Slide Slide 11

Corporation and SocietyCorporation and Society

Restoring Confidence Restoring Confidence in the Corporationin the Corporation

Costas Kataras

Athens University of Economics and Athens University of Economics and Business AUEB, International MBA Business AUEB, International MBA

19 February, 200919 February, 2009

Slide Slide 22

The Mood…The Mood… Mission Impossible I ? Mission Impossible I ?

Are Bankers Charlatans ? Are Bankers Charlatans ? Focus 29/01/2009Focus 29/01/2009

At blame for the financial crisis is the ( greedy ) nature of man, say At blame for the financial crisis is the ( greedy ) nature of man, say two renowned scientists: Nobel Prize winner Daniel Kahneman and two renowned scientists: Nobel Prize winner Daniel Kahneman and bestselling author Nassim Taleb ( "The Black Swan").bestselling author Nassim Taleb ( "The Black Swan").

Taleb calls for rigorous changes: nationalize banks..Taleb calls for rigorous changes: nationalize banks..

Slide Slide 33

The Mood…The Mood… Mission Impossible II ? Mission Impossible II ?

Business is a (necessary ? ) evil in society … Business is a (necessary ? ) evil in society …

only the worst sort of people are involved..only the worst sort of people are involved.. Plato, c. 340 BCPlato, c. 340 BC

Slide Slide 44

The situation is hopeless… but not serious !!The situation is hopeless… but not serious !! Plato, c. 340 BCPlato, c. 340 BC

Slide Slide 55

Understanding the Landscape Understanding the Landscape

(1/2) (1/2) Understanding the Landscape of Business Ethics can be Understanding the Landscape of Business Ethics can be

ProblematicProblematic Business Ethics / Integrity /PracticesBusiness Ethics / Integrity /Practices (ie how to conduct business responsibly )(ie how to conduct business responsibly )

Corporate ComplianceCorporate Compliance ( ie focused on complying with laws and regulations )( ie focused on complying with laws and regulations )

Corporate GovernanceCorporate Governance (ie policies and practices that stockholders, executive (ie policies and practices that stockholders, executive

managers and board directors use to manage themselves managers and board directors use to manage themselves and fulfill their responsibility to investors and other and fulfill their responsibility to investors and other stakeholders ) stakeholders )

Slide Slide 66

Understanding the Landscape Understanding the Landscape

(2/2) (2/2) Understanding the Landscape of Business Ethics can be Understanding the Landscape of Business Ethics can be

ProblematicProblematic Corporate ResponsibilityCorporate Responsibility ( ie fulfilling the responsibilities or obligations that a ( ie fulfilling the responsibilities or obligations that a

company has towards its stakeholders. For example profit vs company has towards its stakeholders. For example profit vs environment )environment )

Corporate Social ResponsibilityCorporate Social Responsibility ( ie as above, but with greater stress upon the obligations a ( ie as above, but with greater stress upon the obligations a

company has to the community. Sometimes encompasses all company has to the community. Sometimes encompasses all responsibilities to stakeholders-ethical, social and responsibilities to stakeholders-ethical, social and environmental )environmental )

Corporate SustainabilityCorporate Sustainability ( ie aligning an organization's products/services with ( ie aligning an organization's products/services with

stakeholder expectations, thereby adding economic, stakeholder expectations, thereby adding economic, environmental and social value)environmental and social value)

Slide Slide 77

Business Ethics: Business Ethics:

The Definition ChallengeThe Definition Challenge

“ “ ..achieve commercial success in ..achieve commercial success in ways that honor ethical values and ways that honor ethical values and respect people, communities, and respect people, communities, and

the natural environment..”the natural environment..”

( ( Source: Business for Social Responsibility- nonprofit CSR Ass., US )Source: Business for Social Responsibility- nonprofit CSR Ass., US )

Slide Slide 88

Restoring Confidence in the Restoring Confidence in the CorporationCorporation

TopicsTopics

1.T1.The Business of Business… he Business of Business… 2. The Rise of Corporatocracy2. The Rise of Corporatocracy 3. Corporation and Society3. Corporation and Society 4. Restoring Confidence4. Restoring Confidence 5. Social Issues Become Strategic5. Social Issues Become Strategic 6. Government and Society: A Larger 6. Government and Society: A Larger

RoleRole 7. “Nice” Capitalism ( Wanted !!) 7. “Nice” Capitalism ( Wanted !!)

