder and Director 

Change Factory 

Let us start by setting one thing straight: Do not target young 

people. Do you need young people? Yes, of course. Did Apple 

poach Ian Goodfellow, a 34-year-old who was one of Google’s 

top AI researchers? Yes. Did they first poach John Giannandrea, 

a 54-year-old researcher? Most definitely. You can focus on 

young people, but do not overestimate the results of having a 

company filled with the same age group, as you also need more 

experienced talents – and their expectations have changed 

as well. If you want to answer young people’s expectations, 

do not forget two things: They are not as young as you think 

(Millennials have children and mortgages to pay), and they 

have come around to the fact that ping pong tables will not 

help them advance in their careers. Although you could at 

some point address Baby Boomers and Generation X members 

as groups with common interests and goals, Millennials >> 


31

have to be considered as individuals with 

different aspirations – or at least as sets 

of subgroups with different aspirations 

– all while their attitude has rubbed off 

on their elders. 

But you will have to reconcile different 

time scales to address these aspirations 

in a way that serves your company: 

• your company’s strategy and short-term 

goals that serve your long-term goals; 

• the relatively short-term goals of the 

employees who will stay, on average, 

three years in your company; 

• the long-term goals they strive to serve 

by working for you. 

Think adapted compensations and 

benefit strategies, custom career paths, 

and identification with their leaders. If 

talents start seeing a position in your 

company as both a stepping stone to 

another position and a valuable experience 

in itself, consider what you can do 

to bring them both. 

The era in which talents climb the ladder 

in one occupation – whether it be 

communications, human resources, or 

sales – and go from a junior or assistant 

position to a senior or head position is 

partly over. Career paths increasingly 

consist of two years spent in corporate 

communications, three years of entrepreneurship, 

one experience in employer 

branding, and one in digital project management. 

How companies adapt to this 

new paradigm is key for their ability to 

win the talent war. Adjust to that new 

paradigm by offering training and opportunities 

that will bring added value 

to your employees. 

Of course, some jobs include mandatory 

trainings, such as in ethics or confidentiality 

and privacy. But why would 

you offer training in communications 

only to communications officers? Then 

again, why would you even tell your 

employees what training they should 

follow? Of course, 

the company can 

still suggest the 

most appropriate 

trainings to reach 

a given goal, but 

why would you 

not empower your 

employees even 

more? Give them 

the possibility to 

access the whole 

catalog of courses 

they can attend – 

whether online 

or offline – and 

encourage them to actually make the 

most of it, which implies encouraging 

managers to happily allow their teams to 

take time off for training (for reasonable 

amounts of time, of course). 

Make your middle managers a key link to 

the growth of your company in the long 

run. They are the ones who are in touch 

with your employees on a regular basis 

and are therefore uniquely positioned 

to know what your employees want – 

and what they are actually planning for. 

But they cannot make it happen if they 

stay in their fields within the company. 

A network of middle managers will both 

allow for developing transversal projects 

and for creating more mobility opportunities 

for people within their teams, 

allowing the employees who want to 

change positions to do so within the 

company. 

Making empowerment part of your company 

culture is the best way to help your 

employees grow – so they can make 

your company grow. 

Offering the possibility of having various 

career paths sounds great on paper. But 

how do you ensure your employees feel 

they have actual opportunities within 

your company? Did you know that black 

women tend to move from one company 

to another more than white women 

because they feel that it is the only way 

for them to get ahead in their careers? 

Microsoft took a big stance to create an 

inclusive company by launching their 

“communities” at the end of the 1990s. 

“Communities” are groups of workers 

who are united by the fact that they identify 

with groups that could be discriminated 

against in the workplace: Blacks@ 

Microsoft, the LGBTQ+ community, the 

parents community, the Asian community, 

etc. How does it work? It creates 

opportunities for talents who fit in their 

communities – through scholarships 

and the sponsoring of organizations such 

as Black Girls Code – and advocates for 

changes. The point is to make the lives 

of these community members easier 

within Microsoft, even though the law 

does not require special dispositions in 

all the countries where Microsoft is present. 

“Communities” can also act as small 

internal lobbies to offer insurance and 

benefits to same-sex domestic partners, 

as they would for heterosexual couples, 

and cover transgender care, for example. 

It even led some LGBTQ+ employees to 

say that, although they are in a country 

where being gay is illegal, Microsoft 

offices are a safe haven where they can 

be themselves. 

Even though you cannot necessarily 

reproduce this exact model within your 

company – some countries would 

consider it discriminatory and illegal 

– think about what allows people to 

feel that they have equal opportunities 

within your company. There are two 



So how do you set in motion sustainable actions that are 

good for your employees and good for your company – and 

ultimately good for society? Of course, there are simple things 

such as making sure you reduce waste used by company 

operations – in packaging and in advertising. But for all 

the things that are harder to measure – or have a long-term 

impact that cannot be proven yet – such as making your 

company more inclusive, find and follow your own KPIs. 

ways to do so: On the one hand, ensure that who they are 

does not slow their careers down; on the other hand, provide 

an inclusive and transparent environment at every level of 

your company. Start with easy things that you can control: 

See that the pay gap is bridged within your company (or 

create dynamic salary scales as Warren Buffet did), that all 

mothers and fathers are treated the same (Millennials are 

now old enough to have children!), that you offer the same 

compensations to same-sex couples as you do to heterosexual 

couples, and that people who have a sick parent are able to 

take some time off to take care of them. Without getting too 

political, see that your employees know you are aware that 

they are individuals with different needs and have identities 

beyond being your (young) employees. 

Then, make sure that your staff is diverse at every level. A 

company where the whole C-suite is composed of white males 

might seem less attractive to young white women or people 

of color. Leaders with varied experiences will be better able to 

understand the experiences (and struggles) of a diverse workforce. 

A more diverse workforce will have more empathy for 

a diverse set of clients, a better ability to expand product lines 

to cater to diverse needs, and a better ability to understand 

why some demographics will not use them. It will also allow 

you to communicate in a more thoughtful way so that you 

can make positive contributions to social debates instead of 

being talked about in a negative way. 

It would be tempting to directly associate young talents with 

the causes they seem to support, just as it would be easy to 

think that meaning well results in great actions. Sometimes 

even the best intentions end up serving a bad purpose, as in 

the case of Doug Evans. Even though he was very much aligned 

at a personal level with healthy ways of eating, he ended up 

founding a company, Juicero, that produced expensive juicers 

pointlessly connected – in other words, he ended up selling 

a wasteful way to take care of oneself. 

This article started with the idea that young people tend 

to change positions more often than previous generations. 

Measuring how long people stay in your company is a good 

start. You can also measure packaging costs, the time needed 

to recruit talent, the number of candidates for a given position, 

the growth on given markets, etc. Consider what 

society cares about. Companies and society as a whole now 

belong to the same world. Companies have a major impact, 

and both your employees and your clients know it. Then 

again, do not “greenwash” (insincere environmentalism) or 

“pinkwash” (fake concern for women’s rights), as these rate 

very poorly among young talents – they make the company 

look like it is trying to show positive actions to hide (very) 

negative ones. They want their company to be aligned with 

their values. They also want the company’s actions to be 

aligned with its message. 

Do not lie about the areas in which you could still improve 

your actions; acknowledge that you are not perfect and 

could do better. Glossier, a company that has made sending 

stickers and a plastic pouch with each order part of its playful 

image, has acknowledged that this marketing move can 

be considered wasteful if the little gifts are not used. They 

now plan to give customers the option not to receive the 

gifts with their order. If you feel there is an area you could 

improve in as a company, let your employees know and 

create taskforces that go beyond research and development. 

You can even include your customers to create a more open 

company, as they might be the ones to let you know something 

is unsustainable in the way you work. Maybe some of 

your employees and customers already use solutions to reuse 

packaging, reduce the pollution created by ordering online, 

use fewer chemicals – they can bring interesting ideas to the 

table. In the field of sustainability, being able to admit that 

you probably can do better and actually achieve continuous 

improvement is key. 

The two keywords of how the search for talents affects 

corporate culture as a whole are probably empathy and 

empowerment. If you want to attract the best talents, make 

the talents you already have within your company feel like 

you care. Listen to them, act accordingly, and find ways to 

give them more responsibility and more freedom to make 

your company the change they want to see in the world. 


33

The Future 

of Business: 

What Matters 

Most to the 

Millennial 

Workforce 

The conversation around Millennials and Generation Z is 

old news? Well, by 2020 they will form 50 percent of the 

global workforce. In fact, business leadership is becoming 

Millennial. Therefore, it is better to forget the frustrations 

of managing and influencing these folks. They are about 

to be in charge soon. So, it might be time to assess our 

attitudes to those born between 1980 and 2000. 

“The contract between the organization 

and the individual is beginning to 

change,” says Lynda Gratton, Professor of 

Management Practice at London Business 

School (LBS). “The old contract looked 

like this: ‘I work to buy stuff that makes 

me happy.’ The contract is negotiated 

by tangible assets. The new contract 

will be, ‘I work to make me happy.’ We 

have to think about work as being the 

thing, not the money you get from it. I 

don’t see many companies realizing how 

profound that change will be.” 

The fact that purpose tops the agenda for 

Millennials is backed up by PwC’s recent 

Workforce of the Future survey, which 

found that 88 percent of them want to 

work for a company whose values reflect 

their own. Millennials will comprise 75 

percent of the global workforce by 2025. 



The Deloitte 2017 Global Human Capital 

Trends report similarly found that most 

Millennials look beyond a company’s 

financial performance when deciding 

whether or not to work there. Only one in 

five survey respondents said they would 

choose to stay at a solely profit-driven 

company for more than five years. 

Profit with purpose the new norm? 

“Profit with purpose is set to become the 

new norm,” said Antonio Zappulla, CEO 

Designate of Thomson Reuters Foundation, 

at this year’s World Economic 

Forum in Davos. “Up to this point, social 

enterprise and impact investment have 

been driving this concept, which has 

somehow remained confined to a niche. 

Not anymore. Now, it’s all set to change: 

The CEOs of the future will want their 

companies to be recognized as forces for 

good. In business, CEOs have gone from 

being symbols of aspiration to objects of 

intense scrutiny,” he explained. “Even 

the younger, ‘cooler’ entrepreneurs, the 

kick-starters of the shared economy, are 

now being asked questions about the 

impact their companies have on society. 

Trust has become the ultimate currency.” 

“There has to be a strong connection 

between what your company wants to 

do and be, and what you want to do and 

be,” advises Richard Hytner, Adjunct 

Professor of Marketing at LBS. “If you 

can’t see any connection at all, you’re 

in the wrong place. Don’t expect your 

company to find that connection. There 

are many things you can – and should 

– delegate responsibility for in life. Your 

personal purpose is not one of them.” 

The Associate Professor of Strategy and 

Entrepreneurship at LBS, Dr. Ioannis 

Ioannou, adds: “When companies are 

genuinely committed to purpose and 

sustainability, it is reflected in their 

governance structure. The top of the 

organization sets the tone and signals 

a credible pledge to purpose.” 

ESG performance also an indicator 

for talent recruiting? 

“Responsible businesses have a governance 

structure that monitors and advises 

on environmental, social, as well as 

financial issues,” Ioannou continues. 

“When leaders understand and thrive 

within the broader social and environmental 

context in which their businesses 

operate, it also signals to employees, 

investors, and key stakeholders how 

important purpose really is.” 

Ioannou cites Intel as a strong example 

in this area. The company has made 

social responsibility everyone’s job, with 

clear sustainability goals. “In 2008 the 

leadership team took a bold step and tied 

environmental performance to employee 

compensation,” he says. “Since then, 

Intel has continued to rally the troops 

through a series of responsible competitions 

and sustainability projects. The 

winning teams receive environmental 

excellence awards and a pay bonus.” 

He advises senior executives to follow 

suit by setting ambitious targets and 

providing generous incentives that fully 

reflect their organization’s purpose. “You 

fail to send out a consistent and credible 

message when, for example, social 

responsibility is part of your company’s 

media rhetoric, yet only financial performance 

is incentivized.” 

Positive perception of companies 

declines 

The Deloitte Millennial Survey 2018 

shows a clear, negative shift in Millennials’ 

feelings about business’ motivations 

and ethics. Today, only a minority of 

Millennials believe businesses behave 

ethically (48 percent vs. 65 percent in 

2017) and that business leaders are committed 

to helping improve society (47 

percent vs. 62 percent in 2017). 

There continues to be a stark mismatch 

between what Millennials believe responsible 

businesses should achieve and what 

they perceive businesses’ actual priorities 

to be – but where matches exist, the 

perception is that those companies are 

more successful, have more stimulating 

work environments, and do a better job 

of developing talent. 

Diversity and flexibility are key to 

loyalty 

Forty-three percent of Millennials envision 

leaving their jobs within two years; 

only 28 percent seek to stay beyond 

five years. The 15-point gap is up from 

seven points last year. Employed Gen Z 

respondents express even less loyalty, >> 


35

with 61 percent saying they would leave within two years if 

given the choice. 

Attracting and retaining Millennials and Gen Z respondents 

begins with financial rewards and workplace culture; it is enhanced 

when businesses and their senior management teams 

are diverse, and when the workplace offers higher degrees of 

flexibility. Those who are less than satisfied with their pay and 

work flexibility are increasingly attracted to the gig economy, 

especially in emerging markets. 

Money still matters to Millennials 

Paul Polman, former CEO of Unilever, once told a businessschool 

audience: “You need to have something where you 

want to have an impact and that aligns with your values. It 

will drive your passion. People’s self-worth should not be 

measured by their net worth.” 

Millennials do not want to work for an organization that is 

driven only by profit, but nevertheless money still matters. 

Successful companies offer a smart mix of salary and benefits 

as well as a good work–life balance and leadership opportunities 

to attract the best talents. 

According to PWC’s Next Gen Survey, the new workforce 

generation believes in flextime and that productivity should 

be measured by the quality of work rather than the amount 

of hours spent in the office. 

Young workers are not ready for Industry 4.0 

Millennials and Gen Z recognize the current and future importance 

of Industry 4.0, yet many feel unprepared for the changes 

it will bring. Fewer than 4 in 10 Millennials (36 percent) and 3 

in 10 Gen Z currently in work (29 percent) believe they have 

the skills and knowledge they will need to thrive. 

While technical skills are always necessary, respondents are 

especially interested in building interpersonal skills, confidence, 

and ethical behavior – all of which they consider essential 

for a business to be successful. They would like business to 

take a lead role in readying people for Industry 4.0. 

So how to respond? 

The blogger Deirdre Pluck writes: “On an employee level, HR 

can achieve this by ensuring Millennials are clear about their 

job purpose and align their objectives with the goals of the 

organization. Employees who are clear about their goals and 

understand their purpose in the businesses are much happier, 

engaged, and more likely to stay with your organization longer.” 

Lauren Coulman is a social impact consultant. In her worthreading 

essay in Forbes magazine, she writes: “These kids are 

more financially savvy, highly entrepreneurial, and true 

digital natives, putting the generation that preceded them 

to shame in their ability to disrupt industries. Existing in a 

world of corporate hierarchies, political game-playing, and 

BOOMERS VS. MILLENIALS 

@ WORK 

Boomers 

Millennials 

Monday 

Tuesday 

Wednesday 

Thursday 

Friday 

9 a.m. – 5 p.m. 

9 a.m. – 5 p.m. 

9 a.m. – 5 p.m. 

9 a.m. – 5 p.m. 

9 a.m. – 5 p.m. 

Monday 10 a.m. – 8 p.m. 

Tuesday 2 a.m. – 12 p.m. 

Wednesday 11 a.m. – 5 p.m. 

Thursday 3 a.m. – 2 p.m. 

Friday 10 a.m. – 4 p.m. 

Source: thecooperreview.com 



PROFILE: THIS IS WHAT 

DISTINGUISHES MILLENNIALS, 

ACCORDING TO STUDIES: 

• They grew up with digitalization and are globally 

networked. Development and freedom of choice are 

extremely important values for them. (Future Institute) 

• They have grown up in a world where there are rampages 

and terrorist attacks – this leads to an abstract 

sense of insecurity. (The Guardian) 

• Millennials are often stressed. According to a recent 

study from the United Kingdom, 49 percent of respondents 

suffer from too much stress – mainly due 

to comparisons with others. (Mental Health Foundation) 

• They are a generation of heirs. However, the consequences 

of the financial crisis have made it more 

difficult for them to build up their own assets. The rich 

thus become richer, and the poor remain barred from 

social advancement. (Business Insider) 

• Millennials have pretty clear ideas about jobs: They 

demand fulfilling tasks, a secure job, a good salary, 

and bosses who see themselves more as coaches. 

(Hays) 

low institutional trust, what we’re really 

witnessing is a clash of values, and 

a major shift in how we operate, consume, 

and societally engage. With our 

wider social impact ranking higher in 

millennial collective decision-making, 

and purpose becoming as important as 

profit, working with (and not against) 

this new world order will inform who 

succeeds long-term, and the teller will 

be in how we perceive and respond to 

the change.” 

A passing trend or a tidal change? 

“Maybe we will stop talking about purpose 

in 10 years’ time because it will just 

be ingrained in any organization as a 

taken-for-granted – that any company 

that wants to be successful must pursue 

purpose,” says Alex Edmans, Professor 

of Finance at LBS. Deirdre Pluck adds: 

“Organizations that are not focusing on 

recruiting, nurturing, and engaging the 

Millennials of today a re putting their 

business at risk of losing the leaders of 

tomorrow.” 

Source: London Business School, Deloitte Millennial Survey 

MILLENNIALS’ MOTIVATION 

AND ETHICS (%) 

Good work-life balance 

Opportunities to progress/be leaders 

Flexibility, i.e., remote working, flexible hours 

Sense of meaning from my work 

Professional development training programs 

The impact it has on society 

The quality of its products/services 

Strong sense of purpose 

Opportunities for international travel 

Fast-growing/dynamic 

A leading company that people admire 

Invests in and uses the latest technology 

The reputation of its leaders 

16.8 

13.4 

11.0 

9.3 

8.3 

6.8 

6.4 

6.2 

5.9 

4.4 

4.3 

4.1 

3.1 

BUSINESSES ARE OUT OF STEP 

WITH GEN Z PRIORITIES 

43% 

39% 

25% 25% 

Generating jobs Improving society Generating profits 

Percentage of Millennials 

seeing as stated business 

priorities 

24% 

51% 

Percentage of Millennials 

seeing as actual business 

priorities 

Source: Deloitte Millennial Survey 


37

igration-led 

Innovation 

The Premise of a New 

Social Architecture 

Can we count on the Marie 

and Pierre Curies of our time 

to bring their collective genius 

to science? Are we benefiting 

from the entrepreneurial spirit 

and thousands of jobs created 

by all the Hamdi Ulukayas out 

there? The answer is no. The 

way we designed our social 

architecture around migration 

is preventing many creators 

from contributing. 

By Alice Barbe, Guillaume Capelle, 

and Camille Soulier 

How can we get rid of obstacles 

they face on their way to innovation 

and entrepreneurship? 

It is only fair that anyone 

should be allowed to start a positive 

project. It is also a pity that our societies 

and economies are missing out when 

newcomers are not able to reveal their 

talents. We need new spaces and tools 

encouraging both newcomers and locals 

to find their complementarities, learn 

from each other, and build a brighter 

future, together. 

At SINGA, we believe in migration-led 

innovation and we think that the fusion 

economy is completely underexploited. 

We have created incubators, spaces, and 

accelerators to support ideas, projects, 

and super projects fitting this description. 

After three years, our programs have 

supported more than 211 companies, 

which have in turn created more than 

300 jobs. In 2019, we plan to support 100 

more in seven European cities. 

Essentially, migration-led innovation 

comes from the ability to use one’s diverse 

background to identify a gap or an 

opportunity in the market, or use one’s 

experience to create a never-seen-before 

product. For instance, what Shaza has 

missed the most in her journey from 

Syria to France is daily contact with 

her parents. She is working on a connected 

object to keep bonds alive despite 

the distance, beyond existing digital 

tools such as audio and video. Shaza 

is now prototyping her product with 

the support of SINGA and a renowned 

university in Lyon. Abbas used to be an 

accountant in Afghanistan before he 

left for Italy, then France. His passion in 

life? Pizza. Abbas reinvented himself as 

the first at-home Pizzaïolo, bringing his 

oven with him to people’s homes, where 

he cooks and teaches small groups of 

friends how to make pizza with local, 

organic ingredients. Today, Abbas has 

become so popular he is turning down 

events and is looking to expand his 



“Everybody is a 

genius. But if you 

judge a fish by its 

ability to climb a tree, 

it will live its whole 

life believing that it 

is stupid. 

Albert Einstein 

business by creating 

training and job opportunities 

for other 

newcomers. 

SINGA’s inclusive approach 

also means 

that we are promoting 

solutions built with 

diversity instead of for 

diversity – a good way 

to avoid local resentment 

and contestations. 

When you aim 

to create social innovation and business for all with people 

who are refugees, you include local citizens. The bridge is the 

best to avoid the “us” vs. “them” distinction. We are promoting 

a plural and evolving sense of belonging. 

In many ways, what we have created through entrepreneurship 

is contributing to a new social architecture. When you build 

society and economy like a house, there are people inside 

and outside. You design windows to look out at others. You 

design doors and stairs, entryways, and means to ascend that 

are only accessible to those privileged enough to have made 

it inside. You discuss how your precious food and drinks, the 

only available resources, can be split with new roommates 

without affecting established tenants. You get into frenzied 

discussions over whether you should open the door or not. 

It is time to look at it differently. Big data, AI, and climate 

change challenge our definition of identity. We have plural, 

cross-borders, and evolutive identities. No matter our nationality 

or language, we can love the same sport or team, and we 

can commit to solving the same global issues together. We 

understand that migrants are not outside societies, they are 

also inside them. They do not come empty-handed; they bring 

human and intellectual wealth. Societies are not houses with 

unwavering foundations and impenetrable walls – they are 

shaped on common stories and experiences. They are the results 

of everyday human interactions, which may lead us to inventing 

the new penicillin or the next sustainable energy source. 

SINGA is a global community of refugees, migrants, and local citizens 

who are meeting in the present and building the future together. 

SINGA implements local incubators in 20 cities of eight countries 

to support migration-led citizenship and innovation. In each city, 

SINGA creates a value chain between the community, innovators, 

and their local ecosystems. 


39

FINANCING COMMON 

PROSPERITY 

“ 

To get all businesses involved in solving 

the world’s toughest problems, we must 

change the accounting rules. That’s why 

we need to ensure that corporate reporting 

makes clear how a company is making its 

money, not just how much money it has made. For every robust, 

time-tested measure of return on financial capital, we need 

another for social capital (the economic benefits that derive 

from cooperation among groups), and yet another for natural 

capital (the supply of natural ecosystems – think forests, oceans, 

mineral deposits), all of which are turned into valuable goods 

or services in the future.” 

Peter Bakker, President of the WBCSD and former CEO of TNT 



41

The Curse of the 

Carbon Bubble: 

How to Really 

Exit the Fossil 

Age 

New Hybrid Financial 

Engineering for a Low-carbon 

Economy in the 21st Century 

Prof. Dr. Dr. Stefan 

Brunnhuber 

Professor for Sustainability 

and Psychology 

Member of the Club of Rome 

Introduction 

The world has changed. We are now 

living in a new era – the Anthropocene 

– where everything is connected. At the 

same time, we are operating within 

geophysical planetary boundaries and 

face increasing levels of complexity, uncertainty, 

and acceleration. Such a “full 

world” confronts us with the challenges 

of asymmetric information, increased 

unwarranted liabilities and maturities, 

and uncontrolled feedback loops, which 

lead to vast direct and indirect costs 

and expenditures for damage control, 

spillovers, and negative externalities. 

What does this mean for the financial 

sector? The search for a new planetary 

balance will change our investment 

strategies, risk analyses, consumption 

patterns, political decision-making, and 

the way we do business. In fact, it will 

change everything – even our minds 

and consciousness. In the following, 

we address the prominent role of the 

financial sector as one of the key players 

in this shift. New financial engineering 

will be required as we move toward a 

new equilibrium. 

Eighty percent of our world economy 

depends on fossil fuels. On a global scale, 

this percentage has not changed since 

1971. However, within this time period, 

total primary energy consumption has 

tripled in absolute terms. Fossil fuels generate 

CO 2 

emissions that lead to global 

warming, and global warming is now 

considered to be the single largest threat 

to humanity. Robust scientific evidence 

has shown that going beyond the “2 

degree scenario” (2DS) will cause huge 

disruptions to our planet in the form of 

extreme weather patterns and the loss 

of biodiversity and natural habitats. It 

will significantly affect human life due 

to forced migration, the rise in uninhabitable 

regions, and food insecurity 


FINANCING COMMON PROSPERITY 

due to harvest loss, to name but a few factors. Although we 

have traditionally used a linear perspective to look at future 

trends, we will increasingly find ourselves confronted with 

non-linear tipping points, where no return to the earlier status 

quo is possible. 

If we take the 2DS as a political benchmark, then the so-called 

carbon bubble represents the financial correlate to this scenario. 

It will affect approximately $23–100 trillion in assets 

over the next two decades. This large range in estimation is 

related to the extent to which the fossil fuel value chain is 

taken into account. Of the 3 billion tons of fossil reserves still 

available on this planet, only 500 million tons can be used 

before reaching the estimated carbon limits of the 2DS. The 

rest of the fossil fuel reserves consist of stranded, unburnable 

assets that need to remain in the ground. In statistical 

terms: If we want to remain within the 2DS with 90 percent 

certainty, there is in fact no planetary carbon budget left, even 

with future food production and deforestation calculated in. 

This means that most listed companies will have to depreciate 

their balance sheets by up to one-third or more. Institutional 

investors with skin in the game in assets that are dependent 

upon fossil fuels will be forced to write off substantial parts 

of their investments. 

Flogging a dead horse 

This will relatively quickly lead to a depreciation of large 

cohorts of pension funds and privately funded social security 

systems, in particular those of the Baby Boomers. But as long 

as no alternative scenario is available, rational investors will 

stick to their assets as long as possible and resist change – 

even if the horse they are flogging is dead. In the period up 

until 2017, only $2.5 trillion of the estimated $23–100 trillion 

carbon bubble was divested. What we need is a different 

perspective on how to invest in the future. 

The six-pack 

The carbon bubble is part of a larger picture, expressed in the 

2015 UN Sustainable Development Goals (SDGs). A lot has 

been written about the SDGs, but little about how to finance 

them. Calculations demonstrate that the world community 

requires an additional $4–5 trillion every year to finance our 

future. About one-third of the goals are eligible for private 

investments, while two-thirds refer to the global commons. 

If we had endless time, our options would be unlimited. We 

keep pretending that we are in such a situation – but we are 

wrong. We have 10–15 years, at most, to significantly >> 


43

change the course of this planet for the better or for the 

worse. We do not have limitless time for academic discussions, 

further field studies, randomized controlled trials, or 

political propaganda or maneuvering, nor for endless expert 

panels or manipulated fake news campaigns. As our time is 

restricted, our options are limited, too, and we will have to 

carefully choose the tools and interventions that have the 

highest likelihood of changing the course of this planet for 

the better. We may also have to make bold decisions and 

adopt a multi-step approach to enable the world community 

to shift toward a more sustainable future. The longer we wait, 

the more limited the options and the smaller the window for 

opportunities will become. In the following, we introduce 

the so-called financial six-pack. It provides a rationale for 

operating within the given limits and will allow us to shift 

our society toward a sustainable model, ensuring the survival 

of our grandchildren and great-grandchildren. 

