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REDEFINING CORPORATE PRINCIPLES
Joan Veon Notes from Davos – World Economic Forum

JV Notes:

--We are confronted with a huge and growing chasm of power, prestige and knowledge of the MNC vs. the small, medium and individual entrepreneur which is going the way of the dinosaur.

--The corporation, is now becoming mother, father, brother, sister, and conscious to their employee instead of only being an employer. This is as a result of corporate social responsibility. As the company moves left of center, the employee will be forced or move unknowingly and gladly with their employer either to keep his job or because he agrees out of compliance.

JV: It is global vs. national; Visions vs. no vision; Control (collectivism) versus freedom (individualism)

The following is the transcript from part of a major workshop entitled "Redefining Corporate Principles". It basically addresses the fact that companies operate above the nation-state and have changing responsibilities to the communities in which they operate. I have provided some comments from a couple of the participants but mostly the summaries from Carli Fiorina who is extremely articulate, bright, quick, and global in her outlook. I wonder very seriously if these CEO’s know and understand (Americans anyway) that they are being "communized"? The WEF has duplicated all of the UN positions. I believe, as I have tried to analyze its activities, that it has been the catalyst to bridge the gap between governments and corporations and then to marry them, thus creating a shift in government or governance to use their terms from the Constitution to the UN Charter.

The Rev. Leon Sullivan is a communist and he yelled at the CEO’s to CHANGE OR DIE!!!! RAISING his fist in the Nelson Mandela fashion. They applauded him. I just wonder if the American CEO’s have figured something out versus the other CEOs who come from socialized, Marxist, and communist countries.

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Jorgen Centerman – President/CEO ABB

Henry Paulson, Jr., Chairman and CEO, Goldman Sachs

Francois Roussely, Chairman and CEO, Electricite de France, France

Leon Sullivan, President and Founder, The Global Sullivan Principles, USA

Carleton S. Fiorina, Chairman, President and CEO, Hewlett-Packard – MODERATOR

Carli – Opening Remarks

Corporate Responsibility Redefined – I think all corporations would agree today that it is not enough to have good products, profits and to pay tax, simply doing well and doing no harm is no longer good enough. Companies are therefore actively rethinking their responsibilities to the communities in which they live and work and to the world at large. The realization that globalization is fragile, the realization that the digital divide is widening, not narrowing, all of these things are forcing companies each day to think differently to think about whether it is possible, indeed required, to do both well and good. The pressure with regard to these responsibilities comes both from within and from without. Employees increasingly want to have pride and feel good about the activities of the corporation of which they are apart and so investors begin to look closely at a company annual reports to feel company with the way completes itself in communities and countries around the world. Bridging the Digital Divide – is it philanthropic or a search for new business models, which will teach us more innovative and creative ways of producing our products and marketing our services. Is this in fact good business as well as good service.

Leon Sullivan

You should know that I am not a businessman, I am not a global official, I am a Baptist preacher and what I do is the work of the Lord. Several years ago I was with Martin Luther King who was my friend and he wanted to change laws in America that discriminated against Black people. Later on I went to be on the Board of Directors for General Motors. In addition to improving the conditions for blacks, minorities and women in General Motors, I went into South Africa and was able to change that system using the power of my influence on companies rather than see a race war. I wrote the Sullivan Principles, ending discrimination and helping to end apartite. Later company leaders from Europe, Asia and other parts of the world asked if I would change the principles to Global Sullivan Principles. Last year the United Nations adopted my principles. They work in companies from 25 employees to millions to improve the conditions of life for poor people, black people, the improvement of the environment, ending sweat shops, abuse to women, giving people an equal change. The Sullivan Principles are gaining rapidly as major cities like NY, Philadelphia, etc to require that companies doing business in their jurisdiction must endorse the Sullivan Principles. This movement must grow. Next week I will met with colleges and universities in Washington because business schools these principles of equal rights will be presented. These principles are in consonance with the Global Compact that calls on the world, businesses of the world to do the right thing so we will be working closely with the U.S. and the UN Global Compact, and with other organizations, calling on companies to do the right thing.

