Top 10 corporate responsibility stories of 2013

Plus ça change in corporate responsibility. If nothing else, 2013 provided ample evidence that, contrary to popular belief, corporate responsibility issues, even the huge stories that dominate the media, do not exactly come out of nowhere. So many of the top CR stories of the year, like the Rana Plaza disaster, Apple's tax problems, and JP Morgan's huge fine, were already prefaced by the big stories of the previous year. Among our top 10 of 2012 were a Bangladesh factory fire, corporate tax avoidance, criticism of tech companies, and prosecutions in the financial sector. So the writing was already on the wall for most of the big stories of 2013. It would appear, as Ethical Corporation editor Toby Webb said recently, that with all the excitement about new opportunities and win-wins, companies are underestimating the importance of sound ethical risk management in the corporate responsibility equation. So, if you want to know what CR risks lie ahead for 2014, you could do worse than checking through our list of the big stories of 2013.

1. Rana Plaza building collapse
Back in April 2013, more than 1100 people, mostly garment workers, died when the Rana Plaza building collapsed near Dhaka in Bangladesh. It was probably the single worst garment factory disaster yet, in an industry that has suffered more than its fair share of needless fatalities. But Bangladesh had already seen a series of major industrial accidents leading up to Rana Plaza, which had been met with little tangible response from business and government leaders. Rana Plaza looks to have at last changed that. The Accord on Fire and Building Safety in Bangladesh, signed by nearly 100 global retailers, as well as labour unions and NGOs is a legally binding agreement to ensure worker safety through independent factory inspections, mandatory repairs, financial support, and sanctions for noncompliance. More than 2m vulnerable Bangladeshi garment workers are already covered by the Accord. A competing agreement, signed by Walmart, Gap, Target and other North American companies was criticized for having weaker enforcement and failing to involve labor unions. Nonetheless, both pacts are evidence that factory safety in Bangladesh is finally getting the concerted attention it deserves.

2. Apple's tax avoidance
Corporate tax avoidance had been a growing story in the UK and elsewhere prior to 2013, as evidenced by our top stories listing of 2012. But the issue exploded onto the public consciousness when Apple's CEO Tim Cook was forced to testify to a Senate committee in Washington back in May of this year. The company had avoided paying literally billions of dollars in tax by exploiting various loopholes in international tax treaties and funnelling its European profits through a shell company in Ireland. All completely legal, of course, but hardly what the public expects of a good corporate citizen. Now that attention to corporate tax avoidance has gone global, and with inequality and government debt the two biggest global risks today, the obvious questions are which country will be next in taking aim and which company will be in the firing line? Corporate tax reform is also undoubtedly going to loom even larger in the coming year.

3. NSA spying
Without doubt, Edward Snowden's whistleblowing on the US National Security Agency's (NSA) mass surveillance programs was the story of 2013. Nothing else even got close. However, the corporate responsibility dimensions still remain somewhat murky, which is why it doesn't quite make it to the top of our list. We do know, however, that telecoms companies like Verizon are required to hand over all call records  (or "metadata") to the NSA about cell phone calls made in the US. We also know that none of these companies ever sought to challenge the legality of the action. Another revelation was that the secret PRISM spying program allows the NSA to tap into the servers of internet companies like Google and Microsoft to access customer data. We also know that NSA pays millions of dollars to these same companies. We do not yet know exactly how complicit tech companies have been in the whole mess but one thing for sure is that they now realize that the NSA spying story is undermining their customers' trust and are calling for government reform. Expect much more to come in 2014.

4. JP Morgan's $13bn misconduct settlement
Our annual list of major corporate responsibility stories would not be complete without an entry from the finance industry. As we predicted at the beginning of the year, 2013 was marked by the return of government and some major financial sector scalps. None of these was bigger than the whopping $13bn fine landed on JP Morgan for misleading investors in the same of mortgage backed securities in the lead-up to the financial crisis. To date, it is the settlement ever between the US government and a corporation, and will come as some (though probably not enough) relief to those who have viewed most of the finance sector giants as getting away with the crisis relatively unscathed. On the other hand, JP Morgan is probably pretty sore about catching the flack for misconduct that was less about their own practices and more down to firms like Bear Stearns that they were encouraged by the US government to acquire at the height of the meltdown. No one comes out of this looking good.

