Business & Society with Senthil Nathan

#1 Profit with Purpose - Unpacking the Rise of Socially Responsible Business with Jeffrey Sachs

• Senthil Nathan • Season 1 • Episode 1

Share episode

Embark on a journey of discovery with Professor Jeffrey Sachs, a luminary in the realm of sustainable development, as we discuss the transformative role businesses must adopt in our rapidly changing world. This podcast delves into the necessity for companies to transcend their traditional profit-centric paradigms and wholeheartedly embrace social equity, environmental preservation, and global collaboration. Sachs eloquently challenges the dated Milton Friedman doctrine, advocating for a corporate accountability that extends well beyond the bottom line and into the heart of societal welfare and planetary health.

As we traverse the nuanced landscape of the Sustainable Development Goals (SDGs), Professor Sachs sheds light on the intricate relationship between these global aims and the private sector's potential to foster change. From confronting the criticism of 'woke capitalism' to addressing the sly tactics of greenwashing, we uncover the authentic vision of business practices that genuinely contribute to our collective goal of sustainable progress. It's a revelation of how forward-thinking companies can support fundamental initiatives, such as educational advancement in less affluent nations and the conservation of our precious marine life.

Concluding our enriching exchange, we explore the profound intersection of sustainable advancement and spiritual wisdom, tapping into the moral and intellectual virtues that underpin both the individual's growth and society's advancement. Professor Sachs's insights inspire us to consider the ethical imperatives that guide our behavior and the significance of personal development in crafting a harmonious global community. This is more than a conversation; it's an invitation to engage in the ongoing discourse on the critical role of business in shaping a future that we can all be proud of.

Additional inspirations from Professor Jeffrey Sachs:
•Book Club with Jeffrey Sachs :
    Apple -  https://podcasts.apple.com/in/podcast/book-club-with-jeffrey-sachs/id1555300202
   Spotify - https://open.spotify.com/show/2PtBgoV7nNBPjQFzAGuIjH?si=387ddb8985fd420f

If you want to follow this podcast, please subscribe to the Business and Society with Senthil Nathan on Apple and Spotify. We welcome your comments and suggestions at bspwithsn@gmail.com.

Senthil Nathan: 0:10

I'm Senthil Nathan, Chief Executive of Fairtrade Australia and New Zealand. Welcome to my Business and Society podcast, where we discuss the role of business and society with influential thinkers. Joining me today is Professor Jeffrey Sachs. Professor Sachs is one of the greatest thinkers of our time. He is the university professor and director of the Center for Sustainable Development at Columbia University and President of the UN Sustainable Development Solutions Network. He has been a special advisor to three United Nations Secretaries-General and currently serves as an SDG advocate under Secretary-General António Guterres.

Senthil Nathan: 0:51

Professor Sachs has received 42 honorary doctorates and his recent awards include the 2022 Tang Prize in Sustainable Development, the Legion d'Honneur of the President of the Republic of France and the Order of the Cross from the President of Estonia. His most recent books are The Ages of Globalization: Geography, Technology and Institutions and Ethics in Action for Sustainable Development. 
As sustainable development challenges grow exponentially and the expectations of business from society is at an all-time high, what role should businesses play in society? Why and when did this idea of socially responsible businesses start? I ask these questions to Professor Sachs. Professor Sachs, thanks so much for joining me today.

Jeffrey Sachs: 1:39

Yes, wonderful to be with you! Thank you for inviting me.

Senthil Nathan: 1:42

Why and when did we start expecting businesses to play a vital role in sustainable development?

Jeffrey Sachs: 1:49

Businesses play a vital role in our economy. They produce most of the goods and services in our economy, and we therefore know that they have to play a vital role in the right kind of economy. That's what sustainable development means. Sustainable development means an economy that satisfies certain objectives. One, a high level of productivity that generates material well-being. But second, an economy that is socially fair, that doesn't leave people stuck in poverty, for example. Third, it means an economy that does not destroy the environment as it produces goods and services, so it's one that is environmentally sustainable. And fourth, an economy that is in peaceful relations with other parts of the world and, in fact, where governments and civil society are cooperating with each other across national borders, because our problems are not limited to what happens within our nations and our solutions require cooperation that transcend our national borders. So for me, sustainable development means prosperity that is fair, environmentally sustainable, peaceful and cooperative.

