The Concept of Corporate Citizenship in a Global Environment

Written by admin on April 11th, 2011

corporate performance. In part this trust has been squandered by the recent series of corporate ethics scandals and governance failures. It has also been affected by a combination of increased democratization and press freedom around the world, easier access to more information through the Internet, greater public awareness of global issues through the media, increased consumer choice and sophistication, and higher societal expectations of the private sector.

In response to these trends, leading companies are being called on to be more accountable and more transparent to more stakeholders on more issues and in more places than ever before. In the wake of corporate governance and ethics scandals, there have been demands for greater financial accountability and transparency, resulting in increased shareholder advocacy and new regulations, such as Sarbanes-Oxley in the United States. At the same time, certain governments and stock exchanges are also calling for greater public disclosure on environmental and social performance, in areas such as carbon emissions, product safety, occupational health and safety, training and diversity. There are also growing calls for greater transparency on private sector engagement with governments on issues such as lobbying, financing political campaigns, payment of taxes and receipts of public procurement contracts and incentives.

In all of these areas, business leaders are facing new and challenging questions in terms of what to be accountable for, who to be accountable to, and how to actually measure and report non-financial performance in practice.

A number of global voluntary efforts are underway to develop standards, guidelines and procedures for measuring and reporting on corporate social and environmental performance. These range from multi-sector alliances, such as the Global Reporting Initiative, which is developing guidelines and indicators for public reporting on sustainability performance, to sector-focused efforts such as the Extractive Industries Transparency Initiative, which focuses on public disclosure of payments to governments by oil and mining companies, the Fair Labour Association in the apparel sector, the Equator Principles for project finance in the banking sector, and global framework agreements being negotiated between certain trade unions and global corporations. Growing numbers of Asian companies are engaging in these and other accountability initiatives.

5.3. From paternalistic approaches to partnerships

The third key trend in global corporate citizenship is a move away from more traditional, paternalistic attitudes that “the company and its senior executives knows best” to more genuine engagement, consultation and cooperation with key groups of stakeholders. There is growing recognition that the challenges we face, both as individual companies and nations and as a global community, are too great and too interdependent, and the resources for addressing these challenges too varied and too dispersed, for any one actor or sector to have all the solutions. New types of alliances between companies and other sectors, built on mutual respect and benefit, are becoming essential to both corporate success and societal progress.

The area of community investment offers a good example, where leading companies have moved away from traditional philanthropic approaches, focused on one way disbursement of charitable funds, to efforts aimed at engaging the core competencies of the company and building mutually beneficial partnerships between the company and non-profit or community organizations. Cisco Systems, for example, has been able to expand its Cisco Networking Academies program to over 10,000 academies in all 50 U.S. states and over 150 countries, working with partners ranging from the United Nations, the United States Agency for International Development and the Peace Corps, to local schools and nongovernmental organizations. In the Philippines, the Ayala Group has worked with Nokia, one of its key business partners, Pearson Education, the International Youth Foundation, the Department of Education, local authorities and parent-teachers associations to provide science materials to over 80 under-resourced schools. Just two of thousands of examples, through which companies, working in partnership with others, are providing education, training, and other opportunities to millions of young people and low-income communities around the world.

Some of the most interesting partnerships are in the form of strategic global or national alliances aimed at transforming not only individual corporate practices, but also influencing public policy frameworks and the broader enabling environment. National examples in Asia include the pioneering Philippines Business for Social Progress, the Thai Business Initiative for Rural Development and the Asia-Pacific Business Coalition Against HIV/AIDs.

In addition to community-level alliances between individual companies and nonprofit organizations, we are also witnessing the emergence of strategic global or national alliances aimed at transforming not only individual corporate practices, but also influencing public policy frameworks and the broader enabling environment. One example is the United Nations Global Compact, with over 2,000 corporate participants and some 30 national business networks, many of them from developing countries, working with UN agencies, trade unions and non-governmental organizations.

Through the power of collective action, the Global Compact seeks to advance responsible corporate citizenship so that business can be part of the solution to the challenges of globalization. It is a voluntary initiative with two objectives:

• Mainstream ten principles in the areas of environment, human rights, labour, and anti-corruption – all of which are based on international, intergovernmental agreements – into business activities and supply chains around the world;

• Catalyse business actions and partnerships in support of UN goals, especially the Millennium Development Goals.

Asian companies have been among the pioneers in supporting the Global Compact. In countries such as China, India, Indonesia, the Philippines, Thailand, South Korea and Australia, individual companies, stock exchanges, business associations and governments are starting to explore ways to implement the compact’s ten principles as core elements of sound business practice. In November 2005, the Chinese government will host a major Global Compact Summit, taking a vital leadership role at a time when global industrial capacity continues to shift to China and Chinese companies continue to increase their international investment and influence.

Concluding Remarks

Although local business conditions and cultures vary from country to country, the elements of what it takes to be a successful and sustainable business over the longer-term illustrate some common imperatives. Being a profitable, but also responsible corporate citizen is increasingly one of these imperatives. This requires business leaders to be committed to a set of clearly stated and publicly upheld values – underpinned by policies and standards that are applied everywhere the company operates, not only in its home market. It requires companies to have risk management systems and accountability structures in place to protect existing value, by minimizing any negative economic, social or environmental impacts and reputation damage arising from their business operations. It also requires companies to support learning, innovation and partnerships that help to create new value, by delivering new products and services that meet societal needs as well as creating shareholder value. And it calls for ongoing efforts to evaluate and measure progress and performance against each of these three areas.

In summary, regardless of industry sector or country, global corporate citizenship rests on four pillars: values; value protection; value creation; and evaluation. These four pillars not only underpin the long-term success and sustainability of individual companies, but are also a major factor in contributing to broader social and economic progress in the countries and communities in which these companies operate. Along with good governance on the part of governments, they offer one of our greatest hopes for a more prosperous, just and sustainable world.

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