Intergenerational Leadership: an Extension of Contemporary Corporate Social Responsibility Models

Corporate Governance and Organizational Behavior Review / Volume 2, Issue 1, 2018

INTERGENERATIONAL LEADERSHIP: AN EXTENSION OF CONTEMPORARY CORPORATE SOCIAL RESPONSIBILITY MODELS

Julia M. Puaschunder *

* The New School for Social Research, The Schwartz Center for Economic Policy Analysis, Department of Economics; Columbia University, Graduate School of Arts and Science; Princeton University, USA Contact details: 6 East 16th Street, 11th floor, 1129F-99, New York, NY 10003, USA

Abstract

How to cite this paper: Puaschunder, The following paper promotes the idea of intergenerational equity J. M. (2018). Intergenerational leadership: an extension of in the corporate world as Corporate Social Responsibility (CSR) contemporary corporate social means to coordinating the common goods and imbuing economic responsibility models. Corporate stability beyond a purely governmental approach. The outlined Governance and Organizational Behavior Review, 2(1), 7-17. intergenerational equity constraints herald a call for http://doi.org/10.22495/cgobr_v2_i1_p1 intergenerational equity – the fairness to provide an at least as favorable standard of living as enjoyed today. As an implicit

Copyright © 2018 The Author contract and transfer between living and future generations, intergenerational equity avoids discriminating against future This work is licensed under the Creative generations and ensures future infrastructure, equal opportunities Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0) over time and constant access to social welfare for the youth. http://creativecommons.org/licenses/b Intergenerational equity grants a favorable climate between y-nc/4.0/ generations and alleviates frictions arising from the negative

ISSN Online: 2521-1889 impacts of intergenerational inequity. Outlining some of the causes ISSN Print: 2521-1870 of the current intergenerational imbalances regarding climate stability and overindebtedness prepares for recommendations on Received: 17.10.2017 Accepted: 11.05.2017 how to implement intergenerational transfers. The impact of intergenerational transfers on societal well-being is discussed. JEL Classification: M14, G3, F6, G32 Future research avenues comprise of investigating situational

DOI: 10.22495/cgobr_v2_i1_p1 factors influencing intergenerational leadership in the international arena in order to advance the idea of the private sector aiding on intergenerational imbalances and tackling the most pressing contemporary challenges of humankind.

Keywords: Corporate Governance, Corporate Social Responsibility (CSR), Global Systemic Risk, Globalization, Intergenerational Equity, Intergenerational Leadership, Public-Private Partnerships

Acknowledgement: Financial support of the Austrian Academy of Science, Austrian Federal Ministry of Science, Research and Economy, the Eugene Lang Liberal Arts College of The New School, Fritz Thyssen Foundation, International Institute for Applied Systems Analysis, Janeway Center Fellowship, the New School for Social Research, the Tishman Environment and Design Center, and the University of Vienna is gratefully acknowledged. The author declares no conflict of interest. The author thanks the participants of a 2014 PhD workshop at the New School Department of Economics and the Schwartz Center for Economic Policy Analysis as well as the audience of the International Conference ‘Past and Future of Corporate Governance: Practices, Reforms and Regulations’ at the Roma Tre University Department of Business Studies in May 2016 for helpful comments on the presented ideas for most valuable intellectual stimulation and helpful feedback. All omissions, errors and misunderstandings in this piece are solely the author’s.

1. INTRODUCTION world. Followed by the eighteenth-century industrialization, technological advancements, From the sixteenth century age of enlightenment, technical inventions, and capital accumulation science and technology remarkably revolutionized the leveraged the standard of living for humanity. The

