THE LIFEWORTH REVIEW OF 2008

Sexpenses

May 12, 2009 by  
Filed under First Quarter

Dr Jem Bendell
Adjunct Associate Professor, Griffith Business School, Australia
Lala Rimando
Business Editor, Newsbreak magazine, The Philippines
Ms Claire Veuthey
Research Associate, Lifeworth Consulting, Switzerland
Eliot Spitzer: was timing of scandal ‘too convenient’?

Eliot Spitzer: was timing of scandal ‘too convenient’?

Those seeking more leadership from government and judiciary on promoting corporate accountability often praised the work of Eliot Spitzer, when New York State Attorney General. He pursued matters of corporate crime and malpractice, on issues such as price fixing in the technology sector and stock price manipulation in the financial sector, costing companies billions of dollars in fines.1 This is not a man the financial services industry would wish to have around amidst the credit crisis with its requests for unusual support from the government and federal reserve. On 10 March 2008, the New York Times reported that Spitzer was a client of a prostitution ring. Two days later, he announced his resignation as governor of New York, citing ‘private failings’.2 Journalist Greg Palast suggested the timing of the news was too convenient:

While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators. Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.3

Sex scandals have long been the downfall of politicians. They are less often the downfall of leaders in business and civil society, unless involving children. However, both the growing prominence of such leaders in society, and the widespread use of sex workers in business circles, means that such scandals are likely to arise in future. In February 2008, the role of sex in one of the biggest corruption scandals in Germany came to light.4 In illegal transfers that cost the company 42.5 million, VW worker representatives accepted ‘special bonuses’, such as opulent trips and extravagant nights out involving prostitutes in places such as Brazil and Korea in exchange for favourable policy votes.5 A former German MP, Hans-Jürgen Uhl, and the ex-CEO Ferdinand Piech may also be involved, the newspapers reported. Labour relations have been a source of national German pride, with VW in particular historically being a bastion of worker rights. But the current scandal has exposed the potential risk of close relations between executives and labour leaders. This has led to some to call for a broadening of the concept of corporate responsibility and accountability that has shaped German corporate governance for decades, with the bilateral engagement between management and unions now seen as an insufficient mechanism for socially accountable corporate governance.

This case is not unique. An oil executive was sentenced in February 2008 for awarding his favourite American prostitute a contract to pay for her services with company funds—on top of raiding company coffers for trips to massage parlours and strip clubs.6 The payment of sexual services were also part of the bribes paid by Chinese businessmen to government officials in the Philippines, which we discuss below. Discussions by one of the authors with business people from Geneva to Singapore suggests that corporate hospitality for clients often involves arranging sexual services, and can be facilitated by major hotel companies, through opaque or false billing records.

The question we consider here is not prostitution per se. Its legal status differs from country to country; a particular problem for Elliot Spitzer was that it is illegal in New York State. The moral and pragmatic arguments on how and whether to control the industry also vary. The key issues for corporate responsibility, however, concern corruption, governance, health and gender, as well as the reputational risks involved.

It is widely accepted, and defined in law, that a corporation should not be plying clients or partners with personal gifts, beyond hospitality. This stands whether the bribe consists of an object, straight cash, or a service. All resources a company disburses should be purchases linked to its core business and administrative needs or somehow connected to serving the interests of the organisation’s owners via legal means. Bribery skews the competitive market and sets an unfortunate precedent for business relations; agreements are signed and sales made for the wrong reasons. Bribery within the context of stakeholder relations, particularly when these relations constitute processes of corporate governance, give rise to particular concerns, as revealed in the VW case.

The purchase of sexual services, however, adds insult to injury with a new dimension to institutional responsibility and corporate norms of individual behaviour. Especially where sex tourism is rampant and responsible for the exploitation, trafficking and exposure to disease of millions of children and women, and generally a reflection of a dearth of economic opportunities, and poor education and welfare systems, businesses should take a particularly strong stand against their employees’ use of prostitutes’ services on the company dime. Accepting cultural arguments to excuse using sex workers for business ends is cowardly and opportunistic. Considering bars with sex workers as one might restaurants, in terms of business locales providing a service that can make potential clients feel at ease and see the company favourably, obfuscates the participation in a vicious system of exploitation and social marginalisation; and therefore cannot be equated to a lavish meal out. That line should be clearly drawn. Let’s not forget the risk of contracting and spreading disease, even if using protection: for the ‘beneficiary’, his or her partner at home, and the person providing the service. In addition, business environments that treat such sexual services as a normal way of doing business effectively discriminate against women in their own organisations, who are excluded from the bonds made and deals done in such settings. Moreover, responsible investors may be horrified to learn that what has been charged as ‘food’ at a hotel by a corporate executive was actually sex. Given the reputational risk associated with such practices if they hit the newspapers, there is also a material financial reason for investors to be concerned.

