Can profitability go hand-in-hand with responsibility?

OECD Forum, 15th May, 2001: SD Roundtable: What is the Contribution of Corporate Responsibility to Sustainable Development? Moderator Maria Cattaui
OECD Observer

As Chairman of Koc Holding Company, Rahmi Koc knows the bottom line, and his voicing of a standard business fact was the anchor to which all parties involved in Tuesday’s discussion agreed. “The goal of business is, as it always was-making money.” As a philanthropist however, he has pursued quite a different personal agenda, and he stands firm in support of broad corporate responsibility that includes attention to workers, the environment, honesty and fair conduct, and transparency. He remains clear though, that “The right government mechanisms must be put into place, but the companies themselves must be allowed to decide their specific approaches privately, in a more pro-active approach.”

Acknowledging that business must always strive to maintain its profitability does not mean it has to abandon social goals, however. Clearer evidence must be shown about the relationship between responsibility and profitability, a fact that is slowly becoming more evident. Today, responsibility must be made to support the bottom line. “If one can show to a CEO that there is a tiny percentage gain in the share prices of his company from following responsible policies, then that CEO will be convinced to use those policies,” says John Maresca of the Swiss Business and Humanitarian Forum. “Right now we’re in a phase where that hasn’t yet been demonstrated in a convincing way for CEOs.”

As head of Andersen UK’s Greenhouse Gas Emissions Trading Services, Frank Joshua said that the real challenge ahead is to bring the goals of business and social responsibility to a meeting point, a process that has begun gradually over the past 15 to 20 years. “What we have seen in the last ten years in the climate change arena really is an evolution in the attitude of business towards climate change. We have had a number of businesses like BP, Shell, Dupont and others … to put their companies at the forefront of reducing greenhouse gasses. In most cases these companies are not regulated by any government, they’re not required to do it, but its good business sense.” Companies, he concluded, are driven to better conduct by concerns about compliance costs.

Voluntary initiative does require costs though, and costs affect competitiveness if not all parties comply. Christina Tahon, director of health, safety, and environment at SOLVAY presented several ways her company has voluntarily reduced both greenhouse gas and wastewater emissions since 1992. She admitted that for the chemical industry “countries need to harmonise environmental regulations,” and that for global benefit on a long term basis, there is a need for “industrial citizenship, and communication with both the scientific world and regulatory authorities.”

Robert Massie is chairperson Global Reporting Initiative, a coalition of activist and social interest groups which strives to work with businesses to promote social and environmental responsibility. According to him, the future for sustainability lies in the creation of standardised reporting guidelines. “We realised on the one hand companies were receiving diverse information requests, while stakeholders were getting very uneven information that could not be compared,” he said. “Our idea was that perhaps we could convene a process to create a generally accepted reporting framework through a multi-stakeholder gathering.” This standard, he suggested, could be used as reference point for stakeholder negotiations and conflict resolutions.

Irresponsible company behaviour in the past will, of course, lead to credibility issues whenever business and humanistic goals are attempted to be linked. Mr Massie believes his group’s benchmarking will be able to restore it.

Peter Winsemius of McKinsey & Company, noted “in the past, there was a level of certainty. Governments regulated and companies either complied or were forced to by fines.” Today, he continued, business responsibility has been brought before both customers and investors. “Business people are slowly becoming surrounded by people who demand responsible behaviour.” He added that the transition to environmental concerns was a logical progression. “In the post Cold War era, a whole generation has grown up with a feeling of certainty that has allowed for higher goals.”

When John Evans of TUAC asked why the OECD guidelines for multinationals adopted by governments last year had not been mentioned as a potential benchmark, John Maresca answered: “there are many products out there that are called guidelines, and the OECD product is not the most prominent among them. I guess the Global Compact would be the most prominent among them.” Similarly, a student from the group, while acknowledging the positive discussion at the meeting, asked why it seemed companies were simply moving to third-world safe havens to escape responsible conduct even after the Global Compact was passed. Moderator Maria Cattaui noted that the Global Compact was designed to improve operational conduct, not ethical conduct, before answering: “why do negative things happen still? Well, I don’t think any of us would say there’s a magic wand that was suddenly waved by the Secretary General of the UN, though we all admire him for throwing out this challenge. The question is, can we minimise the negative impacts and maximise the others?”

©OECD Observer May 2001




Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.3% Apr 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.4% Mar 2018
Last update: 06 Jun 2018

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.
  • International co-operation, inclusive growth and digitalisation lead the themes of the 2018 OECD Forum in Paris on 29-30 May, under the banner of What brings us together www.oecd.org/forum. It is held alongside the annual OECD Ministerial Council Meeting on 30-31 May, chaired this year by France with a focus on multilateralism www.oecd.org/mcm.
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • Ambassador Aleksander Surdej, Permanent Representative of Poland to the OECD, was a guest on France 24’s English-language show “The Debate”, where he discussed French President Emmanuel Macron’s speech at the World Economic Forum in Davos.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018