Doing well by doing business ethically


CIPE is founded in the belief that business plays a key role in shaping democracy and making it work. The notion that business has a stake in democracy is still not commonly accepted globally. As we we continue celebrating International Democracy Day, it is useful to reflect on the role of the private sector in making democracy work through concrete examples. We spoke to Olajobi Makinwa, Head of Anti-Corruption and Transparency Initiatives at the UN Global Compact, to see how their member companies from around the world see their role in this regard.

From your perspective and from the perspective of your member companies, how does ethical and responsible behavior by business contribute to stronger democracies and democratic stability more broadly?

Responsible and ethical business practices introduce a greater degree of transparency and stakeholder engagement. By doing so business helps to grow and strengthen all forms of participatory engagement, including better and wider access to information that affects people. It can also enhance the living conditions of ordinary people, which can give people a stake in democracy and the means for participation. At the workplace, ethical business practices set high standards for treating people and communities well.  

Can you give us some examples?

Global Compact participants have in many ways contributed to the strengthening of the democratic stability of the countries where they operate. In Kenya for example, Safaricom (Kenya) partnered with the UN Office in Nairobi to implement a text-messaging campaign through which customers were given the opportunity to unite around a common message of peace. The Gap (USA) has strengthened engagement between compliance officers and local workers’ rights representatives, which in turn has resulted in fewer strikes and stoppages in the countries of operation.

In terms of environmental issues, Sasol (South Africa) is hosting dialogues on water management and sustainability with industry peers, governments, external experts and stakeholders, in order to help ensure that communities and the business sector have access to adequate and safe supplies. Oil and Natural Gas Corporation (India) has engaged in collective action by signing an integrity pact which contributes to the creation of a level playing field and enhancing the fight against corruption.

By creating income opportunities, improvements in technology, providing access to quality education and medical care, business can be an engine of modernization. Its contribution to long term development is critical and its value-oriented practices send important signals to societies at large. Unilever (UK) has implemented HIV/AIDS prevention programs within their communities of operation in Africa. MTN (Nigeria) provided personal computers and internet services to educational institutions across the country.

MAS Holdings (Sri Lanka) operates a program to encourage female employees to strive for professional advancement, hence contributing to gender empowerment and greater equality. Depending on country-specific context, each business has its own history embedded in societal and institutional predicaments. As global integration has advanced, especially over the past two decades, and as new technologies diffuse rapidly in the world, there is growing aspiration to underpin markets with sound ethics and universal values to give them greater sustainability and acceptability.

Business’s role in development is often viewed through a prism of philanthropy, yet the examples you give are much more engaging and complex than just giving money to a charitable cause. Do you foresee an expanding vision of how business can contribute to democracy and governance?

The recent financial crisis has reinforced the importance of efforts that promote sound ethical and responsible business practices and build trust and confidence in markets. Look at it from another side – unethical and irresponsible behavior undermines both trust and confidence in economic and political systems. Global integration can act as an accelerator of democracy as businesses aspire to be the best in class – not only through their products and services but also through their ethical performance. Philanthropy is a welcome add-on, but what matters much more is how businesses are managing their core activities around the world.

One area where responsible business practices have a particularly important link to the quality of democracy is the area of bribery and corruption. We know that in addition to being damaging to business and investment, corruption wastes public resources, disproportionately affects the poor, and reduces public confidence on political institutions, especially in fragile democracies and countries emerging from conflict. Many companies have stood up to corruption and cleaned up their own practices, but they are still in the minority.  If a critical mass of companies would join hands with these companies, they can contribute much more to the economic development of countries as to their democratic development.

In this regard, what needs to be done to promote ethical practices by companies in emerging markets?

Companies in emerging markets have long embraced notions of ethical responsibility and good markets. Some of them have been leading in this agenda for quite some time, especially those that are fully integrated in the global economy. The overall degree of openness and prevalence of a fair and level playing field provide a global basis to diffuse good practices. In countries where public institutions are weak, many challenges remain. In such instances, greater cooperation between foreign and local companies on ethical issues as well as support for dedicated UN Global Compact Local Networks and collective action can go a long way to advance the case for sound ethical behavior and, ultimately, good governance.