Recent revelations about the mislabeling of foods and the use of illegal food additives by Japanese companies suggest a collapse of corporate ethics. The latest incident — mislabeling of chicken by Zen-Noh Chicken Foods, an affiliate of the National Federation of Agricultural Cooperative Associations — has led to the arrests of several executives.
Earlier, following the outbreak of mad cow disease, Snow Brand Foods was found to have used false labels on beef packs. More recently, Kyowa Perfumery and Chemical was accused of using food additives not authorized by law. Other similar irregularities have also come to light.
The bubble economy produced many greedy speculators, causing mammonism to prevail even among good citizens. Once the bubble burst and the economy entered the so-called lost decade, hardship began to dull the conscience and ethical sense of many such Japanese. The recent spate of corporate scandals must be viewed against this backdrop.
These are hard times for business, but using deceptive means to expand sales is an act of self-destruction, as evidenced by the bankruptcy of Snow Brand Foods. Some of the reasons that companies fail to win the hearts and minds of consumers may be beyond their control. Still, there are iron rules that must be obeyed if they are to build consumer confidence and survive the tough competition in the age of globalization.
In this sense, the Global Compact initiated by U.N. Secretary General Kofi Annan — a seminar on the subject was held in Tokyo recently — provides food for thought. The GC initiative is designed to promote cooperation between the world body and private corporations in areas of common concern, such as human rights and labor standards. Mr. Annan spelled out the concept at the World Economic Forum, an annual gathering of economic and political leaders from around the world, held in Davos, Switzerland, in January 1999. In July 2000, 44 global companies, including DuPont, UBS and Deutsch Telekom, joined the program.
A corporation can become a GC member simply by sending to Secretary General Annan a letter from its chief executive officer expressing support for the compact and its nine guiding principles and pledging to take responsible action in the areas of human rights, labor standards and the environment.
The nine principles include protection of and respect for internationally declared human rights, respect for freedom of unionization and the right of collective bargaining, elimination of forced labor, elimination of discrimination in employment and vocation, and promotion of the development and diffusion of environmental-protection technologies.
Each member corporation is required to submit a detailed annual report to the U.N. Secretariat stating the results it has achieved and the lessons it has learned in implementing the nine rules. These reports are posted on the GC Web site.
There are already more than 500 GC members around the world. In Japan, though, there was — before the Tokyo seminar was held — only one member, Kikkoman Corp. The session was aimed partly at enlisting the support of Japanese corporations. In late May, Ricoh Co. joined. More companies should follow suit.
In a seminar speech, the Kikkoman president, Mr. Yuzaburo Mogi, said the company had joined the GC because of the increasing need for responsible multinational corporate action in times of escalating globalization. He firmly believes that multinational companies must operate in ways that preserve the global environment and benefit the global community.
It may seem that joining the GC brings little benefit to a corporation. In the United States and Europe, however, the GC is increasingly used as a key yardstick for investors. In Europe, for example, 60 percent of pension funds are said to be managed in line with the “socially responsible investment” movement, which is based on the idea that investors should give priority to companies meeting their social responsibility in areas such as human rights and environmental protection.
Company employees are “organization people” in that they are influenced, consciously or not, by the standards set by their organizations. Companies committed to social contributions will not behave in antisocial ways. On the contrary, companies without established corporate ethics may act in ways inimical to the general well-being.
The Tokyo seminar, attended by more than 100 people from 73 companies, highlighted the pressing importance of corporate governance. The message is that companies that repeat socially irresponsible actions have no future. Good corporate citizenship is the key to survival in the 21st century.
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