The Anniversary Of A New Economy - The War In Ukraine At One Year

The meeting Helle Jorgenson had with Martin Frost of the Financial Times in the U.K. on Friday, February 25th, 2022 was transformed by Putin’s invasion of Ukraine the day before. Instead of their planned agenda, they talked about why European corporate and political leaders were not better prepared for it. For example, much of Europe was still dependent on Russian energy giving him tremendous leverage. They were warned it was going to happen, and know Putin’s modus operandi.

Then, Frost and Jorgenson talked about steps business leaders and board members can and should take in this extraordinary situation – including the influentials who, like Frost, are faculty in Jorgenson’s Competent Boards board training programs.

The following Monday morning, Jorgenson met with much of her faculty and they agreed to say that if Putin did not stop the war, these companies “will stop all interactions with Russia within six months,” as Jorgenson put it in an exclusive interview on Electric Ladies Podcast. They stopped them within six days.

Now, one year later, the killing and bombing in Ukraine continues, leaving tens of thousands dead, including civilians.

The rapid pivot Jorgenson described reflects the accelerated birth of a new economy – accelerated in part by the war, and how unified NATO countries and others have been against Putin’s aggression. And, also by Europe’s quick pivot off Russian energy; the flurry of legislation Congress passed that will expedite the transition to a net zero and social equity economy; and the transformation in business models expedited by the pandemic, such as wide adoption of hybrid work and reinvented supply chains.

Climate change. Covid. Conflict. Multiple massive disruptions catapulted the world’s economies into a place it’s never been – in the middle of a brutal, unprovoked war of choice by an autocrat.

“What does a transition plan look like?”

“I don't think you can talk to any of the leaders in Europe without saying, ‘Why were we not better prepared on this?,” Jorgenson said. “Now we need to make some of those decisions” they discussed should have made previously.

“Everyone I talk to, they're really dialing up on making sure that they are prepared in the future and actually putting more efforts into it. But none of us can do this and have it happen in a day,” she added. Now they need to decide, “What does that transition plan look like?”

The core question is, transition into what exactly? What values and priorities will prevail? Then, they can talk about when and how.

Climate disclosure rules in the European Union are more stringent than those proposed by the U.S. Securities and Exchange Commission, which is finalizing its own such rules. In the midst of this uncertainty, business leaders, including board members, are wrestling with how to reconcile these new economic and political forces, including environmental and social priorities, with their fiduciary and business responsibility to turn a profit and sustain financially viable businesses.

A series of hard short-term – and long-term – decisions in a new economy

Jorgenson quoted one of the other Competent Boards faculty members, former Unilever CEO Paul Polman, a long-time leader in sustainable business practices, as saying, “We can't do all of these long time term things right, without doing the right short term things.”

“I'm a little bit afraid, in terms of all of the regulations, that we only look at the compliance and say, ‘Okay, can we comply with this? Tic mark,’ and then forget actually…How do we make decisions that are, to our best knowledge, keeping us as resilient as possible?,” which requires understanding all your stakeholders and their priorities, she emphasized. Telva McGruder, Chief Diversity Officer of General Motors and former head of their global manufacturing, explained their transition decisions this way on Electric Ladies Podcast, for example: “Changing our trajectory, so to speak, from internal combustion engines to electric vehicles is impactful both personally and professionally, technically to not only our team members, but also to all the communities that we touch by virtue of this change.”

Now, a year into this brutal war that is devastating Ukraine, killing and maiming thousands of Ukrainian civilians and destroying their homes, schools, hospitals and economy - a war that is killing thousands of Russian soldiers - a war that is costing even nearly every country either access to food supplies like grain, or access to energy sources, or economic stability, treasure and/or weapons – every type of leader has a series of decisions to make about what they can and will do short term, and long term.

Regulations and many stakeholders are pushing them to leverage this moment of transition to birth a new global economy that serves the planet and its people – not just profit.

Natalie Jaresko, former finance minister of Ukraine talked about rebuilding Ukraine in a way that describes this new economy more broadly:

“What we have an opportunity to do is not to rebuild what was destroyed (in Ukraine), but instead to renew and revitalize the country and make it the 21st century. Use green technologies. We can have green steel. We can have communities where we are building healthy, nurturing communities where it's planned in a way that they are living communities with water and energy sources, multipurpose…We rebuild roads that have electric vehicle recharging stations throughout and bicycle lanes. Biking is very popular in Ukraine and there was never a bike lane in the Soviet Union. So, we can rethink this using the best 21st century technologies to be greener, to be cleaner, to be more community oriented.”

This is a vision for the broad economy. But first, the war in Ukraine has to end.

Listen to the full interview with Helle Jorgenson, Telva McGruder and Natalie Jaresko, on Electric Ladies Podcast. Full disclosure, the author is a member of the Competent Boards faculty.