The Young Want Business to Look Beyond Profits

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By Suresh Kr Pramar

Suresh Kr Pramar
Suresh Kr Pramar

The news from Davos this year is that the young are aggressively demanding change. They want businesses to clean up their act and respond more actively to the demands of society to become ethical and responsible businesses. The young are asking businesses look beyond profits. Though only for-profit-businesses, who make up one percent of  the priviledged class, are trying to prove their responsible credentials and trying to repair their tarnished image the detractors remain unimpressed

According to Liesel Pritzker Simmons, heiress to the Hyatt hotel fortune, “There is a big push from this generation to go beyond profit. It’s not just that it is the flavour of the month or that it’s cool. After experiencing the recent crisis at a relatively young age, I don’t have confidence in traditional capital markets,” said Pritzger, who helps run an educational charity.

Mark Penn, chief executive of public relations firm Burson-Marsteller, says “CEOs have a bigger job than ever because they both have to perform for their shareholders and perform for the world at large. For the clients I work with today, every one of them understands that companies have to be socially responsible … This has gone from something that a lot of companies dismissed to recognised table stakes for every company.”

A study released this week by the Edelman public relations firm reveals that trust in CEOs fell 12 points to 38 percent. According to the study this is  the biggest drop in nine years. Confidence in government officials was even lower on only 29 percent. “Business is now better placed than government to lead the way out of the trust crisis,” said Edelman. “But the balance must change so that business is seen both as a force for good and an engine for profit.”

Senior leaders at the World Economic Forum (WEF) are debating what they can do to help address recent social unrest fuelled by the economic crisis as indebted governments cut spending and raise taxes to try to balance their budgets. Large corporations at the meeting including Bill Gates, have pledged funds for various programmes. Gates pledged a further $750 million to the troubled global AIDS fund and Dutch food and chemicals group DSM, which announced on Thursday it was donating $1 million to the World Food Programme (WFP) to help fortify rice with vitamins.

The detractors claim that these are not enough to cover the growing problems, many caused by the operations of business in various parts of the world. Occupy protesters who were turned back when they tried to enter the forum conference centre, say they are not convinced.

“I don’t think these people are genuinely evil or bad. But this isn’t the solution. We should empower people and not make them dependent on philanthropy,” said activist Laurent Moeri. “Social corporate responsibility is just a way to attract customers. I’m very ambiguous about that.”

Kumi Naidoo, head of Greenpeace International points out that “It is not fair to paint all corporations with exactly the same brush. But on balance, at best corporations are taking baby steps in the right direction. At worst, they are pulling back and preventing movement on human rights and particularly on environment and climate change.

Dr. Michael Hopkins, CEO, MHC International has said that for many years the twin ideas of free markets and social responsibility to curb the excesses of the former have been in vogue. Believe it or not, the model has actually worked for many large corporations.

As ever, those who pretend to act responsibly and some of those through published social or sustainability reports, have not helped an increasingly skeptical public – Enron, WorldCom, Madoff, Lehman Brothers, TepCo, etc. – to see that a radical change is taking place among many corporations – General Electric, Nestle, IBM, Ford, being some of these.

Dr Hopkins feels that what has not worked has been government responsibility. He says governments give financial markets the opportunity to dice and slice mortgages through de-regulation as happened un the USA.  We need a more responsible government that regulates business, but also one that increases spending to stimulate growth when times are hard. In fact we need both corporate and public responsibility to create the sorts of sustainable development we would all like to see across the whole planet.

While the west has been hardest it by the recklessness of rouge businesses the situation in India is no better.  There are growing demands for more inclusive economics to bring the fruits of economic development to the poor and the needy. Business and governments have hardly done much to make this a reality.

A pointer is the government feet dragging over the issue of making CSR mandatory. The debate has been on for the past couple of years. There have been changes in the department of Corporate Affairs with each new comer giving his own views on the issue of CSR. The business lobby is far to powerful and influential to allow the government to implement any policy or decision which goes against its (business) interest.

Meanwhile the ranks of the poor and needy is growing in leaps and bounds even as the country chalks up high economic growth rates. According to the Paris-based international organization – ‘Organisation for Economic Cooperation and Development’ (OECD) in last two decades it is doubled in India which lagged it in all rising economies. In 1990s the top 10 percent of wage earners used to earn 6 times more than the bottom 10 percent, which has now completely doubled and become 12 times.

Disclaimer:  The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of INDIACSR

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