The only certainty for today’s business leaders: The current trade environment is here to stay, according to John Veihmeyer, chairman of KPMG Americas. Corporate leaders are fairly optimistic about their 12-15 months prospects, but they worry about their peers. Companies don’t have the luxury of waiting.
Most are engaged in major transformations of business, rethinking decades-long practices and creating corporate responsibility practices, as opportunities to get ahead and see longer-term, sustained growth by applying a sustainability lens. Investors seek information about the impact of their funds and intensify responsible environmental behavior.
CEOs are increasingly focused on sustainability, not just where risks are but where opportunities lie. His comments came during KPMG’s Business Perspective on Sustainable Growth: Preparing for Rio+20 event.
Rio+20 in June, marking the 20th anniversary of the 1992 United Nations Conference on Environment and Development, will focus on (1) a green economy in the context of sustainable development and poverty eradication and (2) the institutional framework for sustainable development.
KPMG’s goal: bring a business perspective to the policy debate. The audit, tax and advisory services firm hosted its top global executives and prospective and current clients Feb. 13-16 at the Sheraton New York Hotel and Towers to discuss a number of corporate responsibility initiatives around energy security, transportation, green growth, CSR reporting and more. Dignitaries in attendance: U.N. Secretary General Ban Ki-moon and former U.S. President Bill Clinton.
In his keynote speech, Ban noted the decline of ecosystems, the widening gaps between rich and poor, climate change, the deterioration of trust in government and business. He detailed a crisis of leadership and a lack of imagination and urgency looking at the world’s problems. And he hailed the 7,000+ signatories of the U.N. Global Compact (a strategic initiative for businesses that commit to align operations and strategies with 10 principles in the areas of human rights, labor, environment and anti-corruption.
Twenty years ago (circa the first Rio summit), few companies had instituted sustainable business practices; today 95 percent of G250 companies report on their corporate responsibility efforts, and almost half of these report financial gains from their CSR programs (KPMG). But business still doesn’t properly value CSR with the right incentives. Instead, they use it for public relations. Ban called for businesses to place corporate responsibility at the core of their cultures and operations. “I’ve been urging the leaders of the world not to be a prisoner of their constituents,” he said. “If they have a vision, they need to carry it out.”
The business leaders present agreed in large part, noting coming trends that will adversely affect business should it not act: food supply, climate change, energy, water, market volatility, a rapidly expanding middle class.
“We need to be more courageous,” declared Paul Polman, chief executive of Unilever (Dove, Lux, Pond’s). “I don’t work for the shareholders; the shareholders will be rewarded if we please the consumer.” Polman called on his fellow business leaders to find shareholders who align with their beliefs, not the other way around, reminding his peers of the power of today’s consumer, who can bring down a regime in weeks and a company in “nanoseconds.”
These consumers, part of the new mega-middle class, offer challenges and opportunities for companies. And they have placed climate change at the top of the agenda, the cause debate not withstanding. The price of risk must be transparent and visible, said Michel Lies, group CEO Swiss Reinsurance Co., who says more people have mobile phones than have insurance.
Nevertheless, Rio+20 must address all these issues and more, said Jorma Ollila, chairman of Royal Dutch Shell, even in a time when governments are much more focused on debt crises. He called on business and government leaders to build trust through honest milestones, true incentives and stable regulatory frameworks that allow companies to invest in solutions.
Outcomes from KPMG's Business Perspective on Sustainable Growth: Preparing for Rio+20 will be shared at Rio+20. Both events aim to craft a forward-looking agenda to focus on global green growth. KPMG International is hosting the event, in cooperation with the UN Global Compact, the World Business Council for Sustainable Development and the United Nations Environment Programme.