Next (Other OTC: NXGPF - news) week the business elite gather in the Swiss Alps for the World Economic Forum. Unilever CEO, Paul Polman, who will be there, reveals the tough challenges the global economies face .
The schatzalp in Davos is reached by a funicular railway. After the five-minute vertiginous journey up the mountain where during the World Economic Forum you are as likely to bump into Mick Jagger as George Osborne guests at the summit restaurant can look down over the Swiss town which has become synonymous with the world’s business elite.
Banking leaders Lloyd Blankfein, chief executive of Goldman Sachs (NYSE: GS-PB - news) , and Jamie Dimon, his opposite number at JP Morgan (Other OTC: JPAAZ - news) , will be two of the main arrivals next week for a series of meetings, seminars, reports and presentations on everything from saving Europe, defining the future for the West, rebuilding banking and understanding sustainability.
Fund manager George Soros will also be there, alongside the leading US economist, Kenneth Rogoff, and the head of the International Monetary Fund, Christine Lagarde.
CEOs from hundreds of global businesses will tramp along the snowy streets, shoulder to cashmere-coated shoulder with government leaders as charitable foundations and non-governmental organisations arrange meetings to push their case.
Some dismiss the event as so much hot air, a gathering of the Masters of the Universe who hob nob at late-night parties and do deals in private rooms.
But for many attendees this is a chance to meet old acquaintances, talk more broadly about business and think a little differently about the world.
Titles of the planned events include The Global Energy Context, Leading Through Adversity and Pioneering Sustainable Growth. The title of the whole gathering is Resilient Dynamism, suggesting that the world’s businesses need to rediscover some confidence and build a securer future.
One of the best ways down from the Schatzalp which is 1,900m (6,234ft) above sea level is by toboggan. The run takes the intrepid through a dark forest where there is little light. It can sometimes feel a little scary.
Paul Polman , the chief executive of Unilever , and one of the key players at Davos, believes the West has a long way to go down the economic toboggan run before it reaches the relative safety of the town at the bottom. It will be a key theme of the week-long event.
Speaking to The Sunday Telegraph ahead of the World Economic Forum, as he did in 2011 , Polman says that businesses and governments have to come together to make the significant changes necessary, changes that have become all the more important as the world’s economic powers struggle to rediscover growth after the calamitous financial collapse of 2007 and 2008.
Billions of pounds of liquidity have been pumped in by central banks around the world, he says, but this is just a sticking plaster over the fundamental need for change.
His blueprint for change is disarmingly honest when it comes to state provision, we all need to pay more for less.
“Some of the issues that we spoke about then [in 2011] have become more pertinent now,” he said.
“The economic environment has deteriorated, if you look at the amount of money we have pumped in and the return we have got for that money it is obviously by any business standards been relatively poor.
“The structural changes that need to be made for society still haven’t been made. There has been a growing realisation that our present model of growth, while it has served us well for a long time, certainly has enormous shortcomings which are increasingly transparent.
“Individuals need to get used to lower pensions and welfare payments. Government needs to get used to lower spending levels, businesses need to get used to the costs that come with it and bear their part.
“Everybody has to chip in. People are realising in the West that our model is not a sustainable model.”
Some people are realising, yes, but Polman fears that the politicians find it difficult, maybe understandably, to explain to their voters that a great transformation is needed.
“We need to do a much better job of explaining to the population at large what is going on here so that everybody understands what needs to be done.
“Right now there is a lack of engagement. We are sitting on an enormous time bomb of shifting populations. When Bismark invented the pension in the 19th century the average lifespan was 37 years. The pension was the exception, people worked until their death.
“The dynamics have now completely shifted but politicians don’t want to explain that to people. Vested interests take too big a share of voice.”
He talks of a report that he read late last year by Boston Consulting Group which described the West’s economic model as something akin to a Ponzi scheme.
The report by Daniel Stelter highlights a Bank for International Settlements report which says that the combined debts of the public and private sector in the 18 core members of the OECD rose from 160pc of GDP in 1980 to 321pc in 2010.
BCG argued that the major increase in debt was not being used to fund anything as useful as growth but instead was being sucked up by a speculation-driven asset price bubble and to pay interest on previous debts as liabilities were rolled over.
As soon as the asset price bubble collapsed, the whole model some say based on a confidence trick imploded.
“Like in business, if you invest a dollar of capital you have to look at your return,” Polman said of the huge growth of debt.
“A dollar invested in government debt used to create about 60 cents of economic value.
“Our economic model of over-consumption of high public and private debt is unsustainable. In our lifetime we might get away with it but it is grossly irresponsible.
“Individuals have to contribute more to get less, otherwise you don’t get there.”
The debate at Davos will focus on how the era of Western consumption can be better managed. Is it really possible to continue with a system where the state often accounts for well over 50pc of economic activity?
In the emerging economies, the government’s share of economic activity is nearer 20-30pc.
“No system is going to survive if 55-60pc of the GDP is [coming from] the government,” Polman said, citing France as an “extreme example” of a state with too great a role in the economy.
“Who creates that money? Where does the money come from? The small group that has to carry that has a disproportionate burden and becomes uncompetitive. It is a big issue that needs to be addressed aggressively.”