5. Europe's horse meat scandal
At the beginning of the year, the big news was all about horse meat turning up in products it wasn't supposed to be in. Like those clearly labelled as "beef". The scandal started in the UK, quickly spread to a suspect supplier in Ireland, and soon rocked much of Europe. Customer trust rapidly evaporated as it became clear that effective oversight of the food industry was sorely lacking. Companies acted quickly to withdraw potentially contaminated products and shore up confidence but further revelations of large scale criminal activity in the food supply chain will do little to restore trust in a thoroughly compromised industry.

6. India's new CSR law
The world's largest democracy now has the world's most extensive CSR legislation. But that is not necessarily a good thing. Under the new Companies Act, passed by the Indian Parliament in August 2013, large Indian companies must spend at least 2 per cent of their net profits on CSR each year from 2014 onwards. It also requires firms to set up a CSR board committee and institute a CSR policy. The new CSR legislation has met with a mixed reaction, especially as it seems to institutionalize a somewhat backward looking approach to CSR which emphasizes philanthropic giving whilst ignoring the core strategic business of the firm. It will also be incredibly hard to enforce in a country already hamstrung by an overburdened legal system. On the plus side, the legislation does force many of India's laggard companies to finally take some responsibility for the various social problems faced by the country's citizens. For better or worse, CSR is no longer something that can be ignored in India.

7. Chevron's Ecuador pollution case
It has been a big year for Chevron and Ecuador in their long-running, aggressively-fought pollution case. In November, the Ecuadorean high court made its long-awaited appeal decision which upheld the original 2011 judgement requiring Chevron to pay $9bn to compensate for contaminating the rainforest during crude oil extraction over two decades ago. Chevron has never operated in Ecuador but inherited the lawsuit and its toxic legacy when it took over Texaco, the original operator, in 2001. For its part Chevron continues to dispute the legality of the ruling and has refused to pay. The appeal was at least partially successful for Chevron by halving the original $18bn damages bill, but not in overturning the decision. Chevron is now awaiting the outcome of a counter-suit heard last month in the US against the plaintiff's main lawyer, who the company claims engaged in bribery and fraud to secure the conviction. Meanwhile, attempts by the plaintiffs to seize Chevron's assets overseas to pay the fine also had their ups and downs in 2013. For example, Canada first denied them the rights of enforcement in May, only for a judge to overturn the decision on appeal in December. Other actions are underway in Brazil and Argentina. This has fast turned into a test not only of the Ecuadorean legal system, but of the global legal system's appetite to prosecute international legacy corporate responsibility issues.

8. Rosia Montana mining protests 
2013 saw major protests against mining operations all over the world, including Australia, Canada, Columbia, Greece, Niger, Peru, even Tibet. But the biggest of the lot was probably in Romania, which saw a mass protest movement arise in response to plans to mine around the town of Rosia Montana. If approved, it would be Europe's largest gold mine but critics claim that it would inflict untold social, environmental and cultural damage. Mass street protests erupted after the government proposed a new law that would enable the Rosia Montana Gold Corporation (majority owned by the Canadian mining company Gabriel Resources) to finally start operations after years of failing to acquire the necessary environmental permits. At stake here then is not just the proposed mine but the legitimacy of the democratic process, which protesters feel has been fatally undermined by the hastily forced through legislation. As one protester put it: "People today confront a corrupted political class backed up by a corporation and a sold out media; and they ask for an improved democratic process, for adding a participatory democracy dimension to traditional democratic mechanisms."

 9. New UN Global Compact 100 Index
There were several entrants to the new corporate responsibility standards and guidelines category in 2013, with the G4 guidelines of the Global Reporting Initiative probably being the most talked about. But September's launch of the Global Compact's new stock market index, the Global Compact 100, for us represented the most significant development. First, as John Entine noted, it offered a welcome new development in a social investing field "hungry for innovation and dogged by ideological correctness". But more than that it showed just how far the UN was willing to push the needle on its voluntary approach to corporate responsibility that heavily prioritizes incentives rather than enforcement. While many are still criticizing the Global Compact for not having sharp enough teeth to weed out laggards and green washers, the new index makes it abundantly clear that the UNGC is moving in a very different direction. Ten years ago it would still have been unthinkable, but the reality is that the UN is no longer just in the business of accords, declarations, and principles but is now also firmly in the finance industry.