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post-WWII economic boom heralded golden years of political authorities to regulate economic activity in socio-economic advancement and economic capital the architecture of the world economy. growth outpacing every measure of previous ages had The following paper promotes the idea of known. intergenerational equity in the corporate world as an Though looking back to an epoch of enormous alternative to national governance and a novel economic progress in the 20th century; the extension of contemporary Corporate Social improvement of living conditions seemed to be Responsibility (CSR) models. Intergenerationally slowed from the turn of the millennium on due to the responsible leadership is built on the idea that impact of unforeseeable system fragility. The era of corporate executives have an obligation to globalization, featuring complex interconnections and incorporate needs of far-ranging constituents, transactions faster than ever before in history, including future generations. In the eye of a current appeared to imply emergent systemic risks (Centeno pressing demand for attention to intergenerational & Tham, 2012). Globalization leveraged pressure on equity in the domains of climate justice and austerity, contemporary society. Global systemic risks of the following paper theoretically highlights the climate change and overindebtedness in the corporate world’s potential to alleviate current aftermath of economic crises raise attention for intergenerational equity imbalances and explores intergenerational fairness. Pressing social dilemmas intergenerational justice implementation strategies of beyond the control of singular nation states call for the corporate world. corporate social activities to back governmental The paper is organized as follows: first, the regulation in crisis mitigation. What happens in one integration of intergenerational equity is proposed in part of the world today, impacts around the globe. CSR models and advantages of the corporate sector The global interconnectedness imposing dangers social responsibility discussed. Intergenerational creates a need for framework conditions securing equity implementation strategies are outlined in the from negative consequences emerging from the new cases of climate change burden sharing with bonds web of social, ecological and fundamental transfers and overindebtedness. The discussion of the on a grand scale (Centeno, Cinlar, Cloud, Creager, theoretical results is followed by an outlook of future DiMaggio, Dixit, Elga, Felten, James, Katz, Keohane, research in the domains of intergenerational equity Leonard, Massey, Mian, Mian, Oppenheimer, Shafir & and CSR. Shapiro, 2013). Tomorrow’s children may not enjoy the same 2. INTEGRATION OF INTERGENERATIONAL EQUITY standard of living as Western World economies in the IN CSR MODELS eye of climate change, overindebtedness and heightened austerity demands. Global challenges of Globalization converged the concept of nation states climate change but also overindebtedness in the wake (Held & McGrew, 2007). Nowadays the range of of economic crises currently raise attention to opportunities of what contemporary nation states can transnational intertemporal fairness. autonomously do is ultimately limited by their Intergenerational equity nowadays has come into dependence on each other (Panitch & Gindin, 2012). public scrutiny entering the academic and practical The role of states in maintaining property rights, discourse in the public and private sectors. overseeing contracts, stabilizing currencies and Since the 2008/09 World Financial Crisis reproducing class relations has gradually deteriorated pervaded societal demand to increase the socio- since the beginning of internationalization. ethical commitments of corporations. Social International interdependence limits national awareness due to mass media reporting heightened sovereignty and economic autonomy (Held & McGrew, stakeholder pressure exerting influence on corporate 2007). In the wake of global capitalism, the power and decision makers for ethicality. Therefore today's most political authority have been diffused away from local pressing societal long-term downfalls call for state ruling to global governance. The classic ideal of corporate social activities to back governmental the command and control state was displaced by a regulation to steer intergenerational justice. In the philosophy of global economic hegemony (Held & implementation of intergenerational equity, the age of McGrew, 2007). globalization shifted the influence of national While industrialization has weakened the power governments and their policies as predominant forces of local governance and national control, in the economy to international governance of the globalization has also lead to unprecedented corporate sector. Since decisions in one country can problems of climate change and overindebtedness in directly affect the interest of citizens of other the wake of economic crises. Globalization also societies in a whole new range of trans-boundary shifted national governments’ intergenerational problems, the range of influence and efficacy of equity implementation to international governance national democracy got challenged. Limits to and the solutions in the corporate world (Panitch & Gindin, constraints on national economic autonomy and 2012). Nowadays pressing dilemmas beyond the sovereignty have become blatant due to increased control of singular nation states call for attention for international interdependence. With a trend towards intergenerational fairness and corporate social the constitutionalization of free trade and capital activities to back governmental crisis mitigation movements through bi- and multilateral agreements (Centeno et al., 2013). to protect free markets around the world, In the light of growing socio-political and corporatism stepping in on societal downfalls grew environmental challenges, heightened stakeholder (Panitch & Gindin, 2012). Holding widespread access concern has risen attention of global stakeholders on to vital economic resources and markets, today corporate ethical conduct in the intergenerational multinationals have become quasi-global governance domain. Today’s intergenerational imbalances become institutions that leveraged into implicit legal and blatant through information provided to stakeholders by heightened transparency in the digital age that

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makes corporate conduct and governmental actions leaders tend to contribute to the creation of economic visible to a broad range of constituents. Local and societal progress in a globally responsible and communities, customers, employees, and NGOs, as sustainable way by means as never before well as shareholders, are increasingly monitoring experienced. ethical behavior in the digital age featuring greater Given the pressing demand for attention to transparency, accessibility, and reachability of climate change mitigation and overindebtedness soft corporate conduct. Especially in the aftermath of landing demands in the aftermath of economic crises, economic crises, corporations have become under the need for an introduction of intergenerational scrutiny for societal contributions and corporate equity conscientiousness in the corporate world is board managers increasingly respected for corporate blatant. In a climate of corporate governance and social conduct with stakeholders playing a global challenges beyond the control of singular conspicuous role in influencing the interaction nation-states, the idea of promoting intergenerational between governments and business. The corporate equity in the corporate world has reached world is nowadays more than ever urged to consider unprecedented momentum. Departing from narrow- the needs of a wider range of stakeholders in their minded, outdated views of responsibilities of decision-making, go beyond ethical requirements and corporations only adherent to making a profit for outperform responsibility expectations within the shareholders and abiding by the law (Friedman, 1970); surge of a positive organizational scholarship corporate executives nowadays are more prone to act movement. responsibly in meeting the needs of a wide range of With growing socio-political and environmental constituents. Apart from avoiding unethical societally challenges around the world in the domains of harmful behavior, such as bribery, fraud and financial social irresponsibility, environmental employment discrimination, corporate executives resource consumption and growing costs for an aging currently pro-actively engage in corporate governance populace, there is increasing pressure from practice with a wider constituency outlook, including stakeholders – among them governments, local the needs of future generations. communities, NGOs, and society at large – that The future conceptualization of sustainable and corporations and their leaders contribute to responsible managerial behavior may, therefore, societally-attentive business practices. Access to embrace the wider constituency range and stretch the information law revolutions in the Western World concept of corporate responsibility to voluntary have steered attention to corporate ethicality. sustainability for future generations. An extended Corporate social reporting and the engagement of stakeholder view considers a broader set of stakeholders have led to the adoption of a variety of constituencies, including future generations, in global ethical standards, which may directly affect the corporate decision making with impact on the social propensity to engage in intergenerational equity performance and long-term viability of their implementations. In the age of heightened organizations. A broader, social contract between shareholder and stakeholder activism towards business and future society may be enacted by corporate social endeavors, the time is ripe to discretionary activities that are not expected of investigate the potential of corporate activities to corporations and their leaders in a moral or legal engage on intergenerational equity in the aftermath of sense but directly contribute to societal welfare and economic crises. the wellbeing of future generations. This suggests As multilayered economic system are structured that there is a need for a broader definition of by the strategic coordination of international corporate responsibility that goes beyond compliance corporate entities, corporate multinationals nowadays and encompasses the obligation to contribute to have turned to solve global societal crisis beyond the societal progress in a responsible and sustainable control of singular nation states. International trade, way. global capitalism and economic hegemony of Intergenerationally responsible leadership is corporations have led to a strategic coordination of called for that steers intentional corporate executive public and private actors’ awareness of actions to benefit the stakeholders of the company as intergenerational imbalances (Binder, Kriebaum, well as the larger society including future generations. Marboe, Nowak, Reinisch & Wittich, 2014). Intergenerational corporate leadership imbues should- Intergenerational equity deficiencies subsequently are do care for future generations alongside concerns tackled in bottom-up approaches to shed light on the about future society. Not simply considering avoiding rights of upcoming youth, voice the needs of unborn unethical behavior, such as bribery, fraud and not being present in courtrooms and lobby for employment discrimination, but also adopting a favorable future conditions. positive and proactive ethics lens, intergenerationally Increasing and expanding CSR initiatives responsible leadership is an ueberethical drive to indicate that more and more business leaders commit consider the interests of a wider range of their companies to contribute to the “triple bottom stakeholders. Intergenerational justice concerns of line” to harmoniously consider social, environmental, the corporate world thereby directly reach out to and economic sustainability in everyday corporate future world inhabitants. Surpassing state-of-the-art decision-making (Elkington, 1997). Respect for ethical corporate leadership quests on ethically ‘people, planet, and profits’ has become a corporate compliant behavior and avoidance of unethical necessity and industrial imperative. Corporate corporate conduct, incorporating intergenerational sustainability and social responsibility have thus equity into contemporary CSR models may extend the emerged to unprecedented momentum in academia idea of ‘positive CSR’ – that is outdoing legal and and practitioners’ discourse. In the international ethical expectations – with respect for future arena, the UN Global Compact has raised over 10,000 constituents. Going beyond mere compliance involves members 2000, including over 7,000 businesses in actions that pro-actively promote social good. Beyond 145 countries around the world. Today business what is required by law, intergenerational corporate

