As the world leaders converge to Davos for the World Economic Forum annual event, the underlying theme that will cut across the discussions will be “Rebuilding Trust.” This builds from the most ubiquitous buzzword from last year’s WEF gathering – “poly-crisis”. The term polycrisis is defined as a cluster of related risks with compounding impacts and unpredictable consequences. The sustainability risks are no more externalities that are not material anymore, they have consequences that can trigger and accelerate other risks. For example, the interconnect between impacts due to climate changes, water stress, natural resource consumption, food security, etc., can have compounding risk outcomes that can be supercritical. It is no more sustainability challenges or problems; it is now a crisis.
Prof. Adam Tooze states, “A problem becomes a crisis when it challenges our ability to cope and thus threatens our identity.”
The urgency to address the sustainability challenges is very clear and addressing the erosion of trust is one sure way to counter the crisis. Currently, an analysis of geopolitics shows us that there is not just a trust deficit between the East and West, but also between the North and South on issues of sustainability. It is pervasive in all directions. In the recently concluded COP28, the references to the Global North and Global South itself were an indication of this divide. The urgency of the crisis should prevail and the understanding that inaction is going to be costlier than action should bring together all parties to achieve our goals. Although global cooperation is critical in our response, we also need to be pragmatic that in this juncture of reduced global cooperation, we might have to explore alternate pathways for collective action and the private sector has a big role to play in that. Only business constituents saw a sustained rise in ethics for three years by Edelman Trust Barometer 2023[1]. The same study also demands more societal engagement from businesses.
I put forward four thoughts for the business leaders who are coming together at Davos that I feel are critical to be discussed to regain trust. The progress towards a sustainable tomorrow depends on the speed at which we can regain trust across stakeholders.
Speed is critical – Six of the nine planetary boundaries are transgressed [2]:
The planetary boundary is a framework to study the anthropogenic effect on earth systems. The 2023 update study is showing us that we have crossed the safe limits in 6 of the 9 planetary boundaries. It is not clear how long we can continue like this before we create irreversible change and harm. This is where the speed is critical and the lack of concrete action plan as to how we are going to address this is creating anxiety among the new generation and rightly so. The way the global leadership has handled it till now is resulting in a rift in the trust quotient. This anxiety mustn’t be turned into despair. Their voice needs to be heard, they should have a seat to decide the future course. There must be some radical rapid regenerative way we need to attend to this and we need an inter-generational thought process for that.
Greenwashing has undermined trust:
Post 2020, we have had several cases where greenwashing has come to light. Due to its deceptive and ambiguous nature, it is difficult to identify greenwashing. However, the scepticism one incident creates can impact genuine efforts as well. Distrust regulation is one way to counter greenwashing and many countries including the EU are adopting the same. But the key to regaining trust is trustworthiness demonstration. It is the way an organization consistently behaves in a manner that actively demonstrates its commitment and integrity. It shall also include hyper-transparency. Technology is available and it can help in trustworthiness demonstration and hyper-transparency, but there is a big stumble block of behavioural change.
AI will put trust in media to the test:
Manipulation of is information has been around for some time now. The viral nature of social media platforms has spread disinformation and unsubstantiated stories at an alarming rate. But AI is taking this to new levels. We have all started to see that AI has the power to create Artificial Truth. If not controlled, Truth will be redefined by the stakeholders who have the influence and resources to define the controls. Collective wisdom and action must prevail especially on the use of AI across media. It cannot be left to localized actions as social media is now global and content can be created from anywhere in the world. Immediate action on this is critical to regain trust in the media. If not tackled fast, it can have a runaway reaction in reducing trust in everything. We need to realize that we will not be able to trust what we hear and see. While regulations are critical to curtail this, public awareness and media forensics are also important elements. The sustainability agenda can be hijacked using counter-fake narratives. If not controlled this will increase the polarity in society and create huge trust deficits.
Responsible Leadership is critical:
It is simple logic that longer tenure means accountability over a longer period and hence more sustainable decisions. The CEO tenure rates have shown a decline in the past decade [3]. Although the average tenure change has seen modest change, the median has decreased by 20% in six years and is 4.8 years. Combine this with the polarity in political leadership that is resulting in shifts at the policy level. I am writing this at a point in time when some of the major economies are going to elections in the next couple of years and there are probabilities of big policy changes because of change in political leadership.
In the Edelman Trust Barometer, 2023 referred to earlier, while the trust in governments was low, the respondents felt CEOs has influence to improve economic optimism and hold divisive forces accountable. That is a big expectation and responsibility of the CEO. It is not easy, but responsible leaders need to focus on fulfilling their long-term contract with society and the planet. Leaders need to think about what legacy they leave back on the last day right on the first day and plan their tenure accordingly. The CEO collective in a forum like WEF has the power to influence and it needs to be used.
We have seen that once the human race is pushed to the corner like the pandemic we might work more effectively. We trusted many things blindly without arguments, and self-interest was minimal because we realized that we would collectively go down. In the case of the pandemic, there was a high hope that there could be a cure through a vaccine. But when it comes to sustainability, there can be a scenario of no return. The leaders assembling at Davos collectively have the capability, capacity, and influence to the goal of “Rebuilding Trust” with all stakeholders, so that we can work collectively to the common goal of a sustainable future. It is not just Rebuilding Trust, but the speed at which we can rebuild is critical.
Rebuilding Trust @ Speed to Solve the Polycrisis – let this be an obligation on every responsible leader at Davos.
[1] https://www.edelman.com/trust/2023/trust-barometer
[2] https://www.stockholmresilience.org/research/research-news/2023-09-13-all-planetary-boundaries-mapped-out-for-the-first-time-six-of-nine-crossed.html
[3] https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-2/
