Vol. 4 No. 5 – September/October 2013

Compact Sustainability

Editor's Letter

  By Dirk Olin, Editor in Chief

In September, chief executives, NGOs, and thought leaders from around the world convened at the United Nations Global Compact’s Third Annual Leaders Summit in New York. At the event, the UNGC unveiled an updated “business engagement architecture” designed to deepen the commercial commitment to economic development, improving human health, and addressing environmental problems.

U.N. Secretary General Ban Ki-Moon, as well as Georg Kell, the organization’s accomplished executive director, led the proceedings.

Ban put a charge into the formalities right from the start: “While U.N. Global Compact members are on a good track in terms of high-level commitments and goal-setting,” he said, “much more needs to be done to deepen sustainability efforts in how they think and act, from boardrooms to supply chains.

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CEO Games

According to the University of Virginia’s newspaper, The Daily Progress, Darden Graduate School of Business Administration has prepared a new web-based game that will allow students to make ethical choices as they step into the role of a company chief executive. Called BizHero, the web-based game runs on PCs or tablets. It’s structured around several in-game modules — operations, community, human resources, marketing and finance. The player will face issues such as where to allocate funds: a decision to direct more funding toward production means the company’s marketing message might not get disseminated. Not directing enough funding to HR might lead to corporate corruption. “We wanted to create a complex enough world to try to [strategize],” said Darden professor Bobby Parmar, who created BizHero along with Fred Telegdy, a Darden digital curriculum manager. UVa Innovation selected BizHero as one of 10 proof-of-concept projects to participate in a six-month-long crowd-funding initiative.

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Donate to Develop

Foundation President Patrick Gaston leverages his company’s global reach for global impact.

By Dirk Olin

Patrick Gaston is President of The Western Union Foundation, where he leads a global philanthropic strategy, including employee engagement, grant making and strategic initiatives that support education as a pathway to economic opportunity.

Immediately prior to joining Western Union, Gaston served as president and CEO of Gastal Networks LLC, a management consulting firm assisting organizations in building results-driven corporate responsibility and philanthropic strategies. Before that, he served as a senior advisor to the Clinton Bush Haiti Fund, and he previously served as president of the Verizon Foundation, one of the 15 largest corporate foundations in America.

Gaston also serves on a number of national non-profit boards, including the NAACP Board of Trustees.

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Wired for Good

Western Union CEO Hikmet Ersek on educational access and clean money.

By Dirk Olin

Hikmet Ersek is the president and chief executive officer of The Western Union Company, a Fortune 500-ranked global leader in payment services. Ersek has executive management responsibility for a global financial services network spread across 200 countries and territories and an iconic,160-year-old brand. The company today counts employees from more than 100 countries working in 300 offices around the world.

During Ersek’s tenure as CEO, which began in 2010, Western Union has steadily diversified its business mix. Besides growing its retail money-transfer business to more than 520,000 worldwide “agent locations,” the company has expanded into electronic and mobile channels, added a global cross-border business that serves small- and medium- sized enterprises (SMEs), and broadened its financial services product line to include stored-value cards and e-wallets.

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Remarkable Leaders

The 2013 CEO of the Year Award and Lifetime Achievement Award finalists.

   By The Editors

Allan Lim
Chief Executive Officer
Alpha Biofeul(s) Private Limited

Allan Lim graduated from Nanyang Technological University in 1999 with a bachelor’s degree in engineering degree. Since then he has embarked on start-up projects ranging from microbial research to biodegradable plastics to a novel recycled coffee durable product. In 2005, he was awarded the Spirit of Enterprise Award for his enterprising spirit and his efforts in promoting the enterprising spirit to youth.

Chad Rosenberg
President and CEO
American Global Logistics

With more than 20 years of industry experience, Chad Rosenberg is widely renowned as an expert in international logistics.

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Name, Blame, and Shame

Why activists target corporations.

 By Bill Shireman

Why do social cause activists blame major corporations for many of the world’s most complex and intractable problems?

Part of the reason is obvious: sometimes, companies genuinely make matters worse. But often, they make them better. Yet many activists give them almost no credit for what’s good in the world, and nearly all the blame for what’s bad.

Executives often believe that activists target their companies for strictly cynical reasons. They want to raise money and accumulate power. They want to oversimplify real-world problems, and avoid the hard work of real solutions. They want to damage profits and ruin businesses. They want to destroy capitalism and replace it with a “socialist” alternative that they control.

Activist leaders sometimes accommodate them in these beliefs. But the vast majority of activists are anything but cynical, and most don’t really want to destroy capitalism, or even the company.

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The Myth of the Profit Motive

Why the bottom line should not be top of mind.

 By Bill Shireman

The idea that corporations exist solely to maximize profits is one of the most damaging frauds perpetrated by business leaders against their own institutions. What better setup could there be to demonize corporations, as soulless machines that exist solely to take wealth from others, and keep it for themselves – no matter who is harmed in the process? As Harvard management guru Michael Porter writes, “the public’s dismay over corporate greed continue[s] to challenge the market system and the legitimacy of business itself.”

Great business leaders know that their companies serve a higher purpose than mere profit. David Packard, cofounder of the electronics giant that bears his name, said it this way in 1947: “Many assume, wrongly, that a company exists simply to make money....the real reason HP exists is to make a contribution.

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Sustainability, Step-by-Step

 The advocates of context-based CR.

   By Mark W. McElroy and J.M.L van Engelen

 We now turn our attention to the practice of context-based sustainability, which is fundamentally about managing the sustainability performance of organizations in a way that takes vital capitals and stakeholder well-being explicitly into account. Here we should first acknowledge that the approach we advocate here is by no means the only approach to managing the sustainability performance of organizations; rather, it is the one we think is the best and most legitimate at this time, and which logically follows from the capital- and context-based school of thought.

In using the term sustainability performance, we mean to refer to the degree to which an organization’s non-financial performance, consisting of its impacts on vital (non-monetary) capitals in the world, are sustainable.

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Responsible Lobbyists

Despite its bad press, the paid pursuit of influencing policy can offer real societal value.

 By Dr. Stephanos Anastasiadis and Dr. Sigrun M. Wagner

 Lobbyists paying elected representatives to place questions in the U.K. parliament. Arms manufacturers giving South African officials BMWs in exchange for army contracts. Smoke-filled rooms featuring stuffed brown envelopes. No wonder lobbying has a bad name. But these are not images of lobbying: They depict corruption, albeit in a policymaking setting. These actions are morally suspect and usually illegal. They also contravene the UN Global Compact: Principle 10 requires the combating of corruption. In fact, lobbying is far more often about committee meetings, reports, and other unspectacular activities. Lobbying can be understood as the focused provision of relevant information, with the intention of influencing public policy or process.

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