Regulation – harmonization – transparency 

Taxation, fees, and subsidies 

Impact funding 

Ex-swap strategies 

Private–public partnerships / private-citizen partnerships 

Parallel currencies 

List 1: The financial six-pack 

In the following, we describe the six most relevant financial 

engineering tools required to finance our future. They are 

structured like a staircase (see graph below). The staircase 

follows the following rationale: The more time we have available 

and the more strongly our world is built on multi-lateral 

agreements, the more we will be able to favor the lower steps. 

The less time and the more multipolar and bilateral our world 

becomes, the higher we will have to climb up those stairs and 

the more we will be forced to favor bold and unconventional 

monetary and financial decisions in order to put a more sustainable 

common future in place. Whereas there is increasing 

literature and empirical evidence concerning the lower steps, 

there is less awareness about the upper steps of our staircase. 

In fact, a “tragedy of the horizon,” as Mark Carney coined it, 

is associated with the issue. Global warming and its associated 

risks imply a time lag of 25–30 years between the initial carbon 

emission, the resulting climate impact, and the discount 

of any future impact. In short, the future will be over before 

it has even started. As neither the Paris Agreement nor the 

SDGs contain any politically binding criteria, a multi-step 

approach is required. 

Regulation – harmonization – transparency 

Since 2008 in particular, efforts to regulate the international 

payment and trading system have gained momentum. Most, 

if not all, academic and political attention has focused on 

regulatory efforts that seek to avoid, prevent, and manage 

future crises. There is general agreement that financial crises, 

especially idiosyncratic ones, cannot be predicted, and that 

systemic crises require additional regulatory effort to insulate 

the real economy from these more intrinsic perils. There has 

been a wealth of proposals, most of which focus on singular 

codes of conduct and rules, and some of which suggest replacing 

the entire system with an alternative – past examples 

include the Chicago Plan in the 1930s, the introduction of the 

gold standard, and its abandonment in the 1970s. 

Discussions cover aspects such as greater transparency and 

accountability; increase in the level of sound regulations; 

international cooperation and reinforced institutions; Basel III 

(plus); the recapitalization of the International Monetary Fund 

and the World Bank; a shift to more macro-prudential policy 

tools; and more surveillance strategies such as early warning 

exercises, mutual assessment programs, and peer reviews. 

This debate also refers to a variety of contributions on a different 

set of risk assessments, such as market-to-model versus 

market-to-market; the “too big to fail” argument; bonus programs 

for top managers; the impact of bail-in strategies along 

a liability cascade and contagion effects (from stock owners to 

borrowers to clients to the taxpayer); whether ratings agencies 

should serve as a public good, and so on. This list is not 

complete and not fully updated, as regulatory efforts since 

2008 alone would have filled a volume of some 35,000 pages. 

This process has also not come to an end. The argument on 

regulatory efforts needs to be more general and fundamental: 

Is regulating the monetary system currently in place the best 

way to achieve a maximum of output with regard to resilience, 

efficiency, and sustainability? Regulatory efforts always tend 

to be behind the curve, despite their ability to adapt to historical 

events. What if all these regulatory efforts produce a 

false sense of control over manifest reality? What if all these 

preventive regulatory efforts fail? What if regulation of the 

given system is a suboptimal, even wrong approach, like trying 

to put toothpaste back into the tube, making the overall 

system even less resilient to future adverse shocks? 

If we cannot predict idiosyncratic and random crises and events 

like black swan effects but want to stop them from becoming 



systemic risks, then regulating the given system may produce 

only limited results. It is somewhat like operating on the heart 

of a runner in an “Iron Man” competition while he is actually 

running. However, regulation has a moral and economic point 

to consider: A completely unregulated market is like forcing 

your six-year-old child to work on the streets shining shoes 

instead of going to school and becoming an MD, a teacher, an 

engineer, or a physicist. When we constantly regulate a system, 

we admit that we are unable to rely on the self-regulating or 

autopoietic power of the given, and thus implicitly admit that 

there is something wrong with the system’s design. Regulation 

is just the first step up the staircase. 

The beauty of taxation, fees, and subsidies 

There are dozens of very clever and thoughtful taxation schemata 

on how to refinance social and ecological goods and 

invest in the commons. The debate of the last 50 years has 

demonstrated the intellectual power of these schemata. With 

the high growth rates during the post–World War II period 

in particular, redistribution mechanisms involving fees and 

taxes successfully provided additional sources of revenue and 

income to finance social and ecological projects and public 

infrastructure. However, although times of high growth are 

now past, redistribution via taxation and fees has become more 

and more critical in a worldwide context. For example, if the 

poorest 20 percent of Scandinavian citizens are richer than the 

richest 20 percent in developing countries, the well-established 

and conventional way of redistributing money through taxation, 

fees, and subsidies becomes, at its best, one political tool 

among others, but it is not the tool to finance our future. 

To further clarify the argument: Most financial experts and 

academics agree that a carbon tax is the best redistributive 

measure. Theoretically, it would be the mechanism to shift 

corporates, consumers, and states away from the fossil age 

toward a low-carbon-oxid economy. But the argument has several 

flaws. Firstly, implementing a carbon tax would require a 

high level of global consensus, as states and corporates would 

otherwise be incentivized to avoid the tax. Secondly, a carbon 

tax would have a massive impact upon the entire value chain. 

Currently, the average barrel of crude oil costs around $10. To 

remain within the 2DS, a barrel would need to cost around 

$75–100, and this increase would need to happen within 

the next 10–15 years. This means that most products along 

the value chain would face massive price and cost pressures 

with hugely disruptive social consequences, which are next 

to impossible to anticipate. >> 

Sustainability 

accomplished 

80% 

System level 

SCR (SOCIAL CORPORATE 

RESPONSIBILITY) – SECTOR – 

SYSTEM: A THREE-STEP APPROACH 

Transformation curve 

20% 

by proxy sector 

value chain 

SCR & ESG criteria 

efficiency – adjustment – avoiding – 

rethinking – reducing – replacing – 

recycling 

lifestyle changes and modification – 

agricultural reforestation 

system – 

infrastructural changes 


45

In other words, the dilemma is the following: 

We have to increase carbon tax 

and reduce the direct and indirect subsidies 

for all fossil energy, which will 

make it possible to lower CO 2 

emissions 

in the atmosphere on a global level. At 

the same time, we have to reduce the 

tax burden and increase subsidies for 

renewables on a local and global level. 

Both of these strategies interfere with 

social and ecological tradeoffs on the 

local and global levels, such as overcoming 

poverty and hunger and protecting 

biodiversity, among other things. In such 

a complex, mixed, and unforeseeable 

situation, technology, taxation, subsidies, 

and regulation are part of the solution, 

but they are not the solution. Focusing 

only on taxation and regulation overlooks 

the speed, volume, and magnitude 

required to ensure the shift. Instead, 

it generates endless “socio-ecological 

paradoxes” and forces us to engage in 

multilevel re-regulatory efforts to compensate 

for unwanted social impacts. 

Such paradoxes are created when we 

want to do good and avoid harm, but they 

create the exact opposite. For example, 

if a nation representing 3–4 percent of 

the global burden of atmospheric CO 2 

decides to exit the fossil age, the shock 

caused by the drop in demand for fossil 

fuels would trigger a decrease in the 

prices of fossil fuels for the rest of the 

world, leading to increased consumption. 

The impact of impact funding 

Ratings are a tricky problem. On the one 

hand, it is crucial that we learn to differentiate 

between green and “brown” or 

“black” investments. However, studying 

corporate reality reveals that, on average, 

about 20 percent of all tangible and intangible 

assets as well as short-term and 

long-term spillovers can be managed and 

mitigated within the corporation only. 

Anything above this would cause the 

business to collapse. We can differentiate 

between three levels. 

1. SCR and ESG criteria on a 

corporate level. 

2. Sector level that implies value 

chains, customers, and clients as 

well as the social and ecological 

environment by proxy. 

3. Systemic level. This requires a shift 

in the incentives to make it happen. 

List 2: Ratings are tricky: from SCR 

to sector to system 

Corporate profits are near record highs 

but are realized on the basis of huge, 

unpriced, negative externalities. Such 

negative externalities are transferred to 

TAXONOMY is key to ensuring private equity 

impact-funding. There are initiatives by different stakeholders 

(NGOs, politics, the corporate world, science) 

with different interests and objectives that have to be 

reconciled. Essentially, we require a matrix that allows 

us to evaluate, measure, and compare the entire expenditure 

of human economic activities. This includes a 

“total costs analysis” upstream and downstream along 

the value chain; integral accounting; improved comparability 

for mergers and acquisitions; and measuring 

and evaluating the impact not only on profit, but on 

human wealth in general. In addition, we need a relative 

benchmarking for different sectors (such as aluminum, 

cement, agriculture) and between sectors, facilitating 

comparability as well as improving corporate decisions 

(de-risking) and public awareness on different levels 

(OECD, EU, G7, G20). Finally, we need an enabling 

environment for harmonized regulation and taxation 

that would set up a new global accounting system for 

every agent involved. Initiatives such as these that seek 

to better incorporate natural, social, and human capital 

have been around for at least 30 years. However, most 

of them already failed at the stage where the different 

stakeholders provide completely different views on 

the topic. For example, international accounting firms 

already have different opinions on how to evaluate and 

measure an upstream impact of child labor or water 

pollution on the corporate balance sheet. We might end 

up with three findings: relative banning, relative benchmarking, 

and single case-to-case approaches. 

tax payers and governments. Disruptive 

and involuntary system changes can lead 

to unprecedented suffering and costs. 

Any change by design is better than by 

disaster. We have to differentiate between 

the sign and symptoms on the one 

hand, and the overall root causes on the 

other. Whereas ranking refers to symptoms 

in the form of further transparency, 

information, and documentation, the 

root causes lie in the monetary system 

itself. A system change such as this does 

not mean that we have to do everything 

all at once at the same time, but we do 

have to consider (almost) everything to 

ensure this integral change. 

Generally speaking, investing in something 

is a commitment to the future and 



“impact investments” even more so because they consider not 

only the returns in terms of money, but also the “impact” such 

an investment can have upon social and ecological perspectives. 

The higher the impact, the better. In 2017, the value of 

such impact funds – where capital is primarily divested from 

the fossil sector into the green sector – totaled $250 billion. 

The taxonomy of impact funds (brown or black versus green) 

differentiates between good and bad investments in relation 

to their impact on social and environmental welfare (a “good” 

investment would involve no tobacco, no weapons, no coal, 

no alcohol, no child labor, etc.). In this respect, impact funding 

is the right choice. However, several aspects demonstrate 

that the matrix underlying impact funds is flawed. Firstly, 

the volume of funding is far too low and the speed too slow 

to guarantee any significant shift. Secondly, the approach is 

too silo and too micro, maximizing the interests of lobbies 

PRIVATE EQUITY FUNDS 

historically have high yields ranging 

between 19 and 25 percent annually. 

In a world where GDP grows by 

2–3 percent and private investors 

demand 10 times more, this revenue 

has to come from somewhere. 

In fact, most of it comes directly or 

indirectly from the lack of financing 

for public goods. This means that instead 

of funding public preschooling 

and collective healthcare; protecting 

against pollution; eradicating poverty 

and hunger; and averting the 

collapse of biodiversity, the money 

instead goes into the private sector, 

where “high-net-worth individuals” 

realize additional returns. A 19–25 

percent return for private equity, 

even with additional impact funding, 

is an unrealistic scenario in a world 

where the wealth gap is increasing 

and public common goods are underfunded. 

Private equity is a small 

part of the solution, but it is not the 

solution. 

without seeing the full picture on a macro level, which has 

to balance and reconcile the many different interests with 

each other. Thirdly, the impact funding strategy is skewed 

toward parts of the world with higher environmental, social, 

and governance (ESG) standards. This occurs at the expense 

of more vulnerable regions on the planet, where liquidity is 

most needed. Fourthly, the shift toward green bonds will put 

a risk premium on the old brown and black bonds, which 

will make conventional investors resistant to changing their 

portfolios or encourage them to simply greenwash their assets. 

All of this together will create further regulatory and 

documentation efforts and do little to nothing to change the 

negative impacts on the environment. 

Impact funds remain a complex, well-nigh unresolved story 

of excluding or banning industries. There is even a strong argument 

for remaining invested in critical industries in order 

to keep control over the executive management and steer 

it toward greater social corporate responsibility and higher 

ESG standards. Whereas theoretically the difference between 

a “green,” a “brown” (fossil), and/or a “black” (guns, drugs, 

alcohol, child labor) investment is easy to make, in practical 

terms such a taxonomy has to take into account all the different 

business models and corporate shares and interconnected 

corporate participation. In short: Are Volkswagen and Apple 

green or brown? Are SAP and Deutsche Bank green, brown, or 

black? Those corporates that fail to achieve the “green” label 

will withdraw their collaboration, as they might have to pay 

a higher risk premium on their assets. Finally, the strategy 

behind impact funding leaves the 2DS almost untouched, as 

we see below. 

Private vs. public financing of the commons 

From an investor’s perspective, agents who invest in state 

bonds, pension funds, and/or private equity and who are 

engaged in impact funds represent clients’ selective interests. 

These interests are fundamentally mismatched with those of 

the global commons. Financing the SDGs requires an agent 

or co-signer with provision and revenue interests representing 

the global commons themselves. The United Nations, the 

World Health Organization, and the World Bank are three 

examples of such agents. In addition, the more connected 

we are, the more we need to invest in common goods. A real 

initial impact investment honors the fact that the commons 

come first and private investment second; it honors the fact 

that taxation, fees, donations, and other forms of redistributive 

financing are too slow in speed and too low in volume to >> 


47

PRIVATE–PUBLIC CONTRACTING 

allows for a long-term perspective, especially in critical infrastructure 

such as energy, health, education, and telecommunications. 

In 2017, $90 billion was contracted globally, down 

from a peak in 2012 of $140 billion. The World Bank advisory 

offers blueprints and guidance on how to contract private- and 

public-sector interests. However, the devil is in the details. 

De-risking is the major issue, where both sides have to clarify 

who is going to take the risk in the case of “force majeure,” 

such as natural catastrophes, terrorism, or state failure. Who 

is the insurer of last resort? How to determine payments, 

and who is fully and who is partly compensated? What is the 

very nature of the financial assets (bond, bank financing, or 

corporate financing)? The International Center of Settlement on 

Investment Disputes associated with the World Bank seems to 

be just one institutional alternative among others. In order to 

de-risk the project for the private sector and make it bankable 

for the public sector, both sides have to give in: The private 

sector has to surrender its high-yield expectations and its shorttermism, 

and the public sector has to tackle corruption and 

bad public management. There is currently a tendency toward 

partisanism and to advocate for private-sector money instead 

of public procurements. 

ensure the required change. Financing 

of the commons should not be a transitory 

measure in the case of economic 

crises, but rather a constant monetary 

intervention to ensure ongoing societal 

transformation toward a sustainable 

future. 

From derivatives to hybrid ex-swaps 

During the last two decades, derivatives 

were the new kids on the block. In an 

unstable economic environment, it was 

rational for investors to buy first-, second-, 

or third-tier derivatives in order 

to reduce the risk of failure. The “hot 

potato” could be handed over to someone 

else, and at the end of the day, someone 

always paid the bill – mostly taxpayers. 

These times are over. The greater 

the extent of our global interconnection 

and the more a risk is identified 

as systemic, the less a derivative can 

help leverage or hedge the investment. 

Put the other way around: As long as a 

risk remains local or sectoral, a derivative 

is a rational instrument to hedge 

microeconomic risks. This is because 

diverging expectations regarding a risk 

can be leveraged by buying a derivative. 

However, the rise of our global interconnectedness 

causes risks to be shared at a 

systemic level, where they can no longer 

be geographically or sectorally isolated. 

Future expectations such as pricing in 

the impact of global warming will be 

more likely to converge than diverge. 

This explains the increase in asymmetric 

shocks, where the agents in question did 

everything right, but still they were hit by 

the unexpected consequences of negative 

feedback loops and fat tail events, all of 

which have widespread repercussions. In 

this situation, using a derivative of any 

sort is an irrational financial decision 

because rather than reducing risks, they 

produce further systemic risks and lead 

to additional costs. A rational investor 

in the era of the Anthropocene fully 

understands this risk assessment, and 

therefore requires a different financial 

environment in order to become invested. 

NIMBY (not in my backyard) 

When the Vatican, for example, switches 

from brown to green investments, it 

clears its own balance sheet. However, 

the situation in the real world has not 

changed at all, because the brown or 

black investments – for example a coal 

site, mine production, or child-laborintensive 

products – from which it has 

divested will still pollute the air and kill 

humans. Nor will this divestment change 

the working conditions for the children, 

whose labor will now be under different 

management that may be less competent 

than the former. This hot potato will 

thus be handed on repeatedly, but the 

ecological and social impacts will remain 

unchanged. In an unstable, non-linear 

complex scenario, only a so-called exswap 

asset makes sense: Swap the asset 



and close down and exit the previous one 

as fast as possible to avoid asymmetric 

shocks, non-linear feedback loops, and 

increasing costs of damage control. 

If such a global exchange bond or a global 

swap were created – where brown fossil 

fuel investments could be swapped for 

large-scale green investments – companies 

and investors would not face 

extinction but rather experience a very 

steep transition to different types of 

investments and businesses. These largescale 

projects could include things such 

as reforesting the Sahara, the electrification 

of Africa, and many others that have 

been outlined by various organizations. 

To overcome shareholder-value maximization, 

most ex-swap assets require a 

contract with the public sector, providing 

a co-signer with a long-term perspective. 

Globally, 200 fund managers manage $47 

trillion in assets, which is more than 50 

percent of global GDP. So, if we want to 

gain momentum for a change toward 

a low-carbon economy, we need to get 

these 200 fund managers in one room 

and tell them what to do. 

Hybrid private–public partnerships 

(hy-PPPs) 

The standard argument is that we have a 

lot of liquidity in the market. We simply 

have to create an environment that will 

enable private investors to make green 

investments. Indeed, there are close to 

$300 trillion in financial assets, in which 

institutional investors hold about $150 

trillion assets under management. Yet, 

less than 2 percent is invested in infrastructure 

or common goods, and about 

10 percent of investments have negative 

yields. If we think this proposal through 

to its end, we will end up living in a 

privatized world: The investors’ interest 

is to provide as much purchasing power 

as possible to fuel the consumption level 

of the Baby Boomer generation of the 

Western world. This is indeed a feasible 

scenario for about one-third of the SDGs, 

but not for the other two-thirds – these 

are (global) commons and require an 

entirely different financial approach to 

ensure our common future. One way to 

guarantee the financing of the commons 

is a co-signer principle, with a different 

public and a common protagonist’s skin 

in the game – a protagonist following 

a different agenda than privatizing the 

world. The federal public sector and 

the international multilateral development 

banks (European Investment Bank, 

World Bank, Asian or African Development 

Banks) are such candidates. 

In a fully connected world, there is no 

private without public – there are more 

and more hybrids. In fact, this situation 

requires a closer look with regard to the 

agents and protagonists involved. In a 

country with a low income level, a low 

tax base, low tax-collection levels, and 

a high debt burden, there are a variety 

of possibilities for the private and 

public sectors to generate additional 

liquidity to finance public goods. Each 

possibility follows a different protocol, 

risk assessment, liability, and type of 

politics. Done the right way, they reverse 

short-termism toward a long-term view, 

reverse maturity toward long-term yields, 

and honor and foster the relevance of 

public goods and infrastructure for a 

common sustainable future. 

Take the generally accepted UN human 

right for access to fresh potable water for 

every human being. Should we privatize 

this right so that all freshwater springs 

become a private equity and these equities 

are then sold to humans with 

private yields, which then increases the 

wealth of the owners of those springs? 

As more than 500 million people do not 

have access to fresh water, the owners 

of these springs would have to be taxed 

to generate sufficient revenue to ensure 

that those 500 million can exercise their 

right to access drinking water. Instead 

of this linear process of privatizing the 

commons and taxing the private yields, 

we could start creating hy-PPPs, where 

5 percent of the assets are private and 

95 percent public, for example. The 

public money comes from a monetary 

source in the form of parallel green 

additional liquidity (earmarked for this 

specific right, see details below). This 

combination can bring private entrepreneurial 

expertise and risk assessment 

together with a public co-signer (such as 

a governmental body or an international 

development bank). Yields, maturity, 

liability, and risks are split respectively, 

and both agents (private and public) 

have a long-term interest, creating a 

win-win situation with constant private 

revenue and more healthy people while 

meeting public interests at the same 

time: There will be fewer negative social 

spillovers, such as healthcare costs for 

the treatment of diarrhea. A healthier 

population is able to attend school, do 

business, pay taxes, extend their lives, 

and increase their own wealth and the 

wealth of nations in parallel. This is 

true for all global commons: fresh air, 

access to basic healthcare, schooling, 

protecting biodiversity, and reversing 

global warming, among others. 

A common is a common and remains a 

common as soon as we, as a world community, 

declare it a common. Private 

equity is private equity as soon as we, as 

a world community, declare and define it 

as a private asset. However, the financial 

tools for achieving both are different. 

Financing the commons as commons 

requires an entirely different approach 

than turning them into private equity. 

Do we want to live in a fully privatized 

world? No, we do not. Instead of >> 


49

violating the nature of the commons, we should adopt the 

financial architecture to the nature of the commons and not 

the other way around. This requires a shift in our mindset and 

a shift in the architecture of our monetary system. 

End-of-pipe financing and redistributive measures 

The most commonly advocated form of financing for our commons 

is so-called cofinancing, which constitutes the core argument 

in most, if not all, economic proposals on financing the 

social and ecological commons. So far, the staircase has been 

following this rational. Cofinancing has the following rationale: 

Goods and services freely traded on the market are taxed, and 

this revenue becomes the main source of finance for common 

goods. In this widely accepted view, the commons are secondary 

and subordinate to the activities of the free market. Only 

when the market generates sufficient yields and liquidity and 

the political will is strong enough are common goods eligible to 

be financed. This cofinancing strategy is a form of end-of-pipe 

technology, well known in engineering science: We first implement 

a technology, lifestyle, or economic activity that harms 

our environment (e.g., polluting fresh air), then add a filter at 

the end of the process (i.e., at the end of the pipe) in order to 

avoid too much damage. The cofinancing strategy follows the 

same rationale. The economy grows first, we take a certain 

amount of money (through tax or fees) from the added value 

chain, and finally distribute it to social and ecological projects. 

Parallel currencies 

So far, we have been working our way up the six-pack ladder, 

defining new financial engineering in the Anthropocene. One 

step – probably the biggest one – is still missing: a parallel 

currency system. This is necessary because the first five steps 

are unable to guarantee the volume of liquidity required and 

the speed we need to generate sufficient purchasing power. A 

parallel currency system is about additional, optional, targeted 

liquidity or purchasing power, running in parallel to the given 

system, designed (partly) differently to the well-established 

monetary system. It uses new technology (mainly distributive 

ledger technology) with a smart contract, earmarked to 

(mainly) finance our global commons and operate through 

complementary monetary channels. This mechanism would 

make it possible to steer economic decision-making, stabilize 

the overall economy, and orient our entire society toward a 

sustainable future in a coordinated way. 

A parallel currency system could be implemented through new 

third- or fourth-generation blockchain technology in digital 

form only, competing with bank deposits and conventional 

cash money as a medium of exchange, a store of value, and 

an international unit of account. It would operate in parallel 

to existing currencies and be eligible for the payment of 

taxes and wages. Such green “central bank digital currencies” 

do not settle wholesale inter-bank payments like reserves do, 

nor do they provide anonymity like cash does – they have a 

larger direct impact on the retail markets. They can achieve 

a significant welfare effect through targeted and earmarked 

outputs. This can happen through three alternative channels. 

Firstly, it can serve as a “citizen dividend,” whereby the additional 

money is given to private households either directly 

or via tax reductions, stimulating consumption. Secondly, 

the money is given to the public sector, stimulating public 

infrastructure (education, security, health). Besides this “public 

channel,” there is another, third channel. Here, the money is 

given to NGOs, SMEs, or local community organizations. In 

the traditional perspective, we generate unspecific, expansive 

growth in a first tier and then battle with regulatory efforts 

and transfer payment systems (fees and taxation) to generate 

enough money to finance ecological and social projects in a 

second tier. In this new approach, the money is distributed first. 

It is this pre-distributive design rather than a redistributive 

mechanism (end-of-pipe financing) that has the potential to 

shift and transform our entire society, moving it in the right 

direction. It will increase the overall welfare effect in the form 

of millions of green jobs, fewer illicit transactions, additional 

green growth, an enlarged green tax base, and reduced costs 

for negative spillovers and disaster management, among others. 

Such a parallel optional currency mechanism would provide 

targeted, programmable, identifiable, recordable financial 

transactions and earmarked and dedicated funds, avoiding 

fraud and corruption. This would create a new parallel marketplace 

for the 75 percent of the world population that has not 

been benefiting from the existing operating model. This new 

mechanism would also eventually become intertwined with 

the traditional sector and would provide central bankers with 

an additional monetary tool to achieve price stability, employment, 

and the global commons at the same time. The residuum 

left – meaning the additional liquidity injected through this 

mechanism – is determined by whether, and to which extent, 

the previous five steps of the six-pack have been completed. 

The multi-step approach to a sustainable future: the six-pack 

To note: In this perspective, the higher the global consensus 

is on the lower steps, the lower the necessary effort will be 

for all further steps. For example, if we can come up with a 

global agreement on regulating tax havens, common accountings 

standards, harmonized ESG criteria, and a global carbon 

tax, we may end up with less need for ex-swap asset strategies, 

public contracting, and a parallel currency system. The lower 

the level of global consensus achieved on the lower steps, the 

bolder the decisions will have to become on the higher steps. 

Assuming that we end up with next to no global governance 

consensus but still want to finance our future, we will have 



to make the effort to install additional 

parallel liquidity to ensure the transition 

from a high-carbon society to a 

low-carbon one. 

Conclusion 

What is required is an exit strategy aiming 

for a rapid phase-out of high carbon 

emissions and socially critical projects 

that not only guarantee the end of our 

high-carbon-oxid economy, but also 

lay out a plan to shift to a low-carbon 

economy, while consolidating existing 

collaterals such as pensions, private insurances, 

and so on. This procedure 

requires a new financial mechanism 

that differs from the approaches taken 

in the past, such as hedging, leveraging, 

and derivatives. 

The scope, speed, scale, and symmetry 

(4-S) of the challenges ahead should 

match the 4-S of the solutions. Unprecedented 

action must be taken, or we 

will have to bear unprecedented consequences. 

Thinking the unthinkable will 

be the most advantageous and rational 

strategy. A successful risk analysis requires 

overcoming the executive myopia 

and linear thinking predominant in 

corporate and public leadership, beyond 

the “least drama” and “lowest common 

denominator” scenarios. These “business 

as usual” scenarios have simply become 

far too expensive. What is required instead 

is an emergency-like transition to 

a post-fossil era. Finding the fastest and 

least disruptive way to do this is key, as 

time is not on our side. The new financial 

mechanisms described will make the 

world safer, more resilient, more foreseeable, 

and more certain. Traditionally, 

we have gone to vast lengths to regulate 

the given system with taxed economic 

activities and increased charity, philanthropy, 

and private pledges, and we have 

redistributed that money to social and 

environmental projects – with reasonable 

but insufficient results. 