Targeted solutions to such practices are, however, hard to establish. A group of organisations including the UN World Tourism Organisation, Accor Hotels, and NGOs advocating the end of child prostitution, set up the Code of Conduct for the Protection of Children from Sexual Commercial Exploitation in Travel and Tourism in 1997, committing to take steps to help prevent the facilitation of child sexual exploitation. A vital first step is an explicit repudiation of this mode of deal-making by companies themselves, as well as a credible threat of serious sanction for individuals that do not abide by the employer’s code of conduct. The extension of such measures to address the sexist nature of much corporate hospitality is also necessary. Given the large number of women involved in corporate responsibility, it is surprising that sex on expenses, and sexist hospitality more generally, has not yet become more of an issue. Many senior female business travellers have had first-hand experience of returning to a hotel room while the men continue their night in a club. Might some greater solidarity with the women in those bars emerge?

» Olympian graft

(The references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.)

This section can be referenced as:

Bendell, J., and N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines.
(Page numbers for this section are available in the pdf download and hardcopy.)

From bail-outs to better capitalism

May 11, 2009 by  
Filed under Third Quarter

People began to realise just how bad the situation with the financial industry was when governments began bailing out major banks and insurers. They started in the US, in March 2008, with investment bank Bear Stearns. Then, in the space of ten days in September 2008, the two mortgage giants Fannie Mae and Freddie Mac were taken over by the federal government as was one of the world’s biggest insurers, American International Group (AIG). During the same period the four remaining large independent banks disappeared. Lehman Brothers was allowed to fail, Bank of America acquired Merrill Lynch at a discounted price while Goldman Sachs and Morgan Stanley turned themselves into regulated banks.

The Federal Reserve System (Fed)’s lax monetary policy, leading to abundant liquidity in the system, and loosening lending practices combined to cause a crisis in sub-prime mortgages in the US. What transformed this into a global financial crisis was the complex and opaque securitisation process and the shadow banking system made of off-balance-sheet vehicles, special-purpose vehicles and the like. Yet, as the crisis developed, it became clear that the whole system of highly leveraged banking had become unstable and unsustainable.

In a first plan to rescue the financial system, the US Treasury Secretary Hank Paulson and the Chairman of the Board of Governors of the Fed, Ben Bernanke, had Congress pass a vast bail-out of US financial institutions whereby the Treasury Department can buy up to $700 billion in toxic mortgage-backed securities or recapitalise the banks.5 This dramatic turn of events raised many questions and was widely commented upon. Were these bail-outs necessary? Should taxpayers’ money be used to bail out private companies that failed because of their excessive risk taking? What should regulators and government demand in return? In other words, who should pay the price for yesterday’s recklessness?

Robert Borosage: it would be obscene to help the predators and not those that they preyed on

Robert Borosage: it would be obscene to help the predators and not those that they preyed on

That bankers were going to be bailed out, while homeowners still struggled, was galling to many. Robert Borosage, president of the Institute for America’s Future, said, ‘many homeowners were misled by predatory lenders to taking mortgages that they didn’t understand and couldn’t afford. It would be simply obscene to help the predators and not those that they preyed on.’6 Some also questioned the revolving door between bankers and regulators, and whether people such as Paulson, who became super-rich from working in one of the firms whose practices had helped create the crisis, should be deciding how to hand out billions to the same sector.7 They could point to investment firms scrambling for the oversight of all the assets that the Treasury planned to buy, so they could receive hundreds of millions of dollars in fees.8 News that the bankruptcy courts had released $2.5 billion to secure Lehman Brothers bonus payments, at a time when savers were still losing out, was just one example of a situation that seemed to many like a systemic abuse of power by a professional elite of regulators, judiciary and bankers.9

