Is big business coming to save the day?

Walking down the Promenade, Davos's main street, it almost feels like it's a charity convention that's in town, not a gathering of 119 billionaires, lots and lots of hotshot CEOs and business delegates.

"Let's make business the greatest platform for change," reads the sign on one corporation's rented shop front. Another went with "Is growth an illusion?" in bright and curvy neon letters you'd rather expect on the wall of a hipster coffee shop.

Further down the road there's the "SDG tent" which hosts open sessions on topics like the future of capitalism, sustainable finance or LGBTI rights — all paid for by companies keen to show how committed they are to helping achieve the 17 sustainable development goals (SDGs) set by the UN.

Sustainability — this time for real?

The message companies are trying to send is pretty clear: We have woken up, they want to tell the world. Gone are the days of profit over morals. We now care about the environment. We now care about making this world a better place.

But haven't companies been telling this story for pretty much as long as the World Economic Forum (WEF) has existed? And still the world is not on track to reach the goals it has set for itself — take the 2015 Paris Climate Agreement or the SDGs. So is big business really going to follow through on its promises this time?

The anti-WEF protestors on the Promenade have certainly made up their minds. "Do you really think that institutions and corporations that have been thinking and doing business in one way may change just like that just to be nice to others?" Sebastian Justiniano asks. "I don't think so."

Changing to make more money

Svein Tore Holsether disagrees. He's the CEO of Yara, a Norwegian corporation whose main business is the production of synthetic fertilizer. That makes it part of the agricultural sector that accounts for one quarter of global greenhouse gas emissions.

Sitting in a quiet corner in one of Davos's fancy hotel lobbies, Holsether explains why he wants to turn Yara into a more sustainable company. "I think it represents an incredible business opportunity," he says. "We run our businesses for profit and that's something we need in order to reinvest and develop the business." 

He talks about how Yara shifted their strategy towards developing new solutions after the Paris Climate Agreement. How they, for example, are planning to help farmers maximize yield, so they need less land, which would then be free for trees that would suck carbon emissions out of the air. How this would be good for the environment, food security, the farmers — and, of course, Yara's bottom line.

"That's become more and more clear in recent years that companies that are able to adapt their business models to both the challenges but also the opportunities that we see now are also the ones that will survive," he says.

Go green or go home?

In fact, companies may have less and less of a choice in whether they want to go green or not. The Global Risks Report released ahead of the WEF listed environmental factors as the biggest threat to the world order. Extreme weather and natural disasters caused by climate change do hurt business.

Read more: China’s economic woes threaten to derail climate actions

And even Larry Fink, the CEO of the world's largest asset manager, BlackRock, recently warned that companies not taking sustainability seriously could run into trouble when looking for financing in the future.

Whether such a market-driven transformation of the economy would happen fast enough is yet another question. Yara's carbon dioxide emissions, for example, have gone up from around 10 million tons in 2013 to 16.6 tons in 2018, despite the new sustainability strategy.

So if market forces may actually work too slowly to get businesses to behave more sustainably, what can get the job done quicker? Some argue what's needed is an economic mind shift on what the purpose of a business is.

The big idea thrown around at Davos this year was the concept of stakeholder capitalism. It's the notion that companies do not just have a responsibility to generate profits for their investors but to everyone affected by their actions, like their workforce, consumers or the environment.

Making stakeholder capitalism work

The economist Mariana Mazzucato is all for it, as long as it's more than just an empty buzzword. "Given the crisis that we're facing — not just the climate but also inequality, health systems, the welfare state kind of collapsing in many ways around the world — we don't have time to bullshit," she says.

Governments should rethink how they invest in the economy and particularly what they demand in return for it. After all, giving money to companies makes them a stakeholder, and an important one at that. As an example for how this could work, she mentions the German government, which tied public loans to steel companies to their ability to reduce their carbon footprint.

"Make it conditional," she says. "They have to or they die. That's what we do in other areas. You can't abuse children in a factory. There's the law, you'll be put out of business. We need to make things mandatory." She adds though that this would only work with proper metrics in place that make sure businesses deliver on what they've promised.

An initiative that's working on such metrics is the nonprofit World Benchmarking Alliance (WBA). They drew up a list of the world's 2,000 most influential companies that together make up half of the global economy. Currently, a team of around 50 people is busy ranking them by how they contribute to achieving the various SDGs.

By making these benchmarks available for free, they hope, it will be possible to hold companies accountable and make sure they follow through on their commitments.

"It's like New Year's resolutions, right?" says WBA's CEO Gerbrand Haberkamp. "We know that it's hard to keep them. And it's the same for companies. When it's February, it's hard to still go to the gym. This is why we need these benchmarks," he explains.

Where does all that leave us?

So are the shiny sustainability campaigns more than smoke and mirrors? Are businesses really starting to behave more responsibly? Yes, it seems some really are. Not necessarily because they have a big heart, but because it makes commercial sense.

Are they changing fast enough? No, they are certainly not. It's probably best put in the words of climate scientist Johan Rockström: "We're still having islands of success in an ocean of ignorance."