SUSTAINABLE DEVELOPMENT
D espite the global progress achieved with the United Nations’ 2030 agenda for (SDGs), it remains clear that there is still much to be done. Challenges such as inequality, environmental issues arising from climate change and biodiversity loss, lack of political will and the insufficiency of adequate financial resources – further affected by the post-pandemic climate – have hindered progress to achieve the SDGs. A renewed commitment across all sectors will be the turning point in addressing these challenges, while accelerating the path towards a more just, prosperous and sustainable world for all. Part of the many actions contributing to the UN’s goals is including and involving society in decision-making processes. Translating this perspective into the business realm, the employee share ownership model offers various benefits with social implications that are subject to analysis. sustainable development and its 17 sustainable development goals A glimpse into the future According to the Organisation for Economic Co-operation and Development (OECD), it is estimated that in the next 10 years around 10 million small and medium-sized enterprises (SMEs) worldwide will face the need for leadership change due to current owners retiring. In the United States, the Family Business Institute of the University of St Thomas reported that around 60 per cent of family businesses do not have a solid succession plan. This trend is echoed in countries such as Mexico, France and Slovenia. The challenge of succession is exacerbated by the ageing business population, particularly in the US and Europe, where it is estimated that more than half of business owners are over 50 years old. As SMEs represent a significant part of economic activity and job generation, the lack of effective succession can have a significant impact on the economy. The challenge involves careful planning by business owners, as well as the design of policies and government support programmes that promote business continuity and the successful transfer of assets, knowledge and legacy-purpose. The Employee Stock Ownership Plan (ESOP) allows company employees to acquire a stake in the company’s ownership, enabling them to share decision-making power and financial benefits collectively. It gives staff a voice while fostering a sense of belonging and long-term motivation. For founders and owners, employee participation in capital offers a succession-planning tool and a way to improve productivity, innovation and resilience within the company while impacting all stakeholders. Democratic business governance aligns workers’ interests with the success of their companies and promotes genuine motivation, engagement in business success and purpose in job performance.
This model facilitates an innovative mindset and allows workers to take responsibility for the result of their work, leading to greater accountability while providing a higher degree of participation in the decisions that affect their lives. At the same time, wealth is shared equitably among all stakeholders. Championing co-operative businesses The US leads the list of countries with the largest number of companies successfully following the ESOP model, with some 6,447 firms employing 10.1 million workers nationwide and covering 10 per cent of private sector employees. Large companies such as Publix Supermarkets, WinCo Foods and Amsted Industries all appear on the list; however, most companies under this model are SMEs. In the UK, the most renowned employee-owned company is the John Lewis Partnership; following the introduction of tax incentives through legislation on employee-owned trusts that came into force in 2014, nearly 2,000 new companies have been created in the country under this model. Thousands of co-operatives that provide stable jobs and maintain the value of local communities can be counted in countries such as Germany, Italy, France and Spain; the latter is home to Mondragon Co-operative Group, the largest of its kind in the world. The co-operative model can now be found in Argentina, Chile, Peru, Mexico, India, Morocco and Japan, all places where ESOPs have contributed to ensuring material well‑being and economic stability. According to the International Cooperative Alliance (ICA), there are more than three million co-operatives in operation, totalling 12 per cent of the world’s population. In 2024, the government of Canada announced its support for employee share ownership and Slovenia is preparing a law on ESOP, while in Mexico work is being done on a public policy proposal that could eventually apply to the entire Latin America region. What we have learned so far is that share ownership thrives best where legislation supports it; even when there is still much to be done, the global landscape is evolving and employee share ownership is becoming a reliable strategy for achieving sustainable economic development. Imagine a workplace where every voice matters, decisions are made collectively, employees’ economic interests are aligned with the company’s success and the sense of ownership fuels innovation. Employee-owned companies are a reality worldwide and ESOPs are part of a future where empowerment, equity and prosperity are not just aspirations, but intertwined realities in the fabric of the economic landscape. A mutually beneficial arrangement This business approach represents, on the employee’s part, the opportunity to participate in the company’s financial success – a powerful incentive that raises morale and commitment. Furthermore, by becoming partial company owners, employees can contribute to decision-making and experience a greater sense of ownership and responsibility towards the company.
Ambition | MAY 2024 | 29
Made with FlippingBook - Share PDF online