Global Sustainable Development:
The Corporate Responsibility
Also a Concrete Self-interest
By Wolfgang Sauer
 | | A child watches a health worker give him a vaccine, at a UNICEF-assisted health clinic in Shia Huang Loui village, China. (Photo courtesy of UNFIP/Robert Lemoyne)
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Can the world expect a better life for the poor with a globalized economy? Yes and No. It all depends on the capitalistic behaviour of the world, not only of the rich countries but also the rich classes of the poor and poorest countries, where they often protect themselves against the impact of foreign investments, afraid that they will lose the economic domination within their countries.
To have success, there will be freedom in every sense of the word - freedom of a working democratic society, which controls and attacks corruption, as well as in those countries that should promote free-entrepreneur productive investments. Through experience, those investments which bring labour, social behaviour and education to their employees and the human environment also need some logical guarantees:
- Guarantee for the investment;
- International acceptance of taxation;
- A positive moral environment for their responsibility; and
- Open cooperation with local Governments and authorities for the improvement of life in the region.
All these have to be a result of freedom to speak, which is the base for democracy and consequently wealth. The ethic obligation of capitalism is, without question, also responsible for helping to resolve the problems of the world.
Freedom is the guarantee for property, which is the base for globalization of the world! But to maintain freedom, there is a need for continuous vigilance. Let us avoid that globalization will be a social chaos, where the rich countries are getting richer and the poor remain where they are. Mexican author Carlos Fuentes expresses the dilemma in his words: “If governed, globalization will be an opportunity for everybody, if not governed, globalization will be inequality for everybody.”
Reducing the number of poor people is one of the most serious challenges for sustainable development, and is a commitment for States and international organizations. I think that companies are especially well prepared to join this worldwide effort.
Why is the business world a good partner in this effort? In my view, companies are the strongest beneficiaries of the capitalistic economy. Thanks to their huge productivity, they accumulated a tremendous amount of wealth and power, especially in the nineties. As a result, they are today the most productive organizations of the modern world. This profound economic and social change is the result of using advanced administration skills. Peter Drucker said that to administrate is the most important function of modern society, and companies do that better that anyone else.
What can the business community do to help in this situation? Generally speaking, there is this wide spectrum of stimulating economic growth: first, expanding activities and markets in their own field, which means creating jobs and wealth; and second, supporting aid initiatives, especially in the third sector. It is also a chance for the companies to show why they are the leaders, a chance to use their special administration skills to reduce poverty, a chance to improve employment of people and resources for the common good.
I think the contribution to public issues has changed a lot since the days of early capitalism. At that time, voluntary giving by Ford, Carnegie and Rockefeller benefited hospitals, libraries and universities. Compared with traditional philanthropy, there are now new strategies to help poor people; for instance, the Bill and Melinda Gates Foundation, which finances international vaccination and children’s health programmes, or the Turner Foundation, which supports international children’s health and environmental programmes.
We learned that poverty is not only a question of productivity. It is a fact that in a capitalistic economy, business has the greatest potential to promote opportunities. Creating jobs is the most urgently needed improvement, especially in less developed countries. For example, in Great São Paulo, more than 60 per cent of the youth between 15 and 19 years have no occupation. Here, it is valid to say that human dignity begins with an occupation capable to generate some personal income.
Perhaps a positive strategy could be for public and international institutions to act more indirectly, such as with tax advantages, to help companies in assisting poor people. Aid is not limited to big companies; small companies can be the most promising area-they have a great potential to create jobs. An example of such indirect action is to channel public and international support to create smaller companies and promote their development.
Therefore, the legal foundation of a company must be made as easy as possible. In most countries, there is an awful bureaucracy, which tends to discourage new entrepreneurs and, in many cases, drift them into illegality. Governments can do much more to simplify these rules. It is a fact that public institutions operate in a way that may be unfavourable to poor people. In some cases, they do not receive the benefits of State investment in education and health. In these sectors, companies have many opportunities to help. For example, business leaders can use methods they learned as successful entrepreneurs and apply them in a rational way to the organization of social facilities. This means not only doing a lot of research before spending money, but also includes creating well-planned programmes and participating in their execution. The control demands also a confident accountability and verification of the results.
