BiGS Actionable Intelligence:
Let’s be honest—we are not winning. By October 2026, companies will have exhausted their total carbon budget to stay within the 1.5 °C Paris Agreement target. In the hour and a half after you read this, an additional nine species will have gone extinct, according to the United Nations Convention on Biological Diversity. And we are already beyond the safe operating space for six out of nine planetary boundaries, according to the Stockholm Resilience Centre.
We can see the impact. Global economic instability from these challenges, compounded by wars and more polarized societies, makes it easy for business leaders to feel powerless. And the recent election in the U.S. might make progress on these issues feel even more difficult.
But we have power.
The scale of these issues, though pressing, is not insurmountable if we view them differently — as unprecedented opportunities for innovation and collaboration. And if we recognize that these challenges are interconnected, they then require a different way of dealing with them, both in our daily lives and in how we run our companies and investments.
At the recent roundtable on Europe’s Green Transition hosted by the Institute for Business in Global Society (BiGS) at Harvard Business School, we agreed that economic instability caused by climate change, nature loss, and growing inequality is a problem of the global commons— resources from which we all benefit but no one owns. We also recognized that this is a problem we have not had to contend with in our history until now because it was only in the last century that both population and the demands of a modern lifestyle put such substantial strain on the planet.
Our typical approach to decision-making, which prioritizes financial capital and GDP growth, drove an output economy (i.e., the pursuit of the production of paid-for things). Over the past 70 years, this delivered notable prosperity, alongside a belief that competition and markets will solve all problems. But this same approach is now proving inadequate to find solutions to the problem of the commons, and therefore to our global economic stability. It’s time for an update.
Decisions fit for the future
This update means our starting point is not the output economy of the past, but the impact economy of the future. This impact economy favors a broader set of socioeconomic outcomes intended to drive economic success. It means leveraging all forms of capital—natural, social, human, and financial—to provide more profitable and sustainable outcomes for all people living on the planet.
Leading companies are reprioritizing the capital we depend on to run the business: from the skills of our staff to the communities where we operate to the natural resources we use in our supply chains. Experiments with decision-making this way have been growing for decades.
The most recent development currently being piloted by leading companies, Beta Framework for Integrated Decision-Making, is a huge advancement, as it allows companies to develop innovative solutions that address the interconnectedness of performance on four capitals, rather than just one (financial). Experiments lead to action, as we see from Natura, a Brazil-based global cosmetics company. By leveraging integrated profit & loss accounts to value all capitals, they exemplify a commitment to regeneration across their business. Natura amplifies positive impact through innovative financial tools, such as blended finance and a recent R$1.3 million sustainability-linked debenture tied to Amazonian bio-actives, underscoring the fusion of nature and innovation at the heart of their strategy.
But decision-making based on all capitals alone isn’t enough, of course. Smart collaboration is how we will win the fight against the systemic risks that threaten our economies.
Examples of system collaborations
So, what does it take to collaborate across the economic system?
Where companies have an abundance of capacity for innovation and action, they often lack the legitimacy to enact broad-scale policy changes. On the other hand, governments have legitimacy but are often constrained by limited capacity or political pressures. The key to effective, systemic collaboration lies in creating a mutually beneficial environment where both parties can contribute and put their unique strengths into practice.
There are many examples of successful collaborations, both old and new. In 1959, three major insurance associations came together to reduce highway safety risks in the United States. Together they represented about 80% of the United States auto insurance market. Choosing to address these risks rather than simply increase auto insurance rates, they established the Insurance Institute for Highway Safety (IIHS). The Institute has significantly influenced vehicle safety in the U.S. ever since, from conducting crash tests that have led to improved vehicle designs, to influencing federal safety standards and providing consumers with safety ratings for vehicles.
More recent examples show companies using their voices to advocate for ambitious action that addresses the systemic risks of today. The corporate collaboration that delivered the Natural Capital Protocol in 2016 is one example. This collaboration harmonized 40 different approaches by major (competing) consultancies and companies to manage their relationship with nature. It created a level playing field for managing nature risk for the global commons.
Another example is from 2022 when hundreds of companies and financial institutions called for governments to hold them accountable for their future impact and dependencies on nature through the development of the Global Biodiversity Framework (GBF). It worked. Target 15 requires the assessment and disclosure of nature-related risks, impacts, and dependencies by large companies and financial institutions through operations, supply chains, and portfolios, alongside a reduction of negative impacts on biodiversity.
These successful ventures have a common characteristic: they offer benefits to policymakers, businesses, NGOs, and financial institutions, creating a mutually attractive environment for collaboration. It is this type of transition we need to move toward, and both businesses and governments play a pivotal role.
Companies need to be recognized for their leadership, such as transforming their finance functions to define performance on all capitals, like the food company Olam Agri, or investing in integrated profit & loss accounts like cosmetics giant Natura & Co. Regulatory recognition, public recognition, and cost of capital recognition are urgently needed to speed up the transition.
A new era of collaboration
Governments need support to create enabling policies that invest in sustainable infrastructure and support innovative solutions. Major opportunities exist for innovation and collaboration, such as working together to transition away from the $7 trillion implicit and explicit fossil fuel subsidies and direct capital toward creating the conditions for a speedy transition to net-zero and nature-positive to deliver stable economies.
By working together, we can harness the power of systems collaboration to win the fight. The next “industrial revolution” is fast upon us and our economies will adapt. How fast we transition to an impact economy is wholly dependent on how much trust we can build in one another to collaborate, and how courageous we are willing to be.