Inequalities of outcome and opportunity are jeopardizing social cohesion, making it more difficult to work together towards a net-zero future. What should businesses do to support equality, fairness and inclusion? And what role can a luxury car manufacturer like Mercedes-Benz play in this respect? An interview with James Gomme, head of WBCSD’s (World Business Council for Sustainable Development) Business Commission to Tackle Inequality.
Mr. Gomme, income and wealth have always been unequally distributed in societies. However, you say that a critical point has now been reached. Why?
First of all, while inequality between countries has been decreasing in recent decades, the wealth and income gap within countries has widened. We are now seeing wealth inequality as high as it has been since the early 1800s, with the richest 10 percent of the population holding 75 percent of all wealth, and the poorest 50 percent holding just 2 percent. Historically, extreme inequality has been a precursor to instability, and today is no different. At the same time, other emerging trends such as conflict, climate change, technological disruption, and the COVID-19 pandemic, for example, are all hitting the most vulnerable the hardest and have the potential to further escalate the scale of inequality around the world in the years ahead. So, while inequality has been a part of our societies over the ages, we have, I believe, now reached a critical juncture. The high level and structural nature of inequality, coupled with several historic disruptions, make mounting inequality a systemic and a business risk – one that affects not only individual communities or companies, but entire economies and societies.
How does this imbalance relate to the climate crisis and the transformation aim to net-zero?
The planetary crisis that we are facing is having profound impacts on people. It is undermining human health, disrupting access to essential products and services, and destroying livelihoods. The World Bank predicts that 132 million people could be pushed into extreme poverty by 2030, as a result of climate change if we do not take concerted action. It will therefore not be possible to tackle inequality without robust efforts to mitigate and adapt to climate change. At the same time, it will also be impossible to address the climate emergency without putting people at the center of this agenda and working to ensure that the journey to a net-zero economy creates a fairer, more prosperous future for all.
We must recognise that the transformation is going to profoundly impact workers, suppliers, communities, and consumers at the local and global level. Companies need to engage with governments and other stakeholders to intentionally and collaboratively mitigate negative impacts and to ensure a transition in which everyone can see opportunity.
What can companies do to foster this scenario?
There are a number of key actions that business can take to tackle inequality. First of all, corporate respect for human rights should sit at the centre of everything. It helps to ensure that human dignity moves to the center of how business gets done. It reinforces a company’s capacity to lift people out of poverty, improving the lives of the world's most vulnerable people.
Following from that there is a role for business in terms of utilizing its innovation and capacity building to make essential products and services more accessible and affordable for consumers who are currently underserved. Business has to explore new ways, perhaps in collaboration with government or through new blended finance mechanisms, to try and make sure that everyone has access to what they need to be healthy and productive.
And then, there’s a key pillar of action around jobs and economic opportunities. Business has to make sure that opportunities are available to everybody, regardless of their backgrounds, and that workers and those entering the workforce are empowered with the right skills to thrive, both now and in the future.
Finally, there is also an urgent need to ensure that value and risk are distributed more equitably. Today, over a billion working people worldwide earn less than they need to afford a decent standard of living
To tackle inequality and restore faith in our economic system, it is critical to ensure that work provides a path out of poverty and an opportunity for upward mobility and prosperity for all.
What responsibility do these topics imply for a luxury manufacturer like Mercedes-Benz?
I think, there is a huge opportunity to redefine what luxury means, in terms of not only being the experience that the consumer has in relation to the product, but also the assurance that this product has been produced in a way that maximises positive social impact throughout its value chain. That every component of that product has been sourced or created in a way that has distributed value to a wide variety of global stakeholders, has enriched their lives and has made a contribution to tackling inequality. Our research at the BCTI (Business Commission to Tackle Inequality) indicates that this is increasingly important for consumers and moving forward could represent an important source of competitive advantage.
Social inequality is often primarily viewed from a risk perspective. Do you also see opportunities when it comes to tackling inequality and realizing a more just and inclusive society?
While the business case for action to tackle inequality is certainly about mitigating risk, it is also about building a world of opportunity in which companies can thrive in the long-term. Tackling inequality can strengthen the operating environment by building trust, enhancing social and political stability, and containing crises. There is also mounting evidence that it is an important driver for long-term, sustainable economic growth. Furthermore, as momentum builds behind a shift in the way business performance is perceived and measured, tackling inequality is also about unlocking a variety of company-level benefits, including attracting and retaining talent, winning consumers, enhancing access to capital and staying ahead of policy and regulatory change. Of course, measures to promote social equality will come with costs, but these costs should be seen as investments in long-term business success. So, yes, there are huge opportunities, both in the operating environment and at the individual company level.
What encourages you that the global community will succeed in reversing the current trend and effectively combating inequality?
There are a few things that give me hope. Firstly, I take a lot of encouragement from the progress that has been made with regard to efforts to address the climate emergency in recent years. Of course, we still have a lot of work to do here as well, but we are seeing the entire global business community rally behind net-zero commitments. We have also seen governments take strong action, and we have seen bodies like TCFD (Task force on Climate-related Financial Disclosure), and the ISSB (International Sustainability Standards Board) start to set clear standards which are helping to further mainstream action. For me, this represents an important blueprint for the path we need to tread on the social side of sustainable development as well.
And then on a personal level, interacting with leading companies in this space also gives me hope. There is a growing community of passionate individuals and purpose-led companies, who are driving this agenda forward at pace, and we are really pleased to be able to count on their leadership. The urgent call to action now is for all businesses to use the tools and resources at their disposal to head off the risks posed by mounting inequality. We need to ensure that equal opportunities and better outcomes are available for all.
joined WBCSD in March 2016 on a long-term secondment from Mitsubishi Corporation, Japan’s largest general trading and investment company. In July 2021, James launched The Business Commission to Tackle Inequality, a high-profile initiative that is seeking to clearly establish the role of business when it comes to tackling the critical systemic challenge of mounting levels of inequality globally. Initial recommendations for action are summarized in the report “Tackling inequality: The need and opportunity for business action.”