The bail-outs were defended by the fact that these financial institutions were ‘too big’ or ‘too interconnected’ to fail and that failure would have caused a systemic risk. If governments and regulators have let financial institutions become so big that they cannot be allowed to collapse, shouldn’t they be encouraging more competition and more diversity? This is at least the view of trade unions. UNI Finance Global Union, the global trade union for finance workers, has repeatedly called for a diverse finance market that includes not only private banks and insurance companies but also public banks, savings banks and insurances, cooperative banks, mutual insurance companies and foundations.10 However, this does not seem to be the view of governments and regulators who were pushing failing institutions into the arms of healthier ones (for example, the acquisition of Merrill Lynch by Bank of America in the United States or the takeover of HBOS by Lloyds TSB in the United Kingdom). As Lina Saigol, a Financial Times columnist, argued, this ‘new generation of gargantuan institutions [will have] the power to dictate the next financial boom and bust’.11 With the new injection of funds from governments, many banks turned their attention to attempts at buying each other out, and thus compounding the problems associated with market domination by too few players, rather than getting back to the business of lending money to people in the business of making things for others.

Another issue raised by the bail-outs was that of moral hazard. Many commentators, including Financial Times columnist John Gapper, argued that the rescue of AIG ‘encourages the idea that institutions can run amok in markets and will be bailed out. Indeed, the bigger they are and the worse they have behaved, the more likely it is to happen.’12 Other critics called these events ‘a perfect demonstration of Wall Street socialism’13 and the ‘socialisation of finance’.14 It is true that the financial industry seems to have understood better than any other how to privatise gains but socialise losses. After all, in 2007, Daniel Mudd, the CEO of Fannie Mae, reaped a 7% pay increase to $13.4 million while his company was losing $2.1 billion and its shares fell 33%.15

In many cases the bail-outs became part-nationalisations of the banks involved. This gave governments some additional influence over their practices, yet most politicians were cautious about what influence they would exert, and merely spoke about future executive pay. This timidity is an issue we return to in the following section, when discussing the broader implications of the financial crisis.

The irony of increasing government ownership of the banks is that taxpayers may face a double whammy of their own. Not only have they bought up bad debts, but they have bought into potentially massive legal liabilities. In a comment in The Guardian, Nick Leeson, the trader who brought down Barings Bank in 1995, said, ‘For my role in the collapse of Barings I was pursued around the world, and ended up being sentenced to six and half years in a Singaporean jail. Who is going to go after the reckless individuals responsible for the financial catastrophe? Apparently no one.’16 However, as time passed there appeared to be growing pressure to hold companies as well as individuals responsible for the global financial crisis. On 24 September 2008, regulators announced the broadening of the investigations into the collapse of the sub-prime mortgage market to include Fannie Mae, Freddie Mac, Lehman Brothers and AIG.17 In addition, many observers expected a sharp rise in shareholder lawsuits against investment banks and other financial institutions following the millions of dollars of losses they made by gambling money in asset-backed securities and the like.18 Lawsuits were emerging from Hong Kong to Paris to Reykjavik.

These actions slam the legal door after the capital horse has bolted. Rather than punishing the individuals who profited from using other people’s money to buy derivatives they did not fully understand, but knew could turn a profit in time for their next bonus, this legal action will cost the companies’ new owners, including the taxpayer. First the bankers, then the lawyers, will have bled the collective purse. As this situation becomes visible to the general public, calls for the people who made millions from speculating with their money to replenish their depleted pension funds may grow. There could be investigation into whether there was abuse of fiduciary duty by those who received large bonuses through creating, investing, rating or trading in mortgage-backed securities or credit-default swaps since the deregulation of those markets in 1999. Given the mobility of capital, such processes would require international cooperation, to freeze assets of those being investigated. If this happened, it would remind us of the words of Interface CEO Ray Anderson, who said that people like him would in future be regarded as criminals for doing things that at the time they considered normal business. Letting bankers live as millionaires, some as billionaires, from creating a crisis that has emptied the pensions funds and now the coffers of government, would sadly stand as a testament to systemic injustices of contemporary societies. However, it is unlikely that governments will want to see such a wave of litigation. As such, there may be growing calls for some form of ‘financial truth and reconciliation’ commission, to explore how this crisis developed, where fault lies, and how to repatriate some savings.

» The end of financial triumphalism

(The references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.)

This section can be referenced as:

Bendell, J., and N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines. (Page numbers for this section are available in the pdf download and hardcopy.)

