My first trip to the United States for ‘quite a while’ was catalyzed by an irresistible invitation from long-time friends and allies, Jane Nelson from Harvard and Chris Pinney from the High Meadows Institute, who, with Caroline Flammer from Columbia University, had decided to host a Symposium on Corporate Responsibility & Responsible Investment: Past, Present, and Future hosted at Columbia’s Low Library.
Most seductive was the amazing participant list that read as a ‘Who’s Who’ of many of the founding entrepreneurial leaders of a half-a-century-old social movement dedicated to reshaping business and investment behaviour to deliver sustainability outcomes. Equally seductive in my decision to make the trip were today’s compelling facts, the state we are in from climate and nature, through to the rise of populism, the changing geometry of geopolitics, and the irrevocable march of AI.
In short, it was a great opportunity to hang out with brilliant minds and deeply experienced agents of change in reflecting on where to go next, so very relevant to us all, including Morphosis with its broadly framed adaptation economics agenda.
Like a high-end concert orchestra with a complex musical agenda, the wide-ranging discussion probed decades of work in influencing markets, including shareholder voting, securing sustainability-related information disclosure, and seeking better alignment of fiduciary responsibilities with sustainability outcomes. As the Symposium evolved, discussions focused more on systemic change drivers, from the role of industrial strategy to varied approaches to ownership and new forms of broader market governance in shaping sustainability outcomes, drawing on international experience that challenged the heartland of hard-core Anglo-Saxon capitalism.
Through a neoclassical economics lens, the Corporate Sustainability movement has been largely framed as being about internalising negative externalities, and upside sustainability-related opportunities, into business and investor decision-making. For others, however, the challenge has been framed as being centrally about advancing ways to more effectively hold those with power to account for how their decisions impact others. I have followed both of these pathways simultaneously over my chaotic journey. But whilst I have been, and continue to be, drawn to an externalities approach because of its elegance, modernity, and communication power to the professions, the accountability lens has always seemed to me to reflect more honestly the underlying raw challenge that we collectively face. As Jared Diamond’s erudite (if rather long) book, Collapse, concludes, civilisations fall apart when those with the power to change direction cannot be effectively held to account for the mounting damage they cause to others, and to the systemic foundations on which their power ultimately depends, such as nature.
The state of accountability became one underlying theme of the Symposium. Drawing on some of my learnings during my time as founding CEO of the non-profit think tank, AccountAbility, I introduced the idea that accountability mechanisms had a social lifecycle, in effect a half-life. However wonderful they may have been in their prime, they inevitably decay over time under the pressure of over-standardisation, professional co-option, contestation, gaming, and, at times, straightforward and sometimes violent attack. My amateur sleuthing over the years suggests that this has been true throughout history. Moreover, it appears to be true whether one considers the plumbing, such as information disclosure, or the meso level, such as corporate governance, or the macro level, perhaps including some endangered modern variants of procedural democracy itself.
At Morphosis, we focus on the challenges of creating and investing through and in markets, economies, and businesses that can deliver the adaptation solutions we need in a world in which the lives of households, communities, and nations are increasingly disrupted by climate change. Whoever we are, wherever we are, and whatever we think we are working on, we will all become adaptation advocates, practitioners and, ultimately, adopters.
In this context, my take-out from the Symposium is that many of the Corporate Sustainability-labelled accountability instruments and institutional arrangements we have created and often usefully deployed over the last fifty years will not serve as keystones in addressing the challenges we now face. Many, if not all, may still have a role to play, but they will not serve as the basis for a next generation of accountability innovations we will need to survive, let alone prosper inclusively in the future. We need to honour past efforts and achievements, and move on. Paraphrasing what John Maynard Keynes allegedly said, “our challenge is not a lack of new ideas, but our willingness to let go of old ones”.
That said, we do not need to imagine and invent from scratch. The future, as always, is imminent in today’s world, including many of the accountability instruments and enabling institutions we will need. Centrally, we will need to raise our game in advancing collaborative governance arrangements that integrate the public interest into business decisions and accountability. Policy-directed credit and enforced industrial strategies, for example, keystones in shaping China’s development, will be needed more widely to get beyond the narrow interpretations of materiality and fiduciary duties that have for decades prevented the alignment of markets with sustainability outcomes. Blended ownership and corporate governance, including state ownership, will be part of a pivot away from the short-termism that has enveloped public markets.
So many thanks to the Symposium organisers and participants in shining a much-needed spotlight on the phase shifts needed and eminently possible for the Corporate Sustainability movement in acknowledging its past successes and limitations and moving forward in making a positive difference to our collective futures.
Simon Zadek,
Managing Partner, Morphosis
Geneva
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