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responsibility extends CSR as a broader social There are several advantages of TC&MEs contract between business and society over time. implementing intergenerational equity as a CSR Intergenerational equity leadership of the corporate means. TC&MEs hold enormous economic power, with sector defines social responsibility beyond the largest multi-national corporations having compliance and encompasses the wider obligation to revenues larger than many nation states. In their contribute to societal progress in a responsible and corporate governance, TC&MEs leadership decision sustainable way. Stretching the constituency attention making quickly adapts to market demands without to future generations is based on a voluntary having to reach international consensus – contrary to sustainability with respect for future generations’ stakeholder engagement and international negation needs to ensure the long-term viability of society. demands of classic global governance entities such as Corporate leaders thereby pro-actively the United National, International Monetary Fund, and outperform legal and ethical expectations regarding the World Bank. the rights and needs of future generations. This In addition, TC&MEs are not dependent on positive CSR drive refers to an ueberethical voters – such as governmental officials – and can thus enhancement of societal welfare beyond the narrow address intergenerational concerns faster and more scope of the current generation. As a broader flexibly than governmental technocrats can. Further definition of corporate responsibility beyond TC&ME leadership may be more stable than avoidance of negative downfalls, the call for governmental officials enacted through voting cycles intergenerational responsible leadership in the – that is global corporate leaders are likely to stay corporate world encompasses the obligation to longer in ‘office’ than their governmental contribute to societal progress with respect for the counterparts. Governments, being unsure to be re- needs of future generations. Defining novel elected, are inherently shortsighted and may not fully responsibilities with a broader social contract take the longer-term implications of deficits into between business and society embraces discretionary account. activities that contribute to the sustainable societal If the corporate world adopts intergenerational welfare and thereby provides a broad range of equity in current CSR endeavors, it could help corporate, social and societal advantages. governmental officials in very many different ways ranging from tax ethics to first-aid global governance 3. INTERGENERATIONAL CSR MODEL ADVANTAGES support. For society, acknowledging intergenerational equity in the CSR practices promises to alleviate In the given literature on globally responsible currently pressing societal predicaments of leadership in the corporate sector and contemporary overindebtedness, social welfare reform needs and CSR models, intergenerational equity appears to have environmental threats in the wake of climate change. widely been neglected. While the notion of Investigating the possibilities to integrate a temporal sustainability has been integrated into CSR models dimension in contemporary CSR thus innovatively (Steurer, Martinuzzi & Margula, 2012), guides the implementation of financial social intergenerational equity has hardly been touched on responsibility, environmental protection education as intergenerational fairness differs from and social welfare. Corporate attention to sustainability as for being a more legal case for intergenerational concerns would thereby embrace codifying the triple bottom line, which pays attention future crisis prevention in the eye of the societal costs to a balance of social, economic and environmental and negative externalities of corporate misconduct obligations of corporations to the wider constituency. and financial collapse resulting in economic Since 2008 the International Law Commission of downturns, unemployment, and pension saving the United Nations has been promoting losses. Besides averting negative impacts of intergenerational equity primarily on global managerial unethical corporate conduct, corporate governance issues – such as climate change intergenerational ethicality would also build business awareness, overindebtedness, and pension reform – reputation attracting talent, raise customer to the public sector. The implementation of confidence as well as sustainable employee and intergenerational equity in this domain, though, citizenry welfare. Within academia, integrating the seems to be slowed by an ongoing discussion of notion of intergenerational fairness in corporate whether international law can overrule nation states’ governance models fills an up-to-date undiscovered sovereignty. The debate has just recently started and research gap that spearheads interdisciplinary may not come to a satisfactory end in the near future. behavioral law and economic models. Integrating intergenerational equity in CSR Overall, enhancing intergenerational social models in academia and practice appears as an conscientiousness in the corporate world is an advantageous alternative given the enormous innovative way to unprecedentedly leverage untapped untapped potential of transnational Corporations and potentials to implement social welfare and Multinational Enterprises (TC&MEs) to implement environmental protection through future-oriented and equity. Nowadays, international trade is driven by socially responsible economic market approaches. transnational corporations. As corporate entities with Thereby averting future predictable economic, social economic influence beyond the borders of nation- and environmental crises serves the greater goal to states holding subsidiaries in various nations of the ensure a future sustainable and temporally- world (Binder et al., 2014), TC&MEs are acknowledged harmonious humankind. as international legal entities and must, therefore, abide by international law standards and fulfill international court laws (e.g., ICSID and UNCITRAL). Therefore, TC&MEs should, like nation states, consider adopting concern for intergenerational equity.

