While there’s plenty of doom and gloom to be found in the headlines about omicron, inflation, labor shortages, and the global supply chain, there are plenty of business leaders ready to be optimistic in 2022. The world being in such a state of flux is the perfect time for companies to reinvent themselves and find success through increased efforts in combating climate change, furthering their ESG work, and boosting productivity and employees’ wellbeing through the hybrid work models that have become standard during the pandemic.
It’s the perfect time to heed the wise words that are attributed to Winston Churchill during World War II: “Never let a good crisis go to waste.” At least, that’s the consensus that came out of Fortune’s CEO Davos Dinner, which took place virtually this year after the annual World Economic Forum in Sweden was postponed due to the pandemic. The event featured dozens of executives from a wide array of industries discussing the top opportunities and challenges they’re facing this year.
The concerns expressed by these CEOs mirrored the results of Fortune and Deloitte’s latest survey of top executives, in which 71% of respondents said that the labor and skills shortage would likely be the biggest hindrance to operations in 2022, followed by the pandemic (56%).
“It is an incredibly competitive labor market and that’s across the blue collar and the white collar,” said Deloitte CEO Joe Ucuzoglu. “It’s somewhat fascinating. It’s proving wrong some of these prognostications that all the innovation and the deployment of new technologies would be this big net destroyer of jobs. What we’re seeing is that the opposite is happening, that digital transformation is driving a ton of growth. It is creating a need for more great people.”
One solution, as agreed upon by many of the CEOs in attendance, is to embrace the changes in normal work operations that were caused by the pandemic. “This crisis we were put in, to go remote and hybrid, is actually itself a huge opportunity to increase productivity, to access talent geographically across the world that we hadn’t been able to do,” said Kristin Peck, CEO of Zoetis Inc. She also noted that this model needs to address the negative mental health aspects that come with isolation, pointing out that some businesses have scheduled “drop bys” with leadership to stay connected. Fun and creativity are key, she said—one company’s CEO even carves out time to read stories to the children of his employees as a means of giving parents a break and boosting overall family wellness.
Another common theme in the discussions was how the pandemic’s disruption offered companies the chance for redefining and reinventing themselves. This idea is tied closely to businesses leading the way on reducing emissions and increasing sustainability, as well as bolstering their ESG efforts. “We have a tremendous opportunity as CEOs and businesses to be a force for good, to take and seize the leadership moment that we have in front of us,” said PayPal President and CEO Daniel Schulman. “Bringing our desires to change the world together at scale, so we’re not all doing it individually but we rally around some very big ideas and come together, it’s a huge opportunity.”
The area that most CEOs agreed that they could be a force for good was climate. In the wake of the COP26 climate conference, “the private sector is moving fast,” as Bank of America CEO Brian Moynihan put it.
Occidental Petroleum leader Vicki Hollub agreed. “While some people were disappointed with COP26, I thought there were a lot of positives,” she said. “The business community was more involved in this COP than any before. And there was no discussion about whether climate change is real or not so, finally, we’re all to the point. We know we have to do something about it.”
For many companies, that “something” is aiming to have net-zero emissions by 2050, efforts that, according to Hollub, will take worldwide collaboration and trillions of dollars. It’s really the next eight years that are crucial, according to Paul Polman, the former CEO of Unilever and author of Net Positive: How Courageous Companies Thrive by Giving More Than They Take. Unfortunately, climate change is “still on an uncontrolled trajectory,” he said, and soon businesses will be under intense pressure to act from a number of forces.
“The real driver of climate change awareness right now is actually, interestingly, the financial market, which is rapidly moving from seeing it as a risk mitigation to an enormous opportunity, which is a good sign,” he said. “I don’t think it’s driven by morality. It’s really driven by financial returns, which we know moves an economic system at scale. The second force, believe it or not, is actually your own employees. Every company now has a Greta Thunberg and the level of pressure that CEOs get, if they are perceptive to them, to move faster on this. The third, not surprisingly, is the cost. There is not a business in the world that doesn’t have cost increases in the value chain because of our inability to deal with these negative externalities. And we all know very well that governments increasingly are putting these negative externalities back on our business.”
On the financial end, companies could look to follow L’Oréal’s lead in designing products for the climate-minded consumer. The cosmetics company’s CEO, Nicolas Hieronomus, said that while two-thirds of consumers “declare” that they will change brands or products in favor of something more sustainable, only about 10% follow through. “They do not want to pay more and more importantly, we’ve learned, they do not want to sacrifice anything in terms of product quality,” he said. “We are coming up with products that are as good as and sometimes even better than the state of the art and are more sustainable and that triggers real demand.”
But, as Polman argued, CEOs need to think—and act—on a much bigger scale to halve emissions by 2030. As this event ended, he challenged the attendees to work together to do more now, and lead by example.
“So what are the successful companies, the successful leaders?” he asked. “First of all, the ones that take responsibility for the total impact that they have in the world. We can take a lesson from Facebook and many others of how it can go wrong if you don’t. The CEOs that think net positive—that means not any more net zero.
“We are way beyond the planetary boundaries. We are borrowing from future generations at a speed that is beyond normal, so you need to think regenerative, restorative, reparative, and that means you’re actually a part of the broader transformation. You’re discovering you can only do so much as a CEO, but you cannot let yourself be dragged down by the ones that are not moving. You need create to these broader coalitions to really drive these broader systems.”
