Magazine

2
n°2

e
zin
a
g
Ma

No time to waste
The emotion pills we are all taking
Presenteeism: A bad business proposition
The Hikikomori Phenomenon – is IT to blame?
How can corporations become more sustainable?
Music Mastery – innately human or also artificial?
Greenflation: The Achilles heel of the green economy?
Sweeping with the Enemy: Coopetition as a strategy for a better world

An alliance with a purpose

EAESP

THE COUNCIL ON BUSINESS & SOCIETY

Recognising the enormous role business can and must play in helping solve large-scale, global issues facing the world, eightbusiness schools from around the world have formed a partnership: The Council on Business & Society. Through our individual andcollective efforts, we strive to create and disseminate knowledge about those issues and train future business leaders capable ofand committed to solving them.

THE SCHOOLS THAT MAKE UP THE COUNCIL ON BUSINESS & SOCIETYEAESP• ESSEC Business School, France, Asia-Pacific and Africa• FGV-EAESP, Brazil• School of Management, Fudan University, China• IE Business School, Spain• Keio Business School, Japan• Stellenbosch Business School, South Africa• Trinity Business School, Trinity College Dublin, Ireland• Warwick Business School, United Kingdom

The partner schools share a commitment to and belief inthe power of academic excellence, collaboration,
innovation, and transformative leadership. Each isa recognised leader in management education andoffers a wide range of business-related degrees andexecutive programmes.

COUNCIL COMMUNICATION TEAM

For further information and enquiries, please contact:
ESSEC Business School(France)

Mr. Tom Gamble
tom.gamble@essec.edu+33 134 439 656
FGV-EAESP (Brazil)

Prof. and Deputy-Dean Tales Andreassi
tales.andreassi@fgv.br+55 113 799 7821
School of Management,
Fudan University (China)

Mrs. Elsa Huang
hzhuang@fudan.edu.cn+86 212 501 1408

IE BUSINESS SCHOOL (SPAIN)

Ms. Kerry Parkekerry.parke@ie.edu+34 915 689 600

Warwick Business School(United Kingdom)

Mr. Warren Manger
warren.manger@wbs.ac.uk+44 2476 572 512

Keio Business School (Japan)

Ms. Miyoko Kashimakashima@kbs.keio.ac.jp+81 455 642 441

STELLENBOSCH BUSINESS SCHOOL(SOUTH AFRICA)

Mr. Owen Mbundu - Head of Marketing
marketing@usb.ac.za+27 21 918 4111
Trinity College Dublin
Business School (Ireland)

Ms. Sandra Rafter
PR and Communications Officer
srafter@tcd.ie+ 353 870558084

Compiled and edited by Tom Gamble and CoBS Editorial team members
Olga Panashchenko and Pavan Jambai.

Head of Design Melissa Guillou© Council on Business & Society 2022
The information and contents of this magazine are the property of the Council on Business & Society
and may not be reproduced, republished or edited without the prior agreement of the former.
Printing allowed for reading or educational purposes on condition that the sources are mentioned.

ISBN: 978-2-36456-237-0

/3

THE DEANS OF THE COUNCIL’S MEMBER SCHOOLS
DEAN LUIZ ARTUR LEDUR BRITO,
FGV-EAESP, BRAZIL“Being recognized worldwide as a think-tank, FGV-EAESP not only produces academic research inmanagement and public policy, but also applies research via its close relation with the corporate
world. its participation in the Council on Business & Society enriches its global vision through themultiple perspectives generated by the Council’s initiatives.”

DEAN ANDREW BURKE,
TRINITY COLLEGE DUBLIN BUSINESS SCHOOL, IRELAND“We are the business school at the heart of a world-renowned research-led university located at
the centre of a European capital city and a hub for global business. Our approach to education
encapsulates a project-based approach where impact on both business and society are key. We
encourage our students to graduate with a ‘moral compass’ to take a step further in order to excel
at ethical leadership beyond the realm of the organisation.”

DEAN ANDY LOCKETT, PROFESSOR OF STRATEGY AND ENTREPRENEURSHIP,WARWICK BUSINESS SCHOOL, UNITED KINGDOM“As a leading European business school at a world-class University, Warwick Business School iscommitted to developing ideas and people that shape how we do business. We believe in the powerof education to create the leaders the world needs to tackle societies’ great challenges, such as
global warming, ageing populations and increasing inequality.”

DEAN AND PROFESSOR XIONGWEN LU,SCHOOL OF MANAGEMENT, FUDAN UNIVERSITY, CHINA.
“The School of Management, Fudan University joined the Council to communicate, exchange andcollaborate with our global partners, absorb advanced management ideas and share China’s uniqueexperience. As a leading business school in China, we will make continuous efforts to drive themutual development of global management education and the social economy.”

DEAN LEE NEWMAN,IE BUSINESS SCHOOL, SPAIN“IE Business School’s mission and purpose are based on the pillars of academic excellence,
innovation and entrepreneurship, technology, social responsibility and internationalisation. at ie
we firmly believe in the power of the entrepreneurial mindset to change the world for the better.
we will keep encouraging students through the cobs initiatives to explore social innovation andentrepreneurial challenges with special emphasis on unconventional approaches to enduring social
problems.”

DEAN MARK SMITH,
STELLENBOSCH BUSINESS SCHOOL, SOUTH AFRICA“At Stellenbosch Business School we pride ourselves on our commitment to responsible leadership
through teaching, research and social impact. We are committed to making a difference throughout
our local, national and international ecosystems and proud to be members of the Council on
Business & Society.”

DEAN AND PRESIDENT VINCENZO VINZI,ESSEC BUSINESS SCHOOL, FRANCE, ASIA-PACIFIC, AFRICA.
“At ESSEC, we believe that training students and participants for responsible leadership is key
for answering the challenges of a complex world. Together with the members of the Council on
Business & Society, we strive to promote responsibility so as to impact today’s economy andsociety, and shape tomorrow’s world.”

DEAN SAKASUME YU,
KEIO BUSINESS SCHOOL, JAPAN“As the leading business school in Japan, it is our duty to investigate how business should maintaina balance with global societal issues. We desire to explain to the world what Japan has experienced
through rapid growth by means of the Council on Business & Society.”

The Council on Business & Society

THE DEANS

4\/THE COBS
welcomeS
A NEW DEAN
MARK SMITH
Dean of Stellenbosch Business School
Stellenbosch Business
School has always been apioneer for management
education on the African
continent. It was the firstschool to gain the triple
crown of international
accreditations. It led theway in placing responsible
leadership at the heartof its activities at an
early stage. And now, it isadvancing the notion ofsocietal impact through its activities and theactions of its almost 30,000 alumni.

All of these areas of expertise are imbued
with our African heritage and a commitment
to responsible leadership.

The school is located in the heart of thebeautiful Western Cape of South Africa.
It is a region characterized by extremes.
There are extremes of beauty and inequality,
extremes of wealthy winelands and poor
informal settlements, and extremesof vibrant diversity and being on theforefront of climate change. All of this is
set in the context of a young democracy
and transforming nation. Against thisbackground Stellenbosch Business Schoolsees itself as a gateway to Africa for its
international partnerships and a gateway to
the world for its local and national partners.

In joining the Council on Business & Society
we feel that we have found an alliance ofleading business schools from across theworld committed to similar values, goals,
and initiatives. We are very proud to be the
new African partner. For us, this represents
the great opportunity to work with likeminded schools committed to responsible
leadership. We can learn from our sharedexperiences of business and management
teaching and research spanning the globe.
We also have important contributions
to make in terms of sharing our own
knowledge, research, and experiences fromAfrica. Indeed, Africa as a continent andAfrican societies have much to teach theworld in terms of humanity, resilience, anddiversity. We are looking forward to thesharing the journey with the CoBS Alliance.

It is in these ecosystems at the local,
national, and international level that the
School seeks to make a difference though its
teaching and learning, research and societal
impact work. Our unique combination ofacademic expertise combines future studies,
ethical governance, development finance,coaching, entrepreneurship, equality &diversity, and conflict & collaboration.

The priorities for business school in South
Africa are aligned with those of other leading
schools and, at the same time, somewhat
distinct from those elsewhere in the world.
We face the challenges and opportunities
of a new and young democracy. We face
the challenges of climate change andpossibilities of developing climate resilience.
We face the challenges of inequalities andthe hope of working to promote inclusion,
entrepreneurship, and responsible leadership

DISCOVER
STELLENBOSCH
BUSINESS SCHOOL

Choose your journey
towards responsible
leadership.

Saara Hamunyela, alumnus

The world is fraught with challenges and an abundance of potential to choose
a more desirable future of all. Against a backdrop of climate change, inequality,
and the struggle against gender-based violence, it is crucial that the business
you choose challenges you to change the world. This is why Stellenbosch
Business School is so strongly committed to delivering learning experiencesthat will help you to become a responsible leader.

Choose the future. Choose your Future.
Choose Stellenbosch Business School.
Business Management and Administration | Development Finance | Future Studies
Management Coaching | Leadership Development | Project Management | Financial Planningusbcom@usb.ac.za | +27 (0) 21 918 4111 | www.usb.ac.za

6\

/7

Business with a Wider Mission: Inclusive
growth and the B4IG initiative/EDITORIAL

Camille Putois
CEO B4IGIn the past, most people used to think that thesolution for many of the world’s problems
was economic growth. The more, the better.
Simplifying a bit, growth would equal to sharedprosperity, anywhere, anytime. It seemed as
obvious as the law of gravity. Thus, in poor
countries, the consensus was that faster
economic growth would almost automatically
imply higher living standards for all themembers of society. And in rich countries, italso seemed obvious that economic growthwould improve the lives of all, including those
who are relatively poorer.

A central feature of the B4IG coalition is thewillingness to share best practices, innovate,
deploy pilot programs and explore adapted
metrics to evaluate the concrete efforts.
Otherwise said, the coalition intends to use thebest available professional practices to track,
monitor and improve its inclusive businessactions. B4IG also intends to work in close
partnership with policymakers and public
officials to advocate for systemic change andinclusive business practices.

While these expectations could have been
proven right at some point, the fact nowadays
is that economic growth, either in rich ordeveloping countries, does not necessarily
lead all people to be better off. Social unrest in
many parts of the world is a testimony to thechallenge of achieving both economic growth
and a balanced distribution of income. The
sad truth is that we can too frequently have akind of economic growth that mostly benefits asmall part of the population, leaving most of therest behind.

As such, the ongoing partnership with the
CoBS makes a lot of sense. The CoBS, as aninternational alliance of business schools
working in Sustainability and CSR, is an obvious
academic partner for such an initiative that iswell aligned with its mission. The CoBS intends
to contribute to B4IG in two ways. First, by
the involvement of professors of its member
schools in B4IG working groups. These working
groups address many pressing issues, some ofthem much in line with the expertise of those
professors. Second, by preparing researchbriefings, based on the latest research carriedout in the CoBS member schools. These
research briefings correspond to the B4IG
pledge areas and reflect B4IG’s willingness to
put in practise the latest scientific expertise toadvance inclusive growth.

An unprecedented international coalition© PHAWAT TOPAISAN

Adrian ZICARIESSEC Business School,
Executive Director, CoBS

Facing this global challenge, the coalition
Business for Inclusive Growth (B4IG) was
launched during the G7 Biarritz summit (2019)by some of the largest global companies andthe OECD, as well as several internationalorganisations, foundations and trade union
organisations to address inequalities of income
and opportunity throughout the world. B4IG
represents an unprecedented collective effort
driven by the ambition to scale up businessaction on inequality, human rights in direct
operations and in supply chains, diversity,
equity and inclusion, the future of work, and thegreen transition, among others.

Science, education, business

Achieving growth, particularly in emerging
countries, remains a necessity. At the sametime, it is essential for this growth to be
inclusive, thus benefitting all members ofsociety and not only a happy few. Thus, theB4IG coalition intends to be a step in thispromising direction. And the CoBS is honoured
to be a part of it.

The Council on Business & Society

EDITORIAL

/9

FABIOLA H. GERPOTT
WHU—Otto Beisheim
School of Management

JAKO VOLSCHENK
Stellenbosch Business
SchoolMASAYUKI KOHIYAMAKeio University

BO ANNE-MAY DE BOER
IE Business School

SALIL SHAHANEESSEC Business School

ANDRÉ SHIMZU
FGV-EAESPDANA UNGER
The Arctic Universityof Norway

SHUNXIN DANG
Trinity Business School

FREDERIK DAHLMANN
Warwick Business School

NICOLAS CADORESSEC Business School

MARIO MONZONIFGV-EAESPLEE NEWMAN
IE Business School

SAMUEL VARKEY
Trinity Business School

PRATEEK JHAESSEC Business School

DAVE GRIGGS
Universities of Warwick& Monash

HAINA SHI
School of Management
Fudan University

ADRIAN ZICARIESSEC Business School

MICHAEL CASTELLANO
IE Business School

YULAN GUAN
School of Management
Fudan

RUAN DOS SANTOSFERREIRA
FGV-EAESPWENDY STUBBS
Monash University

XIN ZHANG
School of Management
Fudan University

FÉLIX DUBOIS-AUBECQESSEC Business School

JAN ONDRUSESSEC Business School,
Asia-Pacific

WLADISLAW RIVKIN
Trinity Business School

DONGDI CHEN
Warwick Business SchoolGABRIEL MENZIESIE Business School

KEVIN MORRELL
Cranfield School ofManagement

JING ZHOU
School of Management
Fudan University

LIANG KONG
Warwick Business School

NICOLAS JULIENESSEC Business School

STEFAN DIESTELUniversity of Wuppertal

DAVID SANTOSIE Business School

MAKI DAN
Keio University

PAUL PERNOTESSEC Business School

DONG WANG
School of Management
Fudan University

FARID BADDACHE
KSAPA© KOLDUNOVOURCONTRIBUTORSBRAINS
THAT HAVEBRAWNEDUCATION & SOCIETY

The Council on Business & Society

The
The
Council
Councilonon
Business
Business& Society& Society

EDUCATIONOUR CONTRIBUTORS& SOCIETYBUSINESS FOR INCLUSIVE GROWTH:SCALING UP BUSINESS ACTION ON INEQUALITYA KNOWLEDGE-DEDICATED EMAGAZINEWITH A TRULY
INTERNATIONAL PERSPECTIVE

THE INCLUSIVE BUSINESS LANDSCAPE IS CONSTANTLYEVOLVING AS MORE COMPANIES PAY CLOSER ATTENTION
TO THEIR IMPACT ON SOCIETY.
Business For Inclusive Growth stays at the forefront of what is transpiring globally,
communicating developments on methodologies, inclusive business practices,and B4IG’s role in scaling up business action on inequality through their newsletter.

8

CURRENT SCHOOLS

12

CAMPUSES

4

CONTINENTS

32,650258,000
ALUMNISTUDENTS & PARTICIPANTS

TO STAY INFORMED OF B4IG’S ACTIONS AND NEWS RELEVANTTO INCLUSIVE BUSINESS PRACTICES, SIGN UP FOR THE B4IG
NEWSLETTER HERE: B4IG.SUBSTACK.COM

14 \/ 15/CONTENTS
editoRIAL / 6-7
OUR CONTRIBUTORS / 8-9

16

PLANET

BUSINESS, SOCIETY
THE HIKIKOMORI PHENOMENON –IS IT REALLY TO BLAME?
BY JAN ONDRUS

19

AI AND ETHICS:HOW TO BREAK OUT OF THE MATRIXBY NICOLAS JULIEN

25

THE ELEPHANT IN THE UNITED NATIONS’ ROOMBY ANDRÉ SHIMZUTHE EMOTION PILLS WE ARE ALL
UNKNOWINGLY TAKINGBY LEE NEWMAN
HOW TO SURVIVE A PANDEMIC
AND OTHER CLASSES YOU MISSEDIN BUSINESS SCHOOLBY MICHAEL CASTELLANO
PRESENTEEISM: A BAD
BUSINESS PROPOSITIONBY WLADISLAW RIVKIN, STEFAN DIESTEL,FABIOLA H. GERPOTT & DANA UNGER

31

37

41

THE POTENTIAL NEGATIVE IMPACT
OF AI AND SUBSEQUENT POTENTIAL
SOLUTIONSBY SHUNXIN DANG

47

51

DIGITAL IMMORTALITY BASED ONAI TECHNOLOGY – DO WE REALLY NEED IT?
BY YULAN GUAN

57

The Council on Business & Society

AI AND ITS PROBLEMS – AN UNAVOIDABLEREALITY OR A DYSTOPIA?
BY DAVID SANTOSSWEEPING WITH THE ENEMY:
COOPETITION AS A STRATEGYFOR A BETTER WORLDBY JAKO VOLSCHENKARTIFICIAL INTELLIGENCE –HOW WORRIED SHOULD WE BE?
BY SAMUEL VARKEYCONTENTEMBRACING THE INEVITABLE DIGITALREVOLUTION: BUILDING A HARMONIOUS
SOCIETY WITH AI
BY DONGDI CHEN

2022: A SOCIAL ODYSSEYBY PRATEEK JHA
BUSINESS, CONCERN AND COMBAT RESPONSE TO
COVID-19: CORPORATE STRUCTURES AND SOCIALKNOWLEDGEBY RUAN DOS SANTOS FERREIRA

100

61

HOW CAN LARGE CORPORATIONSBECOME MORE SUSTAINABLE?
BY FREDERIK DAHLMANN, DAVE GRIGGS,WENDY STUBBS, & KEVIN MORRELL

67

GREENFLATION: THE ACHILLESHEEL OF THE GREEN ECONOMY?
BY PAUL PERNOT109

THIS BUZZWORD MAY LEAD TO YOUR
NEXT BUSINESS OPPORTUNITYBY BO ANNE-MAY DE BOER

115

71

IS AI BECOMING THE NEXT OIL AND GAS?
BY NICOLAS CADOR
77
81

85

MUSIC MASTERY – INNATELY HUMAN
OR ALSO ARTIFICIAL?
BY GABRIEL MENZIES89

POST-DISASTER RECOVERY: THE ROLE OFCSR IN RE-EMPOWERING LOCAL COMMUNITIES.
BY MAKI DAN & MASAYUKI KOHIYAMA

95

CROSS-LISTING AND CSR: FRIENDSWITH BENEFITSBY HAINA SHI, XIN ZHANG & JING ZHOUREALIZING LOW-CARBON NEW VALUEAROUND CUSTOMERS, PRODUCTS
AND ENTERPRISE OPERATIONSBY DONG WANG

103

121

125

129

GREENFLATION: THE DIRTY COST OF BUILDINGA CLEAN AND GREEN ECONOMYBY SALIL SHAHANE
THE ISE SUSTAINABILITY INDEX IN BRAZIL:
A STORY OF PURPOSE, CHALLENGE,
AND SUCCESSBY MARIO MONZONI & ADRIAN ZICARI
THE MAIN BARRIERS PREVENTING
THE WORLD FROM REACHING
NET-ZERO CARBON EMISSIONSBY FÉLIX DUBOIS-AUBECQCLIMATE SOLUTIONS FOR CORPORATIONS:BE SUSTAINABLE-COMPETITIVE BY
CREATING SUSTAINABLE VALUE CHAINSBY LIANG KONG
DESIGNING SOLUTIONS FOR RESILIENT
RAW MATERIALS SUPPLYBY FARID BADDACHEThe Council on Business & Society

135

139

145

151

155

CONTENT

/ 17

BU
SO SINCI ESS
ET
,
Y

16 \

THE HIKIKOMORI PHENOMENON –IS IT REALLY TO BLAME?
BY JAN ONDRUS

19

AI AND ETHICS:HOW TO BREAK OUT OF THE MATRIXBY NICOLAS JULIEN

25

THE ELEPHANT IN THE UNITED
NATIONS’ ROOMBY ANDRÉ SHIMZUAI AND ITS PROBLEMS – AN UNAVOIDABLEREALITY OR A DYSTOPIA?
67
BY DAVID SANTOS

31

THE EMOTION PILLS WE ARE ALL
UNKNOWINGLY TAKINGBY LEE NEWMAN

37

SWEEPING WITH THE ENEMY:
COOPETITION AS A STRATEGYFOR A BETTER WORLDBY JAKO VOLSCHENKHOW TO SURVIVE A PANDEMIC
AND OTHER CLASSES YOU MISSEDIN BUSINESS SCHOOLBY MICHAEL CASTELLANO© GIBSONPICTURESPRESENTEEISM: A BAD
BUSINESS PROPOSITIONBY WLADISLAW RIVKIN, STEFAN DIESTEL,FABIOLA H. GERPOTT & DANA UNGER

41

47

EMBRACING THE INEVITABLE DIGITALREVOLUTION: BUILDING A HARMONIOUS
SOCIETY WITH AI
BY DONGDI CHEN

71

THE POTENTIAL NEGATIVE IMPACT
OF AI AND SUBSEQUENT POTENTIAL
SOLUTIONSBY SHUNXIN DANG

77

2022: A SOCIAL ODYSSEYBY PRATEEK JHA

81

BUSINESS, CONCERN AND COMBATRESPONSE TO COVID-19: CORPORATESTRUCTURES AND SOCIAL KNOWLEDGE
BY RUAN DOS SANTOS FERREIRAARTIFICIAL INTELLIGENCE –HOW WORRIED SHOULD WE BE?
BY SAMUEL VARKEY

51

DIGITAL IMMORTALITY BASED ON AITECHNOLOGY – DO WE REALLY NEED IT?
BY YULAN GUAN

MUSIC MASTERY – INNATELY HUMAN
OR ALSO ARTIFICIAL?
BY GABRIEL MENZIES

57

POST-DISASTER RECOVERY: THE ROLE OFCSR IN RE-EMPOWERING LOCALCOMMUNITIESBY MAKI DAN & MASAYUKI KOHIYAMAThe Council on Business & Society

61

85

89

95

BUSINESS, SOCIETY

/ 19

The Hikikomori Phenomenon –is IT really to blame?
Jan Ondrus, Associate Professorof Information Systems andAssociate Dean of Facultyat ESSEC Asia-Pacific,
shares initial research into the
Hikikomori phenomenon – thegradual withdrawal into the virtualworld and behavioural extremes –and the influence of IT.
Related research: Hikikomori and Technology-Enabled
Escapism: An Affordances and Constraints Perspective, by
Ha Eun Park, Barney Tan, Felix Tan, Jan Ondrus, and Takahiro
Kato delivered at the Forty-First International Conference on
Information Systems, India 2020.

NOT-SO-SPLENDID ISOLATION© LAN ZHANG

IT has thepotential to bringvast numbers ofpeople together
in virtualsocialization
and also inhibits
physical – some
may say real –socialization.

E

xperiencing lockdown during the worst days of the
COVID-19 pandemic, many of us might, on at least
one occasion, have faced a strange sense of splendid
isolation – sometimes even utter loneliness as the mandatory
month or two passed by.
But imagine such isolation – self-imposed, this time – forstretches of at least 6 months at a time. And with the passingof days, weeks and months, gradually withdrawing into
the confines of a single room. In touch through connected
devices, yet with friends becoming first virtual meet ups, thenone by one artificial in the form of identities and characters
created in a video game. Science fiction? Not really. This is
the world of the Hikikomori, a phenomenon of our modern,digitalised society that now afflicts more than an estimated
2 million people throughout the world.

The Council on Business & Society

BUSINESS, SOCIETY

20 \

/ 21
In a nutshell, using IT and digital devices can be positive forsome, and negative for others.
Prof. Ondrus and his colleagues tie in this approach withevidence gleaned from data and tailored questionnaires fromthe Yokayoka Hikikomori Support Center based in Fukuoka,
Japan, one of the most successful centres for treating thedisorder.
IT designers and developers enable users to connect to eachother, interact and obtain online visibility. Often, the applications
and games launched on the market also offer varying degrees
of involvement and interaction – from fully-fledged proactive
engagement through posting comments, discussion themes,
catchy videos or taking on a virtual alter-ego, to being a passive
onlooker, fan or follower and in some cases lurker. One argument
frequently advanced in the face of criticism – or perhaps evenas a safety measure against abuse – is that IT often provides
the user with a choice: either that of being visible or remaining
invisible online.

© YUJI KARAKI

But by offering the world a space for people to meet online,
the double-edge sword of IT also – through the unintended
constraints it induces – leads to encouraging an absenceof physical relationships. Indeed, virtual socializing makes it
more difficult to see and feel non-verbal messages such as
gestures, voice tone, eye contact and emotion, let alone smell
them – for example, the emotions generated through perfume,
good cooking, the presence of flowers or even odour signals
transmitted through the body such as fear, attraction, or warmthand openness. As a result, trust is more difficult to foster andwith it long-term relations. Loneliness and, eventually, social
withdrawal might also occur as result. All in all, in an increasingly
complex and faster world, coupled with the fear of physicalcontact caused by COVID-19 pandemic and other diseases,
such a temptation to turn to easier, more convenient and “morehygienic” means of establishing relationships is very real.

IS IT TO BLAME?
Originating in Japan, the term relates to an affliction – anextreme form of pathological withdrawal or social isolation –above all characterised by physical isolation in one’s home.
We might immediately imagine a teenager engrossed in on
online game, but the phenomenon also touches the adultworld. In 2019, a Japanese government survey revealed thatover half a million recluses existed in the 15-35 age bracket.
A further survey in 2015 showed that just over 600 thousand
adults – aged between 40 and 64 – also fell into the category
dubbed “adult Hikikomori” (Wikipedia). And the disorder is not
only Japanese, but international – recognised as existing inmost digitally connected countries in the world including theUSA, China, South Korea and the countries of Europe.
Other addictions indeed exist – internet addiction or online
gaming, for example – but Hikikomori is different in that on
a diagnostic level it is the long-term isolation and recoil fromsocialization that significantly characterise it. Many havepointed to information technology being a root cause of thisillness. But is that so?

BUSINESS, SOCIETY

The Council on Business & Society

For Prof. Jan Ondrus at ESSEC Business School Asia-Pacificand his fellow researchers, the question is more nuanced. On
the one hand, IT has the potential to bring vast numbers ofpeople together in virtual socialization. On the other, it also
inhibits physical – some may say real – socialization. Thereis no doubt that digital technologies have influenced theappearance of the Hikikomori disorder, though Prof. Ondrus
sees a chink in the argument. For him, whereas research has
focused on the antecedents, consequences and treatmentof the affliction, little has been done to explore how – or towhat extent – the mechanisms of IT can cause someone tobecome a Hikikomori. After all, not all of us who have accessto the internet necessarily do.

WHAT WE KNOW ABOUT HIKIKOMORIPrevious studies have shown that Hikikomoris tend to use theinternet extensively and it has been recognised as one of the key
catalysts for its development. School truancy is one consequence,
not holding down a job another. Sufferers are a solitary lot, rarely
having groups of friends and subject to loneliness – spending
upwards of 12 hours a day on the computer – as well as a lack ofability to express their emotions which may end up in extremes ofphysical violence towards family members.

Therapy has focused around family support groups,
counselling either over the phone or face-to-face, and art
therapy. It is interesting to note that the Pokémon GO mobile
app game has even been tried as a means to help thoseafflicted to socialize, though trials proved disappointing –users ending up staring into their own screens despite being
physically in the same room. And although face-to-facetherapy coupled with home visits seems to be a preference,
there is no consensus among medical experts on which
treatments are most effective.

EXPLORING THE IMPACT OF IT
Profs. Ondrus, Kato, Barney Tan, Felix Tan and researcher
Ha Eun Park bring our attention to research factors theycall IT affordances and IT constraints. Basically, IT offers
an environment and tools that enable users with positive
opportunities – IT affordances. On the flip side of the coin, IT
creates limitations that prevents a user from doing things – ITconstraints. As such, the researchers argue that we cannot
simply claim IT to be a root cause of the Hikikomori syndrome
per se, but study the influence of IT through the lens ofopportunities and constraints as it triggers both intended andpositive, and unintended and negative outcomes for users.

IT AND THE THREE STAGES OFHIKIKOMORI DEVELOPMENT
While Prof. Ondrus and his fellow researchers are still carryingout ongoing research, their initial findings point towards IT
influencing Hikikomori development through presenting aseries of “IT Escapes” as the disorder progresses. Theseescapes are relational, emotional, and spiritual, with each
escape becoming more influential at a different stage indevelopment of the disorder, be it Pre-Hikikomori, Nascent
Hikikomori or final-stage Pathological Hikikomori.
These unintended IT escapes can be taken through the
influence of a number of factors which the researchers call
Hikikomori Drivers – which then ultimately lead to negative
physical and social outcomes.
These include withdrawal into isolation, with those sufferingfrom Hikikomori also showing other forms of behaviour
outside of the social norm – barricading themselves in theirrooms, cutting contact with friends, parents and family
members, failing to turn up to school or work and disinterestin holding down a job.

The Council on Business & Society

BUSINESS, SOCIETY

22 \

/ 23

THE REALITY OF THE UNREAL

Drivers – or the latent, pre-conditioning influences that may
lead a person to enter the Hikikomori cycle – can simply be amatter of having access to the Internet. A traumatic childhood
experience constitutes another – be it rejection or bullying
at school. A third driver can be disrupted family dynamics
stemming from parents divorcing or separating – or even an
overdependence on one’s parents. And finally, the culturalenvironment too plays a part, countries or social groups
characterised by conformity and collectivism seeming tohave a higher tendency to trigger the disorder. In short, theavailability of IT coupled with negative family, school, working
environments and stressful life events open up a road that
leads to Hikikomori. Moreover, the influence of these drivers
are significant throughout the three stages of the disorder.

IT does influence the emergence of mental frailty anddisruption – as manifested in its most extreme form in the
Hikikomori. Moreover, as humans, we tend to see IT devices
and technologies as somehow set solid and unchangeable
once launched. But this research and its findings hint thatsuch IT creations, in a sort of nightmare sci-fi scenario, do inmany ways take on a life of their own.
One could argue that machines and technology – much
like philosophies and dogmas in the real world – are inthemselves not necessarily harmful, the harm coming when
they are used and interpreted by humans for other ends.
But this too, may reinforce the argument that innovatorsand creators would be wise to blend into their designs anessential reflection on the possible and unintended uses their
non-human offspring might spawn. ///The Pre-Hikikomori stage, for example, sees people engaging
in social media networks or virtual worlds that, gradually gains
importance to begin to replace face-to-face contact. In the
Nascent stage, people become increasingly more comfortablewith conversing and expressing their emotions in the virtual
space and begin to withdraw – the virtual relationships
becoming more intimate than their physical relationships.

KEYS
TAKEAWAYS© MICROSTOCKHUB

As such, despite the intention of IT to bring people together tosocialize, it actually exacerbates the progression of loneliness
and withdrawal. As stage 3 kicks in – Pathological Hikikomori– extreme and problematic behaviours begin to occur alongwith complete immersion and preference in the virtual over thephysical world. Online gaming and virtual reality simulators are
the main means of escape, with Hikikomoris even ending up
marrying a “virtual waifu/husband” – a virtual animated wife or
husband).

 ikikomori, a phenomenon of our modern, digitalisedH
society, now afflicts more than an estimated
2 million people throughout the world.
It is an affliction – an extreme form of pathologicalwithdrawal or social isolation – characterised by physicalisolation in one’s home and extremes of behaviour.

DRIVERS

STAGESIT ESCAPES

Nascent-Hikikomori

Emotional EscapeInternet Access
Traumatic childhood
experience
Disrupted faily
dynamics

Pathological
Hikikomori

Relational EscapeFigure 1. How IT Contributes to Hikikomori Development

BUSINESS, SOCIETY

The Council on Business & Society

Withdrawal from Physical
Relationships

Complete Physical
IsolationIT through the lens of opportunities and constraints
as it triggers both intended and positive, andunintended and negative outcomes for users.
 herapy has focused around family supportTgroups, counselling either over the phoneor face-to-face, and art therapy.

SevereConformity andCollectivism

Withdrawal from Social
ParticipationIT has the potential to bring vast numbers of people
together in virtual socialization and also inhibits
physical – some may say real – socialization.

Severity of
Hikikomori

Relation Escape any have pointed to information technology
Mbeing a root cause of this illness.

Mild

Pre-Hikikomori

PHYSICAL SOCIALOUTCOMESIT influences Hikikomori development through presenting
a series of “IT Escapes” as the disorder progresses.
 hese escapes are relational, emotional, and spiritual,Teach escape becoming more influential at a different stage
in development of the disorder: Pre-Hikikomori, Nascent
Hikikomori or final-stage Pathological Hikikomori.
IT innovators and creators would be wise to blend into
their designs an essential reflection on the possible
and unintended uses their software generates.

The Council on Business & Society

BUSINESS, SOCIETY

/ 25

AI and Ethics:
How to break out of the matrix
Nicolas Julien, MiM-ENSAE
student, ESSEC Business
School Runner-up in the2022 student CSR article
competition, explores the fears
and preconceptions of AI and calls
for stakeholder cooperation to tackle
the possible risks that AI may bring.
AI is ultimately avery opaque toolthat few people
understand.

A

re you afraid of Artificial Intelligence? You are likely
to be sceptical and concerned about the significant
advances of this mysterious and unfamiliar
technology, suspicions that are warranted. But what exactly
do we have to fear? Usually, we are afraid it will transformin an uncontrollable force, cause mass unemployment, or
fall into the wrong hands. In 1968, Stanley Kubrick alreadyshowed the dangers of artificial intelligence with the character
HAL 9000 in 2001: A Space Odyssey. Since then, questions
and concerns about this technology have continued to growwith its large-scale deployment. But what are the real ins
and outs of artificial intelligence today? What is the potential
negative social impact of AI, and what are the possible
solutions accordingly?

