A challenge to the profession
Former Unilever CEO Paul Polman took on short-termism, climate change, and income inequality at the CIMA President's London Centenary Dinner.
On 8 March 2019, 100 years to the day after CIMA was formed, Paul Polman, HonFCMA, delivered a speech to the almost 200 guests at the CIMA President's Dinner in Merchant Taylors' Hall in London.
Polman is chair of the International Chamber of Commerce, chair of The B Team, and vice-chair of the UN Global Compact, a voluntary strategic initiative to encourage businesses to achieve the UN's Sustainable Development Goals. For ten years until December last year he led Unilever with a personal mission to "galvanise our company to be an effective force for good".
It was highly appropriate that he spoke at the dinner. CIMA's first president in 1919 was Lord Leverhulme, who founded Lever Brothers — the company that went on to become Unilever in a merger with Dutch company Margarine Unie in 1929.
Polman's speech started by acknowledging CIMA's route from its beginnings in 1919 and ended with a standing ovation. In between, he recognised International Women's Day (also 8 March) and covered issues pertinent to a better future for business and humanity — and challenged accountants to play a greater part in achieving that. Here are some key (edited) quotes from the speech.
On short-termism
"We're running [companies] into the ground with short-termism — this myopic focus on shareholders. There's no question about it, especially when you think that 50% or more of the investments companies make create value for a company only three to five years out or more. It's bizarre that we have let this happen.
"Christine Lagarde [IMF managing director and chair] summed it up very well when she said ... the financial sector [prioritises] ... profits over long-range prudence and short term over sustainability. That's what is happening."
On GDP
"How we define GDP, industrial output — pretty narrow measure. Should have never been used as a measure of the wellbeing of a country. We produce more weapons or wage wars, GDP goes up. We produce cleaner air or better education, we don't see anything in GDP. A little bit bizarre to me."
On wealth inequality
"The financial crisis showed one thing to people in the street, if you like it or not. It showed that banks were too big to fail and people were too small to matter. It's as simple as that.
"Many people have not seen any progress in the last 30 to 40 years. Last year alone the bottom 3.8 billion people in the world, the poorest people, saw their combined net worth go down by 11% ... whilst the billionaires saw their net worth go up by 900 billion [dollars], 2.5 billion a day."
On equal pay for women and men
"[Some people] say, 'Yeah, we know we have a difference, but between now and 2020, we'll fix it. Or 2025, so we're on it, we're on it.' Well, if you have a problem now, why don't you fix it now?"
On climate change
"We can actually [limit the temperature rise to] one and a half degrees in the next 30 or 40 years if we decide to do so. If we don't decide to do so, we're about to commit the biggest intergenerational crime in the history of humankind. Let me be clear on that."
On development goals
"It costs far less than the 10—12% of GDP that we are now spending [wastefully] on conflict, defence, and wars than in implementing the total Sustainable Development Goals with the simple objective to irreversibly eradicate poverty and do that in a more sustainable and equitable way, to leave no one behind, to finish the job that Kofi Annan [former UN secretary-general] started in the first 15 years of his Millennium Development Goals.
"On each of these famous 17 [Sustainable Development] Goals, the cost of not acting is now higher than the cost of acting. And we call ourselves the most intelligent species."
Challenge to accountants
"What world are we steering ourselves to with our systems that we've produced, including our accounting systems? ... Are we creating wealth for a few, a few islands of prosperity in oceans of poverty? ...
"Now, we know how to optimise financial factors, but we won't solve the issues of climate. We won't solve the future of humanity if we don't broaden that and also ... optimise our return on not only financial capital, but also social and environmental capital. What's wrong with that?"
Oliver Rowe is an FM magazine senior editor. To comment on this article or to suggest an idea for another article, contact him at Oliver.Rowe@aicpa-cima.com.