Our message for the World Economic Forum

As we prepare for the 2013 World Economic Forum Annual Meeting, we need to go beyond personal or institutional agendas to find smart solutions that meet common challenges: economic crisis, financial instability, climate change, poverty, conflict and corruption.

These challenges share a common cause – humanity’s unsustainable practices.

We must not forget that the UN projects one billion people will live on an income under US$1.25 in 2015, at which point we have to start working on new development goals replacing those set at the beginning of this millennium. Will we be more ambitious now, or less?

If we are to create inclusive and stable growth, higher employment and lasting poverty reduction, it must be on different terms than our current way of doing business.

New growth must be built on new foundations

We need to change the way we do business by implementing the standards agreed in the last decade such as the UN Global Compact. Still, future prosperity will always be undermined by corruption, excessive risk-taking, a lack of transparency and other unethical practices. Only a more ambitious change of mindset among CEOS and their regulators will begin to defeat these troubles.

We have the models for a more sustainable business practice, many of these driven by industry leaders who wanted to change the rules of the game. They are aware of the risks and the costs of unsustainable business practices that are a barrier to economic recovery.

Furthermore, nine of the world’s ten fastest growing economies score less than 40 out of 100 on the Corruption Perceptions Index 2012, a serious warning sign of systemic public sector corruption that reveals a deep antipathy towards the fight against bribery, secret dealings and abuses of power in countries where resources are massive.

The World Economic Forum has driven many of the common responses needed to battle problems, such as the Partnering Against Corruption Initiative. International bodies like the G20, Financial Action Task Force, the Financial Stability Board, the OECD and others are taking important steps to make key areas of the economy more transparent and better regulated.

Our challenge at Davos in 2013 is to ensure that the models for better business impacts on societies, supply chains, environments and each other are applied from the board room right to the front line.

Compliance takes centre stage

Fortunately, business is taking compliance with these models more seriously. As several huge foreign bribery scandals in 2012 have shown, compliance has gone from being a legal box for one staff member to tick, to a key part of a successful company doing business.

Trust in business is still low. When business stories made headlines in 2012, the stories tended to concern tax avoidance, market manipulation, bribery or dodgy mortgages.

Two in three Europeans, for example, believe that corruption is part of their country’s business culture. The challenge for business compliance is now to convince staff, investors, partners and people that sustainability is business as usual.

Companies: look at your impact on societies

Companies have enormous potential to impact societies positively, but the great question for the next few years is: will they be more transparent about their impact on societies where they operate?

Through their supply chains, tax payments, political contributions, salaries, royalty payments, factories and suppliers they run and hire, companies have myriad impacts on communities.

The last decade has seen notable progress in the disclosure of supply chains and anti-corruption programmes. Two-thirds of the world’s 105 biggest companies (68 per cent) report on their corruption prevention programmes. This compares to less than half (47 per cent) in 2009, the last time Transparency International analysed corporate transparency.

However, only half disclose or ban political contributions and 85 do not disclose income tax in any country of foreign operations. Stories continue to emerge of companies that expanded into foreign markets with bribes, and of countries that are not feeling the benefits of natural resources exploited in their country.

The onus is now very much on companies to publish what they pay to governments, country-by-country, and project-by-project.

Legislation in the United States and the European Union will make this disclosure obligatory for oil, gas and mining companies, but all companies should proactively seek this level of transparency.

Efforts to create a culture of integrity will be helped by the G20, whose efforts to involve the private sector in reducing financial and other risks have led to the creation of a Business group, or B20.

As an ever broader array of business interests come round to the idea that clean business is good business, we must find the means to spread the message and put it into practice. It should be an important part of the discussions that take place at Davos.