Corporate Citizenship in the 21st Century - Conference Report May 2000

Imagery provided by Joanne Theaker

What can Business do for Peace and Sustainable Development?

Report on Forum held May 2000 Taplow Court

Joanne Theaker

Introduction

This was the subject of a 3 day Conflict and Peace Forum at Taplow Court from 2nd–5th May 2000.  Leading thinkers and organisations that have been developing strategies and taking action in this area gathered with participants active in media, academia and business to discuss just what can business do for peace and sustainable development?

This event was founded on the simple premise that large-scale transnational businesses have become one of the most potent economic and political forces of our times.  Furthermore it is in the interests of everyone, including those businesses themselves, to find ways in which they can work together with governmental and non-governmental agencies to find solutions to some of the most pressing environmental and social issues facing our planet.

Many business leaders are realising the importance of taking a more pro-active role with regards to social and environmental issues and Corporate Citizenship is becoming a strategic issue for all organisations.  There is a growing realisation that the state alone, in the form of governmental agencies, is unable to effectively maintain social peace and provide an environment where its citizens are able to their full potential.

Fifty-one of the world's top 100 economies are private companies. Mitsubishi, General Motors and Shell all have larger turnovers than Norway!  General Motors has the same annual revenue as Austria.  Korean motor manufacturer Daewoo - with a workforce of 91000 has the same annual revenue as Bangladesh with a population of 116 million.  Globally 358 Billionaires have as much wealth as the poorest 45 percent of the world's population. 359 corporations account for 40% of the world's trade. The 12 most important global industries, such as textiles and the media are each more than 40% controlled by five or fewer corporations.  Ten corporations control almost every aspect of the world's food chain.

How business behaves strongly determines how the world relates. This is why the UN has recently granted official observer status to selected businesses as well as traditional non-governmental organisations.  This event sought to answer clearly why it is in the interests of business to take more responsibility for social and environmental issues, or what we might call "Sustainable Human Development".  Beyond that the event seeks to answer how the business world can become involved in local and global decision making processes and, finally what business can do for peace and sustainable development.

The event began with a lively public panel discussion on Tuesday night in Westminster Central London, with Dr Hazel Henderson, Professor Johan Galtung, Anita Roddick (founder Body Shop) and Ed Mayo (Director New Economics Foundation).

Professor Johan Galtung

Professor Galtung concentrated on the need for business to address the basic needs of humanity, which includes peace and fulfilment and security, not just freedom.  Professor Galtung heavily criticised economists and business's tendency to 'hide' behind the rule of market forces; "Now there is a holocaust going on at the moment, and it is called Economics, and as usual, it is nothing personal.  As the Nazis used to say, when they were to kill their victims in their holocaust, 'it is not a matter of personal decision.  It is the Command of High Forces.  Every holocaust throughout history has carried this banner - 'it is nothing personal', and now we have economics, and 1000 people are dying every day, 350,000 each year, and the method of killing is starvation and the reason is 'market forces'.  Nothing can be done about it - for this is the rule of the market!"

In addition to these views Professor Galtung expressed the view that we would do better to talk about "Americanisation" rather than globalisation, for it is not the sharing of cultures but the domination of a culture that we are experiencing.  In fact following on from this, we have seen a typical de-contextualisation of economics ideas in the form of the proposed universal solution of the market.  In his critique on mainstream economic thinking Professor Galtung points out that the nature has been left out of the theoretical and policy making framework all too often.  "only the Anglo-Saxon tradition will make this assumption about nature; that we are separate from it; that it has been given to us to own and control; that it is limitless and it will never end.  To me, it is no coincidence that Protestantism, Darwinism and Economism have all emanated from the same tradition, because it removes nature from society's awareness and will only discuss it in terms of man's objectives".  "We have inherited the God of the Anglo-Saxon tradition in three aspects;  He is omnipotent, omniscient and omnipresent.  In modern terms these aspects manifest as the state, science and the market respectively.

"An economy is a triangle linking Nature, Production, Consumption.  Economics is the theory of what happens in that triangle, Business is the practice linking the three."

In his analysis he raises the following five points;

[1] Business and world structure

It is not enough for the world to be interconnected, it has to be interconnected with equity, including at the level of company decision-making.  A formula: "whatever advantage I want others to give to me in a deal I shall be willing to extend to them".

