It was in 1911, The Devil’s Dictionary was published. The idea of a corporation or a company that is encapsulated in that dictionary has been around for over a century. But if Bierce was around and had to define the company again, there would likely be a shift. Indeed, the profits do remain, but there is an increasing sense of collective responsibility and action. Corporates are increasingly looking to collaborate and work towards the goals of the greater good — something I would name as Private Multilateralism.

But before we talk about this collective action phenomenon from the private sector, let us get down to the brass tacks on multilateralism. In international relations, multilateralism refers to an alliance of multiple countries pursuing a common goal. A multilateral agency is an institution set up by this alliance to pursue those goals. In the space of climate action, multilateralism is also critical and challenging. I remember reading somewhere, “No one has THE SOLUTION, but everyone is part of THE SOLUTION”. Yet over the years, the notion of multilateralism seemed to be confined to government collaboration.

There was a marked shift in the post-WW2 world, beset with many challenges relating to economic growth and poverty reduction; multilateralism was seen as fundamental to the world where we have peace and prosperity. Over the years, as the challenges evolved, like financial crisis, cyber security, climate change etc., multilateralism took a new dimension of collective effort to address this. Private corporations became involved in the new narrative — especially in the space of climate change. This could be due to the waning patience as we are running out of time, and the global commitments are nowhere near the 1.5oC limit.

Private Multilateralism as a term resurfaced in my mind at COP 27, where I saw unprecedented participation from the private sector.

Companies around the world have called for collective action against climate change. This has happened across sectors, and multiple initiatives are in place that aids in this direction. Before COP 27, more than 100 CEOs and senior executives shared an open letter addressed to world leaders. The letter stated, “We, the Alliance of CEO Climate Leaders, are in this together to solve the climate crisis. We are ready to work side-by-side with governments to deliver bold climate action.” [1] Now, that is what I call Private Multilateralism.

No one has “The Solution”, but everyone is part of “The Solution”

Another example of private multilateralism is The Climate Pledge. Signatories commit to reaching net-zero carbon emissions by 2040—10 years ahead of the Paris Agreement. Amazon co-founded this and today has 378 signatories across 34 countries with a cumulative market cap closing to $15T, and it is growing. The Carbon Disclosure Project (CDP), started by the investors to track the data around emissions and resulting risk to finance, is another entity formed collectively by the top financial institutions. Transparency of climate impact was the objective that brought companies together worldwide to be part of the CDP movement. Nearly 20,000 corporations around the world disclosed data through CDP in 2022, including more than 18,700 companies worth half of the global market capitalization[2].

The first time I considered the term was the movement from the Millennium Development Goals (MDG) to Sustainable Development Goals (SDG). It was during the conception of SDGs the first explicit call was made to the private sector to participate in the global multilateral movement (to that scale). The reason is easy to guess. The turnover of significant companies is bigger than the GDP of many countries. Corporations have immense economic clout, and their power to influence change (if willing) is a force to reckon with. The combined market cap of the world’s top 50 companies was proportional to 27.6% of the global GDP in 2020, up from just 4.7% of the global GDP in 1990[3]. It was logical for the UN to call the private sector to join the global development agenda.

But, from the SDG developments to even today, a lack of trust is evident. In the book Net Positive’ written by Paul Polman and Andrew Winston, there is a reference to how the first meetings of SDG were somewhat tense for Paul, as the eyes were on him, wanting him to answer for the sins of capitalism. Paul was the sole representative from the business constituency on the SDG working group. Things have not changed much, as the UN Secretary-General stated at the beginning of COP 27, “Surplus of confusion and deficit of credibility” [4]. It was supported by the chair of the expert committee set up to look into greenwashing, Catherine McKenna, when she stated, “Too many of these net-zero pledges are little more than empty slogans and hype”. I totally agree that there is hardly any company with a fully firm road map to net zero. The challenge is that most of the promising solutions are still evolving. As Winston Churchill put it (in a different context), “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Private multilateralism is very much needed and should be integral to solving global challenges, but it has a big stumbling block to overcome – the trust deficit. During the start days of the pandemic along, Ruby Thapar and I deliberated on “Mutuality of Trust”, where we said that believing that repeatedly doing what you think is proper will improve your trust quotient is the most significant slip-up. Trust is not about capability but simply about the best interest of all!

In the end – after a century of Bierce’s definition of a corporation, it seems to be the right time to redefine corporation as “an important entity for obtaining stakeholder value with collective responsibility towards the common good.”

Santhosh Jayaram – Global Head, Sustainability – HCL

[1]https://www.weforum.org/agenda/2022/11/cop27-alliance-of-ceo-climate-leaders/

[2]https://www.cdp.net/en/articles/media/just-1-point-3-percent-of-companies-leading-across-all-environmental-issues-cdp-disclosure-scores-reveal

[3]https://www.visualcapitalist.com/top-50-companies-proportion-of-world-gdp/

[4]https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/deficit-of-credibility-un-deepens-benchmarking-of-corporate-net-zero-pledges-67395527