A New Role for Global Businesses

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GÖRAN LINDAHLMuch of the current debate on globalization focuses on the potential downside of unfettered competition. Will unemployment trigger social unrest in Europe? Will regions dependent on natural resources or commodities face more exploitation? Will the troubling social divides in emerging economies widen even further? As a businessman with almost 30 years of international experience, I see globalization as basically a good thing. But I also know that transparency and a free flow of trade, capital, skills, technology and information, even mixed with the human aspiration for a share of the better life, will not automatically lead to a better life for all.

The pursuit of profit alone cannot hold societies together. This is no new insight. What is new is the way that globalization is changing the landscape. Before 1989, two geopolitical power blocs, each with its own ideological and economic system, faced off across the Iron Curtain. In today's post-cold war world, trade, commerce and technology have reconfigured the global balance of power equation. Market forces and large corporations in many ways have a bigger impact on people's lives than governments or regional and international institutions.

Against that backdrop we need to widen the focus of business and embrace a new civic role for large corporations, globally and locally. Big companies like ABB train local people and transfer technology and business know-how into emerging economies. We treat employees and local communities everywhere with respect. We try to set examples of decency, fairness and solidarity, as well as of performance and competitiveness. Why? Partly because such behavior reflects the ethical core of a company. And partly because we clearly see it helps not only to be responsible but to be seen as being responsible.

Enlightened self-interest alone is reason enough for business to behave responsibly because good social practices help our bottom line. Just as companies discovered that reducing their impact on the environment can also improve their competitive position--by lowering costs and meeting the expectations of consumers--we recognize that tackling broader social responsibilities also furthers commercial goals. Companies that are good local citizens will find it easier to hire and keep talent, obtain good financing and gain societal approval, political support and regulatory consent.

To be sure, the social responsibilities of business are largely regulated by laws and public opinion. But it is good business to go beyond mere compliance. A firm like ABB can use our strengths--a global presence, a multicultural perspective, the proven ability to get things done quickly--to complement the actions of others and to fulfill our larger civic role. Shareholders demand--and rightly so--the creation of value as reflected by increasing profits and stock prices. That is the reason businesses exist. The economic dimension came first. But to it have been added the environmental, and now a societal, element.

Actions speak louder than rhetoric. In South Africa, we train local people in electrical engineering skills and help them establish themselves in business, which in turn supports the rural electrification program in that region. In India, China, throughout Asia, in the Middle East, Africa and Latin America, we transfer technology, engineering and business know-how.

But globalization has thrust upon the international business community another even more challenging dimension to our new civic role. An already worrying gap is widening between the international norms and declarations on human rights, such as the U.N. Charter, and current societal and business realities. Big companies need to step into the breach to ensure that globalization delivers more than a litany of dashed hopes. We must now act as co-guarantors of human rights.

To promote a new civic role for large corporations, I believe the business community must become active on a global level. U.N. Secretary-General Kofi Annan has begun to involve businesses in the U.N.'s work. To give that alliance substance, I propose an agreement giving business an integral role in ensuring the observance of the Universal Declaration of Human Rights. Such a pact would aim at widening corporations' transfer of know-how into emerging markets to include the sharing of democratic habits. In ABB, we did this in the Balkans by making sure we got Serbs, Kosovars and Bosnians to work together to rebuild war-damaged electricity infrastructure. In an emerging market country, we once talked the government into offering squatters along a future power transmission line financial incentives to move, instead of using the army to evict them.

The result is a win-win equation. Getting corporations as co-guarantors of human rights, the U.N. gains an ally. Businesses get smarter by becoming more a part of the societies they work in. And most importantly, for the people in troubled countries, global business becomes a partner. I think that this is in our interest, and in the interest of societies everywhere. It is good business practice.

Göran Lindahl is president and CEO of ABB