We are on the cusp of a new era of globalization. After 60 years of focusing on free trade and market liberalization as the main drivers of globalization, this new period will concentrate on the twin challenges - climate change and the shifting demographics of a world of 9.8 billion people in 2050. At Resonance, we call this Globalization 3.0, and we believe it will dominate the business and policy agendas of companies and governments for the next several decades.
Last month, at the Ayala Integrated Risk & Sustainability Summit in Manila, I had the honor of discussing how companies can get ready for and thrive in Globalization 3.0 with two distinguished business leaders: Jaime Augusto Zobel de Ayala, Chair and CEO of the Ayala Group, and Sunny Verghese, the CEO and Co-Founder of Olam. As executives of leading frontier market companies, Mr. Ayala and Mr. Verghese provided powerful insights into the challenges and the opportunities confronting all of us in the decades ahead. What’s more, they provided practical insights for business leaders as they prepare for the future.
Integrating Enterprise Risk and Sustainability
The first step for organizations getting ready for Globalization 3.0 is to develop the tools to recognize risks by integrating enterprise risk management (ERM) with sustainability. This will give companies the data, insights, and analysis they need to manage the associated risks they will face in this new era. According to Mr. Verghese, “Future cash flows of a company are at risk if the company is not ESG-oriented [environmental, social and governance-oriented]. The only way to manage risk is to put sustainability at the heart of business.”
Not only will integration of ERM and sustainability enable companies to better assess and manage risks, it will also enable companies to identify and seize the opportunities created by Globalization 3.0. Mr. Ayala emphasized, “The continuity of businesses in the Philippines will depend on companies incorporating sustainability into their core strategy. What other sustainable services and products can businesses offer?”
In the decades ahead, sustainability will not simply be something companies do because it is the right thing, but it will also become a key knowledge asset – creating value for shareholders and society at large. Companies that focus on sustainability will have the data, the knowledge assets, and the systems needed to thrive in Globalization 3.0. Companies that ignore sustainability or treat it as a peripheral issue will struggle.
Moving Forward For Globalization 3.0
At Resonance, we are working every day to help our clients get ready for Globalization 3.0. We are helping our clients to better integrate sustainability into corporate strategy and to provide clients with the tools, processes, and support needed to execute in frontier markets. We are enabling leading companies, NGOs, and donor agencies to develop new business models and partnerships that will enable them to lead in this new era.