Corporate Social Engagement Must Be Part of Core Business Strategy
中文 – Chinese version 

Kai Bucher, Media Manager Tel.: +86 15022372037 – kai.bucher@weforum.org

• Even in times of crisis, companies should continue to be engaged in society
• A global company that is built to last should consider its contributions to society and not just to its shareholders
• To be sustainable, a corporation must engage in society in a way that aligns with its core business strategy

Tianjin, People’s Republic of China, 28 September 2008 – Instability in the markets and the financial turmoil of recent weeks should not deter companies from continuing their engagement in society, Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, told participants in a session on the final day of the Annual Meeting of the New Champions 2008. “When we face a crisis, corporate social responsibility and corporate global citizenship should not be put on the back burner,” he said.

Global companies must be good corporate global citizens, concerned stakeholders in the most challenging issues facing the world such as climate change, argued Schwab. “As a global company, you are a global citizen who does not only have rights or the license to operate on a global scale but also duties. We have a global space that has to be administered and global challenges that cannot be solved by government or business or NGOs alone. Companies have to engage in public-private partnerships together with government and civil society to engage in those social issues.”

Business leaders on the panel agreed. “If you want to be a global company, a company that is built to last, not only should you consider how to contribute to your shareholder but you also have to consider how to contribute to society,” said Yang Yuanqing, Chairman of the Board of Lenovo, the first private Chinese company to be ranked in the Fortune 500. “It is important not just for a company’s short-term success but for the long term.”

Nobuyoshi John Ehara, Partner and Representative Director of private-equity firm Unison Capital in Japan, agreed: “When we become principal shareholders, we try to instil the notion in management that corporate global citizenship or corporate social responsibility is a very significant agenda for us. We should not just focus on profits but on long-term value. This can be established very quickly if the company is very efficient with an action plan. They could establish a reputation in a matter of only a few years.”

“It’s about building sustainable businesses in sustainable communities,” Samuel A. DiPiazza Jr, Chief Executive Officer of PricewaterhouseCoopers International, explained. “What you do should be part of your core business strategy. You do it because it’s good for your business not just because it makes you feel good.” He added: “Businesses cannot succeed in societies that fail. If you want businesses to succeed, you have to build great societies.”

Sinosteel Corporation, which has a joint venture in northern South Africa, has built schools and brought teachers to the communities in which it operates. This has resulted in an increase in the percentage of local children going to school from 14% to 65%. “Companies with international businesses must play a bigger role in meeting social responsibilities,” said Sinosteel President Huang Tianwen.

In choosing the issues in which to engage, therefore, companies should consider their operations and corporate objectives and how what they might do aligns with their core business strategy. “There may be certain investments for which you won’t see a return immediately,” said Khalid Abdulla-Janahi, Chairman of Ithmaar Bank in Bahrain. “You cannot do things by textbook; you have to believe in them.”

The CEO has a pivotal role in driving corporate social engagement, Abdulla-Janahi observed. “People always look towards their leader.” Remarked DiPiazza: “The CEO has to define the strategy and culture of the business. If the CEO is just about numbers and profits, I don’t think the business will be sustainable in the long term.” The management and staff have to have the mindset for corporate global citizenship, Huang concluded.

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