Sustainable Business

Moderator: Jan Mühlfeit

Participants: Riprand Graf V.U.Z. Arco-Zinnenberg, Jan Švejnar, Luděk Niedermayer, Camilla Schippa, Petr Šmída

 

 

 

Moderator Jan Mühlfeit, CEO of Microsoft Czech Republic, introduced the discussion by emphasizing the complementary role of profit and “care” in capitalism. Recognizing that the recent economy has focused too much on profit, he asked the panelists to consider the balance of global power and wealth, the emergent value systems for capitalism, the role of sustainability and the need for global companies to renew trust in the global financial institutions.

Riprand Graf V.U.Z. Arco-Zinnenberg, founder and Chairman of American Assets Corporation recognized that the current capitalist system has benefited only a few people at the expense of others. The new, sustainable system, he argues, must distribute benefits more evenly to shareholders and it must exhibit a long-range cost-benefit analysis that considers the effect on the community and environment. 

 

Sustainable business is the sensible deviation from profit maximization according to Jan Švejnar, Professor at the University of Michigan and Chairman of CERGE-EI. In his view, “sustainability” can refer to taking account of the environment, the social community, the greater economy, and any combination of these three elements.

 

Luděk Niedermayer, former Czech National Bank Vice-Governor, currently based at Deloitte Consulting, noted that the emphasis on computerized financial models has contributed to the current crisis by ignoring elements like human preferences. For him, sustainability relies on a human approach to business, one that considers risk, changing preferences, and values social and environmental concerns. He also conceded that mathematics was not guilty for the crisis, though it was “used improperly”.

 

Looking at the wider effects of peace and conflict on world population, Camilla Schippa, Senior Vice President of Global Peace Index stated that violence has a great economic impact: violence and businesses that produce the means for violence have been very economically destructive. Without growing peace in the world, the world's increasing population will be unable to cooperate and live sustainably.

 

The new paradigm for business and entrepreneurs, according to Riprand Graf, will be that of “sustainability is innovation”, and they are also the ones who hold the potential to solve our current problems. Petr Šmída, Chairman of the Board of Directors of Alfa-Bank, also emphasized that technology and education have the potential to change the way that the population uses resources, to become more sustainable. But innovative sustainable businesses and financial institutions must come together to find such solutions.

 

Jan Švejnar stressed that businesses could combine environmental and economic goals despite an increasing global competition through education, positive regulation that encourages sustainable business, and policies that incentivize sustainable business for consumers and entrepreneurs. To do this, businesses must “compliment what we have with increasing coordination.

 

Education could create more sustainably-minded and peaceful citizens, agreed Camilla Schippa, stressing that the “ability of societies to have a free flow of information” would ensure this education.

Another way of achieving sustainability, argued Petr Šmída, is a risk management system that holds profiteers accountable for their actions and does not pass the failures of individual business leaders solely onto their shareholders. Luděk Niedermayer argued that businesses could move forward by “learning from the recent past”, citing ineffective management, policy and subsidies.

 

The lively discussion, which brought about more questions than answers, was concluded by re-emphasizing the need for education and innovation for sustainable businesses. By integrating research and development in the business model, new entrepreneurs could contribute to a more dynamic system that has the potential to affect global environmental and social disparities. Policies should come from the bottom-up rather than being passed down from the executives and businesses as having a duty to increase access to wealth, opportunity, and education. 

 

The European “competitive edge” relies on its ability to produce and invest in sustainable business models. In the words of Jan Švejnar, “quality, in the end, is what it’s all about”.