AI IS EVERYWHERE© OCIACIA

What if AI is already governing us? Indeed, it is likely that you
strongly underestimate how pervasive algorithms are in yourlife and society. For example, how often have you interactedwith an AI today? Don't forget all the Google searches, articles
or videos from social network newsfeed suggestions, yourroute recommended by a travel app, the price of your Uberride, etc. We interact with AIs daily without even realizing it.
More importantly, we must consider the bigger picture asbanks, financial markets, medical research, the automobile

The Council on Business & Society

BUSINESS, SOCIETY

26 \

/ 27
which self-taught itself to speak from Twitter data, and maderacist comments in less than 24 hours. Thus, AIs present thesignificant risk of amplifying social divides and generating
discrimination. The AI era is pushing us more than ever torethink our human values and ethics, as we cannot outsource
our responsibilities to machines.

© AGSANDREWFRIEDMAN'S SHAREHOLDERS 2.0

industry, and corporate marketing departments are all
spheres where AI sits in on a large scale as one of their main
working tools.
In short, as Dr. Fei-Fei Li, Co-Director of the Stanford Institutefor Human-Centered Artificial Intelligence, says, “AI iseverywhere. It's not this huge, scary thing in the future. AI ishere with us”. The democratisation of such a powerful tool
then inevitably brings about negative social impacts that are
already observable today.

AI: A THREAT TO HUMANITY?
To understand the genuine negative social impacts of AI,
on must first take a step back from the fantasies of an AI
that turns against humans. AI is merely a set of statistical
tools and matrix calculations, very powerful, but which can’t
compare to the calculation capacity and complexity of thehuman brain. Today we are only at the stage of “weak” AI,
specialised in solving a single specific task, which requires
data scientist’s supervision. Consciousness, self-awarenessand freewill in machines are all far beyond the capabilities
of science today. Therefore, ideas that AI will turn directlyagainst its creators like Frankenstein’s monster will remainscience-fiction for a long time to come.

AI: A THREAT TO OUR JOBS?
Another irrational fear is that machines will replace
employees, leading to mass unemployment. Three-quarters
of US adults believe AI will “eliminate more jobs than it
creates”, according to a Gallup poll. However, in reality, AI
will probably create more jobs than it destroys. Interestingly
enough, the same Gallup poll revealed that fewer than a
BUSINESS, SOCIETY

The Council on Business & Societyquarter of people worried that automation would affectthem personally, which illustrates how irrational we arewhen estimating the impact of AI. In terms of numbers, theconsulting firm PwC evaluates that in the UK, 7.2 million jobs
will be created for 7 million destroyed. Like any technologicaltransition, AI will inevitably lead to a profound transformationof the labour market which is more of a challenge toovercome than a real negative social impact.

AI: A WEAPON OF MASS NUISANCE?
In reality, the main social dangers of AI seem to come fromits use by humans. As with any powerful tool, artificial
intelligence can be used for the wrong purposes and thus
have a negative impact. Perhaps the most telling example
is that of China, whose embrace of AI enables it to assert its
totalitarian vision and objective of mass surveillance. The
widespread monitoring of the population is made possible byvisual detection algorithms. No wonder Premier Li Keqiang
stated that “the development of AI is a priority for the Chinesestate”.
At the individual level, there is also no shortage of misuse.
Imagine waking up one morning and discovering a videoof yourself praising racism circulating on the net. Although
you never shot the video or uttered such words, it looks very
realistic because it was generated by an AI. Dystopian, isn't
it? Such an application actually already exists, under thename FakeApp. More generally, deepFake, which consistsof simulating false, ultra-realistic videos, can be extremely
dangerous as it acts as an engine for inappropriate purposes
like spreading misinformation, promoting an ideology orcommitting cyber-harassment.

THE REAL PROBLEM ORIGINATES IN
THE WEAKNESSES AND FLAWS OF AI
Beyond misuse by humans, AI itself has flaws andvulnerabilities, which, if left unchecked, can generatesignificant social risks. AI always works with a database fromwhich it can learns. The main problem with this is that an AI
is very sensitive to the data it is fed. When the data is biased,
the AI will reproduce the bias. It is very common for an AI toover-generalise a database, which means that it relies toomuch on the patterns observed in the database provided toit. This problem is called “overfitting” and is closely monitoredby data scientists to ensure that each algorithm is correctly
generalizable, which is called “robustness”. This explains why
data is considered the “Achilles’ heel of AI”.

AI REPRODUCES HUMAN ERRORSThe most telling examples are the cases of racist AI anddiscriminatory algorithms. For example, in 2016, ProPublica
researchers showed that an algorithm assessing the recidivism
risk of criminals in the United States obtained different resultsfor people of different skin colours with exactly the sameprofiles. The problem is that the AI performs better with thisbuilt-in racism, because social-economic parameters such as
poverty, which mainly affects black people, can lead to more
recidivism. An AI has no ethics; it only strives for performance,
without differentiating between causality and correlation.
Therefore, a human decision based on AI recommendations,such as a judge's sentence, could then result in detrimental
discrimination. Today, many firms use such algorithms to
make decisions: for example, Amazon was strongly criticised in2018 because its recruitment algorithm suffered from genderbias. Another example is Microsoft's artificial intelligence, 'Tay',

Nowadays, the major AI players, such as GAFA, do notconsider the social impact that the use of their algorithms canhave. Facebook, for example, deliberately offers content thatis both pleasing and shocking to users, even if it is actually
misinformation leading to a large-scale propagation of fakenews. The GAFAs seek to maximise their performance, user
retention and engagement, by any means. Moreover, thealgorithms lead to “filter bubbles” in that they isolate you frominformation and perspectives you haven't already expressed
an interest in, which in turn threaten critical thinking. In 2018,
Google also exemplified its disregard for negative social
impacts when it fired its two directors of its ethics and AI
team, Timnit Gebru and Margaret Mitchell, the two directorsof its ethics and AI team, within two months. Google, thecompany that designs the most sophisticated AI and controls
the most information flows, has literally dismantled its own
ethics.
All this shows that the AI giants can be considered asshareholders 2.0, in the way Friedman conventionallyconsiders shareholders, in that they are only seeking forprofitability and monetary gain at the expense of a healthyfabric of society.

STAKEHOLDERS TO THE RESCUE
The challenge now is to identify what solutions exist thatcan limit the negative impacts of AI and the Shareholder 2.0
mentality driving it. We need to change gears and transfer toa stakeholder system, wherein each actor has the capacity to
act responsibly.
First of all, the academic sphere is mindful of the conflicting
forces between ethics and IA and put in place numerous
initiatives. These involve taking a step back, such as with
the Ethics and Society Review at Stanford University whose
system requires AI researchers seeking funding to assess
their work for any potential negative impact on society before
being green-lighted for funding. Researchers are also turning
to pinpointed research on how to better secure data in theface of ethical dilemmas, as is the case with the WeBuildAI
initiative, a collective and participatory framework that enables
people to build algorithmic policy. By compiling the viewsof different stakeholders on ethical dilemmas, researchers
construct a computational model that enables an AI to makerecommendations that are both efficient and ethical. A similar
project exists to create an algorithm that recommends videos
by assessing their ethical and social impact, called Tournesol.
You can participate right now, by rating YouTube videos on
how recommendable, actionable, educational, or entertaining
you think they are.

The Council on Business & Society

BUSINESS, SOCIETY28 \Secondly, projects like WeBuildAI or Tournseol therefore
also require individual commitment: we can all help limit
the negative social impact of algorithms. More generally, it
is important that we use AI-related tools responsibly. Thisrequires an effort to think critically, to get out of our “filter
bubble”, and step out of our matrix. We thus become better
informed while we in turn teach the algorithms that thecontent they send our way is not always the content we want.
Additionally, firms and their employees must also learn toassess the negative social impact of their algorithms, andstop focussing only on profitability and performance factors.
They must consider ethics in their processes and become
accountable through transparency. We are witnessing a trend
towards uniting a common will among tech giants to addressthese issues, for example with the creation of the Partnershipon AI coalition by Amazon, Apple, Facebook, Google, IBM, andMicrosoft, which focuses on the development of benchmarks
and best practices for AI. This is a good starting point, but westill have a long way to go.
Finally, it is essential that the governments require moreregulation of GAFA. The European Union is taking the lead,notably with the creation of the RGPD, a regulation aimed atcontrolling the use of data in general, or with the publication ofa White Paper by the European Commission's, which proposesa framework for managing these new tools in a responsible
manner. States must therefore remain at the forefront of AI
issues while consulting specialised experts, so that they canplay an active role in regulating and monitoring the use of AI.

#5

EXECUTIVEEDUCATION
PROGRAMSDON’T WAIT
TO LEARN AGAIN

The engagement of all stakeholders will only be possible with
an awareness of the issues at stake in AI. By persisting asa source for fantasies and preconceptions, AI is ultimately
a very opaque tool that few people understand. The use ofdeliberately vague lexicon such as “neural network” or “deeplearning” leads to a misunderstanding of how to approach AI
and understand its dangers.
An employer like Amazon refusing to employ someone
because they are black would immediately fall into illegality
and cause a scandal. However, this does not apply to AI, as
it is still very much misunderstood today. Thus, NGOs are
emerging such as the AI Impact Alliance, which organises
workshops and conferences on AI strategies and solutions
in order to increase AI’s impact on social welfare and raise
public awareness on the conflicts between ethics and AI.
In conclusion, there is a genuine effort to educate and raiseawareness on the issues posed by AI that we all need toembrace. And the good news is that by reading this article,
you have already taken a step in the right direction. ///© MARRIO31

THE IMPORTANCE OF EDUCATIONESSEC EXECUTIVE EDUCATIONKEYSTAKEAWAYS

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 lthough conscious AI directly harming humansAremains science-function, it is possible for someto use this tool for the wrong purposes.

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 laws come directly from the AI’s operation itself such as
Fbeing too sensitive to data, which can lead to a serious
impact on society with a perpetuation of discriminations.
 ech firms today do not consider enough the negativeTsocial impact they often wreak by using AI, andare only focused on performance indicators.

 any stakeholders are unaware of their power and theMreal dangers of AI. Education and awareness raisingof all stakeholders on this subject is crucial. We needto understand the matrix in order to get out of it.

BUSINESS, SOCIETY

The Council on Business & Society

1218160921 - Photo: © Denis Allard/Rea.

It is possible for all stakeholders to start acting more
responsibly at their level in their approach to AI.

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/ 31

THE ELEPHANT IN THE UNITED NATIONS’ ROOM
André Shimzu, FGV-EAESPWinner of the 2022 student
CSR article competition,
tackles the climate crisis froma fresh angle – that of political
populism and how it prevents
united climate action.

As for climate changes, scholars already have aconsensus about what needs to be done: reducegreenhouse gasses emissions until worldwide energy
generation becomes net zero-carbon. This objective needs tobe reached before it becomes too late, and it is only possible
with wide cooperation of a diverse set of stakeholders– namely governments, companies, political parties, nongovernmental and international organizations. However, anelephant in the room that no one wants to talk about sits rightin the United Nations building, in the very discussion room
where national leaders discuss dealing with global warming.
The elephant of the global alt-right rise blocking the realcapacity of the efforts to revert climate changes.

© MPHILLIPS007

An importantdetail is that theelephant cannot be
defeated directly.

It happens because there is little effectiveness of the actions
to solve this problem without the participation of the twolargest American countries: The United States of America
and Brazil. Both have essential roles in global environmental
protection. First, they are among the most polluting countries
in the world being respectively in the 2nd and 12th positions(GLOBAL ATLAS CARBON, 2022). Second, the USA has animmense potential to develop sustainable technology andhelp other countries with investments in their environmental
areas. Third, Brazil has one of the largest green areas in theworld, Cerrado and Amazonia, which must be protected to
avoid climate change.

The Council on Business & Society

BUSINESS, SOCIETY

32 \

/ 33

A RECENT PAST
Climate change is a serious and urgent problem that is
no longer debated in the scientific environment, only inpolitics (FANCELLI, 2021). These two presidents have been
discrediting science to gain arguments on political discussion
among their follower base. The way in which those two led
their countries during the Covid-19 pandemic shows thedeadly consequences that alt-right denialism presents andwhy this problem needs to be resolved – else, there will
be no effective progress on environmental causes. Trump
stated in February 2020, without evidence, that the virus
would be weakened by the change of seasons because theheat should cause negative effects on the virus. He alsolied by announcing several times that the pandemic wasunder control, defending that the USA was the country withthe lowest daily death rate in the world (PAZ, 2020), where
actually it was the country with the most Covid-19 deaths in
the world.
In Brazil, Bolsonaro made many similar statements.
Even further, he encouraged his supporters to invade
hospitals to check if the media was not lying about Covid
hospitalizations; often defended the use of medicines
such as Hydroxychloroquine in medical protocols to treat
Covid-19, even when researchers indicated that these were
not effective; and did not reply to 53 e-mails from Pfizer aboutpurchasing vaccines. Further, he stated that: “As for Pfizer, it isclear in the contract: ‘we are not responsible for any collateraleffect’. So, if you become a Crocodile this is your problem. If
a woman grows a beard or if a man starts to speak with hightones, Pfizer has nothing to do with it”. (AOS FATOS, 2022).
The two presidents demonstrated arguments and actions
in common: discrediting science; repeating that theirgovernment was doing well while avoiding the critics; blaming
the media; spreading lies and distortions about facts throughtheir social networks. But they did not start to act this way
with the pandemic – they were already ruling their countries
with denialism. What the pandemic did was just to show thatthese leaders would defend their ideologies even if they costhundreds of thousands of lives: it is happening with Covid-19
and has not been different with climate changes.
Condemning actions like these should be somethingcommon in any functional justice system. However, whensuch actions come from heads of state of two influential
countries, condemning these actions becomes difficult.
Moreover, they have the legitimacy of votes and expressive
popular movements to support them, while their belligerent
way to govern makes any negotiation or cooperation for theenvironmental cause unfeasible.
It is true that Donald Trump lost the elections in 2021. Also,
Jair Bolsonaro will probably lose the presidential electionsin 2022 according to recent electoral research in Brazil.
Although, do these facts mean the end of the alt-right, which
is not just an American phenomenon? Sadly, solving thehorror of this recent past is more complex than just winning
an electoral process.

© PAIWEI WEI

Why is there an elephant in the UN room, if they are so
important for this discussion? Because both are on the mainstage of a political phenomenon that attacks democratic
principles, the scientific community, and the logic ofinternational cooperation: the alt-right denialist populism
represented by Jair Bolsonaro in Brazil and Donald Trump in
the USA. More than just denying the necessity of reaching
Net-zero carbon emissions, these movements attack all thebases that sustain the efforts against climate change.

CAN ELECTIONS STOP THE ALT-RIGHTPHENOMENON?
They cannot. That is the answer of Michele Prado, a Brazilian
writer who researched different alt-right groups. In her book
“Tempestade Ideológica” (Ideological Storm), she states that
this movement is bigger, older, and independent of its leaders.
In the Brazilian case, the author highlights that the basesof what would become Bolsonarism have been widespreadsince 2004 by Olavo de Carvalho, a self-styled philosopher
who deeply influenced the president and his followers.
Moreover, Prado said that it is Bolsonarism that needs thosegroups and not the other way around (PRADO, 2021).
In 2020, the message of the United States elections was that
Trump lost, but Trumpism did not (TACKETT, 2020). Research
revealed that 56% of the politicians elected by the republican
party believe mostly or partially in QAnon theory, which
believes in the existence of a wide organization composedof artists and politicians from the Democratic party thatworships Satan and develops a scheme of child trafficking
and paedophilia in the world (RUSSONELLO, 2020). Besides
the population, at least two dozen Republican candidates whobelieve in the conspiracy ran for congress seats in 2020. Twoof them won (BERGENGRUEN, 2021).

The German government established a partnership with the
USA to combat radicalism and, consequently, the alt-rightdevelopment in their countries. The subject is so importantthat this program received an investment of one billion euros
to strengthen research and initiatives toward democracy.
They select subjects such as racism, gender inequality,
extremism, democracy prevention, and others to develop
research to understand and deal with the alt-right.
One of the main objectives of this program is to help thesecountries to develop an education towards radicalism
prevention as those movements are recruiting andradicalizing teenagers using social networks. In this way,
education is a fundamental aspect to develop a civicmindedness that knows how to deal with social networks,
fake news, scientific facts, tolerance of differences, and theseriousness of climate change.
Another important element is to demobilize this movement
through the improvement of the relationship between
entrepreneurs and anti-democratic politics. The American
elections in 2020 were the most expensive in history, costing
approximately 14.4 billion dollars (HILLSTROM, 2021). It
is improbable to reach this quantity of resources just withspontaneous acts from citizens. These numbers are just a
symptom of the lobby influence from main donors, usuallybusinessmen, in political decisions. Regularizing lobbies
is necessary to end this kind of relationship that makes it
possible to benefit companies who support politicians thatare going to destroy the bases of democracy and the efforts
for the environmental cause. Even being a hard decision, thisfunds needs to be prohibited or at least hampered because
they are being used to conduct the world to a global collapse.

© HONGLOUWAWA

Even away from their presidential posts, their influence
remains in politics and among the population. And, theenvironmental cause requires efforts from the whole
population in daily decisions like consuming habits andrecycling. These changes are difficult to make even among
non-denialists as soon as they demand to give up habits thatalways existed in their lives. However, in the case of people
blinded by denialist ideologies, which is an expressive andorganized part of the population as Trump’s election had
shown, this challenge becomes even harder.

WHAT CAN BE DONE?

BUSINESS, SOCIETY

The Council on Business & Society

The Council on Business & Society

BUSINESS, SOCIETY

34 \DEALING WITH THE ELEPHANT
The elephant in the UN room seems invincible by its
sovereign right and democratic legitimacy. It came to stayand there is no way to easily take it out of the room. The bestthing to do is to research and learn how to deal with it: limit its
movement; define strategies for media and the population todeal with offenses and threats; pressure the financial sectorsthat profit from these politicians; establish laws and protocols
to identify and punish efficiently cases of denialism that can
put the population in dangerous situations. Step by step, thiselephant is going to lose its strength until it becomes possible
to execute the plans of net-zero carbon.

The FGV-EAESP OneMBA
No single university can really understandwhat constitutes success in other regionsof the world.
That's why five top-ranked businessschools in Asia, Europe, North and SouthAmerica joined together to create
OneMBA, the global executive MBA
program that is more diverse and globally
relevant than any other.

An important detail is that the elephant cannot be defeateddirectly. The best way to combat it is by engaging people intheir daily lives; educating them about their usage of social
networks; preventing radicalism in schools; teaching themto identify and deal with conspiracy theories when someone
from their circle starts to believe in them. It is in the private
spaces where radicalism can be weakened because theelephant is strengthened when discussed under spotlights,
regardless of the arguments.

Target Public

In other words, our society needs to achieve a different levelof maturity, which will need efforts from all sectors of society.
It is similar to the environmental cause. In other words,
solving the problem of alt-right rise and climate changes
requires similar, synergic, efforts, even being different
subjects. Both are difficult, urgent issues, without clear
answers. On the upside, however, it is possible to deal withboth simultaneously.
The elephant should not be understood as a wholly different
problem from climate change, it is just a different part of thesame problem which is not receiving the necessary attention.
Dealing with the elephant is not another problem to solve
beyond the environmental cause, but actually, a more efficientand holistic way to understand and solve it. ///OneMBA executives from around the globe
continue their career while attending classes at
the OneMBA partner university most convenientto them. In addition, all OneMBA executives
come together for four week-long global
residencies held in US, Europe, Latin Americaand Asia, spread over the 21-month program.
Between residencies, OneMBA global teams
from different world regions, work together tocomplete course projects. Upon completing the
OneMBA Program, executives receive the
OneMBA certificate issued by the five partner
universities, as well as an MBA from their home
university.

Minimum of 7 (seven) years of professional work
experience. Your current or expected global
management responsibilities will be considered.
Bachelor’s Degree or equivalent.

Admission Process
Pre application: candidates fill in the preapplication form on the internet with their general
information, submit their resume and confirm
application by paying the application fee.

KEYS
TAKEAWAYS●The alt-right rise in the global political scenario
acts like an elephant blocking international
efforts to revert climate changes.
●What happened in Brazil and in the USA in
recent years shows how dangerous denialism
can be by discrediting science and spreading
conspiracies and lies among the population.
●This elephant and the greenhouse gasses emissions canonly be resolved through a wide cooperation of several
stakeholders such as governments, political parties,
entrepreneurs, and civil society. As they need similar efforts,
the solution for both of them pass through similar paths.
●The best way to deal with these problems is to research
about it and develop in society a civic-mindedness
that knows how to deal with social networks, fakenews, scientific facts, and the seriousness of climatechange. This mindset needs to be developed in
the population but also in all society’ sectors.

BUSINESS, SOCIETY

The Council on Business & Society

Candidates:• Are encouraged to participate in a profile
interview which aims to align expectations
regarding the program. Profile analysis isscheduled after application is confirmed.

For more information on the FGVEAESP OneMBA
e-mail: admissionsoffice@fgv.br
Phone: +55 11 3799-3488

/ 37

The Emotion Pills We Are All
Unknowingly Taking
Lee Newman, Dean of
IE Business School andProfessor of Behavioural
Science and Leadership,
explores how we can recognise
the negative and send out thepositive in our work and daily lives.
Originally posted in video format, with kindacknowledgements to IE Insights.

You may not know it, but every day – at work andoutside work in your daily life – you’re taking two
types of pills: the blue pills, and the red pills. Whensomeone gives you positive feedback for a presentation you
made yesterday, it feels good and you feel proud. That’s apositive emotion, that’s a blue pill. And, when someone steals
your credit in front of the boss, that’s a big red pill – negative
emotions that typically last for a very long time.
So, what’s critical – and we know from behavioural science –is that this ratio of blue to red makes a big difference in yourdaily life, in your performance, in the way that you think, and in
the way that you behave.

DIAL UP THE BLUE, DIAL DOWN THE
RED© SIBANI DAS

We can change theway in which we
handle negative
emotions.

So our goal is to dial up the blue and dial down the red.
What happens when we have a lot of blue? Well, we’remore creative, we’re more innovative when we face difficult
challenges. In contrast, when we run into a lot of red
emotions, our attention narrows, we tend to find and focus
on the differences we have with other people, we’re lesscreative or less innovative, and we tend to interpret the neutral
behaviour of other people negatively – even if it’s not there.

The Council on Business & Society

BUSINESS, SOCIETY© NICK CLEMENTS

38 \So, our mission is to dial up the blue and dial down the red atwork and outside work on a daily basis. Practically, how could
you do that?

HANDLING EMOTIONS
Well, we can look for ways to find positive moments in ourday. We can take time out in difficult moments to breathe, tomeditate, to take a walk in nature. Or, we can socialise – formany of us, socialising is a great way to diffuse negative
emotions and create positive emotions. We can also work tohandle negative emotions differently. It’s very difficult to get
rid of those people who cause negative emotions in our lives,and it’s equally difficult to eliminate all of the stressors in ourdaily lives. But we can change the way in which we handle
negative emotions. We can choose our battles more carefully.
We can talk them through with other people. And learn to justlet things go in those difficult moments.

So these are examples of ways that you can affect the lives ofother people at work and outside of work to dial up their blueand dial down their red. So I hope you’ll take those practicalideas and start today in re-thinking the role of positive andnegative emotions in your daily life. And I also hope that today– is a great day. Just say no to red pills! ///Watch Prof. Lee Newman’s
video version of this article
on IE Insights.

GIVING OTHERS POSITIVE VIBES

Humour is a great way to give other people blue pills. Positive
feedback to other people – we don’t take the time to do
it enough – and it’s a great way for you to hand out blue
pills on a daily basis. The red pills you are handing out are
typically little bad behaviours that you and all of us have inthe workplace. We don’t listen to each other carefully, we
micromanage sometimes, other times we’re multi-tasking
and spending too much time on our mobile phones and notenough time with our colleagues, listening.

© GETTYIMAGES

But it’s not only about you – it’s about other people. You’ve
probably never thought about it, but you are actually givingout blue pills and red pills to your colleagues and people inyour daily life. So your mission, I would suggest, also ought
to be thinking about how you can give out more blue pills andfewer red pills. How might you do that?

www.business-class.fr/workshops/
BUSINESS, SOCIETY

The Council on Business & Society

/ 41

How to Survive a Pandemic and OtherClasses You Missed in Business School
The consequences of the
COVID-19 pandemic havereached every cornerof the world, increasing
poverty, inequality, and social
vulnerability, even in wealthiercountries. As Michael Castellano,International MBA student at IE
Business School, explains, businessschools have a fundamental role toplay in addressing these problems
and repairing societies—if they dotheir job right.
RESULTS OF PANDEMICS MAY VARY

© MF3D

To repair societies
and eliminatesocial inequities
after COVID-19,
business schools
must not onlychange what andhow they teach,but also whothey teach andwho teaches.

In October 2020, Fareed Zakaria penned an opinion piecein the Washington Post noting “pandemics should be
the great equalizer,” but COVID-19 was not. Although
95% of all countries experienced economic contraction
due to the pandemic, it became painfully clear as the crisis
dragged on that the virus disproportionately impacted certain
communities over others. Instead of affecting all people
equally, COVID-19 deepened socio-economic divides aroundthe world and brought an additional 97 million people into
extreme poverty in 2020 alone.

The Council on Business & Society

BUSINESS, SOCIETY

42 \

/ 43
environmental, social, and/or economic problems and apply
scientific and technological innovation for impact.”© MINDFUL MEDIA

2. Diversify the Campus Community: To repair societies
and eliminate social inequities in the aftermath of COVID-19,
business schools must not only change what and how theyteach, but also who they teach and who teaches. For example,
in the United States, every generation is more diverse thanthe last; however, recruitment into top MBA programs has
not kept pace. Although individuals who identify as Black,Indigenous, and People of Color (BIPOC) comprise 39% of
the US population, they represent less than 25% of students
enrolled in US MBA programs. To truly foster a more equitablesociety, educational institutions must embrace diversity
among the campus community and seek out students
from underrepresented and/or historically marginalized
backgrounds.

Now, more than two years since the onset of COVID-19, we
can see how the world has forever changed. The experiencedemonstrated that our systems were much more fragile
than we knew, and the pandemic aggravated issues aroundinjustice and inequality that were already bubbling below thesurface. As a result, many have cast aside hopes of returning
to pre-pandemic normalcy, advocating instead for a newnormal that remedies the former system through innovation.

EDUCATION AS THE GREATEQUALIZER
The virus may not have affected everyone equally, but
education can serve as an anecdote and a true equalizer insociety. Education can equip all people with the tools to lift
themselves up from their circumstances. The pandemic also
underscored that business contributes meaningful solutions
in times of need. Consider the ways that business principles
transformed the course of the pandemic, from rapidly scaling
up production of life-saving vaccines, coordinating complex
supply chains of personal protective equipment, or marketingrisk-mitigating behaviors to the public.
Business schools occupy an important position at thisintersection between business and education, and therefore
have an essential role to play in guiding the response during
the remainder of the COVID-19 pandemic. Moreover, trends

BUSINESS, SOCIETY

The Council on Business & Society

indicate that conflict, uncertainty, and instability will continue
to define global affairs, meaning business schools will have aunique opportunity to create the leaders of tomorrow. Arming
students with a well-rounded business education will preparethem to tackle future issues and generate a ripple effect withthe potential to transform companies, communities, societies,
and indeed the world.

BUSINESS SCHOOL 2.0
The insecurity of recent years has encouraged many
individuals at all stages of their careers to rethink theirrelationship to work and question their contributions tosociety. This has led to an unprecedented wave of careerchangers and new enrollees in MBA and other continuing
education programs. Yet, as the world economy shifted
during the COVID-19 pandemic, how did business schools
respond? Did academic institutions continue teaching anantiquated paradigm of maximizing profit at all costs, or did
they innovate to meet the moment? The following section
offers three high-level recommendations for how academic
institutions can forgo the old methods of operating and reenvision a business education amid crises.
1. Teach a Pandemic Pedagogy: A wise professor once said,“We don’t need more accountants or financial analysts: weneed leaders.” The Millennial generation currently comprises
the bulk of the workforce, and as they rise in corporate ranks,

they carry with them the countless experiences of crises,
recessions, and conflict that have defined their generation.
To prepare younger generations to lead in an increasingly
uncertain world, business schools must revise their curricula.
This involves developing a “pandemic pedagogy” andphilosophy of education that is rooted in the present, yet
designed for the future. A business school curriculum should
become crisis-proof, prioritizing soft skills, critical thinking,and resilience strategies for the future of work.
Above all, business schools must integrate Environmental,
Social, and Governance (ESG) principles into academic
studies, as well as classes in business ethics and humanities
that coach students to become more empathetic andjust human beings. This can include service-learningcomponents, in which students employ business principles
to uncover tangible solutions to real-world problems, while
deepening their awareness of socio-economic inequities. At
IE Business School, courses such as “Marketing Strategies
for Sustainability” and “Social Entrepreneurship andImpact Investing” attract as much interest from students
as other traditional business courses. According to Dr.
Rachida Justo, Professor of Social Entrepreneurship at IE
Business School, “The escalation of human-made socioenvironmental challenges has pressured the businessworld to deemphasize individualistic, profit-prioritizing, andsometimes unethical mentalities. Business schools havethe power and responsibility to develop the capabilities of
future entrepreneurs in using business acumen to solve

According to Paula Fonseca, an International MBA student
at IE Business School, “Diversity enriches the educational
experience because we are able to derive our learnings not
only from business cases, but from the lived experiences ofour classmates and colleagues.” Diversity of lived experience
not only brings perspective to academic material, but alsooffers a nuanced understanding of overlapping concernsthat effect a particular community. In this sense, universities
should not only promote diversity among the student body,
but also among the faculty and visiting lecturers. Instead ofbeing an archetypal ivory tower, business schools should
uplift the first-hand experiences of atypical instructors, suchas visiting lecturers from disenfranchised communities
leading seminars on topics related to social and economic
equity. Consider the 2022 viral tweet from a professor at
Wharton School of Business in which she remarked that 25%of her students believed the average salary in the US exceeds
six figures, when half of all Americans earned less than
$35,000 USD in 2019. Even a top-notch education cannot
prepare students to be leaders if they remain disconnectedfrom the world in which they will lead.
3. Measure Achievement through Impact: Finally, if colleges
and universities want to make a positive difference in theworld, they must measure institutional achievement throughimpact. This means adopting a new set of performanceindicators. Prominent rankings of business schools and MBA
programs have historically evaluated institutions based on
metrics such as the average starting salary and bonuses ofrecent graduates and mean GMAT scores of the student body.
For MBA students in the class of 2022 and 2023, studying for
the GMAT meant multi-tasking during a pandemic, politicalcrises, and other unprecedented hardships. In fact, forstudents in certain regions of the world, sitting for the GMAT
may have been their first time in public after the onset of thepandemic. Standardized tests have long been criticized asbiased and poor predictors of a student’s performance, but
the pandemic makes an even stronger case for eliminating
the exam and other barriers to entry for certain students.

The Council on Business & Society

BUSINESS, SOCIETY44 \Furthermore, if business schools are to be thought
leaders and foster more equitable societies, perhaps
salary-based indicators are not the best measurementof success. Instead of awarding accolades based on
earnings, universities should consider non-financial
indicators that bear in mind the positive contributionsof graduates to their communities. In the aftermathof COVID-19, as the world grapples with social,economic, and political challenges, encouraging
students to pursue non-traditional, less lucrative
vocations, such as public policy or elected office,non-profit leadership, or social entrepreneurship might
not garner top rankings, but is certainly a laudable
achievement. Rather than deemphasizing thesecareers, business schools should create a pathway for
future transformational leaders and put people and theplanet before profits.

 he pandemic did not impact all communities equally,T
but deepened pre-existing inequities, the ripple
effects of which will continue for generations.

REIMAGINING A MORE
EQUITABLE FUTURE

 usiness schools occupy a unique positionBat the intersection of business and education
have a fundamental role to play in repairing
societies in the aftermath of COVID-19.

In a follow-up opinion piece leading up to the releaseof his book Ten Lessons for a Post-Pandemic World,
Fareed Zakaria optimistically observed, “The pandemic
upended the present, but it’s given us a chance toremake the future”. Although COVID-19 disrupted
ways of life, toppled economies, and amplified social
vulnerability, it has given the world a chance tochange course. In this moment, business schools
have a unique opportunity to leverage their expertiseat the intersection of education and business toderive efficient and productive ways to advanceeconomic empowerment, alleviate poverty, andachieve social objectives. By teaching timely course
material, incorporating historically marginalized
and underrepresented individuals, and assessing
achievement through social impact, business schools
can prepare the leaders of tomorrow and reimagine amore equitable future for all of us. ///KEYS
TAKEAWAYS o prepare students for a world of uncertainty,Tbusiness schools must create a “pandemic pedagogy”,
grounded in the present, but built for the future mbracing diversity among the campus communityEand emphasizing the lived experiences of students
and faculty enriches learning and fosters empathy.

C

M

Y

I f colleges and universities want to make adifference in the world, they must measureinstitutional achievement through impact, using
a new set of performance indicators.

CM

MY

CY

CMY

K

ExecutiveMBA

The world around us is in constant motion. At IE Business School, we pride
ourselves on our ability to prepare professionals for the rhythm of today’s
ever-evolving marketplace.
Our innovative approach to education, unique methodology and dedication
to experiential learning set us apart, helping you to take control of your own
career path. Our futuristic learning spaces, such as the WOW Room,embrace the latest technologies to spark change and inspire.
As a member of our community, you join a family of restless entrepreneurs,
game-changers and life-long learners from around the world.
We’re pushing the limits of education. We’re shaping tomorrow’s leaders andcreators. But more importantly, we’re building tomorrow.