Jeffrey Sachs: 3:29

Now business is really the main economic institution after all, it has to get with the game. In other words, it has to understand that its job as business is not to make money that ends up destroying nature. It is not to lobby a government for unfair privileges that may increase personal wealth but decrease the well-being of society. It is not to game the international system in a way that leaves conflict in other places. In other words, it's to tame our very narrow and sometimes very dangerous self-interest so that we get along, live harmoniously and appreciate our responsibilities in society. But now it's even harder because we have to appreciate our responsibilities not just to our neighbors or even to our country, but internationally and with respect to nature. And those are new ideas, and for a lot of people in business, not even acceptable ideas and after all, a lot of people in the United States, I'm sure in Australia, basically believe, "hey, we're here to make money, don't preach to me, don't tell me all these fancy theories, I'm a business person, I'm here to make money, I want to have a good life and you do your own thing" and that kind of idea is very prevalent in the United States. I think it's wrong, I think it's philosophically a mistake. It does not lead to a good life to the people in the society, even for those individuals who think they are going to make it and we therefore need a much more sophisticated understanding of what it means to have a decent life in a decent society that functions in a world that stays peaceful. We are not doing  a great job on this right now. I have to say so, in the sense, I think there is a lot to learn. 

Senthil Nathan: 5:46

That sounds very counterintuitive to Milton Friedman's doctrine, which is often cited and has been popular for some decades now, that the social responsibility of business is to increase profits, what would you say to Friedman if you meet him today?

Jeffrey Sachs: 6:01

Well, I knew him when he was alive. He was very clever, by the way, very witty, very funny but I did not agree with his philosophy then or now. I think that there are two aspects. One, a very powerful point and Milton Friedman may have known it, but he certainly didn't appreciate it adequately and that's the following.

Jeffrey Sachs: 6:32

To his credit, Milton Friedman would say, I didn't say people should misbehave, but what I did say, is you behave according to the law. The law should be set right and then you make profits within the law. So he had a kind of division of labor. The division of labor was government should set things properly. It should maybe stop pollution or tax pollution, but then business should do what business does and that's make money, but within rules of the game set by the government. Now there's some merit in that, in that if we had better rules, businesses could focus more just on profit without having to look around and ask am I doing the right thing? But we don't have good rules, and one of the reasons we don't have good rules is business by the way, of course, in the United States, in Australia, in the Anglo-Saxon world, business lobbies government, or business even runs government, and so the idea that government sets the right rules and business makes profits is not how it actually is. Business sets the rules and business sets the rules to make even more profits.

Jeffrey Sachs: 7:56

In the United States, we are dominated by our corporate lobbies that influence government in a very crude way actually, through campaign contributions, because American elections are money games. We don't have free media, we don't have low-cost elections, we don't have even powerful political parties. We don't have a parliamentary system. We have a congressional system where congressmen have to let's say, have to Congressmen raise a lot of money to run their advertisements and their campaigns and to get out the vote. Where do they raise the money? Basically, from corporations and from very wealthy people. What do the congressmen then do in the end? Well, they set the rules not according to the general interest, but according to the lobbying interest. This is obvious. It's obvious in many sectors, even in the United States, in our war making, because we have a strong military industrial complex that always wants to produce more weapons. They want to sell these weapons to Australia, by the way. That's why Australia is on the tab for buying ridiculously expensive, completely unnecessary submarines, for example. This is because of the American lobbying, not because of some dire threat coming from China.

Jeffrey Sachs: 9:23

Now I won't go into that, except to say that Milton Friedman basically neglected that pretty sordid fact, which is that you can't expect government and business to work properly when business is not merely following the rules, but making the rules and making the rules for profit. The second point, though, and it goes back to all philosophers from time immemorial there are so many things in life where it's not just a matter of law or not, but a matter of responsibility. You can cheat and not break the law. You can use loopholes, you can observe in some place oh, they don't have environmental regulation. I could dump all my toxic wastes here and I'm not even breaking the law and it's free to do. Now Milton Friedman would presumably say yeah, go ahead and do it.

