Critical Concerns for Businesses:
Most of the focus in business has been on critical legal and auditing issues of corporate governance. But, there are other crucial issues that business needs to concentrate upon with new vigor. They range from largely domestic topics, to broad international social responsibility questions – matters of corporate policy on the environment and labor and transparency, which wrecked the Cancun WTO negotiations in the Fall of 2003. We look at many of the following issues:
- Rule of Law Issues - Relating to compliance with governmental rules, regulations and laws is fundamental to every organizational Code of Ethical Conduct.
- Ethics and Compliance Standards - That consider compliance with laws and regulations, as well as potential conflicts such as in "gifts," "conflicts of interest" and "personnel issues."
- Compensation - Is the total compensation awarded corporate leaders an ethical issue? We say yes. It directly impacts public perceptions of integrity, which impacts critical issues of trust.
- Composition of Boards of Directors - Perceptions of integrity and trust have now come to focus on the roles of "independent" directors – who trains them, who selects them, what powers should they have?
- Chief Ethics Officers - An increasing number of corporations have appointed people to this key post – what should be its scope of responsibilities, who should this CEO report to – in management and in the Board?
- Corruption and Money Laundering Issues - Related to international business transactions and the provision of illicit funds to foreign public officials as these officials abuse their office for personal gain.
- Human Rights Issues - Relating to the civil discourse of organizations relative to all individuals with which they interact in all countries– a major topic for non-governmental organizations.
- Labor Issues - Embracing workplace conditions, gender, ethnic and related matters in developing nations – a major topic for non-governmental organizations.
- Environmental Issues - Involving full compliance with existing host and home country laws and regulations. – a major topic for non-governmental organizations.
- National cultural issues - Relating to respect by organizations for national customs, traditions, religious and cultural matters as practiced in the individual countries in which the organizations operate.
- Local Community Issues - Pertaining to the social behavior of organizations wherever they pursue their activities and which might embrace philanthropy.
- Supporting Emerging Free-Market Systems and Structures - Which imply identifying, recognizing, promoting - and refraining from weakening - actions that assist governmental policy-making to build competitive, transparent and well regulated open markets.
Disclaimer: We do not claim expertise in all these areas. We track the debates. We have extensive contacts in diverse fields, including academia and non-governmental organizations, to provide first class insights and analysis.
Ethics & Values (Globalization)
Never before have issues of ethics and values been so prominent within debates and official negotiations across national borders under the heading of globalization. Every industry is impacted. It relates to the enforcement of patent rights. It concerns perceptions of genetically modified foods. It embraces the ways in which U.S. firms sub-contract factories in poor countries to produce goods for Western markets. It relates to every aspect of the natural resources industry. For business, coming to terms with this vital and complex agenda means new strategies and corporate behaviors.
- It means having a vision about where the world is going and our part in it;
- It means restructuring the company to make it genuinely multinational;
- It means being right on top of the latest global developments that can influence business decisions, knowing the strategies of foreign competitors, and having the right contacts.
Major corporations worldwide are often seen as suspect by local publics in part because they are perceived to be more powerful than national governments, yet not democratically accountable. Globalization is widely seen as undermining the power of governments, while boosting that of business. Vogl Communications monitors the issues and provides business with strategic advice.
Interest Groups Setting the Agenda
"There is great scope for practical action across the whole agenda. I think business has a role and that includes working with others including governments and NGOs. We're committed to doing that."
Sir John Browne, Chief Executive Officer of BPAmoco
At Vogl Communications we are in continuous contact with non-governmental organizations and we track critical new developments to provide clients with insights and assist them to work constructively with NGOs.
- Global corporations need to understand the dynamics of the issues that comprise the integrity agenda.
- They need to know the perspectives of the diverse groups that are influencing the agenda's evolution on a worldwide basis.
- They need to determine how best to dialogue with these groups to secure constructive resolution of issues that serves everyone's interest.
The critical players include:
- Global non-governmental organizations (NGOs) - Such as Amnesty International, Greenpeace, Human Rights Watch, Catholic Relief, Bread for the World, The Red Cross, Transparency International.
- National civil society groups (NGOs) - From the outset, for example, Amnesty International saw itself as building global networks from its original head office in London. The anti-corruption group Transparency International now has 77 national chapters around the globe.
- Churches - The oldest of all civil society organizations remain the most influential in many developing countries in setting demands in the realm of social accountability and responsibility.
- Shareholder groups - In both the United States and in Europe there is increasing attention to "socially responsible investing" on the part of rising numbers of individual and institutional investors.
- Labor - Organized labor at the national level in leading industrial countries, combined with international trade union associations, are frequently at the forefront in questioning the merits of globalization.
- Think tanks and research oriented issues' leaders - The gathering importance of global integrity and governance issues in the era of globalization has stimulated a growing number of leading "Think Tanks" to become engaged in this area, such as the Institute for International Economics, the Harvard Development Center, the Brookings Institution, and many others.
- Politicians - The collapse of communism and authoritarianism in many countries in the 1980s and 1990s, from Russia to South Africa, from Nigeria to Indonesia, boosted public debate about social justice. Many politicians now seek to broaden their public appeal by campaigning against corruption and for social programs that raise demands on business.
- International agencies - The pressures of the diverse civil society organizations, combined with the crises that globalization has spawned (notably the Asian financial crisis) have placed governance issues center stage on the agendas of many international official agencies, such as the United Nations, the OECD, the World Bank and the International Monetary Fund.
- The Media - Is having an enormous impact on the global value debate. It is finding growing public interest in all aspects of the integrity agenda, from human rights to corruption, and has found no shortage of villains.
Reputation Management
Positive global reputations are won with difficulty and lost with ease.
How corporations handle business ethics and social responsibility issues internally and externally (including the ways in which they are communicated) impacts their reputations and therefore their relationships with their stakeholders. Vogl Communications has evolved expertise in this area. It is central to our strategic thinking and to sound ethical practices by business.
The costs of complacency of taking the management of ethics and social responsibility for granted, are enormous. Sadly, many companies only accept this conclusion after they have become embroiled in a crisis. We argue that pro-active corporate work here is an enormously good investment.
- As Nike, Shell, Texaco, Exxon and many others have found, when a reputation crisis ignites over an integrity issue, then top Board-management strains are quick to surface. Management becomes distracted from running the business. The Board worries about its own reputation. Vast amounts of time are absorbed in determining actions. The stress can have major impact.
- An ethics crisis prompts new corporate evaluations by the financial media and securities analysts. This leads institutional investors to reassess. Declines in stock prices are probable.
- Costs of salvaging the situation in terms of new staff training, new compliance procedures, possible damages awards and public relations, can be significant.
- Consumers may lose trust in the company, thus impacting sales. Potential employees may look to a firm seen to have higher integrity.
- Governmental regulators may become more vigilant, while the influence of the corporation's lobbyists may decline.
- A scandal can prompt demands for a total review of the corporation's approaches to value issues.
Corporations in a competitive world must invest in building stakeholder trust. This is a central issue in ethics management – it all comes down to securing a reputation for integrity.