INTAKE:LENGTH:LENGTH:FORMAT:

September & March

15 Months

Online & Madrid

Blended Methodology© SOLIDCOLOURS

Find out more about our
Executive MBAs on:
admissionsblendedmba@ie.edu

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The Council on Business & Societyie.edu/embas

/ 47

Presenteeism: A bad business proposition
Can there be a worthwhile
tradeoff between work andhealth? Professors Wladislaw
Rivkin, Trinity Business
School, Stefan Diestel,
University of Wuppertal, Fabiola
H. Gerpott, WHU—Otto Beisheim
School of Management, and Dana
Unger, The Arctic University of
Norway, explore why presenteeism
occurs and how to combat it.
Related research: Should I Stay or Should I Go? The
Role of Daily Presenteeism as an Adaptive Response to
Perform at Work Despite Somatic Complaints for Employee
Effectiveness, Wladislaw Rivkin, Stefan Diestel, Fabiola H.
Gerpott, and Dana Unger; Online First Publication, March 17,
2022.

THE 800-POUND GORILLA© GORODENKOFF

Presenteeism mayhelp employees
achieve theirgoal for the day,but more often
than not it has aspillover effect.

For most readers, working in a state of ill health may
not be an alien event. In fact, most of us are used toand expected to push through with the work, especiallywhen on a deadline. However, not many of us may be awareof the name for this phenomenon – Presenteeism – also
referred to as the 800-pound gorilla in the business andcorporate world.
The reason it is referred to as such is due to the tremendous
costs for employees such as increased burnout, impaired
workability, and productivity loss which in turn and mostimportantly reflects as costs for the organisation.

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BUSINESS, SOCIETY

48 \

/ 49

Beyond the moral obligation of organisations and managers
to safeguard the health of their employees, there is also
concrete evidence that engaging in and encouraging
presenteeism has grave consequences both in the short andlong term. So why exactly do some organisations encourage
it and employees engage in it?

And as we are socially conditioned throughout our life, it isunsurprising that how others perceive us is also a crucial
determinant of presenteeism. In order to answer the dreaded
yet pointless question of ‘what would my colleagues andmanager think?’, most employees engage in presenteeism
especially when the workload is too much to ‘prove their worth’.

It is saddening that employees may find these findings eyeopening. Often when they think there is a trade-off between
taking care of themselves and being efficient, there is notrade-off at all: when ill, protecting and preserving their healthtoday means avoiding negative work-related consequences
tomorrow.

OBVIOUS BUT OBLIVIOUS – WHY
PRESENTEEISM OCCURS?

LONG TERM PHENOMENON? NOTQUITEBAD MANAGER = BAD CULTURE= BAD COMPANY

Researchers until now have identified macro-level
determinants that are detached from the individual levelof the employee. At the job level, work demands such asrole demands, long work hours, and time pressure, and at
the organisational level, working in the private sector andorganisational size are some of the factors that are attributed
to presenteeism.

Irrefutable proofs from various studies have reinforced thefact that the estimated costs of presenteeism potentiallyexceed those of absenteeism. Presenteeism not only directly
impairs the ability to work – making more errors becauseof the inability to concentrate while working – but can also
compromise physical and psychological recovery processes.

Any employee would swear by this: Employees leave (bad)managers, not (bad) companies. Since they have the front
seat view to an employee’s working state, managers are theones who can help as well as further hurt the employees
when they engage in presenteeism.

One of the major determinants of presenteeism, theresearchers found, was the amount of work progress in theconcerned day. It is indeed understandable that employees
would prefer to work even in a state of discomfort when theamount of work is overwhelming and would rather rest when
the workload is manageable.

To illustrate, consider an employee experiencing a headache.
After a few hours, the headache may either have gotten worse
or better. In both cases, presenteeism is likely to be reduced
as either the employee stops working due to a continued
prevalence of the health complaint (absenteeism) or
continues working as the experience of ill-health has passed.

SPILLOVER EFFECT
Engaging in presenteeism may help employees in achieving
their goal for the day, but more often than not it has a spillover
effect. Most human beings have a fixed reserve of selfregulation and self-control for a given period of time. And it isuncommon for an average human to have an infinite amountof willpower.
When engaging in presenteeism employees are forced toreach deep into the reserve of self-regulation and deplete
most of their resources. They use the resources to refrain fromfocusing on and/or distracting from ailments and tending totheir complaints by taking breaks or contacting the doctor.
What follows this day of self-regulation and suffering is
usual absenteeism or a day of mediocre productivity sincepresenteeism usually spills over to the next working day. Even
though the recovery process might happen between thesedays, especially during sleeping hours, it is seldom complete
and effective.

Managers can also highlight that presenteeism is not
rewarded but in fact, disapproved. This is usually achieved
through flagging presenteeism behaviour when an employee
engages in it as well as walking the talk and setting example
themselves by not engaging in presenteeism.
In reality, however, the hands of the manager are usuallytied, having to abide by company policy and rules. In thiscase, managers can encourage employees to only workon inherently enjoyable work tasks when engaging inpresenteeism. As they say, where there is a will, there is a way.

EMPLOYEES AS FAMILY
The COVID-19 pandemic, despite the tragic losses it caused,came as a blessing in disguise for employees who had little
to no control over their presenteeism behaviour. The flexibility
to work from home, which is now likely to be a permanentfeature of the corporate world, has more or less effectively
addressed the problem of presenteeism.
However, to have a real and sustainable change, there
needs to be mutual acknowledgment between employees
and management (including managers) that this is a realissue. On their side, employees should be encouraged to
speak up about their problems and rights to avoid adverse
effects on their health – which in turn affects the companies'
productivity.
In a nutshell, management would do wise to treat theiremployees as family, especially in the current complex andchallenging situation and age. Various reports state that
employees are increasingly seeing work as a means to live
their lives and not the other way around. And if the job does
not offer flexibility, purpose, and compassionate leadership,companies might find it difficult to attract and retain
employees in the not so far future. ///© GECE33

BUSINESS, SOCIETYManagers should be vigilant about this since not all somatic
complaints are visible and apparent. They can offer targeted
support to employees who feel unwell by giving positive
feedback about their achievements. They can also instruct anemployee to stop working if it becomes evident that they are
engaging in presenteeism.

The Council on Business & Society

KEYS
TAKEAWAYS

 resenteeism, defined as the behavior
Pof attending work in a state of ill-healthis being labeled as an “800-Pound
Gorilla” due to the tremendous costs for
employees and organisations alike.
 ne of the major determinants of presenteeism,Othe researchers found, was the amountof work progress in the concerned day.
In order to answer the dreaded yet pointlessquestion of ‘what would my colleagues andmanager think’, most employees engage inpresenteeism especially when the workload
is too much to ‘prove their worth’.
 ecent studies have shown that presenteeismR
is a dynamic behaviour that can fluctuate
across shorter time frames such as days.
 ngaging in presenteeism may helpE
employees in achieving their goals for the
day but more often than not it has a spillover
effect on the effectiveness of the next day.
Managers
should highlight that presenteeism
is not rewarded but in fact, disapproved.
 he COVID-19 pandemic, even with all its
T
destruction, came as a blessing in disguisefor employees who had little to no control
over their presenteeism behaviour.

The Council on Business & Society

BUSINESS, SOCIETY© FLAMINGOIMAGES

However, this rich understanding does not contribute to
the fluctuations within the individual at a personal level.
For instance, an employee suffering from chronic healthcomplaints has to engage in presenteeism over the long term
to produce a performance that is comparable to that of an
employee who is less affected by such complaints.

For a long time, people in the scientific community assumed
that presenteeism is a relatively stable phenomenon that only
fluctuates over longer time frames such as months or years.
However, recent studies have shown that presenteeism isa dynamic behavior that can fluctuate across shorter timeframes such as days.

/ 51Fighting humanbias and prejudice
within AI systems
is important.

Artificial Intelligence –How worried should we be?
Samuel Varkey, Trinity Business
School winner of the CoBS
2022 student CSR article
competition, highlights threecore issues that shape people’s
misconceptions about AI –deepfake, prejudice and self-drivingcars – and which business andsociety must address.

A

rtificial Intelligence or AI is a term that is heard a lot
in today’s world. Many do not know exactly what it
actually is, but everyone knows that it is definitely
having an impact on our daily lives. In fact, AI is all around us.
The shows that Netflix recommends to you and your voiceassistants like Siri and Alexa are all examples of Artificial
Intelligence. In fact, Tesla’s self-driving car seems to be
the next AI revolution that will dominate the coming years(McFarland, 2021). However, with the rise of AI, there areseveral dangers and negative social impacts that can rise.
In this article, we will be looking at the most-pressing issues
that can rise due to AI and how we can solve them.

DEEP-FAKE IT TILL WE MAKE IT?

© DEVRIMB

We all may have seen the video of historical leaders singing
a song together as a joke (Bananamare, 2021). Or we may
have come across the video of former US President Barack
Obama ‘insulting’ the then current US President Donald
Trump (BuzzFeedVideo, 2018). What do both these videos
have in common? The answer – both videos combined
have approximately 20 million views. But there is anothercommonality between the two videos that is probably one of
the greatest dangers that humankind may face – Deepfake
technology.

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BUSINESS, SOCIETY

52 \

/ 53

© HAKULE

is indeed a reality. At the end of the day, AI algorithms arebuilt by humans, which leads to AI learning the biases andprejudices owned by their creators. One example of this is
PredPol, a software developed by the LAPD (Los Angeles
Police Department) to predict the areas where crime ismost likely to occur. The software predicted that crimes
are most likely to occur at areas where the majority of theresidents were non-white. Another AI software that showedbias and prejudice is COMPAS, an algorithm used in the US
to predict the likelihood of a criminal reoffending. However,this algorithm predicted a higher likelihood of reoffending
for African Americans and lesser for white men (Larson
et al., 2016). Certain AI systems have also proven to be
misogynistic. For example, gender recognition AI systems
showed an accuracy of 99% for white-skinned men whereas
the accuracy dropped to 35% for dark-skinned women(Timothy Revell, 2018). Further examples of misogyny by AI
occur during Google Image searches for the term ‘CEO’. Only
11% of the search results comprised pictures with women,
whereas 27% of CEOs in the US are female (Daniel Cossins,2018). Furthermore, a different study showed that men weremore likely to be shown in higher paying jobs than women(Datta et al., 2014).

Deepfake technology is defined as when one person’s faceor voice is replaced with another subject in order to create
a fake scenario (Sample, 2020). In the two above examples,none of the people are actually performing the actions as
the video shows. Barack Obama is not publicly ‘insulting’ his
successor and the current world leaders definitely did notcome together to sing a song. While the world initially foundthis funny, everyone was quick to point out the dangers ofsuch a technology.
According to a Wall Street Journal article, a German energy
firm paid £200,000 into a Hungarian bank account after being
called by a scammer who used deepfake to mimic the voiceof the company’s CEO (Catherine Stupp, 2019). In today’s
digital world, where media platforms like Instagram, TikTokand YouTube are dominating, deepfake technology sets a
dangerous precedent. What is even more dangerous is thatthese deepfake videos are extremely easy to make.

BUSINESS, SOCIETY

The Council on Business & Society

According to a Guardian article, it only takes a few easy steps
and software (which is readily available) to create deepfakes(Sample, 2020). Deepfake is a dangerous tool that cancreate havoc upon society. When Elon Musk smoked a joint
on a live show, Tesla’s stock price crashed (Neate & Wong,2018). In a world where such small actions can have severe
consequences, one can only imagine the threat that deepfake
technology brings.
So, how exactly can we counter deepfake? There are multiple
solutions for this and one of them is the use of technology.
The US Defence Advanced Research Projects Agency(DARPA)’s Media Forensics department awarded nonprofit research group SRI International three contracts forresearch into the best ways to automatically detect deepfakes(Bocetta, 2019). Furthermore, Researchers at the Universityof Albany discovered that analysing the blinking pattern of
the individuals can help identify if the video is a deepfake ornot (Li et al., 2018). However, according to Siwei Lyu, one of
the aforementioned researchers, media literacy is the mostimportant step to be able to combat this problem (Cartwright,2020). A lot of people are unaware of deepfake technology
and can be easily fooled. Therefore, efforts must be taken to
make people aware and instruct them to be more cautious
with the videos they view on a daily basis. An additional
technological solution that can be helpful in the case where
deepfake video gets past detection technology is reverse
searching (Engler, 2019). With the help of reverse searching,or reverse image search, people can upload images tounderstand the exact source of the image. This can be usedby people to understand the source of the media that they
consume. There is a gap existing in this space in that reverse
video searching is still not possible (Engler, 2019). Due to thefact that most deepfakes are videos, it is essential to build
technologies that can reverse search videos.

AI AND PREJUDICE
Racism is unfortunately still one of the problems thathumankind is yet to solve. But what if even the AI systems
built around us projected racism? This nightmare scenario

These examples prove that fighting human bias and prejudice
within AI systems is important, or else it can have serious
consequences. One solution to this is to include larger anddiverse datasets when training the algorithm (Harini, 2018).
This will enable the algorithm to learn from a diverse dataset
and as such make the model less biased. Another solution
is to ensure gender and racial diversity within the teamthat develops these algorithms. As mentioned earlier, thesealgorithms show prejudice due to the humans creating them.
Therefore, to solve this problem, we go to the source andensure that there is diversity within the team that develops
such algorithms. This may not fully eliminate the problem, but
it is a step closer to mitigate such bias from occurring. Finally,
the algorithms should be tested on diverse datasets in orderto ensure that there are no unnecessary prejudices occurring.
In the above example of the gender recognition system, had
the AI system been tested on people from multiple ethnicities,
rather than just on white-skinned men, the errors would havebeen identified and the system would not have gone into
production.

SELF-DRIVEN OR SELFDESTRUCTION?
As mentioned earlier, Tesla’s self-driving cars will mostprobably revolutionize the world in the coming few years.
However, as one may assume, driverless cars bring a lot of
new problems to solve. One CNN correspondent tried using
the self-driving feature of the Tesla car and the car nearlycrashed into a construction site, tried to turn into a stopped
truck and attempted to drive down the wrong side of the road
(McFarland, 2021). Furthermore, the vehicle also expressed a
lot of hesitancy, especially in heavy traffic. Another situationthat has not been solved yet with respect to self-driving cars istheir decision making. You may be familiar with the hypotheticalscenario set during ethics lectures where you need to kill 1
person or 20 people and students have to make a choice.

The Council on Business & Society

BUSINESS, SOCIETY

54 \This same scenario is given to the software of self-driving car– and it can lead to severe consequences. One study showsthat the self-driving car is trained to protect the driver rather
than reduce the overall casualties during a crash (GREG
KEENAN AUTO, 2017). One way to solve this problem is tomake self-driving cars ‘utilitarian’, where the car does notprioritize the life of the driver and tries to reduce the overall
damage. Another potential solution would be to allow thehuman to take control whenever necessary. For example,
if the road ahead is undergoing construction, the humanshould be able to gain control and navigate safely (Jonathan
O’Callaghan, 2020). Furthermore, the car should be trained indiverse environments, especially with unpredictable situations
like higher traffic etc. so that it can learn how to navigate
through such scenarios.
One important solution to combat the negatives of AI as awhole is to ensure correct ethics and standards. One way to
do this is to collaborate with the Government to create an
Office of AI, similar to what is happening in the UAE (Minevich,2020). The purpose of this office is to propose policies
to create an A.I.-friendly and safer ecosystem (Artificial
Intelligence Office, 2021).

© KOKOUUAI has a lot of revolutionary applications that can improve
our lives significantly. But if left unmonitored, it cancause unprecedented issues that will taint society fora long time. The most pressing issues are Deepfake
technology, Prejudiced AI, and Self-Driving cars. We haveproposed solutions for these problems, but as we all know,
implementing solutions is a challenge in itself. A common
misconception is that AI will take over the world. However,
if it does, the root cause of this will be humankind. Our
goal is to build AI that will support humankind and allow
the development of our planet and civilization, rather thansomething that will grow to destroy its own creator. ///TrinityBusiness
SchoolOne Year to
Change your Life
Full Time Trinity MBA
The Full Time Trinity MBA is an intensive projectbased management programme designed tocreate unique and global leaders. Accelerate
your current career path or transition to a new
industry, you will gain the knowledge, skills andnetwork to achieve your goals.
Delivered over one year based in the heart of
Dublin at Ireland’s premier business school.

→ Find out more, visit tcd.ie/business/mba

KEYS
TAKEAWAYS

or email us at thetrinitymba@tcd.ie eepfake Technology can create unprecedented challenges
Dand tacking it is one of the major AI challenges.
 ias and Prejudices occur in AI systems due to theBexisting bias of the researchers developing the AI.
 elf-driving cars are not yet ready to be launched on aS
full scale. Research must be conducted to improve its
safety and to eliminate prior programmed biases.
 onitoring AI systems by the government isMessential, similar to what is being done in UAE.
 arger and unbiased data sets must beLused while training and testing the AI.
 I Research and Development teams must have diversityAin order to mitigate biases occurring in the AI algorithms.

tcd.ie/business/mba
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Artificial Intelligence –How worried should we be?
Yulan Guan, School ofManagement Fudan runnerup in the 2022 CoBS student
CSR article competition,
explores the technical andethical arguments in the AI andimmortality issue, and reflects on thelessons to be learnt from Leonardo
da Vinci and Michelangelo.

Imagine a world in which your mind could live forever.
Uploading and archiving your mind to create a digital agent
which is integrated with AI technology. And the digital agent
can behave and think just like you do.
Researchers believe that this kind of digital immortality will bea feature of the near future (Kurzweil, 2006). Human beings’
wish to be immortal probably started a long time ago, whether
in eastern or western cultures. 2,200 years ago, Qin Shi Huang,
the first emperor of the Qin dynasty in Chinese history, wasdesperately obsessed with seeking an elixir which would have let
him live forever. The legendary King Arthur from British culturesought the Holy Grail to pursue his eternal youth. Nowadays,in a modern society in which digital immortality is offered by AI
technology, the question begs: shall we take it or not?

© MICROSTOCKHUB

Death may be thefairest procedure
for mankind inall societies.

THE HISTORY OF ARTIFICIALINTELLIGENCE
The term “Artificial Intelligence” was selected by Dr. John
McCarthy to name his research field at the Dartmouth
conference of 1956, regarded as the birth of AI (Buchanan,
2005). The assertion from that conference that “every aspectof learning or any other feature of intelligence can in principle
be so precisely described that a machine can be made to

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© BELTERZQUESTIONS FOR THE INDIVIDUALS

simulate it” (McCarthy, 1955: 13) opened the first generation ofgeneral AI research. Researchers at that time were optimistic
about developing in just a few decades a machine with human
intelligence. It was thought that HAL 9000 from the famousscience fiction and the movie 2001: A Space Odyssey, amachine with human intelligence or even exceeding human
intelligence, could be created by the year of 2001. However, itturned out that they underestimated the difficulties in making
things happen. The field of study then transformed into narrow
AI research without the intention of making machines withcognitive abilities, and in the 1990s achieved big commercial
success across industry by improving processes andincreasing efficiency. Nowadays, the general AI research wave
seems to be making a comeback with technologies like big
data, deep learning, and neural network paving the way. Topics
such as the artificial brain, brain simulation, and mind uploading
are increasingly discussed. And countries and companies are
putting a lot of money to launch projects in the field.
The US launched the Brain Initiative and the EU the Human
Brain Project both in 2013, followed by Japan’s Brain/MINDS
Project in 2014. The China Brain Project launched in 2018,
targets research into the neural basis of cognitive functions
and driving AI through computer simulation. A US company
called LIFENAUT allows people to upload their personal datafrom all kinds of sources in order to create a digital back-up of
their mind. LIFENAUT’s so-called mind uploading experimentis to test whether a software-based mind appears to have aconsciousness that is equivalent to that of its brain-based
person predecessor (Rothblatt, 2012: 141). If the hypothesis
is validated, it will be considered as the digital immortality ofhuman beings. Obviously, AI technology has brought lots oftechnical and economic benefits, but along with it come aplethora of legal, social and ethical issues, especially when AI isapplied to human immortality.
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QUESTIONS FOR THE WHOLE
SOCIETY
Can digital immortality be regarded as one human rightrequirement to be explicitly safeguarded and included in a
Universal Declaration of Human Rights? And can the rightto the pursuit of immortality be considered law by countries
in the same way as the right to the pursuit of Happiness in
the United States Declaration of Independence? Maybe theanswer is no. Based on current human knowledge, the truthis that every human being dies. For thousands of years, withthe development of technology, human lifespan has greatly
extended. But for technology to make people live forever,no matter what form of human immortality, means totallychanging the course of nature and cannot be regarded as anendowed human right.
Digital immortality achieved through AI technology will trigger
subsequent social and ethical problems. Data privacy, data
control and misuse, data bias and discrimination are issues
that have already occurred and which have led to legislation
and regulation. Should digital immortals be treated like humanbeings and granted social identities? Who will own personal
data after death – the heir or the AI company? People withpower and wealth swarming into countries allowing digitalimmortality may result in social instability. These questions
are related to ethics and the constitution of modern societies.
And the key solutions should be on a governance level.
First, digital immortality should be defined explicitly and theboundary of AI applications well-defined. Second, digitalimmortality should be considered in a broader context as
one part of building a community with a shared future formankind. Governance should be planned both nationally andinternationally.

Can AI substitute human intelligence? Will your digitalimmortal truthfully reflect the real you? Digital immortality
may result in human beings relying too much on AI andignoring the development of human potential. This is a great
threat to human intelligence and a generator of harm to thedevelopment of civilized society. Generally, a human being only
exploits less than 10% of his or her total intellectual capability.
There are very few people in history like Leonardo da Vinci
and Michelangelo, who developed more of their potential
during the High Renaissance and created great works driving
civilization. As a famous painter, Leonardo was also dubbed a
Master of Water and master of topographic anatomy. During
his life in Milan, he listed a total of 36 his talents in a resume toapply a job for Sforza, including science, technology, medicine,architecture, music and painting. Leonardo achieved thesetalents by curiosity, observation, and experiment – factorsthat have been neglected by modern human beings andprove difficult for digital immortals to acquire or simulate.
The greatness of Michelangelo derived from the philosophy
presented by his masterpieces, which can make people think
about life. He sculpted one of his best-known works the Pieta
at the age of 23.

After being famous early, competing with elder contemporary
Leonardo da Vinci, and facing death, Michelangelo gained
more and more thoughts and insights on life and started thejourney of going beyond himself at the age of 65. He sculpted
another three works for the Pieta until the end of his life at
the age of 88, showing his understanding and thinking aboutlife and death. There is reason to doubt that digital immortals
could not reflect Michelangelo because digital immortals
will not die. AI cannot substitute human intelligence. Its roleshould be a supplement and enhancement of it.

EFFICIENCY AND FAIRNESS IN A
SOCIETY
The emergence of new technologies is always fascinatingand exciting. New technology is a driving power for improvingsocial efficiency. We should embrace new technology all thetime while being cautious and careful with its application.
Policymakers play crucial roles in designing related
governance mechanisms to secure a “good AI society” (Cath,2017). For the time being, we don’t know when the singularity
will come. It may be near or far away. However, the social andethical consequences of digital immortality should be taken
into consideration right now. What we know for sure is that
not every human being will achieve digital immortality. Deathmay be the fairest procedure for mankind in all societies. ///KEYS
TAKEAWAYS I technology has brought lots of technicalAand economic benefits, but along come withlots of legal, social and ethical issues.
 I technology applying to digital immortality
Anaturally brings ethical issues related to theconstitution of modern societies. The key
solutions should be on a governance level,
where the boundary of AI applications should
be well-defined and digital immortality should
be considered under the framework of building
a community with a shared future for mankind.
 I cannot substitute human intelligence. Its
Arole should be a supplement and enhancementof human intelligence. Human beings should
focus on developing more of our potentials
instead of relying too much on AI.
© PITIPHOTHIVICHITThird, legislation and regulation should be developed to makeAI technology work for good in a society, where technologies
bring universal benefits to every person fairly. Last, legislation
and regulation should be updated with the emergence anddevelopment of every new technology, including changes inmoral preference.

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Embracing the Inevitable Digital Revolution:
Building A harmonious society with AI
The forthcoming digital
revolution is the key to both
the door of happiness andPandora's box. Dongdi Chen,
Warwick Business School
Runner-up in the CoBS 2022
student CSR article competition,
opens it all up.

H© KEVRON2001

It is vital that thedevelopment andapplication of
AI technologies
are shaped bya diverse rangeof voices.

ave you ever been shocked by benevolent idealsof AI in fantasy films, such as Star Wars C-3P0 &R2D2 and Wall-E, which reflect the hope, dreams,
and anticipation of AI? And whether you were surprisedthat a common purchase on Amazon platform could bringan amazing series of customized services, like extensive
recommendations catering to your preferences? These arejust two microcosms of AI-based functionalities in the era ofdigitalization, one of the most typical characteristics of the
21st century. Similar to the disruptive impacts of the Industrial
Revolution in the 18th century, the digital revolution has
exploited the power of computers to substitute, supplement
and amplify the routine mental tasks performed by humans(Makridakis, 2017) as well as seamlessly incorporating AI
into our daily lives, ranging from the management of social
networks (Gadek et al., 2018) to organizational decisionmaking behaviours (Jarrahi, 2018), especially making
predictions for sophisticated social or natural phenomena(Armstrong，2014).
In terms of data-based powerful intelligence and automation
capabilities, current research has reached an emerging
consensus that advanced digital tools may offer substantial
economic benefits, particularly boosting productivity
levels and elevating GDP growth trajectories through 24/7
automation capabilities and relatively precise decisions basedon data analysis, which frees workers from monotonousjobs and makes them gain unprecedented opportunities to

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enjoy a higher quality of lives. However, as a coin has two
faces, novel social issues arise with the widespread use of AI& automation robots too, and the most prominent problems
that should be taken into account can be attributed to thefollowing three categories: Unemployment and Income
Equality, Cybersecurity and Privacy, and Ethical Issues
represented by bias and discrimination. In the following
paragraphs, we will analyze these sources respectively tofigure out their interrelations and causes respectively, basedon which we will then carry on exploring effective methods
to properly deal with the emerging social problems as well as
ensure smooth digital transformation from the perspectivesof corporate and government governance.

ANALYSIS OF SOCIO-TECHNICALPROBLEMS: THE CONFLICT OF
HUMAN-MACHINE INTERACTIONS
AND MISMATCH BETWEENTECHNOLOGIES AND SOCIALINSTITUTIONS.
The first two industrial revolutions in human history, whether
the Age of Steam or the Age of Electricity, unexceptionally
took at least 200 years to promote the transformation ofhuman society, during which people had gradually formed an
entirely novel way of working and living with steam engines
as well as electricity (Peters, 2020). However, in recent years,
the rapid development of digital technologies represented by
AI with strong flexibility and disruptive power have generated
novel definitions of work, organization, and lifestyle, which
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caused a mismatch between digital technologies and current
inflexible social institutions that developed and stayed in theindustrial age – thus causing negative social problems andconflict of human-machine interactions.
Among three categories of social impacts, the first andforemost one is massive technical unemployment andaccompanying income inequality. As mentioned, a majorityof the work required by the economy of the industrial age isfundamentally routine (Ford, 2013). Due to its repetitivenessand low level of skill, an increasing number of labour-intensive
agricultural and manufacturing industries have graduallyadopted automotive robots to engage in manual work andreplace lower-skilled labour to reduce labour costs (Goyal
and Aneja, 2020)To considerable extent this results in higher
unemployment and disruptive changes in existing-working
position. For instance, the U.S and Japan installed one
automatic vending machine for every 50 labourers to savehuman power (DecResearch, 2020). Moreover, accompanying
the change in work is a worsening income distribution
structure and income inequality. As companies continue todisplace workers with robots and automatic machines ona large scale, increasing demand and limited talent supply
significantly enhance the income level of high-tech talents
and simultaneously widen the income gap between highand-medium-skill and low-tech workers (Schang and Almirall,
2021).
Moreover, if the intelligent functions of AI are usedunreasonably and illegally, they will exacerbate existing social
problems and lead to devastating consequences, especiallyOn the other hand, just as technically sound cloning
technology cannot pass the test of social ethics, AI
unexceptionally raises ethical concerns owing to the bias
and discrimination in machine learning algorithms. In recent
years, gender and racial discrimination have constantly
emerged in several popular AI application fields, such as
AI-added resume screening, facial recognition, and criminal
assessment of the judicial systems. Particularly, a typicalexample concerned is that the news feed algorithm ofFacebook had distributed deliberate fake news stories andmisinformation that unfairly biased voters against Hillary
Clinton and influenced the election outcome in favour of
Donald Trump while increasing societal divisions among
Americans through “filter bubbles” (Isaac, 2016). As such,
because these algorithms are designed by conscious
humans, they will inevitably, and often inadvertently, reflectsocietal values, biases, and discriminatory behavior.

framework to seek an effective human-machine collaboration
mechanism. Here, human and digital workers play to eachother’s strengths and cover their weakness simultaneously,
instead of rudely replacing human labor with AI. In addition,enterprises should provide employees with necessary AI
skills training and sufficient education programs, so that
employees can build trust and recognition of AI based on
their full understanding of AI. On the other hand, for high-risk
occupations affected by automation, such as manufacturing,
the government should proactively invest in diverse typesof vocational training programs, thus developing varietiesof useful courses for workers to help them easily adapt
themselves to new technological job positions. Finally,
firms should assume corporate social responsibility actively
within the framework of social security policies to offer
material aid to groups or communities affected by temporary
unemployment, thereby reducing the income gap to a certain
extent and supporting social stability during businesses’
digital transformation (Siegrist and Cvetkovich, 2000).

SOLUTIONS: BUILDING A BETTERWORLD WITH AI REQUIRESTHE CONCERTED EFFORTS OF
ENTERPRISES AND GOVERNMENTAs Elon (2021) pointed out, ‘’AI doesn’t have to be evil todestroy humanity if AI has a goal and humanity just happens
to come in the way’’. It is the same case when it comes to AI
or even nuclear weapons, the fact being that technology itself
is neither good nor evil. Overall, the above social problems are
not caused by AI itself but are rooted in the improper use of
AI and the conflict between innovative technologies and thecurrent social system. Therefore, the key idea of mitigatingthese negative effects lies in the combination of two main
strategies: the formulation of AI usage norms and theregulation of human-machine relationships, which require thejoint participation of enterprises and government.
Firstly, AI-induced technical unemployment could be
categorized as structural unemployment, the solution towhich lies in the promotion of knowledge sharing and humanmachine interaction by enterprises and the employment
promotion policies of the government. On the one hand,
if a firm is thinking of adopting AI to reduce costs in the
future, the leadership term should take an overall view ofcurrent working positions within the organization's strategic© BO1982© POSTERIORI

in the areas of Cybersecurity and social ethics through whichpeople easily recognize the pain points of society. On the
one hand, a social network is one of the vital features of thenovel ecology of work in the digital era, of which cybersecurity
and core interaction are two interrelated sides. With the
emergence of digital platforms and cloud technologies withpowerful storage capabilities, the information and knowledge
sharing of B2B, B2C, and C2C have shown exponential growth(Vuori and Okkonen, 2012). In this case, a large number ofpotential hackers have attempted to utilize AI to identify
vulnerabilities existing in the network and then carry out
data theft and privacy violations. This not only violates theinterests of individuals and organizations but also worsens
the instability of the network society, especially within widelyused software systems like Zoom, thus making AI-enabledcybersecurity a social issue.

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64 \The Full-time MBA
Moreover, in addressing AI-enabled cybersecurity and privacy
issues, technical support from enterprise and the social
regulation guarantee are also the key. Interestingly, AI is botha facilitator for cyberattacks and a dedicated supporter for
effective cyber defence. In terms of efficient data processing
capability and ongoing learning features of AI, firms could
not only identify unknown threats and existing vulnerabilities
through automatic network tracing and research, but also
secure authentication anytime a potential user attempts tolog into their accounts via AI’s facial recognition or fingerprint
scanners functionalities (Daniel, 2021). However, the smooth
operation of sustainably effective cybersecurity programs
is inseparable from external institutional guarantees, which
necessitates AI and Privacy Protection legislation. The
government should promptly enact and modify laws andregulations documents to offer external support for network
security and privacy protection that caters to the needs ofdata and privacy protection.
Furthermore, as mentioned above, AI ethics arefundamentally derived from the ethics of creators in thecontext of organizational and social ethics, and, like amirror, the technologies reflect a narrow and biased visionof current society. Therefore, to solve the problem of social
prejudice and discrimination caused by AI, eliminating
discrimination in the code design of machine learningalgorithms is a direct technical measure from the enterpriseperspectives. Meanwhile, the elimination of gender and racial
discrimination through moral education and regulations
is a more critical solution to the root cause. On the one
hand, enterprises should strengthen self-regulation to
standardize organizational ethics, especially carryingout strict supervision in the design and application of AI
technologies, thus making these digital workers comply tobasic business ethics: fairness and inclusivity; transparency,
privacy, and interoperability; collaboration between people
and AI systems; and the trustworthiness, reliability, androbustness of the technology (Parloff, 2016). On the other
hand, anti-discrimination education and legal norms should
be promoted actively at the level of government to containany conscious or unconscious discriminatory behaviour, andthus enable each individual to equally thrive in society.

HOW TO BETTER EMBRACE CHANGESIS THE MOST SIGNIFICANT LESSON AI
WILL TEACH US
In conclusion, the societal issues raised by AI illustrate
an important truth: it is vital that the development andapplication of AI technologies are shaped by a diverse
range of voices including social scientists, ethicists,
philosophers, economists, lawyers, and policymakers in
addition to engineers and corporations (Knight Foundation,2017). Embracing disruptive technologies, together withallowing social systems and mindsets to actively adapt tosuch changes, could maximize the dividends brought bytransformation to some degree. Moreover, this may be thecrucial lesson that AI brings us in addition to technologicalassistance. ///BUSINESS, SOCIETY

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For theChangeMakersKEYS
TAKEAWAYS

 s the core technology of the digital age, AI has
A
greatly promoted economic development andliberated people with its data-based powerfulintelligence and automation capabilities.
 nemployment and Income Equality, Cybersecurity andU
Privacy, Ethic Issues represented by bias and discrimination
are three prominent social issues brought about by AI.
 uman-machine collaboration and AI skills training at theHenterprise level along with employment protection andpromotion policies at the government level are short-term
feasible solutions to alleviate technical unemployment.
In response to cyber security and privacy violations, thegovernment needs to proactively take legal measures toassist enterprises’ AI-based cyber defence systems.
In order to eliminate AI bias and discrimination,enterprises should carry out strict supervision in thedesign and application of AI technologies according
to business ethics and government regulations.
 he harmonious coexistence of AI and societyTrequires participation of a wide range of social
entities in the development and application of AI.