Slide Slide 99

1.The Business of 1.The Business of Business…Business…

Slide Slide 1010

The Long-Running DebateThe Long-Running Debate

Two Contrasting Ideological PositionsTwo Contrasting Ideological Positions

“ “ the business of business is… the business of business is… business”business”

vsvs

“ “ corporate social responsibility “corporate social responsibility “

Slide Slide 1111

And the Winner is .. And the Winner is .. …Prof. Milton Friedman & the School of …Prof. Milton Friedman & the School of

ChicagoChicago

“ “ ..the business of business is business..”..the business of business is business..”

“ “ ..social responsibility is a ..social responsibility is a fundamentally subversive fundamentally subversive doctrine..”doctrine..”

“ “ ..managers that will invest recourses to deal with ethical ..managers that will invest recourses to deal with ethical issues should be fired..”issues should be fired..”

Naomi Klein, in her book The Shock Doctrine, accuses Friedman of being complicit in Naomi Klein, in her book The Shock Doctrine, accuses Friedman of being complicit in military coups in countries such as Chile and Indonesia that were used as a way to military coups in countries such as Chile and Indonesia that were used as a way to shock the population into accepting unpopular neoliberal policies for the benefit of shock the population into accepting unpopular neoliberal policies for the benefit of foreign multinational companies.foreign multinational companies.

( Milton Friedman, 1912-2006 )( Milton Friedman, 1912-2006 )

Slide Slide 1212

Corporations Disregard all Human Corporations Disregard all Human

Laws Laws Carl Marx was RightCarl Marx was Right

“ “ ..companies with 10% profits feel secure ..companies with 10% profits feel secure enough.. with 50% became adventurous.. enough.. with 50% became adventurous.. with 100% disregard all human laws and with 100% disregard all human laws and

with 300% can even take the risk of with 300% can even take the risk of committing crimes ”committing crimes ”

( Carl Marx )( Carl Marx )

Slide Slide 1313

..Deceiving..Deceiving Coca Cola and its Dasani Bottled (Tap !!) WaterCoca Cola and its Dasani Bottled (Tap !!) Water

It comes from the same source as local tap waterIt comes from the same source as local tap water Result :Coca Cola withdraws bottled water from UK (2004) Result :Coca Cola withdraws bottled water from UK (2004)

and admits that Dasani is nothing but tap waterand admits that Dasani is nothing but tap water

Slide Slide 1414

..Cheating..Cheating Starbucks coffee 200% more expensive in Athens Starbucks coffee 200% more expensive in Athens

than NYthan NY

A cappuccino costs : 4,65 $ in Athens, 2,35$ in New York, A cappuccino costs : 4,65 $ in Athens, 2,35$ in New York, +100%+100%

Average PP of an American : + 100%Average PP of an American : + 100% Result : +200%Result : +200%

Plus : Cheating and stealing the tips of personnel .”California Plus : Cheating and stealing the tips of personnel .”California court orders Starbucks to return $100m in tips to baristas” court orders Starbucks to return $100m in tips to baristas”

Slide Slide 1515

..Controlling ..Controlling Monsanto’s Terminator Technology Monsanto’s Terminator Technology

Controls genetically engineered seeds (ie rice, corn, etc) Controls genetically engineered seeds (ie rice, corn, etc) for which farmers pay high pricesfor which farmers pay high prices

Terminator technology is used to sterilize crops, ie the Terminator technology is used to sterilize crops, ie the seeds lose their ability to reproduceseeds lose their ability to reproduce

Result : 80% of farmers committing suicide in India, are Result : 80% of farmers committing suicide in India, are farmers not able to pay off their debts / loans used to buy farmers not able to pay off their debts / loans used to buy expensive GM seedsexpensive GM seeds

Slide Slide 1616

..Killing ..Killing Mrs Anderson vs General Motors (1980)Mrs Anderson vs General Motors (1980)

Chevrolet Malibu cars fuel tank, not sufficiently protected in collisionsChevrolet Malibu cars fuel tank, not sufficiently protected in collisions GM cost- benefit analysis shows :GM cost- benefit analysis shows :

Repair cost : 8,59$ / per carRepair cost : 8,59$ / per car

Anticipated fatalities (Human Life): 500Anticipated fatalities (Human Life): 500

If pay the cost of each human life , ie 200.000$ /per life the average cost If pay the cost of each human life , ie 200.000$ /per life the average cost is: 2,40$ per caris: 2,40$ per car

Result : Decide not to repair the cars !!!Result : Decide not to repair the cars !!!