[2] Business and world culture

It is time to question the old shibboleth of competition and develop a business ethic of cooperation (which is already coming), in economic theory as well as in business practice. Single-minded competition becomes very ego-centered.  Fusions are signs of an overload of competition under the present conditions.  Business cooperation for problem solving.

[3] Business, human needs and the environment

Business practices have now been related to the environment; it is high time they are also related to the basic human needs of survival, well being, freedom and identity.  The more corporations dominate the global situation, the more significant their impact on basic human needs.  The market alone is not the answer, without a market component is not the answer either.  Business brings together production factors, produce, and distribute to the consumers.  Pattern of cooperation beyond charity have to be found for meeting human needs.

[4] Business and the goods and services for peace

To the extent that peace is based on conflict transformation, and conflict transformation on very many dialogues there is a need for organization of the dialogues, and for ways and means to have the findings flow together in a GNIP, the gross national idea pool. Massive operations of catastrophe aid also call for big organizations, usually commanded by the state (the army) or the big corporations.  The world needs cooperation from business in all these matters.  It is worth remembering that economic sanctions for sure hurt business, and sometimes nobody else.

[5] Business and global governance

Business has to be brought into global decision-making in a major way, perhaps using the ILO tripartite formula as a point of departure (Boutros-Ghali, An Agenda for Democracy.  At the same time the corporate role in financing global governance through a tax on transnational transactions will have to be explored. Co-responsibility, make business both responsible and accountable, like governments and NGOs, also to the public. The following diagram offers a synthesis of these points and clarifies the basic principles of what professor Galtung means by "Peace Business".  In it the economic activity is divided into three realms of Development, Environment and Peace.  In each realm a distinction is made between "peace business" and "violent business".

Three realms are considered in this model;

  • Development in this model is defined and the satisfaction of basic needs and removal of violence.
  • The physical environment also has basic needs and is fundamental to all economic development
  • Peace is a fundamental requisite for sustainable development and depends upon the satisfaction of basic human needs and creative conflict handling.

In Professor Galtung's words we can say "development is good for business - people improve their purchasing power - but is business always good for development?  A clean environment is good for business - ensuring resource availability and a healthy workforce - but is business always good for the environment?  Peace is good for business (except arms and reconstruction) - trade can blossom - but is business always good for peace?

DomainPeace BusinessViolent Business

Development-        Bottom Line-        Externalities

-        Economics

Meeting basic needs
Solidarity with all Today and TomorrowThe needs of the needy-        Survival-        well-being

-        identity

-        freedom

Highly Conscious

-        sharing positive

-        reducing negative

-        Internalizing

Open to all Effects - alternative economics

Economic Growth matching supply and demand
The profit of the greedy-        killing economy-        people in misery-        identity eroded

-        only one system

"Unconscious"

-        keeping positive

-        pushing negative

-        Externalizing

 

Decontextualised mainstream economics

EnvironmentEnhance Nature-        cycle control-        small cycles-        nature - "an sich"Use Nature-        point control-        expanding cycles-        nature "fur mich"

PeaceStructure-        Equity-        Connectedness

Culture

-        basic themes

-        verbal behaviour
Handling Conflict

 

Global Governance

What ever advantage I want from others I extend to them-        Circle connections-        Horizontal links-        Company branches

-        Cooperation

-        dialogue

-        mutual brainstorming

-        transcending incompatibilities

- UN Corporate Assembly accountable to people and governments

Advantages for me not for others including prices-        pyramid connection-        vertical lines-        TNC's

-        competition

-        debate, publicity

-        dominating the other

-        attitude / behavior control

-        business set apart

-        people and governments accountable to them.

* Please see paper World in Economic Crisis on Transcend Web site.

Dr Hazel Henderson

Dr Hazel Henderson spoke about a fundamental shift in values and thought that taking place in the world today which represented a paradigmatic shift in the way the people of the world would run their affairs.  This change, she argued, is ultimately leading towards an 'age of light' characterized by new phototronic technologies, new individual, social and environmental awareness and a biocentric mode of living.

The current state of the world represents a transition period characterized by three zones of operation.  In zone 1 (breakdown) we can see the destruction of the planet through pollution, wars short-term economic policy based on rigid dualistic ideas about man and the environment.  In zone 2 (fibrillation) we see a flickering between the old and the new, the destructive and the constructive, the dualistic and non-dualistic.  In zone three (breakthrough) we see "win win" solutions, new forms, sustainable societies, appropriate technology, human centered policy.