We are calling for a social conscious for the businesses of the world to turn a human face and to change what has been happening for 2000 years, fill the empty boats with raw sugar, gold and slaves to turn a profit. This must be changed and in this century we are going to work that it is changed. Either you will change as Captains of Industry, you will CHANGE OR DIE. You will CHANGE OR DIE in this century. All over the world People are learning more about what they should have with the environment and opportunity. Collectivism and communism are still alive in this world. Imagine the people who come to your company as consumers and protestors. IF YOU CHANGE, there will be great benefits, new profits, new horizons, and things you never dreamed. DEVELOP AFRICA. Help build Africa. As you build, you will make profits. If you do not change, the day will come that capitalism in America will lose everything you have because the common man of the world will not stand for it anymore. That is where I come from. I want you to fill your company with the Sullivan Principles—do what’s right—help the little guy. Profits are lost if you do not help. Put your religion into action. Help build the little guy. If you do, you help build and support yourself to one-day make a free and peaceful world. CHANGE OR DIE!!! CHANGE OR DIE !!!!

Carli – Profits are not the only product of a company. He raises some interesting companies? Are they being demonized fairly or unfairly?

ABB –

We truly recognize the need for global policies to have a cohesive and responsible policy when it comes to corporate social responsibilities. That is not enough. We need mechanisms, mechanisms to make it a practice. What is needed is a cultural openness from all stakeholders to get a constructive force to change.

ABB operates in 100 countries. We needed a motto for our business and early on, determined that we wanted to be insiders instead of invaders. 160,000 people and 45,000 in the developing countries. We face an uneven social conditions. We can’t change it on our own. It is clear to everyone in Davos that to be a good corporate citizen, its vital and becoming a basic license to operate. Without it you will not be able to attract the talent to go forward. WE need measurements that we can ….making sure that we get what we expect. We want an integrated approach: the social pieces with the environmental pieces and has created a sustainable affairs group. We have run case studies in UK, Switzerland, Brazil, South Africa, China, and Egypt: In South Africa, social priorities are clean water, health services, education, infrastructure. Here we are engaged in many projects: Actively participating in the rehalbiltation of first time offenders. We are active on a massive scale in South Africa. Now that we have a social policy, what next? To take it to all the stakeholders throughout the world.

On an international basis we are very active and supporting the UN Global Compact and are partnering with United Nations Devleopment Programme, Prince of Wales Business Leaders Forum, and the World Business Council for Sustainable Development. We are calling upon other companies to join us in this effort. Trying to sum it up, the WBCSD defined corporate social responsibility: as a commitment by business to contribute to sustainable development by engaging all actors, their families, and the society at large to improve the quality of life. "Good Corporate Citizenship is a License to Operate.

French – I think that the UN Global Compact as well as the project to create a "Responsibility Task Force" after Davos, are completely convergence with all the ideas. In a nutshell—there are no new responsibilities but those, which involve basis responsibilities and timeless values, which evolve with the times.

Carli –

Both have raised measures and metrics. What gets measured is what gets done. We need to have a financial rating system to social and environmental responsibility.

Hank Poulson – Goldman Sachs

I want to begin by saying that most parts of the world particularly those that have been making efforts to open up their economies are reasonably better off than they were 5 or 10 years ago. They are better off politically and financially and there is real improvement in structural reform. I start off—often times it is difficult for us who work or run major companies when then look at the demonstrations in Seattle or those here on Saturday to understand what is motivating them. Opening up economies, finance and trade which will continue to benefit the world. One of the biggest threats is protectionism, nationalism and the backlash against globalization. I don’t think any of us should take for granted that the world is going to continue moving in this direction. If there is an economic downturn, there is a possibility of rising protectionism. So I think about it there are 3 things that we all need to do:

  1. Articulate spokesman for the benefits of market driven forces, open trade, and structural reform
  2. Recognize that the arguments that are being raised by a number of people on the other side are valid.

