The Aspen Institute “The Role of Business in Society”Workshop Block IIVanderbilt University March 4, 2006
The Global Compact The Global Compact is a voluntary initiative that seeks to advance universal principles on human rights, labour, environment and anti-corruption through the active engagement of the corporate community, in cooperation with civil society and representatives of organized labour.
The Ten Principles Human Rights • Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and • Principle 2: make sure that they are not complicit in human rights abuses. Labour Standards • Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; • Principle 4: the elimination of all forms of forced and compulsory labour; • Principle 5: the effective abolition of child labour; and • Principle 6: the elimination of discrimination in respect of employment and occupation. Environment • Principle 7: Businesses should support a precautionary approach to environmental challenges; • Principle 8: undertake initiatives to promote greater environmental responsibility; and • Principle 9: encourage the development and diffusion of environmentally friendly technologies Anti-Corruption • Principle 10: Businesses should work against all forms of corruption, including extortion and bribery.
Global Compact Participants • Alcan, Inc. • Anglo American plc • BP Plc • DaimlerChrysler AG • Gap Inc. • Hewlett-Packard Company • Nike Inc. • Nissan Motor Co Ltd • Petrobras SA • Pfizer, Inc. • Royal Dutch/Shell Group • Siemens AG • Starbucks Coffee Company • Unilever • Volkswagen AG • Yukos Oil About 100 of the FT Global 500 Corporations are members of the Global Compact.
Equator Principles Preamble Project financing plays an important role in financing development throughout the world. In providing financing, particularly in emerging markets, project financiers often encounter environmental and social policy issues. We recognize that our role as financiers affords us significant opportunities to promote responsible environmental stewardship and socially responsible development.
Statement of Principles We will only provide loans directly to projects in the following circumstances: • The borrower has completed an Environmental Assessment. • The borrower or third party expert has prepared an Environmental Management Plan. • Lenders have appointed an independent environmental expert to provide additional monitoring and reporting services.
Equator Principle Participants • Bank of America • Barclays plc • Citigroup Inc. • Credit Suisse Group • Dresdner Bank • HSBC Group • ING Group • JPMorgan Chase • Royal Bank of Canada • The Royal Bank of Scotland • Wells Fargo
Goldman Sachs Environmental Policy Framework Goldman Sachs believes that a healthy environment is necessary for the well-being of society, our people and our business, and is the foundation for a sustainable and strong economy. Goldman Sachs recognizes that diverse, healthy natural resources - fresh water, oceans, air, forests, grasslands, and agro-systems - are a critical component of social and sustainable economic development. We recognize that as a global company we have an impact on the environment through the goods we purchase, the manufacturing and production we finance, and the investments we make.
Specific policies outlined • We will make efforts to ensure that our facilities and business practices adopt leading-edge environmental safeguards. • Goldman Sachs intends to be a leading U.S. wind developer and generator through our recently acquired subsidiary, Horizon Wind Energy • We will make available up to $1 billion to invest in renewable energy and energy efficiency projects. • We will work to make environmental, social and governance criteria a part of best-in-class investment research. • Goldman Sachs will not finance any project or initiate loans where the specified use of proceeds would significantly convert or degrade a critical natural habitat. • We will not finance projects that contravene any relevant international environmental agreement which has been enacted into the law of the country in which the project is located.
Mectizan and River Blindness • It is a debilitating and agonizing disease that affects more than 18 million people, many of them in Africa and Latin America. Worldwide, as many as 120 million people may be at risk for the disfiguring skin infections, painful eye lesions and eventual loss of sight caused by onchocerciasis, or “river blindness.” • In the 1980s, Merck discovered that the drug Mectizan (ivermectin) had potential for use in humans infected with the parasite that causes river blindness. • In 1987, Merck established the Mectizan® Donation Program to help deliver Mectizan to populations facing a significant public health threat from this disease. • Treatment programs now exist in 34 countries in Africa, Latin America and in Yemen in the Middle East, and more than 40 million people receive Mectizan to treat river blindness each year.
Better Banana Project • Chiquita supplies nearly 25% of the bananas consumed in North America and Europe. • In 1992, Chiquita teams up with the Rainforest Alliance and voluntarily invests $20 million for capital improvements to farms. • By 2000, 100% of Chiquita’s farms met Rainforset Alliance social and economic standards. Today, More than 160 banana farms were certified, covering 120,000 acres in Ecuador, Colombia, Panama, Guatemala, Honduras and Costa Rica. • Chiquita protects significant swaths of rainforest, recycles or reuses nearly 80 percent of the plastic bags and twine used and has reforested more than 2,500 acres with nearly 800,000 trees and bushes.
Beyond Grey Pinstripes BeyondGrey Pinstripes, a biennial ranking of business schools, shines a spotlight on exceptional full-time MBA programs and faculty at the forefront of incorporating issues of social and environmental stewardship into the fabric of their business curricula and research. These programs and pioneering faculty are preparing students for the reality of tomorrow’s markets, equipping them with an understanding of the social, environmental, and economic perspectives required for business success in a competitive global economy.
Survey Methodology • Invited 590 accredited MBA programs to participate • Collected data on 1,842 courses, 1,713 extracurricular activities, and 828 journal articles from 91 global MBA programs • Conducted all reviews using multiple raters
Survey Findings Students at Top 30 schools are exposed to relevant topics in 25% of their core coursework.
