Transforming Business for Tomorrow's World

The Deepwater Horizon oil spill is perhaps the most dramatic example of the damage corporations can do to the environment, but it is hardly the only such instance. From greenhouse gas emissions to deforestation and from water use to pollution, the business world shapes the planet and its future. But for the past century, corporations have largely ignored these and other negative consequences, choosing instead to focus on their profit margins.

In his new book Corporation 2020: Transforming Business for Tomorrow’s World, Pavan Sukhdev, a leading expert on the green economy, argues that in order for corporations and society alike to survive and thrive, we need to rethink the way the business world works. This requires not just action by corporations, but also the strength of governments directed toward transforming regulations and creating incentives for corporations to change and adapt.

Sukhdev contends that companies must evolve business practices that increase human well-being and social equity and decrease environmental destruction and ecological losses using four crucial reforms:

• Disclosure of externalities: Under current reporting systems, many effects of business on the planet, like greenhouse gas emissions, freshwater usage, and pollution go unaccounted.
• Resource taxation: Perverse subsidies for industries like agriculture and fishing buoy companies that can’t make real profits while stripping the planet of natural resources.
• Accountable advertising: The advertising industry has spent a century turning “wants” into “needs,” heedless of any motivation besides profit. In the era of Corporation 2020, it needs to inform consumers more responsibly about characteristics of products like lifespan, country of origin, and disposal procedure.
• Limited leverage: Overleveraged corporations have been one of the key drivers of the past four major financial crises, especially when these same institutions are considered “too big to fail.” Governments must step in to limit the financial risk corporations are allowed to carry.

Sukhdev firmly believes that corporations can be saved from themselves and turned into an engine of both profit and societal well-being. With examples of companies already successfully implementing his ideas, like sportswear maker Puma and software company Infosys, he offers a sweeping vision of a better corporate model that allows business to coexist with the environment long into the future.

Pavan Sukhdev is the Founder-CEO of GIST Advisory, an environmental consulting firm that helps governments and corporations value and manage their impacts on natural and human capital. A former banker at Deutsche Bank, he founded and chaired Global Markets Centre – Mumbai, a leading-edge front-office offshoring company. He has been Special Adviser and Head of UNEP’s Green Economy Initiative, lead author of their “Green Economy Report”, and Study Leader for the G8+5 commissioned project on The Economics of Ecosystems and Biodiversity (“TEEB”). Pavan chairs the World Economic Forum’s “Global Agenda Council” on Biodiversity and serves on the boards of Conservation International and the Stockholm Resilience Centre.