The global economy is at an inflexion point. The widening economic divide has complemented, and arguably contributed to, a deeper political gulf, stoking populism and widespread discontent. An increasing crisis in sustainability and the spectre of climate change has created a world that is in the throes of an existential crisis. A growing body of empirical research demonstrates that these crises are stifling mobility, innovation, investment, and growth, and creating long-term geopolitical risk. The Edelman Trust Barometer reveals that nearly half of the mass population believes that the system is failing them, expressing an urgent desire for global change. The existing paradigm of capitalism needs to be radically reshaped and reborn if it is to survive.
Despite shrinking margins and increased challenges to achieving profitability, the imperative on businesses to return value to stakeholders remains as high as ever, with heightened shareholder demand and activism. Against this backdrop, the conversation regarding what corporates do to eliminate internal organisational bias and inequality has taken hold in the idiom of diversity and inclusion. At the same time, the ESG impact and commitment to sustainability of corporations are being seen as a key component of performance. Declining trust in governmental systems and institutions is leading the public to increasingly seek agency as employees, consumers, and investors.
Our model harnesses the power of inclusion, empowerment, and social change as a strategy for better business, and sustainable profitability.
We propose that the chasm between the two discourses of profit and good is a false dichotomy. The Davos Manifesto 2020 on The Universal Purpose of a Company in the Fourth Industrial Revolution states that “a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large. The best way to understand and harmonize the divergent interests of all stakeholders is through a shared commitment to policies and decisions that strengthen the long-term prosperity of a company.”
Doing better and doing good are inherently linked. Exclusion engenders lost opportunity, which impacts profitability and leads to short-term gain instead of sustainable value. The economic cost of exclusion negatively impacts societies and markets, thus affecting the bottom lines of corporations and their ability to deliver results and profits for stakeholders, and those who are excluded represent vast untapped potential. The profit motive that drives capitalism, far from being in tension with inclusion, empowerment, and sustainability, as it has traditionally been seen to be, is in fact inextricably linked to the squaring of this circle and creating a pipeline of long-term value return.
This model of capitalism harnesses the power of “inclusive disruption” in order to unlock value, and activates investors, consumers, and employees as economic actors. Where instead of just “equality”, in which all are treated equally, ”equity”, where every player is empowered with the tools they need in order to achieve their full potential, is the focus. And where inclusion and empowerment are part of a model of “Return on Equity” and corporations keep the pulse on their “Equity Quotient” to power sustainable long-term profitability and growth.