10. South Korea's nuclear corruption scandal
GSK's corruption scandal in China may have got most of the headlines, but in our book, the corruption scandal that has engulfed South Korea's nuclear industry this year tops it for potential impact. Two short years after Japan's Fukishima disaster, neighbouring South Korea is also facing a devastating loss of confidence in its nuclear industry which supplies about a third of the country's energy needs. The scandal has centred on a swathe of faked safety certificates that have been issued for critical nuclear reactor parts over the years, and the bribes that have allegedly been paid to look the other way. Most commentators pin the blame on the closed structure of the nuclear industry in South Korea with only a single national operator and close ties between the operator, suppliers and testing companies. The prime minister has likened the industry to the mafia. A number of reactors have been shut down, trust in the industry has plummeted, a national energy shortage is underway, and now some 100 officials have been indicted for their part in the scandal. Corruption that compromises the safety of the nuclear industry is probably about as bad as it gets. And its unclear yet whether South Korea can really turn this one around.

Photo by rijans. Reproduced under Creative Commons licence

Should the UN Global Compact have sharper teeth?

Do those teeth need sharpening? Georg Kell, Executive Director of the UN Global Compact. 

The emergence of multi-stakeholder initiatives and voluntary corporate accountability programs for business have become some of the most interesting aspects of the CSR debate over the past decade or so. The largest of these in terms of company participation is the UN Global Compact, which now has some 10,000 participants, including over 7,000 businesses in 145 countries. By any account, that's a huge number. It's also a huge experiment given that there's never been anything quite like it before or since.

A few years ago we were the official bloggers of the Global Compact's 10 year anniversary, "Leaders Summit" which took place in New York in 2010. At that time we made various comments on the successes, failures and future challenges of the compact. As geeky academics, we are now eagerly awaiting the publication of the special issue of the journal Business & Society (which we are on the board of), entitled "The UN Global Compact: Retrospect and Prospect", edited by our friends and colleagues Andreas Rasche, Sandra Waddock and Malcolm McIntosh. They've put together a nice collection of academic papers on the subject, including a terrific introduction from the editors, and the special issue really demonstrates how seriously the academic community is taking the Global Compact.

Some of the big questions for researchers interested in the Compact - and indeed for many in the practitioner community - are about its governance and effectiveness. Does membership have an effect of corporate social performance? What governance system would be most effective to ensure corporate accountability? And perhaps the biggest question of them all - should the compact, as its critics maintain, have more regulatory power to discipline companies that don't live up to its principles, or is it more important to have a low bar for participation so as to engage the maximum amount of companies?

Answers to these questions are slowly beginning to emerge from the research community. Over at the aptly named Global Compact Critics website, a colleague of ours at the University of Zurich, Patrick Haack, has written a guest blog based on his research that reaches a conclusion which the compact critics love to hate. Yes, you guessed it, Haack recommends that rather than kicking out any "bad apples" in the compact, the UN should keep them in. Paradoxically, this is the way to build legitimacy according to Haack: “a “soft” and consensual approach is in the best interest of the Global Compact and transnational governance more generally... "keeping bad apples” and providing them with time and resources to overcome organizational barriers may prove more fruitful than unconditional punishment."

Provocative stuff. Unsurprisingly, the critics have hit back - in the form of a post from Mariëtte van Huijstee from SOMO, the organization behind the Global Compact Critics website. "By keeping bad apples in at all times," she argues, "the initiative loses its legitimacy and appeal for other companies in the long run." This is no arcane academic argument; it goes to the heart of how to build an effective mechanism for corporate accountability and ensure that companies act in the best interests of society.  But the answers are not obvious and the need for good research is critical.Some of what has emerged so far has shown that the diffusion of the Compact has been dampened by the effect of critical NGOs who have voiced concerned over its "weak" inclusive approach - meaning that companies from countries with strong networks of international NGOs have been less likely to sign up than those from countries outside of these networks. This helps to explain why the Compact has been particularly successful at getting traction in developing countries, even whilst developed country NGO criticize its lack of teeth.

So the debate will no doubt rage on. But soon, we hope, we'll have the research to show what the real advantages and disadvantages are of the Compact - and whether its weakness is, as Haack contests, one of its main strengths.

Photo by djevents. Reproduced under Creative Commons Licence

The Human Factor

After two weeks a final reflective moments on the Summit are in place. You might have got it by now that, yes, I am by and large optimistic about the Global Compact and in particular the Summit. On reflection, much of it comes from the one to one interactions I had during the event.

