Bar Rising for Companies on Concern for Social Issues

Bar Rising for Companies on Concern for Social Issues

The Reverend Leon Sullivan died recently at the age of 78. To the last, he was a remarkable and effective fighter for what is right and a tremendous influence on the global ethics of major corporations.

He was the author in 1974 of the Sullivan Principles, which became the leading set of guidelines for foreign businesses operating in apartheid South Africa. He became so appalled by the South African regime that by the late 1980s he was campaigning for American companies to withdraw from that country. A decade later he turned his attention to globalization and formulated the Global Sullivan Principles for business. More than 100 US companies have accepted them.

Business leaders who seek to actively direct their corporation's social and ethical behavior around the world in accord with the views of Leon Sullivan deserve acclaim. As he indicated in remarks in late January at the World Economic Forum in Davos, he was unrelenting in calling on business to act in line with the highest standards of integrity.

The bottom line is that the most successful companies over time -- the best companies -- are those that build reputations of trust and honesty with all of their stakeholders worldwide.

There are still far too few companies that can claim to adhere to the guidelines that Rev. Sullivan articulated (see box), or meet the standards that United Nations Secretary General Kofi Annan has set in his Global Compact initiative to stimulate responsible corporate global citizenship. But the numbers are rising.

The crucial issue is the chief executive officer's focus on integrity. If she or he goes beyond words and presses constantly for raising corporate ethical performance standards, then the corporation can become a leader. Ray Gilmartin at Merck, Sir John Browne at BP Amoco, Sir Mark Moody-Stuart at Shell, Alan Hassenfeld at Hasbro and Jack Welch at General Electric are among those superb ethical leaders who are making a difference and setting a standard that all in business should replicate.

Translating broad principles, such as those developed by Rev. Sullivan, into effective corporate practice is difficult. The list of issues that need to be addressed is getting longer as activist nongovernmental organizations campaign with mounting skill on a widening agenda. They include rule-of-law issues, ethics in the workplace, good corporate governance, employee and customer privacy, corruption, human rights, labor rights, environment, new science (including biotechnology) and local community issues.

Developing a global integrity management process should start with internal assessments of current corporate practices. It should then move through what I believe are eight basic stages:
  1. Ensuring board commitment;
  2. Ensuring the CEO's consistent leadership;
  3. Establishing core global policies;
  4. Listening to the key internal and external audiences;
  5. Evolving effective programs;
  6. Monitoring compliance;
  7. Communicating internally and to key external audiences; and
  8. Providing leadership in active participation in international standard-setting forums.
A model is Sir Robert Wilson, Chairman of Rio Tinto, the world's largest mining company. His annual "Social and Environment Review" is an extraordinary document that should be required reading for every business leader who wants to understand the full, detailed scope of reporting on good corporate citizenship.

In his introduction to the newest report, Sir Robert writes: "Each year we face new challenges and a greater variety and complexity of issues driven by society's growing expectations. Issues once thought to be remote from the conduct of our business are now integral to it and others are becoming increasingly important to us: sustainable development, climate change, human rights, biodiversity, and product stewardship among them."

He continues: "We strive to achieve the highest standards in these areas in order to continue to attract the best employees, to sustain access to resources and markets, and to reinforce the group as the supplier and partner of choice."

The Rio Tinto report details a substantial number of precise corporate social and ethical commitments. The company reports on the extent to which it has met these commitments in the course of the last year. The candor in the reporting is what makes this a credible and exemplary statement. The costs of pursuing the process needed to develop this kind of a report are substantial, but they are insignificant compared with the reputational damage done to companies that are negligent in the many areas of the integrity agenda.

Simply stated, global values matter. European companies have been under more intense NGO and governmental pressure to evolve comprehensive global ethics approaches than their US rivals. But globalization is leading to intense pressures on business everywhere. International standards are evolving and the largest multinational corporations risk heavy sanctions if they fail to come up to speed.

The first level of sanction is reputational damage as investigations by NGOs lead to adverse newspaper articles. The second level of sanction is the consumer response to the negative publicity. The third level of sanction impacts the stock price.

Shareholders are increasingly becoming sensitive to social-responsibility issues, and companies seen to be acting without integrity will increasingly be hit in the markets. The fourth level of sanction relates to recruitment; companies with tarnished reputations will find it very hard to recruit top board directors and young MBA graduates.

Leon Sullivan outlined a set of overarching general principles. Rio Tinto has put enormous flesh on the bones with its sustainability report. Here are the yardsticks for CEOs to examine and to use in strengthening the good citizenship roles of their enterprises. They provide, in addition, a solid and objective base for determining the best companies.

The Sullivan Principles:

The Preamble to the Global Sullivan Principles states that the aims are to support economic, social and political justice by companies where they do business; to support human rights and to encourage equal opportunity at all levels of employment, including racial and gender diversity on decision making committees and boards; to train and advance disadvantaged workers for technical, supervisory and management opportunities; and to assist with greater tolerance and understanding among peoples, thereby helping to improve the quality of life for communities, workers and children with dignity and equality.

The principles call on corporations to:
  • Express our support for universal human rights and, particularly, those of our employees, the communities within which we operate, and parties with whom we do business.
  • Promote equal opportunity for our employees at all levels of the company with respect to issues such as color, race, gender, age, ethnicity or religious beliefs, and operate without unacceptable worker treatment such as the exploitation of children, physical punishment, female abuse, involuntary servitude or other forms of abuse.
  • Respect our employees' voluntary freedom of association.
  • Compensate our employees to enable them to meet at least their basic needs and provide the opportunity to improve their skill and capability in order to raise their social and economic opportunities.
  • Provide a safe and healthy workplace: protect human health and the environment; and promote sustainable development.
  • Promote fair competition, including respect for intellectual and other property rights, and not offer pay or accept bribes.
  • Work with governments and communities in which we do business to improve the quality of life in those communities -- their educational, cultural, economic and social well-being -- and seek to provide training and opportunities for workers from disadvantaged backgrounds.
  • Promote the application of these principles by those with whom we do business. We will be transparent in our implementation of these principles and provide information which demonstrates publicly our commitment to them.
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By Frank Vogl, president of Vogl Communications, Inc. The text of his recent Pennsylvania State University lecture on global corporate accountability can be found at www.ethics.org. Copyright © 2000 The Earth Times, all rights reserved. The Earth Times is a GreenBiz News Affiliate.