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4. INTERGENERATIONAL EQUITY being of future generations relative to those alive IMPLEMENTATION today. Regarding climate justice, current generations are called upon to make sacrifices today for future The outlined intergenerational equity constraints are generations by mobilizing low-carbon energy to cut complex and their solution interdependent. The carbon emissions to avert global warming (Sachs, current world economy opens possibilities but also 2014). Climate change mitigation at the expense of threatens future generations. This unprecedented lowered economic growth seems to pit the current intergenerational kink heralds an overall call for generation against future ones. Costly climate change intergenerational equity – the fairness to provide an abatement prospects are thus hindering currently at least as the favorable standard of living as enjoyed necessary action on climate change given a shrinking today. Eternal equity addresses justice over time. As time window prior to reaching tipping points that an implicit contract and transfer inbetween living and make global warming irreversible (Oppenheimer, future generations, intergenerational equity not only O’Neill, Webster & Agrawal, 2011). reduces unfairness for future world inhabitants who As a novel alternative to ensure climate justice, are born in less favorable condition than their Sachs (2014) proposes to fund today’s climate parents. Intergenerational equity also ensures future mitigation through intertemporal fiscal policies infrastructure, equal opportunities over time and funded by climate bonds financed through taxation constant access to social welfare for the youth. faced by future generations. Climate stability bonds Intergenerational equity avoids discriminating against are introduced as a means of intergenerational future generations on the basis of the remoteness of climate change burden sharing strategy to elicit the time at which they will live. Thereby future-oriented climate stability for posterity. The intergenerational equity grants a favorable climate current generation mitigates climate change and between generations that ensures climate stability provides infrastructure against climate risk financed and averts frictions arising from austerity plans and through climate bonds to be paid by future diminishing social welfare standards. generations. Since for future generations the currently created externalities from economic activities – the 4.1 The economics of climate stability: Climate effects of CO2 emissions – are removed, this entails that the current generations remain financially as well burden sharing with bonds off as without mitigation while improving the environmental well-being of future generations. As Climate change accounts for one of the most pressing Sachs (2014) shows, this intergenerational tax-and- problems in the age of globalization as for transfer policy turns climate change mitigation and exacerbating more risks than ever before in terms of adaptation policy into a Pareto improving strategy. water crises, food shortages, constrained economic Sachs’ (2014) intergenerational burden sharing idea growth, weaker social cohesion and increased security presents a 3-model climate change burden sharing risks (Centeno & Tham, 2012; The World Economic through fiscal policy (with bond issuing) and reflects Forum Report, 2015). The implementation of climate the implementation regarding contemporary finance stability accounts for the most challenging and growth models with respect for maximizing the contemporary global governance predicament that utility of the model. The current generation thereby seems to pit today’s generation against future world mitigates climate change financed through bonds to inhabitants in a trade-off of economic growth versus remain financially as well off as without mitigation sustainability. Current climate stability policies (e.g., while improving the environmental well-being of cap & trade, carbon tax, green energy) outline that the future generations. burden of climate change aversion – including the Jeffrey Sachs (2014) novel angle towards climate cost of mitigation and adaptation – is unevenly justice elicits future-oriented loss aversion, which distributed by falling mostly on the current leads to a fairer solution across generations. Shifting generation. The excess burden for current generations the costs for climate abatement to the recipients of has also been implicit in the work of the typical the benefits of climate stability appears as a novel, Integrated Assessment Model, IAM, (Nordhaus, 2008), feasible and easily implementable solution to nudge contemporary threshold as well as other mitigation many overlapping generations towards future- and adaptation models, e.g., social cost of carbon. oriented loss aversion in the sustainability domain. Innovative intertemporal fiscal policy approaches This powerful strategy instigates immediate climate (e.g., of Jeffrey Sachs, 2014) guide the development of change mitigation in an overall Pareto improving a basic framework to study how an efficient and fair crisis management for all generations. While allocation of efforts towards mitigation and intergenerational burden sharing on climate change is adaptation can be achieved. a novel economically superior strategy and real-world In standard neo-classical economic models, relevant emergent risk prevention means (Centeno et climate change abatement is perceived as trading off al., 2013); we currently lack information on the from economic growth as for cost-cutting behavior. impact of climate mitigation through debt on While classic economics portrayed balancing the economic growth and the model’s sustainability over interests of different generations as ethical problem time. Testing for the feasibility and sustainability will of competitive markets requiring governance for provide real-world relevant means how to implement intergenerational transfers and some economists even climate stability on a long-term scale. Studying the opposed discounting of future utilities (Allais, 1947; types of bonds issuing that would achieve such goals Harrod, 1948; Ramsey, 1928); climate change has will help exploring the more complicated bond leveraged intergenerational equity as contemporary issuing practices involved. In this context, it should challenge of modern democracy and temporal justice also be investigated if the climate change debt- an ethical obligation for posterity. adjusted growth model stays within the bounds of a In general, resources are balanced across sustainable fiscal policy. generations by social discounting to weight the well-

