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…
