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Latin America Must Move from the Capitalism of Shareholders to a Fairer and More Inclusive Capitalism of Stakeholders

ECLAC’s Executive Secretary, Alicia Bárcena, participated in Mexico City in a gathering with businesspeople focused on the debates at the World Economic Forum in Davos (Switzerland).

19 February 2020|News

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Alicia Bárcena, ECLAC Executive Secretary, during the event
Alicia Bárcena, ECLAC Executive Secretary, during the event held on 18 February in Mexico City.
Photo: ECLAC

Promoting sustainable development and equality is not the work of a single actor – the State or the private sector – but rather of society as a whole, and the business sector plays a critical role, the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) highlighted at a high-level event with Mexican businesspeople held on Tuesday, February 18 in Mexico City, and presided by Nicolás Mariscal Torroella, Chairman of Consejo Marhnos.

The United Nations regional organization’s most senior representative was one of the speakers on a panel entitled “Perspectives from Davos,” organized by the Social Union of Mexican Entrepreneurs (USEM), which is led by Emilio Díaz Romero, at the Industrialists’ Club in the Mexican capital. The participants analyzed the outcomes of the recent World Economic Forum (WEF) held in Davos, the challenges faced by Latin America and the Caribbean in terms of corporate social responsibility, the region’s economic and social situation, and the challenges for achieving the Sustainable Development Goals (SDGs).

The other panel members included Mónica Flores, President of Manpower Latin America; Luis Ramírez, a Global Shaper from the WEF; and Katja Bechtel, a representative from the Partnership Against Corruption (WEF).

At the event, ECLAC’s Executive Secretary reflected on the discussions around capitalism that took place during the last meeting of the WEF. “Since the 2008 crisis, capitalism based on maximizing shareholder benefits has been undergoing an ideological crisis. The debate, both in the business world and in political circles, has focused on sparking new ideas to move towards a capitalism that is fairer and more inclusive,” she explained.

“We must move from the capitalism of shareholders to a capitalism of stakeholders,” she stated in support of the debates held in Davos.

Bárcena indicated that capitalism has shown great flexibility, it has increased its geographic expansion, and today it is constantly evolving and interacting with a global world that faces important technological changes. However, it is incapable of guaranteeing an equitable distribution of the wealth that is produced.

“Shareholder capitalism, with its short-term view, has not taken into account the consequences of its financial goals for workers, clients, suppliers, communities or the environment. The Davos Manifesto 2020 puts benefiting diverse stakeholders at the center of corporate activity, and offers an alternative to short-sighted shareholder capitalism,” she stated.

From ECLAC’s perspective, Bárcena explained, the current debate offers a critical starting point for rethinking the system, beginning with a shift in perspective in companies’ management style, as participants in the Davos forum indicated, but also, as the economic debate suggests, questioning the architecture of the system, starting with its values and moving towards its regulatory component.

“The debate furthered in Davos is extremely important, and can be considered a starting point for diverse actors in the system to redesign rules and instruments to limit the polarization of wealth and power imbalances through new fiscal rules, new rules on competition, new rules for standardizing workers’ rights, and a new multilateral system,” she sustained.

In her remarks, Alicia Bárcena also emphasized that the private sector’s commitment to making progress in a sustainable way is key, especially in a globalized world such as today’s. “In a world that is ever more corporate, promoting greater social responsibility among companies is critical to moving towards a new development pattern based on an environmental big push,” Bárcena stated. “In the current context, the region needs equality and environmental sustainability to be the essential pillars for a new development model. That is why it is necessary to foster the creation of corporate awareness with a collective vision, so that everyone can participate fully in the forging of equality and a path towards sustainable development.”

During her presentation, Bárcena recalled that the region’s current economic performance is insufficient for achieving the SDGs: Latin America and the Caribbean will grow 1.3% in 2020, accumulating seven years of meager gains, with weak domestic demand throughout the region associated with lower investment, per capita consumption and exports, and a sustained decline in the quality of employment. This scenario is coupled with growing social demands and pressures to reduce inequality and improve social inclusion, which have emerged in unusual ways in certain countries of the region.

“If the region doesn’t change its development model and in particular orient itself towards a sustainable energy transition, the 2030 Agenda and its 17 Sustainable Development Goals will not be achieved. This entails a change in the three pillars of that Agenda, which are economic, social and environmental,” the senior United Nations official underscored.

Bárcena indicated that there are new opportunities for transforming production, particularly in Mexico, which already has a much more diversified production base than other countries in the region. It faces challenges, such as increasing the technological capacity to boost productivity and establish value chains, even ones with regional capacity. Some examples of this include the administration of smart cities; the expansion of electromobility, sustainable construction and infrastructure; sustainable agriculture and bioeconomics; the circular economy; and the management of biodiversity, particularly in southeastern Mexico. In this sense, she noted that private sector participation is critical for the region, since it represents 75% of total investment.  

However, ECLAC’s Executive Secretary emphasized that resuming a path of greater growth in a framework of sustainability requires an investment policy that goes beyond investing in machinery and equipment, channeling flows towards sectors and activities that have greater linkages and chaining, with clear environmental components. “We need an investment policy with green goals explicitly incorporated into regulations (emissions reduction, efficiency in the use of natural resources, protection and improvement of the environment, biodiversity and the promotion of environmental sustainability). To achieve this, ECLAC proposes a new social compact between the State, the market and society, to forge sustainable development that is fairer and more egalitarian, which includes fiscal and production-related policies for sustainable development,” she said.

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