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The More Ethics (in business), The More Progress

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By Bernardo Kliksberg (for Safe Democracy)

Bernardo Kliksberg analyzes the importance of corporate responsibility and how ethical conduct in businesses and corporations allows everyone to win: both the society, and the businesses themselves. Kliksberg points out which countries are the most advanced in corporate responsibility, discusses how companies are competing to lead the fight for ethical business, and explains why, thanks to growing social pressure from investors and consumers, corporate responsibility has won the battle of ideas in today’s world of globalization. Far from being a passing fad, social responsibility appears to be here to stay.


[2] Bernardo Kliksberg is one of the foremost world experts on the fight against poverty. From Washington he directs the Inter-American Initiative on Social Capital, Ethics, and Development sponsored by the IADB. He is a special advisor to the UN, UNESCO, UNICEF and other international organizations, as well as being the author of numerous books published worldwide.

ACCORDING TO THE ECONOMIST: The movement for corporate responsibility has won the battle of ideas. This appears to be holding true. 70 percent of CEO’s and financial leaders consulted by the World Economic Forum commented that in the future there will be a growing interest by a majority of investors to uphold corporate responsibility. The same thing is taking place with consumers: corporate responsibility is becoming an ever more important factor in deciding what products to consume. Many people have even begun to boycott businesses and bring lawsuits against companies that use child labor, sell products questionable for human health, or destroy the environment. Workers too are demanding that their companies practice corporate responsibility, and work more productively when they do.

THE MOST (CORPORATELY) RESPONSIBLE

Those companies most developed in this respect are contending for leadership in corporate responsibility. A general understanding is growing that upon a company’s decision to do business in an ethical fashion depend key questions of productivity, performance, and competitiveness.

And so responsible competition has been winning ground. According to surveys on accountability done in 80 countries around the world, Northern Europe appears to be clearly in the lead. Among the five countries considered to promote the most accountable businesses are Finland, Norway, Sweden, and Iceland.

As was shown in a meeting of investors called by the UN: questions about the environment, social responsibility, and corporate control of government are having effects on decision making over the long term. Companies and investors who do not keep these questions in mind do so at their own risk.

SOCIAL ACTIVISM

Judging from the recent protests in France and around the world, civil society is becoming progressively more active and better mobilized, especially in remonstration of corporate immorality.

Pearlstein of the Washington Post explains: The choice for the corporate elite in the United States, as well as in Europe, Japan, and Latin America, has become quite clear: either create better social contracts that allow for a more equal distribution of wealth (in a way that still allows your company to be an active competitor in the world market), or face the very real possibility of a popular uprising against globalization.

RESPONSIBILITY IN LATIN AMERICA
Latin America presents a different set of circumstances for those companies looking to practice corporate responsibility. Apart from the creation of good working conditions, clean business practices with consumers, transparency in investment, and respect of the environment, other issues must also be addressed.

On a continent where one of the highest priorities is fighting the extensive and persistent plague of poverty and inequity, corporate responsibility should include an active role in public policies that support social development and equality. One example is the participation of more than one hundred companies in Brazil’s current social program, Zero Hunger.

ONLY ONE ETHICAL CODE

In countries with high levels of fraud and fiscal evasion, responsible corporations should set examples of honesty at all levels of business.

Likewise, companies should support fiscal contracts that dedicate large inversions of resources to education, health, nutrition and other issues essential for the development of human capital.

And even more so, companies should be expected to follow the same ethical code abroad as they do in their own countries, avoiding the hypocritical double standards that have become so common in modern foreign investments.

EVERYONE WINS

Many businesses, however, wonder whether or not the reforms required in order to promote corporate responsibility would be viable in the cut-throat capitalism of the modern world. And the answer is, absolutely. In practicing corporate responsibility both companies and the societies they operate in benefit. The president of the World Counsel for Sustainable Development, Stephan Schmidheiny, described himself how the success of his corporate conglomerate New Group is mainly thanks to anti-poverty business policies of corporate responsibility.

What is unviable, therefore, is not reforming business to meet modern standards, but ignoring the growing social demand for corporate responsibility.

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