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you need to transform your careerin just one year.
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/ 67

AI and its Problems –An unavoidable reality or a dystopia?
David Santos, IE Business School
BBA student finalist in the
CoBS 2022 student CSR article
competition, clears the mist on
AI and contends that legislation,
education and setting society’svalues have a vital role to play.

F

rom Alan Turing’s paper “Can machines think?” written
in 1950 until present time, AI has experienced an
exponential and vertiginous evolution. AI went fromprogramming a computer to able to play chess in 1957 toonline assistants like Siri or Alexa integrated into our phones.
And the truth is, AI has not hit the ceiling yet and we will notstop witnessing the countless disruptive possibilities yet tocome.

© GREMLIN

It is important toraise awarenessabout theupsides anddownsides thatnew technologies
could have.

Interacting with AI technology in devices in our daily life ismore common than ever, even if we do not notice it. Have you
ever thought about how Netflix can recommend you the best
choices for your taste? Or how social media tailors content
to submerge you in their platforms for as long as possible?
All these examples are part of how AI has been gradually
introduced into our lives. This undeniable increased use of it
has provoked the rise of ethical and social concerns regarding
the implementation and use of AI. Can AI turn our lives intoa dystopian science-fiction movie or it is just the worst ofomens? And if that were the case, how could we tackle thatsituation? This article aims to answer these questions.

RIGHT HERE, RIGHT NOW
Knowing where AI is at the moment and where can it go is
the key to identifying the potential social negative impactthat it can cause. Artificial Intelligence has not deployed
its fullest potential yet. To understand where AI is at thecurrent moment and where it can be in a (not so distant)future, differentiation among the different types of AI is needed.

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CAN ANYTHING GO WRONG?

© ANNA GONTAREK-JANICKA

In 2018, Elon University and Pew Research Center published theresults of a survey that asked technology experts among others
if people would be better off or not in 2030 with the presence of
AI. Results were as follows; 63% of respondents answered thatpeople’s lives will be improved thanks to AI while the remaining
37% answered just the opposite (Anderson et al., 2018).

There are four types of AI sorted into two different groups: themachines that we have already created and the machines thathave not been built yet.
The first group, the one composed of the machines that wealready have, is made up of reactive machines and limited
memory machines. Reactive machines execute specific actions– the computer playing chess, for instance, receiving stimulus
from a player, and the computer responding with the mostsuitable options. Limited memory machines are those capableof performing determined actions after collecting data andmaking predictions that will enable them to respond (Hintze,2016). Self-driving cars are the flagship example of this type ofAI, which can already be seen on roads using sensors to collectdata regarding current traffic, road limitations, and other vehicles.
All this information collected by self-driving cars is stored for alimited amount of time. It is transient, as opposed to the humanexperience of driving which gradually improves.
The second group, composed of machines that do not yet exist,
is divided into the theory of mind and self-awareness, which areconcepts that have not been developed as of now. The theoryof mind attempts to aid machines to understand the fact thatliving things have feelings and emotions, stating that there will
be a moment in which machines will be able to identify other’sthoughts. This would imply that machines could adjust their
behavior and the way they interact with others depending on
what they perceive from around them. The last step for Artificial
Intelligence after having implemented the theory of mind concept
to machines, and perhaps the potentially most dangerous one,is self-awareness. Self-awareness consists of providing humanawareness to a machine, a more advanced consciousness
than the one explained in the theory of mind. This advanced
consciousness would mean for a machine to be given selfawareness of itself, being aware of its own processed emotions
while understanding external stimuli and the emotions involvedin them (Hintze, 2016).
It is undeniable that AI has gradually contributed to theimprovement of our welfare up to the present. For instance,
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What AI can offer so far has been proven during the last years,
not only during the pandemic but also contributing to theachievement of the Sustainable Development Goals (SDGs),
among other examples. In this sense, AI has enabled thecreation of projects related to the aim of advancing into a moresustainable model of cities by reducing waste or increasing
the efficiency of processes like commuting (Gupta et al.,2022). Without any doubt, it is among the greatest disruptive
technologies of the last few years. Therefore, the question arises:
What can go wrong with AI?
Since AI is not completely developed, we cannot safely measure
to what extent AI could affect our lives. However, to the point
at which it has been developed, we can identify the impact thatis currently having on our society as well as on what could
result. Within the 37% of the survey respondents with a negative
perspective regarding AI, some experts like John Sniadowski
or Erik Brynjolfsson stated that AI, if not used correctly, would
contribute to a faster and more intense concentration of wealthand power. This was the most recurring problem found in thesurvey caused by the AI as it could provoke a massive increaseof inequality between the group of people that control thistechnology and the rest.
As it happens when implementing a disruptive technology, it isdifficult to identify in time the long-term hidden negatives. This
concern was seen after implementing the internet in our lives
when problems like internet addiction or information overload
appeared in our lives for the first time. When implementing newtechnology into our lives, the purpose is to make our lives easier.
AI is not an exception. It aims for making the world a better place
to live by reducing diseases, diminishing waste, ending inequality,
and improving our quality of life. Unfortunately, certain problems
can appear down the road, as has happened in the past.
Since the implementation of AI, many jobs have been replaced bymachines, making them outdated. Examples include customer
support robots or self-driving cars, replacing human assistantsand drivers respectively. Due to this technological shift, a fear of
losing your job and being replaced by a machine has appeared insociety.

Plus, AI has raised concerns about data privacy. To what extent
can companies know and control our data? Data has been
deemed the new currency of the Fourth Industrial Revolution,in which AI and Big Data play a key role. While you are reading
this article, a huge amount of data is being collected by cookies
and then processed by multiple companies and servers fordifferent sorts of purposes. Implementing AI in our world implies
assuming that we will have to share our data as it works handin hand with big data. However, it does not mean that all is fair.
There have to be limits that aim to protect the user and theirpersonal information.

WE ARE NOT HEADING FOR A
DYSTOPIA
Even though we cannot draw an accurate picture of how the
future will be, we can try to do so in the near future on the basisof what we have so far. Artificial Intelligence has been createdby humans with the objective of improving our day-to-day lives.
Hence, if it is created by humans, we should always have control
over it to ensure that its objective is always met and it is not used
for other purposes. Understanding how far AI could go and its
wide-ranging possibilities demonstrate that at a certain point it
could exceed human intelligence and capabilities.
To avoid this dark scenario and the problems it would entail,we need to ensure that technology matches society’s values inevery process it is required. But it is not also a matter of knowing
those values, it is all about spreading them amongst society as
well as providing such society with a critical and ethical sense.
Bryan Johnson, founder and CEO of Kernel, said in his interview
for Pew Research’s survey that the solution lies in prioritizing
human quality of life over human improvement. Failing to do sowould lead to human irrelevance as fast progress would be overindividualized welfare.
As said before, to prevent a small group of people who owns
this technology concentrating more power and wealth, we, as asociety, have to establish and clarify our values. AI is a powerful
technology that should only be used for fair purposes that
legitimize its use. The government then has to play a key rolein raising awareness from the beginning, integrating ethics andtechnology-awareness programs in schools. If people know whentechnology is being used unfairly, they will be able to identify suchconduct and stop it on time.
Regarding the growing fear of job loss, the disappearance of
certain jobs is inevitable, but that does not mean that it is the endof the labor market as we know it. According to Gartner Inc, the AI
industry will create more jobs than it eliminates, with more than
2 million new job positions in 2025 (Loten, 2017). Therefore, thesolution is to acknowledge this shift in the labor market and adapt
our education systems so that they can teach the right skills.

purposes. Above all, users need to have full control of their data,
meaning that they could stop sharing it with firms and eliminate
their digital fingerprints. To ensure this, legislation needs to beprepared to face all types of issues regarding data policies sothat the user is protected in each step of the process.

A BRIGHT FUTURE
As a society, we need to take advantage of all the opportunities
that technology offers us. In this scenario, AI is a technologythat provides a wide variety of possibilities, some of them still
unimaginable. Not only that, it is our responsibility to use allthese new means for fair purposes to prevent bigger issues.
Unfortunately, despite the fair use of AI, problems like job loss,
wealth concentration, and data abuse could appear either way.
For this reason, it is important to raise awareness about theupsides and downsides that new technologies could have.
Governments that succeed in doing so will give society a betterchance to live together with AI and make the most of it. ///KEYS
TAKEAWAYS I has not developed its full potential yet.
A
In the upcoming years we will see thetheory of mind and self-aware machines.
 umans have created AI to improveH
our world and so far, it has achieved
great accomplishments
 roblems like concentration of wealth,P
job loss and data privacy issues
need to be addressed on time.
 he improvement of human’s lifeTshould be the priority at all times.
 egislation and education needLto be adapted to the current
technologies in order to be preparedto face potential problems
 I and big data are the engines of theA
fourth industrial revolution and will playa key role in the upcoming years.

New technologies have meant a very abrupt and fast change forus. For this reason, legislation has not been updated accordingly
and we face dangerous legal loopholes. The fourth industrial
revolution has to be accompanied by enforcement of regulationin order to protect the user and avoid increasing the inequality
gap. Companies using big data and artificial intelligence need
to be clear on how are they going to use data and for what

© NIKADA

during the recent pandemic the world suffered, AI enhanced theachievement of medical goals: reporting accurate informationand increasing the efficiency and the speed of the medical
processes and research efforts. Firstly, on a molecular scale, it
helped with vaccine discovery and testing. Secondly, on a clinicalscale, it contributed to hospital capacity planning, which was
clearly exceeded. Finally, on a societal scale, it offered reliable
forecasts and predictions of COVID-19 cases while fighting
against infodemiology, an information overload at anyone’s
fingertips (Bullock et al., 2020).

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Sweeping with the Enemy: Coopetition
as a strategy for a better world
Doctor Jako Volschenk,
senior lecturer in Strategy &Sustainability at Stellenbosch
Business School, recently
published a study on “The value
implications of coopetition”. We
interviewed him for the CoBS Mag.
Sweeping with the Enemy: Coopetition as a strategy
for a better world by Dr Jako Volschenk with kindacknowledgements to Prof. Adrian Zicari. Related work: The
Value Implications of Coopetition included in the Routledge
Companion to Coopetition Strategies.

The CoBS: Dr. Volschenk, in your study you present theidea of coopetition in an attractive light. How would you
distinguish coopetition from collusion? How to make sure it is
not the case?
Dr. Jako Volschenk: One could see coopetition and collusion
as respectively the virtuous and non-virtuous sides ofthe same phenomenon. In fact, some authors argue thatwhile some level of competition remains, one should see
collaboration as coopetition rather than collusion.

© ZORAN MIRCETIC

When it comesto solving
environmental orsocial issues ofmutual interest,
my competitor isalso often my ally.

Moreover, there are a number of characteristics that one canuse to identify collusion versus competition. For instance,collusion usually requires a level of concealment. Thus,
members of cartels often have to deal with the trade-off
between secrecy and efficiency. There are other traits that
we could discuss, but in short – I would ask whether thecollaboration between competitors is for the benefit or the
detriment of consumers.
Collusion usually entails either an agreement aroundgeographic areas where partners may agree not to operate,or to agree on prices (i.e. price-fixing) in some other cases.
This means that consumers are robbed from choice in a

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Specifically, when it comes to solving environmental or social
issues of mutual interest, my competitor is also often myally. In South Africa, the fishing companies on the West coastof the country collaborate to protect the fishing resourcesby helping government with determining and enforcingof quotas. They do this for the protection of their own
interest, but they also realise that they would not be able toaccomplish this on their own. We could use this as evidence
that the tragedy of the commons can be avoided by the“citizens” of the industry when they collaborate.
Another example is the Glass Recycling Company in South
Africa, that acts as an industry body to raise awarenessamongst people about glass recycling. By raising publicknowledge about recycling they ultimately reduce thecost of glass for the industry as well as provide a sourceof legitimacy for glass users. Again this is an example ofindustry players collaborating around a common concern.
The CoBS: At the very beginning of the chapter, you put
forward the case of a wine bottling company that wanted toreuse empty bottles. Could you tell us how it went? How did
they create value for themselves, for competitors, and forsociety?

© PROSTOCK-STUDIO

Dr. Jako Volschenk: Sadly, that example was neversuccessful. It did however stimulate my own thinking aroundwhat could be done when industry players collaborate and it
did pave the way for my research in this area. In fact, it was
the frustration about the lack of progress that galvanized me
to investigate further.

specific region or they are robbed from a lower price, or evensometimes of quality. But this does not need to be the case.
For instance, when Toyota, Citroen and Renault worked
together to design a more fuel-efficient small car, consumers
benefited from a better product as well as a lower-cost
vehicle.

VALUING INTANGIBLES FOR OPTIMISEDDECISION-MAKING

One aspect that I find very interesting is that both collusionand coopetition often happen away from consumers. For
instance, it is usually not in the interest of companies like
Citroen, Toyota and Renault to tell consumers that they are
essentially buying the same vehicle. This would dilute thebrand value for each of these car companies. The same istrue for collusion – companies for obvious reasons would not
like it to be known that they work together.

Dr. Jako Volschenk: This question is continuously underfocus, not only in business schools, but also in industry. It
is an important question because unless we include otherforms of value in our decision-making we may be making
suboptimal decisions. Climate change is one of the biggest
market failures in the history of mankind because we failed tovalue the damage we do.

My own research, on the other hand, is focused on
how companies collaborate with competitors to solve
environmental problems of mutual interest. Quite often it isto the benefit of these companies to publicly announce theircollaboration in order to maximize brand image benefits.
Take environmental certifications like the Marine StewardshipCouncil as an example. It is an initiative of a number ofcompanies in the fishing industry working together to protect
the reputation of the industry. There would be no point in
hiding the collaboration from consumers.

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The CoBS: You point to the creation of other forms of value,
not only financial. How would you estimate those forms ofvalue?

How do we value one litre of recycled water? For someone
living next to a clean mountain stream that water may be
worth very little, whereas that water may be priceless tosomeone in a region that is suffering from heavy oil pollution
in their drinking water. How do we even start measuring
quality of life? The same ambiguity in value is present when
we value good health and the happiness of a community.
Furthermore, when it comes to environmental value weshould admit that nature has value – even if there is no-one
counting. We are unfortunately prone to think of nature onlyin terms of anthropogenic value. The objective is not to put
value on all these different categories but to acknowledge
their existence in our decision-making.

Besides, a litre of clean recycled water could protect the
reputation of a mining company in the same oil polluted
region and hence it can be valued to some extent.

I do believe there is scope for such an initiative still, butvested interests and poor reverse logistics hamper the idea.
Fortunately, 80% of glass in South Africa is reverted awayfrom landfills, and ultimately find their way back to the glass
producers. ///Having said all that, whether companies should reduce theirenvironmental impact is unquestionable from an ethical pointof view. But I believe the corporate world will act much quicker
if we can show the value of those actions.

COMPETITORS AS ALLIES INRESPONSIBLE BUSINESSThe CoBS: You raise the issue of stakeholder salience (i.e.
who the stakeholders are). Particularly, you emphasise therole of competitors as stakeholders. This is unusual! Could
you please explain this interesting point?
Dr. Jako Volschenk: I’m happy you noticed this aspect in myresearch. In an ever-more complex world our competitors
are often also our customers. Take for instance Apple andSamsung and how they both collaborate and compete witheach other.
I believe we are in a post-competition era. While competition
brought us more efficiency, lower prices and choice,collaboration with competitors can further deliver on these.
Furthermore, there are problems that we are unable to solveon our own.

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KEYS
TAKEAWAYS ollaboration should be seen asCcoopetition rather than collusion.
 ollusion usually requires concealment. In termsCof coopetition, the question should be asked:
Is collaboration between competitors for the
benefit or the detriment of consumers?
I n an ever-more complex world our competitors are often
also our customers (for example, Apple and Samsung
both collaborate and compete with each other.
 e are in a post-competition era: competition brought us
Wmore efficiency, lower prices and choice. Collaboration
with competitors can further deliver on these.

Choose your journey
towards responsible
leadership.

● W hen it comes to solving environmental or social issuesof mutual interest, my competitor is also often my ally. In
South Africa, the fishing companies on the West coast of
the country collaborate to protect resources by helping
government with determining and enforcing of quotas.
 he tragedy of the commons can be avoided by theT“citizens” of the industry when they collaborate.
 owever, vested interests and poor reverse
Hlogistics still hamper the idea of coopetition.

Saara Hamunyela, alumnus

The world is fraught with challenges and an abundance of potential to choose
a more desirable future of all. Against a backdrop of climate change, inequality,
and the struggle against gender-based violence, it is crucial that the business
you choose challenges you to change the world. This is why Stellenbosch
Business School is so strongly committed to delivering learning experiencesthat will help you to become a responsible leader.

Choose the future. Choose your Future.
Choose Stellenbosch Business School.

© MICROSTOCKHUB

Business Management and Administration | Development Finance | Future Studies
Management Coaching | Leadership Development | Project Management | Financial Planningusbcom@usb.ac.za | +27 (0) 21 918 4111 | www.usb.ac.za

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/ 77

The Potential Negative Impact of AI
and Subsequent Potential Solutions
Shunxin Dang, MSC Financial
Risk Management student
and Trinity Business School
Runner-up in the CoBS 2022
student CSR article competition,
explores artificial intelligence andthe potential areas of risk awaiting
society.

A

fter more than 60 years of development, AI has madesignificant progress in various fields such as big data,
unmanned driving and brain science. As artificial
intelligence appears more and more frequently in our life, thediscussion on artificial intelligence becomes more lively. It is
undeniable that the development of artificial intelligence has
indeed brought convenience to our lives, but at the same time,it has also triggered people’s thinking about the potential risks
of artificial intelligence.

Facial recognition
technology
misidentifies
black and Asianfaces 10 to 100
times more often
than white faces.

THE POTENTIAL NEGATIVE IMPACT
OF AI ON CHILDREN
With the development of AI voice, many children’s toys, homeaudio and other products have been further upgraded, adding
natural language dialogue interaction. Let’s think about if
these smart toys also "learning" when young children arelearning to speak. What will happen?

© WARCHI

Do children’s toys, as well as home audio, collect data,
analyze children’s learning style, speech habits and family
information? Will collected data and information be directed tothe children’s clothing industry, snack industry or toy industry?
Will these industries analyze and evaluate the information theycollect and target ads to families with children? And at thistime, are toys still just toys, or toys that become a sounding
board for the development of enterprises?

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More imaginatively, in addition to potentially monetizing theinformation they gather, the information gathered mightalso turn the toy into a basis for bias. If intelligent toys pushinformation such as children’s learning style and growth
speed to the education department, will schools and teachersclassify students’ family background and learning ability
before children enter school, and will they set new admission
requirements? Will we one day start to deliberately curry favorwith artificial intelligence?

THE POTENTIAL NEGATIVE IMPACT
OF AI ON ADULTS
The rapid development of artificial intelligence in the past
decade has benefited from the human desire to "replacelabor" with artificial intelligence. Now that AI is deeply
embedded in every part of the supply chain, from customer
preference analysis and market analysis to cargo sortingand delivery, big data analytics and unmanned technologies
have "worked" and humans’ jobs have been taken by it.
The World Economic Forum mentioned in The Futureof Jobs Report 2020 (2020) that AI will replace
85 million Jobs around The World in 2025. With
the development of artificial intelligence, we
finally realize the dream of freeing our hands,
and at the same time, we also face the added"welfare" of unemployment.

THE POTENTIAL NEGATIVEIMPACT OF AI ON THE AGED© THOMASVOGEL

Even the elderly are not immune to thenegative effects of artificial intelligence.
Undeniably, digital endowment can monitor
some of the physical indicators of the elderly,
ensure their health (especially those living
alone), and can replace their children toaccompany them. However, the over-relianceof the elderly on artificial intelligence is also
worth considering.

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When the aged rely too much on robots andhave too much trust in them, or even regard
them as a substitute for interpersonalcommunication, their expectations rise –perhaps too high. Technical glitches, aswell as understanding the technicalities
of using AI-equipped machines, willundoubtedly pose a problem for older
citizens.

POTENTIAL RISK ANALYSIS
Applying the above issues posed by the development ofartificial intelligence to people of different ages, sorting themout we find that the so-called risks can be roughly divided into
the following four categories: privacy, prejudice, employment
and ethics.
The development of artificial intelligence has obviously
infringed upon privacy. The monitoring of electronic devices
and the directional push of big data have appeared in ourlives. Indeed, the problem of bias brought about by artificial
intelligence is not far away. The National Institute of Standards
and Technology Report notes that most facial recognition
algorithms exhibit bias. Facial recognition technology
misidentifies black and Asian faces 10 to 100 times more
often than white faces, with women more likely to be mistaken
than men.
It is inevitable that some jobs will disappear as a result of thedevelopment of artificial intelligence. When machine learning,mechanical automation and other fields gradually develop
and improve, related jobs will be replaced by tireless artificial
intelligence. Moral and ethical issues have been the topic ofdiscussion in recent decades. These are not only limited tothe aged, but also reflect in a variety of human emotions, withmovies related to it emerging in an endless stream. Beautiful
robots in Ex Machina become tools for satisfying carnal
desires; In A.I. Artificial Intelligence, robots are actually the
resurrection of dead relatives and guide people to escape fromdeath. The hero in Her uses his virtual girlfriend to escapenormal interpersonal communication in reality. Although thefilm is fictional, the moral, ethical and emotional issues raisedby AI reflected in these films do have a potential impact.

PRECAUTIONARY MEASURESIn response to the issue of privacy disclosure, theinternational community should formulate a reasonable andtransparent AI application management report as soon as
possible, taking into account the opinions of enterprises,
governments, civil society organizations, internationalorganizations and scholars. The report should clarify thelimits on information collected by AI and the specific uses of
the information collected. At the same time, countries should
improve their legal measures according to their national
conditions, formulate clear punishment measures for privacy
trafficking and information abuse, strengthen governance,and promote the protection of human rights through the ruleof law.

In view of the potential wave of unemployment engendered,
the government should carry out market survey and forecast
as soon as possible, monitor the total number of unemployedpeople, improve the social welfare security system of
unemployed people, and in addition actively develop new
industries and create more new jobs to ease the pressure on
the job market.
To address moral and ethical issues, governments should
provide a learning platform for their citizens to receive
AI-related education and help them adapt mentally andemotionally to the development of artificial intelligence.
It should also be clear that AI must not be given any
autonomous ability to harm, destroy or deceive humans. ///KEYS
TAKEAWAYS I may monitor conversations in families, including but notAlimited to children’s growth process, personal preferences
and other information, resulting in privacy leakage.
 I may lose its impartiality due to data bias,A
personal bias, technical errors and so on.
 I may cause original jobs to disappear,A
causing a wave of unemployment.
 I may hurt the feelings of elderly people livingA
alone, raising moral and ethical issues.
 o address the potential risk caused by AI, theTgovernment should convene representatives of allparties to work out a reasonable, fair, transparent
and effective AI management plan as soon as
possible, and improve relevant legal documents.
In order to maintain social stability and reduce thenumber of unemployed people, market research should
be carried out in time in the early stage to estimate
the number of unemployed, and actively develop new
occupations, improve the social welfare of unemployedpeople, and reduce unstable social factors.

To address the problem of bias, development teams should
try to fully understand the data source when writing the
program to ensure that the data itself is fair and reasonable.
The development team itself should also pay attention tobias and be proactive in improving data when it is skewed.
If necessary, international cooperation can be considered tocarry out mutual supervision or multiple supervision.

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/ 812022: A Social Odyssey
Prateek Jha, ESSEC Business
School MiM student, and finalist
in the CoBS 2022 student CSR
article competition, contends
that business schools canprovide a unique contribution tobuilding back better post-Covid andwinning the battle against social
vulnerability.
“Wars of nations are fought
to change maps. But wars of poverty
are fought to map change.”

M© SANJERIIt is the need of thehour that businessschools encourage
and incentivize
creating more andmore startups
that work to bringsocial impact.

uhammad Ali shuffled around simple words with thisquote but left an upsetting but powerful remark on thestate of the world, which is even more relevant today.
Any large-scale disaster has the appalling potential to severely
change the state of a country and introduce a ginormous scaleof ‘external stresses’. The Covid pandemic has had far-reachingconsequences, not only drastically affecting the global economy,
but also challenging the perseverance and mental strength of allon this planet. It has unexpectedly weakened our very foundation,
making us susceptible to increased suffering and economic
losses as a global nation. As we distantly point towards the lightat the end of the tunnel, there are many who have not been as
fortunate. The past couple of years have left people economically,
mentally, and especially socially vulnerable. The battle against
the pandemic has been that of humanity as a whole. Our
responsibility is to not leave behind any segment of society,especially those which might have now become too fatigued toeven ask for our help. This begs the question: what can businessschools, with their ample resources and concentration of brightminds, do in order to address the situation?

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These entrepreneurial labs can even promote smaller
enterprises or organisations which are not necessarily started
with an aim of becoming a full-fledged company but with amotive of bringing a small change. These need to be morein terms of quantity and address micro-issues that cancollectively bring a larger impact.
They can mobilise resources, as well as employ a large
number of people who are now without jobs due to thepandemic. Overall, these social enterprises built by businessschool students, will have an innovative and modern
approach to the issues of social vulnerability and poverty inthe community by working together with big actors such as
rich enterprises and government organisations.

SOME ARE MORE EQUAL THAN
OTHERS
Social vulnerability is one of the few dimensions ofvulnerability to which the community is a victim, especially
due to the long-lasting effects of the ongoing pandemic.
These can have repercussions such as abject poverty,social exclusion, and severe damage to mental health.
However, assessing root causes for variations in levels ofthese impacts is complex as they are a complex interplayof social interactions, communities, government policies,and culture. The social vulnerability index (SVI) has beena key indicator and a pragmatic tool to assess the impactof the Covid pandemic on respective populations. Recent
research in several countries has clearly shown a higher
SVI independently associated with higher Covid incidence.
“Certain populations (i.e. communities that are racialized,
have older age structures and/or lower socioeconomic
status) have been disproportionately impacted with greatermortality and morbidity, while also being under-resourced
to manage the pandemic response” (Source: Jasmine C.,
Melissa K., 2022). Upon further inspection, it is found thatkey factors that further complicate and multiply the situation
are socioeconomic status, housing condition, and minority
status. As the pandemic brutally enhances this disparity
within populations of rich and struggling economies alike,the need for immediate action increases. Business schools
emerge as central players in this turmoil as they are very wellequipped with academic, financial, professional, as well associal tools to bridge the gap and close this disparity. Thereis an apparent void in the social construct which needs to bemetamorphosed not just for the near future but in the larger
scheme of how humanity will operate in the next several
decades. To bring these revolutionary changes, individuals
with creative and innovative mindsets must be brought tothe forefront, and business schools can provide them withthe right tools and direction to ‘map this change’, as Ali
mentioned.

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TOO MANY COOKS SAVE THE BROT
Business schools must acknowledge their role andresponsibility as social entities to address this issue. To
take centre stage, these universities can help bridge the gap
between businesses, communities, and the government.
Business schools are evidently the intermediary between
communities and governments that can provide innovativeand contemporary solutions. With their resources andwidespread networks, it is very feasible for business schools
to mobilise resources in a prompt, efficient, and planned
manner. With a unique business-minded perspective, itis plausible that business schools can better identify key
stakeholders, as well as provide a clearer picture of the needs
and expectations of these stakeholders in the community.
Once they have broken down the problem and assessed theimpact of the pandemic, effective strategies can be brought
into place to help guide communities and governments alike.
These strategies should involve identifying access barriers
to the socially vulnerable section of the community andconsequently targeting them efficiently. This will be evenmore effective when business schools around the globe workin unison by solving the problem based on knowledge sharing
and collective research.
It is no surprise that business schools are hubs for inspired
innovations. These higher education institutions efficiently
provide the resources and entrepreneurial labs to build anorganisation from scratch. However, there isn’t much focus
or mass motivation to envision social enterprises at suchlabs. Business schools can provide incentives and build
motivations for such social enterprises from this grassroot
level. Social enterprises have a huge role to play in bringing
social impact, moulding public opinions and perspectives,and most importantly, influencing government laws andpolicies that directly affect the underprivileged. Therefore, itis the need of the hour that business schools encourage andincentivize creating more and more startups that work tobring social impact.

If we step further inside a business school, we get a glanceat how these students are indeed the leaders of tomorrowin the making. A clear responsibility arises for these
institutions to build leaders who are conscious of the needfor reducing social vulnerability and bringing a larger change
to the community. These students need to be mouldedwith the vision and innovative mindset to tackle more thanjust business problems. They need to inculcate the drive
to address social issues with a purpose and vision for the
longer future. These future leaders will spread out in diverse
industries with different responsibilities. It is important thatthey are conscious of existent social vulnerability so thatthey become the secondary source of knowledge for thecompanies they work in and inspire social change from there
onwards.

 he battle against the pandemic has been that of humanityT
as a whole, which calls for not leaving any section behind.
 ith brutally increasing economic disparity, businessW
schools emerge as central players as they are very
well equipped with academic, financial, professional,
as well as social tools to bridge the gap.
 ith a unique business-minded perspective,Wbusiness schools better identify key
stakeholders and their expectations.
 ocial enterprises bring social impact, mould public
S
opinions, and influence government laws and policies.
 ntrepreneurial labs at B-schools can promoteEsmaller organisations which need to be morein terms of quantity and address micro-issues
that can collectively bring a larger impact.
 usiness school students need to be moulded with theBvision and innovative drive for the longer future. They canplay a key role in lifting the local communities throughself-sustaining models by being actively involved withlocal investors, stakeholders, and government bodies.

These students can even play a key role in lifting the local
communities by being actively involved with local players,
such as local investors, wholesalers, and government
bodies. Consequently, they can come up with self-sustaining
models that can create temporary jobs much more quickly.
This will facilitate the communication of information from thecommunities to the governing bodies, who can bring change
at the policy level.

ONWARD AND UPWARD
Social entrepreneurship is becoming a business fad,but much slower than we would like. To bring together
all the actors involved, there needs to be rapid actionthat is free from bureaucracy and financial motives. An
effective, inspired, and socially motivated objective inculcatedin the core values of business schools has the potential tobring about a much larger impact than what each individual
actor is currently doing. By taking charge and acknowledging
their key role in this significant initiative, business schools
can create proper frameworks and lay down the pathfor future leaders. Addressing social vulnerability andpoverty is a long road and to ensure that the leaders formany more generations to come are well-equipped, social
entrepreneurship and innovative social strategies must
become the norm for their journey. ///© WARCHI© PAUL BRADBURY

GREAT POWERS, GREATRESPONSIBILITIESKEYSTAKEAWAYS

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/ 85Business, Concern and Combat
Response to Covid-19: Corporate
structures and social knowledge
The consequences of the Covid
pandemic have reached every
country in the world, causing
a huge rise in poverty andsocial vulnerability even inrich countries. What can Business
Schools do in order to address thissituation? Ruan dos Santos Ferreira,
FGV-EAESP Runner-up in the CoBS
2022 Student CSR competition,
explores.

The fact that the Covid-19 pandemic drastically affected
the social structures of every country is the world is notnews, mainly damaging those with less education and/or less financial funds.

© SANJERIBusiness schools
all aroundthe world are
traditionallycrucial fora country’s
development
due to theirtransformativerole in education.

According to the annual report of UNECLAC (United Nations
Economic Commission for Latin America and the Caribbean)(2021), it is estimated that there has been an increaseof 200 million people under the poverty line. In Brazil, asignificant part of the population has lost their jobs and are
now working informally, while the other part do not even havethe means to work and acquire minor income.
A significant number of Brazilians are keeping their Welfare
through “Auxílio Brasil” (Brazil Aid), according to the Brazilian
Federal Government website. While the poorest and the
middle class live in a shortage of resources, the richer classes
got even richer. Growing inequality is reaching brutal levels allover the planet.

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THE VALUE OF BUSINESS SCHOOLS© VICHOT

According to the official website of the business school“Pontifícia Universidade Católica do Rio Grande do Sul”
(Rio Grande do Sul’s Catholic University) (PUCRS) (2020),
institutions have tried to look for solutions in order to aid
companies amidst the Covid-19 pandemic. In an article
published by “El País” (2020) – it was stated that some
716,000 companies ended their activities in Brazil since
the beginning of the pandemic, as reported by the Brazilian
Institute of Geography and Statistics (IBGE – “Instituto
Brasileiro de Geografia e Estatística”). In addition, morethan 50% out of the 716,000 institutions that suffered fromthe repercussions of the pandemic had already suspended
activities since the beginning of the pandemic. As such,acknowledging the state of available financing, with noincome or profit, companies won´t be able to keep active.
Furthermore, the text argues that almost all of thosecompanies were small businesses, even further confirming
the financial logic for being able to maintain themselves
active in the market, which, unfortunately, lays waste any
company showing an inch of fragility, given the neoliberal
logic we live in.

