Messages from Keidanren Executives June, 2018 Reconsidering the Roles of Companies
The Limits to Growth, a report published by the Club of Rome in 1972, warned that the phase of growth will not be sustained in 100 years' time due to issues such as constraints in natural resources and aggravated environmental pollution. Approximately 50 years after the report was issued, the global economy today is characterized by the massive and rapid transfer of people, goods and capital, as well as by strengthened connections between countries and business enterprises. Meanwhile, the negative impacts of growth, which include new issues such as growing disparities, biodiversity impacts and natural disasters, continue to increase and spread on a global basis.
Regulatory measures by governments and international organizations alone will not be sufficient to overcome such issues, while a sustainable and stable economy and society will be difficult to maintain and develop under yesterday's economic and social systems in a world with a population of more than 7.5 billion. Furthermore, the spread of short-termism and speculative behavior in financial markets accelerates economic instability and widens the income gap, making it difficult for capitalism's functions, namely, to direct funds into lasting businesses from a medium- and long-term perspective and leave behind a more affluent society to the next generation, to be exercised in full.
How should companies face this situation and what are the roles they should fulfill?
First of all, companies must have a stronger sense of awareness that addressing environmental and social issues is an essential part of corporate activities, and one that will not only have an impact on medium- and long-term corporate value and profits but will, through changes in corporate behavior, also provide greater benefits to society as a whole.
It will also be necessary through such corporate behavior to incorporate a system for establishing a sustainable economy within the market mechanism itself. In other words, for companies to take specific actions toward sustainability in order to achieve the SDGs (sustainable development goals) by proactively reconsidering their raison d'etre and potential roles, and to promote the penetration of awareness and actions toward sustainability among people, government and society.
I believe that the "insights into the limits of our world system and the constraints it puts on human numbers and activity" that were presented in The Limits to Growth by the Club of Rome will change dramatically as companies actively take on responsibilities toward society.