Business, digital and the public good

Written by Giovanni Reibaldi, on 15 April 2021

Three challenges for the years to come

In the years ahead, our society will face a triple challenge. The first is to drastically reduce our greenhouse gas emissions. The second is to ensure that the slowdown in economic growth (currently due to the pandemic, tomorrow due to the fight against climate change) does not increase poverty and social inequalities. The third is to preserve our individual freedoms and democratic institutions.

To meet these challenges, the contribution of businesses will be crucial. Since the fall of the Berlin Wall and the liberal turn taken by our society, large multinational corporations have dominated most economic sectors. This includes strategic sectors such as transportation, telecommunications, energy, etc. Consequently, their business models largely determine our collective performance, socially, environmentally, and even democratically.

Freedom or Constraint?

Large multinational corporations have two possible paths ahead of them: Freedom or Constraint. The first involves freely committing, starting today, to this transformation from liberal capitalism to a more sustainable and inclusive model. This path has the advantage of allowing each company to define a tailored transformation strategy adapted to its sector and its economic model. By starting today, it also allows for more time to implement the significant changes required.

A key role in this path of Freedom could be played by professional sectors and the various federations representing them. They could help companies within the same value chain develop shared objectives and a roadmap for ecological and solidarity transition. They could also facilitate unprecedented collaborations, for example, in the field of the circular economy.

But there is little time left to choose the path of Freedom. If large companies continue to stand still, the state would then be obliged to assume its responsibilities. To protect the population from the harmful consequences of climate change and the deepening of inequalities, it would have no choice but to take drastic measures, applying to all economic sectors according to a tight schedule. Climate Law would become an annual ritual, just like the Finance Law and the Social Security Financing Law. This is the path of Constraint.

In the long term, it is even possible that this path of Constraint could lead to a real questioning of liberal capitalism. The state could nationalize strategic sectors. Large metropolitan areas could be responsible for providing inhabitants with food and energy security services organized in short circuits. New forms of economic and social cooperation could emerge. The playing field for large multinational corporations would be significantly resized.

Business and the Public Good

The path of Freedom implies a true paradigm shift for large multinational corporations. It involves moving from a model of company conceived as private property - exclusively owned by shareholders, serving their interests - to a model of company conceived as a shared good – a good co-managed with other stakeholders (employees, clients, suppliers, local authorities, NGOs, etc.). The goal is to seek acceptable compromises between profit and the interests of other co-managers.

This new model implies that shareholders recognize new rights for other stakeholders. Shareholders would remain the owners of the company, but they would agree to systematically integrate, at the highest level (boards of directors, executive committees), the viewpoint of stakeholders on the company's business strategy. The modalities of this integration remain largely to be defined, and various proposals are currently on the table.

This model, moreover, is not entirely new. For example, 12 member countries of the European Union already provide, to varying degrees, for the participation of employee representatives on the boards of directors of private companies (principle known as "co-determination").

Time for a Responsible Approach to Digitalization

What will be the place of Digitalization in the debates among the co-managers of tomorrow's companies? This will depend, of course, on the sectors and economic models. But in an increasingly digitalized world, the way companies use Digitalization tends to become a central factor in their social and environmental performance.

Reality shows us today that more Digitalization does not necessarily imply social progress. Digitalization enables empowering employees but also monitoring them. It encourages the sharing economy but also pushes for overconsumption. It develops a more inclusive labor market (for example, for people with reduced mobility). But it also makes it easier to relocate to countries practicing social dumping. And so on.

The spread of Digitalization raises within companies a myriad of human and social issues. Issues related to the distribution of value generated by the economic system; to the prospects for employability and fulfillment of employees; to their quality of life at work; to the balance between professional and personal space/time; to respect for social rights; to contribution to public finances... The list is long and expected to grow in the years to come (Hello artificial intelligence!). And while the environmental challenges of Digitalization have been popularized by French and international reports, reflection on these human and social issues has so far been confined to small circles of experts or activists.

This period of massive telecommuting, booming e-commerce, and forced digitalization of sectors that have so far remained outside the digital realm (small businesses, public administration, education, local healthcare, etc.) is therefore the right time to open a discussion within each company on how to use Digitalization in the service of an ethical, inclusive, and sustainable economic model. And to do so not on behalf of stakeholders, but with them.