New Academy Review

THE International Journal of Corporate Social Responsibility, Sustainability, Leadership and Ethics

 

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Leader to Leader:


Stakeholders and Shareholders


One of the main obstacles to creating visionary companies is the business culture – largely but not completely shaped by the financial markets – that declares that the maximisation of shareholder value is the over-riding business objective.  Adopting this as a business priority, runs the argument, will allow the leaders of a company a reliable compass to make business judgements – and deliver the result their owners want.
The problem, though, is that this doctrine completely neglects the reality that businesses are organisations first and last. And organisations are peopled by human beings who need to be motivated, lead and trusted. The paradox is that successful capitalist organisations that are built to last understand that if they want to prosper the last thing they should be is uncompromisingly capitalist in the sense that everything has to be consecrated to promoting the bottom line. They need to have an organisational purpose – a reason-to-be – that will underpin the organisation’s systems and structures and give it the social glue that holds its people together. This does not solve questions about what product, market and margin is going to make the company achieve maximum profitability, but it is the precondition. Get the organisational motivation right and you have a good chance of making it; neglect this at your peril Will Hutton, The Work Foundation,

Let us, once and for all, deflate the myth that shareholder and employee interests are somehow mutually exclusive. Using a business model rooted in sustainable development -- with its triple bottom line of economic prosperity, environmental stewardship and corporate social responsibility -- we now have a framework that validates the intuitive notion that employees’ “intellectual capital” is as essential to an enterprise’s success as shareholders’ invested capital … Dow’s People Strategy is far more than a standard Human Resources plan … The People Strategy is founded on two underlying assumptions. First, the health and safety of Dow people and surrounding communities is paramount. And, second, that every action we take and behavior we encourage must support our Values – chief among them integrity and respect for people … As a result of the People Strategy, virtually every aspect of how Dow affects the employee’s work experience is being re-examined and, where, necessary enhanced. This includes our ability to attract and retain an outstanding workforce, provide continuous learning, encourage performance excellence, achieve diversity, promote inclusion and develop leaders … We already have a world-class cache of Human Resource initiatives. One very important example: Dow’s web-based training system. In 2001 alone, more than 385,000 courses were completed by Dow employees. Michael Parker, President and Chief Executive, Dow Chemicals Corp.

“What must be clear to every ruler is that the period of stability is now threatened by popular forces of uncertain magnitude, unknown direction and unclear vision … Whatever shape they eventually take, theirs will be an unofficial culture of the dispossessed, the silenced and the scorned.”
Edward Said

Trade unions have a vital role in promoting CSR. We provide a voice for working people, and work to promote high employment standards and positive employment relationships in the workplace. Through trade unions, companies can inform and consult their staff, engage them in workplace and wider strategic decisions, promote equal opportunities and so on. 'CSR branded' companies that do not promote positive employment relationships may find themselves questioned as to why they do not. John Monks, General Secretary, Trade Union Congress

 

New Academy Review: Volume 1 Number 2
Summer 2002

Entrepreneurs are outsiders by nature – outsiders with a work ethic.
Anita Roddick
A company is no more and no less than its people.
John Monks
Every action we take and behavior we encourage must support our Values.
Michael D.Parker
Capitalism at its best, forcing corporate elephants to behave as entrepreneurial fleas.
Richard Scase
Poaching is probably the most important and widespread form of wildlife utiliization throughout much of Africa.
Edwin Muchapondwa
Shareholders are but one of the key constituencies in an organisation, rather than the emperors of all they survey.
Will Hutton
The possibility of losing or attracting customers is, after all, the most potent incentive for business action.
Jeremy Moon
The Enron saga is reinforcing what many see as an urgent need to strengthen obsolescent disclosure standards.

