A Planetary Bargain to Promote Social and Economic Development as We Move into the Next Millennium
Corporate Social Responsibility (CSR) now matters and has taken root at an even faster pace than envisaged when the hardback version of this book was written some four years ago. Encroaching on CSR are other concepts such as corporate sustainability, corporate citizenship as well as the older concerns with business ethics and the ethical corporation. I devote sections of the book explaining the main differences and similarities between these concepts. This significantly revised version of the earlier book updates the material with some of the most important developments since that time and also reflects the author’s new ideas since these have also evolved with time. It also reflects the change from 'CSR comes of age', the sub-title of the earlier book, to a broader concern with 'CSR matters '.
As unemployment remains stubbornly high in most of the richest nations of the world, poverty persists in the developing nations, globalisation protests are more and more directed at large transnational corporations, and many are wondering where it will all end. The social protection gained for people in Europe over the fifty years since the end of World War II is under continual threat as costs rise. And the richest nation in the world, the US, struggles to keep its more meagre than Europe, social protection provisions.
Will it all end with the world’s production going to the lowest com-mon denominator, that is the country with the lowest social costs, the most paltry wages, the poorest working conditions, and those with the lowest pensions for the old? The trend seems to be heading this way as inequalities deepen, yet this is in no-one’s interest. Poor consumers in developing countries would very much like higher living standards, and the sorts of social protection accorded to workers in Germany (say). Transnational cor¬porations need customers for their goods, something not helped by the rising unemployment associated with downsizing or impoverishment in developing countries.
To reverse these negative tendencies, the book’s main thesis is that there is a need for a worldwide compact, or planetary bargain, between the private and public sectors. In this bargain, the public sector will help private organisms to operate with clear ground-rules, and the private sector will pay more attention to longer-term social development issues than ever before. What such a bargain could include, why it is necessary and who should be involved are the themes that run throughout the book. NOTE: This was the first time anyone had mentioned a worldwide compact...I was the first through this book to do so and as you know, it was the forerunner for the UN Global Compact. I am pleased that Kofi Annan acknowledged my work as the first to suggest a Global Compact, that Kofi Annan announced himself in the year 2000.
A planetary bargain will mean more socially responsible enterprises (SREs). In time, it will not be possible to conduct business without being socially responsible. This is inevitable, so, contrary to conventional wisdom, the book does not propose a new set of rules for businesses to adhere to, as, for instance, is argued by those pushing for more corporate social accountability or social audits. The book will argue that new rules or corporate laws in this area may well be unnecessary, because cor¬porations will see for themselves, and many have seen this already, the need to behave more responsibly in the social area. The book does argue for a 'level playing field' in which a minimum set of rules for corporate behaviour is required. However, it does not argue for new sets of complex rules simply because these would make it even more difficult for corporations to operate and, in turn, would encourage further hopping from one advant¬ageous country to another. If the same rules could be applied universally many corporations would accept corporate social responsibility since a level playing field would apply for all. But, despite halting steps in this direction by such bodies as the EU and countries such as France, an agreed set of rules for CSR activities is unlikely and hence a world consciousness of stakeholders such as consumers, employees, local communities etc. will be better placed to create this level playing field.
Can the private sector do more other than just be good at business? It is the underlying thesis of this book that being a socially responsible enterprise is not only good for business; it is actually better for business in terms of long-term profits and stability. It will not be my job here to suggest areas where the private sector can make profits through helping social development directly – they are their own masters at this. For instance, the private sector has been helpful in housing projects for low- income groups, providing credit through the banking system, promot¬ing education through private educational institutions and so on. But corporate social responsibility is not just about corporate philanthropy, as the book argues, it is about a new management and strategic philosophy for companies large, medium and small.
The field of corporate social responsibility, of which this book forms a part, has a burgeoning literature in published form in books, articles, newsprint and increasingly on the Internet. Where possible I have indicated the Internet web pages that I have used, as well as suggesting others that provide useful reference points.
There have been few attempts at quantification of what is meant by corporate social responsibility in the literature, and what does exist, mainly through the social screens of ethical investment companies, is largely subjective. When I started research in this area, I had intended to rank the Fortune 500 companies from 1 to 500 on a HDI index (human development index following the United Nations Development Programme’s work). This task proved beyond my resources but launched me, nevertheless, some eight years ago into this field. This book captures my efforts at determining a conceptual framework for these indicators and then examines how I calibrated them for the UK. There, I was fortunate to be able to use the good services of the Univer¬sities of York and London through my friendship with Professor Roy Carr-Hill to collect the necessary information for the 100 largest com¬panies in the UK – here I only report on the top 25 to keep the book a reasonable length.
But I could not present indicators without first looking at what others have done in the field of corporate social responsibility – and there is a lot. So I have critically reviewed this in the first seven chapters. In these, I also develop the elements of an economic theory of socially responsible enterprises when I show, mainly through case studies and anecdotal examples, that social responsibility not only has strong philanthropic undertones, but, as important if not more so, it has sound economic reasons too. By this, I mean that it is increasingly in the economic inter¬est of business, and consequently of societies, to engage in socially responsible activities. If it is not in the fabric of companies today then these companies, more than likely, will not exist tomorrow. This is why, in the book, I argue the need for a planetary bargain.