To conclude, the multi-step approach of 

regulatory efforts – including stress tests; 

agreed accounting systems; total costs 

approaches; wise taxation and steered 

subsidies; private-impact funding with 

relative benchmarking; a negative ban 

list and case-to-case management; new 

ex-swaps that guarantee the phasing out 

of the fossil age; and hy-PPPs, which allow 

for a longer-term perspective – will 

finally achieve the necessary but hitherto 

lacking liquidity and purchasing power 

through a parallel currency system. All 

steps together provide the rationale for 

such a multistakeholder approach. 

If we consider the timeline of 15 years, 

the magnitude and additional volume 

required ($4–5 trillion annually) and 

the fact that half of the world population 

is living in either autocratic systems or 

failed states, achieving a global democratic 

mandate seems unrealistic. We 

require a bold and unorthodox approach 

on how to finance our future. Considering 

further the little leverage available 

on a corporate and sectoral level and 

the high amount of leverage possible 

through a systems change, there are six 

steps we have to accomplish as a world 

society. If we do this in a smart way, we 

will generate a situation beyond the 

tradeoff between social and environmental 

challenges: We will end up with 

millions of jobs, a cleaner environment, 

and a better place to live. The mechanism 

presented here – or a very similar one 

– will be the fastest and least disruptive 

way to ensure this change. 

Ex-swap strategies 

▲ Parallel 

residuum currency 

▼ 

system 

Private–public partnerships 

Private-citizen partnerships 

Mezzanine products 

Impact funding 

Taxation – subsidies – fees 

Impact 

Regulation – harmonization – transparency – SCR 

◄ Timeline 15 years ► 


51

Sheila Bonini 

Senior Vice President Private 

Sector Engagement at WWF 

1. Introduction 

Five years ago, sustainability was just 

beginning to shift from corporate philanthropy 

to an integrated business 

need. In my former role with McKinsey’s 

sustainability practice, I wrote about 

the management principles required 

for successful sustainability strategies. 

Steve Swartz and I saw that not only 

did environmental challenges pose real 

business risks, but that business could 

also play a positive role in solving some 

of the biggest threats to the planet. At 

the time, sustainability was still seen as 

a “nice to have,” but there was growing 

evidence that well-managed sustainability 

initiatives could be profitable. Indeed, 

meta-studies showed that addressing 

sustainability issues makes a positive 

financial contribution to financial performance. 

I highlighted the economic 

benefits of sustainability initiatives and 

illustrated how better organizational 

practices could help companies reap the 

value of sustainability. These practices 

included focusing on a few key issues 

(what we call “material issues” today), 

setting ambitious goals, communicating 

the benefits of sustainability, and 

creating accountability for sustainability 

across the organization. 

In my new role at World Wildlife Fund 

(WWF), I am acutely aware of the threats 

to our planet: from climate change to 

deforestation and land conversion, water 

scarcity, overfishing, and more. Governments 

and international conventions are 

failing to deliver the scale of change that 

is needed, and time is running out. Now 

more than ever, innovation and change 

must come from the private sector. I am 

optimistic because I know that companies 

have vast resources – from human 

and financial capital to technology and 

the global footprint needed to address the 

planet’s greatest ecological challenges. 

The good news is that businesses increasingly 

recognize the risk from climate 

change and other environmental chal- 



lenges. Environmental risks were at the 

top of the World Economic Forum’s 

annual Global Risks Perception Survey 

this year. Businesses are also getting the 

message that sustainability is a critical 

way to mitigate these risks. According to 

another study by United Nations Global 

Compact and Accenture, 76 percent of 

CEOs surveyed believe embedding sustainability 

into core business will drive 

revenue growth and new opportunities, 

and 93 percent regard sustainability as 

“critical to future success.” 

Sustainability is increasingly seen as core 

to the business, but it has yet to become 

fully embedded by companies across the 

board. The uptick in action to address 

climate change from business has been 

very welcome. Now we need to ramp up 

our climate goals and address other key 

ecological challenges such as deforestation 

and water stewardship. Finally, the 

market needs to better recognize these 

issues as being material to business, and 

businesses need to commit to greater 

accountability and transparency. The 

long-term cost of inaction would be 

staggering. Those companies that lead 

the way to a sustainable future will be 

the first to reap its rewards. 

2. Climate as material to business 

The average global temperature has 

already reached 1°C above preindustrial 

times, with dire consequences for 

economies around the world. From South 

Africa to Guatemala, nations face the 

prospect of shrinking freshwater supplies 

and dropping agricultural yields. 

According to the National Oceanic and 

Atmospheric Administration, extreme 

weather events are becoming more frequent. 

Since 1980, 241 weather disasters 

have saddled the United States with a bill 

exceeding $1.6 trillion. Disruptions from 

climate change are expected to continue. 

According to the Fourth National Climate 

Assessment produced by the US Global 

Change Research Program, losses in some 

sectors are expected to be hundreds of 

billions of dollars annually by 2100. 

To avoid the worst impacts of climate 

change, we need to limit planetary 

warming to no more than 1.5°C above 

preindustrial levels. To do that, we must 

completely decouple the global economy 

from carbon emissions and reach netzero 

emissions globally by 2050. That 

means zeroing out emissions from the 

energy we produce, the buildings in 

which we live and work, the vehicles 

in which we travel, the products we 

manufacture, and the food we eat. Companies 

are a critical element for reaching 

this goal. 

Increasingly, companies see climate 

change as material to their business. 

Focusing on environmental issues that 

are material to business is what makes 

the difference between sustainability 

and charity. Mozaffar Khan, George 

Serafeim, and Aaron Yoon’s research 

shows that companies that are strong 

actors on material sustainability issues 

significantly outperform those with poor 

performance on these issues. This suggests 

that investing in sustainability issues 

increases the value of the company 

for shareholders. This research has been 

corroborated by a Deutsche Bank and 

University of Hamburg survey of 200 

empirical studies that found a positive 

relationship between financial performance 

and environmental, social, and 

governance (ESG) standards. 

Business leaders are sitting up and taking 

notice: According to Ceres, 32 percent 

of companies now conduct materiality 

assessments, up from 7 percent in >> 


53

2014. According to the Power Forward 

3.0 report by WWF, Ceres, Calvert Investments, 

and CDP, more than 60 percent 

of Fortune 100 companies and nearly 

half of Fortune 500 companies have 

already set climate-related targets. The 

new threshold for ambitious climate 

action is “science-based targets.” Emissions 

reduction targets are considered 

“science-based” if they align with what 

the latest climate science says is necessary 

to meet the goals of the Paris 

Agreement – to limit global warming to 

well-below 2°C above preindustrial levels 

and pursue efforts to limit warming to 

1.5°C. According to the Science-Based 

Target Initiative, 554 companies have 

committed to setting such targets, and 

210 companies have had their targets 

approved by the initiative. Importantly, 

these science-based targets must cover 

emissions from a company’s direct operations, 

their electricity use, and their 

supply chain. 

A few years ago, only a handful of companies 

had set 100 percent renewableenergy 

goals. Today, 181 companies have 

signed on to the RE100 campaign, with 

at least 23 Fortune 500 firms, including 

Walmart, General Motors, Bank of 

America, Google, Apple, and Facebook. 

By boosting energy-efficiency measures 

and shifting to low-carbon energy 

sources, the private sector can realize 

cost savings up to $190 billion in 2020. 

Procter & Gamble, for example, has set 

science-based greenhouse gas targets, 

committed to 100 percent renewable 

electricity by 2030, and in the process 

has saved more than $500 million (since 

2010) by improving energy efficiency 

across their global operations. 

3. Integrating nature into business 

Climate is not the only environmental 

issue that business needs to address. In 

just the last 40 years, wildlife populations 

tracked by WWF’s Living Planet Report 

have experienced an average decline of 

60 percent. The news for freshwater species 

is particularly dire: Since 1970, they 

have declined on average by 83 percent. 

Nearly half of the world’s forests are at 

high risk of degradation or deforestation 

by 2030. 

Moreover, nearly 90 percent of the 

world’s marine fisheries have already 

been pushed to – or beyond – their 

limits. This rapid loss of biodiversity 

threatens the $125 trillion per year in 

services that nature provides – from 

clean air to clean water, food, fuel, medicine, 

and more. The year 2020 promises 

to be catalytic with regard to protecting 

biodiversity, as there is a strong civil society 

movement to galvanize public- and 

private-sector support for a new deal for 

nature and people that protects wildlife 

and their habitats. 

The business community has been slower 

to act on challenges such as deforestation 

and the conversion of natural ecosystems. 

Although these issues should 

be top of mind for many industries, 

too often business leaders see them as 

embedded in supply chains, and thus 

a problem that someone else needs to 

deal with. However, the consequences 

of not addressing them – including 

stakeholder backlash and economic 

losses – are quite serious. 

Many of the actions companies could 

take to mitigate these risks are ones 

they should be taking anyway to reduce 

their scope 3 (supply chain) emissions 

and avoid supply chain disruptions from 

land-based environmental issues such as 

deforestation. According to CDP Supply 



Chain, fulfilling the promises of the Paris Agreement will 

require businesses to play a key role in reducing emissions 

within both their operations and supply chains. Although 

most of the largest companies in the world now account for 

and report on the emissions from their direct operations and 

the electricity they purchase (scopes 1 and 2), they need to 

think beyond their direct operations to consider the carbon 

emissions of upstream and downstream supply chain links and 

actively manage their scope 3 emissions. Some companies are 

expanding their climate efforts to their supply chains (which, 

on average, account for four times more emissions than a 

company’s direct operations and often include land-based 

emissions). Walmart, for example, was the first retailer to set 

a science-based target for climate and launched Project Gigaton, 

a groundbreaking endeavor that aims to avoid 1 gigaton 

(1 billion tons) of emissions from its global supply chain by 

2030. Project Gigaton’s innovative structure enables suppliers 

to avoid emissions through a focus on energy, agriculture, 

forests, packaging, waste, and product use. Currently, more 

than 400 suppliers have already joined Project Gigaton from 

more than 30 countries. 

When McDonald’s set a science-based target – the first for a 

global restaurant company – it partnered with franchisees and 

suppliers to commit to reducing emissions from its restaurants 

and offices by 36 percent by 2030. Critically, the company also 

set a goal of reducing its emissions intensity (per metric ton 

of food and packaging) by 31 percent across its supply chain 

by 2030 from 2015 levels. To reach this target, McDonald’s 

will need to reduce emissions from the procurement of commodities 

such as beef and dairy. 

Goals for nature and land-based issues should not just be embedded 

in climate goals, they need to be addressed outright. 

On deforestation, many companies recognize the material 

risks that the issues pose to their business and have set zero 

deforestation goals. More than 400 companies have pledged to 

reduce their impacts on forests and the rights of forest-based 

communities, but fewer than half of these companies have plans 

with time-bound goals, and fewer still have strong monitoring 

systems in place. Moreover, only 45 percent of companies are 

reporting on their compliance. Of great help here will be the 

recently launched Accountability Framework, which provides 

harmonized guidance from the NGO community for companies 

looking to set and implement credible commitments to eliminate 

deforestation, the loss of other ecosystems, and human 

rights violations from commodity supply chains. Standardized 

definitions and guidance on the use of appropriate monitoring 

and reporting approaches should improve accountability to 

corporate commitments. Certification is the most used mechanism 

to achieve zero-deforestation pledges. According to Forest 

Trends, at least 85 percent of companies rely on third-party 

commodity certifications to identify commitment-compliant 

commodity supply. These certification schemes have had some 

success but are often not enough. Companies continue to cite 

the challenges of working in states and countries where insufficient 

regulations, incentives, or enforcement mechanisms 

hinder their sustainability initiatives. This particularly holds 

true in the most important areas for production – regions 

such as the Amazon, the Cerrado savannah, Sumatra, and 

Borneo – where weak enforcement and regulation, human 

rights issues, land-rights violations, and corruption are quite 

prevalent. >> 


55

A relatively new strategy called the “jurisdictional 

approach” shows promise as 

a complement to supply chain-focused 

efforts such as certification. The jurisdictional 

approach is a suite of models that 

seek to align diverse stakeholders – from 

governments to businesses, NGOs, and 

local communities – to find common 

ground around conservation, supply 

chain sustainability, and development. 

Although multistakeholder partnerships 

for regional environmental problems 

have been a common approach for decades, 

the jurisdictional approach takes 

this one step further and focuses on the 

political level, where land-use decisions 

are made and enforced. This approach 

typically combines land-use planning 

of production and protection areas with 

targeted policy interventions and market 

incentives while often utilizing climate 

finance. 

Walmart’s Project Gigaton encourages 

suppliers who source high deforestation 

risk commodities, such as palm oil, soy, 

and beef, to get involved in regional or 

jurisdictional approaches to reduce their 

impacts. As part of this effort, Unilever 

has engaged with the government of 

Sabah, which has committed to certifying 

100 percent of the state’s palm 

oil production to the Roundtable on 

Sustainable Palm Oil standard by 2025. 

Last September, Unilever announced 

that, in addition to its supply chain commitments, 

it would fund the restoration 

of 4,000 hectares in the State of Sabah, 

Malaysia, to provide a critical orangutan 

habitat. This is a great example of a company 

supporting ecosystem restoration to 

simultaneously reduce emissions, stem 

biodiversity loss, and safeguard critical 

water resources. 

4. Accountability 

Understanding the risk posed by environmental 

issues is often not enough 

for companies to successfully enact 

sustainability programs. Companies 

need incentives to shift their behavior. 

Signals from the financial sector have 

been a powerful tool for influencing 

corporate behavior, and the market is 

increasingly taking environmental issues 

into account. 

Public companies are increasingly facing 

pressure from shareholder resolutions to 

act on social and environmental issues. 

According to a Luc Hoffman Institute 

report, these shareholder resolutions 

have become more common, and the 

market is beginning to see majority votes, 

even in the United States, where in 2017 

some of the largest asset managers, such 

as BlackRock and Vanguard, voted for 

climate-related shareholder proposals 

for the first time. In 2017, more than 

two-thirds of filed shareholder proposals 

concerned environmental and social issues. 

Evidence shows that ESG proposals 

have spurred action within companies. 

Filing shareholder proposals can lead 

to improvements in performance on a 

specific environmental or social issue, 

even though such proposals typically 

do not receive majority shareholder 

support. The New York State Common 

Retirement Fund secured agreements 

with Duke Energy and ExxonMobil to 

produce a climate change risk assessment 

that includes an analysis of the 

Paris Agreement goals after shareholder 

resolutions pressured the fund to act. 

Public letters to stakeholders – such 

as the ones from BlackRock CEO Larry 

Fink – have caught the world’s attention. 

These statements have signaled the 

expectation that firms should be held 

accountable to address social and envi- 



ronmental responsibilities in addition to economic returns. 

Investors and analysts can also send a powerful signal by 

asking annual follow-up questions on the key environmental 

and social issues affected by companies. 

We are also beginning to see an increase in shareholder votes 

by large asset managers such as BlackRock, State Street, Fidelity, 

and Vanguard that demand more climate-related disclosures 

from companies. For example, ExxonMobil responded to 62 

percent of shareholders’ requests to increase transparency in 

the company’s report around risks related to climate change. 

Likewise, Shell responded to pressure from Climate Action 

100+ – a coalition of 340 global investors that controls more 

than $34 trillion in US assets – to set leading targets in the 

energy sector for climate goals linked to executive pay. 

Publicly listed companies are also under increasing pressure 

to disclose their business risks to climate change. Earlier this 

year, the Task Force on Climate-related Financial Disclosures 

(TCFD) reported that 785 companies and other organizations 

– including 374 financial firms with collective assets in excess 

of $118 trillion – were committed to supporting the 

TCFD, demonstrating a dramatic rise in support for increased 

disclosure just two years after the task force was launched. 

Companies are getting the message. Some 51 percent of companies 

now discuss climate change risks in annual financial 

filings, compared to 42 percent in 2014. However, the 32 

percent of companies that do disclose climate risks in their 

10-Ks are only looking at it from the angle of mitigating 

regulatory risk. 

Boards are also holding their companies to account. Strong 

executive- and board-level attention to – and prioritization 

of – sustainability is key to success. Setting public goals is 

essential: Companies are much less likely to fail on public 

goals than internal ones. According to Ceres, companies 

that have both board oversight of their sustainability initiatives 

and link their executive compensation to sustainability 

oversight are over two times more likely to have emissions 

reduction targets. Yet, whereas 62 percent of companies have 

some form of oversight for sustainability at the board level, 

only 13 percent have strong oversight practices that include 

board mandates and regular reports on sustainability from 

management. Moreover, whereas 65 percent hold senior-level 

executives accountable for sustainability performance, only 8 

percent link executive compensation to sustainability issues 

beyond compliance. 

A growing body of research indicates that creating executive 

incentives for sustainability is effective in boosting those firms’ 

efforts on environmental and social concerns. 

5. Conclusion 

When it comes to climate change and environmental degradation, 

business as usual is no longer an option. The private 

sector can move at the speed and scale necessary to address 

these issues. However, companies need to broaden their efforts 

beyond climate to include biodiversity and ecosystem 

loss. To make business truly sustainable, we need to establish 

incentive structures that ensure sustainability is synonymous 

with good business. 


57

Stronger Profit Potential 

for Companies 

That Serve 

Society 

Alex Edmans 

Professor of Finance 

London Business School 

Executives need to prioritize 

serving a social purpose if 

they want to achieve stronger 

and more sustainable profits, 

according to Alex Edmans, 

Professor of Finance at 

London Business School. 

He argued that the value a 

business creates extends 

well beyond the profits it 

generates. Professor Edmans 

likens the whole impact of a 

business to a pie – of which 

profits for investors are just 

one, albeit important, slice. 

The pie-splitting mentality 

Professor Edmans, who is also Mercers 

School Memorial Professor of Business 

at Gresham College, argued that a company’s 

value to society should be measured 

holistically to include stakeholders 

such as workers, customers, suppliers, 

the environment, and the government 

through taxes. 

Too many executives, he said, take from 

stakeholders’ slice in order to give a portion 

to investors. They view their business 

as a fixed zero-sum game. With that 

mentality, if you want to grow your slice 

you have to take it from other parts of 

business. A prime example of this kind 

of business was Turing Pharmaceuticals, 

which bought existing drugs, restricted 



supply, and jacked up prices. For Turing it was all about the 

profit slice, which it pursued with gratuitous price-gouging, 

taking the price of Daraprim from $13.5 to $750 (£10.3 to 

£575) per pill. 

“Unfortunately, some companies have the pie-splitting mentality, 

which is why there’s a serious crisis of public trust in 

business,” said Professor Edmans. “Companies can grow the 

pie by investing in all the stakeholders – improving working 

conditions, pioneering new products for customers, or 

reducing their environmental footprint. Profits then rise as 

a by-product of growing the pie.” 

“Actions primarily to benefit stakeholders may yet ultimately 

benefit investors – even if higher profits were never the 

primary objective of these actions.” 

The importance of growing the pie in turn implies that the 

most serious mistakes are errors of omission (failing to take 

a good action that will grow the pie) rather than commission 

(taking a bad action). A company that pollutes or engages in a 

share buyback is often seen as irresponsible. But in Professor 

Edmans’ vision the most irresponsible behavior a business 

can indulge in is maintaining the status quo and failing to 

innovate – such as Kodak. The company’s failure was in 

omission not commissions: It stuck to producing film and was 

slow to move into digital cameras. It failed its shareholders by 

struggling to make a profit, and it also let down stakeholders 

– workers lost their jobs, and customer demand for digital 

cameras was not satisfied. 

Responsible pie-growing business 

Instead, Professor Edmans argued, the best way to increase 

investors’ share is to grow the pie by creating value for not 

only them but also stakeholders. 

The most responsible action that a company can undertake 

may not be to cut CEO pay, but to take risks and innovate – 

such as Vodafone launching M-Pesa, the mobile money service. 

M-Pesa was a service that enabled mobile customers in Kenya 

and Tanzania to transfer money using mobiles. Kenya and 

Tanzania were not huge markets nor obviously profitable, but 

the social need for the service was great. However, through 

M-Pesa, Vodafone has grown its reputation in what are now 

fast-growing frontier markets. 

Similarly, pharmaceutical giant Merck’s decision to give away 

the cure to river blindness was not profitable, but the move 

has done much to enhance the company’s reputation and 

attract key talent. More broadly, Professor Edmans’s TEDxLBS 

talk, “The Social Responsibility of Business”, discusses the 

“To be a successful 

business, you are 

going to need to do 

things which your 

competitors aren’t 

doing [...]. 

Alex Edmans 

large-scale evidence that companies that treat employees, 

customers, and the environment well also deliver high longterm 

returns to investors. 

Professor Edmans recognized that even a pie-splitting profitfocused 

manager will invest in stakeholders, because he or 

she will recognise that it is necessary to, say, train workers to 

become more profitable. But he will only invest if the expected 

profits outweigh the cost. Calculating the future payoff is 

particularly difficult in modern business, where many outcomes 

are unprofitable, Professor Edmans observed. Freeing 

a company from the constant need to justify an investment 

through profit forecasts will, surprisingly, enable it to become 

more profitable because it invests more. 

“To be a successful business, you are going to need to do things 

which your competitors aren’t doing, making investments 

your competitors aren’t making… making investments which 

can’t be justified by a mathematical calculation,” advised 

Professor Edmans. 


59

No Sustainable 

Development 

Without Tax 

Transparency 

Tax and payments to 

governments are some of the 

most important sources of 

income for governments and 

play a vital role in enabling 

the achievement of the 

Sustainable Development 

Goals. It is through tax and 

payments to governments that 

companies – large and small – 

contribute to society. 

Recent tax-related scandals, such 

as the release of the Panama 

and Paradise Papers, have led 

to public debates around the 

world and a growing demand from investors, 

civil society, media, and governments 

for more information on how 

companies approach taxes. 

The current state of public tax reporting 

leaves much to be desired. A recent study 

by RobecoSAM indicated that only 17 

percent out of 830 companies surveyed 

were reporting publicly on tax payments 

at a country level, and most of these 

were only operating in a single country. 

Colin Mayer, Academic Lead of Future 

of the Corporation Programme at the 

British Academy, writes: “Globalization 

has proven highly rewarding for 

an increasingly concentrated pool of 

corporate owners, but it has also alienated 

and displaced other interests. 

It has raised incomes in low-income 

countries but concentrated wealth in 

high-income countries. In the UK and 

US, corporate tax rates declined from 

around 40 percent in 1980 to 25 percent 

by 2015. Erosion of corporate tax has 

created opportunities for those with 

higher personal income tax rates to 

use corporations as vehicles for deferral 

of taxes.” 

Corporate tax avoidance in Europe is 

estimated to cost EU countries €50–70 

billion a year in lost tax revenues. Tax 

payments are an important component 

of corporate governance, and the 

Panama Papers scandal has brought 

the issues of governance and credibility 

back to the forefront of the corporate 

dialogue. 

“The Panama Papers are a reminder that 

much remains to be done to address 

the policies that allow millions to be 

hidden offshore from tax authorities,” 

said Angel Gurría, Secretary-General, 



On June 21, 2016, the European Council agreed on a draft 

directive addressing tax avoidance practices commonly used 

by large companies. The directive is part of a January 2016 

package of Commission proposals to strengthen rules against 

corporate tax avoidance. The package builds on 2015 OECD 

recommendations to address tax-base erosion and profit-shifting. 

The Commission proposals require large multinational companies 

to disclose publicly the income tax they pay within the 

European Union, country by country. In addition, they would 

be asked to disclose how much tax they pay on the business 

they conduct outside the EU. 

Organisation for Economic Co-operation and Development 

(OECD), during the Opening Session of the OECD Forum on 

Responsible Business Conduct in June 2018. 

“Stakeholders need and expect consistent, quality information 

about tax and payments to government in order to have an 

informed public debate around questions of equity, fairness, 

and acceptability of tax approaches,” says Judy Kuszewski, 

Chair of the Global Sustainability Standards Board at the 

Global Reporting Initiative (GRI). “Tax revenues and their 

application are essential to society’s ability to deliver on the 

Sustainable Development Goals. Likewise, tax transparency 

promotes trust and credibility in the taxation system and in 

the tax practices of companies. It enables stakeholders to make 

informed judgments about whether a company’s position on 

tax and payments to governments reflects society’s priorities 

and creates a reliable basis for decision-making.” 

Stop letting the fox keep the geese 

Companies should be prepared to face increasing pressure 

and regulations regarding transparency on corporate tax 

payments. Many individuals and organizations around the 

world are already working to promote the accurate disclosure 

of corporate tax payments. 

Corporate Europe Observatory released a study detailing how 

the “Big Four” accounting firms – Deloitte, EY, KPMG, and 

PWC – influence EU tax policies, despite their obvious conflicts 

of interest as designers and providers of tax-avoidance 

schemes to multinational corporations. Despite all revelations 

of their assistance in tax avoidance since the Luxembourg Leaks, 

the Big Four increased their public procurement contracts 

for advising the EU Commission from €7 million in 2014 to 

€10.5 million in 2018. 

Sven Giegold, financial and economic policy spokesperson 

of the Greens/EFA group and the European Parliament, commented: 

“Paying and courting the fox to keep the geese has 

to stop! We need EU institutions with integrity to win tax 

justice. The EU Commission has to stop giving EU funding 

to the tax-avoidance experts for advice on tax justice and 

employ sufficient independent expertise.” 

Reforming corporate taxation 

As national economies become increasingly integrated, there 

have been growing calls from around the world – including 

investors, governments, and broader civil society – for more 

corporate reporting on tax. Colin Meyer, Professor of Management 

Studies at the University of Oxford, says: “Corporate 

taxation is in need of urgent reform, and several alternatives 

have been considered. One involves shifting both corporate 

and personal taxes from a focus on production to consumption; 

another is to move personal taxation to an accrual basis. 

There are limitations to both. A third approach is to consider 

how corporations can be encouraged to promote a more socially 

responsive agenda that includes a willingness to pay a 

‘fair share’ of taxes as part of their corporate purposes.” >> 


61

CLEVER OR CUNNING? 

THE SHELL CASE 

The Dutch are considered calm and prudent, but this news 

caused indignation: Shell has paid no tax on its profits 

booked in the Netherlands for years, reported the Dutch 

newspaper Trouw, quoting an internal document from the 

Dutch finance ministry. The company did so by using legal 

deductions to minimize its tax quota. The documents reveal 

that the Dutch treasury lost as much as £6.1 billion on 

missed taxes over the years, while Shell’s net profits have 

ranged from €2 billion to €55 billion annually. What happened? 

The Guardian writes: “The arrangement dates back 

to the Anglo-Dutch company’s merger of its two branches to 

establish a single headquarters in The Hague. During discussions 

over the move, the Dutch tax authorities agreed to 

exempt its UK-based shareholders from paying a withholding 

tax on dividend payments if they were routed through 

Jersey.” 

The recent news revealed by the Dutch newspaper 

reopened the debate on tax honesty. Politicians called for 

the European Commission to investigate the oil company’s 

tax affairs. Paul Tang, a Dutch MEP, told The Guardian: 

“The probability that the European Commission will go after 

this tax arrangement with Shell is huge. With European 

law in hand, this construction can be reversed.” The Dutch 

Parliament’s financial affairs committee asked Shell to 

send a representative to attend a hearing. But Shell’s Board 

reacted stubbornly, with its CEO declining the invitation, 

saying it would make more sense for a business association 

to attend. The committee was snubbed. The Guardian 

reported: “Politicians of all parties said they wanted Shell 

to attend. Lawmaker Pieter Omtzigt said in a statement the 

parties had unanimously asked parliament’s chairwoman to 

‘forcefully’ ask Shell to come.” The whole case comes at an 

inconvenient time for the oil company. Environmental campaigners 

are calling for “climate damages tax” and launching 

legal action against Shell. The divestment movement is 

also campaigning harshly against all fossil fuel industries. 