Jeffrey Sachs: 10:31

In fairness, again to Milton Friedman, he was making a slightly different point, because he was saying that companies shouldn't use their profits for charitable purposes, because which charity? They should give the money back to their shareholders and the shareholders can do what they want with it, consume it or give it to charity, but not the companies making the decision. But he painted with a very broad brush and left a very bad impression, basically saying businesses don't have to think about what they're doing, they just have to follow the law and as long as it's law abiding, it's fine. And the examples I'm giving in this second example is not that they have lobbied for bad rules, but maybe there aren't rules. Maybe they're very clever, maybe they can trick a lot of people. Maybe they can addict a lot of people to their addictive products. Maybe they bring a new digital product that's going to make young people addicted and very unhappy, but they're making a lot of money, maybe they have market power. They can raise a drug prize sky high, people will die but it's not against the law and in the United States, most of those arguments when you make them to the kind of hard-core business people, they shrug their shoulders and say, "Yeah", in fact they tell me, "Prof Sachs, what are you complaining about?  that's how our world works" and I'm complaining about that because that's not how our world should work. A business should have social responsibility with the starting point being, "Do no harm". If you add value, ok, then there is the case for making money but if all you're doing is transferring value, you're creating a profit on your balance sheet by literally harming someone's health or polluting someone's environment or driving people to desperation. No, that kind of business in my view is morally unacceptable, should be shunned, and our young people training to be business people and entrepreneurs should understand that's not your job to make profits by hurting other people, despoiling the environment, using loopholes. So, this is where I think Milton Friedman is really wrong. Businesses lobby and it's pretty awful. In most of the time businesses cheat when they can get away with it. They sometimes view things like taxes as basically a game, not as a responsibility to follow the law but a game where they are balancing the potential costs of getting caught vs the benefits if they don't get caught and so forth and that kind of behavior is a moral issue as well as a legal issue and we would do much better if we had morality in addition to the law. 

Senthil Nathan: 13:51

You talked about lack of rules and rule bending. I think the idea of SDGs, which you're one of the key brains behind, came to codify those global rules, isn't it? Now? What has been the overall progress on SDGs so far? They were set in 2015, and we have only about six years left.

Jeffrey Sachs: 14:13

So the SDGs are 17 goals set in September 2015 to be achieved by 2030. And they were approved or agreed by all 193 UN member states, and they are objectives that involve both kinds of problems that we've been discussing. One is they are almost admonitions to governments. These are your goals, you've accepted them. Make the laws and the regulations and the budgets appropriate to meet those goals. They're also signed for business in two ways. One is to say to business this is what the government is going to be pursuing, get with the plan, because you know, don't produce massive fossil fuel-based industries if the plan is to decarbonize the energy system because of the public good of stopping human-induced climate change. But they're also indicators to business on the other dimension, which is these are our societal goals, not just indications of new laws or regulations or public policy, and you as a business should be responsible enough to make money within the context of society achieving these goals. For example, SDG 14 is a safe marine environment that tells you, because the marine environment is important, do not make money by dumping your toxic wastes into the coastal areas, do not make money by destroying the coral reefs and so forth. And so the SDGs are also indicators for business in two senses, a description of where public policy should be and a description of what responsible business behavior is. Now you ask me how we're doing, Lousy!

Jeffrey Sachs: 16:16

The world got terribly off course almost immediately, by the way, because my own country, the United States and I mean the government never showed interest in this, even though, as one of the 193 UN member states, they signed on to it. But Donald Trump became president soon after. I don't think he ever said the word sustainable development goal in his life probably, certainly not in his administration by the time Biden came into office in 2020, we had the COVID pandemic, then the war in Ukraine, now the war in the Middle East. We don't hear a word about the SDGs from the US government in this administration either. It's a real shame. The biggest economy in the world is kind of missing in action on the SDGs. I'll say that all over the world, most governments are pursuing the SDGs. They are making national plans around them. They are working on them. Most low-income countries can't afford the investments that they need to achieve the goals, even the most basic goals like making sure that all the kids are in school through upper-secondary, one of the most important goals of the society is beyond the budgetary means of the low-income countries and unless the richer countries do something to help the poor countries - long-term loans or developmental aid or something else, there are going to be a lot of children in poor countries not in school and that's a tragedy for those kids, it's a tragedy for their societies, it's a huge cost to the economic development and we've to get on with it. So, I spend most of my days trying to make practical recommendations, how to move faster and that's why the network that I lead for the Secretary General of the UN is called the Sustainable Development Solutions Network (SDSN), because solutions is the whole point. What do we do, how do we find a financing, how do we mobilize digital, how do we use the new technologies to speed action and so on because we need to be very practical on these matters. 

