Date posted: 1/12/2016 4 min read

The most powerful thing businesses need to succeed

Nobel Peace Prize winner and former UN Secretary-General Kofi Annan delivers a powerful message: "Business cannot prosper in societies that fail". Here's why.

In brief

  • Chartered accountants should use that influence to encourage the companies they serve to think long term and integrate sustainable development goals into their accounting, such as by including a “natural capital account”
  • The core message to get across is that doing good is good for business, too
  • Business cannot prosper in societies that fail

Photography by Robert Wilson, Getty Images

Nobel Peace Prize winner, philanthropist and former UN Secretary-General Kofi Annan on immigration, democracy and the need for chartered accountants to support the UN’s Sustainable Development Goals

Chartered accountants work across many industries in many countries. What can they do to influence business and political leaders to support the UN Sustainable Development Goals?

It is well known that you can only manage what you measure and chartered accountants are those professionals whose job it is to measure. That means they have huge influence on companies’ governance.

Chartered accountants should use that influence to encourage the companies they serve to think long term and integrate sustainable development goals into their accounting, such as by including a “natural capital account”, which I have heard is gaining ground. You should be encouraging companies to green their businesses by switching to renewables, and to respect core labour standards and human rights.

The core message to get across is that doing good is good for business, too. Business cannot prosper in societies that fail.

In the West, there has been shock at what is perceived as voter distrust of the ruling elites in our democracies (Brexit, the rise of Trump, voter apathy). Are there lessons Western democracies could learn from the work you do to strengthen electoral systems in countries where the democratic tradition is not as entrenched as in the West?

Elections with integrity are a challenge everywhere, including in the West. The report produced by my commission, the Global Commission on Elections, Democracy and Security, in 2012 showed the corrosive impact of money in US politics, for example, which undermines the legitimacy of the democratic system in citizens’ eyes. Such perceptions partly explain the rise of a phenomenon like Mr Trump.

I think that in the West, many citizens, especially younger citizens, take their freedoms and institutions for granted and focus on their frustrations with their governments’ inability to solve pressing problems.

In countries where democracy is either non-existent or in development, on the other hand, citizens crave those freedoms. Maybe that is one lesson Western citizens can learn from those countries: treasure what you have. Use your rights and freedoms to effect the change you want.

It is tragic that so few young people in Western democracies vote. They have forgotten that their ancestors fought for the right to choose and change their leaders. They don’t realise that their votes are more important than their tweets or Facebook posts.

What is your view on the status of refugees in the modern world? Does the modern system of nation states discriminate against people who find life untenable in their country of birth?

It is true that the principle of national citizenship, associated with rights, and the control of a country’s borders are two key aspects of modern “sovereign” nation states as they emerged in the “Westphalian” order. But there has been much progress since 1648. International law now grants rights to all human beings, not only to citizens.

The Refugee Convention of 1951 was a major breakthrough, outlining the rights of those displaced across borders as well as the legal obligations of states to protect them.

But the drafters of the Convention had the Cold War in mind and mainly sought to protect a few thousand dissidents from the Communist bloc. They did not envision the mass displacements of people we are seeing today.

I think that these flows of people are the inevitable counterparts to the flow of capital and goods. In other words, they too are by-products of globalisation. They cannot be stopped, but they can and must be managed better, more humanely, protecting migrants’ human rights whilst accepting states’ rights to control their borders. That is what the Elders, which I chair, have been advocating for the past two years.

It is tragic that so few young people in Western democracies vote … They don’t realise that their votes are more important than their tweets or Facebook posts.

How important was having worked in the UN bureaucracy to your success as UN Secretary-General? Do you advocate leaders spend time “on the shop floor” of their businesses before taking a leadership role?

Like any large organisation, public or private, the UN is a complex machine. In fact it is more of a galaxy of organisations and agencies than one machine.

The UN is made even more complex by the constant interplay of politics and bureaucracy. It can certainly be bewildering for a novice.

So having worked my way from the bottom of the ladder to the top certainly helped me navigate that complexity, both political and bureaucratic. My intimate knowledge of the system allowed me to get things done despite the many obstacles.

Even so, I did not always achieve what I set out to do. Nevertheless, my personal example certainly suggests that hands-on experience can be helpful to future leaders.

Be that as it may, one must also acknowledge that there are moments in an organisation’s development when fresh blood and new vision are required, which may imply that an outsider may be better suited to the leadership role.

As a former winner of the Nobel Peace Prize, do you believe there is a mechanism the UN Security Council could introduce that might help superpowers avoid escalating — either deliberately or by accident — wars such as that in Syria?

The Security Council should be seen as the executive committee of the global security system set up after World War II. Its members, and especially the Permanent 5 (P5), have a special responsibility for international peace and security.

The P5 ought to be dissuaded from using their veto power, which can paralyse the United Nations. The country blocking action ought to have to explain its decision and propose an alternative solution. It has been suggested that a veto only becomes effective if the vetoing state has the support of two or three other permanent members.

This article was first published in the December 2016 issue of Acuity magazine.

Leadership in government

  • Meet Kofi Annan, the civil servant

    Kofi Annan was the seventh Secretary-General of the United Nations, from January 1997 to December 2006. Annan and the UN were the co-recipients of the 2001 Nobel Peace Prize. He is the founder and the chairman of the Kofi Annan Foundation and chairman of The Elders, a non-governmental group founded by Nelson Mandela, that works to promote peace and human rights.

    Annan was a special “video” guest at the CA ANZ Leadership in Government Awards, held in Canberra on 24 November. The 2016 awards were held in support of the UN’s Sustainable Development Goals and recognised public servants whose work helps produce sustainable and prosperous futures for all. Visit charteredaccountantsanz.com/lga for videos and information on award recipients.