INSEAD’s Hoffmann Global Institute for Business and Society convened faculty and experts at the SDG Tent at Davos to discuss the path to Net Zero and family-owned businesses as forces for good.
Listen to INSEAD Deputy Dean, Peter Zemsky and Hoffmann Global Institute Executive Director, Katell Le Goulven, give their key takeaways at Davos 2022
Aligning with the theme of “Working Together, Restoring Trust” for Davos 2022, INSEAD was once again alongside the World Economic Forum thanks to our partnership with InTent, sponsor for the Sustainable Development Goals (SDG) Tent.
The significant roles that family-owned businesses and renewable energy play in advancing the Sustainable Development Goals were explored through panel discussions during the World Economic Forum’s annual meetings in Switzerland attended by leaders across business, politics, culture and academia.
As we experience and tackle various societal and environmental issues such as climate change, environmental degradation, digital exclusion, inequality and inflation, family-owned businesses are increasingly becoming forces for good by taking the lead in meeting today’s challenges from reducing their environmental footprint, creating value to their stakeholders to addressing societal issues such as the well-being of their employees and local communities.
In the panel session, “Good for Business, Business for Good”, moderated by the Hoffmann Institute’s Executive Director Katell Le Goulven, speakers discussed a host of topics including family-owned businesses as forces for good and a key difference between family-owned businesses and companies in terms of long term horizons. Elaborating on what it means by being a force for good, Le Goulven explained that it refers to the “intentionality of integrating societal progress in the business model of a firm”. Family-owned businesses, she pointed out, represent 80% of global businesses and contributes to about 70% of the global GDP.
Owning a company is both a privilege and “an incredible responsibility”, said André Hoffmann, Vice-Chairman of Roche, a company with a 125-year history and a global pioneer in pharmaceuticals and diagnostics. Mr Hoffmann is also a Governing Board Member at the World Economic Forum and a long-time advocate of family-owned businesses as a force for good. “You need to make sure you use this instrument in a way which is beneficial not just to the shareholder but society at large,” added Mr Hoffmann. Family businesses, he added, have a long-term horizon which allows them to think forward. “When it works, it’s brilliant. When it doesn’t, it’s absolutely diabolical,” he said during the session which was held in partnership with the INSEAD Wendel International Centre for Family Enterprise.
Building on this point and citing survey findings on family businesses, Suni P. Harford, President of UBS Asset Management, highlighted that 70 percent of businesses believe it is their duty to lead in a climate-changing world, a mentality, she said, that is “very different from that of institutions”. She added that this is probably due to family businesses having a long-term, multi-generational view whereas most companies focus only as far as the tenure of their current CEOs.
In the same vein, INSEAD Professor and Academic Director of the Wendel International Centre for Family Enterprise, Morten Bennedsen, explained that family firms are in the position to make a net positive impact as they think in terms of succession and future generations. Professor Bennedsen provided three steps for family firms looking to get involved in businesses as a force for good from scratch. Firstly, they would need to comprehend the societal consequences of businesses they are running. Secondly, they would need to commit to purposeful business and lastly, execute purposeful business strategies.
In the session, “Renewable Energy, Scarcity and Circularity: A Path to Net Zero”, INSEAD professor Atalay Atasu, Visiting Professor of Technology and Operations Management, led a discussion on the path to Net Zero that looked at scarcity and circularity during which the panel covered a range of issues such as the Olympics in Paris 2024, the importance of collaboration and the Rebound Effect.
The panel discussion began with insights from Michele Crisostomo from the Italian energy multinational, Enel. Mr Crisostomo comes from a diverse legal and corporate governance background. Sharing a key message on how one could achieve Net Zero, Mr Crisostomo said that it boils down to renewables. “Considering that electricity is the winning energy vector of the future, the only way we can reach Net Zero is if we push on electrification of final consumption where electricity is produced out of renewables,” said Mr Crisostomo who is the Chair of the Board of Directors and of the Corporate Governance and Sustainability Committee at Enel.
Providing insights from a public policy point of view, Fabienne Fischer, a politician, lawyer, and member of the Green Party of Switzerland, emphasised the need to move quickly. The climate, Ms Fischer cautioned, will change more quickly than expected and urged a “recalibration to our relationship” to nature and energy and “the way we use energy”. “We can reach Net Zero,” she said, adding that she hopes that a Net Positive Economy could also be achieved. Ms Fischer stressed the importance for both the public and private sectors to work together to find solutions.
The Olympics is a good example of a public-private sector collaboration. Georgina Grenon, the Sustainability Director of Paris 2024 and an INSEAD MBA ‘99J alumnae, talked about preparations for the 2024 Olympics which will be the first to be fully aligned with the Paris Agreement and will be “fully powered with renewable energy”. The games, Ms Grenon said, are “the biggest event in the world and we are facing humanity’s biggest challenges”.
We also heard from journalist, documentary film maker and author of “The Rare Metals War”, Guillaume Pitron, who cautioned about the conundrum of the Rebound Effect in our quest for sustainability, commenting that the more you go green, the more materials made of rare metal alloys are required to produce the batteries to make the transition possible. These metals are scarce and difficult to recycle and this is a challenging conundrum.
In keeping with the theme of “Working Together, Restoring Trust”, conversations that took place during this year’s SDG Tent in Davos have demonstrated that, with collaboration, cooperation and long-term thinking, it is possible to achieve Net Zero and for family-owned businesses to be forces for good.
It is clear to us that Davos is a powerful platform to bring leaders in business, politics, culture and academia together to reflect, discuss and find solutions for pressing issues facing the planet today. As we progress towards 2030, we look forward to convening more discussions and playing a role in helping businesses and society address the world’s biggest challenges to meet the UN Sustainable Development Goals.