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The Planetary Bargain: Corporate Social Responsibility Comes of Age
tomers’ perceived mean time-to-payback. The success of VisiCalc was due in large measure to the perception that, including the cost of buying a PC and learning how to use the software, the payback time was less than two weeks. Therein lies the final message. With endless iteration possible at near to nil cost, the ‘model’ for the development of models that “s(t)imulate to innovate” is more biological evolution rather than inorganic IT. Increasingly, innovation will evolve from the computer as the product of rapid iteration rather than as the step-by-step process of design. Michael Johnston Board Member, Yorkshire Forward, UK PII: S 0 0 2 4 - 6 3 0 1 ( 0 0 ) 0 0 0 5 8 - 3
The Planetary Bargain: Corporate Social Responsibility Comes of Age Michael Hopkins, Macmillan Press (1999), 229 pp., £40.00
The author runs a London-based research and consulting company concerned with international social development issues both in the private and public sectors, and the title of this book reflects the view that there is a growing need for global corporate social responsibility. It is now clear that all our actions must be sustainable, as outlined in Agenda 21. Therefore research is needed to reduce the harm we are inflicting on the planet. Reducing this to its starkest form, we need to live in a sustainable relationship with the planet, but the planet does not need us. If we become extinct the planet will continue, possibly in an altered form. “To reverse negative tendencies, the book’s main thesis is that there is a need for a worldwide compact, or planetary bargain, between the private and public sectors.” This is the book’s message, and it is one of vital importance. The first chapter asks the question, why there should be socially responsible enterprise? The key factor is that business has to make a profit, but there are wider issues for sustainable development. My experience when working for large organisations has been that there can be conflict at board level between quick returns on investment and what we would now call ‘sustainable development’. This could emerge with the concept of the stakeholder approach. The wider issues, such as trust and social capital, are studied, as well as thier relationship to ethical values. As the author points out, the concept of ethics in business is not new, and can be found in Quaker-owned business and the work of Robert Owen at New Lanarkshire. Most books now see the key to improved ethics being based on the concept of ‘stakeholders’, which includes managers, consumers, investors/owners 602
Book Reviews and Review Briefs
and employees. As the author rightly points out, this concept should be widened to include the natural environment, the community in general, and suppliers. The second chapter explains why there is a need for planetary bargain. Before 1991 little literature or research existed, and although this is now changing a broad consensus has yet to emerge. The author attempts to list the key issues that business should expect governments at a national and international level to address. This is essential as finance and information now exists in a global plane, so a worldwide ethical dimension is now required for a successful, growing global economy. This means that there must be more cooperation with such bodies as GATT, the World Bank, WTO and ISO. The next chapter asks who the stakeholders mentioned in the introduction are. There is a move towards more emphasis on ethical values as shareholders are now asking more questions. Also, the rise of ethical investment funds is having an influence. Examples are given of how both mangers and management schools are becoming involved with ethics and corporate governance, with the Cadbury report and the work of Mark Goyder with the Centre for Tomorrow’s Company also having an influence. According to a report quoted in the Financial Times, ethics and entrepreneurship are the two hot topics on the executive education agenda. Many employees are now having a hard time with downsizing. For large organisations the impact of new information systems make this inevitable, and if it is done in an aggressive way the whole labour force will be adversely affected. Many examples are given of customer power through boycotts, direct action, pressure from shareholders, specialist campaigns, consumer guides and ethical screening. The example of the conflict between Green Peace and Shell over Brent Spar is described. The importance of the natural environment is described from the key works such as Silent Spring, Our Common Future and the Rio or Earth Summit which has led to a flood of more recent research and books, some of which are described. One of the most important recent books on the relationship between business and the environment is The Ecology of Commerce by Paul Hawken. The next section deals with business and its relationship to the wider community. This relationship can subsist in charity, social investment or partnerships with local organisations, and through business’s fundamental mission of providing the goods and services that society needs in a responsible and ethical manner. This approach should also apply to suppliers, subcontractors and trading partners. Chapter four studies the need for a code of ethics and looks at initiatives in Europe, which have mainly come from trade unions, employers’ associations and the EU. In the USA codes of ethics have been more common. In 1992, 83 per cent of companies in the USA had codes of ethics, compared with 50 per cent in Europe. An explanation could be that consumers in the USA are quicker to complain concerning poor goods and ser-