I already mentioned Peter Solmssen, Executive VP and General Counsel at Siemens. My first question in meeting those guys always was why on earth they cut out two days of their busy schedule to hang out at this conference. For him it was about giving the corporate world a 'face'. Having an 'intelligent conversation' between parts of society which normally don't talk to each other – business, government, civil society, academia – for him was one of the benefits of this meeting. And I could so see it – not only in the very open, relaxed and engaging way we chatted about these issues, but also in the way he took part in the conference.

While Peter represents a big multinational, most of the UNCG members – and in fact most of businesses globally – are SMEs. One of the impressions I took away that the cliché we sometimes have of business people can be totally wrong. We often see them as profit hungry machines. But many of them are in fact passionate about creating something, passionate about their contribution to society, their communities and their employees. On that note, the CEO of one of the Argentinean members of the Compact impressed me a lot. Gustavo Grobocopatel is the co-founder of a large Agrobusiness in Argentina and most of all, he stroke me more as an intellectual, and as he admitted somewhat tongue-in-cheek, an accidental entrepreneur. His rationale for supporting the Compact and being at the Summit was that he thinks the world 'needs new governance'. A system of governance where business is ready to live up to its responsibilities.

Of course, not all attendees were of this calibre. As Lord Hastings, the 'Master of Ceremonies' ironically intimated in his introduction to Thursday afternoon's half-empty auditorium of roundtables, some participants had succumbed to the temptations of 'supporting the local economy' – i.e. going shopping in New York. Fair enough, these guys would just turn up once, make sure they had signed in, and otherwise take the Summit as what I saw it in my earlier blog: a ceremonial exercise which boosts their PR. In this category I would put someone like Ali Koç, third generation of the Koç family and in charge of some of their vast business empire in Turkey, which boasts a remarkable record in philanthropy. That's why I was keen on talking to him. When I approached him, the terror of speaking to a 'journalist/blogger' was galvanizing his eyes. After haplessly communicating to his PR-girl, he mumbled something of 'having a flight to catch' and walked off, making some rude comments about journalists these days. He told me to send him my questions by email. Of course he never replied.

So leaning back, the Global Compact in my book counts as what I have referred to as 'mimetic processes' in the proliferation of CSR: it becomes a legitimate 'business' by virtue of many players in the organizational field engaging in a specific management practice. By providing a platform of visible exchange and commitment the UNGC has made it just 'cool', to put it bluntly, for companies to practice CSR.

The 'cool' factor, finally, also explains another remarkable feature of the UNGC: the Summit would not be possible without a veritable little army of volunteers, interns and alumnis of the GC, who invested much of their time for free to make the Summit happen. I hung out with them at the after party in a bar on 58th at the end of the Summit. Certainly in this generation of future business leaders, government officials or NGO activists the legitimacy of responsible business practices need no further discussion. Even to the extent, as one of them told me tongue-in-cheek after a few pints, that the UN Global Compact would struggle itself to live up to one or two of its principles on labour, in particular the 'fair wages' bit. But looking at the happy crowd dancing away to the remarkable one man band that evening, I can solemnly swear to bear witness to the fact that it definitely was not into the 'forced labour' category...

 

Another Summit, The Same Problem?

