The CRT was launched in 1986 by senior business leaders from Europe, Japan and North America to address global issues affected by the performance and conduct of international business. Initially concerned to promote solutions to the tensions arising from trade imbalances, the CRT has monitored the continuing changes in the economic and political landscape, and its influence has grown through the formulation and wide circulation of its Principles for Business.

Global business stands at the crossroads of the fundamental changes taking place in the world. The CRT believes that business has a crucial role in helping to identify and promote solutions to issues that impede the development of a society that is more prosperous, sustainable and equitable.

Globalization is moving forward relentlessly, with freer movement of people, capital, jobs, trade and information. Global businesses operate in essentially a borderless manner and have considerable power to effect change, while the direct role of nation states internationally is diminishing. This leads to the development of soft' laws, i.e., the effect of international conventions and bilateral treaties being used by NGO's as representing society's expectations of conduct, in advance of their adoption into the laws of individual nation states. As reluctant as some corporations have traditionally been to go beyond their operational objectives, the time has come for the roles of corporations, governments and other institutions to be significantly redefineda time for new partnerships and greater cooperation on a global level.

The CRT believes that there is an urgent need for a sustained dialogue, initially among senior business leaders from around the world, and then including leaders of governments and other institutions, to define the critical role of the corporation in a global society. The rules are changing. Whether in the physical, social or economic environment, business leaders can no longer rely solely on past traditions, established strategies or earlier expectations of society.

For such a dialogue to be fruitful, it requires a common framework and guidelines. The CRT offers the following beliefs as a framework for that discussion:

• The primary responsibility of the corporation is to conduct its operations proficiently, i.e., to be technologically innovative, competitive and financially sound. 
• Corporations must be increasingly responsive to issues affecting the physical, social and economic environments not only because of their impact on business performance but also out of a pro-active sense of responsibility to all constituencies served. 
• Corporations need to consider the balance between the short-term interests of shareholders and the longer-term interests of the enterprise and its stakeholders. 
• Meeting traditional objectives and performance criteria is not sufficient. Voluntary standards which exceed the requirements of prevailing law and regulations are necessary to the development of sustainable practices. Society's "license or franchise to operate" has to be earned. 
• Corporations should lead by example through business practices that are ethical, transparent, and that reflect a commitment to human dignity, political, economic freedoms and preservation of the planet. 
• Corporations cannot act alone but should seek to address key societal issues through cooperative efforts with governments, other institutions and local communities. 

• The Employment Dilemma 
• Sustainable Practices and Values 
• Trust, Honesty and Transparency 
• Collaboration and Partnerships for Action 

Some commentators suggest that we are at a major turning point in historya time that occurs only once every hundred years or so, when adequate vision is lacking, leadership is weak, new technology sweeps across nations, gaps widen between people, laws and institutions break down, values weaken, crime and corruption increase, and human relations falter. Such factors inherently threaten world peace, stability and prosperity, while business globalization is accelerating in both the historically major economies and the strong new economies.

The period since the CRT was founded has encompassed the completion of the GATT agreement, strongly endorsed by CRT participants, and the formation of the WTO. Other developments include the completion of the Single European Market, the formation of NAFTA and the ASEAN agreements.

The collapse of communism in Central and Eastern Europe has created both opportunities and challenges. The emergence of India and China (as the latter moves to embrace Hong Kong) as major economies, together with the explosive growth of the Tiger economies, has generated unprecedented prosperity and industrial muscle. The emergence of market economies challenges expanding global businesses to help to enable those markets to reach their potential and to enhance the prosperity of their populations.

Threats to a prosperous and sustainable society include the gulf between rich and poor between the successfully industrialized nations and their less developed neighbors. Social unrest and discontent are increased by religious fanaticism and organized crime. Unlawful immigration is a destabilizing influence as those without money, jobs, knowledge or opportunity are attracted to centers of prosperity.

Business leaders rightly see major opportunities for access to new markets, for the wider utilization of intellectual property and technology, and for new investment. But they are also faced with formidable challenges to reduce the attendant risks.

The same period has seen a revolution in communications, itself the source of huge new global business operations. 