Perhaps the best way for business to organize help is through private foundations and non-governmental organizations (NGOs). In an NGO, each entrepreneur can apply the kind of administrative skills that make him successful and will make the difference in our chronically “under-administrated” world. The field for NGOs is practically unlimited. Because it is neutral, the third sector beyond the public and private areas can act efficiently in any kind of project. Here, companies have an important contribution: to help to build up the non-profit organizations’ capacity to become self-sustainable. To be effective, NGOs must be ready not only to deal with money but also to resolve social problems in a low-cost manner. Again, may I repeat the call for good administration?
In my view, public education is a very important area. To compete in a modern economy, people must have at least eight years of education. In Brazil, 30 per cent of the population over 15 years are “functional illiterates”, with less than four years of schooling and problems to read and write. Among the improvements urgently needed is professional education in the largest sense. If “zero illiteracy” is a goal for the public administration, “100 per cent job training” can be the challenge for the business world.
Why should private companies engage themselves in a general helping action? Of course, there are a lot of humanitarian reasons, but there is also a concrete self-interest; one is to maintain their leading position. Basically, it is the same reason that motivated Henry Ford to pay his employees more, thus allowing them to buy his cars. The poor people of today should be the customers of tomorrow. Moreover, better and more-educated people are urgently needed for continued growth. Banks in Brazil now offer their services to “no account” people - in this way, large sections of the population are included in the modernization process. The result will, no doubt, be a growth in markets. Of course, there are many other areas where business can contribute. But improving education is one of the best tools to achieve a globally sustainable development.
Links:
United Nations Global Compact
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Dr. Wolfgang Sauer is a member of the Advisory Council on the Global Compact Programme for the United Nations and Ambassador of the Sovereign Order of Malta in Brazil. He is a former Chairman of Volkswagen and Autolatina in Brazil/Argentina.
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Agenda ‘02
Today’s world situation is markedly different in many ways from that of the 1992 Earth Summit. Globalization - fuelled by government decisions to liberalize trade and capital markets, and accompanied by privatization and deregulation of economic activities and rapid development of information and communication technologies - has dramatically changed the global economic landscape. The annual output of the world economy grew from $31 trillion in 1990 to $42 trillion in 2000, compared to just $6.2 trillion in 1950, creating millions of new jobs and allowing people to consume more. For example, telephone connections grew from 520 million in 1990 to 844 million in 1998, an increase of 62 per cent.
Governments have used economic as well as regulatory inducements to improve the sustainability of consumption and production, such as: environmental taxes; pollution charges; tradable permits for pollution emissions and water use; deposit-refund schemes for waste management; non-compliance fees and performance bonds; and voluntary codes of conduct.
Businesses have introduced cleaner and more eco-efficient production processes and have reduced pollution and other environmental impacts with eco-friendly design, packaging and labelling.
The public has become more aware of consumer responsibilities and options. In addition to a more widespread practice of the three “Rs” - reduce, reuse and recycle - there is a willingness to pay more for organic and environment-friendly products.
Some proposals and recommendations from the UN Secretary-General’s Agenda 21 Implementation Report are:
- Removing trade-distorting subsidies and improving market access of products and services of developing countries to developed countries, especially products for which developing countries have a competitive advantage, such as agriculture and textiles.
- Unrestricted duty-free and quota-free treatment for exports from the least developed countries.
- Strengthening the World Trade Organization as framework for an unbiased, rule-based and nondiscriminatory international trading system.
- Helping developing countries narrow the digital divide.
- A fourfold increase in energy and resource efficiency in developed countries in the next two or three decades, and a possible tenfold increase in resource efficiency in developed countries in the long term.
- Enhancing corporate responsibility and accountability through such initiatives as the Global Compact and the Global Reporting Initiative, and such tools as environmental management accounting and environmental reporting, with incentives to industry and public institutions to step up research and development into cleaner production technologies.
- Promoting sustainable consumption through government action, including “green” national accounts and procurement measures, and tax reform favouring resource conservation.
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