Tomorrow’s global companies should work with governments, non-governmental organizations and others to create stronger frameworks of laws and regulations for the world’s markets, according to the Tomorrow’s Global Company report launched this week by a group of prominent U.K.-based business and NGO leaders.
Tomorrow’s Global Company: Challenges and choices, argues that stronger frameworks are needed to enable companies to create wealth and shareholder value at the same time while delivering practical solutions to global issues such as climate change, persistent poverty and human rights abuses. It says the challenge is particularly important at a time when the world is undergoing a period of rapid change, with a rising population, rapid economic growth, the spread of globalization, and pressure on the environment.
The report is the result of an 18-month inquiry by a team drawn from representatives of business and NGOs based in Europe, North America and Asia, including ABB, Alcan, Anglo American, Amnesty International, BP, Dr. Reddy’s, Ford, the International Institute for Sustainable Development, Infosys, KPMG, Leaders’ Quest, McKinsey, Standard Chartered, Suez and SustainAbility. The inquiry was initiated by Tomorrow’s Company, a think-tank focused on business issues.
The team members say global companies have a distinct role to play in society as a result of their scale, power and influence. “They can use their global presence, power and expertise to deliver practical solutions such as developing low-carbon power, ensuring decent working conditions and creating products specifically designed for low-income consumers,” the report says.
The authors argue that while the market has proved the most powerful means of stimulating innovation and meeting immediate consumer needs for goods and services, there are major issues relating to long-term sustainability that it has left unresolved: global warming, the depletion of natural resources, persistent poverty and human rights violations.
Progress in such areas depends on creating stronger frameworks for the market through international agreements and national regulation. The report calls for global companies to use their power to help create such frameworks, rather than resisting them.
“The full creative potential of the market can only be realized if governments—supported by companies and others—put in place effective frameworks of regulation and incentives in the short-term,” say the authors. “These are essential for companies to be able to compete on equal terms and to deliver new and innovative goods and services. It is therefore in the interest of global companies to be proactive and work in partnership with civil society, policy makers and others to help international organizations and governments create the frameworks necessary to strengthen and guide the market.”
The report says that to fulfill their potential, companies need to focus on three specific priorities:
• Redefining success - defining and measuring success in a way that aligns and integrates the social, environmental, human and financial aspects of companies’ work;
• Embedding values - defining, living by, and being judged by values that are publicly espoused and applied rigorously in challenging situations; and
• Creating frameworks - supporting sound national regulatory frameworks and international agreements, working with governments, NGOs and others to create them.
The team says that together these actions would reinforce each other and enable companies to “expand the space” in which they operate, having greater impact and influence over a longer timescale.
The report adds: “This is not about philanthropy or companies being seen to be ‘doing good’. These are actions that serve the long-term interests of any company.”
One of the team’s two co-chairs, Nandan Nilekani, CEO and managing director of Infosys Technologies, said: “We are witnessing profound change in the way we live, work and interact in an increasingly global, interconnected world. This changing landscape presents us with challenges and opportunities we need to work with, and status quo is not an option.
“Business, as a force for good, has to respond to this changing landscape and make a positive impact on society and the environment. Truly global companies will need to develop a compelling vision which enables sustainable, profitable development of their business whilst benefiting the society at large. Those of us involved in creating Tomorrow’s Global Company are determined to create a business community that will be a source of economic, social and environmental progress.”
Sir Mark Moody-Stuart, chairman of Anglo American, added: ”Global businesses, operating in a market system, can be a tremendous force for good in the world - so long as the market is shaped and regulated in the right way. So it’s up to us to work with governments, NGOs, academic experts and others to make sure we work within a system that delivers progress and helps to resolve the world’s most difficult issues.”