“Leaving Rio….And Going Towards Corporate Sustainability”

By Erika Karp, Head of Global Sector Research, UBS Investment Bank

In leaving Rio de Janiero, Brazil from the largest private sector event ever held in conjunction with an inter-governmental conference, I am struck by both the complexity and simplicity of this week’s UN Conference on Sustainable Development also known as “Rio +20″. As the world’s political leaders descend upon the city, I would argue that some of the most important opportunities will come from the private sector. Here at Rio +20, the Corporate Sustainability Forum (CSF) sponsored by the UN Global Compact, is where vision can most rapidly turn into action. It’s where an astonishing amount of economic power can bring leadership, innovation, productivity, entrepreneurship, growth and prosperity through capitalism. This city is astonishingly beautiful. This concept in blindingly obvious.

It’s blindingly obvious that over the long run, the success and financial health of a business is incumbent upon the success of the society in which it operates. Blindingly obvious too, is the strategic importance of Rio +20. Here is the opportunity to demonstrate the potential for economic growth alongside good environmental, social and governance performance by the private sector. Given that we face a world in the midst of multiple crises (sovereign debt, banking, confidence…), tremendous leadership and innovation is desperately needed. As for the leadership, it must come from the enormously powerful and concentrated corporate sector. As for innovation, we would echo the remarks of Maria das Gracas Foster, CEO of Brazil’s Petrobras. She stated at the opening ceremony of this Corporate Sustainability Forum, that innovation will require an appreciation of the needs of the broader society. Innovation needs to be built into the working routines of business. Innovation will also require much greater transparancy as that progress is communicated over time.

In speaking of transparency, its worth taking a look at a new article entitled “Brazil: A Sustainable Society” (Ideia Sustentavel) by Amar, Eccles and Serafeim of Harvard Business School. Notable is the extent to which Brazil’s great companies strive to articulate their understanding of, and attention to, the complex interdependence of their profits, their people, and our planet. These companies, including Petrobras, are among the few in the world to offer a “materiality matrix” integrated in their annual shareholder reports. In other words, they help stakeholders better understand the key drivers of their business and their priorities in the context of all those environmental, social and governance factors. They acknowledge the trade-offs inherent in their core processes. They strive for success over the long-term and give greater clarity into the questions with which their own Boards are struggling.

I am leaving Rio, after having met with investors and executives from many other companies including Intel, BMW, Itau, Novo-Nordisk, RBS, PwC, Novozymes, ArcelorMittal, Enel, and Maersk to name a few, even more certain that the world’s private sector can drive a better fate for capitalism. Those companies who build a culture of trust and creativity, and who build the capacity to innovate and transform themselves in a changing world, will win. Those companies will simultaneous serve their shareholders well in the long-run. In leaving Rio, this Cidade Maravilhosa, I am more convinced that we are at an inflection point towards greater corporate consciousness, resilience, and sustainability. We simply must be….since we are in the midst of a new industrial revolution where both enormous risks and opportunities abound. I am leaving Rio knowing that I will be back again soon.