Article: How CEOs, boards and investors responded differently to emerging global challenges in 2019

C-Suite

How CEOs, boards and investors responded differently to emerging global challenges in 2019

Why are CEOs and investors responding to global challenges differently? Let's take a look at some of the reasons.
How CEOs, boards and investors responded differently to emerging global challenges in 2019

Political tension, social inequality, climate change and much more - Looks like the 21st century is battling some of the most difficult challenges the world has ever witnessed. Immediate actions are required to address this global emergency. According to the 2019 EY CEO Imperative Study, investors and boards expect CEOs to address global challenges. Rather than just pouring in CSR activities, both investors and boards want the CEOs to align their business mission and become mindful of these challenges. 

Investors are the ones who are leading the path for corporate change-makers instead of CEOs. While CEOs are yet to proactively engage in addressing global issues, investors on the other hand are keen to take the next steps. This push by investors has played a key role in making CEOs more considerate towards global challenges.  

Here’s an overview of the world crisis and why CEOs are concerned regarding the same: 

Why are global challenges at the forefront?

There are many global issues, such as geopolitical instability, wars and political and economic instability that continue to haunt the world. Though all the news portals are doing an excellent job of reminding us about these issues every now and then the depth of these issues is most often not shared. Here are some recent stats from the World Economic Forum – more than 90% of humanity breathes unsafe air, and about 4 million people are killed as a direct consequence of this. About 500 oxygen-free dead zones have been recorded in the oceans in 2019 as a direct result of overuse of fertilizers and manure runoff. One of the ways to curb this kind of dangerous impact is to deploy strict regulatory policies on organizations all over the world. Hence, such critical urgencies have garnered attention from world CEOs in 2019. 

Here’s why global CEO’s are finally gearing up for global challenges.

The world is currently grappling with many challenges. However, there are few that have made to the top lists of concerns for global CEOs. 

Climate change

Within 30 years, the world needs to achieve a whopping 90% decrease in greenhouse gas emissions to sustain the planet for future resources. This imposed a lot of pressure on countries to deploy technologies that will accelerate economic growth while cutting down their pollutants considerably. The direct onus, therefore, lies on the organizations to function responsibly while putting them under much pressure. In the Global Risks Report, environment-related risks account for 3 of the top threats and in the top 4 for the gravity of the impact. 

Geo-political clashes

The geopolitical discrepancies have been one of the top concerns for CEOs all around the world since 2018 and 85% of the respondents in the risks report expect major geopolitical confrontations in 2020. These confrontations are believed to be around polarization and weak governance. The dicey foundation of technological infrastructure is a major national security threat affecting organizations directly that require immediate attention. 

 

The new generation demands action

In a comprehensive study of why CEOs care about climate change and social inequality by Harvard Business Review the most important highlight is that CEOs feel more pressure to build a purpose-driven and sustainable businesses to attract the top talent as both millennials and Gen Z are drawn to employers that have a higher purpose for a greater good. Hence, the need to act on global challenges is not just because of external imbalance but also to make sure a robust internal structure. 

Citizen trust - A major competitive advantage

The same article also highlighted why proactive actions by CEOs for these challenges is essential to get a competitive advantage. Citizen trust is most critical to gain momentum in the ever-increasing competition. When any organization strives to put their best foot forward, keeping the well-being of the society in the centre, citizens trust the organization or their brand. All the disclaimer showing no-animal tested products are one of the earliest examples of organizations using sustainability to garner consumer trust. 

Is globalization a new challenge for CEOs addressing global issues?

Globalization has certainly been one of the biggest highlights of the 21st century. However, globalization and digitization have given rise to disparate powers and different values. These differences are causing major disagreements among some countries with regards to global challenges. For example, the Paris Agreement around climate change had mixed reactions from different countries. Not only have such disagreements made mitigating global challenges a more difficult task but have also compelled the organizations to change their own policies and technologies that will help in addressing such challenges. 

The EY Study also highlighted some astounding numbers that highlight the profitability of corporate actions for global challenges. For example, the adoption of renewable energy globally, especially by corporate organizations, could save US$160 trillion by 2050. The big picture for organizations globally consists of tremors from such global issues and the business implications surrounding it. The world can’t sustain without everyone participating in saving it. In such times, organizations that have resources worth millions must align their interests and goals with humanity’s purpose and goals. Only the organizations that can truly modify their practices and achieve this will be able to sustain themselves. Otherwise, it’s going to be a continuous keep-up game with all the stakeholders. 

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Topics: C-Suite, #Rewind2019

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