Upon landing in Toronto Saturday I could already see it: The G20 heads of states are in town and their modest means of transportation were neatly parked at Pearson International Airport: Obama's Air Force One, Two Jumbojets each for the Chinese, Japanese and Saudi-Arabian Heads of state, Merkel's and Sarkozy's relatively modest Airbuses, and – how cute – the Virgin Atlantic A340 which must have shipped the new British PM Cameron to TO. Telling array of status symbols...
It looked somewhat different in downtown Toronto. The entire centre, where the convention place for the G20 is located, was fenced off with a 3m high wall – reminding me of my childhood playing next to the Berlin Wall. There was a sizable number of protesters out there – but many thousands more of police. The city was a fortress.
The G20 is another 'tool' of global governance, similar to the Global Compact. But while the Compact receives only scant attention from the public, the G20 is a major event. It leaves you wondering. For me this reflects, once more, the value and benefits of the UN Global Compact. And indeed also the value of the Summit.
Reflecting back, it is chiefly about two things. The first is to legitimize the social role and responsibility of business within the business community. By getting 8,000 players on board, many of them well known brands, the issues of sustainability/CSR/Ethics are now a legitimate concern in the wider business discourse. Of course there is room for ambiguity about individual companies, their achievements and sincerity. But for me the glass is definitely half full. It is mostly about initiating a process, rather than the concrete outcomes, which we should credit the UN Global Compact for. Andreas Rasche (together with Georg Kell) has just published a fine book on the compact taking stock of its achievements and shortcomings. My colleagues and friends Andreas Scherer and Guido Palazzo describe it well in the book: the Global Compact is one tool of global governance, providing a framework for deliberation and learning around the social role of business in a global economy.
The second point for me is that in particular the summit has very much a ritualistic role. As humans, we need rituals and ceremony to visualize, materialize and provide a cognitive frame to inner processes of commitment, of attitudes and thoughts. This is what weddings, funerals, graduation ceremonies etc. are all about. The summit provides such a frame. The leading persons of organizations attend (in fact a third of attendees in my count were actually top brass), make statements of commitment or achievement, are together in the room, and do so under the auspices of the highest formal political authority on the globe: the UN Secretary General. That is one of the reasons Ban-Ki Moon's remarkable commitment to the Compact is vital.
Contrasting this to the G20 and its outcomes here should make Georg Kell and his team a little proud of what they have achieved. At the G20, leaders have basically decided to land large chunks of their middle class constituents with the burden of the debt, countries had to take on in saving the global financial system. To halve the debts by 2013 boils down to little else. No wonder such an agenda needs fences and thousands of police to be sustained. The level of 'stationary violence' by the state in Toronto this weekend in my modest view was much bigger than the few incidents of vandalism by protestors – as much as we condemn this violence. The G20 is an example of lack of deliberation and democracy at the global level. The UN Global Compact Summit points to the opposite: smaller or bigger steps towards common solutions to pressing issues on the global level.
That is why I think it was worth it.

The Elephant in the Room

For the past two and half days I've felt a strange tension in this conference. It is about the thorny question of whether ethics pays. The business case for CSR. The harmony between economic, social and ecological sustainability.

Most of the time panellists and speakers were hammering it home that joining the UN Global Compact and implementing the principles just makes good business sense. I had a very lively conversation with Peter Solmssen, Executive VP of Siemens about this, who joined the company recently as part of the revamp of the board in the aftermath of the corruption scandals. He was fairly bullish that fighting corruption makes good business sense, 'we are more profitable now' he argued. He argued that in most countries big conglomerates like Siemens or General Electric are doing business with public purchasers who at the top level are not interested in corruption, and that companies who are known for not engaging in it, in fact have a competitive advantage. His view is that big players have indeed the chance of forming a 'cartel of the good' to collaborate on addressing ethical issues like corruption – and be the better off with it.

A similar take I got from talking to Gustavo Grobocopatel, President of Grupo Losgrobo from Argentina. His company works in agriculture and adjacent supplies and services, and he sees the particular value for his organization in engaging with the UN Global Compact in improved stakeholder relations. In particular his customers value this inclusive approach and for him CSR is very much about competitive advantage. His organization is particular interesting as it tries to keep more of the value chain of agricultural products in the country, rather than just exporting commodities and falling victim to what is commonly referred to as 'Dutch disease'.

In some ways then it was quite a little 'scratch' (I mentioned my Teflon-ized ears) to hear Klaus Leisinger (President and CEO of the Novartis Foundation for Sustainable Development) say on Friday morning that the talk of 'ethics pays' or 'ethics is just good business' is – in his words – just 'bullshit'. Why, he argued, would companies not do the right thing anyway if it were just good business? Instead he called for a commitment to basic values, brought forward in the 'Manifesto for Global Economic Ethics', by companies a priori, simply because it is morally right, as in some cases it might even cost money in the short term.

I tend to agree with this. Again, we can turn to the ten year old-metaphor: at this age, kids are at the 'conventional' level of moral development (in Kohlberg's theory): they do right and avoid wrong, because mommy and daddy say so and he tries to be a nice boy, and he tries to avoid the smack on the back or wants to get that ice cream as a reward. At least on the rhetorical level, the UN Global Compact members – by and large - seem to be not much beyond the conventional level. Which – don't get me wrong – is quite an achievement. Whole societies have survived on that, so that's fine for our birthday boy.

