What scope is there for corporations to improve their social and economic performance? Can we shape markets in ways that entice or force corporations to operate within a sustainable social and environmental framework? How can business, public institutions and non-profit organisations work together to create new mechanisms of corporate accountability?

The power of business and the scale of economic polarization are awesome. Of the 100 largest ‘economies’ in the world, 51 are corporations. The top 200 corporations have sales equivalent to a quarter of the world’s total economic activity. The world’s 225 richest individuals have a combined wealth of over $1 trillion, equal to the annual earnings of the world’s poorest 47 percent, some 2.5 billion people. The annual income of Sears Roebuck is comparable to that of Bangladesh.

A ‘skeptically optimistic’ book, looks beyond anti-capitalist outpourings and the naïve enthusiasms of ethical trade idealists to chart radical pathways for the global business community. It offers detailed accounts of recent engagement between high-profile multinationals and NGOs, framed within a broad conceptual framework that clarifies what are often confusing and conflicting definitions and evidence about corporate responsibility. Concluding chapters set out the challenge of corporate citizenship – defining the features of a world in which ‘civil corporations’ (framed by civil regulation and civil governance) would be both willing and able to take greater account of their social, environmental and financial footprints.

The book argues that fury at global inequalities and mistrust of the corporate community does not allow for an intelligent debate about the role of business in society, and the place of public policy in this field. Critical, the book posits, is to learn to assess a business’s contribution to sustainable development in terms of its viable options and what it makes of them. ‘Pigs cannot fly’ asserts the author, and business can only do what current knowledge and markets allow them to do. A civil corporation can only take full advantage of opportunities for learning and action in building social and environmental objectives into its core business by developing internal values and competencies.

How can business learn the art of civil navigation? There are no magic bullets. Corporations will have to:

• learn to be transparent about managing information and knowledge
• sincerely engage in dialogue with stakeholders
• be flexible: as interpretation of ‘sustainable development’ changes, business must be prepared to jettison the current confusing plethora of codes and ethical business standards.

Will ‘being civil’ be enough? Will virtuous corporations be absorbed by less-angelic competitors prepared to carry on with cynical, pseudo-philanthropic public relations ploys? Will civil corporations only be able to gain competitive advantage within restricted niche markets with high entry barriers?

Averting such risks depends on:

• The willingness of corporate leaders to go beyond getting their own house in order and commit themselves to the promotion of global governance frameworks to institutionalize civil market behaviour.
• A shift away from the aspirational architecture of sustainable development to an approach sensitive to the scope for and nature of change.
• Standardisation and professionalisation of disclosure and external verification mechanisms.
• Recognition that business behaviour and performance embodies and reinforces our own individual ambivalences as to how we trade off personal and collective interests.
• Recognition that even the most dominant corporations only have restricted room for manoeuvre, especially in the short-term.

Source(s):
‘The civil corporation: the new economy of corporate citizenship’ by Simon Zadek, Earthscan Publications, 2001 Full document.

Funded by: Avina Foundation / New Economics Foundation

id21 Research Highlight: 5 February 2002

Further Information:
Simon Zadek
Institute of Social and Ethical AccountAbility
Unit A, 137 Shepherdess Walk
London N1 7RQ
UK

Tel: +44 (0)20 7549 0400
Contact the contributor: simon@accountability.org.uk

AccountAbility, UK

Zadek.net

Other related links:
'Ethical trade futures: strategies for campaigners'

The New Economics Foundation challenges 'business-as-usual'

SustainAbility specialises in business strategy and sustainable development

Social Accountability International enables organisations to be socially accountable

Insights #36 'Richer or poorer? Achievements and challenges of ethical trade'

ETI promotes good practice in the implementation of codes of labour practice