Ricardo Melèndez-Ortiz
Co-Founder and Chief Executive, International Centre for Trade and Sustainable Development (ICTSD)

Expert opinions included on this web site have not been edited by GE.
View full disclaimer

Public trust in business is lower than at any point in living memory. Restoring this trust will be crucial to long-term prospects. The pursuit of sustainability has a valuable role to play in rebuilding trust. The current crisis has demonstrated the costs of too heavy a focus on short-term gains instead of long-term value creation. Sustainability, with its inherently long-term focus on environmental and social goals in addition to the economic bottom line, could prove profitable in addition to popular. Companies will have to strike a tough balance between delivering for already-battered shareholders and delivering on sustainability goals. When charting their course forward in very different economic circumstances, companies should work with all stakeholders to set goals and interim targets. Delivering on these goals will be more important than ever: failing to live up to promises will further damage dented reputations.

Certain businesses will understandably feel done wrong by current public and governmental attitudes. Most are not to blame for the asset price bubble. Yet, many will be affected by increased regulation and other policies, even though it was some of the most heavily regulated financial institutions that brought about the ruin. Nevertheless, companies would be unwise to simply reject regulation: the public will not be on your side. Instead, businesses should cooperate with government to ensure that regulations are not shaped by an angry backlash, but instead target areas where greater restraints on action may be valuable.

Companies that rely on globalized supply chains are right to be worried about deglobalization. Western anxiety about globalization and job losses remains high. Asian countries hit hard by the collapse in demand for the exports on which they relied so heavily are anxiously looking for signs that those markets will grow again. Nuanced public diplomacy, coupled with collaborative partnerships and a search for solutions along the entire length of companies’ value chains, are called for. Resource extraction companies must be especially careful to maintain community relations and good environmental practice throughout the commodity price crunch, or they face losing whatever goodwill they might have earned. The crisis might have had its genesis in the West, but the poorest, as always, will suffer the most, with malnutrition and infant mortality set to rise. As they fight to cut costs, they should think twice before putting community health programs, or new environmental initiatives, to the axe. Some of this can be dealt with through much better risk assessment. Some of it must present promising lines of business in water supply, for example. But much of it will pose a real challenge for companies that believe in the broader social responsibility of the corporation. Can we help those at the bottom of the pyramid to adapt to the changes in the global climate?