This apparent reluctance to think about the firm beyond the immediate business case became quite clear today in the sessions dealing with Development. I put the question to Jeffrey Sachs, Georg Kell and Chad Holliday in the final press briefing. Kell re-iterated that we are seeing an 'evolutionary transformation', a re-orientation from short- to long-term and a stronger focus on the (financial) risk which non-financial issues can cause. But 'the basic model remains intact', he said. In a similar vein Holliday, who hinted at further economic incentives to internalize sustainability issues, such as pricing carbon. It was then Sachs, who I think took up the question of whether it is time to move beyond the current framework. He said, that providing malaria medications to poor people 'is not a money making venture'. But still he argued that the business contribution to achieving the Millennium Development Goals is vital. So he pointed more at models of shared responsibility and sees business getting much more involved in public-private-partnerships. This was re-iterated by Robert Orr, Assistant Undersecretary General of the UN, who moderated the press briefing. For him the UN Global Compact is very much about becoming/being a player in global governance. He stressed there is hardly no issue on the global political agenda, where business is not part of any possibly thinkable solution. I liked that candour and agree.

Followers of this blog familiar with our writings will know that this is where I see the future of CSR going: Business as a political actor, intricately involved in societal governance. In Kohlberg's model of moral development, this would be the post-conventional level: understanding social contracts and universal moral principles – and doing the right thing based on understanding this. So let's wish our ten year old a healthy further development – there are new stages to discover!

‘Business Schools should be extremely nervous’

One of the benefits of going to big global conferences is that you meet old colleagues and friends. So I was very pleased to bump into Peter Lacy (now Managing Director Accenture, Sustainability Services, Europe, Africa and Latin America). I enjoyed working with Peter while he was Exec. Director at EABIS (an association of businesses and academic institutions to boost CSR in Europe) and built up the organization in the early/mid 2000s.

Peter was here, among other things, to present a Survey on CEO perceptions of the Sustainability topic which I mentioned earlier in another post. I won't bore you with some of the bickering raised here (too small sample of 'converted' companies, CEO rhetoric is no data etc.) since it does not jeopardize the main message of the research: that sustainability is now clearly on the strategic agenda of many major companies and in fact 93% of surveyed CEOs globally see this as a key imperative. No more just an 'issue', a blip on the screen, as it was ten years ago. Though Peter told me, too, that the survey probably just hints at the sheer magnitude of the task ahead, which is implementation. He is a little cautious about some of the statements in the report regarding implementation in these companies as of now, but his main point is well made: what about those non-UNGC members and other companies, who aren't even yet in the strategic stage?
Since Peter knows both worlds, business and academia, I was also interested in his view on what the survey means for us in the ivory tower. Two things emerge. Since one of the findings was, that the investment community cares next to nothing about sustainability, Peter thinks we need to develop tools to make the actual value of sustainability more explicit. This is closely related to performance management as – given current business practices – only if I can give sustainability as a measurable task to my crew, I can reward and assess them on success.
But the main point he made was that in his view, business schools in general have not even entered the first 'issue' stage and are lagging behind their main target audience by – mas o menos- a decade. Of course, he hastened to add - that he is aware that there are a good number of schools out there which have understood the challenge and are able to provide education of managers with regard to sustainability issues. But personally I could not agree more that by and large, business schools are still largely operating within an agency-, efficient markets- and shareholder value-framework. This applies certainly to many of the top North American and European schools. And while this is bad enough I would add that this thinking is still dominating our research by and large – and today's research is the teaching material ten years from now, as Peter put it. He added that from his current work of running a department of 800 staff, in recruitment he finds precious few candidates trained by business schools in sustainability. So Peter's message was that business schools really need to take into account the changing imperatives for business – otherwise business might more and more look for other sources of education (something which came already up in an earlier post).

A cloud of well known words with some rays of sunshine

This morning the Summit opened. It was a well organized and well choreographed session. Our ten year old is a well behaved boy indeed (sorry for masculin-izing the UNGC, I just go by the blue colour of the UN...).

Ban-Ki Moon opened, followed by a number of panellists and it were the usual, well meaning speeches by many leaders in business, and civil society. Moon announced the goal of raising the membership from currently 8,000 to 20,000 by 2020. Bloomberg ventured to step out of his role as Mayor and into that of a concerned citizen by pointing to two of the major challenges for future sustainability: 1bn deaths due to tobacco consumption over the next decade, and a similar level of road fatalities, given the current trends in automotive growth. These were quite daunting, but nevertheless refreshing new angles on the issues.



