10 July 2024 – A key challenge across businesses and policy institutions is to simultaneously boost our ability to address immediate crises and long-term challenges. This requires shifting the generational perspectives and voices included in strategic direction-setting and decision-making. At a moment when systemic change is urgently needed, joining forces across generations can serve as a forceful lever to reimagine corporate strategies and public policies for a regenerative future.
The World Economic Forum’s Global Risk Report in 2024 highlights that we live in times marked by multiple overlapping crises: extreme weather events, AI misinformation and societal polarisation top the list of risks marking our present moment.
At the same time, the Report doubles down on the need to anticipate and act now on longer-term timescales by highlighting the most severe risks ten years from now. Here, environmental threats come to the fore, including critical changes to Earth systems, biodiversity loss and ecosystem collapse, as well as natural resource shortages.
This makes it clear that a key challenge across businesses and policy institutions is to boost our ability to simultaneously face immediate crises, while pursuing a longer-term transition to a regenerative economy serving people and the planet. The current gap between the aspirations set out in the Sustainable Development Goals and their implementation shows how difficult it is to bring both perspectives together. Too often, focusing on immediate challenges and needs trumps our concern for meaningful, systemic change.
Current leadership structures exclude younger generations
Rebalancing the short- and long-term requires more than technical innovation. We also need a change in the beliefs, mental models and relationships informing organisations and institutions.
A key dimension of this shift is the generational perspectives and voices included in strategic direction-setting and decision-making. Younger generations hold huge stakes in the environmental crises threatening their future. Yet, they’re largely absent from the decision-making on policies and business strategies shaping our collective way forward.
The average hiring age of CEOs at Fortune 500 and S&P 500 companies has risen significantly over the past decade – from 51 to 55 years old – while the average age of board members stands at 63. According to a 2023 report of the International Parliamentary Union, only 2.8% of the world’s parliamentarians are aged 30 and 18.8% of the world’s MPs are aged 40 and under. On the world’s most youthful continent, Africa, the population’s median age is 19.7, while the median age of Africa’s political leaders is 62.
It’s not surprising that the 2024 Voices of the Leaders of Tomorrow Report – a global survey of emerging policy-makers, entrepreneurs and researchers under 35 conducted by the Nuremberg Institute for Market Decisions and the St. Gallen Symposium – finds that young leaders see a large gap between their willingness to take over responsibility and the older generations’ willingness to pass on responsibility.
The potential of intergenerational leadership: 3 pathways of change
The New Generational Contract, a joint initiative of the St. Gallen Symposium and the Club of Rome, supported by InTent, seeks to close this gap. We are convinced that enabling a greater involvement of younger generations in leadership is an ethical and a strategic imperative, helping to rebalance perspectives across different timescales and to shift towards regenerative strategies. Emerging evidence on three key pathways helps us understand why.
First, the current approach of selecting leaders primarily for their experience is sensible if the future environment is expected to be similar to that of the past. Yet, in our volatile times, experience can quickly become obsolete and comes with the risk of becoming prisoners of the assumptions and paradigms that have underpinned past successes. Meaningfully involving younger generations can help us escape this success trap and overcome aversion to changes in the status quo.
Research finds, for example, that more age-diverse leadership teams are best equipped to enable sustainable business model innovation. This is because they combine exploitative learning from past experience and explorative learning towards new, at times risky ideas – enabling hindsight and foresight.
Second, the youth-led climate movement of recent years is a prominent example of how, on a global level, younger generations have succeeded in raising commitment to change. The same can happen on the organisational and institutional level. A wealth of findings shows that greater age diversity on corporate boards is associated with greater awareness and results on corporate social responsibility and ESG. A recent study in Nature finds that younger parliamentarians are more likely to put meaningful environmental action and long-term perspectives on the agendas of national parliaments.
Our third argument centres on trust. Trust in the eyes of key stakeholders is fundamental for sustainable collective action. Unfortunately, as the Edelman Trust Barometer shows, public trust in effectively addressing climate change has decreased for businesses and public institutions, particularly among young people. Here again, greater intergenerational leadership will be essential for organisations and policy institutions to address the mounting crisis of institutional trust to be able to shift towards a regenerative economy.
Moving towards a regenerative future together
Intergenerational leadership is not yet a well-defined space for action. It requires bold experimentation. On the political level, several governments and multilateral institutions have created youth parliaments or advisory councils. Unfortunately, as a recent UN Policy Brief finds, such existing mechanisms “struggle to make an impact on decisions taken.”
In recent years, a growing number of businesses have experimented with shadow boards and reverse mentoring initiatives. Yet, such structures risk becoming empty shells, disconnected from the senior leadership team and board, while questions of businesses’ environmental responsibility and impact are rarely raised.
It’s time to move from a mere ‘consultation’ mode towards true co-leadership. The UN Summit of the Future, which will be held on 22-23 September in New York, could potentially be a key catalyst to this end. The Summit will pass the ‘Pact for the Future’ with an entire chapter devoted to ‘Youth and Future Generations’ and seeks to improve the meaningful involvement of young generations at the national and multilateral level. At a moment when systemic change is urgently needed, joining forces across generations can serve as a powerful lever to reimagine corporate strategies and public policies for a regenerative future.
