On October 16, at the 2024 ESG Global Leaders Conference, Professor Francisco Veloso, President of INSEAD, said in his keynote speech that although the government needs to lead change through policy supervision and incentives, Corporate engagement is key to achieving impact at scale.
In an exclusive interview with a reporter from "Daily Business News" (hereinafter referred to as NBD), Professor Veloso shared the practical experience of European countries in achieving standard unification. He said that the ESG regulatory framework is an important means for Europe to promote sustainable development through political Negotiations lead to consensus but also create some tensions, which require constructive dialogue between policymakers, industry representatives and affected groups to ensure that sustainability commitments are effectively implemented while safeguarding the legitimate rights and interests of relevant groups.
At the 2024ESG Global Leaders Conference, Professor Veloso, President of INSEAD, gave a keynote speech. Photo provided by interviewee
ESG development does face obstacles
NBD: Some people believe that the current global ESG development has slowed down or even regressed in some aspects. For example, the United States is unwilling to accept the rules of other countries, which further increases the difficulty of achieving unification of international standards. The energy and inflation crises have also slowed down the development of enterprises. Regarding the pace of green transformation, how do you think countries should rebuild their confidence in cooperation for sustainable development?
Veloso: I think there have been real barriers to the development of ESG over the past few years, whether it's differences of opinion within the United States about this area or challenges related to slow economic growth, but I think there are also positive aspects. .
We see companies becoming more consciously involved and making ESG a part of their business products and services. For a long time, there has been a view that government policy is an important way to solve the stagnant development of ESG. This is indeed important, but if companies do not see themselves as part of the solution to environmental, social and governance issues, or regard ESG as part of corporate development, , it will be impossible to achieve the goal of driving ESG forward.
In this sense, I feel that businesses and the public are starting to get more involved and try to find solutions. So I hope that as the world regains economic stability and inflation falls, the situation you mentioned can improve. But backsliding is a real concern, and it is the responsibility of all of us. For me, it is about leading business schools in recognizing the need to continue to move the world towards a more sustainable future. The signs of climate change are everywhere, and if we don’t take them seriously, it will get worse.
NBD: So how do countries in Europe achieve unified standards?
Veloso: A common approach is the ESG regulatory framework. Of course there are other paths, and they are all at the European level. This means there will be a political negotiation and when a decision is made, it is a decision that allows sustainability to continue moving forward. This is a very important part of the progression because once these elements are identified, all groups need to get into them.
Of course, this can also create tensions, such as the recent protests by French farmers against European legislation, but this is part of an effort to advance and implement sustainability commitments. It is important that, along the way, we learn from this and work to find a way to alleviate the concerns of people or industries adversely affected by regulation.
NBD: For major issues related to sustainable development such as climate change and biodiversity, trade barriers, technical barriers, financing barriers, etc. are still towering. Faced with such conflicts, how can we balance the interests of all parties and jointly respond to global challenges?
Veloso: No one place in the world can solve this problem alone. China can't solve it by itself, Europe can't solve it by itself, and neither can the United States. Therefore, cooperation is particularly important. Unfortunately, due to the impact of trade, people are less open to more sustainable friendly products and services.
It is also important to recognize that among the debates that exist in the world, the field of sustainable development remains one of the most important areas of dialogue. No matter how trade frictions between countries evolve, sustainable development has always been a common language that can be established and further developed.
At the same time, this cooperation can also be used to support smaller and less developed countries, since there are already many solutions at work in China, Europe and the United States that can be applied in different parts of the world, especially Africa. They don’t have the funds or the tools to do it themselves, and they need help and support. This could be a very important area for cooperation around the world to ensure that these countries can also pursue their own path to sustainable development.
Sharing ESG practices is important
NBD: How can technological breakthroughs such as artificial intelligence help global green development in the future?
Veloso: I think artificial intelligence brings both opportunities and challenges, and the challenges mainly have to do with the energy it requires. Computing centers power large language models and artificial intelligence and consume huge amounts of energy. So I'm concerned about the pressure on energy production and the additional emissions if electricity generation is not done in a sustainable way. The development of innovative technologies requires a smooth transition to achieve the goal of net zero emissions.
And artificial intelligence will continue to become the main source of innovation in solutions and business models. We must realize that solving some sustainable problems requires new technologies to expand existing solutions. Artificial intelligence can help people classify information, identify and predict opportunities, help solve some of these challenges, and overcome them to move towards more sustainable solutions. future.
NBD: By what means do you think the current costs of ESG actions can be effectively reduced?
Veloso: In fact, technological innovations are usually R&D breakthroughs within a single industry, with no common ground except in the energy field. The way energy is produced affects entire industries, and finding cheaper and more sustainable methods is extremely valuable. Beyond energy, when you drill down into how each industry operates, there are different solutions.
What’s important is that we need to share more of our best practices and technical solutions with the world and be able to effectively solve the pain points in the industry. What we see in many industries is that entrepreneurs make commitments and ambitions to achieve more sustainable production activities, but sometimes they end up struggling to implement these solutions, which requires us to further search for solutions on a larger scale. Effective technical path.
I think one of the important roles of business schools is to disseminate this best practice more broadly to the world. We are already working with several multinational companies to explore how to combine sustainability and innovation. Relevant case studies provide entrepreneurs with valuable insights into successful strategies and business models, while also providing policymakers with assessment and analysis tools.
For China, I think we need to continue to communicate, cooperate and share solutions to ensure that people realize the importance of more practical solutions and moving forward. In order to cope with climate change, it is recommended to phase out the use of coal as soon as possible and find corresponding alternatives. This is very necessary and extremely challenging.