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This elementary but very innovative model by burden easing (Semmler, 2013). Nations having no Sachs (2014) can be integrated in contemporary national central bank that can control the monetary growth and economic climate models. Yet unknown policies of sovereign nations or a sufficient deposit remains how climate bonds can actually be phased insurance that might calm people who fear a banking into climate policies to obtain socially optimal collapse, led to countries’ downward pressure on solutions. A starting point of this large-scale model is, wages. Unprecedented credit expansion and active in particular, the model by Klasen, Maurer, Semmler & monetary policy resulted in fixed-rate, full allotment Bonen (2015), which includes both the allocation of of liquidity of banks on demand on its leveraged funds to mitigation and adaptation as well as funding investment positions. Longer-term refinancing those costs through climate bonds. To solve, calibrate operations were targeted at reducing uncertainty and and test such a new model of climate change policies to encourage banks to provide credit to the economy and to show that such a debt augmented growth (Semmler, 2013). model stays within the bounds of a sustainable fiscal Regime-dependent negative austerity multipliers policy, new methods like nonlinear model predictive resulted in different value at different stages of the control (NMPC), which solves complex dynamic business cycle at different levels of financial stress systems with different nonlinearities for finite and external indebtedness of the country. In Greece, decision horizons should be employed. Future high levels of austerity triggered a strong research should also analyze micro- and contractionary multiplier (Semmler, 2013). The strong macroeconomic insights on the well-balanced downward effect caused high unemployment, more harmonization of climate change mitigation and financial stress in the financial sector with increased adaptation in order to provide public policy credit and bond spreads, banking risks and falling recommendations. internal and external demand (Semmler, 2013). For Overall climate stability bonds offer to lead a instance, Greek public consumption fell by 9.1%, well-balanced climate mitigation and adaptation which caused investment to fall by 20.7%, imports by public policy mix guided by macroeconomic analysis 3.4%, private consumption by 7.1% and the aggregate results. demand by 7.1%. An austerity-driven reduction in Adding onto the contemporary idea and practice spending had a stronger negative effect on output of climate bonds alongside providing incentives to and employment when there was severe financial channel funds into climate stability, research in this stress, which in turn reduced consumption and area will also retrieve information on the harmonious investment, feeding a downward spiral (Semmler, interplay of climate change mitigation and adaptation 2013). in the public policy domain for ensuring a sustainable Debt stabilization depends on complex regimes humankind. and the economic environment as described by financial stress, the vulnerability of the banking 4.2 The case of overindebtedness system, monetary policy and the state of internal and external demand, exchange rates and other factors. In response to economic downturns, nations The level of aggregate expenditures and taxes are experiment with austerity, which restricts public relevant as well as the composition of spending and spending but also lowers investments and thus may taxes – if government money spending is on health, bleed into economic stagnation and prosperity education, infrastructure, wages and salaries in the decline. Curbing essential government spending on public sector, then the multiplier will trigger positive education, social welfare, public safety, retirement, long-run effects (Semmler, Greiner, Diallo, Rajaram & health, and infrastructure slows economic activities Rezai, 2011; Stein, 2011). and hinders recovery. The negative effects of austerity Overall, austerity as a cure is supposed to be cuts are severe with estimated costs for the US worse than the disease as austerity economics may between 1.25 and 1.75 percent of GDP in 2013 plunge countries into worsening unemployment, (International Monetary Fund, 2013). Austerity cuts in record poverty rates and growing civil unrest (Aja et the Eurozone have led to reductions in overall output al., 2013; Semmler, 2013). Hastily enacted EU austerity in excess of the total level of spending cuts. Austerity programs will have uncontrolled distributional effects economics are making inequality worse due to and endanger the future of the EU welfare state austerity-driven cuts essential to public service (Aja, (Boyer, 2012). In particular, social spending on the Bustillo, Darity & Hamilton, 2013; Howell, 2013; elderly hurts young people if retirement and elderly Pollin, 2013). Not only downplaying the importance of health care spending takes funding away from government spending neglects its multiplier effect on investments supporting education and youth economic growth; but also will austerity induce development (Ghilarducci, 2013). Support from recession-like effects on economic growth (Marglin & spending on the elderly and the young are thereby Spiegler, 2013; Proaño, 2013) and destabilize nation- seen as complements. Policies should thus focus on states (Lawson-Remer, 2013). economic opportunity and foster a strong middle In Europe, austerity measured bred inequality class to stabilize democracy (Lawson-Remer, 2013). resulting in welfare losses and extreme decreases in Potential policy options include increasing tax workers’ wages. In Greece real wages fell by more revenues for social and infrastructure spending – e.g., than 30% since 2009, inflicting damages on social through taxing top-income earners (Piketty, Saez & cohesion, living standards and the EU social model Stantcheva, 2011) – in contrast to spending cuts and (Semmler, 2013). During this period of increasing debt budget plans in line with the Bowles-Simpson financial stress and budget consolidation policy, the proposals (Washington Post, 2013). Austerity-driven EU monetary union using the same currency, led to by controversial economic theory and politics can weaker countries being unable to devalue their own thus result in inadequate socio-economic downfalls currency, which might have stimulated their yet without austerity there is the constant fear of economies by increasing exports and debt repayment bankruptcy. As a result, there is a deep division

