Webinar Series: Global Goodness – Discussions on Global Business Ethics

In my book Global Leadership; How to lead the globe intelligently I have analyzed the challenges of global leadership and found out that the biggest challenge is that there is no such a thing as global leadership. We have learned to lead and manage individuals, teams, organizations, networks, big international companies, nations, even regions, but we don't know how to lead the globe?

The need for this kind of global perspective is new. We should quickly find ways to do that: to define what is global leadership, what is our global vision,  global values, global processes, global targets, who is taking the leading role in making this happen, do we need a global parliament to make the rules and follow the implementation, etc. I have tried to reflect if global leadership is possible at all and could it be intelligent global leadership. But, unfortunately, at the moment, it is more like a foolish global leadership. International cooperation is done with international politics and diplomacy. It is a political power play where every nation is mainly focused on their interests, and a genuinely global perspective is missing.

I have studied leadership at different levels and found out some basic principles of good and functioning leadership. These principles are pretty simple:

1. we should have a clear vision, where we are going
2. we should have shared values, which are steering our cooperation
3. we should have clear targets which are commonly accepted
4. we should have good decision making and be able to make decisions
5. we should have active implementation and follow-up

When we consider global leadership, these five basic principles should also be in place to say that it is intelligent global leadership.  But we all understand that none of these principles are applied in global leadership at the moment, and we don't have any systematic way to lead the globe.

Global leadership is not very complicated in theory, but in practice, it is. The reason for that is that we don't understand the global leadership process, and nations have different visions, values, and targets. Therefore, we should try to reveal the true simplicity of leadership and to develop leadership science. From this leadership science, we should also get some guidelines on global leadership and how to develop global governance models.

Global governance could be seen as a process of international cooperation among transnational actors, aimed at negotiating responses to problems that affect more than one state or region. International Institutions like United Nations and others tend to have limited power to decide and implement what could be the global governance model. Global governance involves multiple states and international organizations, with one state having more a lead role than the rest. Who will take the leading role here politically, economically, and culturally: the USA, China, or EU.

One possibility could be that we try to set up A Globe Ltd organization step by step, first so that Europe will integrate itself and the same way Americas, Asia, and Africa. And then finally we could set up some kind of World Parliament. But who could have the power to orchestrate this kind of integration process? It doesn't happen by itself.

What could be then the global governance model: democrazy, meritocracy, or dictatorship. Probably none of them. If we consider present governance models around the world, they are not the solution either. Maybe we have to develop totally new and innovative global governance models. We should start active research in global leadership to understand what models could be possible to implement theoretically and practically. Leadership science could have some vital input to this research.

Pentti Sydänmaanlakka 6.9.2021

Pentti Sydänmaanlakka: Globaali johtaminen. Miten hallita maailmaa älykkäästi. Alma Talent. 2019.

You are an extraordinarily bright and optimistic person. However, you have ended up teaching a course on the New Challenges of Global Business, which essentially addresses the dark side of international business. The situation reminds me of Star Wars. How does a perfectly virtuous person end up on the dark side?

To start with, thank you Maija-Riitta for your kind words. It is true that I more often find the glass of life half full than half empty. However, I do think that education in business schools suffers of a success bias; our worldview is overly positive and optimistic. Students learn on the various courses about success stories and how to make it. But what about failures? Although we seldom talk about the negative implications of business, it does not mean that they wouldn’t exist. On the contrary, they are there, when the students enter the real-life of International Business. Wouldn’t it make sense to be prepared? To know something about them? At least I think so.

The course you mentioned – New Challenges of Global Business – was created some years ago as a response to a comment from one of our alumni. In a discussion related to IB studies at TSE she said that it would be nice to have a course dealing with topical issues. In response, we created this course with changing themes. For the time being, the focus of the course is on the negative implications of International Business, the dark side of it. The idea is that after completing the course the student is familiar with illegitimate actions in global business environment and is ready to tackle problems related to these challenges in her/his future work.

The underlying idea of the course is that the only thing we can be sure of is that the future is uncertain. By the time the students graduate and enter the labour market, it can be substantially different from today, and the only thing we can do is to prepare them for the challenges. In the mission of TSE it says that we educate responsible future leaders. They need to demonstrate visionary and transformative leadership. It means that instead of trying hard to predict the future and plan accordingly or passively adapt to the changing environment, they need to make sure that they look ahead. They need to decide what they want the future to be, and use the resources available to co-create it. As future leaders they need to be prepared for turbulence and upheaval and we hope to provide them the capabilities that will help them to cope with insufficient insight, foresight, and understanding issues broadly.

