Reflections to a better future

María Angelica Latorre

Andrés Neira [1]

One of the tools we have learned in the Change program at Insead is to become a more reflective leader and a deep listener. To learn to reflect and not react, to identify our personas, our shadows and embrace them. To learn to understand the drivers of our behaviors and those of others, to trigger manic defenses, to have meaningful conversations, to know thyself.

We feel uncomfortable, troubled by the state of the world at this moment. We feel we are not doing enough. Something inside us is pushing us to act. Sharing our thoughts and learnings will be a path to find the way.

Life has brought us once again an important case study and the opportunity to learn, unlearn and relearn. We all know human society is already in breach of multiple planetary boundaries. Our economic, social, political and health systems are all interconnected to the environment. Studies have shown us that everything and everyone is connected:  the combination of deforestation, biodiversity loss and climate change contribute to an increased risk of zoonotic pandemics. Let’s not forget the other crises that are undermining ecosystem services and reducing the economic productivity: soil degradation and pollinator loss. How about education, gender equality, poverty which is the sine qua non of most of these challenges.

What role do you play in this crisis? What is the specific way you are situated to serve? As needs continue to mount, ask how you’re going to rise to this moment.

Are we all involved, or we leave this to the “experts”? Will we allow inequality or find ourselves in each other? Will we build institutions in which we all matter? Will we create a world for all of us?

Dear reader, the choice is ours, yours.

The economy has played an important role in lifting billions of people out of poverty and creating opportunity for many people. Likewise, democracy at its best puts power in the hands of people to create a society that works for everybody. And yet, today both are perceived as failing to meet the needs of most people and the planet. This combined failure of democracy and the economic system is what makes it such a critical moment, one more discernable and clearer than it has been in the past. This crisis has showed the need to shift away from reactive problem-solving firefighting, to being proactive and getting under the surface to understand the root causes of the problems.

How can the system become more inclusive, equitable, and regenerative for all people and the planet? What if we dissolve the gap between self and world?

The pandemic has revealed how quickly and decisively governments, business and society can act when an emergency is perceived to be real. We must acknowledge that we have not seen similar levels of action taken when it comes to challenges such as climate change, biodiversity and inequality. Nevertheless, change nearly always follows a tragedy, and change is at the heart of all human progress. It is up to each and every one of us to drive the recovery in the direction of greater economic, social, and environmental resilience.

These transitional periods often take 12 to 15 years to come back again and they critically depend on leadership, leadership that is out of the ordinary. If we look at our current leaders and that includes populace, but also the mainstream ones we can ask ourselves if they are up the task. So we need a new generation of leaders more concerned about society and the environment. We need social innovators.

Probably one of the tasks that needs to be done is the reevaluation of how economics puts value on things specifically those that are not priced correctly: poverty & inequality, species diversity, healthcare, carbon.. Unless we rethink our economics and align them with these well understood patterns and principles of how living systems work, then we’re going to be constantly experiencing these unintended consequences or symptoms of a system that is fundamentally unsustainable over the long term.

Global alliances are also key. We hope the pandemic will be a catalyst to greater collaboration and cooperation as the best means to fight global threats, but it’s got to involve people in financial markets, government, a range of other institutions in our societies, including educational institutions, like universities and business schools, businesses and not just the CEO but everyone in business. And critically, the rising generation of younger people whose values are rather different.

We have the “light infrastructure” which includes the behaviors and the norms, and the “heavy infrastructure”, the structural underpinnings. Both are important and mutually reinforcing.

• Culture Shift: We all play different roles in our lives — consumer, employee, entrepreneur, member of a community. How do we change people’s expectations about what business is for? We need to think about shifting the norms of all those people.
• Behavior Change: what if we focus on changing the most important actor in the system: the corporation? This is where the impact and business in society is. If we can change their behavior, we can change that impact on society for better outcomes.
• Structural shift: We cannot expect the economic system to change just through behavioral change and cultural change if the rules haven’t changed too. We may have wonderful entrepreneurs, conscious consumers or “protected” workers who make choices about what companies they work for. But if we haven’t changed the actual rules in the system, all of that activity is pretty limited because it’s voluntary.

What would happen if the owners of more than half of the world’s capital demanded change?

An important element to imagine a new economic system is a renewed financial sector—one that takes its collective responsibilities to the world seriously and is willing to act on them.

• More than a third of the world’s invested capital (about $19 trillion) is controlled by the world’s largest asset owners.
• Nearly two-thirds of this money is in pension funds, while the remaining third is in sovereign wealth funds.
• The fifteen largest asset managers collectively handle nearly half of the world’s invested capital. They include BlackRock, which currently manages just under $7.0 trillion; the Vanguard Group, which controls $4.5 trillion; and State Street, which has $2.5 trillion under management. A very high proportion of this money is in passive investments, exposed to system-wide risk.

*Bloomberg data

These investors have enormous power to move the entire economy in more sustainable directions. What if they moved their investments away from fossil fuels or deforestation? It would be a step to take action to build more equitable and sustainable societies all they have to do is find a way to cooperate. The recent letter from Larry Fink, CEO of Black Rock to his customers gives us hope but it is enough?

If we moved from an ethos that recognized that we’re all part of this together, that we face enormous changes that are going to impact all of us, and we just use that simple moral idea of giving more than we take, the whole world would change. We’d go from thinking of ourselves just as consumers, to citizens, and focus on sustainability rather than celebrating selfishness.

• Nature and humans are connected, let’s start taking decision based on that.
• We need 21st century leaders- Start being a social entrepreneur/intrapreneurs-it’s not a business model but a way of working.
• Let’s be courageous, take action and collaborate.

“When a problem appears too large, too intractable and too unspeakable to deal with, it’s easy to give up. There never seems to be enough time, enough resources or enough money to make the big problems go away. Perhaps we can start with a very small part of it. One person, one opportunity, one connection. Drip by drip, with commitment. Those are the two hard parts. The insight to do it drip by drip and the persistence to commit to it”.- Stuck in enormity-Seth Godin

1- María Angélica Latorre y Andrés Neira are students of the Executive Master in Change at INSEAD.

Image: Taylor Brandon – unsplash.com

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