Business leaders in Davos urge policies that favor long-term earnings
They said governments and businesses must collaborate to create jobs and restore trust in institutions
International business leaders gathered in Davos for the 44th World Economic Forum Annual Meeting urged governments on Wednesday to make policy changes needed to stimulate the job market and restore trust between businesses and civil society.
“We must change the dialogue from what we do with the money we make to how we make the money,” Indra Nooyi, chairman and chief executive officer, PepsiCo, USA, said. “There is an ethical way to run a company and be profitable.”
Nooyi said companies should select board members that understand the importance of sustainable growth, and chief executive officers (CEOs) should inculcate long-term vision in the rising generation of corporate leaders, so policy changes last beyond a single CEO’s tenure.
Feike Sijbesma, chief executive officer and chairman of the managing board, Royal DSM, Netherlands, urged companies to lobby governments for policies that reward long-term value creation, saying share prices rarely reward companies for job creation and sustainable environmental policies.
“We need systemic change in how companies are valued. If that is not the case, good policy will always depend on the goodwill of a few CEOs,” he said. Such systemic change, he added, should include new tax policy that shifts the burden from labor to natural resources.
“You need rules of the game that create incentives for a long-term vision,” said Aron Cramer, president and chief executive officer at Business for Social Responsibility (BSR), USA. He added that companies must advocate for new accounting laws and market trading systems. “The question is, do you want to be around for three quarters or three decades?”
The business leaders called for corporations to use their influence on business schools to shift business education away from its emphasis on short-term profits. “Many shareholders depend on a company’s long-term performance,” Nooyi said.
Corporate policies that address environmental and social concern will increase trust in business. “Without that trust, there will be implications for the global economic recovery,” said Dennis Nally, chairman of PricewaterhouseCoopers International, PwC, USA.
Richard Goyder, chief executive officer and managing director of Wesfarmers, Australia, said this lack of trust has led governments to institute policies that hold back growth, especially by discouraging banks from lending.
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