Slide Slide 1717

..Plus..Plus

Dehumanizing- Labor Camps (ie Nike, Gap)Dehumanizing- Labor Camps (ie Nike, Gap) Suppressing – Military Coups (ie United Fruits )Suppressing – Military Coups (ie United Fruits ) Imprisoning our Mind- PCs controlling Users (ie Imprisoning our Mind- PCs controlling Users (ie

Microsoft Defender /Kill SwitchMicrosoft Defender /Kill Switch Claiming Ownership of Natural Recourses-Claiming Ownership of Natural Recourses-

Privatizing the Rain in Volivia (ie Bechtel and Mrs Privatizing the Rain in Volivia (ie Bechtel and Mrs G.Shultz, C.Weinberger )G.Shultz, C.Weinberger )

Owning our Genes – A Nation’s Genetic Code for Owning our Genes – A Nation’s Genetic Code for Sale (ie Iceland and deCODE/Hoffman La Roche) , Sale (ie Iceland and deCODE/Hoffman La Roche) , plusplus

the case of Mr Moore vs University of Californiathe case of Mr Moore vs University of California

Slide Slide 1818

2.The Rise of 2.The Rise of CorporatocracyCorporatocracy

Slide Slide 1919

CorporatocracyCorporatocracy Towards a DefinitionTowards a Definition

““The accumulating corporate power and the evolution, The accumulating corporate power and the evolution, and finally transformation, of the corporation to a and finally transformation, of the corporation to a social institution ( pseudo- authority ) dominating social institution ( pseudo- authority ) dominating the civil society and nations, with the support of the civil society and nations, with the support of banks, the financial establishment, powerful elites banks, the financial establishment, powerful elites

and powerless governments”and powerless governments”

(Kataras)(Kataras)

Slide Slide 2020

CorporatocracyCorporatocracy The Meteoric Rise..The Meteoric Rise..

1720 : The creation of a corporation, as a 1720 : The creation of a corporation, as a legal entity, constituted a serious crime in the legal entity, constituted a serious crime in the West (England) entailing serious punishment West (England) entailing serious punishment

2000 : Of the 100 largest economies in the 2000 : Of the 100 largest economies in the world,51 are corporations and 49 are world,51 are corporations and 49 are countries (in GDP and sales terms)countries (in GDP and sales terms)

Slide Slide 2121

CorporatocracyCorporatocracy .. of.. of Corporate Global PowerCorporate Global Power

Of the 100 largest economies in the world, 51 are corporations Of the 100 largest economies in the world, 51 are corporations and only 49 are countriesand only 49 are countries

Top 200 corporations’ combined sales is equivalent to 27,5% of Top 200 corporations’ combined sales is equivalent to 27,5% of World GDP (from 25% 15 years ago )World GDP (from 25% 15 years ago )

Top 200 corporations’ combined sales are bigger than the Top 200 corporations’ combined sales are bigger than the combined economies of all countries in the world, minus the combined economies of all countries in the world, minus the biggest tenbiggest ten

While sales of Top 200 are equivalent of 27,5% of world While sales of Top 200 are equivalent of 27,5% of world economic activity, they employ only 0,78 % of the world’s economic activity, they employ only 0,78 % of the world’s workforceworkforce

U.S. corporations dominate the Top 200, with 82 slots (41%), U.S. corporations dominate the Top 200, with 82 slots (41%), followed by Japanese firms with 41 slotsfollowed by Japanese firms with 41 slots

