Leo Martin looks at world events and explains why anyone with a view about the right way to conduct business, ethically and morally should express their opinions about the right way forward.
In two weeks’ time when the next edition of ‘CSR and beyond’ appears the electorate will have been to the polls. In the time since the last article appeared, a new head of the Catholic Church has been elected and in a few weeks’ time France will vote on whether to approve the adoption of the European Constitution. Of these three elections, one matters seriously for corporate responsibility but it is not the one you expect!
The election of the new head of the Catholic Church may not at first appear to be of any interest to people interested in corporate responsibility, but a look at two issues, highlights that the church’s views impact directly on business and corporate responsibility.
The evolution of the Catholic Church under Pope Jean-Paul II pitted conservatives in the church against liberals. The link with corporate responsibility may not at first be apparent but there is actually a strange gap emerging between the church and business. It centres upon human rights and gender equality and gay rights in particular.
While many may regard the church as the bastion of personal and moral ethics scores of business people find themselves out of step but not in a way that one might imagine. In the 1970s and 1980s the business community was viewed as the conservative right wing compared to the church who was interested in anti-capitalist liberation theology and human rights but today this position has been completely reversed.
This position is highlighted by the current debate in the USA about gay rights and in particular a bill being debated in the Senate (Bill 1515) which, if passed, would extend anti-discrimination legislation to people on the grounds of their sexual orientation.
The church’s liberals have supported the bill but its conservative mainstream has not. This contrasts with the business community where a significant number of high profile businesses have come out in support of the bill including Boeing, Nike, Coors Brewing, Qwest Communications, Washington Mutual, Hewlett-Packard and, until recently Microsoft.
Microsoft has apparently changed its stance and is now formally ‘neutral’ about the bill after bowing to pressure from a protestant church leader who threatened to organise a boycott against the company for its continued support of the bill.
While the church involved is a large step away from the Catholic Church, there is no question that the election of Cardinal Ratzinger as pope reinforces this divide between church liberals and large swathes of the mainstream business community.
In the business community, equality of opportunity has become a mantra that almost all sign up to. The business community’s rationale for its anti discrimination stance is not some sudden liberal conversion, but rather a pragmatic realisation that it is easier to take no moral position about personal matters than try to draw difficult lines in the ever changing sands of political correctness.
It also reflects the shift in western society’s view highlighted by the increased threat of litigation for any business that is found to discriminate.
To take a second example, the Catholic Church’s teachings on contraception also pose problems for business. In parts of sub-Saharan Africa, businesses are paying for expensive drug treatments to help employees living with HIV/Aids.
Many communities are reluctant to discuss sex education and the Catholic Church’s high profile stance against the use of condoms has contributed to the spread of the disease. This contrasts with the corporate responsibility programmes of many businesses in the region that have championed openness and sex education as well as the use of condoms.
In our own domestic election what is perhaps surprising about CR is that it receives such widespread cross-party support. This reflects partly the fact that definitions are twisted to suit the politician speaking, but also reflects some important features of CR.
The Labour party supports responsible business behaviour because it has signed up to a view of the world that globalisation reduces power of any government to intervene to change business behaviour and therefore businesses must be exhorted to restrain their own behaviour. The Conservatives on the other hand support CR because they believe that business leaders should be left to get on with the job and governments should not interfere.
This common support for CR however, masks some important differences. The Conservative party has stated that it will scrap the operating and financial review, which is at the heart of the current government’s company law reform.
The argument put forward by John Redwood, Shadow De-regulation Minister, is that if shareholders want information that the OFR will provide, they will ask for it.
The Labour government’s support for the OFR rests on the premise that a statutory OFR will raise standards of reporting and will help shareholders to make better decisions about where to invest. The government’s view is also based on a philosophy that it is better to get companies to disclose what they are doing and let shareholders and other stakeholders decide how they want to reward or punish that behaviour, rather than trying to use legislation to change behaviour directly.
The Conservative Party is radical in its view of legislation affecting business. It is committed to sunset clauses on legislation affecting commerce and also on removing the burden of ‘red tape’ on business.
This may mean that legislation protecting consumers, employees, communities and suppliers would be more closely challenged to make sure that it is cost-effective by a Conservative government. The Labour Party on the other hand believes that the legislation they have introduced, such as the minimum wage, is essential to creating a fairer working environment.
The election therefore matters for anyone with a view about the right way to promote the corporate responsibility agenda.
The third vote might seem the least important from a corporate responsibility point of view. Most people in the UK are lining up to celebrate a French humiliation when its population rejects the European Constitution in its vote on 29 May.
The business community has been very quiet on this issue, probably hoping, like the government that it will go away. But the reality is that the mainstream of UK business believes in a ‘responsible’ free market, where businesses are free to make money, to hire and fire and to give customers what they want.
This view of the world is actually winning out in the reforming European Union and these sceptics should be actively championing the EU Constitution for all the same reasons that the French political elite do not like it. The fear in France is that the Constitution is part of the destruction of fortress Europe and the social protection created and enjoyed by old Europe.
The reality is that the forces of globalisation are much too strong to prevent change and Europe will be reformed, either willingly or unwillingly. The UK business community has a once in a lifetime opportunity to express its desire for a free-trading, outward looking, deregulated business environment.
In this environment it can express and champion business ethics, free competition and fair play. It can also push for the best combination of enterprise combined with social protection, some of which may be delivered by businesses themselves as part of the corporate responsibility agenda.
But sadly most businesses will ignore the EU Constitution debate or, without thinking, celebrate a French ‘no’ vote. We have a great opportunity to shape European business and society and to get what we want. This should include the establishment of corporate responsibility as a key part of how the European economy delivers fairness without inhibiting growth. It is a shame that this election that matters most is getting the least attention.
Leo Martin is director and founder of GoodCorporation, the corporate responsibility standard and is the principal character in the BBC’s series, Good Company, Bad Company.
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