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Weekly UpdatesIn two surveys conducted by the McKinsey Quarterly two striking results were found. The first is that executives around the world believe that the effective management of sociopolitical concerns must start with CEOs. These executives overwhelmingly espouse the idea that the role of corporations in society goes far beyond merely meeting obligations to shareholders. The second finding is that consumers expect corporations, mostly large ones, to address sociopolitical problems including climate change and the affordability of drugs in developing nations.
This increasing awareness of the necessity of aligning corporate objectives with societal expectations manifests a change in business and market realities. In particular, it has become difficult in recent years to divorce business concerns from that of the society, and corporations have found that their welfare is linked closely to that of the society where they operate. That is, active contribution and participation in sustaining societal development benefits corporations far beyond publicity and reputation. These contributions position companies strategically and give them an edge in effectively competing in the marketplace.
While the increasing interest in sustainable development is a positive trend, the fear is that many corporations may view it as a marketing tool or simply equate it with environmental concerns; being green. This is exactly what Fortune magazine and more recently The New York Times did. The first in its yearly "America's Most Admired Companies" (March 19, 2007) stated that in 1982, the year of its first survey of corporate reputations, '"green was just the color of money. These days "green" means something more. The three Most Admired Companies this year-General Electric, Starbucks, and Toyota-are building their growth at least partly on strategies and products aimed at helping preserve the planet."'
Similarly, The New York Times magazine (April 15, 2007) argued that "Green" used to mean "liberal," "tree-hugging," "sissy," "girlie-man," "unpatriotic," "vaguely French."
Now, TNYTs insists, "Green" means preserving the American way of life. It represents "the present versus the future." Both magazines, equate green with environmental issues, especially climate change. While this is a welcome development and is a step in the right direction to preserve the planet and minimizing any serious threat to the atmosphere, it does not closely capture the meaning and essence of sustainable development.
The UN defined sustainable development as a "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." This definition is not broad enough and only implicitly acknowledges that the aim of any development is to serve mankind and make it possible for people to utilize their potential without violating their dignity and endangering their surroundings, today and in the future. Practically, sustainable development should be viewed as the "development which safeguards human dignity while pursuing economic and non-economic activities that equally benefit all stakeholders without imposing serious limitations on the ability of future generations to meet their own needs."
The reason that society must emphasize human dignity is because it is at the core of human existence. People whose dignity is violated and who are humiliated and denied opportunities on a daily basis are left despirited. It is unrealistic to expect these people to realize their potential and contribute freely, as responsible citizens, to social and economic development. Indeed, the collective accumulated experience of mankind in the last three centuries evidences that unbalanced development has resulted in tragic consequences and has always led to less efficient and effective utilization of resources.
There are specific issues that must be faced in addressing sustainable development. These are:
* Is sustainable development possible?
* Are social, political, and economic rights part of sustainable development?
* Who should be educated in which subjects?
* Who should advocate sustainable development and how?
* Who should enforce sustainability goals?
* Should corporations energetically pursue sustainability goals?
* Are there rewards for being socially responsible?
* Can sustainability goals be aligned with business objectives?
Recently, the Conferences Board (November 9, 2007) surveyed 198 medium and large MNCs in the U.S. About 46 percent of the executives indicated that corporate citizenship and sustainability are major sources of business opportunities; two-thirds said that corporate citizenship and sustainability issues are of growing importance for their business; ninety-two percent cited "enhancing corporate reputation and brand" as extremely important; and participants' choices of the three greatest challenges currently facing citizenship program were: measuring results (75%), coping with limited financial and staffing resources (58%), and aligning with business objectives (57%). However, when executives were asked to identify the top three activities as the focus of current citizenship and sustainability they mentioned community and stakeholder involvement (64%), corporate giving to worthy causes (55%), and environmental sustainability/climate change (52%).
The latter demonstrates that executives, while acknowledging the importance of corporate citizenship and sustainability issues, still view these in very narrow terms and focus primarily on the traditional activities; contributing to worthy causes and protection of the environment. These concerns should be broadened to include explicit issues related to ethical conduct and safeguarding human dignity. It is only when the latter are addressed and become integral parts of sustainability programs that corporations can sustain their competitive edge and actively contribute to making the world a safe place for future generations. Indeed, this is the measure of corporate citizenship and ultimately of truly competitive corporations.
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