Almost 50% of U.S. corporations in Top 200, did not pay the full Almost 50% of U.S. corporations in Top 200, did not pay the full standard 35% federal corporate tax during 1996-1998. Seven standard 35% federal corporate tax during 1996-1998. Seven actually paid less than zero ( ie Texaco, Chevron, PepsiCo, actually paid less than zero ( ie Texaco, Chevron, PepsiCo, Enron, Worldcom)Enron, Worldcom)Source :Institute for Policy Studies, 2000

Slide Slide 2222

CorporatocracyCorporatocracy .. in Numbers .. in Numbers (GDP/Sales, 1999)(GDP/Sales, 1999)

General Motors > DENMARKGeneral Motors > DENMARK Exxon Mobil > GREECE Exxon Mobil > GREECE General Electric > PORTUGALGeneral Electric > PORTUGAL Shell > IRANShell > IRAN IBM > IRELANDIBM > IRELAND Nestle > HUNGARYNestle > HUNGARY

Source :Institute for Policy Studies, 2000

Slide Slide 2323

CorporatocracyCorporatocracy The Global Pyramid of PowerThe Global Pyramid of Power

Slide Slide 2424

CorporatocracyCorporatocracyHow Corporations Became so How Corporations Became so

Powerful ?Powerful ?

Arrogant, Selfish, U.S. Capitalism and the School Arrogant, Selfish, U.S. Capitalism and the School of Chicago creating inequality in the society of Chicago creating inequality in the society (Disaster vs Nice (Disaster vs Nice Capitalism books, Naomi & Costas)Capitalism books, Naomi & Costas)

Gate Keepers (Media) manufacturing/ engineering Gate Keepers (Media) manufacturing/ engineering consent (The Century of the Self )consent (The Century of the Self )

Technology / Globalization/De localization/Export Technology / Globalization/De localization/Export of Jobs (Lou Dobbs, etc )of Jobs (Lou Dobbs, etc )

The “Other Hollywood Effect”-Weak Political The “Other Hollywood Effect”-Weak Political Leadership (Myth of the Powerless State / Nation)Leadership (Myth of the Powerless State / Nation)

Slide Slide 2525

CorporatocracyCorporatocracy Two Prophetic Books..Two Prophetic Books..

June 24, 2008 July 22, 2008

Slide Slide 2626

“Katharsis”: Topology of Factors Undermining the Future

SOCIETY

INDIVIDUALEN

VIRO

NM

ENT

TECHNOLOGY

ECONOMY

Extreme Market Polarization (8)

Loss of Entrepreneurial

Spirit (6)

Brands’ Overdose (5)

Scarcity of Human

Attention (9) Rise of Eclecticism (11)

Violent Emotional

Detachment from Brands (12)

Collapse of Information

Asymmetry (3)Explosion of Consumer – Generated

Personal Media (10)

Brands’ Insignificant

Impact on ROI & Parent Company

Stock Price (2)

Dramatic Erosion of

Middle Class (7)

Frenetic Time Acceleration

(4)

Increased Complexity &

Unpredictability (1)

Information Economy

Arrogant Corporation

Slide Slide 2727

Mega – TrendsMega – Trends : : A SynopsisA SynopsisCorporations in a New, Hostile, TerrainCorporations in a New, Hostile, Terrain

ComplexityComplexity SocietySociety TechnologyTechnology

plusplus Corporate Confidence ErosionCorporate Confidence Erosion

Slide Slide 2828

ComplexityComplexity The Butterfly EffectThe Butterfly Effect

Have you ever been wondering how the Have you ever been wondering how the current bank and financial crises started?current bank and financial crises started?

Have you been aware of a company Have you been aware of a company Fanny Mae or Freddie Mack ?Fanny Mae or Freddie Mack ?

Slide Slide 2929

Technology Technology The Trojan Horse ?The Trojan Horse ?

