The ground-breaking report, published last week by the World Business Council for Sustainable Development (WBCSD) identified three fundamental challenges for the world: climate change, the loss of biodiversity and rising inequality. Each of these challenges risks further removing humanity from a safe and just operating space of existence. The covid-19 pandemic has highlighted two fundamental truisms that must be acknowledged to solve these challenges; the first being the environment, humanity and our economy are interconnected and interdependent and must function in harmony, and the second that humanity has the capacity for transformational change if we work collaboratively.
Through its 2050 report, the WBCSD outlines how business can lead humanity to tackle these challenges. The report sets out nine pathways of system transformations required for the major areas of business activity: energy, transportation, living spaces, products and materials, financial products and services, connectivity, health and wellbeing, water and sanitation and food. The publication also outlines the strategic direction for businesses over the next decade to drive progress towards the WBCSD’s vision for 9 billion people to live well within planetary boundaries, by 2050. Achieving these transformative adaptions will require significant shifts to the strategic mindset of business leaders and employees. Three specific mindset shifts are highlighted in the publication: “reinventing capitalism to reward true value creation, not value extraction, building long-term resilience and taking a regenerative approach to business sustainability”.
This transformational change to mindsets and businesses will require the redefinition of value within enterprises and economies alike, moving away from judgements based solely on financial data and integrating a deeper understanding of the impacts and relationships between people, environment and enterprise value creation to redefine success. As highlighted in the report this requires businesses to carry a multi-capital approach throughout their strategy and decision making. Enterprises must think regeneratively about their purpose and role in society, discarding the do no harm and business as usual mindsets, to build organizations that enable social, environmental and economic systems to thrive and recover from past degradation.
The systems thinking approach reflected in the paper deeply aligns with the interconnectivity and holistic approach implemented through integrated reporting. The IIRC strongly supports this innovative report and its focus on the transformational change to business through better strategic thinking. The International <IR> Framework is a vessel for developing an integrated thinking mindset within a business, acting as a governance tool for boards, management and staff to better understand their enterprise’s value creation systems and their interconnected role in the world. This approach can have wide-reaching implications, as highlighted in the report by Peter Baker, President and CEO of the WBCSD and Deputy Chair of the IIRC: “The innovative and distinctive part of this report is the need for leaders everywhere to change their mindsets towards building long-term resilience, toward a regenerative approach to business and ultimately toward reinventing capitalism.”