One of the pieces of evidence of this is vaccine inequality
between nations. “The pandemic exposed and intensified theinequalities inside and between countries. On June 17th, 2021,
68 out of 100 people got vaccinated in Europe and in North
America, compared to less than 2 out of 100 in Sub-SaharanAfrica” (UN REPORT, 2021) – which clearly shows the big
inequality between countries and continents.
Beyond that, it is worth highlighting that social inequality
is far-reaching, impacting different sectors of society
such as education – indeed, students from public schools,
if compared to those of private schools, have suffered
more from the inequalities brought on by the Covid crisis.
According to a recent study of FGV EESP Clear (“Getúlio
Vargas Foundation´s School of Economics of São Paulo”),
ordered by the Lemann Foundation, “Education can recede
up to four years, due to the pandemic”. Newborns, children
and teenagers in social vulnerability are the most affected– specially in under-developed and poor countries, while inricher countries, such as China and the United States, thequality of the education has not receded so abundantly.

THE IMPACT OF COVID-19 IN
DEVELOPED AND UNDER-DEVELOPEDCOUNTRIES: DEEPENED INEQUALITIESAND CONSERVATION OF WEALTH?
According to a report published by The World Bank (2020),
the Covid-19 crisis deeply affects the inequalities between
rich and poor countries, and it is expected to keep active
through the following years. Nations that are not completelydeveloped will find it logically hard to finance and pay theirdebts, which, in turn, puts the welfare of their populations
at risk. Furthermore, clearly, poorer countries tend to keep
getting more vulnerable, while the richer ones, also due totheir credibility, will keep getting stronger while each scenario
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demands for quicker and more effective actions. Worldpowers such as the United States, China and Germany,
rapidly announced robust protective measures to slow themass contamination down on the beginning of the crisis,making it possible for the situation to be normalized, evenwith the peak of the pandemic. Moreover, even encountering
obstacles, these countries managed to build a robust combat
structure, which, to a certain level, reduced the social impacts
related to social inequality. However, poorer countries, suchas South Africa, struggled a lot more just to get the basics
such as vaccines and hospital beds. Furthermore, the lack offinancial support was very likely a cause of the deepening of
the vulnerabilities.

BUSINESS SCHOOLS AROUND THE
WORLD AND THE FIGHT AGAINST THE
PANDEMIC
Business schools all around the world are traditionally crucial
for the country’s development due to their transformativerole in education – hence challenges and opportunities
imposed by present, past, and future scenarios. The Getúlio
Vargas Foundation is an example of this. It is an institution
that, since 1944, has promoted actions to guarantee
good communication between corporations, society andgovernment, forming professional leaders in all sectors andlevels (nationally and globally). However, even though it hasa full working structure, similar to Harvard´s and Oxford´s,
this was not enough to limit the effects of the pandemic.
But despite not having typical government functions, withtime, they managed to adapt and even make their education
tactics better. As such, according to the “Exame” magazine(2021), the crisis turned this concept upside down, making
the institutions reassess their rules, in order to guaranteethat lectures and classes could keep happening despite thedifficult and unsure scenario.

From the beginning, the actions promoted and organizedby the business schools were fundamental, with many
companies even asking them for orientation. They werealready struggling to maintain their activities and did nothave the means to pay for strategic consultancies. Therefore,business schools around the world have the profile, theknowledge, and the infrastructure to collaborate with thesecompanies. As stated by Ian Davis (2005), the purpose of
a company is not only to maximize its profit, but also tohave a social awareness – this logic must also apply toschools, especially when it is related to a sector connected
to education, even considering that it is different whencompared to basic education.

HOW BUSINESS SCHOOLS CAN HELP
After the analysis and contextualization of the impacts
caused by the Covid-19 pandemic, as addressed earlier, it
is not news that the crisis drastically deepened inequalities,
leading millions into the poverty line – and mainly those withless access to education and who live in lower income andlower life quality countries. That being said, it is important tostate that business schools were, are, and will be importantto guarantee the maintenance and existence of companies
and, beyond that, the reduction of social inequalities. For
even though it is not characteristic of their implementationand formulation of public policy, dealing with different
stakeholders is one of their attributes. On that account, someactions that were carried out will be briefly assessed.
In order to clarify the great issue, initiatives for impact can be
developed and implemented: the use of laboratory-produced
technologies, for example; the practical application ofknowledge learned in the class – given that business schools
often have “junior companies”; mobilizing academics forstrategic consulting; investing in research, in order to expand
the knowledge of entrepreneurs, managers and employees;

mobilizing Congress to focus on motivations for businessschools. Furthermore, according to an article of “Folha de São
Paulo” (the São Paulo Paper) (2020), Jorge Paulo Lemannused his entrepreneurship program in Harvard to focus on thehardships brought on by the pandemic – Project having the
purpose of financing three Harvard students with US$ 10,000
each.
That being said, there are some lessons that can be learned
and that reside on the fact that business schools haveintellectual, human, and financial resources of their own
to be able to move a whole social structure. Furthermore,these schools form leadership alliances and partnerships,
capable of influencing heterogeneous groups. In this light, it
is fundamental to impose socially responsible guidelines on
people’s training and education. Beyond that, another lesson
can be taken into consideration: how these institutions areeven more powerful when they see that they have to help
other groups on the society, beyond the big corporations. And,in conclusion, business schools can easily help to work on
the foundations of public education, this in order to raise theaspirations of children and teenagers in social vulnerability.
And making it possible, later on, for this group to sociallyascend. ///KEYS
TAKEAWAYS
 he 2020-22 pandemic caused an increase of 200 millionTpeople under the poverty line (UNECLAC 2021 Report).
In Brazil, a significant part of the population has lost theirjobs and are now working informally. Others do not evenhave the means to work and acquire minor income.
 ocial inequality is far-reaching, impacting different sectors
Sof society such as education, with students from publicschools, if compared to those of private schools, suffering
more from inequalities brought on by the Covid crisis.
 usiness schools can play an important partB
in reducing social inequalities as they are
traditionally crucial for a country’s development
due to their transformative role in education.
In Brazil amidst the pandemic, business schools attempted
to provide solutions to aid small companies (some 716,000
companies in Brazil went under during the crisis).
 usiness schools can help reduce inequality by: the use ofBlaboratory-produced technologies; the practical applicationof knowledge in startups and junior consulting; mobilizing
academics for strategic consulting; investing in researchfor entrepreneurs, managers and employees; mobilizing
Congress to focus on motivations for business schools.

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Music Mastery – Innately Humanor Also Artificial?
Gabriel Menzies, IE Business
School Winner of the 2022 CoBS
student CSR article competition,
tunes into a little-explored areain the great debate over AI and
the future – that of music and how
Humankind’s relationship with it mightchange – or not.

M

an: “You are a clever imitation of life. Can a robot
write a symphony? Can a robot take a blank canvas
and turn it into a masterpiece?”

Robot: “Can you?”

BEYOND THE STEEL COLLAR WORKER
When discussing the rise of artificial intelligence, one of thebiggest topic points is the impact on the labour market. Jobs
are being automated at increasing rates, and AI will most
likely replace human workers by the hundred millions in the
coming decades.

© ALENGO

Humans will stillretain the capacity
and the desire tobe creative, even
if they know they
will never better
algorithms.

When we think about the type of jobs that AI will replace us
in, we tend to think about jobs that follow a strict process,often very repetitive. These jobs include warehouse workers,
retail workers, and other unskilled labour jobs. Furthermore,with the way that technology is advancing, it is also probablethat AI will outperform humans in highly skilled jobs such as
doctors, teachers, and even lawyers.
However, there is one job that never seems to come up in thisconversation: musician. This is understandable as music is
an art form, and we tend to think of art as innately human. Art
is born from human emotion and experience, and no matter
how complex, AI cannot experience human emotion.

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As a result, our musical preference will no longer be our own
choice. Algorithms will determine everything we listen toThis indicates a loss of control in our lives as it hinders ourability to select our own circumstances and even our identity.

ARE WE BETTER OFF?
Not being in control of our own musical preference can be ascary thought considering where we are at today. With theinternet and streaming services such as Spotify and YouTube,
we currently have more choice about what we listen to thanat any time in history.
However, as we become accustomed to AI making more ofour decisions for us, we might eventually view this as a goodthing. After all, we will be saving time and energy while also
having songs personalized to our taste.

© ASBEWe listen to music we like in order to elicit a certain reaction
or response that starts in the brain. If this technology cancreate music that elicits an even stronger response, we areachieving the same goal we do when picking our own music,
only better.

Nonetheless, it may be possible that AI will one day
outperform humans in the composition of music in the samemanner that a robot in a warehouse outperforms the human
worker.
When this happens, it will have several adverse effects onsociety. It will take away our freedom to choose, it will impact
the way we identify ourselves and identify with others, andabove all, it will call into question what it means to be human.

ART AND ALGORITHMS“Artistic creativity, it’s magical but it’s not magic, meaningthat it’s a product from the brain” said neuroscientist Charles
Limb. The fact that art and creativity is a product of the brain
suggests that we can “study it like we study other complex
neurologic process.”
The complex process of music creation when done by an
artificially intelligent algorithm can be boiled down into 3
parts: the inputs, the processing, and the output.

INPUTS
The inputs for this algorithm would be all of the factors that
contribute to an individual's musical preference.
Music preference differs based on culture, past experiences,
past and present emotions, neurochemistry, and several otherfactors.

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PROCESSING

data provided by the brain scan showing their excitement.

So ultimately, the solution to the loss of control over ourdecisions when it comes to what we listen to might just be toembrace it.

The parameters necessary for the processing step of such analgorithm would be the elements of music and the conceptsof music theory.

The algorithm would then take these factors into
consideration and compose a song that corresponds exactly
to how this person is feeling in the exact musical style theywish to be hearing, while also putting lyrics on the song thatare about being accepted into university.

SOCIAL COHESION

There are 7 core elements of music: tonality, timbre, texture,rhythm, melody, harmony, form, and dynamics. In a basic
sense, the relationship between these elements, the way they
are arranged in accordance with one another, is what gives
rise to music.
While there do not seem to be any universal rules in music,
there are certain “guidelines” which pertain mostly to culture.
For example, modern Western pop music tends to follow
certain chord sequences, rhythms, and generally has asimple, catchy melody.

OUTPUT
The inputs pertaining to the indicators of one’s music
preference will then decide what guidelines are to be applied
when arranging the musical elements, which ultimately
produce the output: the music itself.
For example, say in the future someone is overjoyed because
they were just accepted into their dream university. They puton their futuristic headphones which are capable of scanning
brains to detect emotions.
The data that their phone has collected about them, such asage, gender, location, previous listening habits, and the factthat they have just been accepted into their dream university
is fed into the algorithm as an input along with the biometricThis type of personalized output could create music foranyone, anywhere, in any situation, as long as the algorithm isprovided with the necessary inputs.

THE LOSS OF CHOICE
If AI eventually reaches this point, it leaves humans with two
choices each time they listen to music.

In the words of 1800s American poet Henry Wadsworth
Longfellow, “Music is the universal language of mankind.”
Humans have used music as an instrument for social
cohesion across every single culture for tens and thousandsof years. We gather in groups to listen to musicians,
participate in festivals, to sing and dance along.
Music has the power to bring people together in night clubs,
during family gatherings, weddings (think of the bond that thesong playing during the first dance creates between a brideand groom), and countless more situations.

The first is to continue to listen to songs created by humanartists. In this scenario, there is a chance of disliking the song,
being unsatisfied with it, or any of the thoughts and emotions
that one feels when listening to a new song in today’s world

With such easy access to music now, someone’s music taste
is also a fundamental part of their identity, which is also afactor in how we connect with others.

The other option is to listen to AI generated songs, where
the music is guaranteed to elicit the strongest possible
neurological response in your brain coherent with the exact
emotion you wish to be feeling in the given moment.

The music one listens to can affect other factors of identity
such as how they dress, how they style their hair, and whothey spend time with. It is commonplace for people who enjoy
the same music to be friends.

When the choice is between something that you might like andsomething that you will surely love, it is not much of a choice.
Humans instinctively choose the option that gives them themost pleasure, and in this case it is the AI generated music.

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SOCIAL DISSOLUTION

THE BEGINNING OF THE END

THE MEANING BEHIND IT

PROBLEMS AND SOLUTIONSWhen humans no longer listen to music created by otherhumans and instead opt for the tailored AI tunes, the role ofmusic in society will fundamentally shift.

From a 60,000-year-old Neanderthal flute to Beethoven’s FürElise to Drake’s Views, music has defined humanity’s pastand present. It is a hallmark of human creativity that allows
us to express ourselves, relate to one another, and even givelife meaning.

If you visit your parents, or were to go through any
memorabilia they kept from your childhood, you would
probably find some drawings or paintings you did as a kid.
These artefacts bear immense meaning to your parents andperhaps to you, but does this mean they expected you to
become the next Picasso?

If AI becomes better than us at making music, we should justenjoy it. After all, the one thing that humans will have overmachines is the ability to actually experience art.

Music becomes an individual experience rather than acollective experience, something that cannot be shared.
Consequently, the groups of people brought together by asimilar taste in music and a shared love for certain singers orbands would no longer be brought together at all.
In addition, the part of people’s identities formed due to aparticular taste in music, alongside any potential experiences
and relationships as a result of these identities, will no longer
occur.
To listen to music is to tune into the product of humanthought, emotion, and experience. Even the solo act oflistening to music on one’s headphones is still an expressionof these things from one (or more) individual to another. This
form of human connection is lost when music is created byalgorithms.

SOCIAL SOLUTION

The idea that one day AI will best us in the creation of music
is daunting, and it may signify the beginning of the end of
human creativity.
If this were to happen to music, it could happen to more art
forms.
All forms of art follow a set of guidelines and concepts theway that music does, and therefore AI could become more
adept than humans in any creative endeavour such as
storytelling, filmmaking, and drawing and painting.
What would be the point of participating in any form of art
if we knew that no matter what, AI could always produce
something better than us?

Perhaps you used to take some piano lessons, or are
currently learning how to play a musical instrument. Were youor are you expecting to be the next Mozart?
The chances are that the answers to these questions are no.
Humans continue to play and create music art when theyknow they will not become the best, and it may be that they
always will.
Therefore, while people in the future may not be listening
to music created by humans when they put on their
headphones, the desire to create and express oneself throughthe use of music will still exist.

While it might change traditional ways of how we connect
with one another, it might also open up new doors that lead toincreased social cohesion.
If it takes away our ability to choose our own likes anddislikes, it also means that we don’t have to have as many
dislikes or waste as much time trying to find what we do like.
And finally, just because AI might be better than us at it, it
doesn’t mean that we must stop singing, playing instruments,and expressing ourselves.
It is up to us to decide how we will respond to this greatchallenge. ///Humans will still retain the capacity and the desire to becreative, even if they know they will never better algorithms.

However, there may be a solution to this that utilizes the same
technology: AI could apply the same logic as it does to asingle person’s music taste to a crowd.
If given the same inputs that determine an individual’s music
preference, except instead it is the data about an entire groupof people, the algorithm could create the song that the mostamount of people would enjoy.

KEYS
TAKEAWAYS

While it would eliminate the role of artists and thus put an
end to concerts as we know them, it could also make way
for newer and more creative ways of musical entertainment,
perhaps even using robots and other forms of AI.

It may be possible that AI will one day outperform humans
in the composition of music in the same manner that a
robot in a warehouse outperforms the human worker.
 hen this happens, it will have several adverse
W
effects on society. It will take away our freedom tochoose, it will impact the way we identify ourselves
and identify with others, and above all, it will callinto question what it means to be human.

©

MI
CR

OS

TO
C

KH

UB

In the case of nightclubs, it could create the song that getsthe crowd dancing. At a wedding, it could create a song thatis the musical embodiment of the bride and groom’s love
for one another. At a funeral, it could create a song to put
everyone in tears.

 ur musical preference will no longer be our own choice.
O
Algorithms will determine everything we listen to.
 umans have used music as an instrumentHfor social cohesion across every single culture
for tens and thousands of years. It brings
people together and creates identity
 ut while people in the future may not be listeningB
to music created by humans when they put on
their headphones, the desire to create and express
oneself through the use of music will still exist.

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Post-Disaster Recovery:
The role of CSR in re-empowering
local communities
What’s crucial in rebuilding
local communities in the wakeof a disaster? Dr Maki Dan
and Dr-Professor Masayuki
Kohiyama, Keio University,
explore how companies can oil thewheels for a timely and effective
recovery.

I© JIRSAK

There are many
CSR activities
with the potential
to positively
contribute to therecovery of local
communities.

t has become all too grim in recent years. The brunt ofMother Nature's ire.

Fierce, complicated, and unpredictable, natural
catastrophes — hurricanes, tsunamis, earthquakes,
wildfires — are happening more frequently and causing
more destruction. The unexpected news of such disasters
disrupt the communities that businesses serve and where
their employees work and live in. In 2019 alone, there were
820 events worldwide that occurred and wreaked havoc oncommunities, causing losses of over $52 billion. So, how
can companies rise above these challenges and contributeto the early recovery of local communities — one of theirmost important stakeholders? The answer lies in impactful
corporate social responsibility (CSR) initiatives.
But CSR in the context of disaster management focusesparticularly on business continuity planning (BCP). Of course,
BCP is important for companies, but at the same time, there
are many other CSR activities with the potential to positively
contribute to the recovery of local communities. As such,Profs. Dan and Kohiyama seek to find out what they are. But
before getting into the details, it is important to draw wisdomfrom the exciting evolution of CSR.

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THE INDISPENSABLE STAKEHOLDER

THE TRIPLE DISASTER

DOING THINGS RIGHTFACING THE UNEXPECTED

In the past, the major recognized responsibility of acompany was earning profits. But this viewpoint changed
after the introduction of Ed Freeman’s stakeholder theory.
In stakeholder theory, companies are held responsible forthe utility of their stakeholders, such as employees andcommunities.

March 11, 2011. 2:46 PM. An unforgiving 9-magnitude
earthquake mercilessly struck the quaint Tohoku. Soonenough, giant waves set off by the quake cut a path ofdevastation as they rolled inland along the north-east coast.
And the lives of people in the region changed forever.

Companies in the Taira area conducted more CSR activities(especially reactive activities) than companies in the otherareas, because Taira is a major commercial area withmany large corporations that focus on those activities.
On the other hand, the Joban area consists of many small
companies in the tourism industry, such as Japanese-style
hot spring hotels. These companies invest fewer resourcesin reactive CSR, but are traditionally more engaged inproactive CSR. Overall, it was evident that companies in
Iwaki City were well engaged in local community activities,
volunteering, and donations, and they invested small
resources in business ethics, work–life balance, and CSV.

The researchers observed that good health and strong
relationships with family, friends, and community can
improve life recovery.

The 1970s saw CSR associated with corporate philanthropy
and mainly implemented through volunteering anddonations. Later, the role of CSR shifted to risk management,
focusing on compliance. In recent years, CSR has been
discussed in terms of value creation. The creating sharedvalue approach first invoked by Harvard’s Michael Porter –and known as Corporate Shared value, or CSV – sparked aglobal movement to redefine the role of business in society
around a simple but powerful idea: a company’s successand social progress are interdependent. As such, CSV is abusiness strategy that attempts to increase profits while
creating shared value with stakeholders. In this concept,
social contributions are viewed not as philanthropic
activities, but as strategic business activities.

SPENDING MINIMUM RESOURCES VS.
GOING THE EXTRA MILE
We now know that CSR involves a range of corporate
activities that benefit both businesses and theirstakeholders. Taking things one step further, the researchers
introduce us to one of many classifications of CSR activities— Reactive CSRs and Proactive CSRs. So, how do the twocategories size up against each other?
The first type, reactive CSR, comprises activities that
support compliance, business ethics, and other actions
that profit the company itself. Reactive CSR activities areusually motivated by social demands. They are generally
episodic and are short-term or one-time operations. The
second type, proactive CSR, consist of activities that profit
stakeholders and society, such as CSV, work–life balance,
local community activities, volunteering, and donations.
Proactive CSR activities create value for stakeholders andsociety, delivering indirect (rather than direct) profit to thecompany. Although proactive CSR activities might notdirectly improve the life recovery of local communities,
they positively affect the lives of employees and indirectly
contribute to the life recovery of the local community.

Japan’s most powerful earthquake took more than
15,000 lives and forced many to evacuate their homes
after dangerous levels of radiation were emitted from the
Fukushima Daiichi Nuclear Power Plant. The disaster also
greatly affected Tohoku’s economy and society. The nuclear
power plant accident caused extensive destruction, harming
agricultural, forestry, and fishery products. The direct
financial damage resulting from the disaster was estimatedat approximately 17 trillion yen, and many companies
were forced to suspend work or permanently close theirbusinesses. Local communities also suffered great losses.
From data acquired from 134 employed local residents
in four areas of Iwaki City (Taira, Onahama, Nakoso, andJoban), the researchers determined the structure of the life
recovery and the effects of CSR activities. And there weresome interesting findings uncovered.
The structure of life recovery and the effects of CSR
activities were determined from the data acquired from
134 employed respondents through a questionnaire survey
disseminated to local residents in fourareas of Iwaki City, located at thesouth-eastern end of the Tohoku
region, namely Taira, Onahama,Nakoso, and Joban. And there
were some interesting findings
uncovered.

RISING FROM THE ASHES
Women and youngsters tended to be more affected by
the disaster than men and the elderly. In addition, people
inhabiting mountainous regions and other regions distantfrom urban areas were found to be inclined to value theirprivate lives over their jobs. People with higher incomes andthose who owned their homes were more active participantsin their local communities than low-income earners andrenters. Finally, people in weak positions, such as contractand dispatched employees, tended to receive lower incomes,
be less engaged in local community activities, and be lessable to achieve life recovery.

Regarding CSR activities, reactive CSRs tend to increasebusiness volume at the expense of employees’ private lives
as time with family is especially compromised. Conversely,
proactive CSRs enhance private lifestyles and humanrelationships. As such, to improve the life recovery in local
areas, companies can implement proactive CSR activities
that:• Improve the work-life balance of employees• Are related to CSV, and• Involve participation in local community activities,
volunteering, and donations.
Giving back is not just a kind gesture. It is a business
imperative. Businesses have always been a driving force
at the epicentre of local communities everywhere. Now
more than ever, employees expect businesses to play a rolein creating better communities, including helping them torecover during times of natural disasters. And there is ample
opportunity for companies to lead the way in increasing
community resilience after calamities to strategicallysupport the communities upon which their success lies. ///In a nutshell, we can characterize the victims who havemade a strong recovery after the earthquake as: (1) male, (2)higher age, (3) living in urban areas, (4) owning their homes,and (5) holding high social status.

© GREMLIN

To explore the ways in which the CSR activities ofcompanies positively impact the life recovery of theiremployees, Profs. Dan and Kohiyama transport us to
the Tohoku region of Japan, home to unspoiled rurallandscapes, historical treasures, and incredible festivals.

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98 \© WILSON-MALONE

Learn toLead
KEYS
TAKEAWAYS orporate social responsibility (CSR) is now considered toC
be one of the most important activities for companies as
it greatly affects both companies and local communities.
 ompanies have large resources for improving local
C
community resilience and local communities canrecover from a disaster in a timely and effective
manner when companies provide appropriate
assistance through their CSR activities.
 SR activities can be categorized as reactive andCproactive CSRs. Reactive CSRs are activities demanded
by stakeholders and society, and comprise activities
that support compliance and business ethics.
Meanwhile, proactive CSRs, which create new value
for stakeholders and society, primarily consist ofactivities focused on work-life balance, CSV, local
community activities, volunteering, and donations.
 ife recovery largely depended on health and humanLrelationships. Proactive CSR activities related to these two
factors, such as work–life balance and local community
activities, increases the life recovery of employees.

THE KBS MBAAPPLICATION

Entrance examinations for the MBA
course are held every October (Fall)and January (Winter). An application
form in Japanese is on the website.
Date of admission April Admission
Quota 100 student/year.

LANGUAGE REQUIREMENTS

Most MBA Program classes are
conducted in Japanese. Full-Timestudents therefore, will use Japanesein class discussions, and for reading
and writing assignments.

KBS MBA =(QUALITY OF EDUCATION)2X (VOLUME OF EDUCATION)2

Keio Business School
MBA Program
Our MBA program is two-year, full-time program, aimed todevelop business leaders with both professional managerial
skills and a sense of responsibility to society and to corporate
citizenship. An emphasis is placed both on particular skill setsrequired in a specific business function, and on developing wellbalanced skills to be an effective general manager who is capableof integrating multi-faceted business operations.

Inquiries: gakukbs@info.keio.ac.jp
Website: www.kbs.keio.ac.jp
Tel: +81-45-564-2441

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HOW CAN LARGE CORPORATIONSBECOME MORE SUSTAINABLE?
103
BY FREDERIK DAHLMANN, DAVE GRIGGS,WENDY STUBBS, & KEVIN MORRELL

GREENFLATION: THE DIRTY COST
OF BUILDING A CLEAN AND GREEN
ECONOMYBY SALIL SHAHANEGREENFLATION: THE ACHILLESHEEL OF THE GREEN ECONOMY?
BY PAUL PERNOT109

THIS BUZZWORD MAY LEAD TO YOUR
NEXT BUSINESS OPPORTUNITYBY BO ANNE-MAY DE BOER

THE ISE SUSTAINABILITY INDEX IN BRAZIL:
A STORY OF PURPOSE, CHALLENGE,
AND SUCCESS139
BY MARIO MONZONI & ADRIAN ZICARI115

IS AI BECOMING THE NEXT OIL
AND GAS?
BY NICOLAS CADOR

121

CROSS-LISTING AND CSR: FRIENDSWITH BENEFITS125
BY HAINA SHI, XIN ZHANG & JING ZHOU© METAMORWORKSSINGKHAMREALIZING LOW-CARBON NEW VALUEAROUND CUSTOMERS, PRODUCTS
AND ENTERPRISE OPERATIONSBY DONG WANG

129

THE MAIN BARRIERS PREVENTING
THE WORLD FROM REACHING
NET-ZERO CARBON EMISSIONSBY FÉLIX DUBOIS-AUBECQ

135

145

CLIMATE SOLUTIONS FOR CORPORATIONS:BE SUSTAINABLE-COMPETITIVE BY
CREATING SUSTAINABLE VALUE CHAINS 151
BY LIANG KONG
DESIGNING SOLUTIONS FOR RESILIENT
RAW MATERIALS SUPPLY155
BY FARID BADDACHEThe Council on Business & Society

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How Can Large Corporations
Become More Sustainable?
What are the strategies toachieve sustainable goals ina corporation? Professors
Frederik Dahlmann, Warwick
Business School, Dave Griggs,
Universities of Warwick & Monash,
Wendy Stubbs, Monash University,and Kevin Morrell, Cranfield Schoolof Management, explore how goalsetting approaches have been the
backbone of corporate successand how they can be transposed tosustainable goals.

© PETMAL

Corporations as
central actors– and arguably
drivers of the
Anthropocene –explicitly feature
only once in the
17 UN SDGs.

Related research: Corporate actors, the UN Sustainable Development
Goals and Earth System Governance: A research agenda, The
Anthropocene Review 2019, Vol. 6(1-2) 167–176, sagepub.com/
journals-permissions DOI: 10.1177/2053019619848217 journals.
sagepub.com/home/anr

IMPACT OF HUMANS ON THE PLANET
EARTH

H

umans have had such a significant and decisive
impact on the Earth’s ecosystems, that the current
era has been dubbed the Anthropocene. This istechnically defined as the current geological epoch, viewed
as the period during which human activity has been thedominant influence on climate and the environment.

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To attract more focus on the pressing issues associated with
the Anthropocene, various governance organisations, as wellas universal guidance, guidelines and metrics, have been
established. Earth System Governance provides a frameworkfor developing new insights into governing this coupled socioecological system while the UN Sustainable Development
Goals (SDGs) provide a shared blueprint for peace andprosperity for people and the planet, now and into the future.
go – goDahlmann, Griggs, Stubbs and Morell identify three potential
high-impact strategies which, if implemented, could lead tosignificant new insights into how corporate actors display
responsibility and accountability regarding Earth System
Governance:

At the heart of the SDG initiative are 17 goals which serveas an urgent call to action by all countries – developed anddeveloping – in global partnership. They recognise that
ending poverty and other deprivations must go hand-in-handwith strategies that improve health and education, reduce
inequality, and spur economic growth – all the while tacklingclimate change and working to preserve our oceans andforests.

• And Integrating global goals into new business models.

While CSR is a happening topic in any corporation, what are
the broader implications of the Anthropocene and the roleof corporate actors in engaging with and supporting Earth
System Governance by contributing to the UN SDGs?

THE PATH AHEAD
The Anthropocene faces unprecedented global challenges
ahead and the assessment of these challenges can no longer
be tackled by individual business practices and organisations.
Unless the philosophy of ‘We don’t win alone and we don’tlose alone’ is adopted by all the stakeholders involved tocreate an immediate and significant positive impact in the
Anthropocene, the path ahead seems very rough.

© KHONGTHAM

Effective Earth System Governance will require changes
at a far broader level to promote and ensure collective andcollaborative action by policy makers, civil society andthe private sector. And moving away from the traditional
concepts, this also requires new financial and businessmodels that are compatible with the ‘requirement offlourishing life on Earth’.

MANAGEMENT & LEADERSHIPThe Council on Business & Society• Integrating global goals into corporate target-setting• Integrating global goals into codes of corporate governance

GOAL-SETTING IN CORPORATIONS
The philosophy of achieving the desired position throughgoal-setting has traditionally been successful in many
corporations. The benefits of steering organizations throughgoals include setting priorities for attention and resources,
galvanizing efforts, benchmarking and progress tracking, as
well as overcoming short-termism.
The UN SDGs have been positioned as an innovative formof global governance that complements more traditional
governance approaches such as norms and rules (i.e.
legislation and regulation). While policymakers around theworld have understood how to tackle the spatial, temporaland contextual factors of such goals, what is lacking is
corporate understanding of how to translate and integrate the
UN SDGs into their strategies and business models.
Indeed, organisations are coming up with solutions toaddress the issue. Inspired by the decades-long successful
and central process of setting organisational performancetargets, companies have recently adopted a variant of thatapproach wherein executive remuneration schemes dependon achieving sustainability targets.
The UK government and other non-profit organizations havealso played a significant role in encouraging and supportingthe corporations to place more attention on sustainability.
Initiatives such as reducing greenhouse gas emissions
and deforestation, or increasing renewable energy, energy
productivity, and electric vehicles, and other sustainability
metrics have helped companies in the context of corporate
sustainability performance.

INTEGRATINGGLOBAL GOALSINTO CORPORATETARGET-SETTING
As much as goal-setting in
corporations is an important
starting point, the key question iswhether such individual targetsetting approaches are effectivein the face of a global biophysicaland socioeconomic system. Moreworrying is the fact that corporations
as central actors – and arguably
drivers of the Anthropocene – explicitly
feature only once in the 17 UN SDGs.
Moreover, there have been various efforts tohighlight the commercial opportunities from
integrating the UN SDGs – however, generalawareness in the private sector remains
ambiguous, limited in scale and largely
anecdotal.
Whether and how companies can reconcile
corporate impacts on people, planet andprosperity while at the same time satisfy theiroverriding raison d’être of (short term) profit
and shareholder returns is a billion-dollar
question that is worth billions of people’s
lives.

INTEGRATING GLOBALGOALS INTO CODESOF CORPORATE
GOVERNANCE
Current corporate governance, ascomplementary as it has been to
corporations, treats companies as individual
actors and not as part of an interconnected
network. Even the few forward and inclusive
corporate governance models based on
stakeholder perspectives remain silent on theneed for systemic integration into wider external
governance systems.
Such gaps in current governance models expose a needto examine corporate governance codes as well as rules
and regulations, both at national and international levels,
to support the implementation of the UN SDGs. Relevant
legislation, codes and norms therefore need to be updated
to reflect the wider sectoral and value chain implications ofbusinesses’ products, practices and actions, and encourageboards of directors to look beyond the narrow confines of
their organizations when monitoring, controlling and steeringthem.

While businesses are increasingly
recognising the various economic andstrategic benefits from being more sociallyand environmentally responsible, suchapproaches are predominantly driven
by corporate assessments rather thanconcerns for finding solutions to global
challenges that may require a departurefrom ‘business as usual’.
This calls for a better understanding andmore in-depth research of the corporate
perception of high-level issues suchas the Anthropocene, Earth System
Governance and the UN SDGs, andwhether and how sustainability goalsetting could be more effectively integrated
into the corporate sector.

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MANAGEMENT & LEADERSHIP

106 \The Full-time MBA

INTEGRATING GLOBAL GOALS INTO
NEW BUSINESS MODELS
Research suggests that the majority of businesses arefocused solely on short-term profit-maximization andwould not hesitate to exploit resources such as thenatural environment and people. As such, it is now more
important than ever to transform companies’ fundamental
understanding of business models.
As a result of major crises such as the global financial crisisand political blindness to social and environmental challenges– and as a response to the critics of capitalism and businessgreed – innovative initiatives based on constructive concepts
such as Shared Value, Net Positive, Future Fit, Conscious
Capitalism and Blueprint for a Better Business have risen toprominence.
Such initiatives are covered under the blanket term ‘Purpose
Ecosystems’ because of their shared efforts to redefine thepurpose and nature of business and focus upon broader nonfinancial performance outcomes. These purpose ecosystems
offer concrete action frameworks, business templates andother practical guidance such as audit and certification to
improve businesses’ legitimacy in society.
The ultimate objective for companies should be to try andadopt business models with a sustain-centric orientationin order to address the interconnected set of seemingly
incompatible social, ecological and economic challenges
with the help of all the stakeholders involved to form a unified
network. This also requires businesses to develop new waysof creating and accounting for value for society that goesbeyond the financial bottom line.