Long Range Planning, vol 33
2000
603
vices. However, concerning policy on pollution reduction, the US government is lagging behind those of the EU. The role of the Caux Round Table is described. This is an international group which consists of business leaders from Europe, Japan and the USA, and its main principles are mobility of employment, capital, produce and technology, making business increasingly global in its transactions. The author holds the view that the responsibilities of business go beyond shareholders, towards stakeholders. There has been some discussion of a move towards a world standard of ethical business behaviour. This would not be easy to achieve, but could develop with the growth of the global market. Also mentioned is the London Institute of Business Ethics, which is having an influence, and the Cadbury code, both established as a result of recent financial scandals. The next chapter evaluates case studies from socially responsible companies in some detail. These include B and Q, The Body Shop, Levi Strauss, Grandmet and Nike. This is followed by details of a Mori poll on consumers’ attitudes to social responsibility in companies; 71 per cent were influenced by this approach when making a purchase. This is followed by examples from Japan, Germany, France, Italy and smaller European countries. A social audit framework is presented, including a set of indicators: 앫 앫 앫 앫 앫 앫 앫 앫
quality of management; quality of products; innovations; long-term investment value; financial soundness; ability to attract and retain talented people; responsibility to the community and environment; wise use of corporate assets.
I expect most people will agree with this list, though in my view more emphasis is needed on green issues. Some large organisations have had a ‘Janus’ approach to the environment, with some areas of business making equipment for energy reduction while other areas still operate out of date processes. Also as well as retaining talented people, all employees need to be involved with decisions being made in a two-way feedback loop. This will lead to a philosophy of holistic management, which will not only make management more effective but also raise staff morale and reduce costs. Applications of SRE indicators are studied, which is putting theory into practice. Again I would suggest this is also a twoway loop which should include practice into theory — we can often establish new ideas from practical applications. This is an important chapter with many examples of how companies are implementing this approach. Much of business is now global, as even the self-employed can trade on a global basis via the Internet, so we all need to be aware of the concept of a ‘planetary bargain’ based on sustainable 604
Book Reviews and Review Briefs
development. However, it is the multinational companies which have the most impact. One major problem is the importation of cheap goods produced by child labour. Recent actions to halt this are most welcome, though it does bring problems as often money earned is vital for the family concerned. One solution would be to cancel Third World debt and make certain that any future aid is channelled via organisations that will use the aid for the purpose given. The advice of Oxfam and other NGOs would be of great use here. The conclusion concerning future developments is brief, consisting of only a few pages. The author is correct in the view that business in the next millennium could be very different, but forecasting how different will not be easy. However, one area not explored is the communications revolution via email, the Internet and electronic money and invoicing via EDI (electronic data interchange.) Most people now agree that we are moving towards a culture of small businesses and self-employment. Also, the increasing use of the Internet by consumers will increase ethical pressures on organisations. This is an important book, packed with information. Most pages refer to research undertaken by many organisations in addition to that of the author, which does not make it easy to read. I feel that that text should have dealt with general principles, with the research described in more detail in appendices. However, dedicated managers should persist with studying this important book and reflect on how it should affect their organisations. Brian Burrows
PII: S 0 0 2 4 - 6 3 0 1 ( 0 0 ) 0 0 0 5 9 - 5
New Rules for the New Economy (10 Ways the Network Economy is Changing Everything) Kevin Kelley, Fourth Estate (1998), 172 pp. plus index, £15.00