The end of financial triumphalism

May 10, 2009 by  
Filed under Third Quarter

Bill Gross: we are all to blame

Bill Gross: we are all to blame

Time will tell what the lessons of the financial crisis really are. One way of exploring the lessons is to look at how people were apportioning the blame at the time. From lenders to investors to regulators, it seemed everyone had blood on their hands. As Bill Gross, chief investment officer at Pimco, the world’s biggest bond fund, put it, ‘we are all to blame. For the most part, you can throw in central bankers, Wall Street, investment bankers and you can throw investors into the pot as well as mortgage bankers and regulators who looked the other way.’19

Joseph Stiglitz: the idea that banks should self-regulate is absurd

Joseph Stiglitz: the idea that banks should self-regulate is absurd

Joseph Stiglitz, winner of the 2001 Nobel Prize for Economics, summarised the main debate around the financial industry and its social responsibility: ‘In both the UK and the US, about 40 per cent of corporate profits go to the finance industry. What is the social function of the industry that justifies that generous money? The industry exists for managing risk and allocating capital. Well, it clearly didn’t do either very well [. . .] The idea that banks should self-regulate, relying on their own risk management systems and rating agencies, is absurd. We lost sight of why regulation is needed. The trouble is that regulators are too close to the people they are regulating. There was a party going on and nobody wanted to be a party pooper.’20

It is true that clues of the crisis to come were abundantly available to regulators. As early as 1993, the Interfaith Center on Corporate Responsibility (ICCR), a faith-based investors’ association, warned of the risks to households, communities and investors associated with sub-prime lending.21 In 2000, a House of Representatives hearing addressed many of the issues that were blamed for the sub-prime market woes, in particular abuses by mortgage lenders.22 In December 2006, a report by the Center for Responsible Lending, a not-for-profit organisation based in North Carolina (USA), published a report showing that, despite low interest rates and a favourable economic environment, foreclosure rates in the sub-prime market were very high (almost 20%). The report held predatory lending practices such as adjustable rate mortgages, no- or low-doc loans and pre-payment penalties as culpable.23

There is also evidence that regulators knew about the loosening of lending standards. The Fed’s survey on bank lending practices revealed a deep fall in standards beginning in 2004 until the end of the housing boom in 2006.24 In addition, global institutions, such as the Bank of International Settlements, issued warnings of the risks associated to parts of the US housing market in 2004.25

Kenneth Rogoff: governments and central bankers fell prey to ‘financial triumphalism’

Kenneth Rogoff: governments and central bankers fell prey to ‘financial triumphalism’

If the evidence was so clear, how could the regulators let the party go on? According to former International Monetary Fund (IMF) Chief Economist Kenneth Rogoff, governments and central bankers fell prey to ‘financial triumphalism’,26 the idea that light regulation and a self-correcting financial market are not only enough to maintain discipline but can help economies to grow faster. That the IMF did little to curb this process, and a lot to increase it through influencing financial liberalisation, raises a serious question mark over its legitimacy and proficiency in helping solve the problems now. It was the International Labour Organisation of the UN that has been warning in recent years of the excessive financialisation of the economy.27

Financial derivatives had became so complex that people trading in them did not really know how they worked, just that they were offered from reputable institutions and were receiving good credit ratings. The more complicated a product, the more ingenious, and the more profitable, or so it seemed. Some call this approach the greater fool theory, or pyramid selling: so long as someone else is willing to buy, then the prices can keep going up. Some talk about a collapse of trust, but that is misrepresenting what was involved in the market and emptying the term ‘trust’ of any meaning. Trust involves people. Most trades are done through a computer, often automatically. Finance professionals did not so much as trust, but they assumed—that complexity, ingenuity, a famous institution, and large market power, were all signifiers of financial value. With the onset of the credit crunch they now assume almost the opposite—hence inter-bank lending grinding to a halt.