Maybe i am hanging out too much on conferences that my ears are by now a bit teflonized for much of the sustainability rhetoric. But reflecting back on this opening session, I feel quite good about the UNGC. It has certainly changed the game for many of the companies involved, most of them – which I did not know – are in fact SMEs.



So the ten year old gives us some reason for pride and satisfaction. But you keep wondering if the bigger worry in fact are not those little friends of our laureate who he hangs out with. In other words, the biggest worry still are those companies who haven't even signed up (or the 1,300 which had to be expelled). I think this aspect highlights the magnitude of the underlying issue and in fact one reason why what has been achieved by the GC is undeniably a success.



I liked Philip Jennings, the General Secretary of the gobal federation of trade unions (UNI Global Union). He highlighted the persistent plight of the trade union movement and the apparent tensions between a company publishing all sort of niceties on employees in their CSR report while at the same time busting their unionized workers. Point well made.



The agenda for the future was probably best put by John Ruggie (Harvard University) in the afternoon plenary, posing that the era of 'declaratory CSR is over' and companies now have to 'know and show' concrete progress. He argued that sustainability, as suggested in the new Blueprint for Corporate Sustainability Leadership is not a 'technocratic fix' but rather an active engagement with stakeholders in concrete situations. This new Blueprint is probably becoming a rather influential tool in the future, the Director General of the Norwegian Oil Fund pointed out: they will use it as a guideline in talking to companies and aligning their investment decisions on it. It seems to be a step closer to what many businesses are calling for: a more level playing field.

What about politics?

Those of you who have followed this blog and our work over the last years will know that we have taken a special interest in the political role of private corporations. So what are the vibes here at the UN Global Compact Summit?

Well, the general gist seems to be that most of whom are quite happy to pass on more responsibility for the environment, human rights etc. (i.e. the ten principles) to the private sector. The most poignant role in this probably put forward by the UK's new Minister for International Development, Alan Duncan. I liked him when I lived in the UK, but was a bit underwhelmed by what he said. Basically he is a pink Thatcherite, talking about shareholder value and how companies can combine this with development. He ducked questions on BP and whether there is a role for governments in preventing these disasters, which was a bit weak, I found.
A refreshing accent was set by Mike Bloomberg and what the City of New York is doing. He was kind of cool, I found, saying that the City's carbon footprint is now at a third of the average American city. He said the City is willing to lead, but he expects business to do its part as well.


So far well and good. If we release corporations into this sphere though, what about democracy and political principles. There is next to no discussion on this here, apart from the occasional reference to more accountability and transparency. Maybe that should be put on the agenda for the next decade. But this will make it a really warranted area of further research for the academic community. How to make this shift in governance of societies one which is really in the interest of those who are governed? Currently, our best hope is that we will be governed by all those 'benign dictators', which are currently gathered here.

The Birthday Party Begins

Ten year olds are in a funny age. Not quite children anymore, they are not grown ups either. They have learned the basics, reading and writing and calculus - but there is still a lot ahead of them.

I like the metaphor for the UN Global Compact ten year anniversary Summit. In the opening ceremony it became quite clear that indeed much has been achieved. To talk about business responsiblities is now widely legitmate and the guest list shows, that many companies have grown with it. This is also visible in who - next to Ban-Ki Moon (UN Secretary General) - was invited to give the major talk in this afternoon's opening ceremony: Wang Zhongyu, President, China Enterprise Confederation - China of all countries. Its nice that ten year olds still don't care too much about what the world around them thinks. And in fact one has to give Chinese businesses in the UNGC a lot of credit, certainly for their commitment and also for successes.

CSR is a world full of ambiguities, but today China's and Chinese businesses' record on the achievement of the ten principles was not on the agenda. Fair enough, this can come at another time.

Equally ambiguous I felt about a 5mins videoclip which was shown in the opening ceremony. I forgot the details, but it was incredibly cheesy, happy-clappy and goosepimply-emotional. Showing this at, say, the Christian Womens Knitting Association of South Arkansas' annual charity dinner - fine. But in a room with over a 1000 people from business (300 of which CEOs or the like)? I don't know. But hey, where shall a ten year old have already got a sense of style?

By the way, who started that fashion of showing a video clip with people talking in the clip while they are sitting in the flesh on the podium? This happened twice today. Why not just talk to each other?

