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12th May 2006 India Bourke

Integrity in Economics: Dr Klaus Leisinger on Business and Human Rights

On May 10th Dr Klaus Leisinger, special advisor to the UN secretary General on the Global Compact and head of the Novartis Foundation for Sustainable Development, spoke to students about the role of business in upholding human rights. As his very presence at Exeter demonstrated we are truly living in a globalised world in which our “spheres of influence” stretch further than we can imagine. Dr Leisinger that, if companies were to operate with in failing states and to compete with “integrity”, they must think hard about how exactly they define their own “sphere of influence”. Respect for human rights, enlightened management and concern for the welfare of those connected to an individual business should not stop at the factory gates but should also apply to business partners, suppliers and even the governments to which the companies paid tax. Although Dr Leisinger accepted that it was virtually impossible for a company to take responsibility for each stage, large companies must set an example.

Dr Leisinger accepted that there might be differences in the extent to which companies should be held accountable: for instance, in developing economies, businesses must be given a chance to get on their feet. Yet, while keen to emphasis the importance of context, he also was clear about the need for a key set of rules that should be kept unconditionally, such as a requirement for a living wage.

For companies, concern for human rights could bring benefits, if it acted as a stimulant to good economic performance or as a safe guard against harmful law suits and even more harmful bad publicity. Reputation can account for 40-60 percent of a company’s value, and maintaining this is critical. A company that focuses on transparency and discussion of such issues will also have an early warning system if an unexpected crisis does materialize.

Dr Leisinger persuaded his audience that the issues surrounding business and human rights will only grow in importance as markets become more and more open and transactions with China expand. The issue seems set to be hotly debated in the lead up to the Bejing Olympics.

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