Capitalism with a Human Face – A 2015 Update

Globalization & CC

To celebrate the publication of Globalization and Corporate Citizenship: The Alternative Gaze  (Edited by Malcolm McIntosh) we wanted to share Klaus M. Leisinger’s reflective update to his seminal article from 2007: Capitalism with a Human Face.

The theory and practice of corporate citizenship and responsibility has many alternative perspectives from the business-as-usual gaze. The essays in Globalization and Corporate Citizenship: The Alternative Gaze encapsulate the essence of these alternative ideas and embrace the idea that the new methods of the next century may not lie in mainstream capitalist thinking. Featuring contributions from Klaus M. Leisinger, Chris Laszlo, David Coopperrider, Simon Zadek, Sandra Waddock and others.

This title is one of a two-volume set – a collection of seminal and thought-provoking essays, drawn from the Journal of Corporate Citizenship’s archive, accompanied by new analysis and reflection from the original authors. Written by some of the most widely recognized academic and business pioneers and leaders of the corporate responsibility and global sustainability movement, the volumes make essential reference texts for anyone interested in the radically awakening new global political economy.

Learn more about Business, Capitalism and Corporate Citizenship.

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Capitalism with a Human Face – A 2015 Update

By Klaus M. Leisinger

Re-reading an article that one has written nearly 10 years ago is usually a mixed blessing. Because knowledge is always preliminary, and because the level of awareness that drives the writing at a given time depends on a context that may have changed substantially, one might end up slightly embarrassed. To my relief, the basic arguments offered in 2007 are still valid. Indeed, corporate responsibility presents a wicked problem: It includes economic, social, environmental and political issues; it does not have a clear definition; it has to deal with different and evolving stakeholder perspectives and (therefore) has no stopping rule. The definition of corporate responsibility continues to be a normative exercise and is predetermined by (mostly) implicit assumptions about what markets can do, what governments ought to do and what a fair division of responsibility looks like.

Nevertheless, much has changed in practice – and in a desirable direction:

  • The Global Compact has broadened and deepened its impact, and the LEAD Initiative allows for a competitive differentiation of leading actors. There is a global spread of the sustainability spirit and practice that penetrates into the value chain.
  • The number of corporate leaders who have realized that the “rules of the game” Milton Friedman was referring to have changed significantly has grown. Such leaders know that their company’s ability to create long-term value depends not only on innovative ideas, good business models and the known conventional economic, legal and technical factors, but increasingly also on a license to operate granted by society. Leaders’ awareness and the resulting “tune from the top” are the single most important precondition for the sincerity of any corporate reform process.
  • The financial sector is increasingly including environmental, social and governance indicators into its evaluations.
  • The Business and Human Rights discourse has matured from a battle of words and mutual distrust to the formulation of UN Guiding Principles helping to implement the United Nations “Protect Respect and Remedy” framework; and
  • The relationship between the corporate sector and most civil society organizations is much more relaxed than it used to be. In complex pluralistic societies the two parties still have different functions – but the atmosphere between most of them is much less ideological gridlocked and “naming and shaming” focused. Cooperativeness in the spirit of shared values and principles for the accomplishment of common goals results in innovative models of collaboration making good use of the different skills, resources, experience and networks brought together in “solution stakeholder teams”.

The Post-2015 Development Agenda for the realization of a “future we want for all” will confront the business world with new demands. Thus corporate responsibility will have to embrace an increasing range of issues, trespassing economics to politics and beyond (Albert Hirschman) – with the ongoing necessity of being successful in the corporate core competence. Reputation capital granted by civil society and regulatory frameworks that make sure the market prices tell the ecological and social truth are powerful incentives to make business a force for sustainability.

 

Klaus M. Leisinger

Klaus M. Leisinger is founder and president of the Foundation Global Values Alliance  (Basel,  Switzerland).  Between  1996  and  2013  he  headed  the former Novartis Foundation for Sustainable Development as President and CEO. Before dedicating his life to not-for-profit work, he gained substantial business experience in several Sub-Saharan African countries.  In addition to his position at the Global Values Alliance, Klaus Leisinger is Professor of Sociology  at  the  University of Basel covering business  ethics, corporate responsibility as well as sustainable development topics.  He also serves  United  Nations  institutions  as  a  senior  advisor  for  the  post-2015 Development Goals and Business Ethics.

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