With easier and more immediate access to information, and the stimulus of media analysis, public interest in the conduct of business has intensified. Sophisticated media presentation focuses particular issues and heightens concern, especially where perceptions develop that the public interest is threatened or power is being abused.

Demands increase for greater transparency and for effective public scrutiny. Society expects corporations to be accountable, not just in traditional areas of financial performance, but across all functions that impact on the physical, social and economic environments.

Society's confidence is undermined by ignorance and suspicion but reinforced by information and understanding. Without confidence and trust society can be expected to review its "license" or "franchise" for business to operate. It exercises its sanction through legislation and regulations, the operation of choice in the market place, actions of pressure groups, and corrosive public criticism of targeted sectors, corporations or key position holders.

Recent campaigns on top executive compensation, environmental performance, employment conditions, sale of arms, and customer service standards provide evidence of the potentially harmful effects of public alienation. Conversely, companies that have addressed the challenges openly have been able to win public support even while undertaking major changes involving restructuring, adoption of new technologies sometimes seen as threatening, and in resolving highly controversial issues such as disposal of toxic waste.

Increasingly, competitive advantage and customer loyalty are achieved through providing access and dialogue and demonstrating genuine concern for the needs of communities and the public interest.

Business has increasingly faced these challenges in regard to its effects on the physical environment and its sustainability. It is in this arena that issues have become most globalized and that intergovernmental conventions and NGOs have had significant influence. This has reshaped national legislation around the world, led to the formation of new international institutions, and had a huge impact on the policies and practices of businesses and their representative organizations. There are few remaining international corporations that have not published statements of environmental policy (as well as safety and health policy) while significant sectors have adopted a coherent voluntary worldwide code of responsible practice. Considerable progress has been made in disclosure, and in introducing reporting and verification procedures.

Although many aspects of environmental concern still await scientific verification, the concept of a voluntary precautionary approach has evolved, coupled with significant public commitments on performance goals. (However, this pro-active move has also led to public concerns about truthfulness and trustworthinessfor instance in regard to spurious claims of "environmental friendliness," misleading eco-labeling and other attempts to establish unsubstantiated competitive advantage or consumer preference.)

Science and new technology have enabled business to take many beneficial initiatives not least in efficient agriculture, safe water and hygienic food processing. However, maturing public attitudes introduce new challenges in terms of what is acceptable in the public interest. The adoption of unfamiliar risks raises deep public concern.

Important examples include the application of bio-technology and pesticides in agriculture and of additives and radiation in food preservation. Business must make both practical and ethical decisions on the adoption of risk, its assessment and communication to its constituencies.

Population growth, unemployment, extremes between rich and poor, public health, immigration flows and social disorder interact to affect the conditions in which business develops. The prevailing political framework determines whether the responses are subject to command economy rule, to free market economies or to something in between.

Education and training are the precursor to economic development, and most political regimes give these high priority. However, the resources required to ensure efficient delivery may be inadequate, depending upon the general economic climate and social infrastructure.

A natural consequence of successful business activity is that employment opportunities and wealth are created, together with an increasingly cohesive and supportive social fabric. Successful business however, depends upon its efficiency, competitiveness and its flexibility to adapt to changes in the marketplace. In the global market, even the most enduring businesses have to adapt, through measures affecting employment levels and disposition. Significant factors include changes in demand, new technology and the arrival of new competition.

All of these developments have far-reaching consequences. Some favor business and others threaten it. But none can be ignored. The CRT affirms that the primary purpose of the corporation is to manage its business effectively. In doing so, however, global business cannot assert that "the only business of business is business." It should seize the opportunity to be an active participant in contributing to greater peace, stability and prosperity.

Many business leaders have recognized the implications of globalization for their corporations and have given increasing attention to the concerns addressed in this paper. A broadening consensus has developed that business has a responsibility towards the communities it serves and depends upon, to contribute beyond the strict requirements of the law, and beyond the needs of self-protection. Participants in the CRT affirm this perspective, and seek to define the responsibility of global corporations in relation to the following key issues:

The CRT has addressed the need for job creation regularly during the past three years. It involves a complex set of issues with far-reaching implications both in industrialized and developing nations.