What kind of ethical problems are hidden in international trade?

The course focuses on micro-level challenges of International Business, that is ethical problems such as human trafficking, modern slavery, corruption, money laundry and violation of human rights. Why? Because when it comes to these challenges everyone can make a change. YOU can decide to be a responsible future leader. YOU can decide to act responsibly and search for solutions which minimise the impact of these ethical problems hidden in International Business.

What kind of leadership is needed to overcome problems?

I think that our role as educators is to support the capability development of future leaders. Here I think we can borrow a model from consumer behaviour research where they use a framework called AIDA – like the opera. The abbreviation comes from the initials of four phases of the process: Awareness, Interest, Desire and Action. Based on student feedback I can conclude that only few of them have been aware of the ethical problems, and how close, for example, human slavery is to their own life. Their comments also point out that the course has aroused interest in these topics. So, it seems that we are on the right track. Hopefully, in the future they desire also to take action, in enhancing the value organisations create for society in an ethical way.

How do you outline the relationship between foreign policy and international trade?

In my opinion, foreign policy and international business are tightly intertwined, and therefore it is not a coincidence that at the Ministry of Foreign Affairs there are two ministers: Minister for Foreign Affairs and Minister for Development Cooperation and Foreign Trade. Both foreign policy and external economic relations are about relationship management related to the interests of the country. Preparation and implementation of a country’s trade policy requires continuous negotiations with international institutions, participation in multilateral trade negotiations and making trade agreements within the EU framework. The Ministry for Foreign Affairs also promotes Finland’s country image.
However, it is essential to remember the complexity of global business. Today’s trade policy is not only about trade barriers, tariffs and quotas for exporters and competing industries. Power structures in global business have undergone a significant change. Nowadays the majority of international business is conducted in global value chains or on digital platforms. The role of non-governmental organisations and supranational organisations, such as the World Trade Organisation or United Nations has increased in International Business. Therefore, trade policies are no longer only based on international trade relations of countries but take into account a much broader agenda.
Here at the Turku School of Economics we think that the future leaders whom we educate should also be aware of the changes of global business and the basics of trade policy. Our position at the heart of a multidisciplinary university offers us a unique opportunity to provide the students knowledge, which combines International Business with Political Science and Political History, as an example. We encourage our IB students to take a minor at the Faculty of Social Sciences and offer them a study module of 25 credits on Trade Policy and Change of Global Business. This has been possible with the generous support of the TT Foundation, our warmest thanks to them. The responsible leader of this KAPPAS project is professor Kari Liuhto at our Pan-European Institute.

Is there a hopeful vision for the future that we tend to overlook?

As I mentioned in my answer to you, I tend to think that the glass of life is half full, not half empty. Also in this case I am optimistic and the main reason for that is the young people I see around me and meet at the university. They are concerned about the future but also committed to make a change. One could expect that students who seek education in a business school would be strongly driven by profit and personal benefits. It is actually the contrary, already for some years the top career goals of our students have been (1) to do meaningful work, (2) to be intellectually challenged and (3) to have a sound work/life balance. I could not wish for more. Thank you!

Discussion on Dasgupta review - Anni Huhtala, Associate Research Professor of VATT Institute for Economic Research

1. What is the most important takeaway of the Dasgupta review?

Our economies are dependent and reliant on nature and the ecosystem services the nature provides. However, we have failed to protect nature. We should change our view on nature and our way of thinking – nature cannot be seen only as a source of raw materials and as a waste sink. Instead, we should see nature as a valuable asset - in a similar manner as we have recognized, and are used to manage, other fundamentally important assets:

• produced capital (“man-made capital” – infrastructure; buildings, machines etc.)
• human capital (skills, knowledge, health)
• Nature is equally important capital for our wealth and well-being.

One should not be scared by the terminology that economists use. Considering nature as a “capital” is to emphasize its importance as a stock – wealth - that is important to manage carefully over time. By destroying nature, we lose its capacity and ability to enable life and, ultimately, serve also people and economies to survive.

2. In this series of webinars, we are talking about global goodness, the possibility of sharing global core values. From the point of view of the Dasgupta review, should we deal with biodiversity issues globally or locally, or both of them?

We should deal with biodiversity both globally and locally.

