Economists often say that the private sector is more efficient than government. This may be true, but it feels like a half-finished thought: More efficient at what? 

 

Government has certain freedoms that most businesses can only dream of, such as the ability to think on longer timescales, change the rules of the economy, or pursue ambitious projects without any plan to monetise them. Although government has the power to fine tune the system of incentives across society – a delicate responsibility, if ever there was one – business can satisfy those incentives more efficiently than any other entity.

 

Stepping back from the day-to-day challenges of navigating through an economic crisis, the key questions become clear. Are the right incentives in place to achieve sustainable prosperity for all of society? And if not, then what do we intend to do about it?

 

Where profit and values merge

 

Sweeping generalisations about business are bound to mislead. Companies have dumped chemicals into rivers, cut down rainforests, and led us down the path of global warming… while other companies have made farmland vastly more productive, developed ingenious methods of recycling, and invested in charitable endeavours the world over.

 

The acceleration of technological progress in the modern era is well known, but a similar trend has followed in its wake in comparative silence. Environmental awareness and social responsibility now figure far more prominently in corporate boardrooms than they did a generation ago – driven partly by genuine concerns, and partly by the need to demonstrate purpose driven leadership to an energised community of employees and customers who demand real initiative on issues in the public eye.

 

For varying reasons, the COVID-19 crisis has brought renewed attention to many of the Sustainable Development Goals outlined by the United Nations. A 2019 business survey by Euromonitor found that 53.2% of respondents had plans to develop sustainable products, and 48% intended to invest in sustainable sourcing of materials. The same survey conducted one year later saw these numbers jump to 68.1% and 60.1%, respectively.

 

The context of these developments makes the numbers even more striking, as a recessionary period normally puts massive pressure on businesses to focus on their own bottom line to the exclusion of longer term goals.

 

Other findings from the Euromonitor survey shed light on the reasons for this shift in the business world toward greater social and environmental progress. When asked in 2019 about the barriers to sustainable investment, “lack of senior/board commitment” was near the top of the list – cited by 29.5% of all respondents. In 2020, only 24.7% gave this response. Another explanation, “lack of awareness”, fell from 23.1% to 17.1% during the same period. “Weak regulatory incentive/legal risks” dropped from 19.2% to 13.0%. “Does not create value for consumer” decreased from 14.7% to just 8.2% of responses.

 

Here, as elsewhere, culture is the prime mover. Society’s newly awakened concerns about sustainability have been clarified and amplified through social media, translating to public policy incentives geared toward greater responsibility. As incentives shift, businesses follow suit – just like a flower angling towards sunlight through the changing seasons.

 

Though many executives must continue to devote their efforts to surviving the current crisis, the path forward is increasingly centred around holistic measurements of success.

 

Full Story: https://expatlifeinthailand.com/lifestyle/business-at-a-crossroads-are-the-right-incentives-in-place/

 

-- © Copyright Expat Life in Thailand 2021-04-19

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