Staying united towards a common purpose: the beginning of a new economy paradigm
The month of March definitely took an unexpected turn for all of us when the COVID-19 outbreak was declared a pandemic by the World Health Organization. The unfortunate spread of the virus has quickly escalated, and although it took us all by surprise, governments, organizations and individuals all around the world have been gearing their efforts towards slowing down, isolating and eliminating COVID-19.
The impact of the outbreak on the economy is already seen, with numerous industries being critically affected and only a few days ago the IMF has recognized the slowdown,” We’ve never seen the world economy standing still. Now we do.”. But what we are witnessing is an incredible global effort as countries, organizations and individuals are united towards a common purpose. For instance, the incredible UAE leadership is making huge strides not only in preventing the further spread of the virus by curfews, a National Sterilization Program, but also to support the private sector and individuals through economic stimulus packages, just to mention a few. Multinational organizations such as LVMH are supporting the French health authorities combat the spread of the virus by converting luxury perfume production facilities to hand sanitizer manufacturing distributed for free. Foxconn, the electronics manufacturer of Apple’s iPhone has also started the production of surgical masks in response to the global shortage. Inditex is committed to convert factories into manufacturers of hospital gowns. Financial institutions and landlords are offering deferment of loans and waivers of rental fees. Other organizations have taken immediate steps in keeping their employees protected and healthy, even before safety measures were imposed. The United Nations Global Compact calls on companies to take collective action towards the COVID-19 outbreak and build on this collaboration for a faster recovery. Individuals are more connected than before and with a deeper sense of giving back to the ones in need, as well as attempting to maintain a spirit of optimism and positivity. In the UAE we had many examples of residential neighborhoods applauding everyone who keeps us safe by cheering from windows and balconies. We are all in this together and together we will get through as well.
These incredible solidarity and collaborative efforts, when looked at from a holistic perspective, are very similar to the principles which underpin the Sustainable Development Goals, as not a single goal can be tackled in isolation and achieving the 2030 agenda is only possible through the mobilization of all actors. After leaving the pandemic behind us, which given all these efforts should happen soon, we need to continue building on these collaborative efforts in order to support the global recovery, as well as enable a faster paced transformation towards a new economy, a new means of value for all and the achievement of the SDGs by 2030. And we have already seen the need for an acceleration of progress given this unfortunate disruption. For example, education saw an immediate transition in the digital space when schools were closed, and we need to ensure that this doesn’t impede our focus on the targets of SDG4 – Quality Education. Supply chains have also been impacted and a need for transparent, ethical and sustainable supply chains is even more evident than before, such as ensuring that the less privileged have access to fair opportunities and safe work environments.
A new economy paradigm
There is no secret that for the past years we have been speaking about the effects of climate change and pollution, natural resource scarcity and growing levels of waste, economic and opportunity inequalities between and within countries, a fast urbanization and nonetheless all the technological breakthroughs that we have been experiencing, from blockchain, AI and a data revolution. This is just a bird’s eye view on the trends that have been and will continue shaping the world we live in and cascade further down to a country-level all the way to us, as individuals. All of these, similarly to containing COVID-19, are not challenges only for governments to tackle, but require all of us, be it as individuals, businesses, non-profits, investors, to collaborate on. And maybe we are fast approaching the tipping point which will unleash the rise of a new economy paradigm in which value will be measured beyond the financials and include social and environmental impact, catalysing the progress towards achieving the Sustainable Development Goals (SDGs). Let’s delve into a few examples reflecting multiple perspectives of impact value driven models, under the umbrella of the SDGs showcasing how and why to frame a new economy in this decade and beyond.
A country perspective
I always speak very highly of UAE’s model of excellence, a model which I truly admire. The first steps taken in relation to the advancement of the UN SDGs were the creation the National Committee on the SDGs and mapping the relevant goals to the respective government bodies and to the country’s Emirates development agendas. For the UAE, shaping a new economy extends far beyond the 2030 agenda, as reflected by the UAE Centennial 2071, with the goal to be ‘the best country in the world’. Amongst various focus areas of this vision, some underpin the foundation of a prosperous society, an education system centered around equipping youth with the skills of the future and an inclusive and cohesive community.