Allen L.White

 

Contents  
A View from the Chair – Anita Roddick
Corporate Social Responsibility and Trade Unions  - John Monks
Notes from the Edge - Tom Cannon
Leader to Leader -Shareholders and Stakeholders
Will Hutton
Michael Parker
Perspectives on Enron
So much for the American Dream? - Richard Scase
Preventing Future Enrons – Allen White-
Confronting the Critics Revisited: The Governance of Corporate Social Responsibility- Jeremy Moon
Refereed Papers
Research Insights into Corporate Social Responsibility (Part 1.) - Ken Peattie  
Corporate governance disclosure: demonstrating corporate social responsibility through social reporting.-  Anona Armstrong & Mary Sweeney
Unfair Trade? The Increasing Gap between World and Domestic Prices in Commodity Markets over the Past 25 Years - Jacques Morisset

Triple Bottom Line Reporting: The Importance of Reputation and Trust - Colin Higgins
Climate Change and Sustainable Energy - Elliot Diringer
Community Participation in Wildlife Management as a Strategy for Rural Poverty Reduction: The Case of CAMPFIRE in Zimbabwe - Edwin Muchaponwa
Regular Features
University of Cambridge Programme for Industry  - Global Anti-Capitalism: Ideals, Aspirations and Political Reality - Marc Stears
Respect Europe   - Respectability for change - Kaj Embren  
Case Studies
Diageo -Global brands, local citizens - Geoffrey Bush
Stepping towards green state with corporate partnership: initiatives in Tamil Nadu - Sumana Datta  
Research Notes  
The changing role of business in society – new perspectives from leaders in business, government and the not-for-profit sector - Adam Faruk
Codes of Conduct: Panacea or Bunk? Cornelius von Baeyer
Book Reviews
What’s On
About the Author
Notes for Writers
Technical Information

Dame Anita Roddick
As the founder of The Body Shop, I often get asked to talk about entrepreneurship -- even by hallowed institutions like Harvard and Stanford. It makes me smile that the Ivy League is so keen to 'learn' how to be an entrepreneur, because I'm not at all convinced it is a subject you can teach. How do you teach obsession, because more often than not it's obsession that drives an entrepreneur's vision? How do you learn to be an outsider, if you are not one already? Why would you march to a different drumbeat if you are instinctively part of the crowd? I never set out to be an entrepreneur, I'd never heard of the word and I was not interested in its definition.  But since those early days I have had plenty of experience of the ups and downs of entrepreneurship and I've met many other entrepreneurs I have liked and admired, so I feel I can discuss the subject with a little authority. The vision of something new and a belief in it that's so strong that it becomes a reality. Vision-making is also obsessive, a type of psychopathology. If you see something new, your vision usually isn't shared by others.
... Most of the entrepreneurs I've met have had an innate desire for social change. They understand that business isn't just financial science, where profit is the sole arbitrator, it is just as much about taking part in political and social activism, using products as conduits for social change. That gives entrepreneurs enormous freedom to experiment with what they want, but it also makes them dysfunctional in hierarchies and inert structures. 
Of course it's easy to talk about creativity, but in essence it remains a mystery to me. I have never heard or read anything that explains how people behave creatively, despite the fact that we constantly glory in human creativity. Einstein said: 'Imagination is more important than knowledge. 'Dali claimed: 'You have to systematically create confusion, it sets creativity free. 'Maybe creativity is magic, maybe it is bestowed by the gods, maybe it is just polished opportunism. I just don't know and I'll probably go to my grave not knowing. The ability to mix all these together effectively...

Unfair Trade: The Increasing Gap Between World And Domestic Prices In Commodity Markets Over The Past 25 Years
Abstract

This paper looks at the spreads between international and domestic commodity prices and then explains why these spreads have increased over time.  The main finding is that the spreads between world and domestic wholesale prices as well as between domestic wholesale and consumer prices have increased dramatically because of the asymmetric response of domestic consumer prices to movements in world prices.  In all major consumer markets, decreases in world commodity prices have been systematically much less transmitted to domestic consumer prices than have increases.  This asymmetry does not seem to be explained, at least systematically, by changes in trade and tax policies across consumer markets or in one individual market over time.  Similarly, factors such as transport, processing and marketing costs as well as changes in standard quality do not appear to have played a major role in the increasing spreads over time.  A special effort should be made, therefore, to understand better the determinants of world, wholesale, consumer prices, and their relationships in commodity markets.  The increasing spreads have certainly cost several billion of dollars every year to producing and exporting countries of commodities by restraining the expansion of the final demand for these products over the past 25 years. Jacques Morisset, Foreign Investment Advisory Service of the World Bank

Corporate governance disclosure: demonstrating corporate social responsibility through social reporting.
Abstract

