BUSINESS AND SOCIETY | 3
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.
Globalisation has created
winners and losers…
Source: World Bank
Percentile of global income distribution
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.
Freshfields Bruckhaus Deringer LLP
relationship in six charts.
powered by PageTiger