IMD takes part in UN Global Compact discussion in Davos
February 8, 2011
IMD contributed to a prestigious CEO and board level discussion related to the future of the blueprint for corporate sustainability leadership of the United Nations Global Compact at a private event linked to the World Economic Forum in Davos in late January. The delegation from IMD included Dr Peter Wuffli, designated Chairman of the IMD Foundation Board, John Weeks, IMD Professor of Leadership and Organizational Change, and Dr Aileen Ionescu-Somers, Director of IMD’s Center for Corporate Sustainability Management. The event was organized by the Guilé Foundation and the United Nations Global Compact with support from the Swiss Confederation, KPMG and Novo Nordisk.
In his keynote speech, UN Secretary General Ban Ki Moon pointed out that although over its 10 years of existence some 6,000 companies had signed up to the principles of the compact, the vast majority of companies were not yet on board. Yet the recent financial crisis had indicated that a new level of corporate responsible leadership is urgently needed, and that more impetus needed to be given to translating the UN Global Compact principles into business operations as well as taking more significant steps in advancing social objectives and bringing more engagement at a global level.
In a review of corporate perspectives on the relevance of the UN Global Compact in terms of driving value for companies, Timothy Flynn, Chairman of KPMG International, stressed that only through leadership at the top of corporate organizations can progress be achieved, and that more discipline and energy needed to be instilled into the corporate response to the blueprint. Kris Gopalakrishman, CEO and Managing Director of Infosys Technologies, and Ditlev Engel, CEO of Vestas, cited their companies’ respective business models and activities as relevant examples of what can be achieved. Lise Kingo, Executive Vice President & Chief of Staff of Novo Nordisk, pointed to an important missing link: the full integration of sustainable development into the agenda of CEOs and especially corporate boards. Kingo called for new ways of thinking about a sustainable model of capitalism that brings a much more weighty contribution to society and the environment.
Professor Weeks talked briefly about the role of business schools. He underlined three ways in which business schools can contribute to implementing the blueprint: first, through thought leadership, secondly, through relevant and practical research and thirdly, through mainstreaming on executive programs. Professor Weeks stressed the highly detrimental affects on companies’ loss of trust ensuing from the ongoing financial crisis.
“In the immediate term, corporate organizations have a strong business case to focus on rebuilding trust since when trust in organizations is lost, transactional costs increase,” he said.
Professor Weeks mentioned recent research carried out by IMD Professor Tom Malnight which showed that corporate leaders are currently restructuring their organizations to deal with issues of low trust. Research on communicating corporate purpose carried out by IMD’s Center for Corporate Sustainability in collaboration with Professor Weeks has showed that communicating corporate purpose in a way that not only “walks the talk”, but “talks the walk”, has a highly positive impact on corporate value as reflected in reputation and sustainability rankings.
In their teaching, business schools can assist in the implementation of the blueprint by focusing on replicable sustainable business models, changing mindsets and filling knowledge gaps. IMD is contributing to this by working on mainstreaming sustainability on programs such as the MBA and EMBA, and more recently partnering with WWF, the conservation organization, in running ‘One Planet Leaders’, a program that is focused on empowering managers to instigate change within their organizations.
During the event, Dr Wuffli commented: “We need to begin by harmonizing the concept of corporate responsibility and the blueprint helps with that. But it still means different things to different people. Currently there is no global view on what corporate responsibility actually is. In my experience, the difference between the US and European interpretation of ‘CSR’ is for example a major challenge that needs to be worked on. This is particularly true in the area of investment management where socially responsible investing, while growing impressively, is far from a globally consistent definition.”
When asked about the outcome of the event, Dr Ionescu-Somers commented: “Corporations are not adequately addressing the fact that the key indicators of sustainability are looking downwards. The whole discussion needs to become highly strategic and focused on making sure that market-based solutions make a real difference. The challenges are getting sustainability higher on corporate leadership agendas, transforming to sustainable business models and implemention. By working on changing mindsets and filling knowledge gaps, IMD can contribute to overcoming the barriers.”