This paper discusses some of the critical issues and corporate governance choices for members of boards concerned with decisions about their organisation’s corporate social responsibilities (CSR). The paper defines corporate governance, corporate social responsibility, and discusses some ethical and pragmatic reasons why Triple-Bottom-Line (TBL) reporting of CSR is of benefit to corporations. It argues that various antecedent conditions (values, legal requirements, perceived benefits of CSR, and the ability to measure and report CSR practices) drive socially responsible behaviour, and that the practice of CSR is demonstrated by TBL reporting. Responsible reporting is transparent and communicates with relevant stakeholders. It will only happen if board members, their accountants and relevant stakeholders are convinced that reporting is possible, credible and worthwhile. The paper reports the opinions of a survey of investment directors on this issue. Anona Armstrong Victoria University and Mary Sweeney University of Melbourne

Research Insights into Corporate Social Responsibility (Part 1.)
Abstract.
The aim of this two-part review is to encourage some of the wisdom relating to CSR produced by academics in recent years, to escape out into the wider world. The review is inevitably selective rather than comprehensive. Trying to cover a field that effectively encompasses the whole of business, the societies in which business operates, and the planet that they all exist upon, is fundamentally something of a “Mission Impossible”. The fabric of CSR is woven from a very diverse set of threads, and this review was only able to pick up a selection that seemed to be of potential interest to the readership of NAR. Apologies are offered to anyone whose research work has been neglected or whose findings have been over-simplified. This article represents the first half of the review, and it concentrates on general CSR issues; on its relevance to specific management functions; and on the challenge of integrating CSR initiatives across a company. The second part, to be published in the next edition of NAR, looks at CSR from the perspective of law, accountancy, accountability and socially responsible investment.  Professor Ken Peattie, University of Cardiff

Community Participation In Wildlife Management As A Strategy For Rural Poverty Reduction: The Case Of ‘Campfire’ In Zimbabwe
Abstract.

Zimbabwe faces an increasing incidence of poverty, especially in the rural areas, with about 76% of the population living below the poverty line. The poorest areas are wildlife-abundant rural districts and the sustainable use of the wildlife and other natural resources by the rural poor could greatly reduce their poverty. CAMPFIRE is a framework to conserve wildlife and fight poverty by giving rural communities, through their rural districts councils, the authority to manage and use local resources, particularly wildlife, to derive economic benefits. Elinor Ostrom carried out an investigation of the institutions that characterise some of the world's long-enduring communally owned resources and concluded that there is a set of design principles that they share. Our starting point in search for reform that should be made in CAMPFIRE is an investigation of the extent to which Ostrom's design principles are satisfied. With such reform CAMPFIRE could be a break-through in long-term rural poverty reduction in Zimbabwe.
Edwin Muchapondwa, University of Zimbabwe
Joint Forest Management in India – case study
The forest management in India experienced a pivotal change in 1990 when the Ministry of Environment and Forests, Government of India issued policy guidelines for the joint forest management (JFM) to combat deforestation and degradation in the country. The JFM is a system of governance that devolves the responsibility of forest protection and management on ecosystem people in partnership with the state forest department for regeneration, efficient use and sustainable conservation. People are organized into village forest committees (VFCs) at the village(s) level with executive committee (EC) elected by the VFC members. The EC takes the role of the regulator in monitoring the access to forests and also in regulating utilization of usufructs such as grasses, NTFPs, and a portion of the proceeds from the sale of trees when they mature. The genesis of the concept can be traced in the 1970s in the success of Arabari experiment in West Bengal and Sukhomajri endeavour in Haryana. However, JFM got real momentum in the ensuing years since 1990. Currently, 27 Indian states have adopted JFM and over 63,000 FPCs are managing around 14 million hectare of forestlands (MOEF 2002). Ms Sumana Datta, Tate Energy Research Institute (TERI), New Delhi, India
PREVENTING FUTURE ENRONS
The precipitous collapse of Enron from glamour stock on Wall St. to penny stock bankruptcy, raises a plethora of questions about accounting, auditing, and regulation of America's publicly listed companies. What is clear, even at this early stage, is that corporate disclosure, the bedrock of efficient and effective capital markets, needs some fundamental rethinking. Allen L. White, Director of the Global Reporting Initiative and Vice President of Tellus Institute in Boston, USA
So much for the American Dream?
US-inspired management models are no longer seen to be the panacea for economic growth and efficiency. The personal and social costs are now being recognised to a far greater extent than only a couple of years ago. The bursting of the dot com dream has revealed other shortcomings of the American model. Richard Scase, University of Kent