Future growth will increasingly take place in regions where there is political instability and weak governance structures without democratic traditions and sound legislation. These markets are often rich in natural resources and can be attractive due to the availability of low cost work forces. We will see more and more companies operating in these demanding markets, where they will be exposed to difficult situations and ethical dilemmas.
Domestic companies in these markets might have limited resources and expertise, and little experience of interacting with international companies. In addition, the division of roles between the authorities and business is often unclear. Some of these countries have been at war or involved in conflicts for many years, and there are usually large differences in standard of living.
Companies must act in a transparent and responsible manner in such societies and markets. This is in accordance with international expectations and makes commercial sense. The World Business Council for Sustainable Development has formulated this clearly: “Business will never succeed in a society that fails.”
Openness on ethical dilemmas and difficulties in day-to-day operations is expected in a world that has zero tolerance for failure. Stakeholders such as employees, customers and media expect all players to comply with legal requirements, and even go beyond compliance on issues such as transparency and reporting.
Strategic and careful planning is a key to success when entering into demanding markets. Sustainable development requires holistic and long-term thinking in day-to-day business operations. Companies must take into consideration how they will deal with issues such as corruption, breach of human rights and safety threats, before establishing new operations. Corruption, which is the focus of the cover story in this issue of DNV Forum, is a particular challenge all over the world and requires special attention. Entry into new markets must also be based on thorough knowledge of the country and respect for its culture and people. Adequate resources must be made available to ensure quality throughout the operation.
A vital move is to ensure that the desired values are integrated in the company’s business culture and that employees understand and act in accordance with a defined code of ethics.
Responsible behaviour is not only right. It is a good investment – for everyone.
Henrik O. Madsen
President and Chief Executive Officer
Date: 2006-12-18