Written a couple of years ago, Kelley’s useful if lightweight book makes claims and predictions in this fast-moving area that have been both proven and overtaken. Computers (the tools) are already irrelevant, as the cost of microchips approaches nanopence. The new economy lies in networking between chips and between people. (Put in brain terms, we have the neurons anyway; brain power comes from multiplying the synapses.) Much of the new economy will consist in services and goods offered by entrepreneurs who literally give away the software and, increasingly, the hardware as their investment in ‘networking’: in building relationships and training their customers. The net
Long Range Planning, vol 33
2000
605
The Planetary Bargain: Corporate Social Responsibility Comes of Age Michael Hopkins, Macmillan Press (1999), 229 pp., £40.00
The author runs a London-based research and consulting company concerned with international social development issues both in the private and public sectors, and the title of this book reflects the view that there is a growing need for global corporate social responsibility. It is now clear that all our actions must be sustainable, as outlined in Agenda 21. Therefore research is needed to reduce the harm we are inflicting on the planet. Reducing this to its starkest form, we need to live in a sustainable relationship with the planet, but the planet does not need us. If we become extinct the planet will continue, possibly in an altered form. “To reverse negative tendencies, the book’s main thesis is that there is a need for a worldwide compact, or planetary bargain, between the private and public sectors.” This is the book’s message, and it is one of vital importance. The first chapter asks the question, why there should be socially responsible enterprise? The key factor is that business has to make a profit, but there are wider issues for sustainable development. My experience when working for large organisations has been that there can be conflict at board level between quick returns on investment and what we would now call ‘sustainable development’. This could emerge with the concept of the stakeholder approach. The wider issues, such as trust and social capital, are studied, as well as thier relationship to ethical values. As the author points out, the concept of ethics in business is not new, and can be found in Quaker-owned business and the work of Robert Owen at New Lanarkshire. Most books now see the key to improved ethics being based on the concept of ‘stakeholders’, which includes managers, consumers, investors/owners 602
Book Reviews and Review Briefs
and employees. As the author rightly points out, this concept should be widened to include the natural environment, the community in general, and suppliers. The second chapter explains why there is a need for planetary bargain. Before 1991 little literature or research existed, and although this is now changing a broad consensus has yet to emerge. The author attempts to list the key issues that business should expect governments at a national and international level to address. This is essential as finance and information now exists in a global plane, so a worldwide ethical dimension is now required for a successful, growing global economy. This means that there must be more cooperation with such bodies as GATT, the World Bank, WTO and ISO. The next chapter asks who the stakeholders mentioned in the introduction are. There is a move towards more emphasis on ethical values as shareholders are now asking more questions. Also, the rise of ethical investment funds is having an influence. Examples are given of how both mangers and management schools are becoming involved with ethics and corporate governance, with the Cadbury report and the work of Mark Goyder with the Centre for Tomorrow’s Company also having an influence. According to a report quoted in the Financial Times, ethics and entrepreneurship are the two hot topics on the executive education agenda. Many employees are now having a hard time with downsizing. For large organisations the impact of new information systems make this inevitable, and if it is done in an aggressive way the whole labour force will be adversely affected. Many examples are given of customer power through boycotts, direct action, pressure from shareholders, specialist campaigns, consumer guides and ethical screening. The example of the conflict between Green Peace and Shell over Brent Spar is described. The importance of the natural environment is described from the key works such as Silent Spring, Our Common Future and the Rio or Earth Summit which has led to a flood of more recent research and books, some of which are described. One of the most important recent books on the relationship between business and the environment is The Ecology of Commerce by Paul Hawken. The next section deals with business and its relationship to the wider community. This relationship can subsist in charity, social investment or partnerships with local organisations, and through business’s fundamental mission of providing the goods and services that society needs in a responsible and ethical manner. This approach should also apply to suppliers, subcontractors and trading partners. Chapter four studies the need for a code of ethics and looks at initiatives in Europe, which have mainly come from trade unions, employers’ associations and the EU. In the USA codes of ethics have been more common. In 1992, 83 per cent of companies in the USA had codes of ethics, compared with 50 per cent in Europe. An explanation could be that consumers in the USA are quicker to complain concerning poor goods and ser-