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among economists on austerity linked to fundamental wealth of the elderly to save for future generations differences in morality over the ultimate purpose of and put sustainable governance in place. We may also economic and social policy rather than technical have to curb our consumption rates to debates on methodology (Milberg, 2013). While the conscientiously transmit the earth’s resources to intellectual argument for austerity appears to be future generations. weak, political forces behind austerity are strong The balance between the welfare of present and (McGahey, 2013). future generations can also be established through Austerity may deepen societal inequality and spontaneous and individual saving decision of the heighten the tensions and contradictions inherent in present generation as well as policy implementations capitalist economies; we need to explore a range of of this preference seeking to arrange tax collection policy approaches that can reduce the level of risk for and governmental actions affecting the economy to borrowers and lenders through governmental loan distort or amend the individual saving preferences in guarantee programs and raise the costs for banks to favor of future generations (Bauer, 1957). Social continue holding cash hoard (Dymski, 2013). The discount rates weight the well-being of future post-2008/09 World Financial Crisis liquidity trap – generations relative to those alive today. Society can featuring zero-interest-rate policies – is made worse if use intergenerational fiscal transfers to allocate the there is a fiscal austerity agenda instead of focusing burdens across generations without the need to trade on federal stimulus (Pollin, 2013). As an alternative, off from generation’s well-being for another’s (Sachs, President Obama sought to stimulate the economy 2014). when he took office during the Great Recession but While classic economic models portrayed also targeted long-term debt reduction by creating the balancing the interests of different generations as National Commission on Fiscal Responsibility and ethical or political problem of competitive markets Reform in terms of the Bowles-Simpson Commission and state governance alike (Allais, 1947) and some (McGahey, 2013). However, also the effects of economists even opposed discounting of future stimulus are still highly debated. The neoclassical utilities (Harrod, 1948; Ramsey, 1928); nowadays, idea is that government expenditure crowds out intergenerational equity has become a political private investment, so it will not be stimulatory in the question of how far democracy goes and temporal long run. The Keynes-Kalecki-post-Keynesian position justice an ethical obligation for the future. But when states that stimulus is fine up to full employment considering the current inequality over time, we face levels are achieved, when inflation may set in. In order legal adaptations not instantly applying to current for stimulus to have a lasting positive impact on external changes. Beyond lagging legal codifications output, employment and real wages, as well as the and yet to be adjusted policy frameworks, we must productivity of labor, must also be raised so as to strive for understanding natural expressions of keep unit labor costs down. intergenerational equity and core humane values of justice as a responsibility for the future. Sustainability 5. DISCUSSION AND FUTURE OUTLOOK intuitions should be explored (Puaschunder, 2017b). Eternal equity has always been lived within the Overall, in the eye of an unprecedented family compound and practiced in the wake of intergenerational equity kink, it has become humane fairness notions. The human-imbued wish to economically efficient to think about the next provide an at least as the favorable standard of living generation and future world-inhabitants’ living to our children stems from evolutionary, social and conditions. Governments must breed hope through religious values. Ignorance regarding forward-looking strategies in the eye of radical intergenerational concerns naturally feels wrong and austerity cuts and unemployment gaps to take away hegemony of now appears like a sin on future people’s fear of the future. Policy makers are generations. Not being intergenerationally pressured to revise social services. While conscientious puts offspring at stake and detaches intergenerational equity concerns are as old as people from their environment. Understanding humankind – the 2008/09 World Financial Crisis has intergenerational conscientiousness as a natural put a new stance on the dimensions of behavioral humane-imbued law will help integrating overindebtedness and irreversible destruction of future conditions in today’s decision making. future potential, which may serve as an explanation Building on Rawls’ (1971) procedural justice, for the 2011 occupy Zeitgeist reclaiming public space intergenerational equity will ensure fairness between as a symbol for common goods. In the eye of leaving generations based on future orientation and social next generations’ debt, unfeasible social welfare and responsibility for future generations. Pursuing sustainability threats, intergenerational equity is an intergenerational equity in the wish to provide a urgent topic of concern. decent standard of living for the upcoming young can While the wish for intergenerational equity has be enabled by a mutual transfer between old and sparked, we currently lack a codified legal framework young. Justice can be sought in future outlooks, on intergenerational fairness as well as an economic humane reflexivity and globalized solidarity enabling understanding of feasible intergenerational equity that one generation does not live at the expense of models that accurately pay attention to future future generations. Financial Social Responsibility will generations. To measure intergenerational equity, we ensure that the current generation is not spending the will have to estimate future developments. money of tomorrow’s children or takes up debt to be Intergenerational equity will require discounting of paid by future children. Generations passing on to the future events by politicians, policymakers and private future will feature age-attentively redistributed individuals who will have to factor in future- wealth, investments for young and respect for future orientation and social responsibility in current generations’ resource consumption needs. decisions. Future world inhabitants must be put into A human-imbued ueberethical drive towards the focus of today’s choices by shifting the current intergenerational conscientiousness comprising of

