When businesses take ethics seriously and they are positively engaged in society, they are in a stronger position to have the ear of government and other key stakeholders. Society expects businesses to be more responsive to social challenges.
In recent times there have been growing calls for businesses to play a greater role in promoting social change. I read recently a public statement issued by the US Business Round-Table made up of 200 major US corporations offering a new definition of corporate purposes.
They amended their two-decade-old statement that unequivocally stated that “corporations exist principally to serve their shareholders”. Their new statement expresses a pledge to shift away from narrow shareholder capitalism that is driven by a single metric of profitability to adopt broader stakeholder capitalism that emphasises greater social purpose and responsibility.
Such a commitment is critical for re-aligning the core purpose of the business with the interests of stakeholders and is a glue that binds the government, business and society.
Large corporates have in recent times lost some credibility due to dodgy business practices, accounting fraud or collusive behaviour to fix prices. Regulation has always been about catching up with perverse forms of innovation that generate negative externalities….