By Michael Smith

Corporations and industries need a purpose beyond profit, says Sunil Mathur, the Managing Director and Chief Executive of Siemens in India and South Asia. ‘Companies’ purposes are critical,’ he explains. They should include a commitment to the UN’s Sustainable Development Goals (SDGs); meeting environmental challenges; diversity in the workforce; and ethical values. 

A moral compass for companies

Mathur was the opening speaker on a panel at the first conference of the Caux Forum Online 2021, marking the 75th anniversary of the Initiatives of Change centre in Switzerland. The two-day business forum, from 12 to 13 July, focused on ‘Corporate governance in the 21st century, responding to systemic crisis’. It was organized by Initiatives of Change Business & Economy, which also convenes monthly meetings on the implications of sustainability for business.  

Mathur heads a £1.2 billion engineering and infrastructure company with a workforce of nearly 10,000 employees. He acknowledged that ‘shareholder expectations are increasingly challenging’, when they clash with the long-term goals of boards of directors.  ‘The stock exchange is ruthless,’ he said.

Companies can only be sustainable if there is a commitment to a higher purpose.

‘Growth is only sustainable if it is valid for all stakeholders,’ Mathur continued. ‘Growth with higher purpose is becoming critical. Companies can only be sustainable if there is a commitment to a higher purpose.' He called for a ‘walk the talk environment’: ‘Does the company live by a moral compass? Does it articulate this to all the employees?’

Siemens now operates, he said, under the acronym DEGREE: 

• De-carbonization;
• Ethics – a culture of integrity;
• Governance;
• Resources – reducing waste;
• Equity – inclusivity;     
• Employability – for all employees.

Siemens, which is based in Germany, weathered a bribery storm in 2006, when a secret fund of $40 to $50 million used to win contracts in African countries was exposed. The board resigned and a new board and CEO were put in place who vowed that ‘only clean business is Siemens business’. The company was so transformed that the Dow Jones has ranked Siemens as the world’s most ethically compliant company.

Mathur admitted there were ethical dilemmas, such as the employment of a child as a tea boy. The child had a right to an education, but might be the only breadwinner in his family.

Humanity at the centre of corporate practice

Isabella Bunn, a professor of business ethics at Regents Park College, University of Oxford, and member of the governing body of Oxford Analytica, also focused on values and purpose. Companies should have ‘a multi-stakeholder approach’, encompassing environmental and social responsibility, corporate governance and the SDGs. The benefits companies brought to society gave them a ‘social license to operate’, she said. ‘Boards need to establish the company’s values culture’ and ‘designate culture as a corporate asset’.

What is different now about purpose is how to put humanity at the centre of corporate practice.

Bunn, who specializes in ethical aspects of economic law, cited organizations that were advocating purpose beyond profit. They included the Caux Round Table for Moral Capitalism; Oxford Analytica; British Academy Future of the Corporation Programme; and the UN Global Compact.

She said that companies should think of purpose in terms of strategy—an ongoing principle for the entire organization. The new emphasis on purpose meant considering ‘how to put humanity at the centre of corporate practice’.

Engaging all stakeholders

Human rights lawyer and mediator Elise Groulx Diggs, who is affiliated to Georgetown University, Washington DC, advises corporations on human rights risks in their strategic priorities and supply chains. The need, she said, was to ‘walk the talk in engaging with all stakeholders on human rights’. This included addressing ‘violations of human rights and climate harm’.

Groulx made the distinction between ‘the art of doing good’ promoted by ‘Corporate Social Responsibility’ (CSR) and ‘the art of doing no harm’ promoted by  ‘Business and Human Rights’, a new field of legal practice.

She included awareness of ‘the upstream supply chain’ in her stakeholder engagement approach, giving the example of the Rana Plaza tragedy in Dacca, Bangladesh. Over 1,100 garment workers were killed when the building collapsed in April 2013. They had been making clothing for Western fashion houses in a building that had been deemed unsafe after cracks appeared in concrete pillars. Bangladeshi law, Groulx said, had forbidden trade unions which would have protected workers’ rights.

You have to be optimistic that things can change.

She also pointed at failures in social investment by mining companies, from Peru to Australia and Papua New Guinea, where decisions were imposed from 5,000 miles away with neither proper consultation nor engagement at the local level.

Yet, she said, ‘you have to be optimistic’ that things can change. The UN’s Principles for Responsible Management Education (PRME) involves 800 business and management schools in teaching corporate values and sustainability.

Groulx briefly presented her ‘galaxy of norms’ model for understanding the new legal universe developing globally. In this, hard law meets soft law through five rings of liability: reporting (including the triple bottom line of people, planet and profit); the legal duty of care for employees, suppliers and other stakeholders; voluntary principles and industry standards, contracts and codes of conduct; and soft law (such as the UN Guiding Principles on Business and Human Rights, the OECD guidelines, the ILO core conventions, the SDGs and the UN Global Compact).

