It’s time to give capitalism a do-over

As written by Guy Cormier and published in Canada’s National Observer

For today’s corporate leaders, environmental, social and governance (ESG) criteria are non-negotiable when navigating 21st-century risk and protecting business value.

In fact, ESG has already been front and centre on the corporate agenda this year, from BlackRock CEO Larry Fink’s annual letter to recommendations from Ontario’s Capital Markets Modernization Taskforce and in discussions on “stakeholder capitalism” at the World Economic Forum in Davos.

What’s evident is that companies won’t improve their ESG profiles without clear reporting standards, and that we need to see progress on transparency and data collection. But we can’t let the conversation around ESG continue without taking a step back and acknowledging the need for a broader discussion about the fundamental shift in attitude we have to see from corporate leaders.

Failure to act on ESG is a failure to drive performance in the modern economy we’re all a part of. The idea behind ESG, put simply, is to require corporate leaders to adopt the more expansive view that corporate growth strategies should also drive social progress and prioritize communities above all else.

Why? Because companies that prioritize their communities will ultimately be more sustainable, more resilient and better set up for long-term growth. When social responsibility goes hand in hand with a company’s mission and is an integral part of its strategic planning, it can drive performance for employees and clients.

It’s been encouraging to see Canadian businesses — large and small — step up to support their communities during the pandemic. The last year has shown us how interdependent we are and how we’ve needed to act collaboratively to address a global issue.

The ability for companies and governments to work together on pandemic relief will only drive clients, investors and employees to now put more pressure on corporate leaders to act on other global issues, like climate risk and income inequality. The expectations placed on companies are higher than ever — which is a good thing. In fact, as leaders, we can use this momentum to make a fundamental shift in the way we view and operate our businesses.

What’s more, environmental and social goals are intertwined. By managing climate risk, companies are also fighting social inequality because disadvantaged groups are disproportionately affected by climate change.

If we want to ensure prosperity, we need to shift the way we view capitalism. Practically and operationally, that means taking a hard look at where we allocate capital, who we hire to run our companies and how we conduct contract procurement.

Smaller businesses may find it more difficult to make the shift in the short term. It’s important to recognize that it won’t happen overnight.

This is a call to Canada’s corporate leaders — we have the opportunity to pursue a path of sustainable growth that will serve as an example for others to follow.

It’s time we turn one day into Day 1.