Senthil Nathan: 18:50

Every other day we read news reports of individual firms announcing sustainability targets, and many of them are anchored towards SDGs, but lately we are also seeing a lot of criticisms about greenwashing and this new trend called woke capitalism. What does the macro picture look like?

Jeffrey Sachs: 19:05

Well, first of all, the criticisms of the SDGs, as open criticism, come mainly from American libertarians. Libertarians say, I don't want to be bothered by anybody else, don't lecture me, don't tell me what to do, I'm a free person, this is my business and this woke stuff I'm not interested in." Now, this is a very peculiar philosophy. It's very Anglo-Saxon, but I would say, since we're all part of the Anglo-Saxon world in Australia, the United States, Britain and so on, it's really American, even US, even more than Anglo-Saxon. Though it was born in 19th century Britain and it actually arose already in the 18th century, with Adam Smith, of course, who was a more sophisticated thinker but believed in the invisible hand, after all, that markets would allocate resources in the right way. So a lot of the attack is basically rich and powerful people and companies in the United States saying leave me alone, what are you talking about, professor Sachs? I will do what I want. And there's a lot of greed and a lot of short-sightedness and a lot of self-approval among the libertarian rich. For example, silicon Valley is filled with libertarians. Isn't it nice to be a billionaire and a libertarian? A libertarian says I don't have to care about anybody else. And how convenient for a billionaire, you know? Rather than say, what do I do with all this wealth that I could never use in many lifetimes? They say I don't have to even think about such a question, I just need to accumulate more.

Jeffrey Sachs: 21:06

So I think that this attack on woke capitalism is contrived and it's an attack by the powerful on the weak. In my view, it's not an attractive proposition. But remember also US politics is in the hands of lobbyists and when it comes to the energy sector, big oil, big gas, big coal is still in the driver's seat. It's like Australia too. There's just a powerful interest in the fossil fuel sector, even though all of our life, when we go outside these days, we know, my God, the climate is really changing and it's dangerous and that's what all the science is telling us. But these lobbies are quite powerful. They're resistant to change right now and it's a slow process. So this backlash is real. But, to my mind, not very attractive, not based on rational ideas, not based on legitimate scientific evidence, but really guided by short-sighted, short-term self-interest of powerful people for whom an argument like this is convenient. 

Senthil Nathan: 22:30

Let's look at the other side of the business that was largely untouched for long, but now a lot of scholars talk about you know the consumption-led growth and the challenges in it. Is the prevailing consumption-led growth model sustainable? I was reading a few scholars, such as Jason Hickel, Kohei Saito. They argue that degrowth is the way out of global climate crisis. Do you agree with them?

Jeffrey Sachs: 22:57

Well, I think in all cases we need to specify what is the problem and what is the solution. So, when it comes to climate, the problem is a scientific one. It is greenhouse gas concentrations in the atmosphere. This was said already very clearly 32 years ago in the UN Framework Convention on Climate Change at the Rio Earth Summit, it said we must stabilize the concentration of greenhouse gases in the atmosphere to avoid dangerous anthropogenic interference, in other words, stop the rise of concentrations of CO2, methane and nitrous oxide and hydrofluorocarbons, some industrial gases. Now the question is what to do about that. The main answer, in my view, is a change of technology so that the activities, the economic processes which currently are making these greenhouse gas emissions are changed to processes that don't make greenhouse gas emissions. For example, most famously, rather than burning coal, we should tap solar, wind, hydro, geothermal, nuclear or other zero-carbon energy sources. Rather than having internal combustion engine vehicles, we should have electric vehicles or hydrogen fuel cell vehicles or maybe, in some cases, biofuel powered vehicles, but vehicles that are net zero emission vehicles.

Jeffrey Sachs: 24:47

When I think of the problem that way, degrowth is too general a term. What we need is technology transformation. We need to move to net zero energy systems. Now that poses some very important questions which I spend most of my days pondering and trying to work on, which is what is really entailed in such a transformation, what is a specific pathway, and can it be achieved through public policy combined with sustainable development objectives of the business sector? So, on the what to do, for the last decade I've been leading projects that I call pathway projects, which aim to define the quantitative path of the energy sector so that by mid-century latest it is a zero greenhouse emitting sector. And we know a lot about what such pathways should look like and a few countries are following them.

