This current age of the world economy began under a double sign. The first is fear about a new global recession. The second is completely opposite in nature and filled with trust: growing attention to environmental issues by economists and G7 governments alike. Worried about the fires devastating Siberia, the Amazon and Africa, along with thawing glaciers, the leaders were thus inclined to think about ‘sustainable development’ in concrete terms.
This age can be viewed with irony, like the scathing wit of Altan (“The recession is a transitory event,” remarks one of his characters a bit grimly. “And then it gets worse,” the other replies), but there is room for a degree of optimism in light of what seems to be a corporate ethical turn. The statement by the Business Roundtable (a group of America’s 180 largest multinational corporations) has downgraded the principle of shareholder value to make way for the interests and values of stakeholders (a firm’s employees, consumers and people in the communities involved in its activities).
In short: we are entering an age in which the central topic is economic growth, however it is tinged with a quality and equilibrium that is a great improvement over the past.
The global economy is slowing down, say the world’s major bankers who met in late August in the USA, against the backdrop of Wyoming’s mountains. The ECB warns that the shadow of the recession could indeed be felt. Europe’s bank is well aware that Germany’s economic crisis (stymied primarily by difficulties in the automotive sector) and Italy’s stagnation ‒ persistent over the past five quarters ‒ are contributing factors. On Friday, ISTAT confirmed zero growth for Italy in 2019. These situations are compounded by the fragility of the whole EU area (with forecasts of a 1.1% growth). The tariff and currency wars against China and Europe, sparked by Trump’s irresponsible sovereignism, have only amplified the negative repercussions for international trade overall. Brexit makes the picture grow even darker. Political tensions in China (Hong Kong), India, Iran and Africa keep everyone on edge.
Thus, there is more than enough to be seriously worried about. Yet, those who pay close attention to economic phenomena cannot help but harbour some well-founded hopes for radical and positive changes. But where? Changes are under way that we can summarize under the heading of the ‘green economy’.
So, let’s take a look at the Business Roundtable statement. Signed mid-August by over 180 top CEOs (Amazon, Apple, Accenture, BlackRock, IBM, JP Morgan, Goldman Sachs, Coca Cola, General Motors, AT&T) along with other large Corporate America firms employing over 15 million people, the statement overturns Milton Friedman’s shareholder theory (‘The social responsibility of business is to increase its profits.’), which nourished and distorted economic thinking and action from the 1980s until our times. It is now sustained that, in addition to profit, a firm’s duty is to enrich the lives of its employees, consumers, suppliers and communities, respecting the rights and values of individuals and the environment. In short, this is a move from Friedman’s Chicago School neo-liberals to a new interpretation of Keynes, a liberal with a strong social sensitivity.
Let’s take a closer look. According to the most suspicious and disenchanted observers, this is an opportunistic turn, an attempt to wave the green banner to save the interests of businesses being faced with increasing ethical and social criticism. It is truly “a major philosophical shift for business,” as the Wall Street Journal proclaimed enthusiastically. The Economist was also favourable, writing of a corporate social commitment towards ‘civil’ capitalism ‒ or more precisely ‘collective’ ‒ that pays attention to the needs of society. Corriere della Sera entitled its article “La svolta etica del capitalismo” (The ethical shift of capitalism). Whether this shift is opportunistic or not, the documents’ formal statements hold a certain strength, a certain official note. The statements reflect the tendency of public opinion, especially among millennials (born between 1981 to 1996) as both managers and consumers, that displays a growing sensitivity for the environment and social equality (well described on 30 August in an article in IlSole24Ore written by Giorgio Barba Navaretti, an economist working at both the University of Milan and Paris SciencePo). They may have an important role to play in improving the economic climate and building a new and fairer growth paradigm. They will also help build a ‘civil’ and ‘circular’ economy that takes responsibility for ‘sustainable and inclusive’ development capable of blending competitiveness with environmental and social sustainability.
How? There is a growing volume of economic and social writings on this subject. Interesting pointers can be found in Responsabili (Leaders) published by Il Mulino, the latest book by Stefano Zamagni, a reputed economist who closely follows questions regarding society, and more precisely, the civil economy. Currently the President of the Pontifical Academy of Social Sciences, he has the ear of Pope Francis on topics in the realm of the ‘just economy’. This is also the realm of Keynes, along with his new interpretors Stiglitz, Krugman, Fitoussi and Crouch. This is a contemporary relaunch of the Church’s social doctrine, in an original dialogue, updated with the best thinking on the environment.
Furthermore, Corporate America’s green and sustainable turn was preceded by commitments taken by firms and business associations in France and Germany. Italy was involved as well with the choice of Confindustria back in 2018 to launch its manifesto on ‘Corporate Social Responsibility for Industry 4.0’, linking high-tech innovation with sustainability (a pathway Italy’s finest companies have been on for years, as we have often reported in this blog). Many associations and business foundations have supported the research and causes of Symbola, led by Ermete Realacci, one of the most authoritative figures in Italian environmentalism. Equally worth noting are the activities of ASVIS, the sustainable development association chaired by Enrico Giovannini, which endeavours to translate in practical terms the principles of the UN Sustainable Development Goals adopted in the 2015 Paris Agreement.
This therefore is the key lever of the ‘green economy’. It can inspire the programmes and initiatives of the new EU Commission, led by Ursula von del Leyen (statements on commitments in this direction are already forthcoming). It can also influence activities in Italy driven by the new government, which can link competitiveness and sustainability to make a very positive power play.