Community of trust

During the online discussion, participants emphasized that potential employees wanted to work for companies that were seen to be ethical, including addressing such issues as climate change.

Mathur appealed for ‘links of trust’ between industry, governments and civil society. He was supported by Northern Irish businessman Peter Brew in appealing for  Initiatives of Change to act ‘as a fulcrum to build trust’ between the business world, governments and civil society. The need was for a ‘safe space’ for dialogue, Bunn said, or as Groulx put it, a ‘community of trust’.

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This report, written by Alan Channer and made possible thanks to the support of the Swiss Federal Department of Foreign Affairs (FDFA), looks back on a decade of Caux Dialogues on Environment and Security and highlights the key impact, recommendations and pointers to the future.

Download the report here

The Caux Forum Online 2021 opened on 5 July with a panel on ‘Swiss Perspectives on Peace – past, present and future’ to celebrate the 75th anniversary of the Caux Conference and Seminar Centre as the European conference centre of Initiatives of Change (IofC) and 15 years of partnership between IofC Switzerland and the Swiss Federal Department of Foreign Affairs (FDFA).

Ambassador Thomas Guerber, Director of the Geneva Centre for Security Sector Government (DCAF), congratulated IofC Switzerland on upholding ‘a principle which is as powerful today as it was in 1946: namely that change at the personal level can go a long way to creating peace within and between countries’. This principle had not lost any of its persuasiveness. ‘Nor has the vision of a just, peaceful and sustainable world in which people pursue responsibility and act on the basis of global interdependence.’

Change at the personal level can go a long way to creating peace within and between countries

 

People from 60 countries had registered for the online event, streamed from the Main Hall at the conference centre in Caux. Ambassador Patricia Danzi, Director General of the Swiss Agency for Development and Cooperation (SDC), and Christine Beerli, President of Initiatives of Change Switzerland, joined Ambassador Guerber on the panel. It was moderated by Rainer Gude, Excecutive Coordinator of the Geneva Peacebuilding Platform.

Switzerland’s involvement in international peacebuilding was relatively recent, Ambassador Danzi explained. In earlier years, Switzerland’s narrow interpretation of neutrality ‘led us to abstain rather than engage’. Switzerland had joined the United Nations in 2002 and hoped to become a non-permanent member of the UN Security Council in 2023-4. ‘For this we are very well equipped and Caux has definitely helped us to reach this important step.’

‘The need for dialogue and trustbuilding hasn’t decreased in recent years,’ said Ambassador Guerber. Conflicts were increasing all over the world and ‘most multilateral peace initiatives have not succeeded’. Evidence suggested that more inclusive peace processes are more durable. ‘Peace processes need to be configured in such a way that different sub-populations in society can  have a strong voice. Whenever these principles have been applied, the peace process has worked.’

‘One concept never fails,’ said Ambassador Danzi. ‘Put people at the centre, ask what is it that the community, society and country wants and build around that.’

One concept never fails. Put people at the centre, ask what is it that the community, society and country wants and build around that.

The speakers agreed that Switzerland, with her long tradition of direct democracy, was well placed to support more inclusive peace processes. But Christine Beerli warned against complacency: ‘We also have a certain danger of losing our old tradition of making steps towards each other, discussing, being a platform to find solutions. We have to work inside Switzerland too.’

Ambassador Danzi welcomed a shift in attitude in many international financial institutions towards the realization that peace and development are inextricable. ‘The horizons have opened and this is an opportunity,’ she said.

Ambassador Guerber agreed. ‘In most cases peace processes take place in fragile settings. It takes years and decades to build stable and solid structures within which a country can find sustainable solutions. So development, humanitarian and peace actors find themselves in the same space. There needs to be more consistent, coherent coordination between them.’

Ambassador Danzi offered a vision of centres like the Caux Conference and Seminar Centre emerging all over the world. ‘What you are doing to bring people together with different backgrounds, and force us all to make these extra steps towards the other, builds trust. The world needs more initiatives like these.’ The pandemic had increased the risk of boxing oneself into a corner and looking at things from just one perspective.  

‘Everybody who operates in peace, security and development in the Swiss Government and international Geneva greatly appreciates the value added by the space IofC has made available,’ concluded Ambassador Guerber.

What you are doing to bring people together with different backgrounds, and force us all to make these extra steps towards the other, builds trust. The world needs more initiatives like these.

• Discover all Caux Forum Online 2021 events
• Find out more about this year's 75th anniversary celebrations

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• Video produced by www.visualiveproductions.com
• Photos by Mark Henley