'Sustainable capitalism' can stem the tide of populism, Michelin CEO says
From CBNC, Published on 2 October 2018
- Amid popular backlashes against globalism, Michelin chief executive Jean-Dominique Senard believes corporations have a duty to dedicate more of their resources to sustainability and ethical practices.
- Beyond just making profits, companies "must also consider the stakes, environmental and social consequences of their activities,” the head of the European tire maker said.
- Nearly a quarter of all assets under management globally incorporate environmental, social and corporate governance data into their investment criteria, and that figure is growing by 25 percent annually, according to financial data.
Corporations have a duty to dedicate more of their resources to sustainability and ethical practices amid popular backlashes against globalism, Michelin's chief executive said Tuesday.
Speaking to CNBC's Charlotte Reed in Paris, Jean-Dominique Senard said that in the face of rising populism, action on the part of the business community couldn't be more necessary.
"All these tensions, the increase of populism across the world, notably in Europe — the corporations have a major role to play to show there is a way forward, notably through what we call sustainable capitalism," Senard said. "It's all about more human-faced capitalism which will insist on long-term rather than short-term, and would try to fight against global 'financialization' of the economy."
What Senard meant by that, he added, is that corporations ought to focus on more than just profits. Of course, companies need to generate profits as a matter of survival, he acknowledged, but "they must also consider the stakes, environmental and social consequences of their activities."
Major economic shifts of the past few decades have contributed to the rise of populism, with wage inequality on the rise and millions of manufacturing and low-skilled jobs lost to outsourcing and automation. Communities left financially struggling a decade on from the 2008 financial crisis feel excluded from recent global growth recovery and the benefits of globalized business. The ensuing resentment has been widely credited with fueling the success of right-wing political parties and more inward-looking national policies that reject immigration and trade. Naturally, this has consequences for multinational, trade-dependent companies like Michelin.
The practice of corporate social responsibility, which aims to ensure companies conduct business ethically and with consideration for their societal and environmental impact, is on the rise. According to the World Economic Forum, out of the $85 trillion in assets under management globally, $23 trillion include environmental, social and corporate governance (ESG) data in their investment criteria — and this is growing by 25 percent a year, according to Bloomberg.
And according to a report by data analytics firm Nielsen, 66 percent of consumers surveyed across 60 countries are willing to pay morefor goods from environmentally-conscious companies.
Michelin in 2013 dedicated itself to more effectively integrate its sustainable development governance system into every part of the company's business. It created an 11-member Sustainable Council chaired by the CEO, Senard, and set six targets to fulfil by 2020 to promote efforts toward sustainable mobility.
These goals included reducing Michelin sites' ecological footprints by 50 percent, developing a responsible supply chain, and reducing carbon emissions by 10 percent. They also aim to ensure a majority of the tire producer's suppliers are compliant with its environmental standards, and contribute to local employment by creating 2,000 jobs per year. Michelin is also a signatory of the UN Global Compact and an official partner of the COP21 climate conference.
This is what Senard hopes will become what he calls "a favorable corporate social responsibility."
"If you live in that context and you create this ecosystem, then you generate what I'd call sustainable capitalism," he said. "And it is very important because if you are consistent with your actions then people feel much more committed, much more engaged. It's a very powerful way to stop the populism which is growing on the fear that this capitalism is going to grow everywhere and just crush everybody in the daily life."
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