Both groups argue that, as quoted in The Independent: 

“Shell is one of the 100 fossil fuel producers responsible for 

71 percent of greenhouse gas emissions since 1988.” 

“Inaction on climate change from governments and businesses 

is increasingly seeing citizens use the courts to call 

time on the destructive excesses of the fossil fuel industry 

and to force investment in sustainable energy,” said Harjeet 

Singh, ActionAid’s global lead on climate change, to The 

Independent. “Forcing companies like Shell to change their 

ways must be part of the transition to a low-carbon global 

economy.” 

The EU already requires companies with 

activities in the extractive and forestry 

industries to disclose the payments they 

make to governments on a country-bycountry 

basis and, where appropriate, 

on a project-by-project basis. 

The G20 also has an important role to 

play in putting pressure on the jurisdictions 

to commit and implement internationally 

agreed standards on transparency 

and to ensure that the information 

provided by companies is comprehensive, 

comparable, and accessible. 

As countries develop their implementation 

plan to achieve the Sustainable 

Development Goals, there is an opportunity 

for countries to strengthen their 

tax transparency regulatory systems so 

that they can count on domestic tax 

revenues as a source of financing for 

development. Target 17.1 specifically 

states: “Strengthen domestic resource 

mobilization, including through international 

support to developing countries, 

to improve domestic capacity for tax and 

other revenue collection.” 

Increased transparency on corporate 

tax payments is expected 

A future where disclosure of the taxes 

paid by businesses is common international 

practice is one step closer. It was 

in this context that proposals for a first 

global standard on tax and payments to 

governments were initiated by the GRI 

Global Sustainability Standards Board 

(GSSB). Therefore, “Tax and Payments 

to Governments” will be a new category 

with own indicators to measure transparency 

and sustainability. With this, GRI 

leverages the work done by the OECD 

with its Guidelines for Multinational 

Enterprises, and the GSSB will take a 

decision whether the GRI Standards will 

need to be updated to reflect the international 

consensus. 



The Grand Theft 

In the European Union alone, at least €825 billion in taxes are evaded every year. This is the result 

of the study “The European Tax Gap.” The author, Richard Murphy, a tax expert and professor at 

the University of London, admits that the sums are only rough estimates. After all, they are the 

result of illegal activities that are deliberately concealed by the perpetrators, such as undeclared 

work. One “popular” method is the so-called carousel model. The faster the carousel turns and the 

more national borders are crossed, the more difficult it is for national authorities to understand. 

There are three particularly audacious examples. 

VAT CAROUSEL 

Tax fraudsters steal at least €50 billion from governments. 

Reporters from 30 countries discovered the massive graft that 

is hitting Germany particularly hard. A Deutsche Welle article 

explains the model: “The scheme resolves around the trade 

of goods such as cars and mobile phones and even uses other 

high-cost items such as CO 2 

emissions certificates. Taking 

advantage of each European country having a different value 

added tax (VAT), the criminals move the goods from one EU 

member state to another, claiming back millions in tax reimbursements 

that they never paid or earned in the first place.” 

Company B acquires goods from company A. 

From its point of view, it is an intra-community 

acquisition, which means that B has to pay VAT, 

which it can later deduct on its VAT declaration. 

Company A sells goods to 

company B. From its point of 

view, it is an intra-community 

delivery, which is exempted 

from VAT. 

VAT 

0% 

B 

Company B does 

not pay VAT 

Company B resells the goods to company 

C, which is located in the same country. 

It is a local sale: company B charges VAT 

to company C. 

Company C 

deducts VAT 

VAT 

x% 

Another EU member country 

Company C purchases the 

goods from Company B. C 

pays VAT to B. 

A 

FISCAL AUTHORITIES 

Company C 

pays VAT 

C 

EU member country 

VAT 

0% 

Company D can resell the goods to 

company A. It is an intra-community 

delivery: Company D charges 0% VAT. 

Company D deducts 

VAT paid to 

company C 

D 

VAT 

x% 

Company D purchases the 

goods from company C. It 

pays VAT to company C. 

Company C resell the goods 

to company D. It is a local 

sale: Company C charges VAT 

to company D. 

Source: ASD Group 


63

CUM-EX DEALS 

Through so-called Cum-Ex deals with taxes, states are cheated 

of enormous sums. Across Europe, the damage amounts to 

approximately €55 billion, according to the media. This is how 

it works: A tax is paid once and reclaimed several times by the 

treasury. The scheme involves banks, accounting firms, financial 

houses, and law firms across Europe and the United States. 

Before dividend payment (Cum) Dividend payment date After dividend payment (Ex) 

Corporate 

A 

A owns shares. 

A 

A receives 

the dividend. 

A receives 

a certificate, 

with which 

they receive 

a tax refund. 

A 

A sells the shares. 

B 

B sells shares without 

already owning them 

(short sale). 

B 

B delivers the shares 

without a dividend, but 

with a compensation 

payment without a tax 

deduction. 

C 

The buyer is entitled to 

shares and dividends. 

C 

Twenty-five percent 

goes to the tax 

authorities 

(capital gains tax). 

C receives a 

certificate with 

which they 

receive a tax 

refund. 



PANAMA PAPERS 

The so-called Panama Papers have been the biggest data 

leak so far: 11.5 million leaked documents have reveal financial 

information on almost 215,000 offshore companies. 

The documents were taken from Panama-based law firm 

Mossack Fonseca. The leaks have included the personal financial 

information of wealthy individuals and public officials 

that had been kept secret. Reporters found that Mossack 

Fonseca’s mailbox company was used for illegal purposes, 

including fraud, tax evasion, and bypassing international 

sanctions. 

The real owner can do what they 

want with the hidden money 

without revealing their own name, 

for example buy mansions, yachts, 

shares, etc. 

4 

Persons want to hide money 

or conceal its origins. They 

contact Mossack Fonseca. 

1 

3 

2 

The dummy director signs all 

legally required transactions 

without the true owner having 

to appear. 

Mossack Fonseca helps to 

set up a mailbox company 

and, if desired, appoints a 

dummy director. 


65

DISTRIBUTION 

OF PROSPERITY 

Whose 

Prosperity 

Are We 

Talking 

About? 

The retreat into the national sphere is in 

vogue – especially in the industrialized 

countries. The election results 

between Washington and Brasilia, 

between London and Budapest reflect 

citizens’ concerns about the negative 

consequences of globalization. However, 

an international globalization report 

shows that the winners of globalization 

are often right where the criticism 

of globalization is loudest: in the 

industrialized countries. 



67

CUMULATED INCOME GAIN PER INHABITANT SINCE 

1990 IN PERCENT 

1 China 518 

2 Hungary 356 

3 South Korea 352 

4 Chile 327 

5 Poland 290 

6 Slovenia 290 

7 Romania 268 

8 Estonia 263 

9 Bulgaria 258 

10 Portugal 239 

11 Greece 232 

12 ... Ireland 231 

21 ... Germany 148 

38 Great Britain 63 

39 Mexico 56 

40 Argentina 51 

41 USA 39 

42 Norway 23 

Source: Bertelsmann Stiftung 

People in the industrialized countries 

benefit the most from increasing globalization. 

This is the key finding of the 

Bertelsmann Stiftung’s Globalization 

Report 2018. The report calculates the 

degree of international interconnectedness 

and the resulting increases in real 

gross domestic product (GDP) per capita 

for 42 industrialized and emerging countries. 

“The report shows: Globalization 

can clearly create welfare gains,” says 

Aart De Geus, Chairman and CEO of the 

Bertelsmann Stiftung. “Protectionism 

is not the right way forward. However, 

globalization must be shaped in such a 

way so the focus is on the people. This 

is the only way we can live up to our 

promise of success.” 

Switzerland profits most from globalization, 

India comes in last 

During the period under study, real GDP 

per capita grew by an average of around 

one trillion euros per year as a result of 

increasing globalization across all 42 

countries surveyed. This corresponds 

roughly to the economic output of a 

medium-sized economy such as Mexico 

or South Korea. In all countries surveyed, 

real GDP per capita growth is positive. 

However, the amounts differ significantly 

from country to country. 

The Swiss benefit the most. In Switzerland, 

the GDP per capita resulting from 

increasing globalization grew on average 

by €1,910 per year between 1990 and 

2016. In India – the last-ranked with 

respect to globalization-related welfare 

gains – this figure rose by an average of 

only €20 per year. China also recorded 

below-average gains (€80 per year). 

The main reason for these low growth 

rates in the emerging countries is the 

low starting level of GDP per capita when 

the measurements were taken. Emerging 

countries such as China and India were 

only in the early stages of a dramatic 

growth curve in 1990, and thus they 

performed worse overall in terms of 

absolute gains than industrialized countries, 

which were already more globally 

interconnected at that time. 

Better distribution of globalization 

gains is needed 

From the Bertelsmann Stiftung’s perspective, 

one of the biggest issues of 

globalization is the unequal distribution 

of globalization gains between industrialized 

and emerging countries, but also 

within states. Since the industrialized 

countries have had higher economic 

performance levels per capita for a long 

time, absolute globalization gains are 

also significantly higher, and therefore 

difficult for the emerging countries to 

catch up with. Dr. Cora Jungbluth, economic 

expert at the Bertelsmann Stiftung, 

sees a revival of the WTO trade rounds as 

a possible solution: “We must promote 

an international economic order that 

does not promote the right of the strongest, 

but sets common binding rules and 

standards,” says Jungbluth. “Only in this 

way can globalization profits be distributed 

as widely as possible.” According to 


DISTRIBUTION OF PROSPERITY 

“ 

Any sustainable prosperity agenda would 

go well beyond CSR or the greening of 

supply chains, and make it the ‘new 

normal’ to act on the pressing challenges 

of the day. This includes such things as 

food security, fuel poverty, and climate 

change. The SDGs can act as the growth 

strategy and innovation space for the 

businesses of today and tomorrow. 

Henrietta L. Moore, 

Director of the Institute for Global Prosperity 

the Bertelsmann Stiftung, this includes 

market openings in emerging countries 

as well as the reduction of subsidies in 

industrialized countries. 

In the industrialized countries, Bertelsmann 

Stiftung experts also see the need 

to ensure that the obvious and tangible 

benefits of globalization are distributed 

in such a way that all citizens participate. 

“We can see from the data that 

globalization is bringing us significant 

welfare gains,” says Jungbluth. This is 

why awareness must be strengthened 

in the industrialized countries that integration 

with the global economy – as 

long as it is based on internationally 

recognized rules and standards – brings 

material benefits. 

Going beyond GDP 

ABSOLUTE INCOME GAINS PER INHABITANT (%) 

BETWEEN 1960 AND 2016 (IN EUROS) 

Rank Country Average p.a. Accumulated Profit 

1 Switzerland 1913 49,730 

2 Japan 1502 39,046 

3 Finland 1410 36,664 

4 Ireland 1261 32,794 

5 Israel 1157 30,080 

6 Germany 1151 29,922 

7 Denmark 1150 29,904 

8 Netherlands 1080 28,072 

9 Slovenia 953 24,768 

10 South Korea 908 23,598 

11 Austria 904 23,491 

12 ... Greece 894 23,254 

38 Mexico 122 3175 

39 Russia 116 3004 

40 Argentina 110 2862 

41 China 79 2049 

42 India 22 567 

Source: Bertelsmann Stiftung 

“What we measure affects what we do. If 

you measure the wrong thing, you will 

do the wrong thing. If you don’t measure 

something, it becomes neglected, 

as if the problem did not exist,” says 

Nobel Prize winner Joseph Stiglitz in 

a recent OECD presentation. For years, 

economists have been searching for a 

new definition of well-being beyond 

GDP. Henrietta L. Moore, Director of the 

Institute for Global Prosperity, brings the 

fragile interdependency between profit 

and purpose to the point: “A prosperous 

society is not necessarily a society that is 

wealthy – although a strong economy 

is an essential part of it. Instead, it is 

a society that is inclusive, sustainable, 

and capable of offering its residents 

the ability to have a fulfilling life. This 

has sparked an interest in new types of 

conversations about the most efficient 

ways in which economic resources can 

translate into well-being for both people 

and the environment.” She adds: “This is 

not just a matter of ceasing to externalize 

the costs of pollution and deterioration, 

but recognizing that the planet’s assets 

are common assets and must be protected, 

maintained and regenerated.” 


69

When your music is global, 

so too is the influence you 

exert, and while some artists 

have hastily sought out the 

protection of publicists, 

agents, and blacked-out 

limousine windows, Coldplay 

frontman Chris Martin has 

chosen to pursue a rather 

more visible, audible route 

toward cultural change. 

By Danny Bowman 



Chris Martin’s willingness to 

speak out is well-known. As 

much as it has served him as a 

respected statesman of political 

pop, by his own admission there have 

been occasions when he has found himself 

banished to the Bono or Bob Geldof 

corner of global philanthropy. “It’s not 

a place I’ve ever sought out,” he laughs. 

In truth, it is an unfair slant for an artist 

whose lyrical prowess is simply a reflection 

of a genuine plea to see us move 

somewhere closer toward global equality. 

He credits the birth of his daughter 

Apple – with filmstar former wife 

Gwyneth Paltrow – in 2004 as being 

the point at which things changed. 

“Things really began to gather pace,” he 

explains. “It’s not as though global ills 

weren’t in my mind before then, but 

I think when you have children, your 

perception of pretty much everything 

intensifies. I also began to appreciate 

the fact that on stage, in interviews, and 

through lyrics, musicians have perhaps 

a greater ability to influence and to get 

people thinking about things than almost 

anyone else. If you can get the right 

melody with the right message,” he continues, 

“you’ve got an ethical, everlasting 

message that will stay in someone’s 

head for a long time, and to not use that 

opportunity would be wrong.” 

Martin’s first major foray into philanthropy 

came in 2002, when he accompanied 

Emily Eavis – co-organizer of the 

legendary annual Glastonbury Festival 

– to the Dominican Republic and Haiti 

to be shown where money donated by 

the festival to Oxfam had been invested. 

It was also a trip that opened up the 

singer’s broader understanding of the 

power and importance of the fair trade 

concept, something he would go on to 

explore further in future overseas trips, 

not least three years later in Ghana – 

again with Oxfam – as part of the Make 

Trade Fair project. 

From the moment the touring party 

left the parking lot at the Dominican 

Republic’s main Punta Cana Airport, the 

realization quickly dawned that Western 

minds were not solving the crisis, they 

were exacerbating it. 

“The first thing was the tough working 

and living conditions people were having 

to endure,” he says, “and at the heart 

of these were the grossly unfair trade 

rules. In cloud cuckoo land where we 

live, I don’t think we appreciate what 

those people have to go through just to 

survive every day. The difference in real 

money that ends up in people’s pockets 

when countries such as the Dominican 

Republic and Haiti sell their product to 

a fair trade company – as opposed to 

when they sell it to a ‘fat-boy’ company 

like Nestlé – is profound,” says Martin. 

“To us, as consumers, it’s about 20 pence 

per jar, yet to the grower, it can be up to 

$90 per hundred-weight of coffee. That’s 

a week’s worth of food.” 

In Haiti, things were slightly better, with 

cooperatives already using nurseries to 

cultivate the best crops, then handing 

them out to each farmer who had signed 

up for the scheme. 

“We met a farmer – he told us that when 

he sells his coffee to a fair trade company, 

he gets paid almost three times as much. 

Trade justice, put simply, is a matter of 

life and death, but it’s also about human 

dignity and equality.” 

The musician also admits to being 

shocked at the quantity of unwanted 

Western goods that were being “dumped” 

on the island. >> 


71

We met a farmer – he told us that 

when he sells his coffee to a fair trade 

company, he gets paid almost three times 

as much. Trade justice, put simply, is 

a matter of life and death, but it’s also 

about human dignity and equality. 

Chris Martin 

“From the outside you’d see this as a good 

example of how produce wasn’t being 

wasted – here we were, the so-called 

developed world, passing on massive 

bulkloads of items, and this is all being 

encouraged by the governments on the 

island. And yet, on closer inspection, this 

wasn’t a good thing at all. When these 

products land, they help people in the 

short-term, but very quickly obliterate 

the ability of producers on the island 

to sell their own cultivated goods. And 

the knock-on effect from that is to stifle 

consumer spending going into other 

areas, so the whole thing retracts.” 

While Chris Martin’s experiences take 

him back as far as 15 years, the painful 

reality of Haiti and the Dominican 

Republic – just as in so many other 

Third World or remote nations – is 

that this practice continues today. Indeed, 

the 2010 earthquake on the island 

obliterated some advances that 

had been made. The premise – at its 

lowest marketed denominator “to feed 

starving children” – will always appear 

admirable, but whether the crop is rice, 

peanuts, or anything else, it traps people 

in hand-to-mouth poverty and starts a 

chain of dependency that is pernicious 

in its process. 

“It was such a shift in the whole concept 

for me,” continues the Coldplay frontman. 

“It was strange to think that something 

we regarded as so virtuous and honest 

could actually be doing harm.” 

In Ghana, his criticisms were again 

aimed at the higher powers, with the 

national government seemingly happy 

to import from the likes of Thailand 

and America, to the detriment of its 

own producers. 

“It was extraordinary to see a country 

that was trying to let its rice farmers 

do well, yet its actions were doing the 

opposite as it continued to import stuff 

really cheaply.” 

In March 2019, Ghana’s Akufo-Addo 

administration did, in fact, launch a new 

initiative to end the estimated $1 billion 

annual importation of rice by the year 

2025. Certainly, the nation’s vast fertile 

lands and excellent human resources 

give it the potential of becoming a major 

rice producer, but many agricultural 

commentators have suggested the target 

is overly ambitious. 

“For balance, there are some places where 

things are working,” he continues. “It 

was so exciting to see this stuff in action 

because the donations from the UK to 

Oxfam, as well as the other charities, do 

have an effect; but we will always want 

more to happen, and faster.” 

Chris has enlarged his philanthropic 

reach to take in a vast number of other 

projects. A fundraiser for Hurricane 

Sandy saw a London concert in 2012, 

and two years later he was part of the 

Band Aid 30 collective that sought to 

raise funds and awareness in light of 

the Ebola crisis. 

In 2015, he became Creative Director of 

the Global Citizen Festival, developed 



to mark the establishment of the United Nations Sustainable 

Development Goals. 

“There is a 17-task checklist that’s designed to end extreme global 

poverty by the year 2030,” he says. “That sounds ambitious, 

but we would rather miss that deadline by pushing ourselves 

than coast toward and end-goal and feel we can take our foot 

off the gas because the deadline is far, far away. Where global 

poverty is concerned, the quicker you get to your goals, the 

more lives you save – it’s as simple as that.” 

His band, Coldplay, also donates 10 

percent of its annual earnings to 28 

different charities, including Amnesty 

International, the Red Cross, War Child 

and, of course, Make Trade Fair. “It’s 

something that has become very natural 

to us, and I’m glad we can keep flying 

that flag,” says the lead singer. “Really, 

compared to what they need to make a 

real difference, it’s a drop in the ocean, 

but it is our drop, and that’s what makes 

it special.” 

What you have to admire about Chris 

Martin is his ability to stay relevant. 

People listen to him, just as they listen 

to his music, because there is spirited 

reinvention, not to mention a precision 

over the message at every turn. Coldplay 

has harnessed, tweaked, and refined its 

sound with every new album; so, too, does its frontman appreciate 

the need for us to talk about global issues in a way 

that makes the subject feel as though it is an evolving and 

ongoing quest. 

“I think the connection is there,” he insists. “Obviously social 

media helps a lot when it comes to getting the right message 

across – that’s certainly something we never had before; it 

was down to Attenborough or evening news bulletins. Do I 

worry that the messages aren’t getting through while other, 

less important ones are? Perhaps, but I think that’s the nature 

of the beast. We can’t be on this stuff 24/7 – people will just 

turn off it and everything will become diluted. So while I don’t 

think we can ever let up on the awareness, the trick is almost 

certainly to keep the message fresh so that people continue to 

listen,” he explains, before concluding: “The more of us that 

do, the more action can be taken. This is true people power, 

and it’s global.” 


73

Basic Welfare 

State Models 

Today, the welfare state 

represents a common 

structural element of all 

democracies. However, these 

welfare states are still very 

young. The following overview 

outlines the origins of 

state-run social policy. 

By Frank Oschmiansky and Jürgen Kühl 

Comparisons between countries at the 

nation-state level play an important role 

in comparative welfare state research. The 

individual welfare states differ, among 

other things, in terms of benefit density, 

eligibility requirements, and the manner 

in which social benefits are financed and 

provided. In the past, welfare states were 

divided into the Bismarck and Beveridge 

types. Since the 1990s, a categorization 

into three types has been established: 

liberal models, conservative models, and 

social democratic models. The following 

will illustrate the thinking behind this 

categorization and which countries are 

assigned to which model. 

The evolution of the modern welfare 

state began some 125 years ago with 

the development of state social security 

systems in Western Europe. The public 

health, accident, and retirement insurance 

schemes created in the German 

Empire under Chancellor Otto von Bismarck 

were the first of their kind in the 

world, making Germany a global pioneer 

in the field of social policy. A shrewd 

political maneuver, this new policy was 

intended to deprive the newly emerging 

social and revolutionary movements 

of their ideological foundations. Many 

European countries followed this example, 

with the first being the neighboring 

countries. Japan, the United States, and 

Switzerland constituted “late bloomers” 

in this respect. Most European countries 

passed national laws on unemployment 

insurance during the first 20 years of the 

20th century. France was the first country 

to introduce this type of insurance system 

in 1905. In this case, Germany was rather 

late to the game. 



INTRODUCTION OF SOCIAL SECURITY SCHEMES 

Accident 

insurance 

Health 

insurance 

Retirement 

insurance 

Unemployment 

insurance 

Germany 1884 1883 1889 1927 

Denmark 1898 1892 1891 1907 

Belgium 1903 1894 1900 1920 

Austria 1887 1888 1907 1920 

United Kingdom 1897 1911 1908 1911 

France 1898 1928 1910 1905 

Sweden 1901 1891 1913 1934 

Netherlands 1901 1931 1919 1916 

Italy 1898 1943 1919 1919 

Japan 1911 1927 1941 1947 

United States 1930 1965 1935 1935 

Switzerland 1918 1911 1946 1982 

Source: OECD 

Insured person 

Financing 

Cash benefits 

Non-cash benefits 

Administration 

Insurance model 

(Bismarck model) 

Group of insured employees 

(gainfully employed) 

Contributions according to 

wages / salaries 

Calculation on the basis of lost 

wages / salaries 

Insurance-related non-cash 

benefits or reimbursement of 

expenses 

Partially private, frequently on 

equal terms (employee and 

employer) 

Welfare model 

(Beveridge model) 

Entire population 

Taxes 

Uniform lump-sum benefits 

Free 

Public 

Transfer intensity Low High 

Source: Schmid, Alfons (2002): p. 89 

Basic models of comparative welfare 

state research 

In order to better highlight similarities 

and differences between different 

types of welfare states, the individual 

states were assigned to different groups. 

These groups or types of welfare states 

affiliate countries whose social policies 

are similarly structured. Of course, no 

state actually fits entirely into one of 

these categories, as most states have 

hybrid systems. 

Older comparative welfare research 

usually distinguished between two systems 

– the Bismarck and the Beveridge 

systems. The Bismarck type is based on 

contribution-financed social insurance, 

which is usually wage-related and linked 

to gainful employment, whereas the 

Beveridge type is based on a tax-financed 

minimum benefit system for all citizens. 

By the end of the 19th century in Germany, 

Bismarck had created a social 

system that was essentially financed 

through contributions from employees 

and their employers and whose benefits 

depended on how many contributions 

were paid and how high these contributions 

were. Next to Germany, France and 

Italy represent the other major European 

countries with this specific performanceoriented 

type of social system. 

On the other hand, William Beveridge, 

who presented his report on the reform 

of the social security system to the British 

Parliament as head of a commission of 

experts in November 1942, placed much 

more emphasis on a basic provision for 

all, which was to be supplemented by 

personal contributions. Financing should 

therefore logically stem from community 

funds, meaning tax revenue. Next to 

the United Kingdom, the Scandinavian 

countries represent the other major 

European countries with this specific 

needs-oriented type of social system. >> 


75

It was by no means a given that the 

Bismarck model would reassert itself in 

the newly founded Federal Republic of 

Germany following World War II. During 

the Allied occupation (1945–1949), the 

traditional German social security system 

was on the verge of a major disruption. 

Allied plans for the German social system 

were based more on the Beveridge 

model and provided for an extension 

of the insurance coverage to almost the 

entire population. 

These proposals were supported by trade 

unions, social democrats and communists. 

In the end, however, the Allies 

abandoned their plans and left the decision 

up to the first German Bundestag. 

The governing coalition of the CDU / 

CSU, FDP, and DP (Deutsche Partei [German 

Party]) parties were united in their 

determination to restore the foundations 

of the traditional German social security 

system. 

The most well-known and commonly 

used distinction today was put forward 

by the Danish sociologist Gøsta Esping- 

Andersen. It distinguishes between three 

types of welfare states: liberal, conservative, 

and social democratic. The categorization 

is based on the underlying logic 

of the relationship between the state and 

the market in the provision of social services, 

the mode and quality of services, 

and the impact of social policy on social 

stratification and the social distribution 

of power. 

The conservative (or continental European) 

welfare states are therefore shaped 

by Bismarck’s social security model, with 

the focus on insurance benefits. The 

strong link between paid labor and social 

benefits often leads to the exclusion of 

women who are not gainfully employed. 

The redistributive effect of social benefits 

is low for this type. Examples of this type 

are countries such as Germany, France, 

and Austria. 



Social democratic (or Scandinavian) welfare 

states are characterized by universal 

services. The aim is to achieve equality 

at a high level, with social civil rights 

forming the foundation of the welfare 

system. The benefits are mainly financed 

through taxes, with the tax rates being 

relatively high. This category features the 

strongest form of liberation from market 

constraints (decommodification). Examples 

of this type are the Scandinavian 

countries: Sweden, Norway, Denmark, 

and Finland. 

The liberal (or Anglo-Saxon) welfare state 

model places its emphasis on the role 

of the free market and the family. It is 

mainly tax-financed, transfer benefits 

are generally means-tested, eligibility 

requirements are strict, and the benefits 

low. Examples of this type are Canada, 

the United States, the United Kingdom, 

Australia, and Switzerland. 

Recent research has tended to extend 

the Esping-Andersen typology by adding 

two further types: first, rudimentary 

(or Mediterranean) welfare regimes 

characterized by a dominance of the 

agricultural sector, where the welfare 

state and the level of decommodification 

are minimal (examples are Italy 

and Portugal); second, the post-socialist 

welfare states that dominate the transformational 

political systems of Eastern 

Europe. It is not yet possible to allocate 

these to specific types in this case due 

to the gradual nature of the change in 

the welfare state that has taken place 

thus far, and the combination of old 

and new elements. 