Jeffrey Sachs: 26:03

It means stop burning coal, oil and gas directly. Go to the zero carbon sources which I mentioned, go to electrification, go to green hydrogen, use the green hydrogen for heavy industries such as steelmaking. Go to hydrogen-based international shipping, go to synthetic fuels for aviation and so on. In all of those cases, it's not degrowth that is really the issue. In fact, probably there needs to be rather considerable growth in electricity production, for example, because if you're going to change from a fossil fuel-based transport sector with petrol to an electric vehicle sector, you need a lot of power generation. So it's growth, but growth that's very different from the growth of the last hundred years, and that's what I would like us to think about in a much more detailed way.

Jeffrey Sachs: 27:11

What is it that we're really after? What is going to make us and make the planet sustainable and make our lives fulfillable? If there are areas where we really are consuming too much for our own good and there are, of course, areas like that Addictive products, almost by definition, have that characteristic. Maybe there are some things that we do where it's not easy to find substitutes or alternatives. It may be that beef eating is a case where maybe there really does have to be a cultural and policy change, that in the places that eat a lot of beef, that should be reduced over time by personal choices and so on. But in many cases it's not again doing less, it's doing better, and we should do less when we're doing too much of something. We should do better in general when there are alternatives that can improve our lives and improve our environment at the same time. Those go together, obviously, and there are a lot of such cases.

Senthil Nathan: 28:37

Now I speak to business leaders a lot. Climate change is one of the issues, but if you look at the SDGs, there are so many indicators that could apply for so many businesses. The challenge business leaders face is prioritization. What should well-intentioned businesses choose to prioritize?

Jeffrey Sachs: 28:56

Well, I think the first thing to say is that for government, which is a complicated enterprise, the SDGs is not an a la carte list. The SDGs is a packaged deal. So I spent a lot of my time saying to government no, no, you can't say I'm going to do health but I can't afford education. Or I'm going to do health and education but I can't afford a safe environment. It's meant to be comprehensive and if you can't afford all of it, then the problem is on the financing side. The problem isn't on the goal side. So we want to help you figure out how to make sure your kids are in school and people have health coverage and you're moving to a sustainable energy system. So for government, government intrinsically is a pretty complex area. It involves the range of public goods and services that transcend a lot of areas, from science and technology to old age, pensions, to public health control, to environmental management and sustainability, to core physical infrastructure and on and on and on. And governments are generally not well equipped for the complexity of these challenges and politicians in general come and go. They're not trained to understand these issues especially and they don't care to. They want to win an election. So sometimes the goals can be helpful. Other times they're just a nuisance. Other times the politician says I don't know what you're talking about, actually never even heard of those words. So we need capacity at governmental level, from local government to state government, to national government, to regional cooperation that is technically capable, because we're living in a highly sophisticated system of engineered systems and we better get this right. So this is the first point. It's complex, but don't oversimplify the issues, because the different components the economic, the social, the environmental they go together. Actually, you can't just say well, I'm going to do two out of the three, okay. When it comes to business, there is a criterion called materiality, which is what of this really matters for us. I'm certainly not against that. Business is not lawmaking. It's not a parliament. I think the businesses, at a minimum, first need to understand what is our challenge. What are we doing? What are areas where we're making money by making something worse for others? Where are areas where our products are creating public bads or externalities that are a distortion of how the economy is functioning? Where we're making money on our balance sheet but not social good? So I want companies to ask about their own product lines. Are these products good for society. Is there some reason to worry about them? If you're producing oil, coal and gas, you better worry not just about the regulations but about what you're doing to society. If you're living off of an addictive product, like the Sacklers did in the United States, peddling opioids, making billions of dollars, but addicting millions and millions of people and knowing it and not paying attention to it. It's disgusting, it could be illegal, it's profoundly immoral, and so you better know, are my products doing terrible things somehow and I'm reaping a profit from it, but really I'm creating harm? So that's the first thing I want companies to ask themselves. I'd like companies to ask themselves about their production processes, of course.

