Interviews

A candlelit dinner is romantic, a candlelit surgical operation is not

Raffaella Centurelli - International Energy Agency

Today 1.4 billion people - more than 20% of the global population - has no access to electricity, whereas more than 2.7 billion people use traditional biomasses to cook, breathing substances that are very harmful to their health: every year the number of premature deaths from respiratory disease related with these practices is higher than the number of deaths from malaria and tuberculosis. According to our estimates, if governments do not take any strong actions, the problem will persist and get worse in the long term. In 2030 people without electricity will be a little less than today – 1.2 billion, but the number of users of traditional biomasses will increase to 2.8 billion, recording more premature deaths than HIV.

In which areas of the world is the problem especially serious?

What is the connection between access to energy and development?

How can energy contribute to achieve the existing Millennium Goals?

The IEA has published a study where they estimate the costs necessary to face the issue of universal access to modern forms of energy by 2030. What are the main results?

What are the requisites in your scenario of universal access to modern energy services?

Do you think these investments will actually be made?

What do you think is the biggest challenge facing the issue of energy and poverty?

What is the link between energy access and another big challenge: climate change?

What are your next steps?

Human capital: from responsibility to sustainability

Giuseppe Soda, SDA Bocconi School of Management

In the debate on competitiveness of economic systems that pervades the economic world, from corporations to policymakers, the call for the need to invest in human capital is almost never missing. This happy intuition, which we owe to the Nobel Memorial Prize Winner, Gary Becker, is based on the idea that people can really make the difference in competitive processes that are more and more founded on knowledge accumulation speed, innovation and intangible elements. In brief, individual creativity, knowledge, skills, motivation and involvement are central elements in corporate innovation and development processes. They are the only road to maintain leadership positions in high added value sectors and globalised competition.

This is also true for developing Countries, where competence is a lever for growth, although from the viewpoint of many corporations the idea of human capital in these situations is still related to the cost compared advantage. While general agreement exists on these statements, together with some rhetoric, their practical translation is different. In spite of the strong commitment of many corporations and some Countries, reality seems to be different. Once again, the recent crisis has demonstrated that actions on human capital have not found, either in the economic policies or corporate strategies, consistent answers with the supposed centrality, often assuming in some instances a secondary, if not marginal, role. So, a legitimate doubt arises: when we say that the richness of a Country is strictly linked with the competitiveness of its corporations and "system" and when we affirm that in the globalised knowledge economy the most critical asset for corporations and Countries is the human capital, do financial markets and tutors of the "value" generated by corporations really believe in this?
What may seem a rhetorical question must however find an answer in policies and actions, otherwise we remain in the intellectually interesting, yet sterile field of hypotheses. If we really believed in it, then the empirical evidence should deliver clearer data on the positive reaction towards virtuous corporations in mediumlong term competitiveness and in the capacity of generating new knowledge and innovation through the effective management of human capital.

Unfortunately, some elements indicate that the real situation is rather different from the declarations made. For instance, in evaluating intangible resources, the empirical evidence shows that in the accounts to financial community, corporations relegate investments in the development of human capital in the indistinct magma of social responsibility activities or social balance sheet.

Additionally, more aggregate data indicate a clear preference of financial markets for costcutter corporate profiles, regardless of the value or productivity generated by cost reduction. As already shown in many investigations, there is a remarkable preference by financial markets for aggressive organisational behaviours, built for instance on the rapid reduction of human capital costs that inevitably jeopardise the supposed centrality of human capital.

This is a contradiction. In fact, if the stock of knowledge and competence of a corporation represents a key element of the innovation and development processes, if these processes are necessary to maintain leadership positions in high added value sectors and globalise competitiveness, then the issue is sustainability of competitive edge and not of social responsibility. It is however true that investments in human capital of meta-national corporations in developing Countries - such as training - also produce important positive "social" effects that go well beyond corporation boundaries. The economic research has drawn attention to the link between investments in human capital, in particular training, education and economic development.
Moreover, unlike the physical and, in part, also financial capital, the effects of capital are exercised on very broad temporal horizons.