TYPES OF WELFARE STATE 

Liberal welfare state 

Conservativecorporatist 

welfare 

state 

Social democratic 

welfare state 

• Encourages private welfare 

• Limited social benefits for 

low-wage groups 

• Strict eligibility requirements 

• Preservation of status and group differences 

• Preservation of traditional family structures 

• Subordinated role of business and private benefits 

• Universal benefits 

• “An equality of the highest standards, not an equality of 

minimal needs” 

• Identical rights for blue-collar workers, salaried 

employees, and civil servants 

Source: Bolkovac, Martin (2007): Sozialpolitik im internationalen Vergleich 

[An international comparison of social policy] 

TYPES AND DIMENSIONS OF MODERN WELFARE STATES 

Decommodification (protection 

against market forces and loss of 

income) 

Residualism (share of welfare 

benefits) 

Privatization (share of private 

expenditures for age and healthrelated 

services) 

Corporatism / statism (number of 

social security systems differentiated 

according to occupational 

groups) 

Liberal 

Minimal 

Conservative 

High 

(for clients) 

Social 

democratic 

Maximum 

Strong Strong Weak 

High Low Low 

Weak Strong Weak 

This text is published under the Creative 

Commons license: by-nc-nd/2.0 

Redistributive capacity (progressivity 

of the tax system, equality of 

benefits) 

Weak Weak Strong 

Guarantee of full employment 

(unemployment rate, expenditures 

on active labor market policies) 

Weak Weak Strong 

Source: Esping-Andersen (1990) 


77

The Rise and Fall 

of Prosperity Around 

the Globe 



By Faiq Lodhi 

What is it that connects 

Bangladesh, Zimbabwe, and 

Paraguay? Is it their shared 

history, culture, or geography? 

Surely not – these countries 

inhabit three separate 

continents and have little 

in common. However, one 

aspect that is prominent 

in all three nations is their 

resilience to prosper and make 

lives better for the people 

that inhabit them. All three 

of these countries showed 

marked improvements in nine 

key factors that constitute a 

prosperous country. This is the 

result of the assessment of 

149 countries in the Prosperity 

Index 2018, published by the 

Legatum Institute. 

Before delving into the findings of this 

index, it is important to understand what 

prosperity stands for in a nation-based 

context as well as a development concept. 

Experts define “prosperity” as a condition 

or situation in which individuals 

from a country have better chances of 

flourishing or thriving – individually 

and as a community. 

Previously, this idea was heavily dependent 

upon the financial strength of a 

nation. However, it was soon realized 

that wealth was not the only marker 

for prosperity, as people from wealthier 

nations were still prone to be dissatisfied 

with their living conditions. According 

to the Prosperity Index, India and 

China are significant cases in point. Both 

countries have managed to perform well 

financially, yet their citizens are dissatisfied 

and do not rank high in social wellbeing. 

This is largely because while they 

have prospered in terms of per capita 

income, they have yet to ensure proper 

governance and strong institutions that 

guarantee an individual’s dignity and 

right to personal freedom. 

The Legatum Prosperity Index 2018 

Inspired from this idea, the Legatum 

Institute devised a nine-pillar index to 

gauge prosperity. This index helps to 

quantify abstract notions of satisfaction 

and success, and it provides a useful 

marker for leaders and policymakers 

who wish to improve the lives of their 

people and nations. 

“The Legatum Prosperity Index is a tool 

for leaders around the world to help set 

their agendas for growth and development. 

Prosperity entails much more 

than wealth – it is about creating the 

environment where a person can reach 

their full potential,” claims Baroness 

Philippa Stroud, CEO of the Legatum 

Institute. 

The index uses a mix of pillars that dictate 

economic growth as well as social 

well-being. These include Economic 

Quality, Business Environment, Governance, 

Personal Freedom, Social Capital, 

Safety and Security, Education, Health, 

and Natural Environment. These pillars 

help in understanding that prosperous 

countries not only achieve high GDPs, 

they are also able to constitute societies 

that are inclusive to all demographics, 

and they empower their people to make 

better choices that help them reach their 

full potential. 

Can it be assumed that such a model 

would be able to realize the localized 

nuances that dictate conditions in different 

countries around the world? 

“The purpose of the Prosperity Index is not 

only to provide a ranking of countries, 

but also to help shape an agenda for 

development,” says Stephen Brien, Director 

of Policy at the Legatum Institute. 

While commenting on the distribution of 

prosperity, he states that “each country 

is unique not only in their history of 

development, and culture, but also in 

terms of the areas that most require attention. 

So, how prosperity is achieved 

is a country-specific challenge.” 

It is also highlighted that prosperity is 

now inherent of sustainability, where 

“having more” is focused upon rather 

than “getting more.” “Our concept of 

prosperity is inherently sustainable – 

through our Natural Environment Pillar, 

we measure the extent to which the 

physical environment is preserved for 

future generations; and through capturing 

Education, we also assess the sustainability 

of human capital,” Brien explains. 

The index also highlights individual 

virtue as a key factor in ensuring the 

sustainable and equitable distribution of 

prosperity. This is further illustrated >> 


79

THE LEGATUM PROSPERITY ENGINE 

Flourishing and Prosperous Society 

ECONOMIC 

PROSPERITY 

SOCIAL 

WELL-BEING 

ECONOMIC DRIVERS 

Financial Capital Enables 

The Pursuit of Virtue 

Social Capital Drivers 

SOCIAL DRIVERS 

Source: Legatum Prosperity Index 2018 – Methodology Report 

in the Legatum Institute’s Methodology 

Report for this index: “When the 

economy and society operate within a 

virtuous, high-trust, service-oriented, 

moral framework, then resources flow 

efficiently to the most productive people 

and places, for the benefit of the many.” 

By providing a ranking of the countries 

and analyzing how they perform on various 

pillars, the index wishes to provide a 

recommendation on what can or cannot 

work for countries, depending on their 

individualized characteristics. “We are 

increasingly ambitious about engaging 

directly with more of the leaders, policymakers, 

businesses, and advisers of the 

countries we research, to help identify 

the pathways to prosperity,” says Stroud. 

“But if a country is a strong performer 

in some pillars and a weaker performer 

in others, our recommendation would 

be to diagnose the areas of weakness, 

identify which aspects are the most binding 

constraints, and look to the success 

of peers to suggest pathways to adopt,” 

adds Brien. 

Key findings of the Prosperity 

Index 2018 

According to one key finding, 2018 saw 

global prosperity at its highest level in 

the 12-year history of the index. It is 

claimed that more people are living prosperous 

lives than ever before. Globally, 

around 113 countries were able to rise 

in the index, in comparison to the year 

earlier. This growth translates to roughly 

six billion people enjoying better prosperity, 

around the globe, particularly since 

citizens in the major rising countries 

shared a higher level of well-being as 

compared to 10 years ago. 

Moreover, although Norway managed to 

maintain its spot as the most prosperous 

country on the index for a second year in 

a row, in terms of regional prosperity, it 

was the Asia-Pacific region that became 

the fastest-growing section, with Nepal, 

Indonesia, and India being key players. 

Nonetheless, although prosperity has 

been on the rise this year, the gap between 

countries that are prospering fast 

and those that are not has grown wider 

than before. According to the index, 

the gap between the top and bottom 

countries is now 10 percent wider than 

in 2013. The difference was also significant 

because whereas the 20 top 

rising countries had steady growth, the 

20 lowest countries fell sharply. There 

were three major pillars that showed 

considerable influence on the prosperity 

of the regions examined. 


ECONOMIC DRIVERS 


MAPPING PROSPERITY IN 2018 

RANK 

1 ST – 25 TH 

26 TH – 50 TH 

51 ST – 75 TH 

76 TH – 100 TH 

101 ST – 125 TH 

126 TH – 149 TH 

Source: The Legatum Prosperity Index TM 2018 

➊ Safety and Security 

One pillar behind the dichotomy of this 

gap, according to the Legatum Institute 

team, was Safety and Security. “Among 

the 20 countries that rose the most 

this year, Safety and Security was their 

strongest pillar and, conversely, in the 20 

countries that fell the most, (this pillar) 

declined significantly. A nation succeeds 

when its leaders set and protect national 

priorities and work with external parties 

to support and align with a domestic 

agenda,” says Brien. 

These claims are backed by the Prosperity 

Index as well. Out of the 20 countries 

that performed most poorly in the index, 

12 of them were in the Middle East and 

North Africa (MENA) region. Simultaneously, 

they also ranked poorly in Safety 

and Security, since most of the present 

countries have been stricken by terrorism, 

military interventions, corruption, 

dictatorships, and the mismanagement 

of resources. All these factors contribute 

to greater insecurity of citizens who have 

to live their lives every day in fear and 

anxiety. It is no wonder, therefore, that 

insecurity is the biggest threat to global 

prosperity currently, and it continues to 

cause issues with other pillars as well. 

➋ Governance 

A lack of safety and security can also 

be due to inept or corrupt governance, 

which is also a pillar where many countries 

from MENA and Africa have performed 

poorly. Bad governance has also 

rendered these countries incapable of 

standing their ground in the face of 

adversity, whether man-made or natural. 

Citizens in most of these countries 

have reported their incapacity to meet 

basic needs such as attaining food or 

shelter, which is curious, since globally, 

malnutrition and absolute poverty >> 


81

5 FACTS ABOUT THE INEQUALITY GAP 

100% 

1 2 

BOOMTIME FOR THE WORLD’S BILLIONAIRES 

The wealth of the world’s billionaires 

increased $900 billion in the last year, 

which is $2.5 billion a day. 

WEALTH UNDERTAXED 

Only 4 cents of every dollar in tax 

revenue comes from taxes on 

wealth. 

1% 

Last year 26 people owned the same as the 

3.8 billion people who make up the poorest 

half of humanity. 

In some countries, the poorest 10 

percent are paying a higher proportion 

of their incomes in tax than the 

richest 10 percent. 

80% 

3 4 

UNDERFUNDED PUBLIC SERVICES 

Today 262 million children will 

not be allowed to go to school. 

DENIED A LONGER LIFE 

Every day 10,000 people die 

because they lack access to 

affordable healthcare. 

50% 

60% 

In Kenya, a poor girl has a 1 in 250 

chance of continuing her studies 

beyond secondary school. 

Life expectancy in the richest 

parts of São Paulo, Brazil, is 79 

years. In the poorest areas of the 

city, it is 54 years. 

40% 

5INEQUALITY IS SEXIST 

The unpaid care work done by women is estimated 

to be $10 trillion, which is 43 times the annual 

turnover of Apple Inc. 

Men own 50 percent more of the world’s wealth 

than women and control more than 86 percent of 

corporations. 

Share of 

total wealth 20% 

Share of the richest 1 percent of the world’s population in total wealth 

Share of each tenth of the world’s population in total wealth 

Poorest tenth 

Richest tenth 

Source: Oxfam 2019, Report on Wealth Inequality 



have gone down. This highlights the 

importance of an equitable distribution 

of prosperity, which is heavily dependent 

on individual virtue (a quality often 

lacking in the institutions that govern 

the people of these countries). 

The impact of bad governance is no 

longer confined to the borders of the 

regions in question. These countries are 

also becoming major sources of individuals 

fleeing and finding refuge elsewhere, 

thus contributing to the global ratio of 

forced migration and refugee crises. Syria, 

Jordan, and Lebanon are prime examples 

of this – where war-torn Syrians are 

crossing borders and fleeing to Jordan 

and Lebanon, both of which are struggling 

to maintain their own prosperity 

as well as catering to the needs of the 

refugees. 

➌ Business Environment 

This is the only pillar that increased 

in all regions, in various capacities. It 

seems that every country is focused 

on increasing its accessibility to business 

and becoming business-friendly. A 

productive business environment has 

the potential to nurture a country’s 

economy, provide financial security 

to its citizens, and empower them to 

make better life choices. Therefore, this 

pillar works as a combination of both 

financial strengths as well as social wellbeing 

– the two aspects that constitute 

prosperity. 

Countries such as Djibouti, Laos, and 

Malawi have been able to rise in the 

index largely because they were able to 

do the following: make their policies 

more amenable to young entrepreneurs 

who wanted to start their own businesses; 

provide utilities, transport facilities, and 

other financial resources to harness a 

business infrastructure; and ensure that 

businesses were able to attain credit at 

accessible rates. 

Way forward to prosperity? 

Drawing upon the factors that contributed 

to the growth or fall of countries 

in the nine selected pillars, the index 

highlights that ensuring safety and security, 

through responsible and honest 

leadership, is the best way for countries 

to attain prosperity within their respective 

regions. Good leadership would not 

only ensure safety and security by discouraging 

corrupt practices and tackling 

violence sensibly, it would also provide 

enabling environments for business, 

personal freedom, and social well-being 

so that individuals can live their lives 

with greater stability. 

The Legatum Institute team summarizes 

it as follows in their report: “Prosperity 

is dependent on good leadership to 

identify and pursue domestic priorities, 

mobilizing support for a clear agenda 

for development. First, by providing 

safety and security, […] second, by nurturing 

their economies and ensuring that 

domestic savings can be the dominant 

source of funding for investment […] 

[and] third, by commercializing their 

economies and integrating them into 

global supply chains.” 

The report is an effective tool for leaders 

and policymakers to assess where 

they stand – both nationally as well 

as within their region – and draw up 

the achievements of their peers to gain 

prosperity for themselves. “We have also 

engaged with policymakers and members 

of the diplomatic communities across the 

world,” adds Brien while discussing the 

future impact of the index, “especially, 

Africa, Central America, and Eastern 

Europe. Much of the feedback has been 

around the practical elements of how to 

use the index to help set an agenda. We 

will be developing more of a ‘user guide’ 

going forward.” 

For further details and in-depth information, 

the Legatum Prosperity Index report 

can be accessed here: www.prosperity.com/ 

about/resources 


83

GOOD PRACTICE SECTION 1: LIST OF ATTENDEES (FROM A - J) 

Companies are listed in alphabetic order 


Audi 

BASF 

Bayer 



Bosch 

Cargolux 


CEMEX 

Deloitte 


EDF Group 



ING 


Solely responsible for the editorial contributions under the 

heading “Good Practice” are the companies themselves. 

Named articles do not reflect the opinions of the publisher. 

KYOCERA 

MAN 


Mazars 


Merck 

METRO 

Moelven 

Nomura 


Pernod Ricard 

Philia Earth 


PUMA 


Symrise 

The University of Manchester 

86 

88 

90 

92 


Audi 

BASF 

Bayer 

84 


GOOD PRACTICE 

94 


96 


98 

Bosch 

100 

Cargolux 

102 


104 

CEMEX 

106 

Deloitte 

108 


110 

EDF Group 

112 


116 


118 

ING 

120 



EMPOWERMENT: THE KEY TO 

SUSTAINABLE GROWTH 

Throughout the years, the Arab African International Bank (AAIB) has been contributing to the 

community while fostering the economy through empowering young generations. As the ones 

who are capable of passing the torch to future generations, youth can be a compelling force for 

development. However, they need to be empowered with the resources and capacity to do so. 

Since banks constitute one of the primary pillars of any economy, they are ideal agents to play a 

pivotal role in youth empowerment as well as economic and social development. 

By Dalia Noureldin, AAIB 

By 2030, the target date for the 17 Sustainable 

Development Goals (SDGs), the 

youth population is projected to reach 

nearly 1.3 billion. This demographic 

transition calls for different approaches 

for managing resources and doing business. 

The financial sector has been at 

the forefront of empowerment through 

pioneering efforts such as financial inclusion 

and education as well as financing 

SMEs and microenterprises. Financial 

inclusion is positioned prominently as 

an enabler of major developmental goals 

in the SDGs, including Goals 1, 2, 3, 4, 5, 

8, 9, 10, and 17. As such, it constitutes a 

catalyst for economic and social development. 

In addition to integrating individuals 

into the formal financial system, it 

broadly fosters entrepreneurial activity, 

since starting and growing a business 

is virtually impossible without access 

to financial services. 

In the context of our efforts to empower 

youth for inclusive economic growth, we 

focused on two major gaps. On the one 

hand, many individuals have the knowledge, 

talent, entrepreneurial capacity, 

and creativity but lack access to finance. 

On the other hand, some individuals 

have the financial resources but lack the 

business skills, which remains a major 

hindrance. Removing these barriers is 

bound to unlock growth in entrepreneurial 

enterprises, which – from a 

purely economic development perspective 

– creates new jobs. As part of efforts 

to fill this gap, and to demonstrate how 

empowerment contributes to socioeconomic 

development, AAIB has paved 

the way through four main impactful 

tracks. These include providing financial 

access to vulnerable groups; conducting 

financial education programs, even for 

young age groups; empowering entrepreneurs 

through financing SMEs and 

microenterprises; as well as providing 

technical support through incubation. 

FINANCIAL INCLUSION 

Microfinance “Sandah” 

In 2018, AAIB inaugurated a new microfinance 

company named Sandah in 

collaboration with the SANAD Fund for 

MSME to allow for the financing of microenterprises, 

small and medium-sized 

enterprises (SMEs) and entrepreneurs, 

as well as the general lower-income 

clientele. This will, in turn, contribute to 

financial inclusion, reduce poverty and 

unemployment, and enhance economic 

well-being. Given that the future of any 

nation is shaped by its youth, having 

Sandah finance microenterprises and 

SMEs will encourage and empower youth 

to achieve their potential, contribute to 

the economy, and reduce unemployment. 

Developing branches for 

differently-abled 

AAIB has broadened the definition of financial 

inclusion to include not only lowincome 

groups but also any marginalized 

groups within society. In this, the bank 

made a commitment to provide access 

and support to customers with different 

abilities and started developing some of 

its branches to serve the differently-abled 

with specially constructed ramps for 

clients with wheelchairs as well as customized 

teller counters that have been 

lowered to accommodate these clients. 

86 


FINANCIAL EDUCATION 

Today’s children and youth represent 

the future client base for financial institutions. 

In AAIB, we acknowledge that 

there is a lack of financial awareness, 

especially among younger generations. 

Therefore, we expanded our financial 

inclusion definition to include financial 

education. 

Banker 101 

AAIB hosted students from different 

stages to spend a day at our branches 

to introduce them to the banking terminologies 

and functions along with 

simulations of these functions. They 

were also provided with simple booklets 

to facilitate their understanding of the 

banking system. 

Money Quotient Program 

The Money Quotient Program (MQ) is a 

series of educational videos produced 

in English and Arabic to fully educate 

our current and potential clients about 

the banking sector and how it works, 

for example types of loans, credit cards, 

mutual funds, and accounts. 

It was introduced on AAIB’s YouTube 

channel and social media platforms to 

maximize its reach and viewership by 

youth and entrepreneurs. 

BUSINESS INCUBATION 

AUC Venture Lab 

Business incubators contribute to the 

chances of success for startup companies 

by creating a supportive environment. 

Our role as a financial institution is to 

continue empowering the entrepreneurs, 

guide them on their career paths, and 

take over the country’s thriving entrepreneurial 

scene. As such, in 2013, AAIB 

partnered with the AUC School of Business 

to establish the AUC Venture Lab, 

the leading university-based incubator 

in the MENA region. The V-Lab supports 

early-stage startups chosen through a 

selection process that judges aspects of 

the project such as its novelty, scalability, 

and commercialization potential. It also 

considers the dedication of the team and 

focuses on empowering and facilitating 

inventors and committed entrepreneurs 

to help them reach their goals. 

CodeGeist Hackathon 

Since youth constitute the largest segment 

of the population, and given their 

ambition, talent, and energy, we believe 

that empowering youth contributes to 

resolving rising socioeconomic issues, 

including poverty, unemployment, and 

income inequality. As such, and based 

on our commitment to continually empower 

young generations and to utilize 

the latest FinTech, AAIB sponsored the 

CodeGeist Hackathon in 2018. The hackathon 

was attended by 200 undergrad 

students aged between 16 and 20 years 

old. Ideas generated from the hackathon 

event might encourage the development 

of a new business or help an existing 

business to grow or diversify their activities 

and creates job opportunities. 

We are proud of our progress with the 

majority of the SDGs and will continue 

to achieve more in the years leading up 

to 2030. This can be achieved by empowering 

innovators and entrepreneurs 

who have a great potential to achieve 

the SDGs by creating job opportunities 

and supporting economic and social 

development. 

AUC V-LAB IN 

NUMBERS: 

• 128 STARTUPS ACCELERATED 

• 550+ JOBS CREATED 

• 1,700+ MENTORING & TRAINING 

HOURS 

• 48% OF STARTUPS RECEIVED 

INVESTMENTS 

• 891 MILLION EGP INVESTMENT 

• 216 MILLION EGP REVENUES 

• 80% STARTUP SURVIVAL RATE 


AUDI STRENGTHENS 

CIRCULAR ECONOMY IN SALES 

Audi wants to reduce its environmental impact and conserve resources along the entire value 

chain. With this in mind, the car manufacturer has established the principles of a closed-loop 

circular economy during the development, manufacture, and marketing of its products. Audi has 

reached an important milestone in its efforts with the Exchange 2.0 project. The company has 

developed a sustainable remanufacturing method for mechatronic parts and transmissions for 

Audi S tronic models. The focus lies with an intelligent new process that saves numerous work 

steps. 

By Susanne Lenz, Audi 

Audi is implementing digitalization 

along the entire lifecycle – from the 

purchase of a new car to its use and 

its sale. This also includes the spare 

parts business. The company’s goal is to 

digitalize its work processes in order to 

generate new revenue potential, increase 

the sustainability of its business activities, 

and reduce costs. These savings will 

enable the Ingolstadt-based carmaker 

to invest in future trends and offer its 

customers new and unexpected digital 

products and services. 

By constantly focusing on the needs of 

customers, digitalization is intended 

to enable them to easily use premium 

mobility. That includes quickly and economically 

replacing spare parts. 

Individual parts retain their added 

value 

Audi is showing how this works with the 

Exchange 2.0 project. It was developed 

in cooperation with the Volkswagen 

plant in Kassel and optimizes existing 

processes for remanufacturing transmissions: 

“In the past, we had to disassemble 

everything to find the fault,” explains 

Dominic Rattmann from Audi Product 

Management Genuine Parts. Not only 

is this process very time-consuming, it 

also costs a lot of money. Aside from that, 

at most only half of the components 

were reused. The rest were replaced as 

a precaution. 

That has changed now. Thanks to the 

new remanufacturing method, up to 

88 


Conservation of 

up to 

80% 

of the individual parts in 

the value chain 

Reprocessing of 

up to 

20,000 

mechatronic parts 

possible 

Possible reduction of 

material usage by up to 

80% 

for gears and 

mechatronic parts 

80 percent of the individual parts in 

the value chain are conserved. Projected 

over the year, this means employees can 

currently reprocess up to 4,500 transmissions 

and 20,000 mechatronic parts. The 

market launch for the remanufacturing 

will take place during the course of 2019. 

New process standard: Innovative 

and sustainable 

The Exchange 2.0 project was initiated 

by Dominic Rattmann and is the first 

joint remanufacturing concept from 

both Audi Ingolstadt and the Volkswagen 

Group Kassel. While the complex 

S tronic transmissions are being processed 

in Kassel, the Ingolstadt assemblies 

remanufacturing unit handles the 

mechatronic parts. That is yet another 

first: Mechatronic parts have never before 

been remanufactured in the Volkswagen 

Group. A total of around 40 employees 

from Research and Development, Genuine 

Parts, Finance, Production Planning, 

and Quality Assurance pushed the development 

of the program forward across all 

brands and developed new tools, systems, 

and lines for the implementation. 

The new process standard involves a 

number of different steps. First, dealers 

must complete a checklist if customers 

lodge complaints about vehicles. The 

list offers the first clues about possible 

causes of defects. Employees then analyze 

the data from the fault memory. 

The fault codes provide information on 

potential prior damage to the wheel set 

or other components: “Even at this stage, 

we can already search for components 

that should be remanufactured,” says 

Johann Wendl from Quality Assurance 

Powertrain. “Unlike in the past, parts no 

longer have to be replaced preventively 

and disposed of.” As a result, the new 

intelligent diagnostics saves numerous 

process steps that had previously been 

necessary. In addition, the new cleaning 

method removes oil from the components 

and provides more information. 

High quality standards during 

remanufacturing 

Only genuine parts that have been approved 

by Technical Development can be 

used to remanufacture the transmissions: 

“This sets us apart from our competitors, 

who sometimes do not have the option 

of procuring genuine parts. We have 

shown how replacement parts can be 

remanufactured at a premium level,” 

says Michael-Andreas Spreng, Head of 

Engine Remanufacturing. The transmission 

is then subjected to a 100 percent 

functional inspection on the test bench. 

Wendl confirms: “The tests so far have 

demonstrated that the remanufactured 

transmissions meet the quality criteria 

of new parts. This is also currently being 

verified by vehicle tests and safety runs.” 

With use of the methods starting in the 

second half of 2019, Audi will achieve the 

conceptual process capability for the new 

remanufacturing method for other components 

as well: “As a consequence, we’re 

focusing on innovation leadership of our 

remanufactured components.” Dominic 

Rattmann adds: “With the Exchange 2.0 

project, we are embodying the circular 

economy in Audi distribution and are also 

managing to combine the strategic key 

areas of sustainability and digitalization.” 

Circular economy: Focusing on reuse 

The added environmental and economic 

value of the project is indeed impressive. 

The use phases of individual components 

are considerably lengthened through repair 

or reuse. Audi can reduce its overall 

material consumption for transmissions 

and mechatronic parts by up to 80 percent. 

The goal is for the new process to 

pay for itself after just one year. The 

industrial remanufacturing of used parts 

in genuine-part quality is the second approach 

within the circular economy. By 

adding this sustainable remanufacturing 

process, Audi is expanding its various 

programs in order to advance the circular 

economy along the entire value chain. 

Audi has already introduced successful 

aluminum recycling projects. 

These projects and the current Exchange 

2.0 project are thus contributing directly 

to the sustainability strategy at Audi. 

Audi has also expressly committed itself 

to the UN Sustainable Development 

Goals. With the activities in the Exchange 

2.0 project, the company is contributing 

to Goals 9 (Industry, Innovation and 

Infrastructure) and 12 (Responsible 

production and consumption). 


VALUE TO SOCIETY – 

A BALANCED APPROACH TO 

MEASURING BUSINESS IMPACT 

Based on our purpose “We create chemistry for a sustainable future,” we want to contribute 

to a world that provides a prosperous future with enhanced quality of life for everyone. But is 

there a way to measure this and guide management decisions in this direction? Together with 

external experts, BASF has developed a method to perform the first monetary assessment of 

the economic, ecological, and social impacts of its business activities along the value chain: 

the “Value to Society” approach. 

By Christian Heller, BASF 

Our current economic system has created 

tremendous wealth for many parts of 

the world, but is it fit for purpose any 

longer? Today, a perfect storm of disruptive 

factors is challenging the stability 

of our social, environmental, and economic 

systems. They include increasingly 

globalized and connected markets; the 

power and influence of technologies such 

as the Internet of Things and Artificial 

Intelligence; growing inequality (particularly 

regarding income and wealth); 

and the many social and environmental 

challenges posed by climate change. 

Meeting these challenges is crucial if 

business is going to maintain the trust 

of society. This will require a systemic approach. 

At the moment, most businesses 

are still operating too much in isolation, 

and companies are managed based on accounting 

principles and concepts that are 

increasingly outdated, as they partially 

stem from the 19th century. We focus 

on pure financial performance while 

neglecting to account in real terms for 

the impact our activities have on the 

environment and society. 

How can our business contribute toward 

creating a more viable future with enhanced 

quality of life? That is a question 

we at BASF continue to ask as we assess 

the challenges and opportunities in front 

of us. Given that BASF is involved in the 

production of so many of the products 

that people around the world use every 

day, we believe we can play an important 

role in addressing some of the biggest 

social and environmental issues our 

society is facing. 

To do so, we need a new way of thinking 

about business performance – a holistic, 

value-based perspective that offers a 

better understanding of the impact 

of our activities throughout 

not only our operations 

but also those of our suppliers 

and customers. 

This way of thinking 

also requires a global 

perspective that 

assesses the impacts 

and value 

of our activities 

in nearly every 

Positive impacts 

on human well-being 

industry and country. Ultimately, the 

method has to identify, quantify, value, 

and demonstrate our economic, social, 

and environmental impacts as a whole 

(and their connection to one another) 

rather than in isolation. 