Jeffrey Sachs: 33:17

What am I emitting? What am I contributing to environmental harm? What about the wastes of my own products five years down the road? Am I just leaving a mountain of electronic garbage or toxic wastes or plastic pollution or other problems down the road? I need to internalize those things. So that's a second area.

Jeffrey Sachs: 33:44

A third area, increasingly and very important, is well, what about my customers? What about my suppliers? I'm part of a value chain. It's a value chain financially, but it's also a moral and sustainable development value chain. Am I selling products that then are really wreaking havoc down the road? Am I buying my agricultural produce from places that have deforested to produce that palm oil, or to produce those soybeans, or to produce the cattle? Now, that requires companies to know about their suppliers. That is a level of responsibility that I think is very important. After all, that's what Fairtrade is about. It's know where your coffee's coming from, know where your products are coming from and don't just say, well, I'm having my coffee as I am and I don't care if it came from a deforested region. We need to get the supply chains to be responsible. And the fourth question that I ask, in addition to our product lines, our production processes, our suppliers and consumers in our supply chains and value chains, the fourth broad category that I ask companies to think about am I a good citizen? Now, a corporation is a legal person and as a legal person, I want you to be a moral person.

Jeffrey Sachs: 35:20

Milton Friedman said no, don't worry too much about that, but I'd say worry in the following areas as a business, as a corporation, am I worsening society by lobbying for special interests, for self-interests that are detrimental for the society as a whole? Am I dragging my feet on the truth about my products. Suppose I have a polluting product and some nice environmental NGO says you have a polluting product. Many companies will say that's absolutely false. We don't accept that. They'll fight it no matter what the truth is. But a decent business will look, think hard, say, oh, you have a point, we need to phase this out, if that's what the circumstance is.

Jeffrey Sachs: 36:10

Similarly, businesses should not look for every loophole that they can ruthlessly pursue. It's sometimes said you know you don't have to pay taxes you don't owe. But what that often translates to is a completely aggressive tax avoidance policy that borders on evasion, or is evasion because it's a gamble. Ah, we're not going to be audited. Or maybe in three years we'll be audited and then we'll just switch once we're caught. That's bad citizenship also. So lobbying, disguising the truth about one's products, being non-transparent, breaking the law when you think you can get away with it, companies need to get with good citizenship. So those are, I think, the main considerations. Materiality means if I'm selling a consumer product maybe the education sector, SDG 4, it's a nice thing but it's not really my thing, if my product is a service that has no environmental impact. I may care a lot about climate or marine or terrestrial ecosystems, but it's not so material for me. But if my product is making people sick SDG 3, that's high materiality and I had better pay attention to that.

Senthil Nathan: 37:43

The implied message there is businesses cannot act alone as a business sector. They certainly need multi-stakeholder partnerships. In your writings you have emphasized the importance of multi-stakeholder partnerships and achieving SDGs. How can businesses start building such partnerships?

Jeffrey Sachs: 38:04

I think businesses first need to understand globally agreed goals, whether it's the SDGs or the Paris Climate Agreement, and if they're clever and smart, they'll understand. You don't get a global goal on a whim. You get a global goal because it's important. By the way, because it's important doesn't mean it's going to be achieved, because powerful interests may not care enough to achieve it. But I would say by the time you get to a globally agreed goal, it's something important. So businesses first need to understand the SDGs.

Jeffrey Sachs: 38:43

A great way to understand the SDGs is to have a sustainable development annual report, which most businesses do at this point. Sometimes they call them sustainability reports and they focus overwhelmingly on some environmental issues. My own advice would be to have a sustainable development report and focus on the 17 SDGs and the intersection of the SDGs with the business. A second way to be engaged is to join up with leading NGOs like Fairtrade or other NGOs, or to join up with the university sector which is working on these issues.

Jeffrey Sachs: 39:28

In Melbourne, Monash University has the Monash Sustainable Development Institute, for example, a world-class, world-leading institute in sustainable development. If I were a business in Melbourne, I would go to MSDI and say we need to partner, because I need to be oriented for the next 20 years into what we're doing. So I would say businesses need proactively to understand the SDGs, make partnerships with academics, with scholars, with scientists, with NGOs to find out, to learn, to understand, to be able to ask the right questions, to know where the future of their own markets is heading.

Senthil Nathan: 40:23

What role does spirituality play in SDGs? Your frame of thinking often includes faith and religion, which is very unique and special, according to me.

