Redesign Capitalism to Incorporate Social Value

CONTENT FROM SOMPO HOLDINGS

The world was facing daunting challenges before the COVID-19 crisis. Climate change, environmental destruction, worsening inequality and widening disparities are problems that some among us chose to downplay or dismiss.

Those challenges can no longer be ignored. The COVID-19 crisis has exposed and amplified our problems – and in some cases made them worse. As well, we have come to re-value just how precious our families and personal relationships are. We are beginning to realize that unless our societies are just, fair and healthy then our individual security and wellbeing are built on fragile foundations.

COVID-19 is a reckoning. While exacting a heavy price, it is also presenting us with the chance to safeguard our futures. We must make the most of this moment. Governments, citizens and businesses must change their behaviors. We all must prioritize how we can contribute to building sustainable societies.

Capitalism has lifted countless people out of poverty. However, with the expansions of digitalization and globalization, capitalism has produced greater inequalities and divisions. In its present form, capitalism is not truly contributing to the well-being of humanity. We need to reimagine capitalism, to incorporate social sustainability and people’s well-being.

Capitalism is a socio-economic system designed to meet the demands of people. To redesign this system, to create a “new capitalism,” the following points should be considered:

1. Create a system that can generate “good demand” to meet the various objectives of the Sustainable Development Goals (SDGs) and captures that as economic profit.
2. Business should pursue the happiness of the whole society in line with Environmental, Social and Corporate Governance (ESG), and society should support those businesses that do, hence resulting in greater future profits and increased current corporate values.

A New Capitalism

We need a new capitalism that increases consumer demand for goods and services that contribute to the SDGs, and that rewards companies meeting that “good demand” with economic returns. In addition, capital markets should factor in forecasts for long-term profits generated by corporate actions in line with ESG, even if those actions do not deliver short-term returns.

Some signs of this are emerging, such as the impact of ESG investment on corporate valuation. In this context, companies should set key performance indicators and take concrete actions to realize social value that can contribute to future profits. SOMPO is working to develop roadmaps for its businesses to generate greater economic value – and to ensure they create social value.

In Japan, SOMPO has entered the nursing care business as an investment in the future to help solve the social challenges of a rapidly aging society. SOMPO is determined to reform eldercare and nursing homes. Our goal is that through technology and datadriven research we can design “nursing care that makes our grandparents smile.” That, in turn, would bring greater happiness to society as a whole, and reduce the burden of nursing care on society.

SOMPO, with its mission of being a “theme park for security, health and well-being,” aims to contribute to the happiness of people, society and the planet.

Contact us at letters@time.com.