To achieve this and truly measure our 

value to – and impact on – the world, 

we created a new measurement framework 

called Value to Society. It measures 

our company performance through both 

the financial and non-financial busi- 

Negative impacts 

on human well-being 

90 


BASF’S VALUE-TO-SOCIETY RESULTS 2017 

Net income 

Amortization 

Depreciation 

Taxes 

Wages & 

benefits 

Human capital 

Health & safety 

Air emissions 

GHGs 

Land use 

Waste (solid) 

Water 

consumption 

Water emissions 

Full supply chain 

Indirect suppliers > 

Direct suppliers 

billion € -10 0 50 bn € 

ness impacts in society and quantifies 

this through the unit of the euro. Our 

impact evaluation considers 12 different 

economic, environmental, and societal 

categories, including areas such as our 

net income, the taxes we pay, health and 

safety, greenhouse gas emissions, and 

water consumption. This enables us to 

value the total impacts of our business in 

a common language that the entire business 

can understand, and it helps us in 

applying that insight to future operations 

and planning. In this way, we can create 

an accurate measurement of BASF’s real 

Own operations 

-10 0 50 bn € 

Customer industries 

Direct customers in 

industries supplied by BASF 

-10 0 50 bn € 

BASF’S VALUE-TO-SOCIETY RESULTS 2013–2017 

Economic 

contribution 

Social Environmental 

contribution contribution 

2017 

2016 

2015 

2014 

2013 

2017 

2016 

2015 

2014 

2013 

2017 

2016 

2015 

2014 

2013 

Full supply chain 

Indirect suppliers > 

Direct suppliers 

Own operations 

Customer industries 

Direct customers in 

industries supplied by BASF 

billion € -20 0 50 bn € -20 0 50 bn € -20 0 50 bn € 

benefits and costs so that we can build 

on how our company contributes to the 

well-being of global society. With Value 

to Society, we follow a common purpose 

outlined in frameworks such as the UN 

Sustainable Development Goals. 

According to our analysis, the results 

show a stable distribution of economic, 

social, and environmental impacts from 

2013 to 2017. In each step of the value 

chain, the benefits of our business activities 

substantially exceed the costs to 

society. Economic impacts are positive 

along with taxes, wages and benefits, 

and human capital. Negative impacts 

are health and safety incidents as well as 

impacts on the environment. We strive 

to increase our positive contributions 

to society and minimize the negative 

effects of our business activities. 

By implementing the Value to Society 

method, we are able to visualize and 

share with customers, partners, and 

regulators both the positive and negative 

impacts of our total business. This gives 

us a pragmatic, efficient, auditable, and 

transferable approach to sustainable 

growth and provides valuable insight for 

everyone we do business with or interact 

with. In turn, this transparency enables 

the integrated character of our actions 

for more informed decision-making, and 

thereby contributes to BASF’s long-term 

success. 

While Value to Society is a game-changer 

from our point of view, we understand 

that there are more skeptical assessments 

and requests for an unbiased and balanced 

approach. We are open to discussions 

about the methodology. We agree 

that we need a shared and standardized 

impact valuation approach in order to 

create a level playing field. Therefore, 

we share our approach, experiences, 

and learnings with our stakeholders 

and standard-setting communities. Together 

with other companies, we plan 

to consolidate the current approaches 

and pursue the implementation of valuebased 

approaches in entrepreneurial 

decision-making processes. But companies 

need to be rewarded for their efforts 

of integrating environmental and social 

responsibility in their business models. 

This requires a bespoke regulatory environment 

as well as capital markets allocating 

resources to leading companies. 

Moving from the traditional shareholder 

value concept to a “system value” approach, 

we truly value the impacts and 

interdependencies of society and business 

in a comprehensive system. This 

system serves as our foundation for 

shaping the future. 


INNOVATION NEEDS 

TRANSPARENCY AND TRUST 

Bayer employees Nguyen Thi Ngoc Anh 

and Bui Van Kip (from left) examining rice 

plants with farmer Huynh Duy Chinh at 

Nhon Thanh Trung village in Vietnam 

We live in an era of distrust in which facts are becoming less and less important and political 

debates are increasingly driven by assertions, images, and emotions. Surveys show that people’s 

trust in societal institutions is declining. According to the Global Trust Report 2017 of the think 

tank GfK Verein, for example, only 18 percent of those surveyed in Germany have confidence in 

the country’s political parties, while only 30 percent trust large companies, and only 45 percent 

trust the media. But when there is no trust and no certainty, what should we base our decisions 

on? We cannot shape our future based on distrust. 

By Kemal Malik, Bayer 

Nothing stokes as much distrust as when 

people have the feeling that information 

is being withheld from them for 

no apparent reason. At the end of 2017, 

therefore, Bayer began enabling access 

to safety-relevant information about its 

crop-protection activities – thus assuming 

a pioneering role in the industry. 

Summaries of test results and assessments 

are available for download at 

https://cropscience-transparency.bayer. 

com. Infographics and videos are designed 

to help viewers better understand 

and categorize information. Since February 

2018, furthermore, it has been 

possible to access comprehensive and 

detailed safety-relevant study reports, 

provided they are not intended for commercial 

use. We also made available 

all 107 Bayer-owned glyphosate safety 

study reports that were submitted to the 

European Food Safety Authority as part 

of the substance authorization process 

in the European Union. 

A bridge to the interested public 

Incidentally, Bayer has been honoring 

its commitment for many years to make 

information about clinical studies – 

including a summary of their results – 

available to the public. The data can be 

accessed using the “Bayer Trial Finder” 

92 


at the homepage of our Pharmaceuticals 

Division www.pharma.bayer.com, as 

well as at www.ClinicalTrials.gov and 

www.clinicaltrialsregister.eu. Researchers 

and physicians can receive even more 

detailed information from us upon request. 

In this way, we want to address 

the frequently expressed criticism that 

pharmaceutical studies are only published 

if their results are advantageous 

for companies. 

These activities show how important 

transparency is to us. We want to give 

experts, engaged citizens, and other interested 

parties the opportunity to form 

their own opinions based on scientific 

information. In so doing, we are building 

a bridge between the interested public 

and our own scientists. 

Of course, transparency has its limits. 

Sensitive patient data from clinical trials 

needs to remain private. Naturally, we 

must also ensure that certain intellectual 

property does not fall into competitors’ 

hands – our entire business model as 

an innovative company depends on this. 

We are working to find the right balance 

between maximal transparency and essential 

confidentiality. 

Innovations are essential for our 

future viability 

Unfortunately, very few people know 

how prudently the research and development 

of medicines and cropprotection 

products are undertaken 

today. This prudence is also reflected 

in the enormous investment of time 

and money. For example, today it costs 

more than €1 billion on average and 

can take 12 to 15 years to develop a 

new drug product. 

The situation in the crop-protection 

business is similar. Of the more than 

100,000 test substances, only one ultimately 

makes it to the market – after 

between 10 and 14 years, on average, 

and hundreds of registration studies that 

need to be conducted before a chemical 

active ingredient receives marketing 

In the Athenix laboratory Laura Schouten 

examines corn cobs for signs of 

nematodes. 

Julin Tong tests formulations of the active 

ingredient acetylsalicylic acid in the USA. 

authorization. The average research 

and development costs here are roughly 

€250 million. 

Is this enormous investment justified? 

At Bayer, we are convinced it is. The 

fact that people today are healthier and 

live longer than ever is due, above all, 

to the many advances enabled by the 

interplay between science and entrepreneurship 

and their impact on public 

health measures such as clean water and 

healthy living conditions. This will be 

the way of the future because there is 

still much to be done. 

For example, treatment options are still 

unsatisfactory for many of the approximately 

30,000 known diseases. Moreover, 

certain diseases such as cancer and 

cardiovascular disorders are becoming 

increasingly common – primarily due 

to increasing life expectancies. Around 

a billion people living in many of the 

world’s poorer countries suffer from 

what are known as “neglected” tropical 

diseases, such as Chagas disease, dengue 

fever, and river blindness. 

At the same time, there are an increasing 

number of people on the planet whose 

nutrition must be safeguarded – the 

world population is expected to rise 

to nearly 10 billion by 2050. Experts 

estimate that demand for agricultural 

products – food, feed, and biofuel – will 

rise by 50 percent by the middle of this 

century. As there is now very limited 

flexibility for the development of arable 

land without endangering rainforests or 

other valuable natural areas, our food 

system must therefore become much 

more productive. In addition, it must 

also become more sustainable because 

we are not doing a good enough job 

conserving natural resources. 

These are just a few examples of the 

challenges we will face in the future. A 

comprehensive overview is provided by 

the 17 Sustainable Development Goals 

at the heart of the United Nations 2030 

Agenda for Sustainable Development, 

which Bayer expressly endorses. We 

want to make substantial contributions, 

particularly to Goal 2, which focuses on 

ending hunger, achieving food security, 

improving nutrition, and promoting 

sustainable agriculture, as well as Goal 

3, which promotes healthy lives and 

well-being for all people at all ages. We 

must make further progress and take 

advantage of the benefits offered by new 

technologies if humanity is to achieve 

these goals. This requires a renewed 

societal consensus that innovation can 

be good and beneficial. Yet, such a consensus 

can only result from an open, 

sincere, and fact-based dialogue. Only if 

we talk with one another can we bridge 

the gaps that are opening up between 

the political camps and the “bubbles” on 

the internet. This completes the circle, 

because such a dialogue requires trust. 

Our efforts on behalf of transparency are 

intended to make a contribution to this 

endeavor – as a step to create renewed 

trust and as an investment in the future 

viability of society. 

Kemal Malik is Member of the Board of 

Management of Bayer AG responsible for 

Innovation. 


SPINNING A YARN WITH A 

75 PERCENT CO 2 

EMISSIONS 

REDUCTION 

By Emmanuel Colchen and Valérie Bouckaert, Beaulieu International Group 

Globally, more and more 

people are moving away 

from the countryside and 

into urban areas. Big cities 

are becoming megacities. 

According to the UN, by 2050, 

almost 70 percent of the 

world’s population will be 

living in urban regions, 

metropolises, and megacities. 

This poses new 

challenges for construction, 

mobility, health, and 

sustainability at work 

and at home. Beaulieu 

International Group is 

following these trends 

intently. It has developed 

and is producing new types 

of polyamide yarns to match 

these growing demands 

for health and sustainability, 

specifically in carpeting. 

Carpets and rugs are ubiquitous: They 

appear as broadloom carpets, carpet tiles 

and rugs in homes, as well as in professional 

settings and vehicles, to name but 

a few uses. The contact surfaces of these 

products are often made from industrially 

produced yarn. Yarns were some of the 

very first products manufactured on an 

industrial scale. Their developers have not 

forgotten their pioneering role in innovation, 

and the sector is taking significant 

steps to reduce its carbon footprint. 

Chief among these companies is 

Beaulieu International Group’s Engineered 

Products division. Its EqoBalance® 

yarns allow a reduction by 75 percent 

of the total CO 2 

emission during entire 

production steps. EqoBalance® replaces 

non-renewable resource-based polymers 

in yarn creation with polymers based 

on renewable sources – in this case, 

biomass. 

The perfect blend of organic and 

synthetic 

Replacing non-renewable resources with 

sustainable resources 

Beaulieu produces polyamide and polypropylene 

yarns, both of which are synthetic, 

as opposed to yarns from sheep 

or alpaca wool, for example. Synthetic 

yarns are made from polymers. Traditionally, 

these require fossil fuels to be 

manufactured. EqoBalance® replaces this 

fossil fuel component with raw material 

from biomass. This method is called “biomass 

balance” and is one of the chemical 

industry’s recent innovations. 

Our sustainable yarns are produced 

using the biomass balance principle that 

is similar to green electricity. From the 

very start of the supply chain, natural 

renewable resources such as biogass or 

bio-naphta are used along with fossil 

fuels to produce polymers that provide 

the basis for yarn production. The result 

is EqoBalance® yarns. Fossil resources 

needed to manufacture EqoBalance 

are verifiably replaced with renewable 

resources in the value chain. 

The change that requires no change 

at all 

The same quality and the same process 

at a lower environmental cost 

CO 2 

is one of the world’s most notorious 

greenhouse gases. One of its properties 

is that it traps heat in the atmosphere; 

another is that it increases acidity levels 

in the ocean. Industrial CO 2 

emissions 

are a globally recognized challenge, 

and tackling that challenge begins at 

the start of the manufacturing process. 

Using yarns that promise 75 percent 

fewer CO 2 

emissions during the production 

process is an attractive option. But 

does it change anything for the carpet 

manufacturer? 

It does not. Carpet manufacturers can 

use the same machines and production 

techniques with the EqoBalance® yarn 

as they would have used with traditional 

polyamide yarns. It requires no additional 

investment or product development, 

and it does not affect the end-product’s 

quality in any way. 

94 


Starting out in pole position 

Green compliance as an increasing 

necessity 

If textile companies use EqoBalance® yarns, 

they already start out ahead in the race 

for climate action. Carpet manufacturers 

or carpet tile makers worldwide are also 

increasingly requesting products that are 

environmentally friendly. They want to 

achieve corporate sustainability goals, 

meet end-customer demands, or anticipate 

governmental regulation. 

Once trends gain steam and come with 

visible benefits, they can become unstoppable. 

There is no telling how fast 

sustainable yarns may spread as part of 

a wave of sustainable technologies. As 

they build momentum in one corner, 

companies will look at continuing that 

momentum in another corner. Beaulieu 

International Group is also pursuing this 

course. Its innovations in carpet yarns 

that replace fossil fuels with biomass are 

happening concurrently with the efforts 

of other divisions to make recyclable 

event carpets or to push the envelope 

in reducing flooring production waste 

near to zero. 

Would you like to know more? 

You can visit the dedicated eqobalance. 

com page to learn more about emissionreductive 

EqoBalance® yarns for carpets. 

You can also go to bintg.com and check 

out what other initiatives Beaulieu 

International Group has developed 

or is developing to help ensure that 

current and future generations inherit 

a world that is better and more 

sustainable than the one we found. 

Emmanuel Colchen, 

Global Director 

Sales, Yarns & 

Technical Textiles 

Divisions 

WHO IS BEAULIEU 

INTERNATIONAL 

GROUP? 

Beaulieu was founded in 1959 in 

Belgium and is a global producer of 

flooring solutions, engineered fibers, 

yarns and technical textiles, as well 

as polymers. The group employs 

more than 5,000 people worldwide 

and has offices and plants in 17 

countries across five continents. 


enjoyed a 2018 turnover of €2 billion, 

20 percent of which came from its 

Engineered Products division. 

It is this division that created 

the EqoBalance® yarn, based on the 

biomass balance model. 

THE INTERFACE CASE 

IN STOCKHOLM’S 

ARLANDA AIRPORT 

EqoBalance® was originally developed 

on request by Interface, a leading 

global provider of commercial flooring 

solutions. One of the company’s goals 

is to be carbon neutral by 2020 and 

carbon negative by 2040. According 

to the GlobeScan / SustainAbility 

Leaders Survey, for more than 20 

years it has been one of the world’s 

top companies in terms of sustainable 

development leadership. As such, 

Interface’s Straightforward II carpet 

tiles are created with Beaulieu’s 

EqoBalance® yarns and were used in 

the renovation of Stockholm’s 

Arlanda Airport, which handles about 

30 million passengers every year. 

Stockholm Arlanda Airport wants to 

become the leading airport in 

Scandinavia and become a role 

model for sustainability. Hence, the 

Straightforward II tiles with Beaulieu’s 

EqoBalance® yarns were a perfect fit. 

CERTIFICATIONS 

Beaulieu EqoBalance® yarn is the 

very first yarn certified by TÜV 

SÜD for meeting the new REDcert 

standard on the “use of sustainable 

biomass for material purposes in 

the chemical industry.” REDcert 

extended the initial scope of its 

standard to allow for considerations 

of impact. Sustainable technologies 

can only benefit the environment 

if they can be widely adopted or 

impact sectors with a large 

economic footprint (such as the 

tufting industry). 

As such, chemical companies 

such as Beaulieu International 

Group are increasingly relying on 

the use of sustainably produced 

and certified biomass to replace 

fossil-based raw materials. 

EqoBalance® has been validated 

and certified with an Environmental 

Product Declaration, meaning it 

complies with the ISO 14025 

standard. 


POST-CONSUMER WASTE 

STRATEGY IN A CIRCULAR 

ECONOMY 

Bergen Plastics – the European market leader of child-safe packaging for laundry capsules and 

pouches – has taken a strategic decision: By 2022 the company will use a minimum of 50 

percent of post-consumer waste polypropylene in its production process. Bergen Plastics wants 

to play an active role in the changing market and be a leader with technology that enables it to 

use recycled plastic materials for its supply of high-tech child-safe packaging in Europe. 

Bergen Plastics takes its responsibility as a major player in this sector seriously. It wants to 

think and act responsibly to ensure a future for the company and the industry. The strategy is an 

integrated part of the company, and all future thinking and directions will be challenged to meet 

the targets of the strategy. 

By Jan Atle Lossius Ellingsen, Bergen Plastics 


Bergen Plastics is a Norwegian-based 

manufacturer of thin-walled packaging. 

The company was established in 1947 and 

is one of the pioneers in the European 

plastic industry. Today, the company 

exports more than 95 percent of its products. 

Its packaging can be found on most 

shop shelves in Europe wherever laundry 

capsules are sold. Every month, millions 

of products are transported from the factory 

in Bergen to locations around Europe. 

The management of Bergen Plastics has 

for several years been exploring the possibility 

of using recycled materials in the 

production process, and preferably postconsumer 

waste materials. There are a 

few good reasons for doing so: First, the 

company is taking an active role in the 

circular economy, which is an obligation 

the company has to European consumers; 

second, this opens up new markets to 

customers who are demanding products 

with lower environmental impacts. 

Becoming the market leader is a result of 

focus, dedication, and an R&D department 

that finds motivation and inspiration in 

finding solutions and overcoming challenges 

– because it loves the customers. 

In today’s market, Bergen Plastics sees a 

96 


strong demand for making more environmentally 

friendly products, which fits 

perfectly with the company’s strategy. It 

wants to be an active part and a motivator 

for all companies looking to change 

trends and step into the circular economy. 

The management of Bergen Plastics has 

made a commitment to its owners and 

stakeholders to swap a minimum of 50 

percent of its polypropylene material 

consumption to post-consumer waste 

materials by 2022, and at the same time 

to develop new processing technologies 

and solutions that allow for reducing 

the amount of plastic being used per 

packaging unit. This is being backed up 

with investments in new technology, new 

process solutions, and R&D on child-safe 

solutions. 

For Bergen Plastics, this is not only a 

strategy, it is an important commitment 

to the Sustainable Development Goals 

(SDGs), which the company clearly wants 

to work toward achieving. For Bergen 

Plastics, Goal 12 (Responsible consumption 

and production) has a clear link to 

the company’s strategy. This is a strong 

motivation for the company and its workers, 

and it makes it easier to communicate 

the strategy to customers around Europe. 

packaging. For Bergen Plastics and the 

management strategies, the goal to create 

child-safe packaging is closely linked 

to Goal 3 (Good health and well-being). 

Bergen Plastics wants to make packaging 

available that protects children from 

any harmful contents. If this is done in 

combination with a circular economy 

strategy of using recycled materials, the 

company is taking important steps toward 

relevant targets that the UN has made 

for 2030. This is important for Bergen 

Plastics – and for all of us. 

The strategy 

of Bergen 

Plastics to 

use postconsumer 

waste materials 

and follow 

developments 

related to the 

usage of recycled 

plastic 

materials in 

the manufacturing 

of childsafe 

packaging is 

important for 

meeting internal goals and stakeholder 

commitments. But most of all, 

it is important because the company 

is making active efforts to achieve the 

SDGs and also making partnerships to 

turn the world in a more sustainable 

direction. It is good for the world and 

good for business, because a sustainable 

business is a profitable business. 

Bergen Plastics sees a growing demand 

from the market, and several of the company’s 

customers have similar strategies 

and interests in swapping packaging volumes 

from virgin materials to recycled 

materials. This provides the confidence 

to invest in new technologies and focus 

on reaching targets by the agreed deadlines. 

The company sees more and more 

companies wanting to engage with it in 

partnerships and develop solutions. The 

reasons for doing so are often based on 

the same goals, such as the SDGs and the 

motivation to create a sustainable future 

for the company, because sustainable 

thinking is good for business. 

For Bergen Plastics, a company which is 

very much driven by innovation and bold 

strategies, the target is to develop better 

solutions and standards for child-safe 

Child-safe packaging = Packaging that prevents children from opening 

packages that can contain harmful products. 

Post-consumer waste materials = These are materials made of recycled 

consumer packaging that are cleaned and re-granulated before being used 

for the production of new products. 

Laundry capsules / pouches = These are water-soluble pouches containing 

highly concentrated laundry detergents. These dissolvable pouches are 

made of polyvinyl alcohol (PVA) or derivatives of PVA. These pods are convenient 

to use and comparatively more efficient than conventional liquids or 

powder detergents. 


CLIMATE ACTION: 

CARBON NEUTRAL IN 2020 

With technology “Invented for life,” the Bosch Group aims to help in solving the challenges society 

faces. To secure the livelihoods of current and future generations, the company is taking smart 

approaches to make all of its business fields more sustainable. Bosch sees connected products 

and services as a way of protecting natural resources and making the lives of people around the 

world easier. At the same time, the company also relies on smart, innovative solutions in its 

interactions with associates as well as its activities related to social responsibility. With this 

comprehensive approach, Bosch contributes to making life, work, and mobility more sustainable. 

By Annette Wagner and Torsten Kallweit, Bosch 

For Bosch, there is no doubt that it can 

only do business long term in a world 

that is socially and ecologically intact. At 

all times, the company’s aim is to secure 

its long-term success while at the same 

time protecting the natural environment 

on which present and future generations 

depend. The company has set itself 

ambitious new targets for 2025, and it is 

stepping up efforts to adapt its activities 

to the challenges facing society. When 

formulating these targets, the company 

analyzed global megatrends and today’s 

most pressing sustainability issues, conducted 

a benchmark analysis of ecologically 

progressive companies, and held 

in-depth dialogues with stakeholders. In 

the future, the focus will be on six globally 

important issues: climate, energy, water, 

urbanization, globalization, and health. 

Health 

1 | Health + Safety 

2 | Substances of concern 

Climate 

1 | CO 2 

scope 1 + 2 

2 | CO 2 

scope 3 

Energy 

New Dimensions 

Sustainability 2025 

1 | Energy efficiency 

2 | Renewable energy 

Water 

1 | Water scarcity 

2 | Water quality 

When it comes to the climate, for instance, 

Bosch is committed to climate 

action and the Paris Agreement’s 2°C 

target. As a sign of this commitment, the 

company aims to achieve carbon neutrality 

globally in 2020 by focusing both on 

direct emissions from its own fuel combustion 

and indirect emissions relating to 

Globalization 

1 | Responsibility 

2 | Supply chain 

Urbanization 

1 | Life cycle assessments 

2 | Resources + Waste 

98 


procured energy. In the short term, there 

are two key levers for achieving this: first, 

procuring green electricity from existing 

renewable energy generation facilities 

and, second, carbon offsets. The program 

will be stepped up significantly between 

2020 and 2030 by two additional levers: 

with Bosch investing 100 million euros 

in energy-efficiency measures each year 

and systematically expanding the share 

of new clean power. In other words, new 

power plants based on renewable energy 

will be constructed as a result of the 

company’s commitment. Moreover, the 

company’s own power generation from 

renewable resources will be increased at 

Bosch locations. 

Climate scenarios forecast that existing 

water risks will become more acute as a 

result of scarcity and poor quality. The 

company has pinpointed 61 locations in 

regions with water scarcity and intends 

to reduce its absolute water demand in 

those locations by 25 percent by 2025. 

Investments of €10 million a year will 

support this aim by quickly bringing 

about success and improvements where 

they are needed. 

Every day in our increasingly urbanized 

world, products are used that have 

an ecological impact, whether during 

their manufacturing processes, use, or 

at the end of their useful lives. To keep 

this footprint to a minimum, Bosch already 

carries out lifecycle analyses for 

its main product groups, which account 

for roughly 50 percent of its sales. The 

aim is to continue to broaden the scope 

of these analyses and to discover potential 

ways of further reducing products’ 

ecological impacts, true to the idea of a 

closed-loop or circular economy. When 

it comes to waste avoidance in manufacturing, 

Bosch will focus in the future on 

reducing hazardous waste and increasing 

its recycling ratio. 

As a globally operating company, Bosch 

also assumes responsibility worldwide. 

Accordingly, Bosch also includes its suppliers 

in its efforts to do business sustainably 

and responsibly. The aim here is to 

continue to act with determination to 

tackle the ecological and social risks in 

the supply network. 

Bosch also aims to minimize risks to 

people’s health and their local environments 

– in this area, occupational safety, 

compliance with substance bans, and 

reductions in levels of hazardous substances 

are key considerations. In 2020 

at the latest, the company aims to have 

reduced its accident rate to a maximum 

of 1.7 accidents per million hours worked. 

Climate action by Bosch with carbon 

neutrality globally by 2020 

The focus is placed, above all, on energy 

efficiency and generating energy ourselves 

from renewable sources, as these 

two factors constitute the major levers 

for achieving our climate goal sustainably. 

By 2030, Bosch wants to save 1,700 

GWh of energy and generate 400 GWh 

of its energy needs itself from renewable 

sources. In order to also support energy 

efficiency measures financially, the board 

of management of Bosch has approved 

an additional annual budget of €100 million 

for the period 2018 through 2030. 

At present, Bosch’s energy consumption 

consists largely of electrical power used 

to operate plants and machinery in production; 

heat energy used for heating 

and air-conditioning in buildings; and 

operating furnaces at the foundries. On 

aggregate, Bosch Group entities used 

some 7,844 GWh of energy in 2018, 

equivalent to 3.26 million metric tons 

of CO 2 

emissions. Emissions intensity 

relative to added value has thus fallen 

by 31.1 percent compared with 2007. 

One important starting point on our path 

toward achieving climate neutrality at 

Bosch in 2020 is to source “green” electricity 

from existing facilities generating 

renewable energy with the corresponding 

guarantee of origin. We want to consistently 

raise the quality of the measures 

by 2030, focusing on new clean power 

– that is, exclusive long-term purchasing 

agreements with investors in new facilities 

generating renewable energy that 

have yet to be built (e.g., wind turbines 

or solar parks) and our own facilities 

generating renewable energy. This way, 

Bosch will make an additional contribution 

to climate protection, as these new 

facilities will be built only as a result of 

our commitment. As of 2019, we have 

started to purchase a significantly higher 

proportion of electricity from renewable 

energy sources. To this end, we are in the 

process of conducting market analyses 

in many countries. 

The other important starting point for 

achieving our climate goal is offsetting 

measures (carbon credits). These are necessary 

to offset CO 2 

emissions from combustion 

processes (heating, process heat). 

In countries where the levers described 

above are not sufficiently available to 

achieve carbon neutrality (e.g., where 

green electricity can only be purchased to 

a limited extent), carbon offsets are also 

necessary. When choosing a project, we 

apply very high standards, for example 

the Gold Standard. Carbon offsets are to 

be gradually scaled back by 2030, and 

Bosch is stepping up investments for 

energy efficiency. 

“ 

When it comes to the 

climate, words are not 

enough. Companies 

need to aim for 

carbon neutrality, 

here and now. 

Dr. Volkmar Denner, 

chairman of the board of management 


CARGOLUX: THE LEAN AND 

GREEN AIRLINE 

In an industry as reliant on fossil fuel as aviation, Cargolux strives to make a positive difference. 