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social responsibility and future-orientation is argued supranational bodies) but also the interlinkages as the basis of eternal equity constituting legal among variables should be investigated. foundations, public policies, and regulation but also Institutional contexts within which companies echoing in bottom-up participatory democracy and and their managers operate determine executives’ social representations of intergenerational equity responsible choices. Differences in corporate (Puaschunder, 2017a). governance and legal contexts but also the nature of With the following piece focusing on the present regulation and the likelihood of enforcement shape and near future regarding an unprecedented business ethics as well as expectations of what is intergenerational equity kink starting from the turn of considered good governance and ethical conduct in a the 21st century turn of the millennium, the article country. Managers’ responsible leadership may, pursues the greater goal of freeing from short- therefore, vary across institutional contexts in the termism shackles and grant wings of wisdom for our international arena. What may be considered as children, grandchildren, and great-grandchildren. intergenerational practice in one part of the world Faith in future liberty grounded on noble munificence may not be ethical state-of-the-art in another. As a over time will acknowledge constancy of our consequence, corporate leaders embedded in children’s freedom, economic prosperity and access different national systems may exhibit different to global common goods in a favorable environment. intergenerational ethics. Cross-national variations in Socially responsible intelligentsia about the future of socially responsible practices could be captured in tomorrow’s citizens of the world will pave the road to order to derive implications for organizational justice. Foresighted vigilance seed the victory of decision makers on how their corporate eternal equity sparked in our fin-de-millénaire responsibility. Adopted CSR strategies may be (Puaschunder, 2017b). scrutinized for globally standardized, locally adapted, and transnational factors to delineate globally 5.1 Future perspectives consistent as well as locally-oriented intergenerational equity CSR approaches with attention to Globalization has placed social and environmental intergenerational equity. concerns on managerial agendas to an increased With the underlying premises of exhibited extent while more and more managers operate in a behavior being a function of both the person and the global environment. Multidisciplinary and multilevel environment in which that behavior takes place, research approaches may, therefore, investigate the future research may also unravel ethical decision comparative and cross-national dimensions of making under situational constraints that the broader intergenerational equity and their implications for cultural and institutional environment impose on the leadership decision making and behavior in the global adoption of sustainable and socially responsible arena. Interdisciplinary and multilevel research practices. Cross-culturally operating institutions may approaches could feature scientific collaborations face challenges for intergenerational equity with researchers based in different countries to implementation stemming from local differences in investigate the comparative and cross-national corporate practices and social ethical norms as well dimensions of intergenerationally responsible as different thresholds to sustainable behavior. For managerial behavior representing different instance, challenges arise if corporations or even disciplinary backgrounds (economics, business, nation states of the industrialized world outsource psychology, etc.), research fields (e.g., strategy, intergenerational practices (e.g., environmental organizational behavior, and international and cross- pollution) into territories with weaker law cultural management within the field of business), enforcement and public scrutiny. These findings methodological approaches (both qualitative and emphasize the need for sensitivity to local conditions, quantitative), and regional expertise (in-depth transparency along the production and value chains knowledge of North-American, European, and Asian as well as stakeholder expectations monitoring when business systems and institutional environments). conducting business in different contexts. Future International studies of intergenerational equity research may also address ethical dilemmas facing should be targeted at deriving a sophisticated managers in the global arena and their coping conceptualization of ‘responsible behavior’ in the strategies in order to enhance research outcomes are intergenerational domain that is applicable to all leaders’ potential operating in the global arena to cultural groups and stakeholders. balance global and local considerations in making International research on intergenerational responsible decisions. As an implication, equity could unravel drivers of intergenerationally intergenerational CSR practices should be locally- responsible managerial behavior. Cross-national, oriented and emphasize sensitivity to local conditions multi-level analyses could thereby retrieve influence when conducting business in different cultural factors on the adoption of globally responsible contexts. Corporate executives with foreign intergenerational leadership and corporate practices. subsidiaries should gain training to adapt to specific Knowledge of contextual factors that promote needs and circumstances of local CSR intergenerational managerial decision making with intergenerational equity customs. regard to corporate sustainability and social The role of supranational factors that influence responsibility could include favorable characteristics responsible leader behavior provide further insight of the organization and aspects of the broader into the propensity to engage in intergenerational institutional and cultural contexts in which firms are equity. With supranational institutions – such as the embedded that automatically trigger intergenerational UN – having turned to the codification of the triple concern. Thereby the antecedents of sustainable and bottom line in the UN Global Compact, managers are responsible management at multiple levels increasingly respected for their accountability and (individual, group, organization, national context, responsibility. Insights on the influence of supranational regulatory measures and institutions