BILLIONS OF DOLLARS VS BILLIONSOF PEOPLE
Unlike other dominant animals that were at the top of thefood chain, humans reached the podium in a very shortspan of time, largely thanks to their cognitive abilities.
The consequences of this, however, are profound. The
fundamental nature of Mankind’s relationship with the planet,and society that has been fashioned over time, has beenaltered to an almost irreversible condition in several ways.
In the end, it is our moral duty to care for our society andplanet so that future generations avoid the consequences
or worse, miss out on an opportunity to indeed face theconsequences. Typically, this is achieved by inspiring changes
among people, corporations, governments and every otherstakeholder part of the natural ecosystem.
Big corporations who have been both the beneficiaries
and causes of much of these changes should be moreaccountable and responsible for their actions. While they haveguidance and guidelines in many sources and forms, truechange can happen only if they decide to embed sustainablevalues in their business models, corporate codes and goals.
Will they be on time or will it be too late? ///MANAGEMENT & LEADERSHIPThe Council on Business & Society

KEYS
TAKEAWAYS

 nthropocene is the current geological age, viewed asA
the period during which human activity has been thedominant influence on climate and the environment.
 arth System Governance (ESG) provides aEframework for developing new insights into
governing this coupled socio-ecological system.
 he UN Sustainable Development Goals(SDGs)
T
provide a shared blueprint for peace and prosperity
for people and the planet, now and into the future.
 ffective Earth System Governance will require changes
Eat a far broader level to promote and ensure collective
and collaborative action by the corporations.
 he researchers identify three high-impact strategies:
T
Integrating global goals into corporate target-setting,integrating global goals into codes of corporate governanceand Integrating global goals into new business models.
 hile policymakers around the world have understoodW
how to tackle the spatial, temporal and contextual factorsof UN SDGs, what is lacking is the understanding of
the companies in how to translate and integrate the
UN SDGs into their strategies and business models.
 he government has also played a significant roleTin encouraging and supporting the corporations
to place more attention on sustainability.
 hile businesses are increasingly recognising theWvarious economic and strategic benefits from being
more socially responsible, such approaches are
predominantly driven by corporate assessments rather
than concerns for finding solutions to global challenges
that may require a departure from ‘business as usual’.
 here is a need to examine the corporateTgovernance codes as well as rules and regulations,both at national and international levels, tosupport the implementation of UN SDGs.
 he ultimate objective for companies should be toT
try and adopt business models with ‘sustaincentricorientation’ in order to create a highly-interconnected
set of seemingly incompatible social, ecologicaland economic systems with the help of all the
stakeholders involved and create a unified network.
 ig corporations who have been both the beneficiaries
Band causes of much of these changes should be moreaccountable and responsible for their actions.

For theChangeMakersOur Full-time MBA is the catalyst
you need to transform your careerin just one year.
W wbs.ac.uk/go/just1year

/ 109

Greenflation: The Achilles
heel of the green economy?
Paul Pernot, MiM student and
ESSEC Business School
Winner of the 2022 CoBS
student CSR competition,
analyses the increasing
phenomenon of greenflation andoffers several ways forward tostabilize the green transition.

In Avignon, a city in the south of France, George R. wasplanning to renovate his bathroom in early 2022. When heasked his plumber for a quote, the plumber handed him
a piece of paper and said: "It's valid for fifteen days". Fifteendays is a very short time! The plumber, faced with George R.'s
apparent hesitation, justified himself: "I know, but I have to do
this so that I don't put my business at risk by buying materials
that are becoming ever more expensive every day. That's theway everyone does it now".

© SEFA OZELAs there is no suchthing as a freelunch, everyone
must do their bit.

The plumber is right. The price of some commodities has
soared in recent months. The price of PVC (composed of 43%oil), which is widely used for plumbing, rose by 90% between
May 2020 and August 2021. The reason to this is a multiple
one: after Covid-19, the price of oil has risen considerably,
then remained high due to the geopolitical situation, but may
continue to rise in order to meet the goals of the 2015 Parisclimate agreements (Schnabel, 2022). Other commodity
prices are rising: copper, aluminum, lithium, cobalt, to namebut a few, and again, the increase is linked to the green
transition.
In short, if commodity prices rise because of the transition toa green economy, so do the costs of all goods and services:that's inflation. Well, actually, it's greenflation.

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110 \/ 111

The concept of greenflation can be summarised as the increase in prices of goods and services (inflation) as a consequence ofthe transition of the current economy to a greener one (i.e. net-zero economy). As the concept is not yet set in stone and is the
subject of much debate among economists, I will voluntarily use a broad definition.
Nevertheless, it is essential to point out that not all price increases are the result of greenflation. For instance, it would be absurd
to think that greenflation is sufficient to explain the annual inflation rate of 5.3% in the EU in December 2021 (Eurostat 2021), as
there are many other reasons for the rise in prices. Yet greenflation remains necessary to explain the inflation we are experiencing.
Nor is greenflation a sign of a failure of the economic system because it is characterised by continuing inflation: the green
transition is a mammoth task which requires massive investments (Blas, 2022). Indeed, the American economist Pr. Harold T.
Shapiro (1981) thought that continuing inflation could not be understood in a purely economic way. According to him, "inflation
relates more directly to our political system's response to a changing social agenda than to any unresolved deficiency in our
economic system". In fact, the Covid-19 crisis was the landmark for a global awareness of the social and environmental issues
within our society. It has shaken up political agendas and accelerated the green transition.

CAUSES AND MANIFESTATIONS OF GREENFLATION TO HAVE IN MIND FOR
EFFECTIVE RESPONSESFirst of all, greenflation is reflected in an increase in the price of some commodities. The latter should be understood as themeeting of a strong demand for metals necessary for the green transition and a supply that is unable to meet such demand.
Supply is low due to massive underinvestment in the mining sector, which had been already heavily impacted by Covid-19. China,
for example, supplies nearly 60% of the world's aluminum, but has decided to cap new smelting in order to be in step with its
carbon neutrality campaign (Sharma, 2021). Lastly, the decrease in productivity induced by environmentally friendly and ethicalagriculture results in higher prices for agricultural materials

New ways of
production

Green Transition

Environmental taxes

New regulations

ESG criteria
Environmentallyfriendly
agriculture

Green technologies (electric cars,
green energies, carbon dioxide
storage, etc.)...require
investment in…

Require less investment
in...

Mining

Fossil fuels

General price increases throughout
the economy: greenflation
Understanding the causes of greenflation

MANAGEMENT & LEADERSHIPThe Council on Business & Society

Still strong
demand for…

Moreover, greenflation is closely linked to rising energy
prices. Contrary to what one might think, the cost of green
energy has become cheaper than the cost of fossil energy.
An IRENA report (2019) shows that onshore wind andsolar photovoltaic power are now frequently
less expensive than any fossil-fueloption and thus without any
subsidies. However, renewableenergies are not sufficiently
scalable and require highinvestment (Schnabel,2022). In the UnitedStates alone, itwould take nearly$4.5 trillion in
investment tomove to 100%
renewable
electricity
generation(Shreve,2019). Anotherproblem is thatmany economies
still rely on
burning fossil
fuels to generate
electricity. Yet theprice of oil is rising.
Undoubtedly, the war in
Ukraine has contributed
to the rise in energy prices,
but this is not the only reason.
OPEC has significantly reduced
its upstream investments since2015 and pressure from investors
is forcing oil majors to reduce
their investments in explorationproduction and to gradually turn torenewable energy. These trends leadto higher fossil fuel prices.
Eventually, greenflation is the increasein prices due to environmental taxes.
The latter are essential for the green
transition to achieve its goal (Remeur,2020). This is because they integrate
negative externalities into the price ofgoods and services, and in this way
can influence consumer behaviour.
For example, imagine yourself in asupermarket, in front of the fruit andvegetable section. Apples from your country
cost $2.9 per kg and those from the otherside of the world cost $3.5 (because of a possible
environmental tax). Of course, if you are on a budget, you
would buy the locally grown ones. Environmental taxes
can therefore encourage consumers to consume in amore sustainable way and are a real game changer for the
ecological transition.

TOWARDS NEW SOCIAL TENSIONS?
Greenflation will have the same negative effects as inflationand may lead to numerous social conflicts withinstates. Inflationary phenomena increase
inequality (Albanesi, 2000). People
on low and fixed incomes will be
the most affected (Modigliani& Fisher, 1978). Not only
because their wages
will not keep up with
inflation, but also
because the lesswell-off families
hold their savingsin cash, whereas
the more welloff families
hold real assets(ibid.). As aresult, theirpurchasing
power
decreases.

© YMGERMAN

GREENFLATION: A VERY RECENT CONCEPTIn France,
the “yellow
vests” protests
that emerged in
October 2018 exemplify
the social tensions arisingfrom greenflation. Indeed,
the carbon tax increase
wanted by the government
was the straw that broke thecamel's back as this tax did nottake into account the economic
and geographical situation of
the households. France is not an
isolated case: the gradual end of
consumer subsidies in Indonesia
since 1998 has led to a 149% increasein the price of petrol, and to numerous
riots throughout the country (Postic etal., 2019).

Moreover, rising energy prices are likely
to amplify social inequalities. Energy
poverty is a real issue throughout
the world and can be defined as theinability to keep homes adequately
warm (Atanasiu et al., 2014). Politicians
should pay heed to Eurostat data on the issue:
in 2020, 8% of the EU population (i.e. 36 million
people) were affected by such poverty. However, not
all countries are equally affected: Bulgaria and Lithuania are
the most affected ones, followed by the southern European
countries. More than intra-state social conflicts, the rise inenergy prices is likely to worsen the phenomenon of a multispeed Europe.

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112 \/ 113

COMMUNICATE, COMMUNICATEAND COMMUNICATE!
Following the “yellow vests” protests, it was regrettable
for many activists that the French government gave up on
increasing the carbon tax. Even worse were the prosaic
explanations of the French government on the reasons forthe withdrawal of the tax increase. Indeed, they dealt mainlywith the tax pressure, whereas they should have highlighted
the efficient, fair and transparent distributional policy thatthe possible upcoming modification of the tax could haveenabled. The nub of the problem was the lack of transparency
which led to the belief that the government had surreptitiously
implemented a new tax. It is indeed essential for governments
to communicate clearly on how the tax works and to insist on
its benefits. In this way, the population is more likely to accept
environmental taxation (OECD, 2010).

UNDERSTANDING THE PROBLEM…
The situation is somewhat paradoxical: while the climate
emergency is on everyone's mind, how can one protest
against measures in favour of the green transition? Is it notpossible for humans to reduce their consumption to achieve
the common good?
In order to better understand the “yellow vests” and their
behaviour towards the carbon tax, I decided to conduct
a survey within a Facebook group called "Gilets Jaunes[Yellow Vests]". A small number of individuals answered (n= 21). Provided that they took the survey seriously, 95.2% ofthem were against the carbon tax, while 38.1% attach great
importance to the climate issue. In fact, the problem is rooted
in the misinformation that abounds in such groups, withalmost 23.8% of respondents believing that climate change
is merely a political chimera. Lastly, the vast majority thinkthat the carbon tax lacks transparency (95.2%) and want tosee something concrete in return (85.7%). These results arein line with other articles that accused the tax of opacity in its
functioning (Cessac, 2019).

… TO PROVIDE EFFICIENT
SOLUTIONS.
Firstly, governments must be able to help the most vulnerable
ones, who will be the most affected by greenflation. For
example, they can distribute energy vouchers, as in France
or in South Korea (Podesta et al., 2021), or offer a reduction
in green energy tariffs. Since 2009, Spain has been offering
a 25% reduction in the regulated price of electricity to lowincome households.
Some states (or regions) have already implemented moreadvanced economic systems: revenues from the carbon
market are allocated to a green fund separate from thegeneral state budget (Postic et al., 2019). Quebec, forexample, has a green fund that finances projects such as
greener transport, help to farmers so they can meet thechallenges of environmental protection, housing renovation,etc. (MDDELCC, 2017). In California, the fund set up has
similar missions with the constraint that 35% of the funds
must benefit disadvantaged or low-income households(Breslow, 2020).
Finally, more audacious but still feasible solutions to reconcile
greenflation and social tensions are proposed by someNGOs. For example, the carbon tax imposed on individuals
and companies could partly be used to distribute money toless well-off households in order to protect their purchasing
power. This distribution to the least well-off households
would take the form of a “climate income” calculated on
the basis of income, location and household composition(Climate Action Network, 2019). Australia and Sweden have
hitherto reduced the taxation of the lowest incomes thanks tothe carbon tax (Postic et al., 2019), and thus limit the social
impact of greenflation.

MANAGEMENT & LEADERSHIPThe Council on Business & Society© OATAWA© LALOCRACIOIn any case, it is of the utmost importance that governments
do not give up on measures for the ecological transition. As
there is no such thing as a free lunch, everyone must do theirbit. But governments have a responsibility to help the mostvulnerable so that the green transition is not only beneficial tothe environment, but also to society as a whole. ///KEYS
TAKEAWAYS reenflation is the increase in prices as a result of theGtransition to a carbon neutral economy. Most countries
have the ambition to be carbon neutral by 2050.
 reenflation is both a venom and a remedy for ourGsociety, as it achieves the goal of carbon neutrality,
while increasing inequality within society.
 o make greenflation fairer, policies must focus onTredistribution towards the most vulnerable by helping themwith their energy consumption, housing, transport andmore broadly, their purchasing power. Governments must
be able to give concrete expression to climate action.
 astly, transparency on the functioning ofL
environmental taxes and their benefits isessential for their acceptance by the public.

The Council on Business & Society

MANAGEMENT & LEADERSHIP

/ 115THIS BUZZWORD MAY LEAD TOYOUR NEXT BUSINESS OPPORTUNITY
Bo Anne-May De Boer, BBA
student at IE Business School,
and runner-up in the 2022
CoBS student CSR article
competition, looks at benefits
companies will gain for goinggreen and explores several ways
in which they can capitalise on
existing resources, nature itself, andinnovations in their supply chains.

Great, we have recognized the need for sustainability– now how can we make it a reality? Firms are facing
increased pressure from law-makers and customers
to engage in sustainable practices such as by decreasing
their carbon emissions, reducing waste or recycling. Now
corporations are left with little choice: they must act. The best
way forward is to embrace sustainability and create value forthe customers and the companies themselves. But how?

© ANTAGAIN

Firms are learningthat by helping
the earth, they
are helping theirbusiness.

WHAT THE FUSS IS ALL ABOUT: THE
PRESSURES THAT ORGANIZATIONSARE FACING FROM A SERIES OF
RELEVANT STAKEHOLDERS.
Particularly since the introduction of the 2015 UN Paris
Agreement many countries have placed more importanceon decreasing their environmental impact (United Nations).
Similarly, the European Union’s “Green Plan” highlights their
aim to be the first climate-neutral continent. A big part of the
UN and EU ambitions is formed by achieving zero net emissionof greenhouse gases by 2050 (European Commission).
Resultingly, corporations are experiencing increased urgency toengage in sustainable business practices.

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116 \/ 117

You may think that talks about carbon dioxide seem repetitive
or boring. However, it is the key for driving positive change.
Sustainability is not just a buzzword – it is a business
opportunity. Some firms have discovered this for themselvesby creating new value, not just for the customers, but also
for their own benefit, while implementing more low carbon
practices. As previously learned, through the limitations posedby laws, regulations and pressures, companies are forced
to adapt. To do so, some companies have been creativeand innovative in order to establish competitive advantages,
generate new revenue streams, increase their client base, ordecrease their costs. So, how can decreased carbon dioxide
emissions lead to increased company success?

© OLUOLU3

THE BEAUTY OF NATURE: TAKING
NATURALLY REPLACEABLERESOURCES TO CREATE VALUE

As new laws that aim to regulate companies’ environmental
impact are put in place, firms are forced to change theiroperations. Simultaneously, customers are more aware of
their environmental footprints leading to changing customer
demands. On an environmental front, these demands revolvearound active involvement in the care for the environment by
reducing greenhouse gas emissions – such as carbon dioxide
and the offering of more environmental-friendly products.
While sustainable practices were not initially a great interest
for many for-profit organizations, they are now forced to
get involved in order to stay competitive and relevant. To
make the most out of this pressure is to react innovatively
and create new value streams for themselves and theirstakeholders.

IT’S GETTING HOT IN HERE: WHAT ISLOW CARBON PRACTICE AND WHY IS
IT RELEVANT?
Carbon on its own is a chemical element that is found inmany compounds that are made up by the combinationof elements (Britannica). It also forms a very common andharmful greenhouse gas: carbon dioxide (CO2). Carbon
dioxide is the primary greenhouse gas (GHG) emitted throughhuman activities, accounting for 80% of GHG emissions in
the United States in 2019 (EPA). As mentioned, CO2 is greatly
harmful to the environment as it is a major concern for global
warming. For example, in the legally binding international
treaty, the Paris Agreement, 193 parties agreed to reduce the
GHG emissions to prevent the global temperature to increaseby 1.5 degrees Celsius compared to pre-industrial levels. As
MANAGEMENT & LEADERSHIPThe Council on Business & Society

the current global temperature is only 0.4 degrees Celsius
away from this benchmark, there is an increased fear of
global warming consequences (United Nations). Therefore,carbon dioxide emissions must be reduced – urgently.
Firms are able to support the mission of keeping the global
temperature below the 1.5-degree Celsius benchmark by
incorporating low carbon practices. Low carbon practices arecharacterized by the low levels of carbon released throughout
the entire value chain of a company. Companies may do thisin various ways: by adapting their supply chains, replacing
materials or resources, reducing their output to decrease
operations, or even through more innovative solutions.
The role of low carbon practices is relevant to reach net-zerogoals, and is perhaps the most effective way of attaining
the 2050 deadline. This is because firms came up with
innovative ways to reach net zero goals without actually
having much impact. How is that possible? Firstly, many
firms, such as confectionary producer Zentis GmbH, offset
their carbon emissions by planting trees around the world
by financing third party tree-planting organizations (Zentis).
This means, they are not adapting their actual practices, butrather offsetting the carbon they produced with temporary
solutions. Secondly, solutions such as carbon offsetting are
hard to track, meaning companies can greenwash easily.
Contrarily, changes in business practices offer a morereliable, measurable and impactful way to determine a firm’involvement in decreasing their carbon effects.

One common way to reduce carbon emissions is by making
use of ample, naturally occurring resources, such as sunlight,
wind or water. These substitutes for energy generation inform of solar, wind and hydraulic power, make the needfor high CO2 emitting alternatives, such as fossil fuels orcoal, redundant. For firms, the implementation of natural
substitutes creates value in the shape of decreased costsof production in the long-term as sun, wind, and water are
free of cost and they omit new carbon taxes. It also supports
firms’ long-term relevance, as transitioned companies
can remain competitive in a
carbon-neutral world, and will
attract sustainability-driven
customers from competitors
to expand market-share.
An example of a firmthat has embraced
the switch to low
carbon practices andare creating value isApple. Already in2016, Apple wasrunning
93% ofits overall
globaloperations on
renewable energy(The Climate Reality
Project). This set
an example for Apple’scompetitors, giving them afirst mover advantage.

Aside from energy efficiency, substituting the materials ofa product with renewable and natural processes also helps
reduce carbon dioxide emissions. For example, Pangea
Organics has implemented the natural process of compostingand plant growth in their packaging of body products. The
firm created packaging for their products that contains seeds
and is entirely biodegradable (Sweeney). This means thatthe boxes can be planted in soil causing new plants will growas a carbon offset, and the composability follows a naturalprocess. This reduces the need for recycling, burning or
waste, all leading to increased CO2 levels or environmental
harm. Pangea Organics’ innovative take on low carbon
practices gained them great media awareness. Their uniqueselling proposition through sustainable approaches to
product design helped them with an increased customer baseand established a competitive advantage.

TWO BIRDS WITH ONE STONE: TWICE
THE VALUE IN ONE PROCESS
Sustainable practices have helped firms search for creative
solutions in how to continue their business offering, or how
to improve it. One way in which firms tend to improve theirbusiness is by increasing their efficiency. This often means
reducing lead times, increasing productivity and generating
more output. While the increase of output may initiallysound counter intuitive to what sustainability stands for,it can actually be a way to reduce carbon emissions andimprove sustainable practices. Firms can be more efficient byimplementing the business model of co-product generation.
The idea here is to get twice the number of sellable products
in one process, reducing the carbon levels for each product.
For example, in the process of creating sugar,
British Sugar, also produces animal feedfrom the by-products of the sugar.
This reduces waste, andprovides them withtwo marketableproducts to selland generate
revenue.
Bothproducts
will also havea lower carbon
impact, as the
carbon emissions
produced are
divided over themall.

© ISMAGILOVFROM BORING TO BRILLIANT:SUSTAINABILITY IS NOT AS
UNINTERESTING AS IT MAY SEEMThe Council on Business & Society

MANAGEMENT & LEADERSHIP

118 \ONE’S WASTE IS ANOTHER MAN’STREASURE: HOW WASTE TURNS INTO
A RAW MATERIAL
In a supply chain, carbon dioxide emissions are produced at
all stages: including the supplier. In the initial raw material
phase agricultural practices can be GHG emission intensive:from farming, to machinery for processing, to transportationand more. To reduce the carbon emissions at this stage,some companies use the waste of others. This also reduces
the carbon emissions at the waste management stage at theend of a product lifecycle, where burning plays a great rolein carbon emissions. The name for the use of byproducts or
waste of one firm as an essential product for another is calledindustrial symbiosis. This low carbon practice is embraced
by Toast Ale, a beer producer. They take excess bread andthe surplus of baked goods from bakeries, grocery storesand more as the main ingredient for their beer (Toast Ale).
Their innovative idea of using bread as a substitute for barley
has helped avoid 48 tons of GHG emissions and saved over
2.5 million slices of bread (Toast Ale).

FROM LIMITATION TO VALUECREATION
Companies are forced to become more engaged insustainable operations by law-makers, customers, pressuregroups and other stakeholders. In order to stay relevant in
the market, to compete with competitors or to benefit fromfinancial or marketing-related perks, firms are forced to act –and they are. Increasingly more firms are becoming involved
in low carbon practices in creative and innovative ways.
Some ways include embracing the resources provided, andprocesses crafted by nature, while others involve adaptations
to the supply chain in order to create double the value in one
process. Firms are learning that by helping the earth, they are
helping their business. They are learning to use sustainability
as a vehicle to drive value for customers and themselves.
However, what will happen when these innovative ideas
become outdated? How might new value be created? ///A SECOND LIFE: CREATING VALUE
WHILE OMITTING CARBONINTENSIVE PRODUCTION PROCESSES
Another way to reduce the carbon emissions and create
value for customers and the company is a concept known as“next life sales”. Next life sales are a creative solution to resell
used products as certified second-hand goods. This means,that a company can enjoy the revenue of a product twice– once as a new good, and once as a certified resold good.
This creates monetary value for the firm, while also creating
value for a customer who can benefit from increased productaccessibility. For example, Lely, a Dutch agricultural machine
manufacturer produces a robotic milking system for cows,
called Astronaut (Lely). Sometimes, a machine is returnedor machines are bought back by the company when a client
wants a newer model or it is damaged. Lely has put in placea certification process where their second-hand Astronautmachines undergo tests and refurbishing (Lely). When readyfor resale, they are labelled as being “Taurus certified” and areready to be sold in a “next life sale.” By omitting the need formore production to earn revenue, Lely has managed to find alow carbon practice to create more revenue with minimal costand effort.

KEYS
TAKEAWAYSCA PLACE WHERE YOURMINDSET DETERMINESYOUR POSSIBILITIES

M

Y

CM

MY

CY

Our flagship full-time MBA program in Madrid. This transformational
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CMY hile carbon-zero goals are good for orientationW
to keep the global temperature under a 1.5-degree
Celsius increase from pre-industrial levels, it
has caused firms to off-set their carbon which
has allowed for greenwashing and difficult
measurements of company impact.
 ow carbon practices are characterized by the low
Llevels of carbon released throughout the entire value
chain of a company. Companies achieve this byadapting their supply chains, replacing materials
or resources, reducing their output to decrease
operations, or even through more innovative solutions.
 ome companies are finding creative andSinnovative ways to establish competitive
advantages, generate new revenue streams,
increase their client base, or decrease theircosts in order to create value for themselves.

K

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Format:Full-time

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September& January

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learning experience tailored to your professional needs. Students
are encouraged to develop an Entrepreneurial Mindset to makethem competitive in any industry or new venture.
Our International MBA will be the mosttransformative experience of your life.

 ompanies are embracing natural resources andCprocesses as a way to incorporate low carbon
practices into their operations. This allows them toreduce their costs, and gain a larger customer base,or even benefit from first-mover advantages.
 orporations are also finding ways to produce two
Cproducts simultaneously, or substituting the raw
materials of one product with the waste, or coproduct, or another. This helps reduce waste andcarbon emissions for the entire new developmentof a good or for the processing of waste.

MANAGEMENT & LEADERSHIPThe Council on Business & Society

Location:
MadridMore info:
ie.edu/IMBA
imba.admissions@ie.edu

/ 121Is AI becoming the next Oil and Gas?
Nicolas Cador, MiM student and
ESSEC Business School article
competition finalist, navigates
through the challenges
Information technology faces toreduce its carbon footprint.

T

he use of Artificial Intelligence (or AI) is growing. The
FAANGs have succeeded in training models based on
consumer data to innovate and create value – they are
now the most valuable companies on Earth. Volume, velocity,
variety, veracity and value are the five keys they have used tomake energy-consuming data a huge business.
However, as the climate emergency has just been restatedby the 6th Assessment IPCC report, how can we ensurethat digital and AI – forecasted to account for 10% of global
emissions in 2030 – do not become the most polluting
industry by the end of the century?

MONITORING THE CARBON
FOOTPRINT OF AI© METAMORWORKS

Cloud computing,the metaverse andnew IoT services
reinforce theprobability of anenergy-intensive
evolution scenario.

AI, thanks to its computing power, enables process optimisation:better logistics, waste reduction, and resource extraction impact
computation are indeed made possible with AI. The study "HowAI can enable a sustainable future" by PWC indicates that AI
could reduce global greenhouse gas emissions by 4% by 2030.
But, on the other hand, the consumption of AI-driven
technologies will create a high demand for energy. AI application,
to be trained, relies on digital infrastructures – cloud, servers,
data centres – and on a large data bandwidth. According to theInternational Energy Agency, data centres currently consume
approximately 200 terawatt-hours (TWh), or nearly 1% of global
electricity demand. By 2025, average estimates suggest thatenergy consumption will increase by a further 25%.

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122 \/ 123
The benefits of such a practice would be twofold: 1) educate
consumers on their digital carbon impact – pushing for arespectful use of technology (digital sobriety), 2) serve asa recognised benchmark prompting software engineers todevelop better designed and less energy consuming software.
Tools do exist today: CodeCarbon seamlessly integrates into
Python codebase to estimate the CO2 produced by cloud
resources. But the quest for energy-efficient algorithms is still
subject to the goodwill of companies. Making regular code
audits compulsory under penalties would be a good way toensure optimisation across the digital world.
While it is difficult to assess AI carbon impact on an ongoing
and accurate basis, more refined calculation models anddedicated tools are needed to drive legislation. Enforcing
digital solution optimisation is key, as Web 3.0 will become
increasingly dominant in the global economy.

© GREMLIN

Raising awareness today about tomorrow's AI energy
challenges will drive programmers to natively design efficientsolutions, while consumers will have to adopt environmentallyfriendly digital uses. Of course, the energy mix also needs tobe further decarbonised: the carbon footprint of the digital
sector could be reduced by more than 80% if all electricity
consumed came from renewable energy sources. ///Moreover, the rise of cloud computing, the metaverse andnew IoT services reinforce the probability of an energyintensive evolution scenario. But direct and indirect global
digital carbon impact is systematically subject to very wide
estimates, given that taxonomy varies between jurisdictions.
While the digital sector is constantly evolving in terms ofusage and equipment, it is still difficult to assess the ongoingcarbon impact accurately. Models are not refined enough anddo not allow us to clearly communicate the energy efficiency
of a particular process using AI. This would enable publicauthorities to adopt measures towards energy optimisation.

DEEP LEARNING VS. GREEN CODING:
A WIDE GAP
Deep Learning, a sub-technique of artificial intelligence-basedneural network models, is an even more energy-intensive
practice. Its use improves learning speed: DeepMind, owned
by Google, recently published an article announcing a
breakthrough accelerating fusion nuclear science.
But pure performance gains are achieved through larger data
volumes, larger models, and ultimately more computations.

MANAGEMENT & LEADERSHIPThe Council on Business & Society

Researchers at MIT have calculated that training a deeplearning model for 4 to 7 days emits as much CO2 as ahuman being for 57 years, or as much as 5 cars during their
lifetime, only to generate and recognise words very close
to human language (NLP) – enabling for instance a voicecommand to be interpreted by Google Assistant.

EDUCATE ALGORITHM
PROGRAMMERS AND CONSUMERS

Of course, it should be borne in mind that training suchcomplex models is only deployed for a small share of AI
solutions. But energy optimisation is often missing fromAI development projects. Software engineers are the firstto admit that they lack concrete baselines and indicators
to gauge themselves. Using surveys conducted at the 38th
International Conference on Software Engineering (464software engineers), researchers found that where green
coding most matters, its practice is rare. Green coding
consists in ensuring that the code uses as few processor
instructions and as little memory space as possible to reduceenergy consumption. But mobile apps are too often developedin a rush to reach the market quickly. Poorly optimised, somecan drain a battery in a day, requiring frequent recharging.

Raising awareness and training developers on these issues
during their academic years is essential. As said within thelatest World Economic Forum report, AI developers "mustincorporate the health of the natural environment as afundamental dimension." And in its "Recommendation on
the Ethics of Artificial Intelligence", UNESCO states: "Member
States should ensure that AI actors give preference to data-,
energy- and resource-efficient AI methods."

A nascent regulatory framework does not yet encourage
developers to update their source codes. Companies are
slowly starting to audit their software infrastructure, butcompetent audit services are still lacking.

To create a challenging climate for AI programmers, it isnecessary to promote energy-efficient algorithms and financeR&D.

Within the community, some good practices are starting to
be shared and dedicated blog sites are emerging. To reduce
the energy produced by deep learning models, researchers
from the University of Montreal recommend that developers
use computationally efficient techniques such as Bayesian
optimisation and random optimisation.
It would also be interesting to develop metrics or indexes that
consumers could understand – such as Energy Rating Labels
used for household appliances or buildings. The energy
performance of a given application (website, applied task,
API) would be quantified in kWh consumed.

KEYS
TAKEAWAYS rowing carbon impact of digital and AI is forecastedG
to account for 10% of global emission in 2030
Issues in quantifying AI positive environmental
impact results in a lack of regulatory involvement
 egulation and auditing are neededR
to improve AI energy efficiency
 aising awareness is key to prompt programmersR
to design eco-friendly AI solutions

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/ 125

Cross-listing and CSR:
Friends with benefits
While good CSR performance
improves the overall
performance of a firm, can it
also be used as a gateway todifferent markets? Professors
Haina Shi, Xin Zhang and Jing
Zhou of School of Management
Fudan University explore how firms
in developing countries use CSR
performance as an entry strategy todeveloped markets.
Related research: Cross-listing and CSR performance: evidence from
AH shares, Shi et al. Frontiers of Business Research in China, 12:11.

CAN THERE BE ‘A’ DEFINITION OF
CSR?

Firms fromemerging markets
are using crosslisting as a means
and motivation
to improve their
CSR practices.

E

ven though CSR has been in the limelight of various
stakeholders both in the business world and outside,
it has been surprisingly difficult to arrive at a universal
definition of CSR. The implication of this difficulty is indeed acharacteristic of the concept itself.
One way of defining CSR is the firms’ considerations of, andresponse to, issues beyond the narrow economic, technical,
and legal requirements for the firm to accomplish social andenvironmental benefits along with the traditional economic
gains that the firms seek.

© PIRANKA

Yet another definition describes CSR as to how businesses
engage their stakeholders, including shareholders,
employees, customers, suppliers, governments, international

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126 \/ 127
In a way, firms from emerging markets are thus using crosslisting as a means and motivation to improve their CSR
practices. And the measures taken in the CSR domain in aneffort for cross-listing have in fact proven that cross-listed
firms perform better in CSR than otherwise similar non-crosslisted firms.
Apart from internal measures, cross-listing also subjects
firms to the securities laws and accounting standards of thehost country. As the laws and standards are more stringent indeveloped countries than in developing countries, it forces firms
to comply with higher levels of CSR regulations.
When venturing into a new market, investors are looking
for every possible information on a firm. One of the mostimportant sources of non-financial information for investors
is sustainability and CSR reports. Since foreign investors value
such information, firms tend to perform better in this regard.

© CNYTHZL

Looking at the phenomenon from the flip side, governments
and organizations can propagate better CSR practices indeveloping markets using cross-listing as a tool. Indeed, CSR
can’t be a strong enough incentive on its own – but coupledwith increased valuation and reduced risk, it might do the trick.

Regardless of the various definitions, the bottom line isstraightforward. CSR encompasses activities that take into
consideration social and environmental concerns. The definitions
depict an intrinsic value to CSR but there has been a rapid
increase in its recognition, especially in the developing markets.

CONCERN FOR SOCIETY OR
SHAREHOLDERS?
It is a no-brainer that CSR is important to the environmentand society as a whole. But why are businesses interested in
CSR practices when, in most cases, it is going to cost themfinancially? Is it because the firms are concerned about theirfootprint or is it because such practices offer them a businessadvantage?
If someone is even vaguely aware of the history of businesses
and firms, it is pretty easy to find out that they rarely partakein something that does not benefit them directly – and CSR is
no exception, at least in most cases.
The primary reason for firms to focus on CSR practices is thatthese activities enhance the firms’ relationships with various
stakeholders, and without their participation, firms cannot
survive. It is becoming increasingly important for businesses
to showcase their beliefs and values along with their products
and services.
Internally, good CSR performance is found to improve
employee relations and customer satisfaction/loyalty,
increase firm competitiveness and product quality, lower thecost of capital and firm risk, and build reputation, all of whichmay, in turn, increase firms’ profitability.
MANAGEMENT & LEADERSHIPThe Council on Business & Society

Until now, the impact of CSR has been predominantly
observed in developed countries with concentrated markets.
However, being increasingly aware of the importance, firms inemerging markets are now actively participating in corporatesocial responsibility (CSR) practices.

