Business and Sustainable Development Commission Report

5.4 Forging a new social contract

Trust in business is at a low point. In particular, people in developed economies "left behind" by globalization have lost faith (see Exhibit 15). Economic insecurity and loss of status, dignity, and identity have become major issues in those areas and electorates are angry and fearful. Investors withdrew more than US$200 billion from equity funds in 2016 in response to mounting concerns about political upheaval in developed economies and rocketing company valuations. NGOs worldwide are probing discrepancies in some sectors between rising profits and executive pay on the one hand, and miserable pay and conditions for workers in the first links of the global value chains that supply them on the other. And governments as well as citizens in countries wrestling with low growth are impatient of companies' ingenuity in avoiding tax when cuts in public spending are straining the social fabric.

Exhibit 15: 
Who has gained from globalization

The global 1% and the Asian middle class

Companies that incorporate the Global Goals in their business strategy can restore public trust by pursuing that strategy with integrity. Taking this course automatically aligns their interests with civil society and government much more closely than has recently been the case. Over the past 30 years, the public and private sectors diverged, with the private sector left to its own trajectory by the "Washington Consensus" until the financial crisis called it into question. 

Now, the public sector, civil society, and, with growing momentum, the private sector are urgently pursuing the same Global Goals for Sustainable Development. They need each other to achieve them. There will be different emphases and difficult trade-offs to negotiate, but in principle all these stakeholder groups are pulling in the same direction. Trust will grow as they learn to work together. All three groups could renew a social contract with the following actions.