Which happened finally, when we were told by Lord Hastings, the master of ceremonies for the Summit, to say hello to the person right of us and the person left of us. I was so relieved we did not have to kiss them. My neighbor on the left was from Uruguay, btw. He contgratulated me on Germany's win today in the Soccer World Cup. So it was nice after all...

Ambiguity also came up with the terminology in the world of CSR. CSR for most people who spoke today is still seen largely as philantropy while 'Sustainability' - the title of the Summit - in their view looks more at making operations and core business processes socially responsible. It all goes to show that language and concepts are, at the end of the day, all ephemeral and relative. Like ten year olds and their slang today. Would I understand a text message from them? Probably not, but if it means something good, I don't care.

'Business Education has Become an Industry'

So here we are. As hot as the weather is in New York, as hotly contested is the role which business education has played recently in making for more responsible companies. At the PRME 'side event' of the UNGC Summit some rather soulsearching questions were raised. Rakesh Kurana from Harvard made it quite clear that one of the dilemmas of b-schools in fact is that they have come to see their students rather as ‘customers’ then people who need education and at times been served a diet that needs some acquired taste. Just to blame the business world for lack of demand for issues of CSR and ethics is not enough in a world where the public increasingly worries about the status of wider societal impacts of business.

While the Accenture Study (in cooperation with the UNGC) of the opinion of more than 800 CEOs suggest a slightly different picture, it leaves us with one general problem: Since business education, certainly at postgraduate/MBA level is in fact privatised and ‘purchased’ by students or their companies, this inherent tension cannot be denied. One of the reasons I personally have started to dislike teaching on MBA – or worse – executive MBA – programs is exactly that it is a tough challenge to make students think, reflect about things unknown or strange to them and, most notably, to read. And the issues the UNGC is concerned about fall exactly in this category.

Interesting comments came from India, delivered by Jamshed Irani, Director, Tata Sons Limited. In his view, since business schools don’t do a good job (in general) at talking about climate change, ethics etc. corporations should have their own universities and b-schools. Yes, you havn’t misheard. I guess this reflects a tradition of a great company with a long tradition of philanthropy and ethics, such as Tata. But what about a b-school run by AIG, BP or Lehman Brothers? Just imagine the type of ‘leaders’ we would get from there...

So far the UNGC summit (i.e. this fringe event) put the finger on one important thing: with delegating responsibility for public goods (and education used to be one) in the hand of private actors, we have opened a pandora’s box. Its irreversible, I think (as the Hewlett Packard Chair in CSR, no less). But we need new criteria for private responsibility for public goods in order to change this focus within b-schools. How this will be achieved – no real answers so far from New York.

UN Global Compact Leaders Summit 2010

What do you bring to the birthday party of a ten year old? Especially if it has pretty posh parents and throws the party nowhere less than at Times Square in New York?

Crane and Matten have been invited to be the official Summit Bloggers for the 10 year anniversary Conference of the United Nations Global Compact this week Thursday and Friday in New York City. Over the next three days Dirk will keep you posted with news and updates on what is going on here.

I have never done such a thing, so expect a colourful medley of comments, lifeblogs from the sessions or just thoughts. Let me know what you think, too, so that we can learn as we go. I have no real idea where this will be going. In the spirit of the party, I am not in the mood of only talking about how naughty the boy has been over the last 10 years. This job is done by others already in the bloggosphere.

And besides, its not how I feel about the compact. In a world with serious governance deficits on the global level I think we can do with all we can. And here the UN Global Compact has changed the game remarkably, I feel. Thursday and Friday this week, around 1200 senior executives from member companies, some of them top brass, will talk about ethics in business, CSR, sustainability etc.. I still have vivid recollections how things were 10 years ago. The laughter and raised eyebrows of my colleagues in the German bank I was working at the time, when I told them I would take a job teaching and writing about business ethics: 'Business ethics: hahahah. What will you do in the afternoons?'. That was '99, so things have changed.

This being more a meeting of members of an organization rather than a normal conference I expect this to be quite exciting. I have also scheduled some interviews with senior managers, so lets see where that takes us.

Today I will first go to the meeting of the Principles of Responsible Management Education (PRME). The PRMEs are an offshoot of the UNGC which have been signed by many institutions of business education worldwide and which aim at implementing business responsibility firmly into the curriculum of business education.

So I have not yet decided on the birthday present. I have to see how the party goes and how the birthday boy looks from close. I will share my impressions with you.