Executive head, The Global Compact
New York, New York
When we launched the Global Compact in 2000, only a handful of companies had explicit policies on human rights. We know of board meetings where the Compact was rejected on the grounds that “human rights is not our business; it’s the business of governments.” A year later, though, many of those companies made a choice to take a stand in their sphere of influence. They do so through their market power and sheer presence, which can have a direct impact on how a society interacts and the values it upholds, or doesn’t. Companies shouldn’t wait for governments to get it right. Most problems we face are pragmatic responses to government’s governance failure. In the absence of responsible governments’ doing their share, corporations are being asked to be part of the solution. Companies can’t make up for government deficiencies, but they can be a positive force. It’s simple. When companies invest abroad, they are aware of the risks associated with that investment. Increasingly, they are obliged to check for human-rights abuses, corruption, and environmental impact. They can insist on transparency measures, for example, before investing in a corrupt environment. Their case to government: If you don’t fix it, then the company is running a risk down the road. We tell every company that joins the Global Compact the same thing: If you are serious about global citizenship, it requires institutional change. It must begin with the CEO. If you don’t have the CEO’s commitment, then you run the risk of simply running a public-relations campaign.
Former secretary of state of the United States;
Principal, The Albright Group
Corporate citizenship begins with an honest look at how the rest of the world perceives the United States. Gone is the America-can-do-no-harm climate. When there is anger toward this country, brand-name American companies are going to suffer; they’re emblematic. So the question for business leaders is, How do you make sure your company is viewed as one that is doing the best it can to help a country’s evolution and development?
In today’s climate, American companies have to develop their own foreign policy. They have to develop relationships with local and national leaders and work with nongovernmental organizations and governments. They have to embed themselves within the societies where they live and be seen not as specifically American companies there to make money, but as American companies that have local context. It’s a matter of advancing the best of U.S. interests, not taking advantage of a population that is willing to work under lesser conditions. Companies can be a beacon of the right approach. They can mitigate their negative impact and push the positive in a way that helps everybody.
That requires serious leadership. From a fiduciary perspective, company executives and board members have an obligation to address social and environmental issues as potential risks. And they have to show ethical behavior. Transparency, openness, and accountability–those things matter. The CEOs who get out of their U.S. offices and travel to see what’s really happening in the world are making good corporate citizenship a priority.
People talk about globalization as if there were a choice. There isn’t. It’s happening, and we have to manage it in a way that benefits communities and companies.
Founder and former chief scientist
Businesses are economic creatures. They can talk about all of this social responsibility stuff, but they are likely to do something about it only if there’s an economic reason for them to do it.
Consider the companies that voluntarily reduced their greenhouse gas emissions. They recognized that it’s probably economically profitable on a global basis, anyway. Processes that use less carbon are generally better economically because they’re more fuel efficient.
But to expect companies simply to be socially responsible without an economic incentive is asking a lot. In today’s hypercompetitive world, I just don’t see companies taking on anything other than what they and their competitors are required to do. Think of the erosion of jobs in this country as we lose out to Chinese competitors with lower cost standards. How can companies take on more burdens?
That’s how they think.
If we can apportion true societal costs to the things we want and don’t want and then apply those costs through financial feedback as opposed to regulation, we all might win. Companies won’t care unless the costs of their bad behavior are reflected back to them. They respond to economic signals, not regulation. Regulation is shortsighted and inefficient; it doesn’t allow for fractional and innovative solutions.
For example, carmakers measure automobile safety in terms of the people in an individual car, as opposed to total safety of the vehicle. If it were about the total safety of vehicles, we might say that SUVs are unsafe on the road because of the impact they have on other vehicles’ occupants. We’re regulating a maker of an individual car as opposed to rewarding the result we want: lower fatalities. We have to encourage the future we want rather than trying to prevent the future we fear.
Senior vice president, corporate affairs
Palo Alto, California
There has been a tendency in the business world to confuse citizenship with philanthropy. They’re not the same thing. Enron was a great philanthropist, and clearly, it was not a good corporate citizen. The heart of global citizenship is about ethics and conduct.
It begins with the way a company thinks about its role in the world. Does it simply exist to make as much money as possible? At Hewlett-Packard, the question we ask ourselves is this: How do we consistently address multiple stakeholders, including customers, employees, and the communities we’re a part of?
Collaboration between sectors is critical, and it’s also the biggest challenge we face. Business, government, and nonprofit organizations all have important roles to play, but frankly, we have not done a fabulous job of working together. Many nonprofit organizations have staked their claim on pointing out the evils of the corporate world. All of that can be difficult. The first step toward progress is taking a seat at the table and then sitting there long enough. Trust takes time.
At HP, we put full-time people on the ground for three years in India to work with government and nonprofit organizations on a project we call “i-communities.” One of our first initiatives is in a rural area named Kuppam, where one in three citizens is illiterate and more than half of households have no electricity. Early on, we asked community members, “What are the biggest problems here and how can technology help?” This wasn’t HP saying, We’ve got a great thing for you. We can go off and innovate alone and maybe even do it faster, but the reality is that none of us has all of the ingredients required to create sustainable impact.
Chairman, The Future 500
Managing director, Mitsubishi Electric Corp.
Are the needs of the corporation and the world in conflict? In the long run, they can’t be. Today, 600 million of the Earth’s inhabitants enjoy the material benefits of industrialism. Soon, 2.5 billion more–China, India, the former Soviet republics–will join us. The final 3 billion people will follow. To accommodate all those people in terms of resources today, we would need three planets. So how can the needs of the world be met in the future? The truth is, we can’t build a sustainable economy. We can only grow one. That’s a lesson I learned from the rain forest. The vitality of nature comes from its capacity to cultivate more advanced forms of life and then support them for billions of years on finite resources and a fixed flow of energy from the sun. That happens through a constant process of feedback and adaptation. In the global economy, the problem is, we are blocking feedback. As companies extend their reach, they become less tied to the communities they serve. Ecological and social costs and benefits never appear on our balance sheets. Feedback only exists in the form of direct financial returns. If there is not adequate feedback, there’s no adaptation. No adaptation, no innovation. It becomes hard to respond effectively to change. We become vulnerable. People talk about businesses needing to be responsible as if it’s something new we need to do on top of everything else. But the whole essence of business should be responsibility. My philosophy is, we don’t run companies to earn profits. We earn profits to run companies. Our companies need meaning and purpose if they’re to fit into the world, or why should they live at all?