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 / Fourth Quarter 2002 / Issue 29(originally published by Booz & Company)


Globalism without Tears: A New Social Compact for CEOs

It is time that companies and governments demand more public examination of NGOs in order to hold them to the high public-interest standards the NGOs themselves espouse. Who makes the decisions in these organizations, how are these people selected, to whom are they responsible, and how are they held accountable? Who is providing the funding, and what are the interests of the financial supporters? Are the accounts audited and disclosed? In the United States, which NGOs are lobbying Congress, and are those that are doing so properly registered under the law? What is the track record of particular NGOs in terms of what they profess to stand for, how they have behaved, and what they have achieved?

Businesses and governments ought to press the media to ask these questions and relentlessly pursue the answers, just as the press does with much of the private and public sectors. Since NGOs are pressing for transparency and accountability on the part of multinationals and international institutions, it is only fair that they submit to the same standards. Were they forced to do so, the important debate about how globalization should proceed would become a lot more responsible and constructive.

Some NGOs fully understand this. Irene Khan, who heads Amnesty International, is one leader who does. “Accountability is important because of the power we have and the media exposure,” she told the Financial Times. “We have to be as transparent as we expect governments and others to be.”

Agenda Item 5: CEOs should press governments and international organizations to develop global rules of conduct.

Under any circumstance, the role of a multinational company in the society of any country will be both limited and ambiguous. When the requisite laws and standards do not exist, business leaders are often pressured to fill some of the void. But it would be far better for governments and international institutions to set and enforce the framework for global capitalism, because only governments have the authority and political legitimacy to do so. CEOs ought to be pressing public officials to move more urgently to establish stronger guidelines for wages, working conditions, environmental standards, anticorruption measures, and the protection of human rights and other such policies. The absence of good governance at the global and national level is an enormous liability for business leaders — among others.

Reprint No. 02404

Jeffrey E. Garten, [email protected]
Jeffrey E. Garten is dean of the Yale School of Management. Formerly a managing director for Lehman Brothers Inc. and the Blackstone Group, he also held senior economic and foreign policy positions in the Nixon, Ford, Carter, and Clinton administrations. A columnist for Business Week, Mr. Garten has also written for many other major business publications. His last article for strategy+business was “From New Economy to Siege Economy,” First Quarter 2002.
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  1. Jeffrey E. Garten, “From New Economy to Siege Economy: Globalization, Foreign Policy, and the CEO Agenda,” s+b, First Quarter 2002; Click here.
  2. Amy Cortese, “The New Accountability: Tracking the Social Costs,” New York Times, March 24, 2002; Click here.
  3. Geoff Dyer, “Biotech Sector Urged to Focus on Problems of Poor Countries,” Financial Times, June 12, 2002; Click here.
  4. Alison Maitland, “Human Rights and Accountability,” Financial Times, June 13, 2002; Click here.
  5. Roger L. Martin, “The Virtue Matrix: Calculating the Return on Corporate Responsibility,” Harvard Business Review, March 2002; Click here. 
  6. Business Partners for Development, Putting Partnering to Work, April 2002; Click here.
  7. Global Reporting Initiative, Sustainability Reporting Guidelines on Economic, Environmental, and Social Performance, June 2000; Click here.
  8. Manufacturers Alliance and National Association of Manufacturers, U.S. Manufacturing Industry’s Impact on Ethical, Labor, and Environmental Standards in Developing Countries: A Survey of Current Practices, April 2001; Click here.
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