STEPPING STONE OR STARTING
POINT
Cross-listing is not without its problems. Given that investorsof a foreign market have some requirements from the firm
when it comes to cross-listing, those requirements may notalways align with the requirements of the investors in thehome country. This puts the firm in a tricky position to trade
off one for the other.

CROSS-LISTING – EXPANSION OF
EXCHANGES (STOCK EXCHANGE)
Cross-listing is the listing of a company's common shareson a different exchange than its primary and original stock
exchange. It allows firms to access more developed capital
markets and achieve better valuation.

Cross-listing, also, does not naturally extend to corporatesocial responsibility. It only acts as a small part of the vast
ocean of CSR. And even though cross-listing enables thefirms to employ better CSR practices, at the end of the
day firms still operate in their host country and so are only
constrained by its national environmental and labour laws.

Apart from better valuation and access, there is also aperception premium associated with cross-listing. Foreign
firms and Chinese firms cross-listed in the US and Hong Kong
markets, respectively, are better valued than their non-crosslisted counterparts from the same country.

CSR can’t be treated as a trend or as a Key Performance
Indicator (KPI) anymore. It is extremely important to focus
on it now so that future generations don’t suffer from theirreversible consequences of our actions. It is worth notingthat we have officially entered the phase of climate change
where it can no longer be reversed with businesses having
had a major role to play in this regard.
If cross-listing is going to encourage firms to better their
CSR practices, it is indeed a tactic that many firms can use.
However, if firms see CSR performance as a mere formality
to enter a developed market, it defeats the whole purpose of
the CSR concept. Are we headed towards impending doom orwill CSR become an intrinsic part of businesses and save our
future? It is just a matter of time. ///KEYS
TAKEAWAYS egardless of its various definitions, the bottom line isRstraightforward. CSR encompasses activities that take
into consideration social and environmental impacts
 ood CSR performance is found to improve employeeGrelations and customer satisfaction/loyalty, increase
firm competitiveness and product quality, lower thecost of capital and firm risk, and build reputation, allof which may, in turn, increase firms’ profitability.

 ross-listing is the listing of a company'sCcommon shares on a different exchange thanits primary and original stock exchange.

For the shareholders and investors, cross-listing is anadvantageous proposition. In addition to increasing the firm
valuation, it also decreases the risk by sharing the risk withforeign and domestic investors. It also offers the shareholders
better information transparency, disclosure, and protection.

 irms from emerging markets are using crossF
listing as a means to improve their CSR practices
as well as venture into developed markets.
 uch measures have proven that crossS
listed firms perform better in CSR thanotherwise similar non-cross-listed firms.

CROSS-LISTING AS A MEANS FORCSR PRACTICESHaving established the advantages of cross-listing for firms,
it is understandable that firms would be interested in crosslisting. However, since developed markets demand better CSR
performance, cross-listing requires firms to monitor financial
intermediaries, such as analysts, underwriters, and auditors ina more stringent manner.

TIME TO WAKE UP

 eing increasingly aware of the importance, firms
Bin emerging markets are now actively participatingin corporate social responsibility (CSR) practices.

 ross-listing, also, does not naturally extend
C
to corporate social responsibility. It only acts
as a small part of the vast ocean of CSR.

© TRILOKS

organizations, and the natural environment through policies,
processes, and procedures.

Furthermore, CSR calls for firms to go beyond the minimum
requirements of law. In fact, this is one reason for thedifficulty in universally defining such a concept. Therefore,cross-listed firms should not look at CSR as a stepping stonethat is forgotten once the objective is reached, but rather as astarting point for an impactful CSR mission.

 ross-listed firms should not look at CSR as anCentry requirement to developed markets but rather
as a starting point for an impactful CSR mission.

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/ 129Realizing Low-Carbon New Value
Around Customers, Products
and Enterprise Operations

Carbonneutralizationand low-carbon
practices are nolonger multiplechoice questions.

Dong Wang, School ofManagement Fudan
University Winner of the2022 CoBS student CSR
article competition, looks into
a dovetailed solution of benefits forstakeholders involved in the quest to
reduce carbon emissions.

Nowadays, it is generally accepted that human excess
will lead to climate change. Global warming has been
an indisputable fact as a result of greenhouse gases
directly or indirectly produced by human life and economic
activities. With the emission of greenhouse gases, the impact
on the earth's climate system has brought disasters, including
glacier melting, rising sea-levels and frequent extreme
climate events. Consequently, the world has been actively
making suggestions for cooling the earth and trying to find"meaningful and effective" measures to save it. Emission
reduction has become a responsibility and obligation thateach of us and every enterprise should take the initiative toundertake.

© DMITRIY83

In spite of the fact that many enterprises have also begun
to join global climate governance, participate in low-carbon
practice and start the journey of carbon neutralization, it isstill a very important topic regarding if or how low-carbon
practice can make more profits or bring new value-added
effects for enterprises, as enterprises are created to seek
profit. According to experts’ judgment and relevant data, thevalue of low-carbon practice is mainly embodied in three
aspects: customer-oriented, enterprise-based, and productcentric, which can be elaborated as follows.

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130 \/ 131
the Pernis Refinery in Rotterdam, the Netherlands, and heats
16,000 households. Its Apomatox platform in the Gulf of
Mexico has reduced fuel consumption by about 40% andcarbon emissions by about 20% ~ 25% through combined
thermal power generation.
Since ExxonMobil launched the "global energy management
system" in 2000, the energy efficiency of the company's
refineries and chemical plants has increased by 15% ~ 20%.
Taking the above data of Shell as an example, according
to the relevant data and based on the energy price inFebruary 2022, it has been calculated that the electricity
charge of Netherlands residents is € 0.35/kWh, and theannual heating consumption of Netherlands households
8,000 kWh. And based on the data of Germany in 2019, theaverage emission of carbon dioxide is 401g/kWh. So heating
16,000 homes a year can bring the following benefits:© GETTYIMAGES• Economic benefit: 16,000 * 8,000 * 0.35 = € 44.8 million• Emission reduction: (16,000 * 8,000 * 401) / (1,000 * 1,000)= 51,328 t.

CUSTOMER-ORIENTED TO IMPROVE
LOW-CARBON EXPERIENCE AND
CREATE A NEW LOW-CARBON LIFEa) Low carbon experiences enhance low-carbon demandand drive the sales of low-carbon products
Responsibility and sustainability are increasingly accepted by
the public. Everyone has tried to integrate low-carbon life andparticipate in the new low-carbon life more and more actively,
hence making low carbon products increasingly welcoming.
For example, more and more residents begin to travel by
public transport and use new energy vehicles, recyclable ordegradable fast-food boxes.
These new low-carbon activities and new experiences
mentioned above can trigger new market demands, such as
the promotion to the development of the new-energy vehicleindustry, and to the research and development of degradable
materials, and so on. In this scenario, enterprises can actively
try to add low-carbon elements to the customer experience,
improve the sense of low-carbon experience, and create a
new low-carbon life with consumers, which will bring more
low-carbon business opportunities to enterprises.
b) Promote carbon inclusion and achieve common
prosperity.
While consumers improve low-carbon awareness and actively
promote low-carbon behavior, the international community
is also generally implementing the carbon inclusive system
to encourage and orderly allocate resources through thescientific planning of "whoever reduces carbon will benefit".
In this process, the volume of low-carbon behavior of a single
consumer is too small. Therefore, the interaction between
enterprises and consumers can form a converging influence.
In addition to spiritual recognition, low-carbon behavior
MANAGEMENT & LEADERSHIPThe Council on Business & Society

can also bring tangible benefits so as to achieve common
prosperity.
Taking automobile manufacturing enterprises as an example,
based on the American ZEV (Zero Emission Vehicle) act,
automobile manufacturers are required to produce a certain
number of zero emission vehicles every year to obtain ZEV
credit points. Therefore, for Tesla, the financial report data inrecent seven years show that Tesla's revenue from carbon
credits business has reached US $3.834 billion, and its
revenue from selling carbon credits in 2020 is US $1.58 billion,
while the annual net profit of that year is US $721 million, andthe carbon credits revenue is more than twice the annual net
profit.
Take "enterprise as the foundation", reduce consumption andemission, and increase enterprise profits.
In the course of low-carbon practice, an enterprise will not
only bear social and environmental responsibility, but also
consider the rate of return on investment. Therefore, from theperspective of the enterprise itself, low-carbon practice will
create value in two aspects:a) Starting from the corporate brand, perform
responsibilities through ESG, undertake social
responsibilities and improve the brand image.
ESG (Environment, Social & Governance), a value concept thatpays attention to the performance of environment, society
and corporate governance, is a key factor in measuring thesustainability and moral impact in the investment strategy
of enterprises or companies. It can build social capital andtrust for enterprises and enhance their ability to resist market
shocks and environmental disasters.

Especially at present, the pandemic has brought challenges
to global economic development. Enterprises can achievesustainable growth of performance through ESG, improve
brand strength and maintain the continuous leadership of
the global market. In short, it is an effective way to improvesustainable income.
b) Starting from the enterprise operation, the production
cost is reduced through energy conservation andconsumption reduction.
In the process of low-carbon practice, enterprises mainly
consider the integration of industrial productivity andecological productivity, rather than offset each other.
Therefore, two aspects can be taken into consideration: oneis the impact of consumption on cost, and the other is theimpact of consumption on the environment. Around these two
impacts, the new value created by an enterprise’s low-carbon
practice is mainly reflected in the following two aspects:

IMPROVING ENERGY EFFICIENCYAND REDUCING DECARBONIZATIONCOSTSTherefore, when improving energy efficiency, the demandfor energy consumption will be smaller than the original
demand, the cost of energy consumption will be reduced, andemissions will be reduced accordingly.

USE OF RENEWABLE ENERGY TO
REDUCE ENERGY COSTS AND REDUCE
EMISSIONS
According to data on global power plants thermal power
generation, especially coal-fired power, is one of the main
sources of carbon emissions. The international powerindustry is also vigorously advocating the adjustment ofenergy structure, promoting the use of renewable energy, andincreasing the rate of industrial electricity.
From the current global application, wind and photovoltaic
energies are more effective in renewable energy power
generation, especially photovoltaic power generation,
which has a good application effect in the world. Moreover,
distributed photovoltaic technology is becoming more andmore mature.

In terms of enterprise production, if energy efficiency
can be improved, energy consumption will be reduced
from the consumption side. Promoting the recycling andcomprehensive utilization of energy is an effective way to
improve energy efficiency. Using waste resources to create
new value or realizing "one energy for multiple uses" hasbecome the focus of energy conservation and consumption
reduction of many energy and manufacturing companies.

Taking Chinese industrial enterprises as an example, it isassumed that 10,000 square meters of rooftop photovoltaic
power stations are being built (the actual inclination,
obstacles, shadows, etc.) and that if all power generation isused for self-use, the power generation cost shall be Ұ0.4.
The peak electricity price of municipal power is more than Ұ1,
and the normal electricity price is Ұ0.5, which is calculated
according to the average Ұ0.8/kWh. And according to CLCD
(China life cycle basic database), 1 kWh of mains power isgenerated, accompanied by 960 g of CO2.

Cogeneration is an important starting point for improving
energy efficiency and saving energy. Shell generates
electricity through cogeneration, and the waste heat fromAccording to empirical calculation, 1.5-MW photovoltaic
power generation can be created. The following benefits will
be generated within one year:

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MANAGEMENT & LEADERSHIP

132 \• The power generated will be: 1,500*3.9 (effective sunshine
hours) *0.8 (system efficiency) *320 days (it is expected that
there will be sunnier days) ≈ 1.5 million kWh.

FUDAN
INTERNATIONAL MBA• Economic benefits obtained will be: 150 * (0.8-0.4)= Ұ600,000.

THE FUDAN INTERNATIONAL MBA PROGRAM WAS• Reduced carbon emissions: (150 * 10,000 * 960) / (1,000 *
1,000) = 1,440t.

LAUNCHED IN 1996 THROUGH COLLABORATIONBETWEEN FUDAN UNIVERSITY SCHOOL OF
MANAGEMENT (FDSM) AND MIT SLOAN SCHOOL OF

The data of reduced carbon emissions is consistent when
the calculation is applied to European countries, but theeconomic benefits will be more objective. Therefore, the useof renewable energy can effectively reduce the cost of energy
consumption and reduce carbon emissions.

MANAGEMENT. THIS PROGRAM, TAUGHT ENTIRELYIN ENGLISH, AIMS TO CULTIVATE PROFESSIONALSWITH AN INTERNATIONAL PERSPECTIVE AND
ENTREPRENEURIAL SPIRIT, WELL-ADJUSTED TO THE
DEMANDS OF ECONOMIC GLOBALIZATION IN CHINAPROMOTE GREEN SUPPLY CHAIN
WITH "PRODUCTS AS THE CORE"

AND THE REST OF THE WORLD. FDSM RANKED 9TH
IN ASIA, NO. 1 IN MAINLAND CHINA IN THE UTD TOP
BUSINESS SCHOOLS RESEARCH RANKINGS 2012-

With the popularity of low-carbon products, green products
are increasingly accepted by the people. Taking products as
the core and the whole life cycle, building a green supply chain
from supply, logistics, consumption, data as well as recycling
effectively improves environmental performance, makes
resource utilization efficient and minimizes environmental
impact. This enhances the green image of the enterprise, wins
the favor of customers and enhances the premium ability of
products. At the same time, we can reduce carbon from the
supply side through green products and contribute to thecontinuous cooling of the earth.
To sum up, carbon neutralization and low-carbon practices are
no longer multiple-choice questions, but blank filling questions
faced by enterprises. In the face of the continuous global
warming problem, it is incumbent upon everyone to bear socialand environmental responsibility. Moreover, through effective
low-carbon activities endorsed by enterprises, we can create
new value for society, companies and consumers. ///2016; FUDAN MBA PROGRAM RANKED 47TH IN THE
GLOBAL PROGRAMS BY FINANCIAL TIMES IN 2016.

© RAWPIXELLEADING FUTURE

KEYSTAKEAWAYS
 he value of low-carbon practice is mainlyTembodied in three aspects: customer-oriented,
enterprise-based, and product-centric.
 ow carbon experiences enhance low-carbon
Ldemand and drive the sales of low-carbon products.

ON THE PRINCIPLE OF LEARNING BY DOING, WE

 nterprises can promote carbon inclusionE
to achieve common prosperity

ACTION LEARNING PROGRAM IS DESIGNED TO

 tarting from the corporate brand, perform
S
responsibilities through ESG, undertake social
responsibilities and improve the brand image.

MANAGEMENT & LEADERSHIPThe Council on Business & Society

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STUDY AND LIVE IN A REAL INTERNATIONALENVIRONMENT DURING THEIR MBA STUDY.
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 tarting from the enterprise operation, theSproduction cost is reduced through energy
conservation and consumption reduction.

FACULTY, THE ILAB TEAMS WORK ON THE REAL aking products as the core and the wholeTlife cycle, building a green supply chain fromsupply, logistics, consumption, data as well as
recycling effectively improves environmental
performance, makes resource utilization efficientand minimizes environmental impact.

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/ 135

Greenflation: The dirty cost ofbuilding a clean and green economy
There is a debate around thepotential cost of a green
transition. "Greenflation" would
be caused by higher demand
for greener solutions, and theconsequences of new public policies(e.g. green taxes). How can we deal
with the social tensions that could
possibly arise with greenflation?
Salil Shahane, ESSEC Business
School MiM student and competition
finalist, explores.

GREENFLATION – THE CAUSE AND
THE EFFECT© GRINDI

Shutting the old
economy too
fast could lead to
exorbitantly highprices in the newer
and the cleaner
ones of the future.

The need for green energy is more than ever today andthis has ironically put a lot of strain on conventionalenergy sources. The more the push towards thisgreener transition, the more expensive the whole campaign.
Government policies have positively influenced the demand
for green energy resources but tightening regulations forthe conventional resources required to produce green
energy have affected supply – making these resources
expensive. The unintended result is “Greenflation”, causedby rising prices for raw materials like copper, aluminum, andlithium that are essential for harnessing energy from nonconventional energy sources like Solar and Wind. Copper andAluminum – two of the most important minerals used in theelectrification processes required to create greener resources– end up doing more damage than good to the environment
due to their procurement processes. As such, public policies

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136 \/ 137

INCREASING AWARENESS AROUNDENVIRONMENT, SUSTAINABILITY AND
GOVERNANCE (ESG)

technological constraints would need to look out for plausible
implications on other priorities like equity and public finances.
For businesses, the balance among different stakeholders like
employers, customers and society will become more complex
and difficult.

ESG concerns have now taken the entire world by storm
and are no longer the prerogative of rich nations. Due to the
new-found ESG awareness, supplies are restrained evenfrom Latin American countries – once considered as the wild
west of global mining. One big copper project in Peru, oneof the largest global exporters of copper, scheduled to open
in 2011, remains unfinished due to resistance from the local
community. A similar trend can be seen in China, one of theworld’s largest commodity exporters, that has cut productionof raw materials like iron ore and steel as it aims to achievecarbon neutrality.

GREENFLATION – TRANSITIONARY
OR HERE TO STAY?
Perhaps greenflation is transitionary and economies of scale
can be applied to eventually rationalise commodity prices
and decrease overhead costs like permit fees, customer
acquisition costs and installation costs. Better access tofunds can probably reduce the threats to the economic
viability of clean energy. Having said that, there is still a
possibility that inflation will appear further up the green
technology supply chain. We can already see some evidence
in the case of electric vehicles. But inflation sources do
not tend to distinguish between conventional and electricvehicles. For instance, on average, the price of Tesla vehicles
increased by 6.3% as compared to 5% seen in regularcars during the same period. Isabel Schnabel, a German
economist, while speaking at an ECB virtual panel, stated that
“While in the past energy prices often fell as quickly as theyrose, the need to step up the fight against climate change
may imply that fossil fuel prices will now not only have tostay elevated, but even have to keep rising if we are to meetthe goals of the Paris climate agreement.”. With the risingdemand and decreasing supply, the prices for non-renewableenergy sources can only go up. As Schnabel likes to put it “At present, renewable energy has not yet proven sufficiently
scalable to meet rapidly rising demand… The combinationof insufficient production capacity of renewable energies inthe short run, subdued investments in fossil fuels and risingcarbon prices means that we risk facing a possibly protracted
transition period during which the energy bill will be rising.
Gas prices are a case in point.” Now, the onus is on thegovernments to acknowledge that this noble transition to agreener future is going to cost dearly in the shorter run. It is
not a matter of “if” anymore but rather a matter of “when” thisprice needs to be paid. Perhaps, the sooner the better.

THE “GREEN” CONUNDRUM

tighten the regulations surrounding their procurement thereby
discouraging investments in mines, smelters or any othersource that belches carbon. This kind of growing demand anddecreasing supply, both due to public policies and regulations,is leading the world into Greenflation.

IS NECESSITY BIRTHING INVENTIONS?
Historically, transitions to a new energy source have pushed
for innovation in the old one. With the introduction of thesteam engine, the makers of sailing ships innovated morein the 50 years than they had in the previous 300 years.
Electricity proved to be the mother of innovations in gas
lighting. Extending this analogy and given the current
scenario, the transition to green energy would require
increased consumption of oil in the transition period. But we
do not see investments picking up in the oil sector as thestringent regulations and dis-incentivising policies against
this polluting ingredient make this sector less and lessattractive for investors. Even when we see oil prices rising(Brent crude has already breached the $100/barrel mark),
the big hydrocarbon companies and countries are reluctant
to join the party. As mentioned earlier, the two vital minerals
in green electrification, Copper and Aluminum, also aresubject to scathing ESG scrutiny thereby making them lesslucrative for investment. It is a paradox that the world needs
more copper than ever to go green eventually and this has
inevitably hurt the environmentalists who recently helped
block a new Alaska mine over concerns for the negative
impact on the local community around the mines and thethreat to aquatic life like the salmon.
MANAGEMENT & LEADERSHIPThe Council on Business & Society

The effects of this greenflation can be felt across different
sectors of the economy and eventually in the entire society.
No one including businesses, governments and central banksis spared by this greenflation. The spurring demand forgreen energy and the consequent rise in commodity prices
required to create green energy would definitely increase thecomplexity of monetary policies for the central banks of theworld. Governments around the world with their labour and

THE BALANCING ACTGovernments around the world need to rethink theirexpenditure and income redistribution policies. The
challenges posed by this transition to a green economy willneed to be faced head-on, to a large extent, by Governments.
They need to mobilise their public capital by employing
it in the essential infrastructure required to facilitate thegreen energy transition. Public accounts need to show hugeinvestments towards green electricity and storage. Carbon
taxes or the green premium are highly unlikely to cover allthese expenditures and hence the public debt has to bear thebrunt in the shorter run for the sake of future generations nothaving to live in adverse climatic conditions.

© SHAUN LOWE

© CIRANO83

Green technologies need more wiring than the prevalent fossil
fuel-based technologies. Electric vehicles, for example, use up to
6 times more minerals than a normal car. Over the past coupleof years, governments around the world have announced new
green spending plans and pledges thereby leading analysts torevise their demand estimates for copper and aluminum. So, we
have on one side public policies and government pledges thatcreate a demand for green technologies; but on the other hand,
we also have tight regulations constraining the supply of theessential raw materials required to build green energy thereby
leading to Greenflation.

This transition could also have regressive income impacts
and carbon taxation could affect the various strata of thesociety differently. In the shorter run, this regressive carbon

pricing impact needs to be compensated for by the different
urban groups affected by it and this compensation again
needs to be borne by the government’s exchequer. Income
transfer mechanisms need to be in place within the country
and between countries to mitigate these regressive impacts.
Reskilling of labour is another priority for the government as
we move towards this greener future. Workers need to beskilled for procuring, manufacturing and maintaining greener
substitutes, and job creation in these sectors becomes apriority. Obsolescence of physical assets like machineryand equipment as we move towards green technology
is something that needs to be compensated for withinvestments in their greener counterparts.

STILL, A LONG WAY TO GO
We are confronted with a conundrum. The cost of doing
nothing is surely more in the longer run. We need tosupply enough dirty material to build new, clean and green
technology. But to achieve this we need to strike a balance.
Having stringent regulations in place that reduce the supplyof essential raw materials will not help realize the goal.
Governments need to understand that this transition needs tobe given time – and shutting the old economy too fast could
lead to exorbitantly high prices in the newer and the cleaner
ones of the future. ///KEYS
TAKEAWAYS overnment policies have positively influenced
G
the demand for green energy resources.
 ut tightening regulations for the conventionalB
resources required to produce green energy
have affected supply – making these resources
expensive. The unintended result is “Greenflation”.
 iven the current scenario, the transitionG
to green energy would require increased
consumption of oil in the transition period.
 ublic policies and government pledges
P
create a demand for green technologies, buttight regulations constrain the supply of theessential raw materials required to build green
energy thereby leading to Greenflation.
 overnments around the world need to rethink theirG
expenditure and income redistribution policies.
Income transfer mechanisms need to be in place
within and between countries to mitigate the negative
impact of the transition on job loss and skills needs.
 hutting the old economy too fast couldS
lead to exorbitantly high prices in the newer
and the cleaner ones of the future.

The Council on Business & Society

MANAGEMENT & LEADERSHIP

/ 139The ISE Sustainability Index in Brazil:
A story of purpose, challenge, and success
Professor Mario Monzoni, FGVEAESP, one of the creators of
the ISE (Sustainability Index)
in Brazil, takes us through its
journey from conception to
successful implementation. From aninterview by Professor Adrian Zicari,
ESSEC-CoBS.
Sustainability indexes are promising tools. They give invaluable
information to investors, as they present a selection of companies ina particular stock exchange with good sustainability results. Amongthe many sustainability indexes in the world, the one of the Sao PauloStock Exchange (ISE B3) has a particular place. Created in 2005, it
was one of the first sustainability indexes in an emerging economy.
We had the opportunity to interview Mario Monzoni, Professor at FGV,
and one of the creators of this index.

FIRST STEPS, FIRST CHALLENGES
Adrian Zicari: How did the ISE begin?

© GALEANU MIHAI

Any corporate
and institutional
PowerPoint having
the ISE on itmeans a plus forthe company.

Mario Monzoni: Legend has it that the ISE began on theinsistence of Fabio Barbosa (at the time, head of Banco
Real-ABN), who had just launched the Ethical fund, afamily of ethical and SRI funds which were the first ones in
Brazil, in 2001. They needed a benchmark to measure thefund's performance and a more appropriate reference thancomparing it to the traditional stock market index.
Raymundo Magliano, who was Bovespa's president at thattime (today it is B3), accepted the challenge and createda working group to think about the launch of an index.
We were invited to this working group as FGV-EAESP as
its Sustainability Studies Centre. In this working group,
we realized it was necessary to look for funding to build

The Council on Business & Society

MANAGEMENT & LEADERSHIP

140 \/ 141© APROTTISE questionnaire itself that had a role as an instrument, anda very important tool for corporate management towards
sustainability. There, yes, in the business world – I believe
it had an impact. We were also responsible for the ExameAward – a prestigious award for companies in Brazil – andthis award also used the ISE questionnaire. Only that in the
Exame Award, as closed-capital companies were also offered
the opportunity, we took all multinationals. This is because,in general, multinationals in Brazil are through subsidiaries– closed-capital companies – and they do not necessarily
participate in the capital markets.

the methodology of the index. We talked to the IFC – theInternational Finance Corporation (World Bank). We sent
them a proposal to finance the first year of our research,which was to develop a questionnaire. They financed thestudies throughout 2004 and 2005 to build the index. Then
we launched the questionnaire, which also included a public
consultation on the questions it included. It is importantto talk about these because we were concerned that thequestionnaire itself could have been a barrier to entry – it wasvery long and it covered several dimensions that concerned
the responsible investing community itself and also thebusiness world.
In 2005, the ISE was launched. That year, it had a large
adhesion, while it decreased slightly over time. The Brazilian
capital market is small compared to other capital markets, so
it wasn't possible to use a Best in Class model, for example,
like the Dow Jones does. Companies competed among
themselves to take part in the portfolio. A council was createdwithin Bovespa, to which we, FGV, submitted our evaluations.
So we designed the questionnaire, sent it back to thecompanies, they responded, we evaluated them and told theboard: "In our evaluation, this group of companies is ahead ofanother group in terms of sustainability practices".
The first stock portfolio was in 2005. The ISE initiallyreached momentum in participation, followed by a drop,
but we were then at another moment in the sustainability
agenda. Personally, I think the ISE was very pioneering. To
get investors, especially institutional investors, out of the
traditional model and into sustainability investing.
Adrian Zicari: How did people react to the initiative?
Mario Monzoni: In the beginning, in 2005 and 2006, somebanks even launched several products linked to the index, but
institutional investors here in Brazil, especially pension funds,
have a benchmark to follow, the Bovespa index. As such, it’svery difficult for them to leave an investment they know tomigrate to others, even though the Investors' Association andother associations linked to institutional investors had been
discussing this issue since 2005. It was a different time than
MANAGEMENT & LEADERSHIPThe Council on Business & Society

today with the explosion of ESG as an issue and interest in itreaching an all-time high.
From the second and third year on, the ISE became selfsustaining, with companies paying to participate in the index.
However, it had a very marginal impact on the investmentcommunity, because at that time that agenda was still veryin its beginnings. The capital market is small, so we had 50
companies participating to draw up a portfolio of 30, 35, 40
corporates to compose the index.
But we’re straying from the subject. The questionnaire andthe approach we came up with involved several dimensions
and three hundred questions and this posed a challenge tocompanies when deciding to join the ISE. Not least because
they often had a single person dealing with the initiative,
multiple internal stakeholders to discuss approval such as theoperations and marketing departments to name only two. In
short, the decision to move the whole company in such a way
was a complex decision involving many issues and questions.

A PURPOSEFUL AND USEFUL TOOL
Adrian Zicari: What impact did the ISE have in companies?
Mario Monzoni: I think it had a great impact on the corporate
sector. The ISE questionnaire, although its function was tobuild a portfolio, ended up serving as a management tool forsustainability. Very importantly, at that time we had the Ethos
indicators and Ibase model, giving us a mix of guidelines forreporting and questionnaires for indexes. These included
the Dow Jones itself and the FTSE which ended up being
imported into the sustainability management systems ofcompanies. Because the questionnaire, in a way, reflected
what was expected of a company in terms of sustainability
practices, there were questions for companies to address
which went from action plans and strategy to very basics.
It was a diagnostic tool to see gaps in terms of management
and, on top of that, action plans to address these gaps, froma strategic point of view. I think that it wasn’t the ISE but theIn the Exame Award there were up to 250 companies
participating. For 10 years, we took charge of, in parallel, themethodology, the questionnaire and the evaluation among
other things. I believe that this has given impetus to orcontributed to driving the corporate responsibility agenda in
Brazil, together with other players that were also active suchas the Ethos Institute and the branch of the World BusinessCouncil here in Brazil. The CDP then played an importantrole in the climate dimension. Today, the CDP questionnaire
constitutes the climate change questionnaire of the ISE itself.
Moreover, I think that, yes, there was a lot of criticism
because the questionnaire was so long, because academia
was developing it and we were faced with the old stereotype
from professionals that “academics don’t know life as it is”.
We suffered a lot in this process, but while the “dogs werebarking”, as we say in Brazil, “the carriage was passing”. I
believe it had a great impact on the business community,
it is still a reference. Being part of the ISE is important. Any
corporate and institutional PowerPoint having the ISE on itmeans a plus for the company. And losing its place in the
ISE is very bad for a company. And actually, at that time we
didn't even use the word "leave". We used to talk about "notentering again" because the portfolio was renewed every year,
so it was possible that a company would not enter the next
portfolio. To be in one year and not be in the next was very
badly seen. For companies, if they want to participate andenter, then they can't leave, because leaving is worse, the loss
being greater than the benefit of entering, perhaps. I believethat in this sense, the impact of the ISE was higher among
companies than among investors themselves.

PRESSURE FOR PROFIT:OVERCOMING THE SHORT-TERM
VIEW
Adrian Zicari: What impact does the index have on
investment decisions?
Mario Monzoni: Investment, I think, follows business as
usual. Maybe now the picture is a little different, as thefinancial community in Brazil is quite innovative in terms
of practices and even the Central Bank is regulating onsustainability issues. If we were to do qualitative researchon what led these things to happen, maybe the ISE has alittle place in the equation. I don't know how relevant thecoefficient is in the equation, but in the business world it
certainly has a greater impact than on the investment side.

Adrian Zicari: What have you learnt from all this?
Mario Monzoni: Oh, everything. It was a very important
experience for us. Today, the ISE has undoubtedly contributed
to what we are as a sustainability centre. However,sustainability is still marginal on the corporate agenda.
Certainly, it's the short term that drives actions and businesspractices, especially for publicly listed companies, whichhave to demonstrate their results to shareholders quarterly.
In Brazil, with high interest rates, with part of the benefits ofsustainability connected more to the medium and long term,when you add interest rates and time to the denominator, it's
cruel.
So when it comes to decision making, without a doubt,
short-term issues prevail. We had to go on building, creatingawareness. I believe that today this ESG world tells me thatcompanies have realized that looking into this is important.
Not that they are already doing things, but they have realizedthat not looking into sustainability issues, especially climatechange, for example, can bring risks to the company andaffect returns. They have a greater and better understandingof what that means.
I'm not saying that this ESG tsunami has made us enter theenchanted world of sustainability or corporate practices,because you only have to look out the window and see socialand environmental indicators, and there is a lot of work to
be done. That's it. Realising the obvious – that sustainability
fights with the interest rate and the discount rate – it fights
with time. Here, we joke that there are three Cs: which isconviction, convenience and catastrophe.
We realize that some companies are convinced that they haveno other way to go, and that to question the environment
will mean questioning their operations, their way of life, their
entire production and consumption model – because their
inputs and outputs are related to the planet. So, they areconvinced that there is no other way. Even if, in the short term,
there is a trade-off, they know that up ahead this will be very
important and will guarantee or increase the probability of thebusiness' sustainability. Others, the vast majority, I think, arein the world of convenience.
Maybe they are tired of fighting against it and they understandthat: "Gee, if I don't do this, my European customer will
buy from the competitor” So, I have to at least say that I’mdoing something. It's the class of convenience. "Not that I
believe in it very much. In fact, I don't even like this issue,
but for my business it is convenient to say that I believe,
because otherwise I can lose market access, or I can havesome reputational problems. Everybody is doing it and why
not me?” It is the convenient group, which I think is the vast
majority. Then there is the C of the catastrophe, usually for
those in denial, who tend to say "what's the point of that?
Another tax to be paid." Sometimes a catastrophe happens,
linked precisely to governance issues. Here, in Brazil that
could be linked to corruption, which is very strong. Or watercrisis. If we talk about ecosystem services, water supply,
water regulation, nobody understands. But when people see awater crisis, they say "Ah, now I understand."The Council on Business & Society

MANAGEMENT & LEADERSHIP142 \
When there's a water crisis, a company has to pay for water
trucks to keep operations going and the usual reaction is "Oh,but I had them for free, now I have to pay?” Perhaps here too,in a catastrophe scenario, companies will understand the
ESG issue at stake. Maybe one thing I've learned is that you
can divide the world into three: conviction, convenience andcatastrophe.

MPGI

LESSONS LEARNT AND FUTURE
EVOLUTION

Mestrado Profissional em Gestão Internacional

Adrian Zicari: If you had the opportunity to do it again, what
would you do differently?