  3. One of the biggest threats is widespread poverty and I agree with Rev. Sullivan.

  4. With regard to the environment, as a CITIZEN OF THE WORLD, I HAVE A CONCERN ABOUT GLOBAL WARMING AND THE ENVIRONMENT.
I believe the corporations, which are the big beneficiaries of globalization, need to be dealing with these issues. AT Goldman Sachs, we have a lot of people who care very deeply about these issues. Volunteerism is very important. We started 10 years ago with Big Brothers/sisters program. Many of our employees get a great deal of satisfaction. In 1997 we started "Community Teamwork" where we tried to get 100% of our people involved doing some kind of activity while Goldman Sachs paid for it. Last year we had 15,000 people, half of which are outside of the US, which is 90% of the people—building low income housing, delivering food to the need, mentoring. We have started a foundation with $200 million deal with education and excellence and innovation in education around the world. We have volunteer efforts of our people in which Goldman matched $10million to the foundation for the projects. The leaders for sometime have felt you need to lead by example. I am most interested in environment and education. I co-chair the Asian-Pacific Nature Conservancy. We are working hard to set aside parks in China and the coral reefs in Asia. I chair the Paragon Fund, which works to conserve birds of prey in Panama. I agree with Rev. Sullivan "CHANGE OR DIE." We all need to reinvent ourselves.

CARLI –

Let me just add a couple of other thoughts to the mix. H-P has a long-standing tradition of very generous philanthrophy. We have concluded because of the complexity of the many of the problems we now collectively as citizens of the world face, and our interactions, our contributions need to be sustainable over the long term and perhaps corporate citizenship requires more than philanthropy. Where does corporate self-interest and community need intersect? It is at those intersection points where corporations will be most motivated to hang in there for the long term. There are some obvious interests: Education. We must search out the creation of new business models so as we work with local communities around the world and within the confines of their development priorities, we are looking to find innovative and sustainable business models for the introduction of information technology. Our requirements/criteria for those business models are to ask our community and we partner, "When the money dries up will the project be sustainable?"

Carli – Summary

We must get beyond the debate from two sides of an issue. Industry and government and NGOs and social activists begin to work together on the set of issues, which are of most importance. H-P has very strict core values and codes of conducts and we have refused to enter countries in which we felt there was a possibility of corruption which continues to be a problem in many nations of the world and not just developing nations. This is one of the reasons why this conference is of importance to bring different parties together to seek some common ground on issues which will continue to vex us unless we can find common language and goals to make real progress.

Question on Tax harmonization

Goldman Sachs – tape turned over - I think it is the same with companies and so what the different tax rates—Hong Kong has a different tax level than Taiwan but as long as you have nations with independent economic policies you are going to have different tax policies and unless or until there is greater coordination on an international basis, and I don’t have any innovative ideas to dealing with your problem.

Carli – "I think the question points out something that is occurring in the background of this debate and which is vitally important. It is driven in part by the capability of technology but if you think about it. Tax regimes, regulatory regimes, governments themselves—national or state and local governments, all of these authorities are based upon fundamentally the protection of physical borders and physical assets. We are now in a world—enabled, accelerated, empowered by technology where the most important assets—capital, intellectual property, content, are both intangible, know no geography, have no borders and the different in paradigm that that suggests where it is not physical assets but intangible assets and it is not geographic borders but global connections where value is really created. The difference in paradigm that that suggests for regulator regimes, tax regimes, for the foundation of governmental power itself is quite profound and I think as well that companies are rethinking their whole essence, their value and their ability to make a contribution based on how the power of technology has changed them forever. I THINK GOVERNMENT AGENCIES, tax regimes, regulatory regimes need also to go through that same profound thinking as to what their role is, how should they contribute in a world where geography and physical assets do not mean the same thing anymore. For many developing nations, their most precious asset is not physical but the brains and ideas of their people—how to tap that and how to unleash it."

JUST A FEW NOTES FROM "CEO IN THE 21ST CENTURY"

The ground is shifting:

We are in the information age – not the industrial revolution

We need to go from the local to the global

There are changes in the business cycle and how we need to respond

We live in a world of constant communication – We no longer need LONG TERM VISION BUT CONSTANT VISION.

SOCIAL AND CORPORATE RESPONSIBILITY HAVE BECOME ONE.

Business is changing and speed is essential – TIME AND SPEED ARE ESSENTIAL.

Complex communications, complex change, developing a global culture, being conscious of the environment.

Chairman of Toshiba: Taizo Nishimuro: "Have eyes and ears of understanding to grasp what is happening and what it means."