In recent years, a remarkable paradigm shift has taken place in the business world.
Driven by the realization that business and society can no longer intersect at the crossroads of profit first and society second, business is embracing a new order that puts the interests of society at the right level, consistent with the interests of the companies. This has prompted a deeper look at the supply chain and a greater focus on sustainable sourcing.
The results of this convergence of interests include more opportunities for the poor around the world, increased environmental protection and, yes, it is paradoxical that it appears that corporate profits have not been reduced for pioneers of this psychological shift.
In short, companies are actively adopting a corporate citizenship philosophy, which means taking responsibility for protecting the environment, reducing inequality, and achieving social justice through supply chain practices and beyond.
This corporate policy of not a dichotomy between business results and corporate citizenship is the foundation of some of today’s most successful companies and is prominently active in the areas of environmental policy, product safety, human rights, management of chemicals in consumer products, conflict minerals and a code of conduct for manufacturers.
Such a focus on multiple areas is consistent with the view of many companies that the old model is neither desirable nor sustainable. Today, consumers’ decisions to buy products are tied to questions about where and how products are developed and manufactured.
Companies cannot ignore consumer interest in ethical aspects such as fair labour practices, supply chain diversity, and sustainable sourcing.
At first glance, corporate citizenship activities may seem detrimental to a company’s bottom line, as there are often significant costs associated with company policies and programs. However, a thorough analysis tells a different story: business can be conducted for profit without sacrificing core human values such as safety in the workplace, good salary and good working conditions.
Human happiness and prosperity largely depend on the free flow and movement of capital, goods, people, and technology. Investment in product development creates jobs and provides purchasing power. In turn, purchasing power ensures that firms can produce more of the same product and developing new products, increase their profit margins, and strengthen their economic base. A vibrant economy expands the tax base, which can help build and maintain public infrastructure.
Deriving Global Benefits
Multinational companies should strive to take advantage of the opportunities inherent in today’s global economy, including moving production activities to geographical areas where labour is cheap, ensuring net profits and creating jobs in areas where the economy would otherwise suffer. Millions of people have been lifted out of poverty.
But everyone has not benefited from globalization. Hundreds of millions of people still suffer from inequality and other forms of economic injustice.
Fortunately, some companies have achieved good business results regarding human health and the environment. Others should do the same, starting by taking a close look at their supply chains.