Henderson critiques the mainstream systems of economic thought and policy and its inability to accommodate social and environmental factors.

  

The top layer of the economy is the monetary economy and the bottom the non-monetary or what Dr Henderson referred to as the "Love Economy".  This second aspect of economic activity acts as a hidden subsidy for monetary system, and yet the tools used to manage those systems are unable to accommodate this fact.  Yet as we have seen macroeconomic managers ignore this activity at their peril and they have frequently been forced to redefine what are acceptable levels of measurable economic activity in order to maintain confidence in the industrial system.  For example the definition of how much unemployment was considered acceptable and in line with full employment by the mainstream system rose considerably over the post war years due to the flood of new labour (particularly women) into the monetary economy and away from the "love economy".  Whilst the economists were forced to redefine definitions of full employment in order to maintain the belief that the industrial system could sustain society, the true cost of such developments in terms of erosion to family and community life, including care for children and the elderly has been largely ignored.

"What is emerging is that the left-right spectrum of economic ideologies that underlies macro-economic management approaches of capitalism, socialism, communism and all the mixed economies were in retrospect quite superficial…Historical and current evaluation tools used to measure industrial "success" deeply rooted in macroeconomic models, are now obsolete from the perspectives of global equity and human development".

"The " Washington Consensus" (i.e. The World Bank, the IMF, the US government) and the WTO still refuse to recalculate prices and macro-economic indicators, including the Gross National Product (GNP) to include these social and environmental costs. Neither do they recognize or account for the full value of human and social capital—or the estimated $16 trillion of unpaid work in all countries: volunteering, caring for the old and sick, raising children and housework which supports paid workers and subsidizes the official, GNP-measured half of all economies (UN Development Report, 1995).

Their official view is still that the benefits of textbook-style free trade eventually trickle down to benefit everyone. Their view of pollution is similar: when there is sufficient money-denominated growth of trade and free markets, this will mean higher average per capita incomes. Then, there will be enough money to clean up the mess and, presumably, people will vote for social protection and environmental remediation.

Many now discredit this view of a new kind of Kuznets Curve (in economists’ jargon). They point out that prevention is usually cheaper, more effective and less disruptive than after-the-fact attempts to fix up the damage

In fact, all world trade in goods is today heavily-subsidized by below-full cost prices, cheap energy and all the taxpayer-subsidized roads, rails, harbors and airports and other infrastructure, which make world trade possible. When more of the social and environmental costs and the taxpayer subsidies are included in the prices, there will be much less world trade in goods.

These below-full cost prices make consumers choose these lower-priced goods over their own home produced, local goods. Often, as huge retail marketeers reach into these local markets, small stores and businesses on "main streets" cannot survive. Once they have been put out of business, the global marketers can raise their prices.

The problem is that economists do not use accurate calculations of efficiencies of scale. When these obsolete economic efficiencies of scale truly reflect actual efficiencies of scale (used by engineers and in thermodynamics), it turns out that local and regional production and trade is the most efficient for most goods. World trade would then be largely in services and information, licenses for greener technologies, etc. "

Dr Henderson went on to enlarge on some of the aspects of the emerging paradigm based on a universal awareness of the interconnectedness of life on this planet.  She predicted a general trend away from non-renewable sources of energy and towards solar and hydrogen based technologies. This is being "driven" by a growing era of inescapable global interdependencies often experienced in the form of negative effects of non-renewable economic activity.  "Today we are already moving beyond the age Information Age, based on electronic technologies, to the Age of Light and its light-wave technologies; from lasers, fiber optics, optical scanners and computing, to photovoltaics and many other thermal and chemical energy-conservation processes based on a deeper understanding of nature and modeling her processes".  As part of this there is, she argues, a desirability to move away from narrowly based traditional economic formulations towards a holistic multi-disciplinary approach to methodology and policy.  In other words a move from economism to systems theory.

Indications of change pointed out by Dr Henderson include;

The "attention economy" – “28 million Americans say they have opted out of the rat race and thrown away their TVs.  People are shopping strategically by identifying what they consider are ethical companies and patronising them.”  Dr Henderson talks of how values are bifurcating in our post industrial society, demonstrated by thee and many more examples.  “Wall street hates ethical investment because values don’t change in a down market”.