As an airline that is strongly committed to corporate social responsibility, Cargolux is at the 

forefront of technological innovation and the introduction of lean business procedures. Efficient 

freighters, environmental conservation, CO 2 

reduction, and animal welfare are among 

Cargolux’s top engagements toward a cleaner, more ecologically aware operation. 

By Jane Bretin, Cargolux 

Moved by its pioneering spirit, Cargolux 

was one of the first all-cargo carriers to 

make CSR an intrinsic part of its operation. 

From integrating sustainable principles 

in its business strategy, to engaging 

with its stakeholders, the airline has 

always defined its priorities with a strong 

sense of global responsibility. Accordingly, 

the company adopted the United 

Nations 2030 Agenda for Sustainable 

Development to strategically contribute 

to the 17 Sustainable Development Goals. 

True to its pioneering spirit, the company 

became the launch customer for the 

B747-8F freighter, which remains the 

most technologically advanced freighter 

operated today. 

A cleaner operation – one step at a time 

stringent environmental requirements. 

These included optimal fuel efficiency 

and significant noise-reduction features 

for quieter movements, thus demonstrating 

the airline’s commitment to the 

communities it operates into. 

In an effort to further its environmental 

commitment, Cargolux has established 

a dedicated fuel efficiency program that 

identifies potential savings areas. The 

responsible committee organises roundtables 

with stakeholders from across the 

company to encourage open discussion 

about how potential energy-related 

savings can be addressed and improved. 

This careful analysis has generated a number 

of internal procedures to further lower 

our carbon footprint. Optimized flight 

plans, tailor-made approaches, threeengine 

taxiing after landing, and the use 

of ground power during turnarounds are 

a sample of initiatives that contribute to 

both lower fuel consumption and reduced 

CO 2 

emissions. Based on recommendations 

from the International Air Transport 

Association, these measures are part of 

a mid- to long-term strategy that aims 

toward carbon-neutral growth. Cargolux 

has so far managed to yield significant 

savings in this area, exceeding the official 

guidelines for fuel and carbon efficiency. 

As an airline, reduction of CO 2 

emissions 

has become a primary area of focus in 

our effort to establish a greener, leaner 

operation. After adopting the 747-400 

freighter in the 1990s, Cargolux played 

an instrumental role in the development 

of Boeing’s latest wide-body freighter, 

the 747-8F. As the launch customer for 

this new, more fuel-efficient aircraft, 

Cargolux took part in discussions and 

worked closely with the manufacturer 

to ensure the 747-8 model respected 

100 


Encouraging ethical business 

With the unwavering support of its 

upper management, Cargolux has 

increasingly led its operation with a 

strong ethical stance, especially when 

it comes to animal welfare. An expert 

in the transport of live animals, the 

company operates these missions in full 

compliance with all applicable regulations 

and goes one step further with 

the establishment of stringent internal 

policies to ensure that animal welfare 

is a top priority throughout the transportation 

process. Over the years, the 

airline has developed a growing list of 

animal or animal-related commodities 

that it refuses to carry for ethical reasons. 

Beyond its numerous embargoes, Cargolux 

actively champions a more ethical 

business model by raising awareness 

about wildlife trafficking throughout 

its extensive network. 

Cargolux has a strong policy 

surrounding captive animal 

transport. The company 

has formerly banned 

all shipments 

of animals 

brought from the wild to restrictive 

environments, and it does not transport 

wildlife, especially primates, for pharmaceutical 

testing either. One of Cargolux’s 

major projects in 2019, a testament to 

its engagement toward animal welfare, 

is the sponsoring of a flight to relocate 

two beluga whales from an entertainment 

park in Shanghai, China, to the 

world’s first open-water beluga sanctuary, 

in Iceland. 

Enhancing the legal framework for a 

transparent operation 

With business activities spanning the 

globe, it is vital for Cargolux to ensure 

that both national regulations and 

company-devised policies are complied 

with throughout its extensive network, 

which includes sensitive geographical 

areas. In order to harmonize procedures, 

the Cargolux Compliance and Ethics 

Program was launched in 2009, with a 

focus on due diligence. Six areas of expertise 

– anti-trust, bribery, embargoes 

and military shipments, fraud, personal 

data, and money laundering – were 

devised to ensure all potential threats 

were covered. 

As an all-cargo carrier whose core business 

is the transport of commodities 

by air, Cargolux is aware of its central 

position in the supply chain and its 

responsibility toward logistics partners. 

The airline is therefore intent on keeping 

these suppliers and service providers 

informed about all the latest policy or 

procedural updates. All staff working 

for the organization also undergo recurrent 

training to ensure a comprehensive 

awareness about the company’s stance 

toward compliance and ethics matters. 

A holistic approach 

Cargolux is committed to involving all 

its employees in CSR projects to promote 

and establish these principles at 

the heart of its business models. From 

paperless operations, lean and agile 

processes, and a business model focused 

on sustainability, we strive to weave 

this approach into our company DNA. 

Our workforce is our strongest asset, 

and only with their support and engagement 

can we built a better, greener 

airline. 

2007 

Cargolux signs 

United Nations 

Global Compact 

2008 

Cargolux becomes 

a founding 

member of SAFUG 

2011 

First Boeing 

747-8F in the 

company’s fleet 

2014 

First airline 

worlwide to be 

GDP certified 

2016 

First airline 

certified Lean & 

Green 

2019 

Beluga whales 

flown back to 

Iceland 

This charter has 

been adopted by 

over 13,000 

companies 

worldwide, 

pledging to 

embrace, support, 

and enact a set of 

core values in the 

areas of human 

rights, labor 

standards, the 

environment, and 

anti-corruption. 

The Sustainable 

Aviation Fuel 

Users Group is 

focused on 

accelerating the 

development and 

commercialization 

of sustainable 

aviation 

biofuels. 

Cargolux is the 

launch customer 

of the Boeing 

747-8F, a 

state-of-the-art 

airplane which 

consumes 16% 

less fuel than the 

previous model. 

Its noise footprint 

is also 30% 

lower. 

Cargolux 

management 

system meets the 

requirements of 

the EU directive 

“Guidelines on 

Good Distribution 

Practice of 

Medical Products 

for Human Use,” 

as well as World 

Health Organization 

guidelines. 

The airline was 

recognized for its 

commitment to 

improving its 

carbon efficiency 

by 10% within five 

years. 

Cargolux is 

SeaLife Trust’s 

official transport 

partner, sponsoring 

the flight to 

relocate belugas 

from an entertainment 

park in 

Shanghai, China, 

to the world’s first 

beluga whale 

sanctuary, in 

Iceland. 


SOCIAL RESPONSIBILITY 

PRACTICED THROUGH 

CORPORATE VOLUNTEERING 

As a corporate group, we take responsibility for society in 

Austria. We are dedicated to this issue as part of our 

commitment to CSR. Our group’s corporate volunteering 

program is also part of our CSR strategy and the Good for 

Austria area of activity. We aim to make a contribution and fulfill 

our social responsibility. This is exactly where our corporate 

volunteering program #ZUSAMMEN.HELFEN comes in. 

GROUP 

By Susanne Hirner, Casinos Austria and Austrian Lotteries Group 

The social commitment of employees has 

a long tradition in our corporate group. 

Volunteering began already in 2013: Each 

employee of the corporate group was 

granted a day to pursue humanitarian 

activity. The chance to engage in social 

activities as an integral component of 

the company was highly popular. 

In 2018 the opportunity to help others 

was further expanded. All employees 

have five days of full pay while making 

a social commitment and offering service 

to society. The new corporate program 

#ZUSAMMEN.HELFEN is voluntary and 

employees can choose from a variety of 

social projects. After all, personal will 

and commitment count. This way, both 

parties – the employee and the organization 

receiving support – can get the 

maximum benefit out of it. 

“Since 2013, when the foundations for 

corporate volunteering at Casinos Austria 

and the Austrian Lotteries were laid, our 

employees have spent numerous hours 

volunteering with heart and soul. This 

also shows that our social commitment 

Bettina Glatz-Kremsner, Director General 

102 


is truly practiced and broadly supported,” 

says the Director General, Bettina Glatz- 

Kremsner. 

In all, a formidable 2,361 hours of social 

engagement were dedicated in 2018 – 

equivalent to around 300 eight-hour 

working days. Our employees spent these 

300 working days at various social institutions 

in Austria. Caritas, Red Cross, and 

Hilfswerk cover a wide range of auxiliary 

social activities. For activities in senior 

citizens’ homes and facilities for disabled 

people, empathy was needed above all 

else; at summer festivals with children 

and adolescents, physical fitness was 

also required. In our commitment to 

the social transfer organization Wiener 

Tafel and the social markets, the focus 

was primarily on collecting foodstuffs 

and making it available. 

An indispensable contribution for 

both sides 

Our corporate volunteering program 

#ZUSAMMEN.HELFEN benefits both nonprofit 

organizations and us as a company. 

For the nonprofit organizations, volunteer 

support is indispensable. Most associations 

in Austria are financed through 

sponsorship and private donations; the 

number of paid employees is commensurately 

low. “Time is money” proves 

wholly true in nonprofit organizations. 

The time donated by our employees is an 

enormous help for facing the ecological 

and social challenges of society. 

The aspect of meaning is the primary 

motive for our employees to get involved 

socially. In addition, we see our corporate 

volunteering program as a tool for 

employee development. By getting to 

know a new environment and pursuing 

activities unfamiliar to them, employees 

develop new interpersonal and professional 

skills and sharpen existing ones. 

The idea of responsibility and sustainable 

action has a long tradition in the Casinos 

Austria and Austrian Lotteries Group. At 

the time the company was founded, in 

1967, its philosophy was already based 

on the idea that society should benefit 

from gaming. 

Today, responsibility within the corporate 

group is perceived as the sum of 

all CSR measures, both internally and 

externally. For us, CSR means making 

all business activities sustainable beyond 

legal obligations and regulations and 

making social responsibility a consistent 

principle of our actions. 

Our 2020 CSR strategy demonstrates our 

commitment to international standards 

of conduct, in particular the UN Global 

Compact and the Sustainable Development 

Goals. It is embedded in our CSR 

management system in compliance with 

the Austrian “Corporate Social Responsibility” 

standard ONR 192500 and shows 

which areas and topics are particularly 

relevant for us. 

For more information, please visit: 

www.casinos.at, www.lotterien.at 

CSR STRATEGY 2020: BEST CLASS FOR PEOPLE, IN GAMING, 

AND FOR THE ENVIRONMENT 

TOP EMPLOYER 

COMPLIANCE ON 

ALL LEVELS 

SUSTAINABLE USE 

OF RESOURCES 

PEOPLE GAMING ENVIRONMENT 

GOOD FOR AUSTRIA 

PLAYER PROTECTION OF 

THE HIGHEST QUALITY 

CLIMATE ACTION 


WE ARE KEEPING OUR 

COMMITMENT TO ACHIEVE 

THE SDGs 

CEMEX is a global building materials company that provides high-quality products and reliable 

services to customers and communities. CEMEX has a rich history of improving the well-being of 

those it serves through innovative building solutions, efficiency advancements, and efforts to 

promote a sustainable future. 

By Martha Herrera, CEMEX 

Our approach to the UN Sustainable 

Development Goals 

Although we contribute to the majority 

of the UN Sustainable Development 

Goals (SDGs), we also identified the goals 

for which we can contribute even more 

in order to achieve the goals by 2030. 

These SDGs are connected to our company’s 

strategy and are reflected in our 

company’s 2030 sustainability targets. 

We will continuously track and measure 

our progress toward these goals through 

key indicators and disclosures. 

We are convinced that by engaging with 

these global goals through our day-today 

activities, we are building a better 

future by tackling global challenges such 

as poverty, inequalities, climate change, 

environmental changes, lack of proper 

education, and capability development, 

among others. 

Collaborating and sharing best 

practices with UN initiatives 

• We shared our experience in the 2018 

United Nations High-Level Political Forum 

on how multistakeholder collaborations 

and investments in urban areas 

contribute to the sustainable growth of 

prosperity and the reduction of poverty. 

• We joined the Global Board of UNISDR 

ARISE (UN Office for Disaster Risk Reduc- 

OUR SDG HISTORY 

CEMEX has committed to 

the SDGs and identified the 

goals that are more 

connected to our strategy, 

impacts, risks, and 

opportunities. 

We prioritized the SDGs by 

analyzing their underlying 

targets and indicators, 

linking them to CEMEX 

2015 2017 2018 

materiality assessment 

before identifying 11 SDGs 

to which CEMEX can 

contribute directly. 

We selected five priority 

SDGs that represent 

opportunities to contribute 

more and identified new 

business opportunities 

connected to our business 

strategy. 

104 


tion / Private Sector Alliance for Disaster 

Resilient Societies) to contribute toward 

building resilient cities and communities; 

fostering collaboration between 

academia, the public and private sectors, 

government, and civil society; while 

launching the ARISE network in Mexico. 

• We are further leading the UN Global 

Compact in Mexico, encouraging more 

companies to become partners and to 

contribute and explore business opportunities 

while reducing negative 

impacts and creating shared value for 

society. 

PRIORITY SDGs 

LINKING SDGs 

UNDERLYING SDGs 

OUR 2030 SUSTAINABILITY AMBITIONS 

 

 

 

 

 

 

 

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SHARING SKILLS FOR A 

BRIGHTER FUTURE 

Globalization, demographic change, and digitalization are disrupting societies and labor markets 

and provide enormous opportunities as well as the potential for a better world. However, these 

developments do not benefit all equally, and in some cases they occur at the expense of others. 

Just to name a few challenges, more than 750 million adults worldwide are unable to read and 

write, 200 million people are unemployed, and automation is expected to replace two billion jobs. 

This requires politicians and companies to search out solutions for these societal challenges to 

ensure participation in the progress. At Deloitte, we want to counter these trends via our biggest 

asset: Many Deloitte professionals are volunteering their wide-ranging expertise to groups that 

include immigrants, children, and care-sector workers, thereby passing on key tools to help 

people thrive in today’s fast-changing society. 

By Marius Trapp, Deloitte 

For refugees who are looking for work, 

the question of how to kick-start their 

professional lives in a new culture is 

often daunting. That stumbling block 

became all too obvious to Simon Schoen, 

a Deloitte manager, after he spoke to 

a friend who ran a refugee shelter. As 

part of a company-wide push to extend 

know-how to disadvantaged groups, the 

manager sought to shrink the gap between 

refugees’ aspirations and their 

day-to-day reality. 

He came up with the idea to start the 

“GetInSites” initiative, which organized 

visits to companies for young migrants, 

offering them a first glimpse of the working 

world in their adopted home. “I 

didn’t want to only donate money or talk 

about integration – I wanted to dive in,” 

says Schoen, whose workshops included 

taking a group of young Iraqis, Somalis, 

and Iranians to large companies from a 

range of different industries. 

“I expected a good atmosphere when 

our heterogeneous group met in a professional 

context, but it came as a big 

surprise that it went so well,” he says. 

“We all left with many new ideas and 

impressions.” 

He is one of many of Deloitte people 

seeking to exert social influence beyond 

the daily workload. Their participation 

forms part of the company’s WorldClass 

program, which seeks to empower 50 

million people to succeed in the rapidly 

changing global economy. By bringing 

individual specializations that range 

from auditing to legal services to consultancy, 

Deloitte is offering wide-ranging 

skills and support to educational and 

social projects. 

From South African startups to 

reflective hats 

Within Germany alone, the company’s 

staff has thrown its weight – and diverse 

know-how – behind a range of projects 

in recent years. These have included 

helping socially-oriented startups in 

Cape Town, South Africa, attract investment; 

assisting a school enterprise 

that manufactures hats with reflective 

pom poms; and a scheme to accompany 

new recruits to the care industry during 

their early days in the notoriously shortstaffed 

sector. 

By incorporating pro bono work into 

their workday, our people contribute 

their expertise to benefit society as a 

106 


whole, effectively “making an impact 

that matters,” in accordance with our 

overarching purpose. The numbers tell 

the story. Some 286,000 Deloitte professionals 

around the globe are busy creating 

opportunities for those left behind. 

By collaborating with businesses, government, 

and educators, we are transforming 

learning and enabling individuals to 

hone their skills for future job demands. 

Our efforts are timely. Inequality and 

social polarization are ascending worldwide, 

while many are missing out on 

the fast-paced changes offered by technology. 

This predicament underscores 

the importance of the UN Sustainable 

Development Goals (SDGs). 

REWARDING HIDDEN MOVERS 

Contributing to the SDGs 

We are contributing toward these goals, 

in particular SDG 4, which strives for 

quality education; SDG 8, which seeks 

decent work and economic growth; and 

SDG 17, which aims at forging crosssectoral 

partnerships. 

One example of how we are pushing for 

these three SDGs is a project that supports 

refugees and migrants as they train 

to be nurses or caregivers. Supported by 

Deloitte since March 2018, the multistakeholder 

project was the brainchild 

of the St. Mary’s and St. Anna’s Hospital 

in the small industrial German city of 

Ludwigshafen am Rhein. 

Once a year, the Deloitte Foundation gives its Hidden Movers Award to 

selected educational projects. The winners not only receive prize money, but 

since 2015, they have also profited from made-to-measure, pro bono advice 

from Deloitte. Multifaceted support is given to educational projects, spanning 

financing, resource planning, project management, fundraising, marketing, 

and much more. It is a two-way street: Deloitte people also benefit from 

applying their specialties beyond the usual structures and from having the 

chance to make a real social impact. 

Weserholz, a project in Bremen, is among the beneficiaries of Hidden Movers. 

It enables refugees – mostly from Arab and African regions – to work with 

carpentry and design specialists, helping the immigrants take initial steps 

toward the job market. The integration venture was awarded €25,000. 

We accompany these new recruits while 

working with them to improve their 

language comprehension as well as social 

and nursing skills. This assistance comes 

from a range of directions: Deloitte’s 

Health Care, Human Capital Advisory 

Services, Global Investment and Innovation 

Incentives, and Deloitte Digital 

partners all pool their expertise on a 

pro bono basis. As well as helping put 

theoretical knowledge into everyday 

practice, we support future nurses and 

caretakers during their exams, using 

both classical and digital approaches 

to learning. 

The project makes a dual social contribution 

– aiding the smooth integration 

of refugees while simultaneously easing 

the shortage of skilled workers within 

the care sector. Moreover, the benefits 

extend to Deloitte itself, fueling an inhouse 

sense of pride and accomplishment. 

“It is a real win-win situation if, 

together with the partners involved, we 

can manage to motivate more people 

with a migrant background to qualify 

in nursing care and provide them with a 

customized learning concept in the long 

term,” says Ibo Teuber, Director of Life 

Sciences & Health Care. “Very compelling 

that Deloitte could lay a key foundation 

with this pro bono project.” 

For more information about Deloitte 

WorldClass, please visit: www2.deloitte.com/ 

de/de/pages/corporate-responsibility/topics/ 

corporate-responsibility 


A GREEN NETWORK TO HELP 

THE CLIMATE 

When we come down with a fever, we can fight it with leg compresses and effective medicines. 

Finding a remedy for an increasingly warming planet is more difficult. One thing is clear: Emissions 

of greenhouse gases must be reduced drastically. Deutsche Telekom has established a clear plan 

for doing so. The Group has approved new, ambitious climate-protection targets that are based on 

the present state of scientific knowledge: We are committed to reducing our CO 2 

emissions by 

90 percent by 2030, compared to 2017 levels. An important milestone will already be reached in 

2021, when the Group will source all of its electricity from renewable sources. Deutsche Telekom 

has also targeted indirect emissions from the supply chain and the lifecycles of our products: 

Emissions per customer will be cut by 25 percent by 2030, compared to 2017 levels. 

By Heinz-Gerd Peters, Deutsche Telekom 

“We want to build the future, not obstruct 

it,” says CEO Tim Höttges about the 

Group’s new climate-protection targets 

while speaking at the 2019 shareholders’ 

meeting. “Climate protection is one of 

the key challenges of our age. With the 

new targets through 2030, we are taking 

our responsibility seriously and are acting 

decisively, quickly and, at the same 

time, in a sustainable manner.” 

A tradition of climate protection 

The Deutsche Telekom Group formulated 

its first climate-protection target back in 

1995 and has been firmly committed to 

climate protection ever since. Assuming 

responsibility for a low-carbon society 

has been one of the three main fields of 

action of Deutsche Telekom’s corporate 

responsibility strategy since 2008. The 

current climate-protection target expires 

in 2020 and is set to be reached by the 

To assess the quality of our internal 

climate targets, Deutsche Telekom also 

submitted them to the Science Based 

Targets initiative (SBTi) for review. SBTi 

is an independent group of experts that 

evaluates companies’ climate-protection 

targets to determine whether – on the 

basis of current science – they will contribute 

toward limiting global warming 

to no more than 2°C above pre-industrial 

levels, in line with the declarations of 

the UN Paris Agreement. The results of 

the evaluation were gratifying: SBTi approved 

Deutsche Telekom’s targets after 

a thorough review. 

108 


company. As Birgit Klesper, Senior Vice 

President for Group Corporate Responsibility, 

emphasizes: “We are recording 

and reducing our CO 2 

emissions across 

the entire value chain, enhancing energy 

efficiency, increasing the share of renewable 

energy we use, conserving resources, 

and reducing environmental impacts.” 

Obstacles and launch pads 

The way to a climate-friendly society is no 

walk in the park. A particular challenge 

to meeting the Deutsche Telekom Group’s 

new target will be to decouple emissions 

from energy consumption. As a result of 

network buildout and increasing data 

volumes – due to the implementation 

of 5G technology, for example – energy 

demand will grow in the coming years. 

To cut emissions despite this growth 

in demand, the Group is taking a twopronged 

approach: It is implementing 

energy-efficiency measures and replacing 

obsolete, energy-intensive technologies 

with more efficient, modern systems, as 

well as sourcing renewable energy on a 

grand scale to operate the infrastructure. 

Already 2021, Deutsche Telekom will only 

use electricity from renewable sources at 

all of its sites worldwide. To achieve this 

target, the Group is sourcing more green 

electricity directly, acquiring corresponding 

guarantees of origin, and concluding 

power purchase agreements, as is the case 

in the United States. Whenever possible 

and practicable, we are also investing in 

our own power-generation systems. At 

technology sites in Germany, we were 

already operating more than 300 of our 

own solar photovoltaic plants by the 

end of 2018. 

In addition to network operations, data 

centers are an important factor for the 

Group’s power consumption. We are 

pooling our data traffic in just a few 

particularly efficient data centers. The 

PUE (Power Usage Effectiveness) figure 

is the central measure of energy efficiency. 

Since 2008, we have succeeded 

in reducing the average PUE factor at the 

T-Systems data centers in Germany from 

1.85 to 1.57. We have even set a PUE 

target of 1.3 for the new high-efficiency 

data center in Biere in the German state 

of Saxony-Anhalt. 

From these many pieces, we are building 

a green network that gives customers all 

the opportunities that digitalization has 

to offer, while minimizing emissions of 

harmful greenhouse gases at the same 

time. 

Positive leverage: The enablement 

factor 

Cutting emissions from our own operations 

is just one side of the coin: Smart, 

energy-efficient technology can also help 

reduce emissions among our corporate 

customers, companies, and consumers. 

Thanks to cloud computing, customers 

can do without their own servers, for 

instance. Products such as smart household 

devices can help people make a 

contribution toward climate protection 

in their private lives. 

We at Deutsche Telekom call this the 

enablement factor. According to company 

calculations, the positive CO 2 

effects 

facilitated for customers in Germany 

in 2018 were 85 percent higher than 

the company’s own CO 2 

emissions (an 

enablement factor of 1.85 to 1). Overall, 

products and solutions generated positive 

CO 2 

effects for Deutsche Telekom’s 

customers, amounting to 12.1 million 

metric tons. 

Worldwide implementation 

Our climate-protection efforts have been 

following the motto “think globally, act 

locally” since the 1990s. Employees at 

all of the Deutsche Telekom Group’s 

national companies are working to make 

the “Magenta Giant’s” business activities 

more climate-friendly. Magyar Telekom, 

our Hungarian holding, has had a zero 

carbon footprint for more than three 

years, for example. On the other side of 

the Atlantic, T-Mobile USA committed 

back in 2017 to using renewable-energy 

sources exclusively by the year 2021. 

Beyond our direct footprint 

Through extensive stakeholder dialog 

activities, Deutsche Telekom also promotes 

climate protection beyond the 

company’s borders. In January 2019, 

the CDP honored the company’s commitment 

to climate protection in the 

supply chain once again with a rank in 

the CDP’s Supplier Engagement leader 

board. This means Deutsche Telekom 

belongs to the top 3 percent of the more 

than 5,000 companies evaluated. 

Another example is the education 

program entitled “Ctrl-Shift: Save the 

Climate – Information and Communication 

Technologies as Allies in Climate 

Protection.” DT’s Greek subsidiary 

COSMOTE implemented this program 

along with the MEDITERRANEAN SOS 

Network (MedSOS). The program’s 

objective is to educate and train young 

people at the primary and secondary 

education levels, along with educators, 

on the ways in which information and 

communication technologies can contribute 

to energy conservation, climate 

change mitigation, and adaptation. 

During the 2017/2018 academic year, 

more than 1,500 students participated 

in the program. 

With these steps, the Group is working to 

enable the next generation and employees 

at other companies to pursue climate 

protection effectively and sustainably, 

beyond our own efforts, so they can 

#takepart in building a climate-friendly 

future for everyone. 


EFFECTIVE PARTNERSHIPS 

FOR SUSTAINABLE 

COMMUNITY DEVELOPMENT 

The EDF Group has established a number of partnerships involving civil society that it believes are 

essential to guaranteeing the successful implementation of its strategic project, CAP 2030. 

By EDF Group 

The EDF Group has made two interesting 

observations: firstly, that companies need 

to broaden their core business, incorporating 

complementary expertise to work 

more efficiently and more effectively; 

secondly, that they must increase and 

combine resources and skills to tackle 

the most pressing sustainable development 

issues, primarily the need to 

protect biodiversity as well as combat 

climate change and the exacerbation of 

vulnerabilities. 

That is why the EDF Group implemented 

a strategy 10 years ago to establish 

partnerships with key organizations in 

France and around the world working in 

a variety of areas – such as biodiversity, 

vulnerable populations, dialogue, and 

consultation – related to the environmental 

transition. 

Partnerships that change the way 

we work and prepare the future to 

protect biodiversity 

In France, the EDF Group has formed 

long-term partnerships with many prominent 

names in biodiversity, including 

the National Museum of Natural History 

(MNHN), the Society for the Protection 

of Birds (LPO), the natural reserves association 

(RNF), the International Union 

for Conservation of Nature (IUCN) 

French Committee, the Federation of 

National Botanical Conservatories (FCBN), 

the French Federation of Natural Area 

Conservatories (FCEN), and the French 

Society for the Study and Protection of 

Mammals (SFEPM). 

EDF GROUP CHARTER OF SUSTAINABLE 

DEVELOPMENT PARTNERSHIPS 

We strongly believe that our partners (non-profit organizations, NGOs, 

educational institutions, and research bodies) represent important allies 

in our effort to make progress and successfully reach the corporate social 

responsibility targets we have set for ourselves. We never lose sight of this 

goal as we work together on matters that are of the utmost importance 

not only to communities but also to EDF, such as preserving biodiversity, 

combating climate change, protecting vulnerable populations, and organizing 

consultation processes. We will all benefit from working to bring about the 

transition toward a more environmentally friendly, fairer, and more united 

society. We are not alone in thinking this way, and the time has come to act. 

