Thursday, September 28, 2006

Why Business will move "Beyond Business"

Mayank Krishna had posted a comment and link to his post on Future of Business: Socially Oriented Capitalism.

Which is also the reason for this post - to extend his point... and to share why Milton Freidman's "Business of business is business" may be - hopefully - out of steps with the emeging tends.

The following are some of the reasons why in time to come, business will move "beyond business":

  • Even though voluntary by nature, the UN Global Compact has been increasingly adopted by companies in India and abroad. In India, more than 125 companies have committed to support and abide by the 10 UN principles (which relate to human rights, labour standards, environmental protections, and anti-corruption) in doing business.

  • 'Triple Bottom Line Reporting(or TBL/sustainability reporting) that was mandated in France is increasingly becoming the norm across the world. This format recommends that companies not only disclose their financial accounts, but also their performance on environmental, and social and ethical parameters. About 25 Indian companies, including ITC, Dr Reddy’s Laboratories, Jubilant Organsys, Ford India, Tata Steel, Reliance, etc., have already shifted to triple bottom line reporting norms.

  • The Global Reporting Initiative (GRI) that started in 1997 under UN Environmental Program, and is spearheading the TBL/sustainability reporting has around 20,000 ‘stakeholders’ across 80 countries. Its 2002 guidelines are followed by around 880 corporations worldwide that include almost all well-known MNCs. More are likely to join once the 3G (3rd Generation) guidelines get published in October 2006.

  • One of the landmark events, which is likely to change how business is done globally, took place in May 2006, and resulted in 'The Equator Principles’for project financing that were adopted by 40 global international financial institutions with funds worth $4trillions. These 10 principles lay guidelines about assessing the environmental and social risks in funding a project, and ensure compliance to the performance standards on these issues. These principle will come in operation from January ’07, when the EPFIs (Equator Principles Financial Institutions) will expect due diligence on the environmental, social and governance issues before funding a project.

  • Increasingly the global trading companies (e.g., Chiquita, Gap, Levi Strauss, Marks and Spencer, Mothercare, Tesco, etc., to name a few) are adopting the nine standards of the ‘Ethical Trading Initiative Base Code’, which is based on the ILO recommendations about child labour, right to collective bargaining and association, working condition, wages, etc.. The ETI initiative also involves the trade unions and global NGOs such as Care International, Christian Aid, Fairtrade, Oxfam, etc.

    Etc.

    My guess is that in time/years to come, just like ISO certification, these will become the norms. So just like, even if an ISO-certified company is not necessarily, the most 'quality-conscious' organisation - and may be just paying lip-service to the norms - similarly, the business will have to follow certain norms to remain in the business (even, if it does not believe in it)
  • 2 comments:

    Mayank Krishna said...

    Thanks sir for linking to my post and extending the idea further.

    The facts and figures highlighted by you make the whole idea appear imminent in near future.

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