OPPORTUNITIES Productivity Globalization Delocalization Etc

THREATS Transparency Reduced Information Asymmetry Empowered , Educated, Never Satisfied, Distant,

Unreachable Consumers etc

Slide Slide 3030

SocietySociety Society Dominates CorporationsSociety Dominates Corporations

The Coca Cola , Dasani caseThe Coca Cola , Dasani case

Slide Slide 3131

Corporate Confidence Erosion Corporate Confidence Erosion Route CausesRoute Causes

Increased Income Inequality / Power Increased Income Inequality / Power Distances in SocietyDistances in Society

U.S. Losing Favor in the West U.S. Losing Favor in the West A Growing Sentiment Against Globalization in A Growing Sentiment Against Globalization in

All Rich CountriesAll Rich Countries Corporations: Lack of Trust in Business is Corporations: Lack of Trust in Business is

Growing Growing Brands :Consumers are Falling out of Love Brands :Consumers are Falling out of Love

with Brands…a corporation’s most valuable with Brands…a corporation’s most valuable asset (30-80%)asset (30-80%)

Slide Slide 3232

Inequality: A Roadmap to CrisisInequality: A Roadmap to Crisis

Source :PricewaterhouseCoopers, World Economic Forum, UNDP, World Bank (2007/8)

Slide Slide 3333

US Losing Favor Across Europe and the US Losing Favor Across Europe and the WestWest

Source :PricewaterhouseCoopers, World Economic Forum, Pew Global Attitudes Survey (2008)

Slide Slide 3434

The Growing Sentiment Against Globalisation in All Rich Countries

Source: Financial Times , Harris Research , 2007

Slide Slide 3535

Mistrust Mistrust The Lack of Trust in Business is GrowingThe Lack of Trust in Business is Growing

% of the public that agreed that you could trust business leaders:% of the public that agreed that you could trust business leaders:

2002: 36%2002: 36% 2004: 31% 2004: 31% 2006: 28% 2006: 28%

(Source :D.YANKELOVICH, 2007 ) (Source :D.YANKELOVICH, 2007 )

Slide Slide 3636

Brand Erosion Brand Erosion Brand Importance Brand Importance Goes DownGoes Down in Recent in Recent

YearsYears

Brand Awareness : 20 % Brand Awareness : 20 % Brand Esteem : 12 %Brand Esteem : 12 % Brand Perception of Quality : 24 % Brand Perception of Quality : 24 % Trust in Brands : 50 %Trust in Brands : 50 % Brand Loyalty : 9 % ( from 40 % !!!)Brand Loyalty : 9 % ( from 40 % !!!)

(Source: WPP, The Brand Bubble by John Gerzema )(Source: WPP, The Brand Bubble by John Gerzema )

Slide Slide 3737

3.Corporation and Society3.Corporation and Society

Slide Slide 3838

Corporation and Society Corporation and Society New IssuesNew Issues

OLD ISSUES Growth Globalization Competitiveness Innovation etc

NEW ISSUES Regulation Environmental Sustainability Labor / Unions Civil Society Governments as Owners Consumer over stimulation and mental health Business Confidence Erosion etc

Slide Slide 3939

Major Periods of Corporate Confidence Major Periods of Corporate Confidence ErosionErosion

1929: 1929: Great DepressionGreat Depression (Unemployment )(Unemployment )

1968-80: 1968-80: Banana RepublicBanana Republic ( Multinationals, Cynicism, UF syndrome , School of ( Multinationals, Cynicism, UF syndrome , School of

Chicago) Chicago)

2001- : 2001- : Antisocial Antisocial (From the Enron Scandals in 2001 to the Virtual (From the Enron Scandals in 2001 to the Virtual

Money Game of Lehman Brothers in 2008) Money Game of Lehman Brothers in 2008)

Slide Slide 4040

The Antisocial Era of Corporations The Antisocial Era of Corporations

Towards a DiagnosisTowards a Diagnosis

Failure to conform to social norms,( i.e. evidence by repeated unlawful behavior)

Deceitfulness, repeated lying, use of aliases or manipulating others for profit

Reckless disregard for safety of (self) or others

WHAT IS THIS ? According to the DSM-IV-TR (Diagnostic and Statistical Manual

for Mental Disorders) this is the definition of a …..

Slide Slide 4141

The Corporation is a.. The Corporation is a.. Psychopath !!!Psychopath !!!