Credit ratings agencies took some heat for an apparent lack of rigour in their valuation of complex derivatives. Developments in accounting, with the introduction of mark-to-market or ‘fair value’ approaches, facilitated a global-market group-think of ‘it is valuable because many of us think that many other people think it is valuable’. The credit ratings agencies are involved in a process that sociologists call ‘social construction’, i.e. where assumptions, beliefs and norms are constructed by people and organisations in society. The larger and more famous the ratings agencies, the more authoritative their ratings are and the greater impact on perceptions and thus of the market price of what they value. Thus within the current system there is an implicit value in play—that might is right. The socially constructed nature of financial markets was discussed at length by financier George Soros. Yet he did not articulate a value basis from which such processes could be more accurate and beneficial. Sociologists and stakeholder dialogue experts have different views on how a socially constructed concept of something’s nature or worth can be made legitimate and effective, with some advocating forms of ‘communicative action’ in the process as a way to achieve a participatory and intelligent view of phenomena. There is no such ‘communicative action’ in the valuing of assets in the financial markets.

Niall Ferguson: a lack of political-historical understanding contributes to the problem

Niall Ferguson: a lack of political-historical understanding contributes to the problem

Perhaps the underlying reason for this situation is a lack of sociological and political-historical understanding within the financial services sector and its regulators. Finance services professionals, like most people, are naturally competent in objectivist or positivist approaches to understanding reality, and so, when they work in fields that are relativist in their nature, they are not at ease with exploring how we might wish to shape the ways in which we decide what the value of something is, and so just fall back on mob rule—where something is valued according to the sum of the views of the most powerful. If we are explicit about values, then we might seek a credit ratings system that allows new entrants, balances views, moderates the influence of strategic commercial self-interest and seeks to arrive at socially beneficial forms of valuation, such as using a five-capitals model of valuation.28 In this way the financial system might be able to learn something from the corporate responsibility community. A lack of political-historical understanding also contributed to the problem, according to Harvard historian Niall Ferguson. He said that most people in the industry and its regulators do not have memories stretching back before the 1980s, so they do not understand how financial systems have evolved over time and how they can collapse.29

This philosophical turn may seem to some readers to be miles away from matters of corporate citizenship. What are the implications of this financial crisis for corporate responsibility and responsible finance? A few immediately appear. First is the issue some dub ‘the political bottom line’.30 Intense lobbying by the financial industry helps explain how the financial crisis took shape. According to the non-profit advocacy organisation Common Cause, the mortgage lending industry spent nearly US$210 million between 1999 and 2006 in lobbying activities as well as political campaigns contributions to both Democratic and Republican politicians that helped persuade the US Congress to refrain from passing regulation that would restrict predatory lending practices.31 In addition, economist Robert Kuttner blamed the repealing of key protections put in place by the New Deal for contributing to the crisis.32 An example of this is the Gramm–Leach–Bliley Act (1999), which eliminated restrictions on affiliations between commercial banks and investment banks. Senator Phil Gramm, who led the charge to pass this bill, has close ties with the financial industry: he is a vice chairman at UBS Investment Bank and was paid by the Swiss bank to lobby Congress on mortgage-related legislation.33 The political affairs of corporations are a key element of social responsibility, implying transparency and consultation on the societal impact of the forms of regulatory change sought by investors.

A second implication for corporate responsibility, and responsible finance, is that much of the work being done in our area is fiddling around the edges, and not addressing fundamental economic issues. This has been discussed in these Lifeworth Annual Reviews since 2001, when the Enron collapse led Business Ethics editor Marjorie Kelly to question whether work on corporate responsibility risked being beside the point, and called for more focus on the fundamentals of corporate law and financing.34 In a new book by one of these authors, The Corporate Responsibility Movement,35 it is argued that corporate responsibility is evolving in a way that can address these deeper challenges. ‘The corporate responsibility movement is a loosely organised but sustained effort by individuals both inside and outside the private sector, who seek to use or change specific corporate practices, whole corporations, or entire systems of corporate activity, in accordance with their personal commitment to public goals and the expectations of wider society.’ The analysis suggests an interlocking framework is slowly emerging, which seeks to integrate economic and social principles, dubbed ‘capital democracy’ by the author. ‘Capital democracy describes an economic system that moves towards the creation, allocation and management of capital according to the interests of everyone directly affected by that process, in order to support the self-actualisation of all’.