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(e.g., NGO activism and the enactment of the UN intergenerational equity could further be solicited Global Compact) on intergenerationally-responsible through building corporate cultures that enhance an managerial behavior may shed light on success ethical climate. factors in the adoption of intergenerationally socially On the corporate incentive level, responsible corporate practices in the global arena. intergenerational equity may be implemented through International institutions should set priorities on the performance management and reward systems to corporate intergenerational equity implementation hold managers accountable for irresponsible behavior agenda. Quantitative metrics based on standardized as well as creating psychological incentives to think evaluation frameworks will coordinate a global about future consequences of current corporate monitoring and impact assessment of the role of conduct. Best practices studies on intergenerational corporations in the intergenerational equity equity in the corporate world will serve as corporate implementation. Indices of local, national, regional risk management tool to help build a culture of and global corporate intergenerational equity intergenerational CSR and foster a corporate design endeavor will help build public-private partnership that pays tribute to intergenerational leadership. In synergies but also shed light on positive and negative building a cadre of intergenerational equity corporate externalities and trade-offs. Independent governance leaders through corporate training and team building institutional evaluation frameworks will streamline development but also corporate intergenerational social, economic and environment goals through cost- performance measurement and intergenerational benefit analysis, life cycle cost discounting and social equity reward systems, intergenerational leadership equality programs. Public-private partnerships will aid in the corporate sector will be advanced. adaptability and flexibility in collaborations between At the organizational level, when recruiting, governments, the private sector, and academia. selecting and promoting managers, it is essential for International organizations’ emergent risk and crises organizations to understand how individual-level prevention frameworks will help reform CSR variables such as personality traits, motives and endeavors to imbue an intergenerational equity focus. values may predict managers’ propensity to engage in Academic research can aid to spearhead ethical behavior. For example, firms can use temporal perspectives in contemporary CSR research. personality tests and integrity tests, along with In particular, a macroeconomic model of global interviews and assessment centers, to help determine intergenerational equity could study intertemporal which employees might be more likely to act transfers between generations with special attention irresponsibly. They can also assess applicants’ to public and private sector contributions as well as attitudes and values to decide whether they will benefit and burden sharing. Based on the match the corporate culture, with the assumption that intergenerational equity dimensions of social candidates’ formal qualifications and job-related responsibility and future orientation, public and skills may not be the best predictors of responsible private sector intergenerational benefit transfers and behavior on the job. Studying personality traits but burden sharing will thereby capture social, also motives and values that steer managers’ environmental and economic intergenerational propensity to engage in intergenerational equity will contribution potentials of the corporate world. Cross- allow to set up assessment centers that reveal which cultural differences could be outlined by cross- individuals are more likely to act irresponsibly and if sectional regression analyses on a global scale. the managerial ethics will likely match the corporate A wider conceptualization of intergenerational culture on the intergenerational equity scale. equity leadership based on comparative cross-cultural Intergenerational equity can also be imbued in research will help detect intergenerational equity corporate activities by creating and enforcing antecedents. Interdisciplinary, multilevel research will company policies and codes of conduct, supporting unravel drivers of intergenerational responsibility and training and development initiatives which are aimed situational influence factors on intergenerational at increasing moral awareness regarding future conscientiousness in the international arena. Avenues generations. Once the individual has joined the of future research could also enhance our organization, induction programs, individual coaching understanding of how companies and other by the supervisor, training and development stakeholders can effectively promote socially programs, and other socialization practices could responsible behavior for future generations. The ensure that newcomers learn values, expected organizational-, situational-, societal, and behaviors, and social knowledge that are necessary to supranational-level determinants of responsible become intergenerationally conscientious managerial managerial behavior can be influenced by top leaders. In terms of communication and control management teams, policy makers, educators, and systems, top management teams and governmental external regulators. Best practice studies in this area officials may actively promote responsible behavior could shed light on how companies can systematically and discourage irresponsible behavior by design and utilize human resource management communicating ethical integrity messages. practices and leadership development programs to Implementing performance management and reward promote responsible managerial behavior. Prospective systems to hold managers accountable for findings may thus enhance our understanding of how irresponsible behavior could, in addition, create a companies and other stakeholders can effectively psychologically favorable situation for prevent, manage and control the corporate risks intergenerational ethicality (Crane & Matten, 2004). associated with the unethical conduct of leaders. Capturing the impact of external factors on 6. CONCLUSION intergenerational equitable decision making and coping with the ethical dilemmas in leadership The age of globalization heralded the call for challenges may serve as a basis for training and intergenerational responsible leadership. With development activities. The implementation of internationalization trends imposing significant

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challenges regarding sustainability of climate business ethics in the global arena. Future research stability, indebtedness and social welfare for an aging should connect the individual experience to social Western world population, the need for responsibility in order to unravel ethicality nudges. intergenerationally responsible leadership has Common goal compliance is hoped to be modeled by leveraged into an international concern. The quest for contexts that automatically nudge corporate decision an integration of intergenerational equity in makers in an intergenerational equitable direction. contemporary CSR models of capitalism in the 21st Public and private sector discourse on century is targeted at strengthening socially intergenerational imbalances will help fortify the responsible economic market approaches. Adopting codification of intergenerational fairness on a global intergenerational equity in the corporate world scale. Internationally validated intergenerational underlines the legal case for codifying equity models will elucidate intercultural, national intergenerational fairness on a global basis. and regional differences on social responsibility in the Contributing to interdisciplinary behavioral law and intergenerational domain. The prospective findings economic models in intergenerational leadership may will help imbue efficiency measures on help alleviating current intertemporal predicaments intergenerational equity implementation through real- and future predictable economic, social and world relevant means. CSR advocates advanced with environmental crises. Acknowledging the untapped intergenerational conscientiousness will lead to potential of corporate entities to address global fruitful corporate contributions for a sustainable challenges beyond the reach of singular nation states, humankind alongside fostering a harmonious calls for the integration of intergenerational equity corporate-citizen relation. Cross-national into contemporary CSR models with attention to sustainability solutions and interculturally-sensitive differing societal cultural values and institutional intergenerationally equitable business practices may aspects related to social responsibility and ethics. help imbue intergenerational equity in corporate Differences in business systems, legal context, the conduct in the global arena with direct implications nature of regulation and the likelihood of for today’s and tomorrow’s society. enforcement and punishment modes, therefore, have to be scrutinized when shaping intergenerational

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