Some important issues come to light when looking from a closer perspective at corporations and at the effects of investments in human capital on the sustainability of competitive edge. A first issue is pay-back, that is the return time of investments in human capital that seem to be inconsistent with respect to market action speed, reference temporal horizons of investors and persistent instability and uncertainty conditions of competitive and geo-political scenarios. In an attempt to overcome this problem, reasoning must shift from the levels of human capital (stock) to the effects it may produce.
Corporate practices that have been extremely popular in recent years, such as for example the ones on talents, have contributed to consolidating this distortion. Confusion has been also nourished by the aseptic translation of macro-economic logic (i.e. the educational levels of a Country will help its economic development) into corporate policies. In fact, at an organisational level, although measured correctly, human capital stock can only partially predict individual and organisation performance. A second aspect, in detriment of studies on "capital levels", shows the need to recuperate a perspective that looks at processes triggered by investments in human capital (innovation, productivity) and consequent performances. From this perspective, the equation that governs individual, group and organisational performance is more complex than the simple link with the capital of knowledge, competence and skills.
To solve such a paradox we must consider that the human capital-performance relation is activated through some crucial organisational processes, which see the intervention of factors that refer to people and groups on scales that are different from the ones that are generally used when we talk about human capital - competence, knowledge or skills. In other words, a human capital engine for development and sustainable growth must not be confined only to competence levels, but it must include at least two other important factors.
We have known for a long time now that competence or knowledge is not able to produce satisfactory results if it is not sided by consistent levels of personal motivation, commitment and involvement. The stereotype of demotivated talent or of the "good, but noncommitted" student generally indicates performance levels that are inappropriate or under expectations. When we talk about human capital, from the perspective of the results it may produce and not in terms of stock, we necessarily need to consider the socio-psychological processes of identification and commitment at an individual level, to which social influence, cohesion and leadership dynamics in the organisation are added. It is a set of factors that, together with human capital levels, determine a relevant part of individual and group performances. Also at broader levels than corporations, social climate elements - cohesion, identification, citizenship - are factors that nourish economic growth and represent a component of the social capital. Moreover, there are some organisational factors that affect the way in which "motivated human capital" is organised in a corporation like an economic system.

Therefore, there is an organisational factor that is complementary to human capital and motivation, which is necessary to generate sustainable performance. In other words, the unorganised human capital is not able to translate its sustainable growth potential because investments in human capital are largely unproductive if not accompanied by adequate investments in and attention to organisational skills. In summary, still looking at the effects produced by human capital and not at its absolute level, organisational skills are a competence at corporate level that effectively combine the human capital and the psychological processes that are implied in the personorganisation relation. If not fully understood, such a complex complementarity will feed a syllogism that often becomes a self-confirmation trap of the uselessness of human capital investments: since human capital investments are made and no tangible results are seen, it is believed that no relation between human capital and performance exists.

The role of business in local development

Glenn Denning, Director of the Center on Globalization and Sustainable Development The Earth Institute, Columbia University

Which are - in your view - the real priorities for sustainable development in developing countries? Which are the "must do" actions to achieve the MDGs in the poorest areas of Africa or Asia?

Sustainable development requires that we first meet the most basic human needs: sufficient, healthy and nutritious food; clean drinking water; effective sanitation; and access to essential health services and education. But escaping extreme poverty also requires that households and communities engage in business enterprises that generate employment and income.
In low-income Countries, smallholder farming is typically the basis of both food security and income generation for 60-80% of the population. By increasing farm productivity and improving access to markets, farmers are able to generate surpluses above their subsistence requirements.
These surpluses, in turn, can stimulate economic growth in rural areas with impacts extending to the entire economy.
This agricultureled economic transformation took place throughout much of Asia and Latin America beginning in the 1960s. Basic infrastructure in the form of rural roads and electrification are important catalysts for the provision of basic public services and for increasing economic growth though improved market access. Access to mobile phone networks and the internet has opened up unprecedented opportunities for information sharing within and across all sectors. All of these investments must be accompanied with actions that protect the environment and conserve essential natural resources for a healthy and productive life for current and future generations of producers and consumers.
Achieving the MDGs in the poorest areas of the world requires an integrated multi-sector approach that includes support for more productive and diversified agriculture, improved access to health services and sanitation, full access to primary and secondary education for girls and boys, critical infrastructure investments, environmental restoration and protection, and business enterprise development. Investments and better policies across all of these sectors will reduce extreme poverty and create the conditions for more sustainable and equitable development.

Which kind of role do you see for the private sector - and in particular for multinational companies?

Do you think there's some distinctive contribution that extractive industry - and oil&gas sector in particular - can give?

Which are the major challenge and what's wrong in the programs that are now in place in developing countries?