News: India requires governance 4.0 in the second half of the 20th century to enable income growth and social peace.
In 2022, new challenges, for instance, climate action failure and erosion of social inter-relatedness are present before the government to deal with. But the issue is that today many people have lost faith in their leaders.
But, the main problem is that global governance is facing a gradual erosion. The re-emergence of infectious diseases, debt crises, and inadequate tech regulation are the unresolved problems of global governance which were ignored by the leadership.
How Global Governance system has evolved?
Governance 1.0– after World War II, both public and corporate governance were marked by the rule of a “strong leader”. This type of leadership worked well in a society, where hierarchy functioned smoothly, and tech and economic advances benefited almost everyone.
Governance 2.0: it emerged in the 1960s. It prioritized material wealth, which led to the rise of “shareholder capitalism”. However, its narrowness further led to the 2008 crisis.
Governance 3.0: it started after the COVID-19 shock. The decision-making is dominated by crisis management, and leaders are focusing more on operational issues. This trial-and-error approach has led to unintended consequences.
What is the need of Governance 4.0?
One, the world has changed and public and corporate governance must change with it. The fourth Industrial Revolution and climate change are disrupting every industry.
For example, technologies such as blockchain are helping in decentralization and on the other hand, inequities are increasing.
Two, many business executives and political leaders are advocating environmental, social and governance metrics to develop a new age of governance.
Three, young people are demanding a better future.
How Governance 4.0 would differ from its predecessors?
First, it should focus on long-term strategic thinking. Dealing with pandemic, socioeconomic crises and people’s mental health need to be complemented with action taken to fight climate change.
Second, there is a need for a holistic approach to reverse biodiversity loss, environmental damage, and involuntary migration.
Third, it will replace the top-down approach with a stakeholder approach. Since the society is complex and interconnected, the roles of each stakeholder in society must change.
Fourth, a new governance system should be society and nature rather than short-term financial interests. Finance and business must serve society and nature, not the other way around.