PHM-Exch> Oped piece on Davos Manifesto Has the era of the ethical corporation arrived?

[Claudio Schuftan]

From: Nick Buxton <nick at tni.org

The link to it is here
https://www.opendemocracy.net/en/oureconomy/has-era-ethical-corporation-arrived/.


Has the era of the ethical corporation arrived?

The corporate world’s embrace of purpose may seem commendable. But without
any enforcement mechanisms, the profit-motive will always win out.
Nick Buxton <https://www.opendemocracy.net/en/author/nick-buxton/>
19 December 2019

Profit is apparently no longer the goal for corporations. Now, it’s all
about ‘purpose’.

This last week, the corporate-led World Economic Forum (WEF) proudly
published its Davos Manifesto
<https://www.weforum.org/agenda/2019/12/davos-manifesto-2020-the-universal-purpose-of-a-company-in-the-fourth-industrial-revolution>
in the Financial Times and Wall Street Journal asserting a vision of ‘the
universal purpose of a company’. WEF’s founder Klaus Schwab said
<https://www.weforum.org/agenda/2019/12/why-we-need-davos-manifesto-for-better-kind-of-capitalism/>
the manifesto offers ‘the best response to today’s social and environmental
challenges.’ The question that must be asked though is: whose purpose is
really served? Will it mean a transformation of the corporation as we know
it, or might it instead be a strategy for increased corporate control of
policy and politics?

On the surface, the Davos Manifesto looks commendable. It calls for
corporations to treat customers with dignity and respect, to respect human
rights throughout their supply chains, to act as a steward of the
environment for future generations and, most significantly, to measure
performance ‘not only on the return to shareholders, but also on how it
achieves its environmental, social and good governance objectives.’ In this
respect, the Davos Manifesto is an advance on the ‘Statement on the
<https://opportunity.businessroundtable.org/ourcommitment/> Purpose of a Co
<https://opportunity.businessroundtable.org/ourcommitment/>rporation
<https://opportunity.businessroundtable.org/ourcommitment/>’ issued in
August by 181 CEOs in the US Business Roundtable that made a vaguer
commitment to generating ‘long term value’ and acting ethically and
sustainably.

The catch is that nowhere in either statement is there a mention of
enforcement mechanisms, legislation or regulation to ensure companies abide
by their commitments. It is an entirely voluntary process that is
completely dependent on self-regulation, which does not challenge the
overriding profit-making purpose of corporations. In this respect, it is an
extension of the corporate social responsibility trend, in which every
Fortune 500 company issues glowing reports where the PR is far better than
the practice. Time and time again, the profit-motive wins out when it
conflicts with any aspirational social or environmental target. It could be
seen when Volkswagen was launching a ‘ThinkBlue’ campaign to “encourage
eco-friendly mobility” at the same time as paying its engineers to
deliberately trick California’s emissions testing system. Or where Apple
says it ‘care(s) deeply about the people who build our products, and the
planet we all share’ yet for years has fought paying its taxes in Europe
and makes phones that are notoriously hard to repair.

However, it would be wrong to dismiss these statements as merely another
example of hypocritical corporate propaganda, because the Davos Manifesto
also proposes a strong ‘quid pro quo’ for companies committing to social
responsibility, saying that companies must become ‘stakeholder(s) –
together with governments and civil society – of our global future.’ In
other words, they argue that corporations as ‘global citizens’ should be
given a bigger role in global governance – in taking decisions that used to
be the remit of governments and people.

This is not just conjecture. In 2010, WEF finalized their ambitious project
called the Global Redesign Initiative
<http://www3.weforum.org/docs/WEF_GRI_EverybodysBusiness_Report_2010.pdf>,
(GRI), which proposed a transition away from intergovernmental
decision-making towards a system of multistakeholder governance. This
proposes that issues of global importance should be resolved by governments
forming partnerships with corporations and a few carefully selected civil
society representatives. As University of Massachusetts Senior Fellow
Harris Gleckman notes, it is attractive to corporations because it expands
the arenas where they can not just exert influence but directly develop
policy. And it is based entirely on an opt-in, voluntaristic approach,
avoiding any international binding standards and regulations that might
constrain profits. Most importantly, it allows corporations to set the
parameters of the debate and to fend off the dangers of regulatory policies
proposed by politicians like Sanders, Warren and Corbyn.

The multistakeholder model is already infiltrating various arenas of global
governance, such as Scaling Up Nutrition (SUN) or the Global Alliance on
Vaccines. In August 2019, however, it received a major boost with a little
known partnership agreement signed by the UN Secretary General and the
World Economic Forum
<https://weforum.ent.box.com/s/dj7x7z2fjxrox49farw5dfxfa1hfqw3h>. This
allows unprecedented access to WEF staff to UN programmes, funds, and
agencies, who in turn commit to participate in WEF meetings. In the
process, it also distorts intergovernmentally negotiated and agreed goals
to fit with the business interests of WEF members. So under financing, the
agreement calls only for ‘build[ing] a shared understanding of sustainable
investing’ but not for reducing banking induced instabilities and tax
avoidance. Worst of all, the partnership was not even discussed or agreed
with UN’s member states. A letter protesting the partnership by 500 civil
society groups
<https://www.tni.org/en/article/hundreds-of-civil-society-organizations-worldwide-denounce-world-economic-forums-takeover-of>
has gone unanswered.

In the meantime, Klaus Schwab in announcing the Davos Manifesto in advance
of their 2020 summit says that corporations need to “seize this moment
<https://www.weforum.org/agenda/2019/12/why-we-need-davos-manifesto-for-better-kind-of-capitalism/>
to ensure that stakeholder capitalism remains the new dominant model”.

At a time when reactionary politicians are promoting isolationist
nationalist and reactionary measures, any statement talking about global
cooperation and more ethical corporate conduct can sound attractive.
However, if it consolidates a model in which corporations exert more power
and influence and which further undermines popular democracy, it will not
resolve but rather fuel today’s social and environmental crises.

Corporate power – whether it is the fossil fuel firms driving the climate
crisis or the tech firms appropriating our data or the banks fueling the
financial crisis – are the reasons for today’s ‘social and environmental
challenges’. Turning to corporations for solutions would serve little
purpose than support their unchanged desire for profit.
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