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BUSINESS AND SOCIETY | 3

freshfields.com

The famous 'elephant graph' by Serbian-American

economist Branko Milanović shows the winners and losers

of globalisation. Real incomes among the world's poorest

people (those on the left of the chart) rose massively

between 1988 and 2008. Those of the very richest in the

West, shown as the 'trunk' on the right, did likewise.

However the 75th to 90th percentiles - which includes

many lower-income workers in developed economies and

upper-middle-class residents in emerging markets - failed

to keep pace with inflation. When the crash happened the

situation was magnified. Today, the proposed remedies run

from Trump's 'America First' agenda to Bank of England

Governor Mark Carney's calls for 'redistribution'.

protecting human rights. And authorities are being equipped

with new powers to tackle corporate misconduct via personal

sanctions, which in turn is fuelling debate about what society

expects of business leaders in changing times.

These are not the only sources of disruption to the business/

society relationship. The lightning advance of technology is

creating new business models that transform markets and

alter the dynamic between companies, consumers and

employees. These disruptive developments raise complex

questions about the future of employment and the responsibility

of corporations towards those whose jobs are under threat.

And reputations must be protected in a world where business

frequently finds itself on the wrong side of the argument and

truth is in short supply.

We are acutely aware of the difficulties this situation presents,

both as an international organisation ourselves and because we

help our clients at the sharp end of the changing environment

- law and regulation is, after all, one of the main ways society

communicates its minimum expectations of business.

The issues that corporations must tackle operate on two

levels - those that disrupt their activities today, and the more

fundamental question of how to improve the business/society

relationship as a route to greater operational certainty tomorrow.

Those that can navigate both will gain a competitive advantage.

Over the coming months we will work with our clients to

examine the changing relationship between business and society

from a variety of perspectives, share lessons from our experience

and invite contributions from leading thinkers to advance

the debate. In collaboration we will identify effective ways of

approaching current difficulties and explore how businesses

might reset the balance over the longer term. Above all we want

to start a dialogue that will help business leaders find clarity in

a confusing, volatile world.

1

Globalisation has created

winners and losers…

Source: World Bank

Percentile of global income distribution

5

0%

90%

95

Real income increase

In order to begin repairing the business/society relationship,

we believe there are three questions corporations should ask

themselves. Find out more on the back page.

95th

75th

Freshfields Bruckhaus Deringer LLP

The business/society

relationship in six charts.

Index

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