The climate crisis and social unrest could finally force corporate leaders to think beyond the profit motiveWhen Klaus Schwab founded the World Economic Forum in an Alpine ski resort in 1971, he wasn´t to know that the 30-year postwar boom was on its last legs. The original idea of Davos was to promote the German economist´s big idea of `multi-stakeholding` - the notion that companies had broader social responsibilities than the mere pursuit of profit for shareholders. But the subsequent oil crisis, stagflation and recession put paid to any progressive thinking in the boardrooms of the west. As corporate revenues plunged, a different economist laid the theoretical foundations of a new era. By the 1980s, Milton Friedman´s claim that `there is one and only one social responsibility of business ... to engage in activities designed to increase its profits` was the new common sense in business, particularly in Margaret Thatcher´s Britain and Ronald Reagan´s America.Since then, financial deregulation and digitalisation have created the conditions for footloose capital to call the shots in a global economy. The figure of `Davos man` - and only 24% of this year´s attendees are women - has become synonymous with a certain kind of deracinated corporate executive, whose only loyalties and obligations are to the balance sheet. But on the WEF´s 50th anniversary, Mr Schwab, now 81, has gamely tried to go back to where he began, making `stakeholder capitalism` the theme of this week´s gathering, and updating the notion of stakeholders to include those concerned to protect the interests of the warming planet. Continue reading...
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