GLOBAL RECESSION - KEEPING BUSINESS AT THE HEART OF SUSTAINABLE DEVELOPMENT
Adam Leach, IBLF’s new CEO, on the challenges ahead

As the shockwaves of the crisis in the financial sector continue to reverberate around the world and recession undermines confidence in the outlook for the world economy, commentators continue to speculate about how business can navigate through what for most are uncharted economic waters.

The scale and impact of that exposure has taken everyone by surprise. In the developed world, what may have seemed at the beginning to be simply an issue of confidence between institutions, is now having an impact on the whole business sector and on the daily lives of individuals – rich and poor – as jobs are lost, debts become unmanageable and access to the essentials of life become even more difficult.

As the crisis deepens, systemic failure of the most powerful financial institutions will affect crucial issues related to sustainable development such as healthcare and education, affordable access to food, water, energy and responsible harvesting of natural resources, the need for economic prosperity - and the crucial challenges of climate change and environmental protection.

An extraordinary gathering of leaders from developed and developing countries (G-20) last week resolved to undertake broad reforms of the institutions that have governed global markets since World War II and to make financial markets more transparent and accountable. So what role for business leadership?

The Business Response

As 2008 moves towards its close, responsible business leadership has in fact never been more needed than now.

The current crisis may, for some, have called into question the attitudes and practices of the business community around the world. This cannot be allowed to overshadow the sound and responsible practices that have become the norm for so many of our leading global companies.

Business still has a vested interest in responding successfully to the vital opportunities presented by billions of vulnerable people – for social well being and governance, prosperous markets and access to effective workforces, and environmental stability.

“When I look at our ten sustainable development priorities – which include using less water to make our beer; tackling poverty by stimulating economic activity among local suppliers; reducing the spread of HIV/Aids in our spheres of influence – I do not see how we could remain competitive if we invested less in these core business activities during difficult economic times... Our consumers do not see sustainable development as a discretionary activity either."

This is the moment when companies that have been operating to the highest global standards can set new standards of corporate behaviour. In seeking to promote renewed sources of growth, leaders worldwide can reaffirm their commitment to responsible and sustainable business practices by looking carefully at how to rebuild the trust of their stakeholders - investors, employees, customers and communities.

Responsible businesses and their leaders can continue to be the drivers of economic growth by:

• Affirming their commitment to responsible and sustainable business practices;
• Balancing the need to reduce costs with the importance of maintaining the long-term health of the company, its stakeholders and the communities in which the company operates;
• Contributing to strategic social, economic and environmental investments for sustainable development by drawing on core business competences and resources;
• Demonstrating determination to act collectively to set new standards of acceptable corporate practice and governance.

“Business reputation is critical to a company’s individual success and to our collective ability to navigate this crisis and begin the recovery. Our business depends on consumers choosing to invite us into their lives, and we understand that consumers only issue those invitations to companies and brands they trust and respect. Using the downturn as cover to withdraw from engagement with stakeholders and critics would be a mistake. Communicating clearly on the hard choices that lie ahead, and engaging them in what we do, can help deepen our relations with the public and strengthen our ties with the communities in which we operate.”

The Role of the International Business Leaders Forum

IBLF brings experience, expertise and resources and helps to guide business action on international development and facilitate collective action by bringing together partners in different sectors to deliver sustainable solutions.

For nearly two decades, the IBLF has steadfastly promoted effective business action on the crisis of inadequate development and many social, economic and environmental challenges. IBLF experience demonstrates that innovative and practical corporate approaches can make a real difference: at the regional level, there are countless programmes that have improved education, access to food and water, developed a new entrepreneurial culture, pulled young people out of poverty and reduced energy consumption. The Rio Tinto Alcan Prize for Sustainability and the World Business Development Awards, two programmes managed by IBLF over the last years, give numerous examples.

Together, we can help fulfil the expectations of stakeholders, respond to workforce aspirations, and help develop workable responses whether by promoting health, food and water security, increasing employment and local enterprise, or providing access to technology. Collective action and partnership between business and communities can help to set new standards of behaviour and inspire leadership – amongst IBLF partners and many others – and if well planned and managed, can make a real difference to individual lives and communities.

These efforts can also make a tangible difference to the future development of the companies themselves, which benefit from more stable and larger markets, improved retention, recruitment and development of human resources, reduced operating and risk costs, and enhanced reputation amongst influential stakeholders such as investors, local community groups and governments.

Whatever comes next during the current crisis and beyond, IBLF will continue to work together with companies to develop effective responses and support leadership values that will deliver a sustainable future for the benefit of both shareholders and society in response to the challenges we all now face.

For further information, contact info@iblf.org