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| McKinsey & Company Global Managing Partner Kevin Sneader speaks in a video address at the 2021 Korea Times Global ESG Forum at the KCCI building in Seoul, Thursday. Korea Times photo by Choi Won-suk |
McKinsey chief emphasizes role of businesses for better world
By Park Jae-hyuk
Businesses should be aware of the fact that serving all stakeholders is a source of long-term competitive advantage, when enacting "stakeholder capitalism" within the focus of environmental, social and corporate governance (ESG) factors, according to McKinsey & Company Global Managing Partner Kevin Sneader.
Stakeholder capitalism is a system in which corporations are oriented to serve the interests of all participants, including customers, suppliers, employees, shareholders and local communities.
Sneader said his company believes there is synergy between the actions required to take the stakeholder view and the value of doing so, after arguing that the COVID-19 pandemic has emphasized the importance of ESG-focused and stakeholder-centric approaches to the future of business.
"I believe that this has been a moment when the similarities and differences between the pandemic and the other elements of ESG will allow us to now know that we must act, act with a view to the long-term and not just with an eye to the short-term improvement of performance," he said in a pre-recorded video address during the 2021 Korea Times Global ESG Forum at the KCCI building in Seoul, Thursday.
Starting his speech with comments on environmental factors that have drawn more attention for the similarities between the pandemic and climate change ― being systemic with direct impacts, non-stationary, risk multipliers, non-linear, regressive and tragedies of the commons ― he mentioned some important differences that make climate change harder to combat than COVID-19 ― gradualness and cumulativeness.
The McKinsey chief, however, emphasized that addressing climate change issues does not require a trade-off with the actions required to recover from the pandemic, despite their similarities and differences, because government spending on renewables creates more jobs, green economic recovery measures perform as well as non-green alternatives, and more people favor recovery policies prioritizing climate change.
Citing the Korean Green New Deal with its goal of net-zero emissions by 2050, he urged governments, businesses and societies to embed climate change into all decision-making, take actions that are needed to adapt to existing climate risk, and work together to decarbonize.
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| McKinsey & Company Global Managing Partner Kevin Sneader speaks in a video address at the 2021 Korea Times Global ESG Forum at the KCCI building in Seoul, Thursday. Korea Times photo by Choi Won-suk |
Care for customers, suppliers, employees
Regarding the societal side of ESG, the consultant said the pandemic led many businesses here and overseas to go the extra mile to ensure that customers, suppliers and employees were safe and taken care of.
"Now, recognizing how goods and products impact consumers and then taking action to reduce the negative consequences of that impact is a vital part of stakeholder capitalism," he said.
Amid the growing calls for conglomerates to help their subcontractors to ensure sustainability in entire supply chains, Sneader noted larger companies can play a powerful role in reducing social and environmental damage by improving the way in which they work with their own suppliers and contractors.
"We've seen large employers such as Walmart, for example, make massive commitments to environmental progress. And in doing so, that motivates and requires the whole of the supply chain that supplies a company of the scale of Walmart to make a difference," he said.
Describing employees as human beings worth of respect and dignity, he also asked companies to treat their employees with respect, and invest in them for the future of both workers and businesses.
"Going above and beyond the issues we've been talking about is one way to ensure that they feel higher commitment, stay longer, and are prepared to help produce the extra productivity that we believe is a key part of ensuring that stakeholder capitalism is a superior source of long-term competitive advantage," he said.
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| McKinsey & Company Global Managing Partner Kevin Sneader speaks in a video address at the 2021 Korea Times Global ESG Forum at the KCCI building in Seoul, Thursday. Korea Times photo by Choi Won-suk |
Governance does matter
Sneader did not deny that governance is a topic that is vitally important, although it attracts less interest because it relates to the internal workings of a corporation.
"It does matter, and it's important that companies take a hard look at their boards," he said, advising businesses to ask questions., such as how do they help ensure awareness and an ability to move forward on ESG issues, and how do boards and companies communicate clearly with all stakeholders to remind everyone of the importance business has in ensuring the prosperity of society as a whole.
He said doing all this will not be easy as there are sure to be challenges along the way, but added that the pandemic has shown the world what can be done when businesses come together behind a common goal, working with the public and social sectors to achieve their ambitions.
"Above all, we've seen business leaders stand up and take actions to ensure that all stakeholders emerge from this pandemic, and provide the prospects of a better future for this world," he said.
