"Capitalist Gone Wild!!"

Trapped in a Toys-R-Us parking lot
Or
How I almost got beat up in a holiday parking lot for spreading FGS (Financial Good Sense)

Last Wednesday (12/17/2003) I was walking up to my car in the local Toys-R-Us parking lot (those that say the economy isn’t improving should try to park at a toy store this holiday season) and was sagging under my efforts to add to Toys-R-Us’ equity holder value.

As I approached my car I noticed somebody was peering in its windows. Behind my car was a black Mercedes S600 stopped, engine running, with the driver door open. Clearly it was the owner looking into my car’s windows. This was curious. While my car is nice it’s not unusual for the local demographic. I noted the guy’s sharply tailored Prada suit.

“Hi, can I help you?” I said walking up with a big holiday smile (genuine at this point).

"Is this yours?” he said nodding sharply toward the car.

“Yes,” I answered, still holding my colorful and burgeoning shopping bags.

He pointed at the license plate, “You put out this newsletter?”

I looked at the license plate which clearly references this blog. Also the license plate frame spells out my company’s name. Obviously my cover was blown! “Sure. Are you a reader?”

“Well I think your last issue about corporate responsibility was full of sh*t!” (Referring to The Sullivan Principles.)

His comment surprised me because there were kids and parents around. Then somebody tooted their horn as his stopped car was fouling up traffic in the busy parking lot.

“Well, why don’t you park and we’ll talk about it.” I said this knowing the next parking spot was probably in the next city, LOL.

“No, this’ll just take a second,” he snapped glancing at the cars wisely backing up. “You guys say you’re all for maximizing equity holder value but by advocating that companies I invest in spend money on social BS, well, that’s basically like stealing from me. Really, that’s just liberal bullsh*t.” He started moving back towards his car door to get in. “That’s all I wanted to say.”

As he was about to get in his car I said, “Can I ask you something?”

“Yeah. What?”

I smiled. “Would you like my parking place?”

He scowled, called me a nasty name (a body part), then climbed into the $120,000 car and roared off. Still standing there with my packages I shook my head as if to wake up. While it felt like an hour or so the whole scene had taken only a few seconds. Traffic started moving again. The world seemed safer.

Now, it would be simple to just say that the fellow was having a bad day (rare holiday parking spots being the supreme annoyance they are) and I was an easy target. But the fact is at last count we’ve gotten over 100 e-mails saying basically the same thing: ‘business is tough-it’s irresponsible to suggest spending any corporate resources on non-essentials like a company’s social responsibility programs.”

Ok, let’s think about Corporate Social Responsibility (CSR) this way…

Had the gentlemen in the parking lot stuck around I would have asked him some simple questions such as:

1.     Do you think it would be ok with equity holders for a company to reject the notion that people of different races, gender, or sexual orientation can add value to a company and therefore block them from working there?

2.     Do you think it would be ok with equity holders for a company to pay fines and huge legal fees for polluting?

3.     Do you think it’s ok to attract the negative attention of the press and risk revenue sucking boycotts?

4.     Do you think it would be ok with equity holders that a company turn its back on the growing number of customers that prefer doing business with companies that try to improve society and take care of the environment rather than simply exploiting them for profit?

5.     Etc. Etc. Etc.

Frankly, it sounds to us like spending money on social responsibility programs can be a good investment rather than just the reckless squandering of corporate resources some seem to believe!

Think about it…

Holiday Comments about Corporate Responsibility

A Broader Perspective on Corporate Governance
"The Global Sullivan Principles"

Any reader of this occasional newsletter knows the focus is on providing executives with techniques to provide stakeholders with sustainable increases in the value of their equity. We often do this by converting key battle tactics to business strategy and by showing the behaviors of history’s great generals. We get feedback that this has proven useful as it has helped readers ask themselves questions that have resulted in action items ultimately enriching their stakeholders. That's gratifying. It’s hard to find any group more focused on helping clients enrich their equity holders than we are, and by extension, our core readers. They are an impressive group.

Of course we also get asked questions ourselves. One of the most frequent is, “But what about the Big Picture? What about corporate governance?”

What does the board DO other than work together, in a principled manner, to help the company create and maintain customers for the benefit of the stakeholders? The point is, with the power large companies have today perhaps enriching the stakeholder isn’t enough—maybe that’s just the beginning.

Ok, this holiday season, with Saddam Hussein now in jail, and with 2004 looking better, we’d like to suggest something…

Back in 1971 a Baptist minister by the name of Leon Sullivan joined the board of General Motors (Sullivan was the first African-American on the board of a major US corporation). At the time General Motors was the largest employer of blacks in South Africa. Sullivan used his position on the board to oppose apartheid, the set of official policies in the Republic of South Africa that discriminated against nonwhites. To do this he created the Sullivan Principles in 1977 which were a set of ethical guidelines for companies operating in South Africa. Where other reformers, such as Nelson Mandela, had failed, the Sullivan Principles were instrumental in bringing about the ultimate dismantling of apartheid. The country has flourished since. (I’ve worked there and greatly enjoyed both the country and its varied people.)

How did he do it? Simple. Economic pressure. Sullivan knew multinationals and large, nongovernmental entities, are growing in power where nation states are increasingly having a difficult time achieving co-operative solutions. Sullivan mobilized over a 100 companies to leave South Africa and apartheid eventually crumbled. That’s a simplification but the Sullivan Principles are credited as the flashpoint.

In 1999, not long before his death, Rev. Sullivan and United Nations Secretary General Kofi Annan, introduced a revised set of ethical operating guidelines called the Global Sullivan Principles of Corporate Responsibility. These expanded guidelines call for multinationals to take a more active role in the advancement of social justice.

But if you read them, and think about them, you can see the Principles provide a sensible framework and filter set for balanced corporate behavior on a global basis. It’s easy to see why many large and admirable companies have adopted the guidelines and why some significant institutional investors have chosen to focus on investing in companies that follow the principles. Have a look and give it a thought.

Happy Holidays and Happy New Year—-and cheers to a strong 2004. –Tal Newhart

***

The Global Sullivan Principals

Announced November 2, 1999 at the United Nations, New York City

As a company which endorses the Global Sullivan Principles we will respect the law, and as a responsible member of society we will apply these Principles with integrity consistent with the legitimate role of business. We will develop and implement company policies, procedures, training and internal reporting structures to ensure commitment to these principles throughout our organization. We believe the application of these Principles will achieve greater tolerance and better understanding among peoples, and advance the culture of peace.

Accordingly, we will:

• Express our support for universal human rights and, particularly, those of our employees, the communities within which we operate, and parties with whom we do business.
• Promote equal opportunity for our employees at all levels of the company with respect to issues such as color, race, gender, age, ethnicity or religious beliefs, and operate without unacceptable worker treatment such as the exploitation of children, physical punishment, female abuse, involuntary servitude, or other forms of abuse.
• Respect our employees' voluntary freedom of association.
• Compensate our employees to enable them to meet at least their basic needs and provide the opportunity to improve their skill and capability in order to raise their social and economic opportunities.
• Provide a safe and healthy workplace; protect human health and the environment; and promote sustainable development.
• Promote fair competition including respect for intellectual and other property rights, and not offer, pay or accept bribes.
• Work with governments and communities in which we do business to improve the quality of life in those communities - their educational, cultural, economic and social wellbeing and seek to provide training and opportunities for workers from disadvantaged backgrounds.
• Promote the application of these principles by those with whom we do business.
• We will be transparent in our implementation of these principles and provide information which demonstrates publicly our commitment to them.

Think about it…