The license to operate in a global market and to make profits entails a responsibility of being engaged in society.
How should a company engage in society? And, what framework should guide that engagement?
The World Economic Forum and its leading partners have been working together to develop answers to these pressing issues.
Key Endeavors Include:
- Professor Klaus Schwab, Executive Chairman and Founder of the World Economic Forum, published an article on Working with Governments and Civil Society in Foreign Affairs journal, To help businesses better coordinate their approaches and improve performance, this article proposes a framework for understanding the different types of social engagement and provides examples for each concept.
- At the World Economic Forum Annual Meeting 2008 in Davos, the Corporate Global Citizenship Initiative Advisory Committee to the World Economic Forum, consisting of selected corporate heads of corporate citizenship as well as renowned experts, presented a thought leadership workstream on Partnering to Strengthen Public Governance: The Leadership Challenge for CEOs and Boards.
- In 2004 the Corporate Global Citizenship Initiative with the support of the Prince of Wales International Business Leaders Forum published VALUES AND VALUE: Communicating the Strategic Importance. The report explores how CEOs, CFOs, and investor relations officers communicate the strategic importance of the social and environmental aspects of their firm’s performance to investors.
- In January 2002, over 40 prominent CEOs endorsed the statement Global Corporate Citizenship: The Leadership Challenge for CEOs and Boards. The statement emphasized that leadership processes focusing on the company’s impact on society and its relationships with stakeholders are not ‘add-ons’ but are fundamental to core business operations.
- In 1971, the World Economic Forum first identified the stakeholder concept - the idea that a company has a clear responsibility to the community beyond its shareholders. Two years later, at the World Economic Forum’s Annual Meeting in Davos, the stakeholder concept became the cornerstone of the Davos Declaration, which articulated the fundamental principles of a corporation’s social and environmental responsibility.
Given all the above, how can Corporate Global Citizenship be defined for the 21st century?
- Corporate citizenship has to be part of a company’s business model. An enterprise must balance the expectations of its wide range of stakeholders.
- Take advantage of difficult times by investing in growth drivers and striving for a more performance-oriented corporate culture.
- Transparency is critical in any engagement with governments and regulators at every level.
To define corporate citizenship, Cynthia Carroll, the Chief Executive of Anglo American, referred to a statement the founder of her company made in 1954. The aim of the corporation is to make profits for the shareholders, he had said, but another key purpose is to make real and lasting contributions to the communities in which it operates. Corporate citizenship is and has to be part of the company business model. The enterprise should be profitable and sustainable. It must balance the expectations of a wide range of stakeholders, including customers, suppliers, the communities in which it operates, governments and aid agencies, among others. The company has to maintain sustainable partnerships with governments at national, state and local levels. It does not seek to appropriate the role of government, but accepts that it has a major presence in the developing world and, because of this, is an important actor in many countries.
Carroll noted that in 2009 the company spent 72% more on its corporate social responsibility (CSR) programmes than the year before. It is focusing on such initiatives as training people and providing HIV/AIDS testing not just for its workers but also for their families and for contractors and their families. It is also implementing plans to reduce the use of fresh water in mining operations. The company works with suppliers and partners to ensure that they apply the same sustainability and responsibility standards that it does.
Safety is a priority. To reduce fatalities and injuries and embed best safety practices in the culture of the company, it has collaborated with those with a stake in the issue, including governments and unions. This has led to a fundamental shift in the company’s safety performance, notably in South Africa, its home. It even went so far as to shut down a mine that had a bad safety record so that all personnel could be retrained. This sent a clear signal to employees that things had changed substantially in the company.
Carroll also discussed the challenge of managing through difficult times. These are key lessons:
- Understand where your growth drivers are and support them with investment. Restructure, shut down or dispose of assets that are non-performing, inefficient or disadvantageous.
- Strive for a much more performance-oriented culture by streamlining operations and adopting best practices.
- Inspire the management team by allowing it to be entrepreneurial.
- To achieve significant savings and efficiency gains, focus on asset optimization across the value chain and every aspect of the business.
- Find synergies that will enhance productivity.
To deal with crises, assaults on its reputation or the spread of misinformation, the company should ensure its communications are effective. It is important to monitor what the media is saying about the company, but it is impossible to respond to everything. Staff should understand and support the core values that the company stands for so that each employee can be an ambassador for the firm. It is also important to engage governments at all levels, in countries where the company already operates and where it is planning to invest. It is critical to be completely transparent in these relationships and to avoid a combative approach. Carroll stressed that her company does not want to be in places where it is not wanted and where the standards for the mining industry are not at the level they would prefer them to be.
Taken from a session at the Annual Meeting of the New Champions 2010. Introduced by Richard Samans, Managing Director, World Economic Forum and featuring Cynthia Carroll, Chief Executive, Anglo American, United Kingdom; Mentor of the Annual Meeting of the New Champions 2010.
This summary was written by Alejandro Reyes. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.