A Rip in the Sea - Bülent Eczacıbaşı

IÖ

I don’t see lack of trust as a cultural or genetic trait either; as in any society, it’s a consequence rather than a cause. Trust tends to be much higher where institutions function well; it’s a type of belief, after all. When institutions don’t function well, or there are no institutions to defend your rights, trust tends to be quite costly.

One of the key characteristics of traditional societies is placing trust only in kin relationships. There have been very interesting studies of what closed societies in Africa, South America, and pre-industrial Southeast Asia trust and distrust. Importantly, the findings show that trust isn’t written in our DNA; it’s something that can be developed through institutions.

BE

The business world needs the trust of the public in order to deliver what’s expected of us. And those expectations only seem to increase. What is the global trend in this regard? Is the public expecting even more from the private sector? Or is hope dwindling? I believe that expectations are growing. The rise of sustainability as a critical issue has created a demand for more contributions in this area. It’s a vital situation that requires the creativity, innovative power, and driving force of the private sector.

Businesses often choose to use social responsibility projects to ensure the public support they need, and society clearly favors companies with a strong social responsibility record. Ask young people where they want to work, and they lean toward such companies.

This trend has a positive aspect, in that it motivates businesses to embrace social responsibility. But it has negative side effects, too. Some companies just pretend to care and launch social responsibility projects in fields beyond their competence. We also see sloppy projects and the skewed allocation of resources, such as spending five times more on the promotion of a project than on the project itself. All this, of course, is just a response to society’s expectations; we behave this way because we’re expected to.

IÖ

The paramount crisis in the world is ecological. In fact, a significant proportion of society blames the business world for this crisis. The prevalent view is that since business caused the ecological problems, it should solve them. Even if we agree that it should, how is it to do that? It goes without saying that it can’t; its solutions might at best limit the cost of the crisis and delay or mitigate the danger. It might invest accordingly. On the other hand, the global economy features an increasing number of colossal companies created through mergers. Their scope leads us to suggest that the business world is the only group with the human resources and capacity to raise awareness of global problems, invest in solutions, and take concerted action.

We’ve just spoken about fragmentation in the business world, but other segments of society are even more fragmented worldwide. You also mentioned the capacity for global impact stemming from global business networks. Labor could set up similar networks as well, but it’s relatively easier and simpler for business to initiate them. So, one thing the business world can do is establish both a global network and a platform to disseminate ideas.

All the same, the problems aren’t that easy to solve. As you’ve just said, the quality of social responsibility projects is key; it’s important that companies make an effort to raise sensitivity and awareness, rather than just pursuing their own interests or publicity.

The UN’s Global Compact has ten important principles. Even if the business world’s only action is implementing these principles and contributing to related social responsibility projects, that would be a hugely important step. Yet, there are so many companies in the world that talk the talk, seem to be interested in sustainable development and even in investing to this effect, but their own practices are fanning the flames! And not just in Turkey but everywhere. One thing we can do is to raise awareness of this conflicting stance in the business world. Take the self-regulation mechanisms in various countries and industries. These industries set their own regulatory standards without the need for a public authority, and all the players in that industry agree to the sanctions that will be imposed in cases of non-compliance. Such measures are predicated on the desire to lead the way. It also requires synchronicity. You need to allocate resources and ensure coordination among different companies, institutions and in your own corporations. The need for collective action is clear once again.

AÇ

One thing to concede is that there are certain things business can do better than any other group, and others that it can’t. There are things it can do in tandem with government and the public sector. And finally, there are things that only the public sector can do. Now, I think the debate in Turkey stems from the fact that the private sector is quite often unable to establish healthy cooperation with the public sector or tries to do things that the public sector should be doing. For example, only government can produce public goods. It would be better if the private sector stayed out of this field because it will fail. Take education: It’s impossible for basic education to be given in any institutional structure outside of the state structure. The figures speak for themselves: There are some 17 million students in Turkey.

What does the private sector do well? It can correctly identify economic choices, if there are any. In an environment where you can make a choice, the private sector identifies it best. It manufactures efficiently and responds to needs much more economically. The public sector can’t do the same – or its capacity is very limited. But with respect to the production of public goods, and by that I mean the many decisions that take place in the political arena, there is nothing the private sector can do. I think we need to debate the idea being tossed about of not paying taxes and deciding on our own where and how to channel those funds to the public good. I don’t believe people would easily accept this proposal.

BE

I agree. It would all be up to individual choice then.

AÇ

You’d be exempting yourself from public decisions.

BE

You’re absolutely right.

AÇ

You’d be implementing your own choices as if they were public ones, and this wouldn’t actually be allowed in modern states. So yes, business will do its duty by paying taxes; public services need the resources after all. Beyond that, the private sector can carry on with its own activities. Personally, I feel that we shouldn’t exaggerate the social responsibility rhetoric. Take Milton Friedman’s old argument, which you’ve also referred to, that the social responsibility of business is to make profit; the rest should be left to the state. Friedman was the last person willing to defend the public sector, yet this is what he said. When you make a profit you’re actually fulfilling all your obligations to society. This argument still persuades me in a way. Because, as you’ve mentioned and observed so well, social responsibility activities easily turn into a publicity exercise or even into a decision to impose your own choices on public ones.

On the other hand, the need to prevent discrimination in certain areas, such as ensuring that women have equal opportunities, is a matter for government. Ensuring women’s employment through equal opportunity hiring practices isn’t something that can be left to the private sector. Government must monitor this matter, although it would be easiest if business regulated itself without giving government cause to intervene. Self-regulation would make the process much more effective. Business could be pursuing different strategies in different areas to that end. Then there’s something else we’ve not yet covered: By taking a pioneering stance in crucial areas, business could act as a role model. I’m not convinced that social responsibility projects should focus on generally accepted problems like education. In any case, everyone wants to do something in education.

BE

Quite.

AÇ

I think a meaningful social responsibility project is one that takes a pioneering role in an area nobody really wants to deal with, like whose education is important?, and establishes a precedent that it’s nothing to fear. Something that’s universally accepted hardly helps generate new ideas. It becomes more of a packaging exercise, and as you’ve said earlier, it’s meaningless for the company unless it’s promoted. And when you promote it, you may end up spending as much on promotion as you do on the activity itself. Which is nonsense.

I have friends who entered the world of business in the 1980s. They said they were expected to put in 16-hour days, and none of them objected. All my friends worked those long hours – and weekends as needed! – to remain in the world of business. But today, no one will be able to force my students to work 16-hour days. Turkey has undergone a cultural sea change. People’s expectations of companies have changed, and they’re choosing their employers accordingly. Consequently, companies have begun to behave differently too.