Jeffrey Sachs: 40:34

Well, first, I've had the wonderful, wonderful honor and pleasure of working with many religious leaders, with Pope Francis, with the Patriarch Bartholomew of the all-ecumenical patriarch of Greek Orthodoxy, with the representatives of the Grand Imam of Al-Akhzar, with the Buddhist leaders, with the Hindu leaders, with Anglican leaders. So I've had a very lucky experience of being part of this ecumenical religious world community. I'm an academician at the Vatican, at the Pontifical Academy of Social Sciences, and greatly appreciate the Catholic Church's social teachings about moral economy, about moral statecraft. The Church has played an important role in peace initiatives. It's played an important role in reducing debt burdens of poor countries. It's played—in fact, Pope Francis opened the session of the UN on September 25, 2015, giving the speech that preceded the adoption of the Sustainable Development Goals, telling the world leaders we need a common plan for our common home. So I believe that the great religious traditions which are core to cultures all over the world, have a great deal of wisdom about thinking about the long term, about thinking about social responsibility, thinking about community life. It's notable that Patriarch Bartholomew the Orthodox patriarch was already, 30 years ago, a great environmentalist and, I would say a leader among the religious leaders of environmental stewardship and responsibility. And when Pope Francis issued his wonderful encyclical in 2015, Laudato Sí, about the responsibilities for environmental stewardship, he thanks Patriarch Bartholomew for the inspiration and the partnership in that. So we can see that these traditions and this sense of deep moral responsibility are very core to our ability to orient ourselves and to inspire people around the world and to inform people around the world about these issues, Laudato Sí, Pope Francis's encyclical about the environment and climate change was very widely read. Interestingly, by the way, it was attacked by some American conservative Catholics saying you know, what does the Pope know about climate change and why is the Pope talking about climate change? The fact of the matter is that the Pontifical Academy of Sciences and the Pontifical Academy of Social Sciences had many sessions involving world-leading climatologists who came to the Vatican to bring cutting-edge science to the knowledge and benefit of the Church, so that the Church could not issue a technical paper but issue a moral paper that was underpinned by the rigorous climate science. So a lot of work goes into that as well.

Jeffrey Sachs: 44:30

Generally, let me say, whether it is religion or moral philosophy, which is another category that's related but not the same as theology or as religion, moral philosophy is about personal and group responsibility. On a philosophical side, I am an Aristotelian, I'm a follower of Aristotle. I believe that the Nicomachean Ethics, his great ethics book, really the founding of ethics as a science, informs us until today. It was written 2350 years ago roughly, and it's still an absolutely fabulous book worth careful reading. And so the moral philosophy outside of the main organized religions is also extremely important. And, of course, over the last 2,000 years, religion and philosophy have talked together back and forth, sometimes aligned, sometimes debating, sometimes arguing, but for 2,000 years.

Senthil Nathan: 45:48

Professor Sachs, I know we have limited time, but this podcast's primary audience is business and sustainability leaders working to identify solutions for complex problems. So I'd like to ask four personal questions to draw lessons from your distinguished life and career. How do you handle conflicting views and differences of opinion?

Jeffrey Sachs: 46:09

Well, the first thing is I'd like to try to understand something thoroughly. So when there are differences of view, I want to understand. Is it differences of knowledge? Is it differences of databases? Is it differences of interest? Is it differences of temperament? So I try to stay. I try and I've learned better over the years stay very calm and listen. I love learning from people who know things. You know as an economist, what do I know about climate change? So I love listening to climatologists and I love listening to engineers who can explain to me how an engineering system works or how a power grid works, and so forth. So I find that a great many arguments are really arguments about fact and science, and so knowledge is really crucial in this. Plato said we're all stuck in the cave and we see flickers on the wall of the cave and we're trying to make out what's going on. And he bid us to go to the sunshine outside of the cave through knowledge. So that's the first point. Sometimes the differences are differences of narrow interest, and then the question is well, what can one say about that? Even when there are conflicting interests, it doesn't mean you have to go to war. War is generally extremely wasteful, dangerous, painful and avoidable. So you even make accommodation relative to war by finding a way to have peace and sharing the pie as they say. But these are the two broad reasons. Three broad reasons for differences of view is knowledge differences or differences of view about the evidence, differences of interest or limited knowledge on each side, and so by interchange one can provide updates to the knowledge on both sides so that one can actually reach an agreement on something.