(Antisocial Personality Disorder -APD )(Antisocial Personality Disorder -APD )

A PSYCHOPATH ALSO CAN BE : Charming, manipulating, focusing solely on self-

gratification, deceiving and swindling the unsuspecting. (Hare 1999, Black 1999)

Slide Slide 4242

Who ? In Managers /CEOs We Who ? In Managers /CEOs We

Trust.. Trust.. Ordinary, Good People Become Monsters in an Evil Ordinary, Good People Become Monsters in an Evil

Place?Place?

The Power of the The Power of the InstitutionInstitution (ie Corporations larger than many Nations, are becoming (ie Corporations larger than many Nations, are becoming

Social Institutions, Pseudo Authorities, etc )Social Institutions, Pseudo Authorities, etc )

The Power of the The Power of the SituationSituation ( ie Poverty, DFI, WTO, IMF, FED, Globalization, Labor ( ie Poverty, DFI, WTO, IMF, FED, Globalization, Labor

Camps )Camps )

The Power of the The Power of the Lucifer EffectLucifer Effect (ie How good people turn into evil / sadists ) (ie How good people turn into evil / sadists )

Slide Slide 4343

Chilling Findings about People and Chilling Findings about People and AuthorityAuthority

Stanford Prisoners Experiment /SPEStanford Prisoners Experiment /SPE

(Prof. Philip Zimbardo, Stanford 1971)(Prof. Philip Zimbardo, Stanford 1971)

The Milgram Obedience to Authority Experiment The Milgram Obedience to Authority Experiment

(Prof. Stanley Milgram , Yale 1963)(Prof. Stanley Milgram , Yale 1963)

“ “ Ordinary People, Doing their JobsOrdinary People, Doing their Jobscan become Agents in a Terrible Destructive Process can become Agents in a Terrible Destructive Process

under the Umbrella of a Legitimizing Ideology and Social Institutional under the Umbrella of a Legitimizing Ideology and Social Institutional Support”Support”

Slide Slide 4444

The Lucifer Effect (1)The Lucifer Effect (1) Demonstrates the impressionability and obedience of people when Demonstrates the impressionability and obedience of people when provided with a legitimizing ideology and social and institutional provided with a legitimizing ideology and social and institutional

supportsupport

Stanford Prisoners Experiment /SPEStanford Prisoners Experiment /SPE

(Prof. Philip Zimbardo, Stanford 1971)(Prof. Philip Zimbardo, Stanford 1971)

The Stanford experiment ended on August 20, 1971, only 6 days after it began The Stanford experiment ended on August 20, 1971, only 6 days after it began instead of the 14 it was supposed to have lasted. The experiment's result instead of the 14 it was supposed to have lasted. The experiment's result has been argued to demonstrate the impressionability and obedience of has been argued to demonstrate the impressionability and obedience of people when provided with a legitimizing ideology and social and people when provided with a legitimizing ideology and social and institutional supportinstitutional support

Slide Slide 4545

The Lucifer Effect (2)The Lucifer Effect (2) Obedience to Authority :Chilling findings regarding Obedience to Authority :Chilling findings regarding

the weaknesses of human naturethe weaknesses of human nature

The Milgram Obedience to Authority Experiment The Milgram Obedience to Authority Experiment

(Prof. Stanley Milgram , Yale 1963)(Prof. Stanley Milgram , Yale 1963)

Ordinary people, simply doing their jobs, and without any particular hostility on their Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process. Moreover, even when the part, can become agents in a terrible destructive process. Moreover, even when the destructive effects of their work become patently clear, and they are asked to carry destructive effects of their work become patently clear, and they are asked to carry out actions incompatible with fundamental standards of morality, relatively few out actions incompatible with fundamental standards of morality, relatively few people have the resources needed to resist authority. people have the resources needed to resist authority.

When Good People Do Evil:When Good People Do Evil:

45 years ago, Stanley Milgram's classic experiments showed that, under orders, 45 years ago, Stanley Milgram's classic experiments showed that, under orders, decent human beings will do anything. ( at 90% level , while psychopaths are at 1%)decent human beings will do anything. ( at 90% level , while psychopaths are at 1%)

Slide Slide 4646

4. Restoring Confidence4. Restoring Confidence

Slide Slide 4747

Can We Restore Confidence ?Can We Restore Confidence ?