Might the financial crisis spur professionals in the corporate responsibility and responsible finance fields to take up this deeper agenda? One process holding back an embrace of that agenda is the way that work in this field has been defined as a particular set of professional practices rather than an evolving field of societal expectation on business and finance. This delineation of a field of practice meant that, in August 2008, the United Nations Principles on Responsible Investment (UNPRI) could put out a press release reporting ‘Rapid growth in Responsible Investment despite credit crisis’.36 They were referring to new signatories, yet many of those same signatories were being lambasted at the same time for irresponsibly investing in ill-understood derivative markets. Until now the field of investor responsibility has been defined by the investors themselves. Therefore the focus has been on the social, environmental and governance (ESG) performance of the firms they invest in. But, with the financial crisis, they are beginning to have to look in the ESG mirror, as the public and civil society increasingly question the financial institutions themselves.

Nicolas Sarkozy: the idea that markets were always right was mad

Nicolas Sarkozy: the idea that markets were always right was mad

Perhaps the lasting impact on the corporate responsibility field will be that the more critical perspectives, such as those often reported in these pages, will receive greater attention from the shapers of the mainstream agenda on corporate responsibility. They will be able to quote people in high places. In Europe, for instance, some political leaders have called for an end to laissez-faire capitalism. In a political rally in French city Toulon, French President Nicolas Sarkozy said that ‘the idea of the all-powerful market that must not be constrained by any rules, by any political intervention, was mad. The idea that markets were always right was mad.’37

Trade unions have also reiterated their calls for more regulation. The Trade Union Advisory Committee (TUAC) to the Organisation for Economic Cooperation and Development (OECD) issued a statement in September 2008 spelling out what governments should demand in return for taxpayers’ money. According to TUAC, ‘international cooperation should go far beyond what is currently under consideration—i.e. reviewing prudential rules for banks and “encouraging” more transparency on the market place. It is the national and global regulatory architecture that needs to be restored so that financial markets return to their primary function: to ensure stable and cost-effective financing of the real economy.’38

UNI Finance Global Union also called for a fundamental overhaul of the financial industry based on tougher regulation, more transparency, long-term investment and sustainable growth.39 In June 2008, it released a statement with 13 key demands on the regulation of finance markets. These asked regulators to act on issues such as pay systems for executives, consumer protection, sales targets, and tax breaks for private equity.40

Given the caution with which governments were saying they would seek to influence banks and change the banking system, the unions have some work ahead. This is not surprising given how in recent decades monetary policy has been turned into a technical not political issue—symbolised by the establishment of independence for national banks. Yet the recent financial crisis has made publics around the world more aware of the political nature of their monetary systems. Most governments oversee a system whereby private banks print money, and loan it out as debt, thereby benefiting from the system of money creation in a way no one else in the economy does. In return for that privilege, we could expect that governments might influence the way they then loan out that money. But they don’t. Why is this monetary process beyond the political process? Why can’t the contracts governing how the private banks issue money incorporate restrictions on the way that money is used, to promote the objectives set through government? For instance, guidance could be given on the employment or carbon created by the activities funded by the loans. Perhaps corporate responsibility could be embedded in the money system?41 Rising awareness due to the financial crisis might lead to more discussion of policy innovations in monetary systems, yet governments do not seem ready to lead that process in 2008.

At a time of crisis it is natural to look for a quick fix. Yet, once the gold dust settles, it is clear that deeper questions must be asked, and discussed by a broader range of people than international financial institutions and the finance ministers of powerful nations. Any economic historian will tell you that ‘moral sentiments’ precede ‘the wealth of nations’. We should be considering what values we want to further through the design of financial systems. Being clearer about the values embedded within and furthered by the current financial system, and whether that’s suitable for this century, would be a good start. Steve Waddell, of the Global Finance Initiative (GFI), said, ‘although stability is clearly the major concern, there are also significant concerns about the social and environmental impacts of finance. Indeed, increasingly there are suggestions that stability cannot be realized without more categorically considering these broader impacts. There is no formal, open and inclusive public space to develop a global strategy to address these concerns.’42 Along with the Network for Sustainable Financial Markets,43 the GFI is one of a number of initiatives of progressive professionals thinking big on the future of finance.

» Beyond the Western financial crisis

(The references are available in the pdf download and hard copy versions of this annual review, available from Lifeworth’s bookstore.)

This section can be referenced as:

Bendell, J., and N. Alam, S. Lin, C. Ng, L. Rimando, C. Veuthey, B. Wettstein (2009) The Eastern Turn in Responsible Enterprise: A Yearly Review of Corporate Responsibility from Lifeworth, Lifeworth: Manila, Philippines. (Page numbers for this section are available in the pdf download and hardcopy.)