The review emphasizes that we are dealing with an institutional failure. We lack institutional arrangements to protect global public goods, the oceans and the world’s rainforests, for example. The review call for a supranational body to deal with global public goods and payments required for protecting biodiversity and ecosystem services.

Of course, there are local development projects that affect land use and biodiversity. These projects and their social impacts should be evaluated - social cost-benefit analyses are needed for that purpose.

3. Does nature have intrinsic value - or instrumental value only? if you think nature has intrinsic value, it would be nice to hear about your personal experiences about this.

Nature has intrinsic value, in my opinion. However, I am not a philosopher and I am not sure what moving from “anthropocentric ethics to biocentric ethics” would involve in practice. I suspect that use of social cost-benefit analyses that economists recommend would be hard to justify as in economics we focus on humans’ point of view and our well-being.

As a concrete example on intrinsic value of nature as recognized in Finland and other counties is that we have established natural parks where we allow people enter only for research purposes. Personally, I know best the Malla natural park that is close to Saana – an arctic ecosystem where, e.g., arctic fox is an important species that perhaps still could be protected locally.

As I was born in Northern Finland where climate can be harsh I have learnt to appreciate nature and its strength.

In the Dasgupta Review, the emphasis is on the need for change in economics. What about the next steps of implementing change in the different sectors of society? There seem to be many conflicting interests that need to be reconciled?

If this was easy, or even medium easy, I guess this would already have been done. All the wicked problems are by their nature, as the title suggests, really difficult, there may not even be solutions, or they will be very ‘painful’ for certain parties. But that should not hinder us from trying. Whenever we discuss the need for systemic transformation there are so many voices, and they are largely contradictory. Though there is one party that does not have a voice, and that is the nature. If we are not speaking for biodiversity, who will?

So this should come from inside of us, it should be something we want, i.e. to save biodiversity, life and the planet. It cannot always go so that we add taxes and fines to control actions. We need more genuine awareness and discussion on the forms of systemic transformation. At the same time, we have to think of what each of us is ready to give up. This is like strategy making: this is about choices, what we want to be in the future, and what not. And the ‘not’ is always the hard choice to be made. In the end, this comes down to the way of living: are we ready to give up some of the achieved benefits, as consumers and as owners of companies: what kind of outcomes (including financial profits) we value in the long run?

Companies need to be made responsible for their effect on biodiversity. They need to beforehand evaluate the effects, make conservation plans (not only the affected area, but also extra, cf. the case example of Rudus in Talouselämä magazine  10/2021) and implement them. All this needs to be carefully and powerfully controlled as well (not the case currently). We need to have changes to the environmental laws to make this more compelling. Yet, this alone will naturally not work: the whole “human ecosystem” needs to be built – with carrots and sticks – for this purpose: the whole civil society should be tuned for this, in co-operation with the governmental bodies, businesses, and the public and third sector. This is only possible together.

People's awareness needs to be enhanced. This is not a problem with kids and youngsters, most of them are aware already. I see a lot of hope in our students in this regard, in the future decision makers. We need to make this a positive thing: people oftentimes see only control, but this should be argued for in a positive spirit, as something we/companies/public sector organizations can be proud of.

As the Dean of a business school, you have a strong orientation towards the future. From the point of view of sustainability, what kind of future scenarios do you have in mind?

And what is the role of business schools in creating the best possible future?

Business schools may play a special role in creating a better future, naturally together with other disciplines; this is already happening as we have moved towards a platform type of cross-disciplinary collaboration especially in research. It is business schools from where many corporate leaders graduate and thereby we have special kind of responsibility of considering what we teach to our students.

Our research agendas and curricula have already changed to address sustainability issues deeply and widely, and it is good that the funding parties also drive this development. In education we have study modules and programs around sustainability and some 30 courses addressing responsibility issues alone, including business ethics. The encouraging observation is that if we did not offer all this, our students would demand it! In a course where I lectured together with Ilari the students asked whether we need to just wait for a new generation of corporate leaders that would consider sustainability issues in general and biodiversity seriously enough already at the outset.

Does nature have intrinsic value - or instrumental value only? If you think nature has intrinsic value, it would be nice to hear about your personal experiences about this.

For me nature definitely has intrinsic value: I think we are part of the nature, we are for it, not the other way around. Due to the current economic-societal systems, man comes always first. There is a long history for that, but I think it is time to change the history. We all can do something for biodiversity in the small scale, starting from our consumption and political choices. We need to stand for the nature as it does not have a voice of its own.

