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Rethinking What it Means to Be a Good Corporate Citizen
The Business Roundtable (BRT) recently released a brief but powerful “Statement on the Purpose of a Corporation,” which reinforces the importance of serving all company stakeholders, even as each company serves its own corporate purpose. While the BRT Statement affirms the commitment of its members to generating long-term value for shareholders, the 181 CEO signatories—including prominent medtech CEOs—also undertake to:
- Deliver value to customers;
- Invest in employees;
- Deal fairly and ethically with suppliers; and
- Support local communities, including protecting the environment through sustainable practices.
The BRT principles have generated discussion about the appropriate role of corporations in society. I believe this reflection is constructive, and mirrors deliberations I’ve seen within the medtech industry, and heard during last week’s MedTechCon executive panels, talks and discussions.
AdvaMed members have long recognized that their obligations extend beyond their corporations – especially to the patients and health care providers who rely on today’s innovative medical technologies to enhance diagnosis and treatment.
This principle of ethical business practices has been firmly captured by the AdvaMed Code of Ethics on Interactions with U.S. Health Care Professionals. AdvaMed continues to revise and update the Code of Ethics to ensure that it is responsive to industry changes and reflective of current best practices. For instance, our Code begins with “cornerstone values” to corporate decision-making. The new Code also applies these values to particular arrangements, for example we recently added a new section to the Code to address key principles for education and marketing programs jointly conducted by health care professionals and medtech companies.
I am proud that AdvaMed members have also taken an increasingly holistic approach to what it means to be a good corporate citizen. This includes forward-thinking corporate responsibility and sustainability policies, including those that guide what I describe as “upstream” arrangements with the supply chain that supports the production of medical technologies. I highlighted a few of these company policies in an earlier blog post. There are many other examples of medtech companies embracing comprehensive social responsibility/corporate citizenship policies, such as:
- A major healthcare solutions company has adopted a code of conduct, supplier standards, and a global human rights policy, along with numerous company policies and initiatives in areas including employment practices, privacy, safety, supply chain, ethical conduct, and access to healthcare.
- A leading provider of cancer management solutions has implemented extensive corporate citizenship policies governing interactions with customers, business partners, employees, and the public, including a commitment to continuously reducing its environmental impact.
- A global surgical implant company has adopted various compliance, ethics, and corporate social responsibility policies, and has concluded that: “Being a responsible corporate citizen is something we must do if we want to succeed as a company. It’s that simple.”
I recognize that for many companies, it can be a challenge to devote enough resources to environmental sustainability and social responsibility efforts. In reporting on the BRT Statement, the Financial Times also observed that:
“even the most environmentally and socially friendly chief executive has to generate enough of a return for the company's owners” to reap the benefits of greater employee and customer enthusiasm.
I know business leaders are questioned on the return on investment associated with corporate compliance, ethics, and social responsibility programs in the medtech space as well.
In other words, does being a good corporate citizen make good business sense? My research on this question leads me to believe that that can be the case.
As I’ve discussed before, in addition to positive value impacts associated with good corporate citizenship (e.g., improved reputation and employee recruitment, reduced fraud exposure), there are indications that ethical businesses can also reap quantifiable shareholder benefits. For instance, Ethisphere estimated earlier this year that its 128 designated “World’s Most Ethical Companies” outperformed the large cap sector over five years by 14.4% and over three years by 10.5%. In other words, it is not a case of ethics versus profits – a commitment to corporate ethics can go hand-in-hand with positive financial results. And I’m pleased to see that, once again, a number of the Ethisphere honorees are from the medtech space!
The BRT Statement on the Purpose of a Corporation concludes with the observation that “[e]ach of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.” I believe that is a laudable pledge. I appreciate that more and more corporations are looking at how they are connected to stakeholders beyond their shareholders. I expect the debate to continue on how businesses – including medtech companies - can strike the right balance in addressing the interests of their many stakeholders while continuing to drive innovation and fulfill their corporate missions.