Plato:Plato:

…” …” business is a necessary evil in society… only the business is a necessary evil in society… only the worst sort of people are involved”...worst sort of people are involved”...

Slide Slide 4848

Towards a New Corporate Social Towards a New Corporate Social ContractContract

Corporation and Society : Evolution PhasesCorporation and Society : Evolution Phases

Corporate Social Responsibility / CSR: The “Green Wash” EraCorporate Social Responsibility / CSR: The “Green Wash” Era (ie Corporations react to pressures from NGOs, etc )(ie Corporations react to pressures from NGOs, etc )

Triple Bottom Line / TBL :The Unfulfilled EraTriple Bottom Line / TBL :The Unfulfilled Era ( ie Charmy annual reports regarding CFP,CSP,CEP and no binding ( ie Charmy annual reports regarding CFP,CSP,CEP and no binding

promises)promises)

Corporate Social Contract / CSC: The License to Operate EraCorporate Social Contract / CSC: The License to Operate Era (ie Civil society and government take control through the license (ie Civil society and government take control through the license

principle and ensure that big corporations comply regarding CFP,CSP,CEP principle and ensure that big corporations comply regarding CFP,CSP,CEP and CHP or the “Corporate Quartet Principle/CQP”)and CHP or the “Corporate Quartet Principle/CQP”)

Slide Slide 4949

Corporate Social Contract / CSCCorporate Social Contract / CSCThe License to Operate Era , The License to Operate Era ,

and the “Corporate Quartet Principle” and the “Corporate Quartet Principle” for a Multiple “Corporate Zero Footprint” for a Multiple “Corporate Zero Footprint”

Government and society could provide a license to corporations to Government and society could provide a license to corporations to operate , based on the approval of their annually submitted plans operate , based on the approval of their annually submitted plans and performance on the following :and performance on the following :

1. Corporate Financial Performance / CFP1. Corporate Financial Performance / CFP (ie Tax Equality- MS in Greece )(ie Tax Equality- MS in Greece ) 2. Corporate Social Performance / CSP2. Corporate Social Performance / CSP (ie Humanity- Feminization of Man in US cities )(ie Humanity- Feminization of Man in US cities ) 3. Corporate Environmental Performance / CEP3. Corporate Environmental Performance / CEP (ie Sustainability – The Big Five oil companies ) (ie Sustainability – The Big Five oil companies ) 4. Corporate Health Performance / CHP4. Corporate Health Performance / CHP (ie Engaging the Brain-From over stimulation(2500 ads/day) to (ie Engaging the Brain-From over stimulation(2500 ads/day) to

Neuromarketing and the “Buy Button” in our Brain /BrightHouse Neuromarketing and the “Buy Button” in our Brain /BrightHouse studies )studies )

Slide Slide 5050

A New Corporate Footprint A New Corporate Footprint Physical and Mental Health/ Happiness and Physical and Mental Health/ Happiness and

DepressionDepression

• Depression the second largest killer, after heart disease, by 2020• 15% of the population in developed world suffers severe depression• 15% of depressed people will commit suicide• “..studies document that strong materialistic values (imposed by persuasive advertising..) lead to low life satisfaction and happiness , to depression and anxiety and to personality disorders” ..(T.Kasser)

Slide Slide 5151

BRAND

Affluenza

Decision Paralysis

Adaptation(Hedonic

Treadmill)

Oniomania(ie Compulsive

Spending)

Atrophy of Individual Values (State

of Permissiveness)

Seek Higher Satisfaction

(Satisfaction Treadmill)

Isolation & Receptiveness

to Brand Stimuli (State of Apathy)

Feelings of Inadequacy (Low

Self- Esteem )

Low Satisfaction / Disappointment

Comparison Disappointment

(Comparison Treadmill)

DEPRESSION

The Secret Paths to Depression in a Materialistic Culture Cultivated by

Corporations Through Brands

High LevelExpectations

Imposed Values of Success (State of

Discrepancy)

Brand “Values”:

Brand Overstimulation:

Brand Overdose:

Brands’ HedonicTreadmill:

