By Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship, London Business School
In recent weeks, we have witnessed thousands of protesters thronging the streets of Glasgow, London and other major cities around the world, turning out to demand immediate action to tackle the climate crisis following the heatwaves that were experienced from China to North Africa to Europe and to the United States.
Whether it is the aftermath of COVID-19 or the economic and political disruption caused by the war in Ukraine, these emerging and powerful social movements such as Fridays For The Future and Extinction Rebellion recognise that the world has been severely set back in its efforts to build a more sustainable and inclusive future and that as 2030 fast approaches, we remain very far from achieving the UN Sustainable Development Goals (SDG). Most importantly, there is a widespread recognition that institutional efforts have failed to account for the most important part of this challenge: the people for whom these goals are meant to serve.
Which begs the question, how could we meaningfully include those at the grassroots level in our decision-making processes on big issues and existential threats such as the climate crisis and the accelerating ecological collapse? Moreover, how could we establish new, fair, transparent, and inclusive global institutions that are not merely based on economic or military power dynamics and hierarchies as the current ones are?
The institutions that were established at the Bretton Woods conference and at follow up UN conferences in the mid- to late-1940s remain to this day the foundation of the global governance system. These institutions, which include the IMF, World Bank, WTO and WHO, have significantly contributed to global economic cooperation and have promoted relative stability and prosperity across the world.
However, the global challenges that we are facing today are fundamentally different from the ones we faced at the end of WWII. Admittedly, a new international charter is urgently needed to avoid further health, ecological and financial crises, and to plot a new course toward sustainable, inclusive prosperity. The Bretton Woods and UN institutions are, at their core, institutions of political compromise. Diplomacy, negotiation, and alignment of interests are, of course, essential elements of an effective global governance system, but they are no longer enough.
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In fact, against today’s torrid background of geopolitical, economic, and ecological catastrophes, it is no surprise that, according to the Spring 2021 Edelman Trust Barometer, people around the world believe that institutions are failing to address our existential challenges. A vicious cycle has therefore been created in which institutions are losing their legitimacy, which in turn further erodes their ability to coordinate and implement global action, which then undermines public trust in them.
We need to be more honest with ourselves. Our current challenges cannot be addressed through compromise and negotiation alone. We may negotiate as much as we like and even reach an agreement on a global path to “net zero” emissions but if that path is not fully, rather than partially, consistent with the science of climate change, then our potential compromise would be irrelevant. The threat will inevitably persist. Even systems-level or integrated thinking would not be enough unless the solutions we arrive at are predominantly based on science, not politics.
Today’s “institutions of compromise” are therefore inadequate for the scale and scope of challenges that we face, and many have even lost the moral high ground that they once commanded. At their core, they remain political and highly polarised. They confine science to merely an “advisory” role. They are sometimes corrupt and only serve vested interests and existing power structures.
Therefore, I believe that a deeper discussion and an honest debate about the core mission and structure of our global institutions is urgently needed. It is high time that we dare ask the big questions: how can we reimagine our institutions and rebuild them so that they are truly effective for addressing the multiple existential threats we face?
To do so, it is necessary that we apply a deeper level of creative and innovative thinking and that we agree upon the principles that would govern them. By building institutions that are as independent as possible of the political cycle, operate on the axis of long-term thinking, and place the unchallengeable tenets of science at their core, we could potentially forge institutions that properly represent the world as it is today, but also, we could protect and defend the interests and well-being of future generations, as well as non-human life. For such institutions to be effective, they must be supported by the appropriate instruments for the monitoring and enforcement of decisions and agreements. Such mechanisms would also enable these new institutions to avoid being hijacked by populists and opportunists, as we have seen taking place in recent years, with our existing institutions. They should be agile and dynamic, capable of adapting to emerging issues.
Fundamentally, our reimagined institutions will need to be built on a revised social contract provided that no institution can be legitimate, let alone successful, unless it is based on popular trust and support. They will need to rebuild trust through radical transparency, accountability and above all, they should draw their power from direct, and democratic representation of nations and peoples. Glimpses of such institutions can perhaps already be seen in the multiple and diverse social movements around the world who have already adopted the science of climate change as their guiding principle and prime directive.
Our collective ambition therefore must be a new type of grassroots multilateralism, which understands that the threats and challenges we face, and the climate crisis in particular, respect no national borders nor do they adhere to power hierarchies. The Bretton Woods and UN institutions emerged from the ashes of a global catastrophe – WWII – to establish peace and promote global prosperity. The climate crisis, if left unchecked, will have catastrophic consequences for humanity and the planet. We therefore face a choice: either reimagine and rebuild our global institutions now – the proverbial Bretton Woods 2.0 – or indeed, be forced to do so after experiencing the full consequences of a total climate meltdown. Nothing less than our very own survival on this planet depends on the choice that make today.
Are we courageous enough to make the right choice?
Ioannis Ioannou is an Associate Professor of Strategy and Entrepreneurship at London Business School. He is a strategy scholar whose research focuses on Sustainability and Corporate Social Responsibility (CSR). He seeks to understand whether, how, and the extent to which the modern business organization contributes towards building a sustainable future.