These values and the incredible vision are transformed into reality as development-centric innovation and social innovation are encouraged by government incubators and accelerators all over the country, such as Expo Live, Dubai Future Foundation, Sharjah Research Technology and Innovation Park, the Authority of Social Contribution - Ma’an Abu Dhabi. And not only do such initiatives provide support to startups and entrepreneurs, but they also foster collaborations and a participatory approach in enabling the country’s vision, while building networks of like-minded individuals from all over the world that are united by the same passion and purpose.
For the UAE, all these initiatives have translated in a year on year growth across multiple global indexes, leading in the Arab world across areas such as IMD’s World Competitiveness Yearbook, Social Progress Index or Global Innovation Index, just to name a few. You can find out more statistics on FCSA’s webpage.
The business case for sustainability is supported by rich research and statistics of how embedding impact-focused indicators (social, environmental and governance related) to the core of business models enables an enhanced financial performance. For instance, investments in learning and development programs and a diverse and inclusive workplace lead to a higher level of engagement, productivity and retention of employees. Steering towards clean energy solutions or models leads to minimizing risks of stranded assets and lastly, ethical and responsible sourcing policies reduces the risks associated with potential controversies, which would in return affect the brand reputation.
If we take a look at the most recent CEO Study on Sustainability, conducted by Accenture and UNGC, 99% of CEOs form Companies with more than $1 Billion in annual revenues believe sustainability will be important to the future success of their business. Moreover, consumers are now scrutinizing the business as usual practices and prefer purchasing from companies committed to driving social and environmental value, with 78% of the respondents to a study conducted by PwC being more likely to purchase from companies that signed up to the SDGs. The trust we have in brands will now be even more amplified on the basis of the actions they have taken to support containing the outbreak, to support their employees and to collaborate with their industry peers.
In the beginning of this month I have also contributed to Entrepreneur Middle East on this topic, in a column focused on impact as a lever for the future readiness of organizations. You can access the article here.
A rapidly growing ecosystem, which complements the existing business models and supports the sustainable development agendas of the countries they operate in, impact entrepreneurship has purpose ingrained at its core. In the case of a social enterprise, a viable business model is created centred around improving or eliminating a certain social challenge. The value generated by such enterprises can be accounted for using Social Return of Investment (SROI) frameworks that demonstrate the link between social impact and its monetary value.
Yet again, the incubators and accelerators ecosystem has started to focus more and more of impact enterprises and besides the local ones aforementioned, at a global level we can see a social enterprise track being included in the program of renowned accelerators, one of them being the MIT Enterprise Forum.
Some impact enterprises focus on technology enabled models and we have started to hear more and more often terms such as agritech, cleantech, edtech which support the solution to scale faster and contribute to advancing progress towards the SDGs. The two interviews on The Impact Talks released this month, part of the special series in collaboration with Expo Live, an Expo 2020 Dubai initiative, focus on technology enabled solutions tackling social development. Reem Al Franji and Borna Scognamiglio are two of the incredible Expo Live Global Innovators showing that business can be a force for good, through Habaybna.net and Pixis.co. If you haven’t yet listened to the interviews, you can find them here.
The investment world
Sustainable finance portfolios have started to become an integral part of some of the world’s largest asset managers, with some of them having committed to phase out investments in assets which don’t yield positive environmental returns for instance. According to a report from Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Investment Management, sustainable investing is growing at a fast pace with $22.8 trillion in sustainable investments under professional management globally. In the same report, 84% of asset owners are quoted to have mentioned that they are either weighing or pursuing sustainable investments and 78% seeking to align to the SDGs.
And such portfolios do yield financial returns, with some of them actually outperforming traditional investment portfolios. It is with no wonder that green bonds and social impact bonds are also on the rise and that some of the largest global investment corporations take strong commitments in driving value and shaping this new economy. As Larry Fink (Chairman and CEO, Blackrock) said, ‘To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society’.
I remain optimistic that economies will start recovering, as over the years when we experienced slowdowns, we have always adapted and shown resilience. And what we can do in order to catalyse progress and remain focused towards a common purpose is to frame our long-term vision and strategies under the umbrella of the Sustainable Development Goals.
I stay committed to my mission of changing the narrative around impact and sustainability as the reason that led me to embark on this impact-driven entrepreneurial journey is to facilitate organizations’ transition towards the new value model and equip them with the knowledge and tools to unleash their impact, as only then we will all thrive. And until we get back to normal once the virus is contained, I will continue my journey virtually and stay connected with each and every one of you across digital mediums.
Stay safe and well and a huge thank you to all our frontline heroes!