Senthil Nathan: 48:31

And some of the challenges you handle are not something we could solve in our lifetime. So obviously you might have had many failures in your career, I assume.

Jeffrey Sachs: 48:41

Yeah absolutely.

Senthil Nathan: 48:41

Have you had any failures and how do you manage them?

Jeffrey Sachs: 48:44

Lots of failures and some successes, and the successes are the compensation for the failures. You know I take a great heart in the fact that Plato wanted to be a practical advisor. He went reportedly three times to the city of Syracuse in Sicily. He was a massive failure once he was almost sold into slavery. His recommendations weren't observed. My feeling is oh, I'm in good company If I fail, well, plato failed too, by the way, confucius failed too.

Jeffrey Sachs: 49:34

Most of the great philosophers were wannabe politicians in a way, and sometimes they weren't listened to until a long time afterwards. So failure, you know, in truth and in all seriousness, complex challenges are not easy to solve. They often are very high stakes, so they're worth working on. They're powerful interests. There's a lot of ignorance in this world. There's a lot of malevolence in this world. There are a lot of vested interests in this world. You can't go into issues like this and expect that everything's going to fall beautifully into place. You can only do your best. Sometimes you get a success that you say wow, that really worked, that's amazing, by the way, that's fun when that happens, but you can't expect that every week.

Senthil Nathan: 50:23

Can you recommend a book or two on business or sustainability to our leaders? I was visiting your office once with Sonia and it took a few minutes to cross the book aisles to reach your cabin. Thousands and thousands of books!

Jeffrey Sachs: 50:38

Yeah, I have 15,000 to 20,000 volumes in my personal collection and the number keeps growing, to the distraction of my wife because we don't have places to put them anymore. But I like books and I like having them around. Even though, practically speaking, about 15,000 are now in my office, they're not at my home and I have a few thousand in my home and it's not simple, but I love having the books around, not to mention what's on the Kindle and on the audiobooks as well. Let me just say I do a book club once a month, a podcast, and it's called Book Club with Jeffrey Sachs, and I would encourage people to go listen. There are very nice episodes. It's a blast for me because I get to interview an author on a new book that I like, and so if you want to find a list of books that I thought are really good, that's a good list of the recent podcasts.

Senthil Nathan: 51:41

Great, I'll leave the link to the podcast. Last question what are one or two essential skills that leaders working at the intersection of business and society must have?

Jeffrey Sachs: 51:54

This is hard work but very rewarding work, and I think again I'll go back to Aristotle. Aristotle talked about intellectual virtues and about moral virtues. Intellectual virtues is technical knowledge, scientific skills, book learning, a network of people that you can honestly rely on and confidently rely on to know the truth in a world filled with misinformation, disinformation, wrong information, fake news, everything else. Building that network with a knowledge, open mind, discernment, those are intellectual virtues. Having a good contact with a wonderful local university is really important in general because that's a lot of skill set that can be very helpful.

Jeffrey Sachs: 52:57

The moral virtues are the virtues of how to live decently, especially with ourselves and with other people. Aristotle talked about four main virtues. We call them the cardinal virtues. Practical wisdom is one, in other words, deliberate, think hard to make proper decisions. Don't just jump at something but think about it. He talked about fortitude or bravery, not recklessness, but standing up for what you believe, but for reasons that are sound and solid. He talked about temperance or moderation avoid addictions, gluttony and just devoting everything to maximum wealth and not quality of life or decency to other people. And the fourth virtue that he talked about as a moral virtue was justice, which is to be capable and oriented towards giving each person their due their due as human beings, their due as counterparts, their due as business partners or academic scholars or whatever relationship, giving each his or her due. I think these are good principles, intellectual virtues and moral virtues. I think it's a good combination.

Senthil Nathan: 54:25

Thanks so much for your important work, Professor Sachs! It was an honor to speak to you today.

Jeffrey Sachs: 54:30

Yeah, it's been a pleasure, and good luck to you and thank you for having me on the program.

Senthil Nathan: 54:37

If you like this conversation, please subscribe to the Business & Society podcast on your favorite podcasting platform. As always, we welcome your comments and suggestions at bspwithsn@ gmail. com. That's bspwithsn@ gmail. com.