Are you ready for a cultural shift in industry’s relationship to regulation?
Arturo Bris, IMD Professor of Finance injected a note of pragmatism into the 2019 Annual International Alumni Event, when he challenged the audience to consider the regulatory frameworks demanded by a planet facing a tipping point.
Gathered on the IMD campus in Lausanne, alumni heard that ensuring food security, and taking a stand on continued investment in ‘sin stocks’, such as fossil fuels, weapons and tobacco, would, he said lead to a confrontation between existing industry standards and regulation for the greater good.
“Sustainable Development Goal 17 states that we must strengthen and revitalise the global partnership for sustainable development,” Professor Bris reminded alumni, “The public and private sector must work together – are we ready for that?”
Professor Bris offered the example of The Agricultural Bank of China’s credit enhancement programs to illustrate his point. The bank offers credit to farmers with no credit history and protects its risk by having the investment underwritten by Government.
Professor Bris referred to the fundamental cultural shift that the environmental crisis will demand from industry and politics. Instead of allowing the private sector to regulate itself, government will be called upon to play a central role in shaping regulation around what and how investment occurs. Furthermore, industry will have to respond to that favourably.
“When it comes to dilemmas – real dilemmas – we, as executives, do not have the resources to solve them by ourselves. We need public policy,” he stated. “Who are we voting for? Are we voting for the governments that support executives to drive the right actions? Are you willing to sacrifice the current political system to support the SDGs?”
Professor Bris then introduced IMD alumni Issaam Kabani. As CEO of clean aquaculture provider Novaton, Kabani has committed to investing in providing clean technology and clean energy solutions to the production of shrimp and seafood.
He told alumni: “It is very important to be coherent with your beliefs. We face catastrophe, and history has always told us that we came back from the brink, but can we do it now? And can we do good and make money?”
Kabani outlined Novaton’s approach in Indonesia and Morocco where the company works alongside government to provide clean solutions for producing export-quality seafood and shrimp.
“For governments, it is about ensuring food security, jobs, micro economies: in Indonesia fishers can produce clean, export-quality fish and for that, government has lowered barriers to us, changing laws to help us because they believed in our goals,” he said.
Purpose will sometimes contradict profit margins, he stated, However, aligning with purpose over profit will ultimately enable companies to offer shareholders a win-win opportunity.