Value of sustainability

August 26, 2019

Corrado Passera's editorial

CEO in illimity

Today the value of sustainability is finally spreading widely, but it is sustainability understood simultaneously as environmental, social and financial. Provided certain responsible steps are taken, this could help ward off the ubiquitous fear that the future will be unavoidably worse than the present. The first necessary change to build a responsible economy is ideological. It is necessary to go beyond a superficial interpretation of Adam Smith's "invisible hand" and his idea that "through free exercise of self interest" the "common good" will be promoted.
In reality, things are different and the common good can only come from shared responsibility across an entire community, that is, shared by individuals, companies and politicians. Nobody can fail to realise the enormous social value created by millions of people who work every day, through volunteering and the third sector in general.
Companies can make a significant contribution to developing sustainability through virtuous conduct, such as investing in training for their staff, or highlighting their entire contribution to GDP and paying their suppliers promptly. Creating more responsible capitalism means feeling a sense of responsibility not only to one's shareholders, but to all the stakeholders and any other people who interact with the company. This topic has been around for decades, so it is pleasing to see Business Roundtable, which represents leading American companies, has signed a statement - albeit a fairly timid one - that moves in this direction. The larger the company, the greater their responsibility to ensure our market-based business system develops towards sustainability. The primary responsibility is often to make their services accessible to those people who are still excluded from them. IntesaSanPaolo's Banca Prossima is an example, having provided energy and resources for the third sector.
The spirit of the banking startup we recently created - illimity - is similar. illimity is a "for profit" bank, but it also aims to help bridge quite a significant gap in Italy: financing SMEs that struggle to get loans, especially companies that are already doing well, but could grow more, and that are struggling a bit, so they need to be returned to a steady footing and be re-launched. Yet, neither the generosity of individuals nor a sense of corporate responsibility will suffice to build the responsible economy we need. Suitable public policies are also needed. The social malaise that we've allowed to grow in recent decades and that has mutated into a form of social hatred isn't the fault of a market-based business system, as some people wish to insinuate. This malaise has many roots, including the exasperations of the capitalist system, the impact of technology and globalisation, the stress an ageing population is placing on the welfare system and, finally and unfortunately, the unsuitability of the ruling class in many of our countries.
When I mention the exasperations of the capitalist system I have in mind particularly its progressive financialization and the dangerous emphasis placed on short-term goals. Encouraging the growth of a sustainable economy would require, for example, tax policies that don't reward financial profit, but funnel benefits towards companies that invest in innovation and create genuine jobs. The world of work is changing completely, with many sectors revolutionising and many jobs being lost entirely or replaced by computers and robots. But, at the same time, many new ones are being created. From such a perspective, the challenge of the sustainable economy is to redesign the education system (which needs to start before the current six years and last for one's entire life); to redefine the relationship between school and work, potentially with multiple apprenticeships during one's life; to adopt active labour market policies that make flexibility sustainable, without reducing it to paralysing job uncertainty. To make the impact of ageing sustainable, for example, responsible politics needs to innovate dramatically in healthcare and welfare, introducing structural measures such as universal insurance against a lack of self-sufficiency. To make our economic system more sustainable and shared is, above all, the responsibility of the ruling class, which must prove it is capable, at least for some matters, of getting people to work together and of being able to share the costs and benefits of the necessary policies equitably.
Yet, the challenge is more cultural than technical. We need to find a new balance between values that have been seen as incompatible for too long. For example, freedom and equality must increasingly be combined using advanced solutions, just like merit and solidarity, or local identity and global vision. Building a shared, sustainable economy is undoubtedly harder than simply seeking an easy consensus, but it can be done without jeopardizing the many positive achievements of our society in recent decades.