Three Davos 2020 conversations to drive change
As the great and the good convene in Davos this week for the World Economic Forum, our Director, Louise Savell, considers what they should focus on if they’re serious about achieving their objective of a cohesive and sustainable world.
This year’s World Economic Forum claims to be “among the most sustainable international summits ever held” bringing together 3,000 stakeholders to discuss how to create a more cohesive and sustainable world.
On one level I struggle to get past a suspicion that the meetings are an echo-chamber for a privileged global elite to talk about doing better, even doing good, in surroundings that prevent them from having to engage with the unappealing realities of poverty, unemployment and the climate crisis. Certainly, the private air travel that many delegates will use to get to the summit seems increasingly hard to justify in the context of impending climate collapse.
On the other hand, solutions to these knotty problems will require deep and far reaching partnerships between businesses and governments, including potentially uncomfortable trade-offs between profit and purpose, and perhaps even the ceding of some of the very power and privilege that has brought delegates to Davos. What better place to face-up to these challenges than a small, Swiss alpine town?
So, leaving my cynicism aside, if delegates are serious about achieving real change, what should they be talking about this week?
Society’s greatest challenges — health, education, climate change and sustainable economic development — will not be solved by working in traditional silos. Moving the needle on these knotty issues will require government, civil society, philanthropy and the private sector to find new ways of working together to effect change.
Cross-sector collaborations can take a range of forms, from loose alliances of interest to formalised legal arrangements like Social Impact Bonds and Pay for Success. However, all such collaborations require planning, tenacity, and compromise to deliver impact at scale. WEF 2020 could be an opportunity to start some of those partnerships moving.
Investment for impact
As world leaders convene to “reimagine the purpose and scorecards for companies and governments” delegates should aim to move beyond ‘do no harm’ Environment, Social and Governance (ESG) considerations, to think about how they might also deploy their public and private capital to ‘do more good’.
Investing for positive social and environmental change may sometimes involve trade-offs between profit and purpose, but with the $1.5 trillion estimated to be held by philanthropies at most accounting for 1% of funds in global capital markets — even a small shift in capital allocation towards investments that seek a positive social or environmental return could have a significant impact on bridging the funding gap of several trillion dollars per annum for the Sustainable Development Goals.
However, capital reallocation to impact-seeking investments will not on its own drive cohesion and sustainability. Improved business practices that boost household and government resources — through payment of living wages and higher corporation taxes — will also be needed to move the needle on the issues #wef20 seeks to solve.
Paid work is not only the primary source of income for most households worldwide it also reinforces “the core principles of equality, democracy, sustainability and social cohesion”. International Labour Organisation (ILO) data from 2018 reveal the persistence of ‘decent work’ deficits — work offering material wellbeing, economic security, equal opportunities and scope for development — particularly for women and young people under 25. More than one in three young workers in low- and middle-income countries live in extreme or moderate poverty.
Too many labour markets across the world are characterised by too few employment opportunities, especially for decent work. Employers complain that education is not giving young people the skills they need for modern workplaces; governments worry about economic development and social unrest; and households struggle to get by.
The Taylor report suggests that in the UK responsible corporate governance, good management and strong employment relations are the best ways to drive better work. Government can surely also play its part by ensuring that education and training curricula respond as technology changes the shape of the employment landscape.
Doing well by doing good? Outcomes-based investment in youth employment
It is all too easy to talk in general terms about what needs to be done differently, without giving an example of what good might look like in practice. Step forward a project designed with the support of my colleagues at Social Finance.
- the Palestinian Ministry of Finance, funded by the World Bank;
- four investors: the Palestine Investment Fund (PIF), European Bank for Reconstruction and Development (EBRD), FMO — the Dutch Entrepreneurial Development Bank, and Semilla de Olivo (a Chilean-Palestinian Diaspora Investment Fund) through the local agent Invest Palestine; and
- consortia of non-government training providers and potential employers.
The DIB will match employment opportunities with suitable employees by training job seekers in employer-demanded skills. Targeting an initial cohort of 1,500 Palestinian job seekers aged 18–29 years (of which at least 30 percent will be women). Importantly, investors will only receive a return on their investment if those job seekers find and sustain meaningful employment.
The DIB replaces traditional donor approaches to employment that focus on the number of young people graduating from training courses and focuses instead on the number of young people starting and remaining in good work. Whilst results are not yet in, by harnessing cross-sector skills, the model has the potential to revolutionise the impact of programmes in a range of contexts in the future.