  • The current ethical state of business seems to be related to size – small being best.  Also women owned business often quotes profit maximization lower down the list of business priorities.
  • Use of global standards as a way of encouraging ethical behavior – for example ISO 14000 – “US companies were shocked to find they couldn’t penetrate European markets.  Ethical standardisation is now a big money earner.  So there is no longer, necessarily a need to attack environmental enemies.  It might be enough to set a good example by out-performing them on these standards.”
  • Alternative currencies - electronic barter / Lets – “that’s how we got out of the 1930’s depression in America.  Barter is now 25% of all world trade”
  • The role of global mass media in the process of paradigm change - e.g. www.ethicalmarkets.com
  • Indicators of economic progress
  • Cultural values – “there is no exclusive territory of developing alternatives.  There is always an alternative or ally waiting to be found”

Anita Roddick

Anita Roddick, founder of the Body Shop, spoke of the great injustice and iniquity of our current global market system and demonstrated some of the more shocking effects of this system on people in the developing world and on the environment as a whole.

"Business leaders in world business are the first true global citizens.  We have worldwide capability and responsibility.  Our domains transcend national boundaries. Our decisions affect not just economies but societies, not just the direct concerns of business, but world problems of poverty, environment and security".

"Business is not apolitical or neutral on the international agenda. It has consistently argued the case for a laissez-faire agenda of deregulation and globalisation.  In doing so it has increasingly marginalised communities and sown the seeds of conflict while it has directly benefited as a result.

Ms Roddick went on to argue the case for fair trade in support of micro enterprise as the way forward for the global economy.  "The real backbone of world commerce and global employment is made up of the millions of unsung small enterprises that farm small plots of land, cook food, provide day care for children, make clay pots, do piecework for apparel makers and carry out countless tasks that larger businesses don’t' do".

Ed Mayo

Ed Mayo, director of the New Economics Foundation spoke of the many new initiatives and developments that are reaffirming the paradigm shift Dr Henderson spoke about.  (The NEF works to construct a new economy centred on people and the environment. Founded in 1986, it is now one of the UK’s most creative and effective independent think tanks, combining research, advocacy, training and practical action. )  These events, Mr. Mayo went on to argue, are in many cases taking place in the heart of the market system, in the form of fair trade; green consumers; ethical investment; community banks; organic farming; lets schemes; social audits; volunteering; business with a conscience.

The New Economics Foundation has four main programs of work;

  • New toolsDeveloping and pioneering the field of social auditing and social reporting.  In conjunction with Hazel Henderson developing new approaches to economic indicators.  The NEF are also doing work on business reporting, trying to create a common template for businesses to report on sustainability.
  • New forms of moneyHelping to spread initiatives like credit unions, tiny money and alternative forms of money and exchange at the local level, for example Lets and time banks.
  • CitizenshipDeveloping techniques for participation and social inclusion, self-management and governance at local levels, including for example the co-operative movement.
  • GlobalisationLaunching of a program around Hazel Henderson’s book Beyond Globalisation looking at reshaping the global economy and asking questions like “do we need a global monopolies and mergers commission?”, “how can we restore the mandate of the UN to include its original mandate of economic management.?”  The NEF will be working on a report they are calling ‘The Four Brothers” which is looking at big accountancy firms and the complete lack of governance and transparency within those firms.

Mr Mayo posed three basic questions in his address;

  • What are the growth areas with the emerging ethical and sustainable economy?

This question was answered by a simple survey conducted with the attendees of the course themselves.  A straw pole was taken and the following list in order of popularity comprised the general opinions of the participants as to which areas constituted the main growth areas of a sustainable economy;