Osborne, who is still grappling with injecting a suitable rebalancing in the UK economy away from the state and towards private enterprise, will be interested in Polman’s views.
It is certainly rare for a business leader to speak with such candour about the troubles the world faces.
Polman’s belief, which underpins much of Unilever’s strategy, is that “sustainability” has to be the watchword.
Energy conservation, job creation and tackling the inequality between nations and within countries has to be part of the agenda.
He admits an “anti-business” rhetoric exists in much of the public debate and that, though tough, this is an opportunity for companies to show what they can do.
“It is not just about growth, it is about sustainable growth,” Polman said. “So the issues of social compliance, job creation, youth employment and social cohesion these are things we need to address as businesses and be proud of.
“If you look at the Edelman surveys, and it will come out again at Davos, they say that trust in government is low lower than in business in fact but that trust in business is also low.
“And rightly so. You open the newspaper every day and you have your Libor scandal, you have rogue trading, or what people feel is a lack of participation in society by some companies in terms of their contribution.
“It is every day now at a velocity that is going up. It is being pushed by citizens. Governments are reacting to that. Then they come out with ill-conceived legislation to respond to an outcry, at times doing more damage.”
He cites arguments about salaries and remuneration, “taxation of the rich” and ill-conceived changes to corporate governance as examples of hasty reactions to perceived ills.
“We need a world that co-operates,” Polman said. “We have to address that holistically but that is proving difficult right now. But it is an opportunity for business to regain that trust. A low base is an opportunity in itself.
“The consumer is able to identify responsible businesses from less responsible businesses.
“The pressure is higher but if you then deliver you will be rewarded more.
“Unilever (NYSE: UL - news) has one of its fastest growth rates now. We have just passed the €50bn (£41bn) barrier since we last spoke in 2011 we have created a Heinz or a Campbell Soup (NYSE: CPB - news) in incremental turnover without affecting the bottom line.
“Ultimately it is the vote of the consumer and the vote of the wallet that drives our growth.”
Issues that pre-2008 would not have created many flickers of interest are now quickly whipped up into infernos of controversy in a matter of days, or even hours or minutes.
Take taxation and the amount paid by foreign-based businesses in the UK. A historic situation that had not changed for years suddenly grew into one of the most controversial business issues of the year with David Cameron demanding that action be taken against those who did not “pay their share”.
Starbucks, Google (NasdaqGS: GOOG - news) and Amazon all found themselves the political whipping boys over the issue . All three were hauled before the Parliamentary committee looking at the issue and ask to account morally for their tax policies.
It is a remarkable change and businesses often appear to be caught without the wherewithal to tackle the flames sent against them.
“What people are saying is that everybody has to contribute to solve the problem,” Polman said.
“The bigger issue on tax is from a government point of view. The governments have to work out how to make their tax systems [work] and again global inter-dependence is important there. You cannot stop a British person going to France to buy alcohol because it is expensive here.
“No one is going to put all those Brits in the paper because they are avoiding tax in the UK!
“You cannot blame someone for shopping at Aldi when they can also shop at Waitrose. When they shop at Aldi they avoid some VAT.
“We are all engaged in that arbitrage within the system that is provided. Companies are no different. If companies didn’t do that then they would work themselves out of business if others [do do it].”
Switzerland, of course, is not a member of the European Union and whether the country suffers or not from that position will not, frankly, be a debate at the World Economic Forum.
What will be behind the scenes between Europe’s political leaders as well as on the public stages and in the seminars is Britain’s relationship with the EU. It is likely that Cameron will be making his speech possibly in the week of Davos and reaction will sweep through the town.
Polman is sanguine about the possible threat of the UK leaving the EU thinking it is a low probability event.
“The possibility has been around for as long as I have been alive,” he says. “Because there is some water between the UK and the rest of the Continent some feel that it is a continuous threat.
“I think it [leaving] is a very low possibility even though some compromises might have to be made from time to time to manage the political process.”
He says there are a lot upsides to membership: “There are many benefits, the trading relationships with Europe being one of them.
“It is better to sit around the table. You can be part of Europe without being part of the euro.
“There are many other things where you want to be part of Europe, to be able to create a thriving economy and the UK has enormously benefited from that the free flow of products, innovation, ideas, people, money.
“The financial industry wouldn’t have been here [without that] to be honest. We would 100pc advocate like most business people that we interact and are an active part of Europe.
“It doesn’t mean you have to agree everything with Europe. I think the idea that all of the 27 members have veto rights is a ludicrous idea. You cannot run a company like that as it leads to the lowest common denominator [policy].”
A very similar debate to the broad one Polman raises in this interview has been continuing at Davos since the financial crisis. How can business be more sustainable?
How can nations work more closely together? How can the West’s economic woes be reversed? Polman admits that at times it can all seem a little woolly; motherhood and apple pie rather than cold numbers. “We are at the point where we have put in a lot of seeds,” Polman says.
“This 'resilient dynamism’ of Davos can only happen if we move from conceptualisation, these small ideas to the stage of scaling up to have an impact.
“That is the focus now. You cannot make the world function you cannot make a company function if the brain and the heart don’t work together.
“Business by its origin is about morality. The original theories of Adam Smith which have many times been misinterpreted were based on the firm belief that business would work for the greater good of society. That high level of morality has always been built in. He was a professor of ethics, after all.”