April 9, 2002
Contact: Catherine Walsh
Harvard Business School
(617) 495-6931
British Petroleum’s Lord Browne Explores Social Role of Multinationals
HBS Professor Rosabeth Moss Kanter and Stanley Litow of the IBM Foundation
Contribute to Discussion
BOSTON -- April 3, 2002 -- Lord John Browne, chief executive of British Petroleum (BP), spoke at Harvard Business School (HBS) today on the relationship between multinational corporations and the economic and social development of poor countries. His speech, which emphasized that global companies had an important role to play in issues ranging from human rights to environmental policies, concluded a special “Rising to the Challenge” lecture series at the School on leadership in a post-September 11 world.
Joining Lord Browne on the stage of HBS’s Burden Auditorium was Stanley Litow, president of the IBM Foundation, and Rosabeth Moss Kanter, the Ernest L. Arbuckle Professor of Business Administration at the School and an expert on strategy, innovation, and leadership for change. Several hundred members of the HBS community attended the event.
Professor Kanter asked both executives to speak to “four gaps” in international social and economic policies that have been particularly exposed in the aftermath of the terrorist attack. “How do we call attention to the longer-term issues of building economies for peace and prosperity? We must close the gap between our focus on the short-term and our focus on the long term,” said Kanter. “The second gap is the one that continues to exist between the promise of globalization and world trade and the realities of poor people around the world.”
The third gap, according to Kanter, is between macro policies set by institutions like the IMF and World Bank and the “micro realities” that make daily life so hard for so many. Last is the gap between what is expected of multinational companies and what is an appropriate role for them on the global stage, she said. “Big companies are caught in a revolution of rising expectations; some of the best are often attacked because they don’t do more.”
“Trust can be restored”
Lord Browne lamented a “climate of distrust” surrounding international trade, investment, and big business. “I believe that trust can be restored and that doing so is the very best contribution companies can make in the aftermath of the events of September 11,” he said.
According to Browne, the creation of firms large enough to compete in a global marketplace, along with the failure of some of those companies to exercise corporate responsibility, has led to unwarranted fears of globalization. He pointed out that world trade grew by “a remarkable 1,700 percent” between 1950 and 2000, thanks to an increasing openness in the international economy. “Over the last half century more people have been brought out of poverty than at any other time in history.”
Companies can most effectively help poor people not by acting as aid agencies or charities, emphasized Browne, but rather by investing in the local and global communities on a long-term basis. He ticked off a list of such efforts by British Petroleum, from appointing the company’s first black manager in South Africa during apartheid to an ongoing commitment to reducing emissions of greenhouse gases around the world. In addition, BP forbids any political contributions to come from corporate funds.
“Globalization is not a zero sum game in which the rich get richer and the poor get poorer,” stated Lord Browne. “Those who argue against globalization are denying the 1.5 billion people who live in absolute poverty the means of escape. That is morally unacceptable.”
A new model
Like British Petroleum, IBM works hard at being “a world-class corporate citizen,” said IBM Foundation president Stanley Litow. His company also has a policy of not making political contributions and of furthering the well-being of communities on local and international levels, he said. IBM’s “Reinventing Education” program, for instance, makes grants to advance education reform in the United States, Brazil, Ireland, Italy, the United Kingdom, Singapore, and Vietnam.
Litow pointed out that the history of corporate citizenship and corporate philanthropy in the United States had its beginnings in the mid-nineteenth and early twentieth centuries, as titans like Andrew Carnegie, Andrew Mellon, John D. Rockefeller, and Henry Ford earned their fortunes with a variety of business practices, “not all of which would past muster if we looked at them with a critical eye today.”
The old model of “making your money in whatever way you want and then giving away a small portion” no longer applies, Litow said. “Companies need to be generous, but they also need to be evaluated on how they conduct business in the first place. Corporate citizenship is about a whole range of things [including] sound labor practices, sound environmental policies, [and] encouraging your employees to lead in the community. You do these things not just because you’ve had a good year,” he concluded, “but [because] it’s the way you conduct your business, and it is good for business.”