GENEVA--Never before in
recent memory has the world been confronted
with so many unsettling global issues, concerns
and challenges. Simultaneously, players have
multiplied and their weights have shifted.
While the role of civil society including the
business sector has expanded, governments and
international organizations have often lost
ground because their political mandate, their
structures and their operating procedures are
frequently ineffective in anticipating and
resolving numerous, complex and systemic problems,
let alone managing them from a global and long-term
perspective.
In
the face of the gravity and urgency of our challenges,
the world needs effective frameworks within which
all stakeholders of global society can join in
a collaborative on-going effort to address pressing
issues on the global agenda.
Business could and should be a strong partner
in safeguarding the environment, reducing poverty,
raising education standards and improving health.
Business can contribute to the evolution of a
more prosperous world not only in terms of its
own responsible product and market strategies
but in playing a substantial role in sustainable
development by engaging in public-private partnerships
and providing not only financial resources but
know-how experience and organizational capabilities.
But business today, following the collapse of
Enron and other corporate scandals of fraud and
greed, is losing its credibility as a trustworthy
partner. Unless there exists the public perception
that business is cleaning up its own house and
genuinely coming back to some fundamental values,
there will be no trust in any business involvement
in efforts to improve the state of the world.
Business leaders have to be conscious of the
corporate problems that surround them and have
to have the willingness to contribute to their
resolution, but self-regulation is not enough.
Every nation needs to have a comprehensive regulatory
framework that effectively ensures proper auditing,
the accountability of corporate boards, the elimination
of conflicts of interests and compensation systems
in line with long-term shareholder and stakeholder
value creation.
We also need the harmonization of global regulatory
standards. Having said this, ultimately these
rules of corporate governance should converge
on the highest, and not on the lowest, common
denominator.
It
is obvious that the issues of transparency
and accountability
underscore a new focus of
attention on the part of a much more informed
and more sophisticated global society which recognizes
the value of good governance as a prerequisite
principle for social welfare. Therefore the "good
governance revolution" which is now required
from companies applies similarly to governments
and other institutions of civil society. What
kind of world would we live in if citizens everywhere
adopted the cynical attitude that no organizations,
private or public, could really be trusted? What
is at stake is more than corporate governance:
it is global governance in a broader sense.
For this reason, looking just at corporate governance
is not enough. What we need is to adhere to some
basic values and principles in developing sustainable
economic and social systems.
In my work for the World Economic Forum, from
the very beginning and ever since, six driving
factors were always essential in pursuing a commitment
for improving the state of the world:
- The stakeholder concept: Companies as well
as society at large should serve all stakeholders
who together form a community of destiny. For
this reason we are accountable, not towards
special interest groups, but towards all stakeholders
of society.
- Cooperation
instead of confrontation: The best way
to improve
the state of the
world
is through joint efforts by all stakeholders.
We believe in the power of "the three "Bs":
Bonding--i.e. defining the problems together;
Binding--i.e. defining joint objectives;
Building--i.e. defining joint action.
- Entrepreneurship in the global public interest:
We believe that it is entrepreneurship which
creates societal progress, and that economic
activities must serve the global public interest.
- Corporate citizenship: We believe that companies
do not only have the responsibility to avoid
harm to society and the environment and to
provide a measure of service to the communities
around them, but that they should also engage
their resources and capabilities in addressing
the big societal challenges of our times.
- The need to globalize globalization: We are
living in an interdependent globalized world.
We believe that globalization cannot only be
an economic process but has to be supplemented
by political and social measures to ensure
that a majority of people throughout the world
can enjoy its benefits.
- Responsibility based on values: We need shared
values to provide a framework for global decision-making.
- Social entrepreneurship: We are an organization
that focuses at the macro level and at the
geopolitical level to build bridges. Global
cooperation at the leadership level has to
be supplemented by concrete actions on the
ground. We believe in social entrepreneurship
as a key driver for societal transformation
and progress.
The Summit in Johannesburg has the opportunity
to contribute to a better world if the basis
for trust is re-established: trust in our institutions,
trust in the fundamental principles that guide
us in our actions and trust in our capabilities
to act together.
(Editor's Note: Klaus Schwab is President of
the World Economic Forum. He wrote this article
at the invitation of Earthtimes.)
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