Everyone Benefits from a Better World:

The Role of Business in Society

 

Georg Kell

Executive Director

United Nations Global Compact

 

Fifteen years ago, it was the fragile nature of the relationship between business and society that led the UN Secretary-General to propose that business and the United Nations jointly initiate a “global compact of shared values and principles, to give a human face to the global market.” Today, I believe that we are at a crossroads.

 

On the one hand, we have 15 years of progress showing us that business and investors around the world increasingly see the connection between the bottom line and the health of societies. Corporate sustainability initiatives, standards, and activities are booming at the national and global levels. What began as a peripheral, ethical movement has evolved into a mainstream, strategic corporate practice.

 

On the other hand, new examples of human rights violations, worker exploitation, environmental destruction, and corruption by business are constantly being revealed. The fact is that until sustainable business practices are rewarded by markets and supported by governments, companies devoid of responsibility will keep winning contracts, cutting corners, and seeking profits at any cost.

 

I can say with confidence that a global movement is underway, changing markets from within. In an interdependent and transparent world, it is increasingly true that long-term financial success goes hand-in-hand with social and environmental responsibility and sound ethics.

 

There are six key developments that make me confident in the transformative potential of this movement:

 

  1. Corporate sustainability has shifted from a moral imperative to a material one. Environmental, social, and economic challenges affect the bottom line. Modern communications and technologies make it harder for companies to hide in the shadows, defy laws, and ignore public opinion. Today, business is called on to be transparent. As a result, sustainability is moving up the agenda – away from the public relations realm to a strategic one handled at the highest levels of the company.

 

  1. Business is moving from resource-taker, to market-builder. Understanding that business can no longer simply outsource responsibility and in-source economic benefits, corporate foreign direct investment has undergone a transformation. Not long ago, companies invested to source cheap inputs from the developing world. As economic growth has migrated, companies are increasingly investing to build markets and see themselves as stakeholders in these societies for the long run.

 

  1. A truly global movement is underway. In 2000, roughly 40 companies came together with a dozen labor and civil society leaders to commit to the Global Compact. Today, we stand at 8,000 companies and 4,000 non-business signatories from more than 160 countries. Our participants represent nearly every industry sector and size, and come equally from developed and developing countries. We have more than 85 country networks, which are convening companies and acting on key issues at the ground level.

 

  1. Guidance for business action is widely available. We have gone from raising awareness, building consensus, and developing first-time guidance to creating a robust knowledge and resource base for action. More than 200 resources have been developed by the Global Compact and partners alone.

 

  1. Companies are collaborating to tackle major societal issues. Issue platforms and initiatives – for example, on gender, peace, climate, water, food, and children’s rights – are the key to breaking through complex issues. Companies are coming together to collaborate and co-invest in solutions to shared, systemic challenges.

 

  1. Investors and educators are becoming key leverage points. Mainstream investors are getting on board and driving companies to act, thanks to the work of groups such as the Principles for Responsible Investment – with 1,200 investors managing assets of roughly $34 trillion – and the Sustainable Stock Exchanges initiative. The Principles for Responsible Management Education initiative is helping to shape future business leaders and has more than 500 academic institutions in 80 countries committed to embedding sustainability into curricula and research.

 

There is no doubt that the pieces are in place. The opportunity to orient business toward sustainability has never been greater. But the truth is that, relative to the challenges at hand, the corporate sustainability movement has resulted only in incremental changes. With an estimated 80,000 multinationals and millions of smaller enterprises, much remains to be done to reach critical mass.

 

I believe a better future is within grasp. History shows the power of individual actions to bring about changes that were once thought to be insurmountable. One person stands up against what is wrong, then others join. Eventually, enough voices force walls to fall, doors to open, and lights to shine. The good news is that enlightened companies have shown that they are willing to be part of the solution. But they will only get so far unless all stakeholders work together. Actions by key players can result in unprecedented changes:

 

  • Beyond governments’ fundamental duties and responsibilities to citizens, they must take measures to accelerate business solutions on sustainability. This means creating enabling environments, incentivizing the right kinds of behavior, and encouraging companies to enhance accountability through disclosing their practices.

 

  • Companies everywhere are called on to do more of what is sustainable and put an end to what is not. We need corporate sustainability to be in the DNA of business culture and operations. The priority is to reach those who have yet to act, and especially those actively opposing change.

 

  • Financial markets must move beyond the short-term and long-term returns must become the overarching criteria for investment decisions. What we need is comprehensive risk management, sustainable value creation, and stronger ethical orientation.

 

  • As individuals we all have a responsibility. As citizens and consumers, we need to take a hard look at how we live and how our choices will impact the world today and tomorrow.

 

With the United Nations expected to launch a ground-breaking set of global Sustainable Development Goals (SDGs) in 2015, business will have a newly relevant framework to guide their strategic priorities and efforts toward society – representing a huge opportunity to drive sustainable business. Businesses, investors and civil society are increasingly considered to be a positive force for sustainable development and are expected to play an important role in implementing the future SDGs.

 

In closing, I am confident that the private sector is prepared to deliver on the compact between business and society. We can move from incremental to transformative impact. It will take our collective determination to bring this movement to scale and requires collaboration on a level never before seen. As a growing number of companies are embracing sustainability, we need governments, investors, and educators to do their part.

 

As my time as Executive Director of the UN Global Compact draws to a close, I am proud of the global movement we have created. But there is still more work to be done. Together, let us charge ahead on our journey toward a sustainable and inclusive global economy.