“The State of Responsible Competitiveness: Making Sustainable Development Count in Global Markets”
In the current economic environment it may seem counterintuitive to talk much about sustainable development. Sure – when economies are booming then one can afford the luxury of fighting climate change, unfair labour practices and unbalanced trade relationships. But companies today, and in some cases entire economies, are facing fundamental challenges. Survival in the midst of a recession of epic proportions can force a realignment of priorities, leaving less room for loftier ethical aspirations. While the dust has yet to settle, we know that more jobs will be lost, more factories shuttered and balance sheets will remain thin at best. So the question arises – can we sustain our commitment to responsible and sustainable practices in the public and private sectors in such a constrained environment?
Lofty goals have been set by the wealthiest countries in the world to improve living standards and ensure basic essentials of a humane life are made accessible to all. Yet most of these targets have been missed and for many the situation grows more perilous by the day. There is a virtual consensus on the need to act on areas such as climate change and global health yet we still fumble when it comes to creating solutions.
At the core of many of these failures is a crisis in accountability. The accumulation of power in fewer and fewer hands has not been accompanied by a greater sense of obligation by those people and institutions to act responsibly and be held to account.
Our failures have not come for want of trying. Political leaders speak often on the importance of probity all the while failing, repeatedly, and generally without penalty to deliver on their promises of social justice and sustainable livelihoods. Those we entrust the matter of business justify excessive profits and the destructions of livelihoods and the natural environment in the spirit of maximizing shareholder value and facing competitive pressures. There are literally thousands of NGOs created as the contemporary champions of the dispossessed masses. Yet their overall impact is difficult to gauge, and they sometimes fail in staying accountable to those whose voices they claim to represent.
Efforts to stem corruption have created a world awash with accountability. Yet some of our greatest achievements in civilising power are still characterised by bureaucratic excess and decay, if not outright greed and corruption. The litany of rules and regulation, if followed accurately, reflect law-abiding societies yet the end goal of sustainable development and accountability remain painfully elusive.
A fresh perspective is very much in need. We can hardly afford to add more layers of compliance to ensure that money is accounted for, and land and resources are not abused. Accountability is not just a toolbox of metrics and mechanisms, a bolt-on to existing institutions, designed to reduce corruption and inefficiency at the margin. Indeed, this one-way, bottom-to-top orientation is part of the problem: dispersing responsibility, dampening innovation and disempowering collaboration.
Market forces have to a considerable extent charted a new course in guiding business and government towards more responsible practices. By rewarding practices that deliver improved social and environmental outcomes companies can internalize sustainability strategies into their pursuit of the bottom line. Governments that had in the past avoided the imposition of stringent regulations for fear for dissuading investment can now implement public policies that further encourage and reward such healthy business practices.
For the public sector to play its role well, it must first take the giant leap of disentangling itself from undue control over resource allocation. In this region in particular it is not uncommon for politicians and elites linked to the vested interests of the state to be loathe to implement reforms that would devolve power and achieve a more equitable distribution of wealth and resources. This applies as much to the political process in which elections may take place but are seldom fair, as it does to procurement and tenders, which are often awarded in a cloak of secrecy. No matter how well intentioned and carefully conceived the overreliance of an economy on the crutches of the public sector spawning a dependency mentality and renders the public purse a rich feeding ground for all kinds of parasites.
As markets begin to support responsible business practices we see a way out of the traditional framework that determined corporate governance. When tied solely to the shareholders interests the imperative to maximize profits superseded all other concerns. But in today’s global economy where competitiveness is no longer a simple factors of reducing costs and increasing profits, the optimal profit margin would start to reflect a corporation’s impact on the environment, its labour and human resource practices and the manner in which its branding is perceived in the marketplace. Companies which are known abusers will not only burn bridges with customers but will find themselves left behind those whose commitment to a more sustainable agenda achieves better sales and stronger relationships with governments.
Saudi Arabia deserves credit for taking the initiative to better understand the dynamics of responsible competitiveness in its own economy. By chartering the Saudi Responsible Competitiveness Index, a comprehensive study of national competitiveness as it is tied to the sustainability agenda, the Kingdom is sending a clear signal to the region. Resource driven growth which has brought considerable development to Saudi in its first fifty years will not survive as a model for growth in the future. Corporate citizenry cannot merely be a function of philanthropy as traditionally conceived. Smart philanthropy must be tied to tangible efforts to achieve growth that is sustainable and enhance core business functions including the development of human capital.
Development cannot be confined merely to the accumulation of wealth. Growth is essential but growth must be balanced. An increase in income should not come at the expense of quality of life or the integrity of basic social institutions such as family and community. Economic objectives, environmental protection and social goals must be welded into a seamless whole. And we cannot overemphasize the primacy of growth that promotes distributive justice instead of wealth accumulation by the few.
Civil society can be a key driver of the responsible competitiveness agenda particularly in emerging markets where the public sector traditionally plays a primary role in society. A vibrant media coupled with active NGO community can play a positive role in promoting sound practices which achieve maximum benefits for the people.
Our societies will not be sustainable unless we constantly seek to eliminate such injustices and contradictions. On the global scale, the disparities between the North and the South threaten the stability and sustainability of the world itself. The imperative of sustainability demands that we forge new patterns of partnership and international linkages, not only between governments but to include all stakeholders in a global economy.