Klaus Schwab, the founder and executive chairman of the World Economic Forum, said companies must focus on three principles: profitability, people, and the planet.

Schwab, the author of "Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet," has championed the stakeholder capitalism model, in which businesses serve both shareholders and society as a whole.

"If they haven't bought in yet into the stakeholder concept, they are on the wrong side of history," said Schwab, a speaker at the Insider's event, "Act to Impact: Keeping Our Promises to the Planet."

He said executives who are focused on the long term have adopted the mindset of creating shareholder value while also taking care of the planet. But, "if you want to make a fast buck, it's a different matter," Schwab said during the "Holding Stakeholders Accountable" session.

"Companies will recognize that they will be better off economically if they take care of nature because young people don't want to work anymore for a company or an organization which is damaging nature, and customers do not want to buy products of such a company," he told Insider's Marguerite Ward.

Act to Impact: Klaus Schwab Fireside
Schwab believes society is at an inflection point when it comes to holding companies accountable for their part in climate action.

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He added that he'd like to have a discussion with billionaire investor Warren Buffett, who said companies shouldn't assign their investors' cash to social causes. Schwab said "I would tell him, 'Look, particularly since you are very heavily exposed in the insurance business, why don't you engage actively into more ESG (environmental, social and governance) responsibility, because it may backfire to you one day in your insurance business."

Schwab, born in Ravensburg, Germany, holds doctorates in economics and engineering and has a Master of Public Administration from Harvard's Kennedy School of Government. He also was previously professor of business policy at the University of Geneva in Switzerland for more than 30 years.

The 83-year-old said the good will of businesses is not enough to stave off climate change. "What we need," he said, "is innovation."

"In order to decarbonize the world or to make it carbon neutral by 2050, a lot of new technological progress has to be achieved," he said. "Our present technology does not suffice."

Read more: These 17 Gen Z climate activists are ready to challenge Biden and their lawmakers to act fast on one of the most urgent crises of their time

He noted that each company, in working to achieve carbon neutrality, has different hurdles. Energy companies like Exxon and Chevron, for example, have many more challenges than companies such as Google, he said. The important thing is for companies to communicate their goals and to measure how well they're executing on their objectives.

He said the COVID-19 pandemic, which has killed more than 142,00 people globally, has been a "wake-up call" that the world needs to work toward improving overall well-being.

"I'm deeply convinced that we are now really at an inflection point where society as a whole does not anymore tolerate companies which are damaging nature or which are not upholding diversity, and social justice, and so on," he said. "I think we have a completely new social consciousness."

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