The world economy will, post the Covid-19 pandemic, see significant changes to its structure in order to improve its resilience and sustainability, with a much more pronounced focus on environmental, societal and good governance metrics in public and private projects to help businesses, economies and societies transition to new ways of working.
Key priorities in realising these goals include changes to the social contract and a focus on decarbonisation and creating green economies, which will provide significant proportions of new jobs, as well as the accelerated move to Fourth Industrial Revolution (4IR) and digital economies, and the change from shareholder capitalism to stakeholder capitalism.
This was the view of the authors of the book Covid-19: The Great Reset. The book was written by World Economic Forum (WEF) founder and executive chairperson Professor Klaus Schwab and was co-authored by Monthly Barometer managing partner Thierry Malleret.
It offers a conceptual framework for the WEF Annual Meeting 2021 that will be devoted to answering the questions the book raises.
As part of the book launch, WEF MD Saadia Zahidi provided insight into the WEF's initiatives and projects in support of the anticipated changes, including the establishment of regional action groups to promote cooperation and support industries to help them develop new business models, as well as its 4IR solution platform that helps countries to harness and disseminate the technologies that can provide positive societal outcomes.
Focusing only on the question of the social contract - one of five priority areas detailed by Schwab - Zahidi said there have been signals that the global economy needed a rethink for some time and that the sources of future growth had to be considered.
"We need to look at not just the speed of growth, but the quality of that growth and the direction of that growth. We can no longer afford to look only at [gross domestic product], but also at what type of growth and whether it is sustainable and inclusive," she said.
All the 4IR technologies (typically involving automation and digitalisation of work) have been accelerated by the pandemic. Everything that can be digitalised will be digitalised, said Schwab.
"How we use technology to address challenges require that we create the necessary ethical human-oriented principles around technology."
Schwab, explaining the rise of stakeholder capitalism, said the role of business in the post-Covid era is moving from short term to long term. He highlighted that the companies that had invested most into the vitality of their businesses instead of short-term profits have performed much better during the current 'acute' pandemic phase.
The move from shareholder capitalism to stakeholder capitalism reflects broader changes in focus from material improvements of life to more generalised concept of wellbeing. This is translated at a corporate level into environmental, social and good governance (ESG) criteria upon which companies will increasingly be measured, as the expectations of their investors and stakeholders change.
The WEF is also working on developing a more unified measurement system to allow the evaluation of companies according to these metrics and how they perform beyond only short-term financial returns.
When considering the macroeconomic effects of the pandemic, and without elaborating, Malleret said the extent to which societal and environmental risks have dramatically accelerated ESG strategies is obvious and that the stakeholder economy will progressively replace the shareholder economy.
The book is available from Amazon in digital and paperback formats.