We form partnerships to maintain a high level of expertise on complex and 

ever-changing issues, foster cooperation by working together on community 

studies or projects, and develop mutual understanding, which will ultimately 

enable us to communicate and move forward in a way that recognizes and 

celebrates our differences. Different points of view play a key part in any 

partnership and, more broadly speaking, any dialogue with stakeholders. 

Each year, we draft an annual agreement to clarify our mutual commitments 

in accordance with EDF’s policies and pledges on ethics, compliance, and 

responsible communication. That is why we establish, work in, and assess 

our partnerships by fostering mutual respect and trust to achieve close and 

effective cooperation. 

110 


l’Echappée will get involved to tackle the 

root causes by developing, supporting, 

or putting at residents’ disposal easily 

accessible tools and methods to re-create 

a sense of ownership and enhance dialogue. 

The program may also be used to 

complement existing state aid schemes. 

EDF works with external partners to study 

biodiversity and make inventories. 

Partnerships with these representatives 

of civil society open the door for the 

Group to access world renowned expertise. 

For example, EDF applied MNHN’s 

methodology to catalog the 34,000 ha 

of land surrounding its hydroelectric 

dams. It has also worked with experts on 

bats and birds of prey from the SFEPM 

and the LPO, respectively, in an effort to 

reduce the impact of its wind turbines on 

flying creatures and consequently drive 

the expansion and acceptability of lowcarbon 

renewable energies. Furthermore, 

these projects expose our partners to the 

reality on the ground, enabling them to 

further develop their own expertise. By 

collaborating in this way, we are able to 

deal with new issues and take on new 

challenges together, such as setting up 

large-scale solar farms on agricultural 

land and in natural areas or studying 

the behavior of marine birds, which 

remains little understood, when building 

offshore wind farms. 

Partnerships that leverage social 

innovation to combat vulnerability 

Throughout the country, social innovators 

are developing ideas and solutions to 

combat vulnerability. Major corporations 

are not equipped to identify and assess 

these people championing new ideas. 

Neither are they able, given their sizes, 

to support such projects to materialize 

and grow. EDF forms partnerships with 

social innovation incubators to rapidly 

put in place innovative business models to 

respond to the challenges currently being 

ignored by society – combating vulnerability 

and energy poverty, in particular. 

It was with this in mind that EDF initiated 

a partnership in 2017 with Ashoka 

(the world’s leading network of social entrepreneurs) 

in France. The partnership 

involves jointly organizing and financing 

calls for solutions – run by a regional 

group of incubators led by Ashoka – to 

identify entrepreneurs working to create 

a positive impact on society. Once the 

NGO has selected a handful of proposals, 

the partnership supports those entrepreneurs 

in developing their ideas. 

One of the first projects supported by 

EDF was put forward by the nonprofit 

organization l’Echappée des copropriétés 

in Toulouse. Their idea involved facilitating 

the renovation of fragile or 

deteriorated commonhold properties 

by engaging with and mobilizing the 

people living in these homes. Often, 

when ownership boards lack leadership, 

residents feel so disaffected that no one 

has the motivation to embark upon the 

collective renovation of the building. 

It is in such situations, where people 

keep coming up against obstacles and 

finding themselves at a standstill, that 

Makesense – encouraging communities 

to develop low-carbon solutions 

“We don’t claim to be 

able to change the system 

by ourselves, but we do 

strongly believe that each 

idea or solution, no 

matter how small, can 

have a big impact. We 

want to shine a spotlight 

on tangible action that 

opens the door to a 

positive future rather 

than fixating on criticism 

that divides us.” 

EDF believes that tangible solutions will 

arise through dialogue with communities 

and authorities to bring about an 

increasingly low-carbon, fairer economy. 

In 2018, the Group decided to partner 

with the Energies for Climate campaign, 

launched in 19 countries by Makesense, 

an international community of citizens, 

non-profit organizations, and entrepreneurs. 

The program has already organized 

more than 300 events (forums, debates, 

screenings, and themed evenings) 

in order to enable anyone and everyone 

– entrepreneurs, individuals, or policymakers, 

for example – to start to act 

collectively by developing or supporting 

projects that transform the way we 

generate, consume, and access energy. 

And it is working – so far, nearly 800 innovative 

companies have been identified 

by members of the Energies for Climate 

community, 100 of which have already 

received publicity or local support. 

edf.fr/en/meta-home 

makesense.org/en 


THE FUTURE IS PEOPLE 

The core pillars of economic growth always include health and education as drivers for 

developing human capital. In Egypt, this is a principle that has shaped the government’s 2030 

vision and will continue to shape visions for centuries to come. While on a macro level, the 

government continues to increase fiscal spending on health and education coupled with 

supporting reforms, on the micro front, the private sector has been enthusiastically embracing 

this principle through various sustainability efforts. At Elsewedy Electric, this principle is not 

just embraced, it also forms the corporate ethos of the company’s expanding operations. 

By Manal Hassan, Elsewedy Electric 

As the most populous country in the 

Middle East, Egypt has a wealth of 

human resources that can be properly 

utilized to jumpstart a once flourishing 

and ever-promising economy. With a 

growing population, however, there is 

a growing need for better services and 

facilities to provide for the creation of a 

healthy, skilled, and educated workforce. 

This is not only necessary for economic 

development, but, more importantly, 

also for a prosperous and content society 

at large. Challenges exist in developing 

human capital in Egypt, but these 

challenges also present opportunities 

for companies to play their part in supporting 

the communities in which they 

operate – and from which they benefit. 

This guiding principle – that the future is 

truly “people” – drives Elsewedy Electric’s 

approach to its CSR efforts. With a measured 

focus on health and education, the 

company has undertaken various CSR 

initiatives to support the development 

of its community. The group’s CSR goes 

beyond donations and acts of philanthropy 

and looks at the social impacts of 

activities by all stakeholders. Although 

charity can ease financial burdens and 

provide other short-term benefits, real 

sustainability is rooted in long-term 

change. At Elsewedy Electric, CSR practices 

take into account the economic, 

environmental, and social impacts of 

all activities. 

On the health front, Elsewedy Electric’s 

methodology begins with a wellresearched 

understanding of the challenges 

present in the sector. Not only 

are upgraded facilities required, but the 

training of medical and administrative 

staff is equally vital to the proper use 

and maintenance of those facilities and, 

ultimately, for the general improvement 

of patient care. This understanding has 

allowed Elsewedy Electric to implement 

comprehensive initiatives consisting of 

physical support for facility upgrades as 

well as training programs to ensure the 

proper use and upkeep of donated equipment. 

For example, Elsewedy Electric 

has supported seven nursing institutes, 

allowing them to accept more students, 

who are provided with access to a large 

range of books and resources related to 

nursing, including medical dictionaries. 

Not only were the nursing schools provided 

with infrastructural upgrades, but, 

more importantly, they were provided 

with educational resources. 

Elsewedy Electric’s support to these institutes 

has ranged from establishing 

an engineering consultant office within 

the institute to build new classes and 

other facilities, to providing dummies, 

paradigms, and various training tools for 

teachers and students, and supplying the 

bookstores with more resources. 

To date, Elsewedy Electric has supported 

seven nursing institutes, namely: The 

Abbasiya Technical Institute for Nursing, 

the Nursing Institute of the Chest 

Disease Hospital, the Nursing Institute 

of the Sheikh Zayed Hospital in Doweqa, 

the Nursing Institute of On Almasryeen 

Hospital, the Nursing Institute of Boulaq 

Al-Dakroor Hospital, the Nursing Institute 

of Alwarak Hospital, and the male 

Nursing Institute of Al Moatamadyia 

Hospital. 

Not only has Elsewedy Electric provided 

all of the abovementioned support to 

nursing institutes, but it has also built 

and equipped the entirety of the Legislation 

Association Main Hospital, a 

facility that offers free treatment to its 

community. 

On the education front, Elsewedy Electric 

has adopted a holistic approach to its CSR 

programs. In 2011, Elsewedy Development 

established the Elsewedy Technical 

Academy (STA), under the supervision 

of Egypt’s Ministry of Education. STA 

112 


provides a three-year, secondary-level 

program of customized technical education 

for major electrical industries that 

meets international education standards. 

All training programs follow the German 

example of dual-approach training. This 

approach, which includes both technical 

and cultural subject matter, combines 

learning with training apprenticeships 

that take place both at the school and 

in factories. 

The company’s vision is to establish STA 

among the leading technical education 

institutions worldwide and to change 

the approach to technical education in 

Egypt and the region. The mission is to 

provide an innovative and enhanced 

educational program focused on developing 

students’ skills in order to create a 

pool of qualified, skilled, efficient, and 

professional members of the technical 

community to support foreign and local 

markets. By offering practical on-thejob 

training, the academy facilitates 

the transition from the undergraduate 

program to the demanding job market. 

STA was established with a clear understanding 

of the current state of vocational 

training in Egypt, namely its less than 

favorable reputation due to the growing 

disconnect between business needs and 

the current education system. With this 

in mind, STA applied the highest standards 

of quality to curriculum development, 

quality control, infrastructure, and 

the student admissions process. In 2018, 

STA acquired the Quality Management 

Certificate ISO 29990. 

The curriculum is implemented in a 

holistic way, combining on-the-job training 

with classroom learning to empower 

students with the necessary knowledge, 

skills, and attitudes. The current curriculum 

covers the fields of energy components, 

industrial electronics, mechanics, 

maintenance, and repair. In addition to 

a strong curriculum – and in an effort 

to nurture a culture of responsibility and 

good finance management – students 

are also given a monthly stipend for 

their personal use. 

Facilities at the academy include a large 

campus with green space, digitalized 

classrooms, state-of-the-art laboratories, a 

conference hall, and an auditorium. STA 

makes use of tablets, online simulations, 

interactive smart boards, and a digital 

library, and students are also provided 

tablets to use for distance learning when 

necessary. Students can rely on a close 

mentoring system and highly engaged 

teachers and supervisors. 

On both fronts of health and education, 

Elsewedy Electric’s CSR strives to not 

only directly help people to live better 

lives, but also lead the charge in actively 

encouraging other players within the 

market to follow suit and participate in 

their initiatives. It is only through setting 

a proper example and reaching out to 

others to join that a sincere call to action 

to the entire market can be sent – to 

implore others to break new barriers 

in developing the amazing wealth of 

human capital that Egypt has to offer. 

Elsewedy Electric strives to improve the 

lives of all its stakeholders, whether they 

are employees, customers, or everyday 

people. Through continued strong governance 

and partnerships with local entities 

and NGOs, the company is working to 

better the lives of everyone, everywhere. 

Investment throughout the group ensures 

innovation, differentiates its products and 

services, and supports its strong commitment 

to sustainable development. As a 

global leader in custom-integrated energy 

solutions, the company strives to improve 

efficiency and cut operational costs in 

every country in which it operates. As 

energy needs are in concert with development 

goals across the African continent, 

Elsewedy Electric is taking the lead in 

energy accessibility so developing markets 

can continue to grow and prosper. >> 

Manal Hassan is CSR and 

Sustainability Director 

at Elsewedy Electric and 

Vice Chair of the Elsewedy 

Electric Foundation. 


ISKRAEMECO IS 

TRANSFORMING THE FUTURE 

WITH METERING SOLUTIONS 

Iskraemeco is one of the leading smart metering solution providers on a global scale. Since 

1945, Iskraemeco employees have been transforming valuable experience, innovation, and a 

sound understanding of customer needs into comprehensive energy management solutions. 

Iskraemeco has an established network of partners, subsidiaries, and production facilities that 

offer reliable and efficient support services to the entire client base. 

By Mojca Markizeti, Iskraemeco 

Metering is part of the electronics and 

energy industry. Both are very dynamic 

in nature and contribute significantly 

to environmental and social footprints. 

Iskraemeco strives to build a fair smart 

future, together with the community. 

The 4.0 industrial revolution is not only 

about technology – it is also about values. 

It is a revolution of knowledge, and 

it will change a producer to a solution 

provider, a consumer to a prosumer, and 

competition to synergy. In the next 10 

years, we will work toward meeting the 

Sustainable Development Goals (SDGs), 

decarbonizing our planet, using 50 percent 

fewer resources, and securing the 

future for the generations to come. 

Iskraemeco’s achievements 

There have been product and solution 

footprint improvements in all phases: 

A) Design phase, where we embedded 

circular economy principles, including 

innovative modular designs, extended 

lifespans (to 20 years), lower 

self-consumption of energy, fewer 

conflict and critical materials, and 

at the same time increased material 

efficiency (20 percent less plastic, 40 

percent fewer metals, and 20 percent 

fewer electronic components 

per product). 

B) Manufacturing phase (packaging and 

logistics included), where investments 

in lean production and process optimization 

have reduced the use of 

energy, water, and other resources. 

Seventy percent of product mass is 

produced locally, and there has been 

a 49 percent reduction in the CO 2 

footprint per product since 2013. Innovative 

packaging excludes plastics 

and decreases the use of cardboard 

by 50 percent. 

C) In the use phase, increased durability, 

interoperability, adaptability, and upgradability 

decrease the CO 2 

footprint 

per product from the manufacturer’s 

and customer’s perspectives. 

D) End of lifecycle phase: The amount 

of materials used for the product has 

decreased. At the same time, products 

are disassembled easier and faster, 

the recyclability of the products is 

improved, and more than 90 percent 

of product materials can be recycled, 

with metals being returned back to 

the material loop. 

As a trendsetter, Iskraemeco strives toward 

implementing sustainability standards 

throughout the entire supply chain. 

Our aim is to monitor and coordinate our 

supply chain in line with environmental 

and social responsibility principles 

and follow stricter standards than the 

ones prescribed by law. We place special 

attention on demanding compliance 

rules, higher labor standards, material 

transparency (chemical composition), 

and forming partnerships on material 

and solution innovation projects. In 

2018 we managed to achieve 95 percent 

material transparency for our latest family 

of products. 

Awareness-raising and knowledgesharing 

are of extreme importance to 

Iskraemeco. Our goal is to educate our 

suppliers, our customers, and the industry 

at large and set higher sustainability 

standards in our industry. Iskraemeco is a 

participant in the United Nations Global 

Compact initiative and acts in accordance 

with the ten universally accepted 

Principles in the areas of human rights, 

labor, environment, and anti-corruption. 

We support sustainable development 

practices that advocate economic growth 

that is in harmony with the environment 

and aims to improve the quality of life 

for its current and future inhabitants. 

114 


In the last few years, we have publicly 

advocated for the urgency of implementing 

sustainability at many important 

conferences and fairs as well as in 

magazines in our industry. In 2018 we 

received the National Golden Innovation 

Award for embedding sustainability 

in the industry. We were nominated 

for the European Business Awards for 

the Environment 2018–2019 and also 

received an award from the EU-LAC 

Foundation for the Integration of Sustainable 

Development Goals into Corporate 

Strategies. Our CEO was invited 

to speak at the World Forum for a Responsible 

Economy in 2018. Moreover, 

Iskraemeco has addressed more than 

1,200 external executives and professionals 

at more than 20 different events 

in 2018 alone. 

How do we make an impact? 

Three-pillar strategy 

1. Internal processes – responsible and 

sustainable processes, production, 

solutions, and company. 

2. Supply chain – sustainability on 

the level of materials, components, 

and suppliers. 

3. Knowledge transfer – building 

greater awareness among customers, 

partners, suppliers, and the industry 

at large. 

SUSTAINABILITY RESULTS 

Using less materials: 

-20% 

plastic 

95% 

Transparent 

supply chain, 

to the level of chemical 

composition of the 

components 

-40% 

metals 

-20% 

electronic 

-50% 

less cardboard, 

Smart packaging; 

no plastic 

Decreased CO 2 

footprint since 2013 

-49% 

Five strategic areas 

• Lifecycle and recycling – Embedding 

circular economy principles to the design 

phase of our products and solutions. 

• Energy resources – Optimizing the use 

of resources: energy, water, compressed 

air, materials, waste management. 

• Material scarcity – Managing and using 

critical, conflict, and hazardous 

materials thoughtfully. Our vision is to 

introduce recycled materials in meter 

components. 

• Supply chain transparency – Monitoring 

our supply chain for material usage 

and defining possible improvements. 

• Labor conditions – Making sure that 

human rights, dignity, and fair treatment 

within our supply chain are not 

compromised. 

Why we need to act now 

Looking at global challenges, we can 

divide them into three main areas: material 

scarcity, decarbonization, and ethical 

principles. When it comes to the electronics 

industry, we need to dig deeper 

and focus on the following five topics. 

• Unfair labor practices in global supply 

chains – Solution: It is our responsibility 

to act and implement fair working 

conditions on a global scale. 

• Conflict minerals used in products (gold, 

3 awards for 

sustainability 

Invested in research 

and innovation about 

materials, footprint 

1000 hours 

500 hours 

invested knowledge 

transfer on sustainability 

issues with all the 

stakeholders 

Speaker, 

educator at 

12 conferences 

100% 

embedded circular 

economy principles; 

modular, upgradable, 

recyclable meter 

tantalum, tungsten, tin, and cobalt) – 

Solution: Establish a transparent supply 

chain, close the loop of materials, educate 

suppliers, and innovate in product 

design. Despite the introduction of the 

Conflict Minerals legislation, this is still a 

pending issue in the global supply chain. 

• Material scarcity (27 different materials 

are a supply risk) – Solution: Push 

technological development to find substitutes 

for scarce materials, limit the 

use, and invest in material innovation. 

• Increasing amounts of e-waste (grows 8 

percent annually and only 20 percent 

is recycled) – Solution: Recycle and 

prolong the products’ lifecycles, closing 

the loop for materials. 

• Use of resources, materials, and rising 

CO 2 

footprint – Solution: Innovative 

product design, innovate processes 

and materials, minimize the use of resources, 

radically decrease CO 2 

footprint. 

Iskraemeco and the SDGs 

Goal 1 (No poverty) and Goal 3 (Good 

health and well-being): Working on enforcing 

higher labor standards through 

our supply chain, Goal 9 (Industry, innovation 

and infrastructure) and Goal 12 

(Responsible consumption and production): 

Embedding circular economy and 

sustainability principles to our business, 

our industry, and our suppliers. Goal 11 

(Sustainable cities and communities): 

With our products being part of the 

large Smart City infrastructure, we can 

significantly decrease energy consumption. 

Goal 13 (Climate action): Decreasing 

the CO 2 

footprint (product, processes, 

company, and end-user) can make a huge 

difference. Goal 17 (Partnerships for the 

goals): As a single corporation, we can do 

a lot, but in a community of like-minded 

companies, we can move mountains and 

build a fair smart future. 

Mojca Markizeti is a 

Sustainability Manager 

at Iskraemeco. 


DRIVING TOWARD SDG GOALS 

THROUGH AGRICULTURE 

INSURANCE 

Developing a microinsurance network can work as a critical step to attain directly and indirectly 

almost all of the Sustainable Development Goals (SDGs). Especially for developing nations, it is 

critical to address the micro-, meso-, and macro-level risk management for insurance in 

accordance with the SDGs. 

By Md. Moniruzzaman Khan, Green Delta Insurance 

As a part of microinsurance, agriculture 

insurance is an opportunity for 

the global financial industry and for 

direct involvement in achieving targeted 

SDGs. Considering the global financial 

industry context, agriculture insurance 

is one of the vital gears for supporting 

economic well-being. It also increases 

the ability of individuals, families, and 

governments to improve social outcomes. 

Following a global trend, Green Delta 

Insurance Company Limited (GDIC) has 

developed and deployed agriculture 

insurance to establish an industry-wide 

practice to comply with the SDGs. After 

completing three years of pilot projects 

with the International Finance Corporation 

(IFC) of the World Bank Group as an 

equity partner, GDIC finally launched 

agriculture insurance commercially in 

December 2018. The agriculture insurance 

of Green Delta shares the objectives 

of the global financial industry while 

targeting the SDGs by increasing access 

to investments and leveraging risks. 

• Access: Financial inclusion for individuals 

and SMEs; enable cash flow; 

provide financial protection; support 

resourceful allocation of capital (Goals 

1, 2, 8, 10). 

• Investment: Investment in developing 

infrastructure, innovation, and technology 

(Goals 9, 13). 

• Leveraging risks: Developing innovative 

product pricing; sharing risk data 

and risk management expertise (Goals 

11, 12). 

• Cross-matching: Positively influencing 

corporate and social governance practices 

– clients, distribution channels, 

and donors (Goals 16, 17). 

Whereas the pilot projects started with 

only 200 farmers with coverage, GDIC’s 

agriculture insurance has now mitigated 

risks and provided investment security 

for more than 15,000 farmers (April 

2019). 

We at Green Delta believe that agriculture 

insurance will be able to reach half 

the population of Bangladesh in the 

future, and we will be able to provide 

economic security for them in addition 

to mitigating risks and protecting their 

investments. 

The SDG Goals targeted through our 

agriculture insurance are as follows: 

Crossing the poverty line: 

No poverty (Goal 1) 

Due to adverse weather, marginal rural 

farmers are always being hurt. Their efforts 

and investments are often at risk 

due to the changing climate, despite 

increased food demand and the evergrowing 

pressure to feed more mouths. 

With each adverse event, it is difficult 

to ensure food for a mass population, 

improve nutrition, and resist sustainable 

agriculture, and it is making the lives of 

poor farmers miserable. 

As experts suggest, agriculture is unique 

because it can be two to four times more 

effective than any other sector for reducing 

both poverty and hunger: 80 percent 

of food is produced by marginal rural 

farmers and smallholders. These rural 

people and farmers are counted among 

the 9 percent of the total population 

living under the poverty line. 

Focusing on achieving the “No poverty” 

goal, GDIC started working on the core 

of the problem by introducing agricul- 

116 


ture insurance, which is called Weather 

Index Based Agriculture Insurance, to 

protect farmers from extreme adverse 

weather events. This way GDIC deployed 

an innovative financial tool that offers 

advance financial inclusion to support 

farmers in order to stabilize their financial 

status. For this, GDIC has developed 

a consortium of distributors, reinsurers, 

and other stakeholders. It already has 

engagements in 10 districts of Bangladesh, 

where around 15,000 farmers 

are insured. GDIC believes that, if the 

farmers have protection against adverse 

weather events and can overcome their 

financial losses instantly, then they can 

sustain agriculture production, thus securing 

the supply of food and improving 

nutrition. This improves financial stability 

and raises them above the poverty line. 

Celebrating a happy stomach: 

Zero hunger (Goal 2) 

No poverty and zero hunger go hand in 

hand. GDIC extends insurance protection 

to the smallholder farmers, who are the 

most vulnerable and mostly live under 

the poverty line. Through Weather Index 

Based Agriculture Insurance, GDIC has 

secured the production of smallholder 

farmers, availing to them the leveraging 

of technology such as mobile money 

transfers and satellite monitoring. 

GDIC is exploring collaborations with 

farm aggregators, impact investors, and 

other associated parties to provide easy 

loans to the farmers. Then again, to secure 

the return of the loans, GDIC works 

toward insuring the investments of the 

farmers. If there is any adverse weather, 

GDIC makes sure that their investment 

is secured by paying out claims. Thus, 

the farmers return to the same stable 

position they were in before the weather 

event happened. This process lets farmers 

sustain production and satisfy food 

demand through uninterrupted farming. 

GDIC has already covered 5,206 acres of 

land in different locations of Bangladesh. 

Bridging the three “I”s: Industry, innovation 

and infrastructure (Goal 9) 

Agriculture insurance promotes the deployment 

of modern technology and the 

incorporation of infrastructure within 

the process. GDIC is creating the platform 

for using high-end technologies 

such as access to the data grid, acquiring 

and analyzing satellite data, using 

interpolated data, etc. Moreover, it uses 

modern technology for communicating 

with all the stakeholders of the insurance 

service while providing weekly weather 

forecasts, crop-specific advice, and call 

center services to the farmers. 

GDIC is looking forward to incorporating 

more technological inventions in its 

services to create an app for its users: 

an e-platform to communicate with the 

stakeholder in real time. GDIC believes 

that investment in innovation and infrastructure 

is vital for overall growth and 

progress. That is why we are investing 

in innovation and infrastructure to facilitate 

sustainable development. 

Sustainable partnerships: 

Partnerships for the goals (Goal 17) 

The agriculture insurance is helping 

GDIC to connect with both national and 

foreign corporates and value-creation 

firms to sustain the development of the 

rural farmers. To create an ideal model in 

the industry and to promote agriculture 

insurance, GDIC engages with multiple 

stakeholders to integrate the services 

into one platform. 

GDIC has joined hands with a number of 

international development agencies such 

as International Finance Corporation 

(IFC), Agriculture Value Chain (AVC) – 

USAID and Business Finance for the Poor 

(BFPB) – Challenge Fund. As for NGOs, 

we have worked with Care Bangladesh, 

Oxfam, Syngenta Foundation Gram 

Unnayan Karma (GUK), and Eco-Social 

Development Organization, among 

others. Besides these organizations, we 

have also collaborations with input 

farms such as Seba Limited, Renaissance 

Enterprise, and seed company such as 

Supreme Seed Company Ltd., etc., to 

create pathways for farmers. 


ING’S TERRA APPROACH: 

10 QUESTIONS ON WHAT WE 

ARE DOING FOR GOAL 13 

If we want to keep global temperatures from rising well-below 2°C, everyone has a role to play. 

As a bank committed to empowering our customers and accelerating sustainability, our primary 

focus is on the Sustainable Development Goals (SDGs) promoting climate action (Goal 13), 

sustainable and inclusive economic growth (Goal 8), and sustainable consumption and 

production (Goal 12). 

By Kaitlin Crouch and Melynda Milman, ING 

ING makes the most impact through 

the money we loan to companies and 

customers. We have a loan book of about 

€600 billion across many sectors, which 

we have now begun steering toward 

meeting the Paris Agreement’s 2°C goal. 

We call our strategy to get there the 

“Terra approach.” 

Here are 10 questions and answers to 

explain the Terra approach and how we 

are using it to take action on climate in 

line with Goal 13. 

1. How does ING’s Terra approach 

work? 

2. What methodology does ING use? 

Although ING’s Terra approach will make 

use of various methodologies, there is 

one that applies to most of the sectors 

in focus. This is the methodology ING 

co-created with the 2° Investing Initiative 

(2°ii), a global think tank developing 

climate metrics in financial markets. It 

is called the PACTA methodology for 

corporate lending. It looks at the technology 

shift that is needed across certain 

sectors to slow global warming and then 

measures this against the actual technology 

clients are using – or plan on using 

in the future. 

3. How does the PACTA 

methodology work? 

Detailed technology roadmaps for each 

sector are being developed by independent 

organizations such as the International 

Energy Agency. These roadmaps 

are used as benchmarks. An IT tool compares 

the data from the sector roadmaps 

The goal is to steer our loan book toward 

meeting the well-below 2°C goal of the 

Paris Agreement. There are sectors in our 

loan book that are responsible for most 

greenhouse gas emissions, so we focus 

on those: energy (oil and gas, renewables, 

and conventional power), automotive, 

shipping and aviation, steel, cement, 

residential mortgages, and commercial 

real estate. We use a specific approach 

per sector in order to make the most 

impact, partnering with leading external 

climate measurement experts where it 

makes sense. 

118 


to data on the technology our clients 

are using today and planning on using 

in the future. In the automotive sector, 

for example, we measure the mix 

of our clients’ production of internal 

combustion engine vehicles compared to 

zero-emission vehicles and how clients 

plan to shift this balance over time. We 

then compare this with the science-based 

transition pathway for the sector. The 

analysis not only tells us what needs to 

shift, but also how much and by

Aliging Profit with Purpose - Global Goals Yearbook 2019

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