Or perhaps an expanded index, which would give even greater
investment possibilities, because one of the criticisms is that
it was too small a portfolio: "I need more, with more sectors,
to diversify my risk." In addition, I would maybe add a little
more inclusiveness there, even if there is a trade-off. Becauseby the time you include more firms, I think you would haveto really differentiate as well. Those who are there are goingto say: "Gee, I want to stay in the club, in the A league, I don't
want to be in the B league." I pushed that idea for a while, but
I don't think the board understood that nobody would want tostay in a B league. That's fine, they call the shots.
A further idea is maybe a more simplified questionnaire,
maybe a more customized questionnaire by sector, which
would be a lot more work – because as I said, we don't have
Best in Class. Sometimes, the best in a sector is the worst
in the sector, because it is the only one. There are not 2,500
companies like the Dow Jones to be able to choose from anddivide into sectors. For the ISE, 40 companies answered thequestionnaires. It was a limitation given a priori, and it was afact of the problem. I don't know, maybe if FGV had gone out
earlier, looked for more partners, it would have been possible
to leave earlier. We were there for 15 years. Maybe it was time
to realize that we had done our part, now the other one can dobetter than us, maybe. ///MANAGEMENT & LEADERSHIPThe Council on Business & Society

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© ALEXSLMario Monzoni: Ever since I received your question, I've been
thinking about this. I don't know. Actually, I was the technicaladvisor for Bovespa, so it was them who decided, not us, but I
think that if everything were to start from the beginning again,
I’d create two leagues, two clubs. Maybe a questionnaire,
the way it is, for the champions. And then a league to givevisibility to those companies that are making an effort, thatare starting out – as if it were an access league – where
obviously you wouldn't be able to compare with the class thatis up there doing a lot of things, but it would give visibility to
the market that they have already started. It would have astandard, minimum standards in there, including reporting
among other things.

Master in International Management

This program offers the opportunity of a double degree graduation, i.e., a Master inInternational Management from FGV-EAESP, acknowledged by CAPES (a Brazilian
Ministry of Education’s institution that recognizes the quality of graduate programs in the
country), plus a Master’s degree from an international partner institution.

Objective
To offer pre-experience graduates in business and similar areas the skills they need tosucceed in companies with global scope, both in Brazil and abroad, through cooperationagreements and double degrees between FGV-EAESP and partner schools.
For further information about the program, next selection process and required
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/ 145The Main Barriers Preventing the World
from Reaching Net-Zero Carbon Emissions
An in-depth exploration of thecomplexities and paradoxesof reaching net-zero by Félix
Dubois-Aubecq, ESSEC MiM
student and finalist in the CoBS
2022 CSR article competition.

T

he concept of "net-zero carbon emissions", or "netcarbon dioxide emissions", has been defined as thesituation in which "anthropogenic CO2 emissions
are balanced globally by anthropogenic CO2 removals overa specified period". Understood this way, it leads to thecessation of CO2-induced warming when net anthropogenic
CO2 emissions themselves halt: unless emissions
subsequently decrease, CO2-induced surface warming would
remain at its last achieved level, in the long term. Anotherconsequence is that this concept does not cover other, lesswell understood drivers of global warming.

© THEMACXThe uncertainties
surrounding theconcept of netzero emissions are
not restrained tothe developmentof scientific andtechnologicalsolutions.

There are different interpretations of this concept. Originallya scientific concept, carbon neutrality emerged at the end of
the 2000s when the question of how to curb the rise in global
surface temperature due to CO2 emissions was raised. It thenentered the field of climate policy, the Paris Agreement beinga striking example, as it set the goal of carbon neutrality by
2050. As such, carbon neutrality is part of the objective ofcontaining global warming to +1.5°C. Buoyed by the narrativeof this concept, over 120 countries have already adopted
neutrality targets.
This is perhaps also its first obstacle: while it is widelyadopted as a solution in climate policies, the concept is not
yet well understood, whether in the scientific, political, or
economic fields. As such, it is subsumed under the moregeneral concept of “neutrality”, which can have at least six
interpretations: carbon neutrality per se; net greenhouse gas
emissions; climate neutrality, which refers more broadly tothe "state in which human activities result in no net effect

The Council on Business & Society

MANAGEMENT & LEADERSHIP146 \/ 147

on the climate system"; carbon neutrality, which refers to
the sole emissions of a country, organisation or activity; net
greenhouse gas emissions at the country level; negative
net greenhouse gas emissions, which refers to a situation
where "metric-weighted anthropogenic greenhouse gas(GHG) removals exceed metric-weighted anthropogenic GHG
emissions".

the development of electric vehicles, which the IEA estimates
could reach 60% of global car sales by 2030.

This variability in the interpretation of net zero reflects
the three main uncertainties surrounding it: uncertainties
about the technical means; uncertainties about the way inwhich policies set targets and plans, both nationally andinternationally; and uncertainties about the response of theprivate sector.

For example, the food and agriculture sectors have received
little consideration on this point outside of deforestation
issues, due to the complexity of the supply chain, thelarge number of actors, the fragile economic situation ofagriculture and the need for low prices. Solutions exist to
combat emissions from this sector, which is responsible
for about 10% of CO2 emissions, such as reducing the useof fossil energy sources in farm buildings and equipment;
reducing the CO2 intensity of agricultural production; making
better use of organic fertilisation and increasing the shareof legumes in crop rotations; storing more organic carbon
in soils by introducing intermediate and intercropping crops,
crop associations or agroforestry systems; developing no-till
techniques and optimising grassland management; capturing
CO2 emissions within plantations.

SCIENTIFIC UNCERTAINTIES: A
CONCEPT AND IMPLICATIONS STILL
DIFFICULT TO UNDERSTAND
Originally a scientific concept, achieving net zero carbon
requires action in the political, social, and economic spheres,and involves ethical, technological, legal, and behaviouralconcerns. However, even before generalising solutions toachieve net zero carbon, it is necessary to consider thatthe concept is not fully understood and that solutions varyconsiderably between sectors.
Firstly, achieving net zero carbon emissions means tackling
all emissions. So far, solutions have been found mainly in theenergy sector (which generates 73.2% of carbon emissions) through the development of clean energy. According to
the IEA, the goal of zero CO2 emissions is even achievablein technological terms, thanks to a more efficient use ofenergy and the development of renewable energies. In many
countries, the cost of renewable energy has fallen so sharply
that the transition to carbon-free electricity looks promising.
A similar trend seems to exist in the automotive industry, with
MANAGEMENT & LEADERSHIPThe Council on Business & Society

However, most sectors show more uncertainties in theirtransition to net zero carbon emissions, including mining,heavy industry, agriculture, food processing, aviation, andconstruction, where the issue is more difficult to address.

The latter solution is central to the goal of zero net carbon
emissions, through the development of carbon capture,utilisation, and storage (CCUS) technologies. The Carbfix
project in Iceland is an example of such developments,
which aims to capture CO2 in rock underground. However,concerns have been raised about the limits of our ability
to remove carbon from the atmosphere, especially using
biological carbon storage. For example, plantations of exotic
tree species are sometimes used to capture CO2 emissions,which could cause hazards such as weather fluctuation or
fire. Similarly, the use of natural carbon reservoirs such as theocean, mineralisation, or soil carbon sequestration (as in the
Carbfix project) still need more research to better understandtheir real efficiency. Lastly, their use could disturb more

The uncertainties surrounding the concept of net-zeroemissions are not restrained to the development of scientificand technological solutions: they expand to the adoption ofthese solutions on a political level, by private companies andby individuals.

Furthermore, the vagueness surrounding the very conceptof carbon neutrality already defined above impacts public
policies: not all countries understand it in the same way.
For example, some countries have restricted the neutrality
objective to CO2 emissions alone, while others, such as New
Zealand, include a variety of selected greenhouse gases (theNew Zealand Government includes all greenhouse gases,
except biogenic methane).

UNCERTAINTIES AT THE POLITICALLEVEL: A NEED FOR COOPERATION
AT NATIONAL AND LOCAL LEVELS

Finally, some countries appear to be more advanced
than others in terms of governance methods, including
cooperation between national and local levels, as in the caseof France with Paris, Denmark, and Sweden.

“Emissions targets are a zero-sum game. If one country orcompany does less, other have to do more to achieve thesame global temperature outcome” . From a public policy
perspective, this reality for net-zero carbon emissions
objectives means that at the international level, somecountries lagging in meeting their carbon neutrality targets
will have to be compensated by additional efforts from othercountries. At the national level, the situation is the same:
some localities will have to make up for the delay of others
in reaching their targets. Otherwise, carbon neutrality is notpossible.

In the end, the lack of cooperation between the various
political actors and the lack of studies on the impacts of suchcooperation thus appear to be the main political obstacle
to achieving the carbon neutrality objectives, along with theabsence of climate policy in many states.

This reality raises two key questions for public policy: thetiming of carbon neutrality targets; and the extent and thecontent of those targets.
However, the first question has rarely been discussed andstudied. In particular, each of the countries that decided toadopt carbon neutrality targets set their objectives according
to a different timescale than the others, following the signingof the Paris Agreements. While most countries have set thetarget in the same terms as the agreements, i.e. by 2050, it
is notable that Brazil, China, India and Ukraine have decided
to push it back to 2060. Some countries, such as Singapore,
have not even defined a specific date. Other countries haveadopted dates that are even closer: 2045 for Germany andSweden; 2040 for Iceland and Austria; 2035 for Finland; 2030
for the Maldives.
The difference in timing is not the main problem. The IEA's
strategy for achieving carbon neutrality by 2050 is basedon the idea that the most advanced countries, which arealso the ones generating the most CO2, should achieve thisgoal before the developing countries. The compensation
between the two should then guarantee carbon neutrality. It istherefore the lack of coordination that is disturbing, especiallyas the question of the timescale has never really been studied
or discussed.
As for the second question, the objectives in terms of carbon
neutrality are not equivalent between countries. On this point,
two types of targets can be distinguished: objectives aimed
at all the country's economic sectors; objectives restricted
to certain sectors. For example, Sweden does not include
emissions from the land use, land-use change and forestry
sector in its carbon neutrality policy. Most countries havealso excluded international aviation and shipping from theirpolicies, except for the United Kingdom.

© SOMCHAI JONGMEESUK© FRANCKREPORTER

ecosystems already impacted by CO2 emissions, such as
oceans which are jeopardised by their acidification.

The Council on Business & Society

MANAGEMENT & LEADERSHIP148 \UNCERTAINTIES FOR PRIVATE
COMPANIES AND INDIVIDUALS: A
NEED FOR LIFESTYLE CHANGE
The problem for companies is similar to that encountered inpublic policies: the efforts of companies to achieve carbon
neutrality will only be effective to the extent that initiatives
are not isolated; the efforts of some will have to compensate
for the delays of others. However, as described above, not all
sectors are equal in this respect: while the energy sector andthe automotive industry appear promising, heavy industry,
raw material extraction, aviation, agriculture, and the agrifood sector are more difficult to address.
Above all, their actions in this area are intrinsically linked toconsumer behaviour. For companies to be more inclined
to initiate carbon neutral policies, it is necessary that
consumers are inclined to change their lifestyles and, if they
are already inclined, do so. Indeed, even though companies
are responsible for a significant proportion of greenhousegas emissions (for example, in France, 30% of CO2 emissions
come from companies in the energy and industrial sectors)
and the services and products are offered by thesecompanies, it is still necessary for consumers to decideto adopt a lifestyle that is more compatible with achievingcarbon neutrality.
For example, carbon neutrality in the transport sector will
require the adoption of new vehicles, new mobility services
and a new urbanisation more adapted to the developmentof shared services. However, consumers must be willing to
adopt these new services, otherwise the company's efforts
will remain a dead letter and could threaten its profitability.
Another example: since food is a matter of personal decisionby consumers, a return to a less meaty and more local
diet can only be achieved through changes in consumer
consumption patterns.
Here, companies are essentially faced with the challenge of
dialogue with consumers. On the one hand, consumption
patterns are changing slowly. On the other hand, companies
are sometimes reluctant to get involved in environmental
issues – because of the complexity of these issues bothtechnically and in terms of communication. Therefore, theslowness of these changes appears to be the main obstacle
to the goal of carbon neutrality in the private sector.

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KEYS
TAKEAWAYSESSEC EXECUTIVE EDUCATION nderstood as the "anthropogenic CO2 emissions
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removals over a specified period", the net-zerocarbon emission objective is not yet well understoodin scientific, economic, and political terms.

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 his objective must also take into account theTslowness of companies to make the necessarychanges and of consumers to change their lifestyles.

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Carbon neutrality thus appears to be a concept still difficult
to understand. Whatever the will of Governments, companies,
and individuals, it remains subject to a scientific knowledge
still uncertain as to its implications. As it is part of a complex
societal environment, it is also subject to public policies
that are still uncoordinated, to slow lifestyle changes andto business uncertainties. The challenges are therefore
immense, and success is far from assured. ///#5

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/ 151

Climate Solutions for Corporations:
Be sustainable-competitive by creating
sustainable value chains
Liang Kong, MSc Businesswith Operations Management
student, and Warwick Business
School Winner of the 2022 CoBS
Student CSR article competition,
explores the options available tocompanies to play an active part in
reducing carbon emissions and leadthe combat against climate change.

C© LAURENCE DUTTONWith mutuallyenhancing positive
actions, we create
hope for ourplanetary future.

limate change is a critical global threat, and it requires
an emergent worldwide response. From the 1997 Kyoto
Protocol to the 2021 COP26 summit, an increasing
number of actions have brought different stakeholders together
to accelerate processes towards the goals of the UN Framework
Convention on climate change and the long-term transitionsof temperatures and weather patterns (United Nations, 2022).
These transitions could be due to natural factors such as
variations in the solar cycle. However, since the industrial
revolution the main driver of climate change and associatedsevere weather has been human activities, owing primarily to theoveruse of fossil fuels such as coal, oil, and gas. It is imperative
to take action to transfer to low-carbon practices since theoveruse of fossil fuels can cause devastating impacts on foodsecurity, livelihoods, and global health (Hobert and Negra, 2020).
One of these actions is to encourage sustainable value chains
which should involve improving efficiency, reducing energy
consumption and pollution (Nardella et al., 2020). Moreover,transitions to a sustainable value chain require a shift fromusing fossil fuels in production to renewable energy sources.
We cannot achieve the goal of low-carbon development without
the full backing of corporations – the primary participants ofthe global economy (Bartlett et al., 2016). Therefore, due to theurgent need for action on climate change, it is necessary toreview the drivers of companies' low-carbon practices, identify
business opportunities regarding sustainability, and highlightpotential limitations of the low-carbon goal.

The Council on Business & Society

MANAGEMENT & LEADERSHIP

/ 153© T_KIMURA

152 \• SOCIETAL EXPECTATIONS:
Corporations are responding to the growing body ofregulations concerning climate change and are anticipating
future policy developments in this area. Their actions on
climate change also respond to rising societal expectations,
including the sustainability needs of investors, consumers,
international organisations, employees, and international
declarations such as the OECD guidelines for multinational
enterprises. Studies show that stakeholder pressure on
corporations can motivate asset owners to undertake
low-carbon practices (Bartlett et al., 2016). Meanwhile,
consumers' expectations lead corporations to pursue
the low-carbon goal. Indeed, the influence of customers'
expectations may be more significant in high-intensivecompetition industries. For instance, a study shows that
customers are more willing to purchase chocolate withsimple packaging than those with ecologically unfriendly
packaging (García-Herrero et al., 2019).

HOW CAN CORPORATIONSCREATE NEW VALUES THROUGHSUSTAINABLE PRACTICES?
DRIVERS OF LOW-CARBON
PRACTICES
Before investigating how businesses generate value throughsustainable value chains, we need to understand what
motivates corporations to conduct low-carbon activities.
• REGULATIONS:
The regulations and policies enforced by government policies
drive a significant portion of corporations' low-carbon
actions. A systematic review of 37 studies found that theoverall effect on emission reductions for policies could be
an average of 2% per annum (Green, 2021). The low-carbon
regulations have compelled automakers in the European
Union, the United States, and other regions such as Japanand China to manufacture more energy-efficient vehicles(IEA, 2021). Although Haites (2018) reported that low-carbon
policies might have little impact on emission reduction since
emissions could fall faster than the cap in every jurisdiction,
the resulting oversupply of allowances could lower carbon
prices and undermine the policy's effectiveness.
• RISKS:
Since penalties for non-compliance can have significant
financial impact on a company's earnings, corporations
anticipating stricter policy requirements tend to mitigate
the business risks of potential new policy impacts inadvance. Moreover, non-compliance can severely damagea company's reputation and, thus, financial performance.
For instance, Bosch was fined $100 million for its role in the
diesel emissions scandal (Foodmanufacturing, 2019), andVolkswagen agreed to pay US$14.7 billion to cope with thescandal's costs (Krisher and Durbin, 2016). Although a study
found that non-compliance might not damage financial
performance since corporations' reputations related toexisting perceptions of how socially 'responsible' the firm wasinitially (Nardella et al., 2020).
MANAGEMENT & LEADERSHIPThe Council on Business & Society

To become sustainable-competitive through low-carbon
practices, companies may benefit from increased economic
productivity associated with low-carbon business models
and sustainable value chains.
• REDUCE ENERGY CONSUMPTION TO CREATE NEW VALUE:SAVING COSTS, BOOSTING MOTIVATIONS, GAINING NEW
DEALS, AND REINVESTING GREEN SOLUTIONS.
Energy consumption and transportation are often acompany's two most significant greenhouse gas emission
sources. By applying high-efficiency energy solutions, thecompany can save costs and achieve cost-leadershipstrategy in the industry. For example, with measures suchas installing more energy-efficient technology, decreasingtransportation miles, and reducing packaging, Ferrero
achieved a 3.4% increase in global turnover in the 20/21 fiscal
year, despite more uncertainties caused by Covid-19 in 2021
(Ferrero Group 2021). By investing in operations that reducecarbon emissions, such as less-energy lighting, producing
green power, and making assembly lines more efficient,
Mahindra & Mahindra Ltd saved operating costs and madeit a competitive advantage (Kerr, 2017). The company's $10
per ton internal carbon price also motivated its business units
to apply more low-carbon technologies. Moreover, Mahindra& Mahindra Ltd reallocated funds from such carbon fees to
low-carbon projects such as energy-efficient motors and zero
effluent discharge, which helped the company further reduce
emissions from its manufacturing.
• REDESIGN TO CREATE NEW VALUE: CONSIDERING LOWCARBON PRODUCTS, SERVICES, AND BUSINESS MODELS.
Unilever is an outstanding example of creating value by
designing low-carbon products. The company identified a way
to reduce packaging by innovating concentrated detergentswith smaller caps and less plastic use, making it easier for
people to use the correct amount. The result is fewer lorries
demanded to transport the bottles, thus reducing carbon
emissions and increasing market share (Unilever, 2021).

Corporations can also create new value by redesigning theirservices. Plastic recycling services may be a good start since
the global plastic recycling market is estimated to produce at
6.5% annually from 2017 to 2023. The recycling market will beworth almost $54 billion by 2023 (Schwartz, 2020). Moreover,new entries can enter the market by redesigning businessmodels concerning sustainability. An excellent example ofbusiness model innovation is car sharing, and the study has
shown that greener mobility applied in the sharing system
could help reduce greenhouse gas emissions (Arbeláez Vélez
and Plepys, 2021).
• BUILDING A RESPONSIBLE BRAND IMAGE BY REDUCING
AND REDESIGNING: CREATING GOODWILL AND
ATTRACTING INVESTORS.
Sustainability has become a strategy for businesses todifferentiate from their competitors by building a reliablebrand image. The sustainability reporting performanceof the FTSE 100 shows most corporations taking lowcarbon practices seriously, which is especially significant
in the highly competitive retail sector (Ceesay et al., 2021).
The innovation of low-carbon products can also attract
government subsidies such as the Low Carbon Innovation
Fund. Moreover, there is an excellent trend in the financing
needs of climate solutions in the finance sector and a desire
to understand their impact. The market of investments
concerning environmental, social, and governance factors(ESG) now accounts for roughly one-third of all assets undermanagement. Evidence suggested that considering ESG
factors could reduce risks and enhance investment andbusiness performance. (Boffo and Patalano, 2020).

WHAT WILL BE THE IMPACTS OF LOWCARBON PRACTICES ON ENERGY
INDUSTRIES?
If corporations are ambitious for zero-carbon goals, what
will happen? Since the purpose of sustainability is correlated
to the green energy industry, we shall estimate the impacts
of corporations' low-carbon practices on the industry. As
the supply of renewable energy has to increase to meet themassive demand for fossil fuels, it will lead to a tremendous
increase in demand for metals such as copper, nickel, cobalt,
and lithium, primarily used for green electricity production
and storage. The International Energy Agency (IEA) (2021)
forecasts that lithium and cobalt production volume needs toincrease more than sixfold than the current quantity to matchthe demand for clean energy production. However, risingdemand will face a slow supply response. According to IEA(2021), copper, nickel, and cobalt mines are capital-intensive,
taking more than a decade from discovery to production. In
addition, increasing production which does not go against
CSR and sustainability goals will also be a challenge. The
combination of increased demand and delayed supply could
cause the cost of these metals to skyrocket. The market
prices of lithium, for example, could rise from $6,000 per
metric ton in 2020 to about $15,000 between 2020 and 2030
(Boer et al., 2021).

Moreover, since the transition from fossil fuels to clean
energy will reduce the demand for fossil fuels, investors
expect fossil fuel prices to fall and thus decrease investment.
However, a reduction in funding can lead to a deteriorationin supply conditions. If the supply of fossil fuels does notmatch demand, fossil fuels prices will not be stable. Moreover,public policies supporting energy transitions such as carbon
taxes and bans on internal combustion engines can burden
fossil fuel production. Therefore, higher input prices for fossil
fuel production and use and accelerated demand for green
energy will obstruct the road to decarbonisation. In order tomitigate such unexpected results, large-scale deploymentsof green solutions and energy efficiency optimisation should
be timely invested, which means that revenue from carbon
taxes and capital from investors should cover spending
on decarbonisation. Realising such a situation requires
knowledge from future research and practices.

MUTUALLY REINFORCING POSITIVEACTIONS.
Simultaneous sustainable actions from corporations and all
related stakeholders may address the systematic challenges
of climate change. Policymakers, investors, and customers
motivate corporations to undertake low-carbon practices,and corporations can share values between business andsociety by identifying business opportunities from sustainablevalue chains. Likewise, corporations' responsible activities
can also train consumers' behaviour to be sustainable
and give policymakers confidence to set more ambitious
decarbonisation goals. With these mutually enhancing positive
actions, we are creating hope for our planetary future. ///KEYS
TAKEAWAYS
 limate change can cause devastating impacts
C
on food security, livelihoods, and global health. As
the main participants of the worldwide economy,
corporations should take action to decarbonise.
 rivers of corporations’ low-carbon practices
D
could be regulations, risk management,
and societal expectations.
 y reducing energy consumption, redesigningB
products, services, and business models,
corporations can earn reputations and investments,
making corporations sustainable-competitive.
 owever, future practices and research may pay
Hattention to the inflations brought by decarbonisation.
 ith the mutually reinforcing positive activities
W
between policymakers, corporations, andconsumers, we will create hope for our future.

The Council on Business & Society

MANAGEMENT & LEADERSHIP

/ 155

Designing Solutions for Resilient
Raw Materials Supply
Ksapa’s Farid Baddache focuseson an increasingly strategic
issue for companies toaddress – that of ensuring theirraw materials supply is both
responsible and resilient – with input
from experts Shivani Kannabhiran,OECD Center for Corporate
Sustainability, and Hélène Vermont,
Responsible Sourcing Manager forMichelin.
Designing Solutions for Resilient Raw Materials Supply, by Farid
Baddache. With kind acknowledgements to Ksapa. Originally postedon the Ksapa blog.

SUPPLY OF RESILIENT RAW
MATERIALS: AN IMPERATIVE© FABRIKACRThe environmentand social are
intrinsicallylinked. It seems
difficult toapproach one
while omitting
the other.

Regulatory pressure, stakeholder expectations and changing
consumer behaviour are encouraging the transformation ofcommodity supply chains towards greater transparency andresilience.
The duty of vigilance incrementally establishes criticalbusiness processes for businesses and investors. New legal
tools are emerging around the world that include the UK
Modern Slavery Act, the French duty of vigilance, and therecent German law governing the due diligence of companies
in supply chains (“Lieferkettensorgfaltspflichtengesetz”).
Regulatory pressures are multiplying and pushing companies,
leaders of industry, and investors to take action. Moreover,consumers, and especially young people – millennials – are
now demanding ethical products that include traceability.

The Council on Business & Society

MANAGEMENT & LEADERSHIP

156 \/ 157
These criteria form an integral part of the purchasing decision,and cannot be ignored and, as such, the positive impact
generated by companies is increasingly strategic. Thisnurtures consumer confidence and now ensures the survivalof businesses themselves. Finally, addressing these challenges
forces companies to act beyond their own scope and minimiseemissions on scope 3 – the organisation’s indirect impact – of
their value chain. This is a complex but not impossible task.
In this light, it is important to bring focus on the raw materials– the non-transformed materials, also known as primary
products – a company uses in its product processes. Theseraw materials, although often only associated with agricultural
products such as coffee, beef, tea, sugarcane or palm oil, canalso include oil, plastics, natural gas, graphite, lithium or rareearths to name a few.

HARNESSING RESPONSIBLE RAW
MATERIALS SUPPLY CHAINS

In 2018, the equivalent of 3.6 million hectares of forest were
cut down, the equivalent in size of Belgium or Lebanon. Datashows that 80% of these losses were related to agriculturalcommodities. IPCC – the Intergovernmental Panel on Climate
Change – reports have on multiple occasions demonstrated
the devastating part raw material production plays indeforestation, and a recent study by the Carbon Disclosure
Project shows that 9 out of 10 listed companies identify
at least one risk of deforestation related to agriculturalcommodities such as wood, soybeans or palm oil. 32% of thecompanies surveyed have already identified direct risks.
In addition to environmental risks, there are real social
risks that should not be overlooked. The textile industry, forexample, is proof of this with working conditions that areoften deplorable. The most basic human rights are neglected
and regular controversies occur, with very few social norms
actually in place to ensure the conditions for production andthe transformation of supply chains.

TOOLS FOR BUILDING RESILIENT RAW
MATERIALS SUPPLY© LIOUNTMILA KORELIDOUThe importance of the duty of vigilance is becoming afundamental regulatory trend, with the increase in the numberof vigilance approaches demonstrating this. However, the notionof duty to be vigilant remains specific and requires study tounderstand how it works. In this light, the OECD – and specificallythe team under Shivani Kannabhiran that leads the agricultural
sector at the OECD’s Center of Corporate Sustainability – haspublished a series of guides to accompany companies.
MANAGEMENT & LEADERSHIPThe Council on Business & Society© LUOMAN

Every agricultural or non-agricultural supply chain has
environmental and social challenges. A compelling example
is the direct impacts of the soybean supply chain on the
deforestation of the Amazon rainforest in Brazil. Likewise,
the cultivation of cocoa also increasingly encroaches on the
Ivorian forest every year. Between natural habitat loss, soil
erosion, biodiversity loss among others, deforestation plays adrastic role in global warming.
One of these is the OECD-FAO Guide for Responsible
Agricultural Sectors, providing strategic and practical
recommendations for companies. The objective here isto help stakeholders adopt responsible conduct in theiragricultural sectors and these recommendations are
expected to be complemented by a regulatory system to be
improved by governments.
Nevertheless, they represent a tool for greater understandingof the risks and alignment across the supply chain’s
ecosystem. The recommendations included in these practicalguides can especially play a supporting role for small andmedium-sized enterprises and the OECD has subsequently
made training a point of honour, opening up a digital training
centre for SMEs.

THE RESPONSIBLE SOURCINGAPPROACH OF A MULTINATIONAL
COMPANY: THE MICHELIN EXAMPLE
Michelin, a world leader in tyre manufacturing, provide a good
example of a responsible resourcing approach that others canbenchmark. When developing the initiative, a number of key andvery practical questions were placed on the table – how, forexample, to define responsible sourcing principles in dialogue
with stakeholders? What appropriate responsible tracing
would be appropriate when sourcing raw materials from highly
fragmented supply chains? Indeed, what do we buy, who do webuy it from, and how do we buy? Hélène Vermont, Responsible
Sourcing Manager for Michelin, cites several strategic andpractical considerations to be deployed across a multinational
company such as Michelin. These include:• Creating a code of conduct for suppliers to ensure thehighest transparency of the company’s expectations ofsuppliers• Designing a systemic approach for reporting of scope
3 emissions of supplier activities to encourage greatertransparency (in line, for example, with the CDP Programme)• Setting high emission reduction targets for supplier activities• Implementing evaluation monitoring to examine which
sectors are considered most at risk
• Promoting the purchase of recycled and renewablematerials• Establishing a conflict minerals policy for suppliers.
For Michelin, natural rubber still represents a quarter of its
purchased raw materials. This category requires a specificapproach in addition to all the elements mentioned previously,
not least because the sector faces major environmental andhuman issues. Nearly 2 million farmers are involved in natural
rubber supply chains which are by nature highly fragmented.
Tyre production alone accounts for three-quarters of theworld’s natural rubber production. As such, together withstakeholders, Michelin has developed a dedicated natural
rubber purchasing policy. Actions are carried out across the
supply chain, engaging tier 1 suppliers, as well as exploring
effective solutions to engage at the level of smallholder
farmers directly.

The Council on Business & Society

MANAGEMENT & LEADERSHIP

158 \EMERGING ECONOMIES AND THE
IMPORTANCE OF A SMALLHOLDERAPPROACH
Ksapa CEO Farid Baddache points to the SUTTI impact
investing solution the ESG consulting company offers its
clients. This tool addresses commodity supply chains andis adaptable and replicable to all local circumstances andspecificities with a single objective: to improve the socialenvironmental performance of supply chains and to help
communities raise revenues above the poverty line.
Primarily, the SUTTI approach is designed to focus on
smallholder farmers with a view to creating a positive impact
within local communities. This involves vocational training
in a hybrid format: digital (permanent access and highdissemination), as well as face-to-face formats (building
trust and anchoring community engagement), the promotionof best agricultural practices, crop diversification, income
growth, social inclusion, improved workplace security andlabour market facilitation.

Recent years have seen ample transformation, with younger
generations singling out the pain point and questioning
companies where it hurts. Where does the food I eat comefrom? Do I eat responsibly? Indeed, the climate awareness ofthese young people has never been stronger than it is today,
one of the effects being to exert pressure on companies tomove the lines, adopt more virtuous behaviours, engage inreal traceability processes and minimize risks across theirvalue chain and the suppliers they work with.
As such, the pressure and expectations of stakeholders on
scope 3 of supply chains not only mitigate carbon emissions
in general, but also play an important role on the social
dimension of corporate impact. As Farid Baddache points out,
the environment and social are intrinsically linked. It seems
difficult to approach one while omitting the other. ///We focus on sustainability,
specifically impact measurement,
global development, digitaltechnologies and due diligence.

According to Baddache, it is essential to combine the needsof both smallholder farmers and industrials, with Ksapa
also developing a strong financial dimension to the SUTTI
programme, notably through the engagement of committed
investors, carbon credits, and a “blended finance” model.
The CASCADE project, carried out in the central Sumatra
Island region of Indonesia, is a solid example of directly
contributing to smallholders in the natural rubber supply
chain, grouping the entire natural rubber supply chain fromthe original players such as the small natural rubber operators
to industrial buyers such as Michelin and its automotive
customers like the Volkswagen Group. In this project, Ksapa
trains up 1,000 farmers, supported by a local NGO responsible
for ongoing villager engagement to adopt sustainable andefficient extraction methods.

SCALE IS CRUCIAL IN CREATINGPOSITIVE IMPACT ON THE GROUNDFor Shivani Kannabhiran of the OECD, scaling up involves a
multiple approach – hence the use of a range of instruments
to enforce it such as regulation, certification, training, butalso the multi-faceted integration of all stakeholders at alllevels. This occurs notably through partnerships between
companies themselves, but also with local governments.
On the other hand, the Michelin Group bases its strategy on
a risk-based approach rather than a systematic approach
to traceability and certification. This, however, can prove
to be slow and does not apply to highly fragmented
smallholder supply chains. Once the risk identified throughthe deployment of a dedicated tool dubbed RubberWay,
appropriate remediation projects can be rolled out such as the
CASCADE project outlined above. The vision of the Michelin
scale-up therefore involves projects to minimise risks thatcan be replicated from one particular supply chain to another.

MANAGEMENT & LEADERSHIPThe Council on Business & Society

Ksapa.org is a
mission-driven company.

KEYS
TAKEAWAYS onsumers, and especially young peopleC– millennials – are now demanding ethicalproducts that include traceability.
 very agricultural or non-agricultural supply chainE
has environmental and social challenges.
In addition to environmental risks, there are realsocial risks that should not be overlooked. The
textile industry, for example, is proof of this withworking conditions that are often deplorable.
 he OECD publishes practical guides whichTplay a supporting role for small and mediumsized enterprises and the OECD has opened
up a digital training centre for SMEs.
 yre production alone accounts for three-quarters
Tof the world’s natural rubber production. Together
with stakeholders, Michelin has developed adedicated natural rubber purchasing policy.
 nother guideline is the Ksapa SUTTI approachA
designed to focus on smallholder farmers with a viewto creating a positive impact within local communities.
 caling up is vital in creating positive impact
S
on the ground and this occurs notably throughpartnerships between companies themselves,
but also with local governments.

WE ADVISE
WE INVESTWE
ADVOCATE

Our teams deliver sustainability
consulting, impact investment
solutions and advocacy services.
Together, we developed a reference
platform to help businesses andinvestors embed climate change,
circularity and Human Rights acrosstheir decision-making processes.

To that end, we at Ksapa havedeveloped a global community ofexperts based across Europe, Africa,
Asia, North and South America.

Visit our website atwww.ksapa.org

HOW MANY BUSINESS SCHOOLS DOESIT TAKE TO CHANGE THE WORLD?

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