Issue Overview

The collapse of financial systems and resulting economic crisis generated a growing disbelief and a fundamental distrust in the ways things operate and how decisions are made. Old social contracts have unravelled, while former assumptions and shared concepts about fairness, agreements, reciprocity, mutual benefits, social values and expected futures have all but disappeared.

The historic social contract between business, government and society seems to be broken, and the legitimacy of corporations has reached a new low point, with business running the risk of losing its license to operate. Movements such as Occupy Wall Street and the recent uprisings in the Arab world express growing public indignation at the perceived disconnect between perks for a few and the rights of many. Citizens are demanding more collaborative, sustainable and inclusive methods of value(s) co-creation. 

Clearly effective leadership must incorporate a values dimension. However, as leaders espouse principles like transparency, integrity and the common good, actual practice often lags far behind. Due to growing interdependencies and interconnectivity, this gap between values and behaviour is increasingly subject to public scrutiny and systemic effects. It appears that even well-articulated and generally supported principles are difficult to translate into everyday decision-making, and into the behaviours observed by suppliers, dealers, customers and employees, sometimes with diverse and conflicting value systems. 

Meanwhile, public scrutiny and social accountability of companies, institutions and governments is growing. On Internet blogs, micro-blogs and social networks, organizations and governments are facing a "24/7" public that quickly exposes controversial or unethical behaviours. Empowered by this "radical transparency", consumers increasingly expect companies to make positive social impact their core mission. Citizens in the USA, Europe and elsewhere demand new, more transparent, collaborative and inclusive models of value creation that produce well-being, happiness and meaning, as much as profits.

Did You Know?

• In a national USA survey conducted for 18-24 year-olds, 63% identified one of the biggest problems in the country to be the fact that everyone does not have an equal chance in life.
• In 134 out of 183 countries in a 2011 survey, people expressed the belief they lived in a country that was significantly corrupt; 72 of them were ranked as very corrupt.
• According to the 2011 National Business Ethics Survey, the share of companies with weak ethical cultures also climbed to near record levels of 42%, up from 35% in 2009.

Quotes

“Working markets do not exist in a social vacuum. They depend on working public systems of justice and education. In the absence of the rule of law, markets can become predatory. Accumulated economic power can undermine genuinely free exchange.” 
Michael Gerson, Senior Adviser, The ONE Campaign

“Values are really underlying many of the world’s most intractable conflicts. And values also seem to be the answer to dealing with many of the world’s most intractable conflicts.” 
Daniel Shapiro, Founder and Director, Harvard International Negotiation Program, Harvard Law School

“A budget is a moral document and must be evaluated by those from the bottom up. And the common good has to outweigh ideological political battles.” 
Jim Wallis, President and Chief Executive Officer, Sojourners

Further resources

A New Social Covenant
The Honor Code: How Moral Revolutions Happen
An Aesthetic Education in the Era of Globalization

Calendar

2013 European Business Ethics Forum
23-25 January 2013
Amsterdam, Netherlands

1st Bahrain International Corporate Social Responsibility Conference and Exhibition 2013
March 2013
Bahrain

2013 European Business Ethics Forum
28-31 March 2013
Amsterdam, Netherlands

September 17-18, Georgetown University, Washington D.C
“The New Social Covenant: Committing to Human Dignity and Common Values in the Global Economy”

Council Insights

The Council believes a new social covenant between citizens, businesses and government is urgently needed. This should be a covenant not a contract, as values and trust are more imperative in a covenant. The engagement and collaboration of all stakeholders is required – governments, businesses, civil society, faith groups and others. While covenants will differ nationally, universal values like fairness and respect for human dignity should feature in all.

Given the importance of business, social covenants should be between citizens, businesses and governments, and take into account the changed nature of today’s world.

To build this covenant, the Council suggests these actions:

• Agreeing on basic, universal ethical values
• Reflecting values in all legislation adopted and regulations promulgated, by individual countries and in international economic agreements that define countries’ duties to each other
• Opening education systems to everyone, fostering equality of opportunity
• Guaranteeing quality jobs; this requires a greater focus on worthwhile jobs for non-graduates, technical educational opportunities, apprentice schemes, a proactive tax and incentive system, and a 21st-century industrial strategy
• Fairly rewarding hard work and contributions to society
• Providing adequate security for savings and assets
• Reducing inequality and keeping income/rewards within fair limits throughout the scale
• Assuring environmental stewardship and preservation of natural capital for the benefit of future generations
• Utilizing only financial sectors recognized as stable, socially beneficial and accountable
• Strengthening opportunities and social mobility
• Promoting societal goals like well-being, happiness and equality of freedom to live a valued life
• Adapting new systems to measure progress at both the national and company levels 
• Moving from a shareholder model of companies and a client model of other institutions (schools, universities) to a stakeholder model

Contact Information

Research Analyst: Karen Wong, Global Agenda Councils, Karen.wong@weforum.org
Council Manager: Council Manager: Michèle Mischler, Associate Director, Public Affairs and Media michele.mischler@weforum.org
Forum Lead: Martina Gmür, Senior Director, Head of the Network of Global Agenda Councils, martina.gmur@weforum.org