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Everybody wins with Corporate Responsibility

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By Bernardo Kliksberg (for Safe Democracy)

Bernardo Kliksberg analyzes the role that businesses play in society, pointing out that corporate responsibility not only produces benefits for the companies and institutions, but also for society as a whole. Kliksberg explains why corporate responsibility is taking on an ever more important and urgent role in developing countries, and why it is essential –in a world of increasing inequality, with over 3 billion poor– to ensure that businesses take on an active role in solving society’s problems. With corporate responsibility, everyone wins.


[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, the most recent an international best seller “More Ethics, More Development”.

A SURPRISING ANNOUNCEMENT WAS MADE by Warren Buffet, guru of Wall Street who has been able to earn twenty percent interest on his investments every year for the last twenty years. Buffet has decided to donate 30 billion dollars, a large part of his fortune, to the Gates Foundation. This has turned out to become the biggest donation in history and is also the largest donation to be granted to a foundation not in the donor’s name.

Buffet explained that the market system has not worked well to help the poor of the world and that large fortunes can be earned thanks to society, so he felt the compromise to return some of it back. He also indicated that he wanted his money to be used immediately and in the most efficient manner possible. With this donation, the Gates Foundation has doubled its original assets of 30 billion dollars, which Bill Gates originally put in to begin the Foundation. The Gates Foundation now boasts six times the finances of the United Nations.

[3] FROM MICROSOFT TO THE FOUNDATION
Gates, the pioneer of new technology, announced that added to his money he will also donate his time. He has proposed abandoning Microsoft and dedicating himself completely to the foundation, which is currently invested in fighting AIDS, malaria, and tuberculosis, and has been able to save almost half a million lives in only a few years.

The foundation has donated large sums to institutes researching about AIDS around the world, with the only condition that the researchers share their information and results in order to expedite the discovery of a vaccine.

[4] AS MUCH GOOD AS POSSIBLE
Are these isolated cases? It does not appear so. A study done at Boston College in 2005 showed that 65 percent of people interviewed –with fortunes of over 30 million dollars–, are planning to donate a large part of their wealth to organizations during their lifetime and not in their last will.

An editorialist of The Economist wrote: if you want to be a true philanthropist, spend your money quickly, do as much good as possible now, while you are alive, and forget about posterity.

The Wall Street Journal –August 21st– refers to one of these cases: Laifer, the head of an investment fund, read about the devastating effects of malaria, which causes more than a million deaths a year –75 percent of which are pregnant mothers and children in Africa–, and estimated that with only 10,000 dollars he could protect a village of one thousand people, by giving them nets, insecticides, and medicine. Five free of malaria zones have already been established in Ghana, Nigeria, and Kenya.

The NGO Civic Ventures discovered that 60 percent of people between 50 to 70 years of age want to spend the next step of their lives enhancing the quality of life in their communities.

[5] UNEQUALITY IN THE WORLD
Gates and Buffet were frank with the limitations of their action: The Gates Foundation is going to spend 3 billion per year. There is 3 billion poor people in the world. That means one dollar per person: hardly enough to solve their problems.

On the other hand, the sudden increase in millionaires is a part of the growing inequality in the world. According to Forbes, twenty years ago there were 140 billionaires in the world, today there are 792, and only in the last year 102 more joined the ranks. The richest 20 percent of the world population controls 86 percent of the wolrd’s GDP, and 95 percent of the credit, while the poorest 20 percent controls less than one percent of both.

Undoubtedly, changes must be made, with the help of an inclusive world economic alliance that provides equal opportunities for everyone.

ADVANTAGES OF CORPORATE RESPONSIBILITY
The traders of Wall Street and of new technologies have begun to claim for corporate responsibility. And they have done it by putting their money where their mouth is.

Today, under the pressure of public opinion, consumers and investors are reinforcing the urgent vision of corporate responsibility in many of the world’s developed nations. Many companies are moving from improving their public relations, to actually instituting policies that protect the environment and society: certifications of corporate responsibility, reports on companies that are known to be responsible, social balance, cultural diversity in the work force, and investment in the community. Being a corporately responsible business brings many benefits.

[6] THE KEY FOR COMPETITION
Multinationals are also looking for guarantees on corporate responsibility from their suppliers and partners. Exporters to developed markets must show that they are corporately responsible. If not, consumers will sanction their goods. The World Bank referred, among numerous examples to the tendency of European consumers to refuse to buy genetically modified food from the United States.

The United States, meanwhile, prohibited the importation of tuna from Mexico, under pressure from its consumers, because Mexican fishermen took no steps to prevent the entanglement and killing of dolphins in their nets.

Michael Porter has explained that corporate responsibility is essential for competition: it lines up social and economic objectives, and betters long-term projects of a company. In effect, 90 percent of the United States population believes that businesses should be conscious of the repercussions on the environment, and 70 percent of Europeans think that corporate responsibility is important when buying a product.

[7] A STEP FURTHER IN LATIN AMERICA
From rebellions against mining companies that destroy the environment, to amazing statistics in the polls, in Latin America, the call for corporate responsibility grows everyday. 84 percent of consumers in Brazil recommend products that donate a percentage of their revenue to certain social causes or NGOs. In Chile, 40 percent of consumers have boycotted and fought, or are willing to fight, against irresponsible businesses. In Argentina, 51 percent of consumers are willing to pay more for products coming from responsible corporations.

There has been much movement to uphold businesses to honesty and corporate responsibility in Latin America, but there is much yet to be done. In the face of mounting social debt, corporations should deepen their commitment to corporate responsibility, create strategic alliances, and solidly support public policies of social development, health, education, and other key areas in order to take on poverty and inequality. In order to accomplish these goals, Latin American businesses will have to go one step further than the traditional models.

SHORT-TERM VISION
A revision done on philanthropy in Argentina (Berger, Ducote, Reiss) concludes: the predominant focal point of philanthropy in people with a great amount of wealth, is characterized by short-term plans, oriented towards specific and punctual projects, and with little attention paid to the strengthening of the institutional capacities of organizations of public welfare.

It is essential that we move towards a world in which corporations make financial commitments and develop policies in order to deal with some of the greatest dilemmas of society. Corporate responsibility and commitment to public welfare will bring good to the continent, the people, and the corporations themselves.

With corporate responsibility, everyone wins.

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