My own human-nature relation and experience starts early each morning as I go to the nearby forest with my dogs. It has a deep effect on my mind and well-being. The nature/forest just needs to be there, it does not need to serve any purpose. It simply makes me happy to watch the birds and ants, how the ecosystem works, because that is a necessity also for our existence. The sad thing is that the municipality intends to cut the forest down as it sees there only land for roads and buildings.

By the way, regarding consumption and other long established habits: I had a summer cottage for 10 years with no electricity or running water, and it was never a problem for me or my family (now I have solar power though). However, it seemed to be a problem for others who constantly asked for why you do not draw a power line there. So this is a question of our long established habits and how to get rid of those, including the idea of eternal and exponential economic growth.

How to enhance biodiversity and fight climate change?

Ilkka Herlin

Partha Dasgupta says he 'has written this essay as an antithesis to the belief that market forces could fix the problems that climate change has created.' (The Economics of Biodiversity: The Dasgupta Review) That belief is only one in the long history of errors based on the misunderstanding that nature and humankind would be something separate: Christianity (thought of us being masters of all creation), humanism, invisible hand, autonomously progressing science, invincible technology, etc.

Instead, we should understand that we are part of nature. The phenomenon that makes us different from the rest of the world is the technology we have created. By believing that we can control the rest of the world using technology, we made ourselves parasites in the global ecosystem. A parasite is a creature that destroys its host. (Serres)

The conclusion is that we should aim to be in symbiosis with the wholeness of the global ecosystem. In symbiosis, both parties benefit. Why can't we do this - if it's so simple? We have these so-called path dependencies, which are being formed both in human capital and in produced capital.

Historians like Tom Hughes have described it, e.g., as large technological systems. Traffic based on fossil fuels, and agrology based on industrial fertilizers and pesticides, are other examples. Not to mention the construction business based on concrete and steel. These are always combinations of human and produced capital. But in specific points, they both become so-called stranded assets. And these days, it happens when they destroy natural capital. And that has happened on a large scale, as we know.

Another comment here is that we don't anymore have anything" natural" left. Human beings have interfered everywhere, and we don't have ecosystems that would not be disturbed by our technology. So there is the unknown world, a mix of nature and technology, and we can't control it - even if we liked to say that we can solve the current and forthcoming problems with our science and technology.

So what to do? The only answer is to deconstruct the technological systems and false beliefs and then build new systems and paradigms based on ecosystems in the phrase's real meaning. It's not an easy task. I've got only two answers though I think they are fundamental.

First, we should remember that we are part of the global ecosystem, not ruling it or the world. Second, we should learn that there is no automated progress in our global system. For that reason, we can't take any solutions independently without assessing the impact on the whole ecosystem.

And part of the process is to understand whether we have enough understanding of the complex ecosystem and its feedback loops. In most cases, we do not. A good example of this is gene manipulation. The precautionary principle should be on top to avoid irreversible damage and unintended consequences.

Economics hasn't taken externalities seriously until now. (Like Dasgupta shows us.)

So we can't trust that science and technology would bring us solutions automatically. On the other hand, now that we have created this new kind of ecosystem, we can't cope without them. We need science and technology if we want to tackle the problems of biodiversity loss and climate change.

What to do in practice? I noticed that somebody on Twitter said that 'it is good to have conversations with each other, but it would be nice to see action too.' I could tell something about that for my part.

 Here, the first conclusion is that we have so many huge problems that we can't solve one at a time. And the issues are connected. The rule is, in brief, if you decrease biodiversity, you increase the amount of CO2 in the atmosphere. And if you decrease the amount of CO2 in the atmosphere, you protect biodiversity.

The more research there is, the more obvious it is that putting down the use of fossil fuels is simply not enough. The role of land-use change is becoming bigger all the time. We have disturbed the cycling of chemical elements in the global ecosystem. This means that while we have decreased the amount of carbon in the soil and vegetation, we have increased the amount of carbon dioxide, laughing gas, methane, and water in the atmosphere. And on the other hand, if we sequester carbon back to the soil, we increase the biodiversity both beneath and above the land.

In short, we need two things, renewable energy and greening the planet. These are the things we have started to progress in Qvidja manor near Turku. As I have tried to say, we humans understand only a limited amount of the ecosystem and its functions; therefore, our strategy is to give nature space, and in the actions we make, we mimic nature.