Survey Findings 54% of schools in our survey require a course in ethics, CSR, sustainability, or business and society, a near 60% increase on 2001.
Fields of curriculum innovation: Base of Pyramid • In the 2002/2003 school years, 4 courses were offered • In the 2004/2005 school years, 27 courses were offered
Fields of curriculum innovation:Sustainability • 2000/2001, 13 courses • 2002/2003, 40 courses • 2004/2005, 60 courses
The Top 30 16 Erasmus (Rotterdam) 17 Colorado (Leeds) 18 New Mexico (Anderson) 19 Asian Institute of Management(SyCip) 20 Portland State 21 Yale 22 McGill 23 Case Western (Weatherhead) 24 INSEAD 25 Calgary 26 Jyväskylä 27 Navarra (IESE) 28 Wisconsin-Madison 29 Minnesota (Carlson) 30 Georgetown (McDonough) 1 Stanford 2 ESADE 3 York (Schulich) 4 ITESM (EGADE) 5 Notre Dame (Mendoza) 6 George Washington 7 Michigan (Ross) 8 North Carolina (Kenan-Flagler) 9 Cornell (Johnson) 10 Wake Forest (Babcock) 11 UC Berkeley (Haas) 12 Nottingham 13 Virginia (Darden) 14 Western Ontario (Ivey) 15 Boston College
References • Goldman Sachs Environmental Policy Framework • http://www.gs.com/our_firm/our_culture/social_responsibility/environmental_policy_framework/docs/EnvironmentalPolicyFramework.pdf • The Global Compact – The Ten Principles • http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html • Equator Principles • http://www.equator-principles.com/principles.shtml • Merck: Mectizan and River Blindness • http://www.merck.com/about/feature_story/05192004_mectizan.html • Chiquita and the Better Banana Project • http://www.rainforest-alliance.org/programs/profiles/documents/ChiquitaProfile.pdf • Beyond Grey Pinstripes 2005 • www.beyondgreypinstripes.org
A free service of the Aspen Institute Business and Society Program. CasePlace offers a wide range of business education materials in social impact management, sustainability and business ethics. The site contains cases and teaching notes, teaching modules, journal articles, course syllabi, books, conference announcements, current events and more!
CasePlace.org • Bringing Sustainability and social and environmental consciousness to the Business School Classroom • Cases • Teaching Modules • References • Announcements
The Promise and Perils of Globalization: The Case of Nike • This case illustrates: • The complexities inherent in being a good corporate citizen in a global economy • the evolution of Nike’s strategies vis-à-vis working conditions, wages, and standards for workers producing Nike brand shoes but employed by independent contractors
Case Overview • By 2001, Nike established itself as the industry leader in the design, distribution, and marketing of Athletic Footwear with over 35% of the market • Nike moved into the apparel sector • Int’l. trade laws and differences in footwear and apparel industries created different relationships between Nike’s footwear suppliers and Nike’s apparel suppliers
Case Overview • The same factors that permitted Nike to grow at an impressive rate over the last several decades also created serious problems for the company in the 90’s • A series of PR nightmares and continued criticism of the company combined to tarnish Nike’s image • Low Wages in Indonesia • Child Labor in Pakistan • Health and Safety Problems in Vietnam
Case Overview • At first, Nike managers refused to accept responsibility for labor and environmental/health problems found at their suppliers’ plants • By 1992, this hands-off approach changed • Code of Conduct • New Departments: Labor Practices, NEAT, Corporate Responsibility and Compliance Department • Increased monitoring and inspection efforts: SHAPE • UN Global Compact and Global Alliance for Workers and Communities • Grading system for suppliers
Conclusions…??? • The results of these various activities have begun to produce some significant changes among Nike suppliers • Not all of Nike’s critics are convinced though • Nike’s continuing controversy over its various activities are not in any way particular to Nike - they are reflective of much broader debates about the definition of corporate citizenship and the process of globalization
Group Discussions • Purpose: To provoke discussion, debate, and reflection on the role of corporations in society • Background questions to consider: • How should Global Corporations behave in the new international world order? • What constitutes good corporate citizenship in a world where the stakeholders are diverse and dispersed around the globe and where no clear or consensual rules and standards exist?
Questions for Discussion / Workshop • Nike recognizes its responsibility to its shareholders (financially) and its employees (labor laws, minimum wage, etc.). What type of ethical and legal obligations does Nike have to the employees of their suppliers and subcontractors? • Because there are no laws requiring corporations to promote standards as rigorously as Nike does, what can be done to encourage other businesses who outsource their production to encourage their suppliers and subcontractors to act responsibly? • If some companies promote and monitor for higher standards and others do not, it’s possible that these “good” corporate citizens might lose their competitive edge. What if being a good corporate citizen causes a company to go out of business?
Questions, continued. • Corporate decision making is driven, to different extents by various stakeholders (shareholders, the environment, employees, local communities, etc.). How does one measure and account for these competing priorities? Which stakeholders do corporations have an obligation to consider, and why? • Who should be responsible, if anyone, for developing labor, environmental and health standards? National governments, intl. organizations, NGO’s, or local trade unions? Why not the free market itself? Or perhaps a combination?