We must alter economy’s trajectory toward an inclusive, equitable and sustainable future now

The pandemic has heightened awareness that continuing crises around climate, inequality and social cohesion are interconnected and must be addressed collectively. Economic thinkers from Mariana Mazzucato to Mark Carney agree that capitalism can no longer leave its negative impacts for government and philanthropy to solve.

The need to alter the economy’s trajectory toward an inclusive, equitable and sustainable future is behind escalating interest in environmental, social and governance (ESG) investing and reporting. To safeguard our collective future, corporate Canada needs to collaborate with community and public sectors to reshape markets in the public interest.

In a recent federal government report entitled “The Future of Business in Society,” Coro Strandberg, co-founder of the United Way Social Purpose Institute (SPI), writes: “All signs point to successful businesses embrac[ing] a stronger role in creating value not just for themselves and their shareholders, but also for society and stakeholders [so that] nature is replenished and people and communities thrive.” While the conventional role of the United Way is to channel donations from companies to community organizations, the SPI offers assistance in the other direction — helping companies embed social values in their governance, business practices and reporting.

Too few of Canada’s corporate CEOs are paying attention. Fewer than half of those responding to the 2021 PwC CEO survey plan to spend more on ESG issues over the next three years. Over two-thirds have yet to factor climate change into their risk management strategies.

Of 3,000 Canadians surveyed by the Canadian Centre for the Purpose of the Corporation, 85 per cent agreed business should put shareholder interests on par with those of communities, employees, customers and the environment. Further, 75 per cent want capitalism reformed to be more inclusive, sustainable and fairer — or be replaced.

ESG criteria provide starting points for this shift, but mere risk management is not enough.

Allyson Hewitt, who co-ordinates the Business for Purpose Network at MaRS Discovery District told us, “The key is to define a company’s social purpose, align ESG activities around it, and engage with government and community partners around bold goals.”

The 17 UN Sustainable Development Goals (SDGs) outline a scientifically validated and widely endorsed set of bold goals for humanity. In many countries, they’re shaping public policy, investment and civic engagement in systemic change — but not yet in Canada.

According to John McArthur, director of the Centre for Sustainable Development at the Brookings Institution and an authority on SDGs, Canada is struggling to gain traction on many SDGs: “The country’s corporate leaders need to play a much bigger role in helping to drive change,” he told us. Canada needs a corporate or trisector council on SDG implementation.

But not all CEOs are out of step; some are leading the way:

Advancing economic reconciliation

Reconciliation with Indigenous peoples includes making amends for the withdrawal of economic rights under the Indian Act. In co-operation with non-profit SHARE (Shareholder Research for Research and Education), the National Aboriginal Trust Officers Association and the Atkinson Foundation, TMX Group — which owns the Toronto Stock Exchange — has made a landmark commitment to this issue. Working with the Canadian Council on Aboriginal Business, TMX will set new targets around board and employee diversity and augment efforts to raise capital for Indigenous businesses.

Investing in employee equity

Non-profit Social Capital Partners (SCP) recently enabled 1,200 employees of the U.S. Taylor Guitar Co. to purchase the company, in a $100-million ESOP (employee share ownership plan) deal financed by the Healthcare of Ontario Pension Plan. As SCP founder Bill Young told us: “ESOPs enable wage earners to build equity and help ensure that good jobs stay in communities. Given how ESOPs have flourished in the U.K. and the U.S., their potential in Canada is enormous.”

Co-creating systemic change

The Transition Accelerator is a charity that creates values-based consortia to decarbonize Canada’s economy in the energy, transportation and building sectors. It does so by convening academics with businesses, communities and governments. CEO Dan Wicklum told us, “Centring social values in Canada’s transition to net zero is in the best interests of society. This in turn requires collaborative investment by philanthropy, the public sector, corporate finance and capital markets.”

We can and must do better. An economy that works for all and for future generations is within reach, if only the private sector works with community and public sector stakeholders to build it.