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Interdependence Coalition: A Call to Action

Ac5f1e056cb7dbf7b42706d642b4dbdf?s=47 Maria
June 29, 2021

Interdependence Coalition: A Call to Action

Ac5f1e056cb7dbf7b42706d642b4dbdf?s=128

Maria

June 29, 2021
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Transcript

  1. The Interdependence Coalition Call to Action

  2. There is a better way to do business. We’re setting

    out to transform how companies operate and how they are governed to contribute to an inclusive, equitable, and regenerative economic system. Our objective is that every company registered in the European Union aligns its interests with those of wider society and the environment, mandated through a Pan-European law.
  3. 3 The route to a fairer economy . The core

    proposal of the Interdependence Coalition is that: Board directors of companies registered within the European Union must consider the interests of all the company’s stakeholders in their decision making. This involves the following key changes at European level: 1 Align investment and corporate governance Incentives are misaligned across the economic system. It is essential that companies and institutional investors are required to adopt sustainable corporate governance models to ensure that the capital markets take responsibility for the impact of businesses and investments practices on society and the environment. 2 Move from voluntary to mandatory stakeholder governance Over 1000 B Corps and Benefit Corporations in Europe have voluntarily committed to consider the interests of all their stakeholders in their governance. It must no longer be optional to run a business for the benefit of wider stakeholders beyond shareholders. We need to move from an “enabling” to a “mandating” legal framework for stakeholder considerations across the European Union. Create EU-wide aligned requirements Regulatory divergence calls for the adoption of EU-level sustainable corporate governance legislation, Directors leading companies in all EU countries should be legally obligated to consider the interests of all material stakeholders, including wider society and the environment. This requirement underpins the reporting requirements proposed under the CSRD. 3
  4. 4 The richest 26 people own as much wealth as

    3.8 billion people. The UN declared that we have 12 years to prevent irreversible climate impacts. 30 million people are enslaved in forced labor. More than 80% of the world’s original forests are gone. Every year 1.3 billion tons of food are wasted as some 2 billion people suffer from hunger and malnutrition. Defining our current reality
  5. 5 Problem: Our current economic system, driven by business as

    one of its key actors, is creating significant negative impacts. Meeting the moment
  6. Opportunity for EU wide change 6 The European Parliament exhorted

    the European Commission to consult on Sustainable Corporate Governance proposal. This had two key focus points: 1. Duty of Care considerations including the interests of all the contributors to a company’s success. 78% of all consultation respondents supported the need for all directors to take account of the interests of all stakeholders. 2. Due Diligence considerations for the social and environmental impact on the full chain of suppliers of a company. 81% of respondents considered the existing voluntary framework insufficient and supported the need for EU wide legal framework.
  7. A plea from our planet 7 Our planet and its

    inhabitants are crying out to protect and restore its natural beauty and its life giving resources. Over 1000 B Corps and friends have committed to reach Netzero by 2030. Climate risk is one of the most recognised elements of investment decisions. Success of the EU’s proposed Green Deal depends on businesses considering the planet as a stakeholder. Without a vibrant planet, we cannot support healthy communities nor can we sustain business. It is time for change.
  8. Business as a leveller “The future is already here —

    it’s just not evenly distributed” William Gibson Livelihoods depend on fair and open access to opportunities. Without conscious focus by businesses on removing biases, the deeply entrenched inequalities extend; restricted lives and lost potential continue generation after generation. The social contract between business and society becomes irreparably broken. Through understanding and by intentionally placing society as a key stakeholder, businesses are uniquely placed to provide these opportunities. They benefit from diverse perspectives, and so do the individuals, families and communities on which our businesses depend. 8
  9. 9 Society expects better of business 86% _ of people

    expect CEOs to lead on societal issues. 65% _ believe CEOs should hold themselves accountable to the public as well as to the board of directors or shareholders 68% _ expect CEOs to step in when government does not fix societal problems Edelman, 2021 For the past half-century, business has become separated from the communities it aims to serve. Society expects more of business than it is currently delivering. Without a working social contract between these two parties, the fundamentals of an economic system are broken. Expectations can no longer go unmet.
  10. 10 What would change for businesses? Given the crises of

    our world today, we see the default change in how businesses operate - with a duty of care to all those who contribute to its success - is urgent and essential. Such a default change could bring about the following benefits to European businesses: 1 Investors benefit Investors are seeking those opportunities that generate social and environmental impact, that have mitigated social and environmental risk and considered wider stakeholders. If all businesses behaved this way, the ESG investment market would become truly the status quo for financiers, options on where to invest would multiply and returns on capital would extend beyond financial. 2 Business benefits Empowered directors Currently those businesses that consider the broader impacts of their business are currently in the minority; others are choosing short term profit maximising decisions that are detrimental to people and planet. By changing the rules of corporate governance for all, we eliminate the opportunity for free rider behaviour. and empower directors to act in the broader interests. 3 Reporting becomes meaningful Lack of clarity on corporate expectations have allowed directors to focus on the financial to the exclusion of other considerations. The behaviour change needed by companies will arise from clarifying and mandating consideration of the broader outcomes. The reporting on these then also becomes meaningful and informative, providing targets and a road map to improved outcomes. 4 Evidence of longevity, higher employee satisfaction, lower turnover, improved access to capital, customer attraction and retention, and improved surpluses for R & D and market expansion. HBR, 2016; Forbes, 2018
  11. Building the case for a coalition - over coffee 11

    There are over 1000 companies in Europe and about 14,000 worldwide that have legally committed to stakeholder governance. Over morning coffee, each Wednesday from 9.30am - 10am CET in June and July, we hear from companies that have put stakeholder governance in to practice. See our “experts” tab to enjoy our conversations with illycaffe, Patagonia and others. We have also enjoyed the company of expert guests who have supported actions for regulatory change - tune in to our conversation with lawyers Wojciech Baginski in conversation with Professor Jaap Winter on why we need to level the playing field for all businesses. Hear what will improve through this recommended regulatory change, and why it makes such good sense for business, as well as for society and for our planet to regulate in this way.
  12. Join Us! 12 We are inviting you to join our

    Interdependence Coalition so that, together, we can change the law to make sure that every business plays its part in building a fairer and more sustainable future for all. Your support for the campaign and for the three principles will be recognised on our website and you will be invited to participate in activity throughout the campaign. Click here to sign up and explore our website for a detailed explanation of our cause and the legal change we aim to achieve.
  13. We invite you to: ◦ Join the coalition by registering

    on our website ◦ Share your own experience as we build up a library of case studies ◦ Be a guest for one of our Coffee in Good Company series ◦ Engage with your directors by making use of the resources on the website to open up a conversation ◦ Be an advocate for stakeholder governance by sharing this presentation widely with your own stakeholders ◦ Change your legal articles to incorporate your stakeholders in to your governance by going to the B Corp website for the relevant country legal requirement • Get in touch: policy@bcorporation.eu Visit us at: www.interdependencecoalition.eu Join The Interdependence Coalition!