  1. E-money, Lets, Barter and ethical investment
  2. Organic agriculture / non-gm food
  3. E-education, conflict resolution, spirituality
  4. Renewable energy, energy efficiency
  5. Ethical media and the arts
  6. Health, preventative medicine
  7. New work culture, peace
  8. E-communities, facilitation
  9. Carbon sequestration
  10. Green transport
  11. Life sustaining products
  12. Personal development
  13. Migration re-cycling
  14. CSO proliferation
  • Does ethics pay?The answer to this must lie in the principle that our definition of success must be broader than the single bottom line of the profit and loss account.  "It's beyond a single issue, beyond a single bottom line whichbrings us back to what Hazel said and also Johan Galtung.  Just about the focus on price, the focus on market benefit, such as freedom and choice.  Moving to an idea of complexity.  That we need to understand human ecology and the biosphere as a very complex and adaptive system.  We need to understand that sustainability is a step forward in terms of sophistication, in terms of business and society.  It's not an easier thing to do, it’s a more difficult thing to do, so managing those two together must be the point".The fact remains that real ethics cost money and that there is no scientific link between ethics and profits.  However there is good evidence to suggest that ethical approaches have made a significant difference to many aspects of business activity.

    Those companies that are getting it right are balancing intelligently between "new money, e-education and energy efficiency".  To conclude "the new economy movement is growing fast, but it still has a long way to go… if we don't change the rules, we will still live in an economy where big business counts more than child labour. Where inner city neighbourhoods continue to decay. Where hamburgers count more than rainforests. Where people are frightened to go out of their houses. Where the powerful take decisions for the poor."

  • How does change happen?

Mr Mayo suggested the following examples as models of change;

"Around 1973 in the Sates, a group of committed social investors took over a struggling bank in a part of Chicago and turned it into what become over time one of the most heroic institutions in the field of community banking - investing it in the sustainable regeneration of the neighborhood and making it pay and proving that it could. At about the same time the civil rights movement, in particular, the African American communities in the States, led by people like Gail Cincotta from Chicago, started to organise to challenge mainstream banks about their policies of discrimination towards people with a high ethnic minority background.  So they stared campaigning and managed to take over Wall Street for a few days and tied red ribbons around the major banks to argue that they were 'red-lining' - drawing a line around areas not lending in those areas.  This led eventually to a piece of legislation - the Community Re-investment act.  This said simply that banks had to serve the whole community.

"As a result of this the lending practices of banks came under ever closer scrutiny - because communities and campaigners had the information about what the banks were doing.  These people were causing trouble for these banks and bringing pressure on them to invest.  Research suggests that over one trillion dollars has gone into local neighbourhood renewal and regeneration since this law was passed.  While this is far from a model of transformation, because the US banking scene is still dominated buy some very large mega-mergers, still within the Us not every is well served by finance.  This has therefore been an interesting example of how emerging ethical business links up with social movements to create change"

"It seems to me that this model of change is about giving space for people to organise around alternatives.  A precious space and one that may be an economic livelihood for people.  It may be a cultural space - a space where people can come together and organise in different terms through different ways of seeing, different visions of society or through forms of resistance.  Ultimately this comes down to the power of imagination,"

An important point concerning information and media was raised here by Hazel Henderson.  "The other thing is when they see what they're doing in a wider context.  And they see that actually, what they are doing is completely related to what all kinds of other people are doing. Quite often people don't see the linkage"

"What I said the evening before was that real change comes from changing values over time, such as anti-racism, pro-democracy, pro-peace, pro-environment.  All of these big changes come from these big social movements and that’s where we need to link into the media, and we need the forms of media that can promote and be embedded within those social movements, rather than reporting on what goes on in Westminster and the narrow circle of London".

Many of these ideas were then taken and explored deeply with Taplow Court as the setting.   Here we also explored with Tessa Tenant (Director Ethical Investment at a large London based fund managers), the power of ethically driven investment as a force for change and some of the difficulties of defining and controlling ethical investment.  Gill Coleman, director of the New Academy of Business gave an address on how the internal culture of companies is changing to reflect a less militaristic style of organisational process.

The following issues were covered in detail during our three days at Taplow Court;

  • The global economy and changing perspectives - The relationship between global markets and the nation state.
  • What are the trends in global world structure and culture?
  • Why and how should business include values other than profit in their calculations?
  • The global financial system and ethical investment.
  • Fair trade.
  • What can business do for peace?
  • Social and environmental auditing.
  • Sustainable human centered development.

Part of the magic and power of the event was that it wasn’t just an interesting discussion that took place. It was an empowering event that generated hope and put ownership for creating a sustainable future squarely with each individual. Each participant left personally inspired by both the experience of SGI at Taplow Court and the dialogue that emerged to continue in their work or with new ideas to take forward to contribute towards creating a sustainable future.

Joanne Theaker

Event Director

May 2000