Resolution of the global employment dilemma may be fundamental to reducing risks of social upheaval and to finding solutions to other key global issues. One of the greatest strengths of business has been and must continue to be job creation, even as restructuring of current activities continues. Country after country has decided that increased private sector employment is the linchpin to sustainable economic growth. The CRT believes that business has a responsibility to provide working conditions that respect each employee's health and dignity, and to provide jobs and compensation that improve the living conditions of workers and their families. But crucial questions must be answered:

• What can and should be the role of business in promoting job creation? 
• What responsibility should business take for promoting flexibility and employability? 
• What is its role in seeking to change regulations which inhibit change in employment practices or impose administrative burdens that threaten competitive employment? 
• What steps must be taken to assist those without jobs?
• Is it true, as some suggest, that technological advances of recent years have eliminated more jobs than they have created? Or, on the contrary, does the problem lie in protectionism and resistance to change? What rectifying actions can be taken? 

• The gulf between rich and poor within nations and between successfully developed and less developed economies; 
• The urgent need in developing nations for a rule of law, necessary infrastructure, nurturing of a new work ethic and other measures to assure sustainable development of a market economy; and 
• The impact of increased immigration and freer trade agreements upon all sectors of societies both within developed and developing nations.

The CRT believes that shorter-term performance criteria have to be balanced against longer-term considerations involving the effects of business on its environments and thus its sustainability. While laws and conventions focus particular provisions for the conduct of business, there is a growing consensus that attitudes, standards and practices must exceed legal requirements. Business needs to monitor the impact of its products and services and to stand for values with which society will identify.

Extending the practice of many corporations which already publish their general principles for the conduct of their business, and of a large number which publish their policies and performance in areas of safety, health, the physical environment and energy efficiency, how should business define its role in areas such as:

• Resource Management 
• Technology Transfer 
• Human Exploitation 
• Employee Development 
• Illicit Substances and Their Abuse 
• The Family 
• Encouragement of Sound Values in Society 

The CRT believes that business, as well as the professions, has a duty to the rest of society to be trustworthy, honest and transparent in its dealings. Public suspicion of business motives and behavior is a negative influence which can lead to restrictive legislation and can threaten job creation and other potential benefits to society. A loss of trust may result in a virtual revocation of business's "license" or "franchise" to operate in the public interest. Communications technology and the media intensify the call for information and explanation. To obtain trust, worldwide business practices must satisfy the perceptions of society as to what is ethical. Global businesses should not participate in or condone bribery, money laundering or other corrupt practices but should cooperate with others to eliminate them.

Some of the key questions to be addressed include the following:

• What are the practical obstacles to greater openness and transparency? 
• What is a right balance between pro-active and reactive measures to achieve public understanding of the standards of business and its performance? 
• How should business leaders approach the problem of corruption, given the diversity of cultures? 
• How can business engage in sustained dialogue with all its constituencies to define shared responsibilities for resolving issues?

The CRT believes that solutions to complex global issues require the cooperative efforts of business, government and other institutions. Working alone, these powerful players are likely to fail. Working together, they can apply local models to international situations and find multifaceted solutions to complex problems. The partnership developed in many cities where businesses collaborate with local authorities, central government, education, emergency services and special interest groups could be adapted to global initiatives. Although the difficulties in achieving effective collaboration are likely to be daunting, business needs to take the initiative and persevere in this process.

Business needs to consider its role and approach in:

• Developing a coherent strategy for addressing global problems 
• Establishing a constructive business network embracing its principal world centers 
• Developing dialogue with relevant public institutions
• Mounting and funding agreed initiatives and action programs
• Monitoring and reviewing progress and outcomes

Building on past achievements, the CRT seeks to be a catalyst for principled business leadership. In particular the CRT provides the means: 

• to consult senior business leaders so that key issues can be identified and possible solutions developed; 
• to communicate the conclusions and discuss them with the wider business community and other constituencies; 
• to monitor the effects of CRT actions on policies and events; 
• to facilitate access to key decision-makers and help construct working partnerships. 

March 1997
 

Originally posted in different form by Lawren Bale 06-07-97
Revised and reposted by Ingrid Shafer 22 April 1999