Long Range Planning, vol 33
2000
603
vices. However, concerning policy on pollution reduction, the US government is lagging behind those of the EU. The role of the Caux Round Table is described. This is an international group which consists of business leaders from Europe, Japan and the USA, and its main principles are mobility of employment, capital, produce and technology, making business increasingly global in its transactions. The author holds the view that the responsibilities of business go beyond shareholders, towards stakeholders. There has been some discussion of a move towards a world standard of ethical business behaviour. This would not be easy to achieve, but could develop with the growth of the global market. Also mentioned is the London Institute of Business Ethics, which is having an influence, and the Cadbury code, both established as a result of recent financial scandals. The next chapter evaluates case studies from socially responsible companies in some detail. These include B and Q, The Body Shop, Levi Strauss, Grandmet and Nike. This is followed by details of a Mori poll on consumers’ attitudes to social responsibility in companies; 71 per cent were influenced by this approach when making a purchase. This is followed by examples from Japan, Germany, France, Italy and smaller European countries. A social audit framework is presented, including a set of indicators: 앫 앫 앫 앫 앫 앫 앫 앫
quality of management; quality of products; innovations; long-term investment value; financial soundness; ability to attract and retain talented people; responsibility to the community and environment; wise use of corporate assets.
I expect most people will agree with this list, though in my view more emphasis is needed on green issues. Some large organisations have had a ‘Janus’ approach to the environment, with some areas of business making equipment for energy reduction while other areas still operate out of date processes. Also as well as retaining talented people, all employees need to be involved with decisions being made in a two-way feedback loop. This will lead to a philosophy of holistic management, which will not only make management more effective but also raise staff morale and reduce costs. Applications of SRE indicators are studied, which is putting theory into practice. Again I would suggest this is also a twoway loop which should include practice into theory — we can often establish new ideas from practical applications. This is an important chapter with many examples of how companies are implementing this approach. Much of business is now global, as even the self-employed can trade on a global basis via the Internet, so we all need to be aware of the concept of a ‘planetary bargain’ based on sustainable 604
Book Reviews and Review Briefs
development. However, it is the multinational companies which have the most impact. One major problem is the importation of cheap goods produced by child labour. Recent actions to halt this are most welcome, though it does bring problems as often money earned is vital for the family concerned. One solution would be to cancel Third World debt and make certain that any future aid is channelled via organisations that will use the aid for the purpose given. The advice of Oxfam and other NGOs would be of great use here. The conclusion concerning future developments is brief, consisting of only a few pages. The author is correct in the view that business in the next millennium could be very different, but forecasting how different will not be easy. However, one area not explored is the communications revolution via email, the Internet and electronic money and invoicing via EDI (electronic data interchange.) Most people now agree that we are moving towards a culture of small businesses and self-employment. Also, the increasing use of the Internet by consumers will increase ethical pressures on organisations. This is an important book, packed with information. Most pages refer to research undertaken by many organisations in addition to that of the author, which does not make it easy to read. I feel that that text should have dealt with general principles, with the research described in more detail in appendices. However, dedicated managers should persist with studying this important book and reflect on how it should affect their organisations. Brian Burrows
PII: S 0 0 2 4 - 6 3 0 1 ( 0 0 ) 0 0 0 5 9 - 5
New Rules for the New Economy (10 Ways the Network Economy is Changing Everything) Kevin Kelley, Fourth Estate (1998), 172 pp. plus index, £15.00
Written a couple of years ago, Kelley’s useful if lightweight book makes claims and predictions in this fast-moving area that have been both proven and overtaken. Computers (the tools) are already irrelevant, as the cost of microchips approaches nanopence. The new economy lies in networking between chips and between people. (Put in brain terms, we have the neurons anyway; brain power comes from multiplying the synapses.) Much of the new economy will consist in services and goods offered by entrepreneurs who literally give away the software and, increasingly, the hardware as their investment in ‘networking’: in building relationships and training their customers. The net
Long Range Planning, vol 33
2000
605