Slide Slide 5252

5. Social Issues Become 5. Social Issues Become StrategicStrategic

Slide Slide 5353

When Social Issues Become When Social Issues Become Strategic Strategic New Organizational Challenges for New Organizational Challenges for

Corporate LeadersCorporate Leaders

The case for incorporating an awareness of social and The case for incorporating an awareness of social and political trends into corporate strategy has become political trends into corporate strategy has become overwhelmingoverwhelming

Issues: privacy, obesity, safety, health, offshoring, Issues: privacy, obesity, safety, health, offshoring, environment, etcenvironment, etc

Companies should look for signs of emerging hot topics Companies should look for signs of emerging hot topics and be ready to respond to them earlyand be ready to respond to them early

CEO’s must be willing to ensure a coherent approach, to CEO’s must be willing to ensure a coherent approach, to engage in external debate and to consider collaboration engage in external debate and to consider collaboration with otherswith others

( Source :McKinsey)( Source :McKinsey)

Slide Slide 5454

Ensuring a Coherent Approach Ensuring a Coherent Approach Organizational Coordination- Reinventing Public Organizational Coordination- Reinventing Public

AffairsAffairs

Slide Slide 5555

CR Delivers Improved Financial CR Delivers Improved Financial PerformancePerformance

CR Index Outperforms FTSE by 3,3% to 7,7% pa CR Index Outperforms FTSE by 3,3% to 7,7% pa

( Source : Ipsos /MORI , BITC , 2008 )

Slide Slide 5656

6. Government and Society: A Larger 6. Government and Society: A Larger RoleRole

Slide Slide 5757

Ensuring Corporate TreatabilityEnsuring Corporate Treatability

““Treatability” is questionedTreatability” is questioned (ie According to top psychiatrists … )(ie According to top psychiatrists … )

Enforcement through the License to Operate Enforcement through the License to Operate Principle Principle ( ie Initiatives and self – regulating promises ( ie Initiatives and self – regulating promises /tactics not acceptable)/tactics not acceptable)

Strong Watch Mechanisms in PlaceStrong Watch Mechanisms in Place

Slide Slide 5858

““Treatability” is QuestionedTreatability” is Questioned

GM/Ford : Private JetsGM/Ford : Private Jets AIG : AIG : Spa Spa FORTIS : Monte Carlo FORTIS : Monte Carlo

Slide Slide 5959

Watch Mechanisms Watch Mechanisms

“ “ ..people are basically honest. And ..people are basically honest. And they are even more honest when you they are even more honest when you

are watch them..”are watch them..”

( Alan Greenberg, ex Chairman Bear Sterns )( Alan Greenberg, ex Chairman Bear Sterns )

Slide Slide 6060

The Myth of the Powerless State The Myth of the Powerless State Government and Society Take a Larger RoleGovernment and Society Take a Larger Role

“ “ ..shareholder value is growing increasingly ..shareholder value is growing increasingly irrelevant as government and society take irrelevant as government and society take

a larger role in shaping business and a larger role in shaping business and industry..”industry..”

( Ian Davis, MD , McKinsey )( Ian Davis, MD , McKinsey )

Slide Slide 6161

7. Nice Capitalism 7. Nice Capitalism (Wanted !!)(Wanted !!)

Slide Slide 6262

The “Nice Capitalism” MovementThe “Nice Capitalism” Movement

Nice Capitalism, Corporations and Nations are Nice Capitalism, Corporations and Nations are InterrelatedInterrelated

Democracy , Justice , Transparency ( no Corruption )Democracy , Justice , Transparency ( no Corruption ) Equality ( narrow income gap, Scandinavian Model )Equality ( narrow income gap, Scandinavian Model ) Responsibility , Honesty,Responsibility , Honesty, Human Centric Attitude , Human Improvement Human Centric Attitude , Human Improvement Sustainable DevelopmentSustainable Development High Standards of Governance High Standards of Governance Human “Ethos”Human “Ethos” Focus on Well – Being , Happiness , “Eudemonia”Focus on Well – Being , Happiness , “Eudemonia” ““Metron” (Human Measure )Metron” (Human Measure )

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“ “ Man is the measure of all things ..”Man is the measure of all things ..”

( Protagoras )( Protagoras )

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Thank YouThank You

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