The Inaugural Address by His Excellency Dasho Tshering Tobgay, Hon’ble Prime Minister of Bhutan, to the 7th International Conference on Gross National Happiness: “GNH of Business”, 7-9 November 2017, the Royal University of Bhutan Convention Centre, Thimphu, Bhutan

Your Excellences, Distinguished Guests, Participants and Friends.

Good Morning! Kuzu Zangpo!

I have the honour to convey the greetings and warm wishes of His Majesty the King Jigme Khesar Namgyal Wangchuck.

On behalf of the Government and the people of Bhutan, it is my pleasure to welcome you all to the 7th International Conference on Gross National Happiness.

I am delighted to see that the conference has attracted speakers, delegates and participants from several countries around the world. We have with us today 177 participants from 29 countries. This is excluding Bhutan. Some of you have travelled half the world to be with us today and brought your invaluable experience, expertise and insights to share with all of us.

I am delighted to announce that the University Technology MARA, Malaysia, will be the host of the next international conference on Gross National Happiness in 2018. The representatives of the host are here with us today. Margaret Chan and Ling Siew Eng. Thank you.

The Conference Theme

The theme for this year’s GNH conference is “GNH of Business”. This is a relevant and timely theme. As some of you may recall, I first made a proposal to integrate GNH values into business at the 6th International Conference on Gross National Happiness held in Paro, in 2015. I then called on the business sector to shift its thinking about the purpose of business. This conference should be understood as implementation of that proposal.

Why GNH of Business

GNH has been the guiding philosophy in Bhutan ever since it was first propounded by our beloved Fourth King in 1979. Since then, it has influenced Bhutan’s development policy and direction. And the GNH index has been developed to provide an accurate picture of wellbeing and happiness in the country.

GNH is not opposed to material and economic progress, but it rejects the idea of pursuing economic prosperity as the only goal. Instead, it proposes that the government should promote ‘conditions’ for the wellbeing of its citizens. So far, GNH has been confined largely to government and to the bureaucracy. There is neither any major interest from the business sector nor concrete effort by the government to reach out to them. This needs to change in Bhutan, and hopefully in the rest of the world.

Integrating GNH will essentially require businesses to value societal wellbeing over profit and orient its businesses towards responsible behavior. This would in essence represent the core values of GNH.

From a GNH standpoint, business is a vital pillar of our society, one, that must make equal contribution, if not more, to improve people’s happiness. For this to happen, business will have to integrate GNH values not only to operate responsibly to address social and environmental concerns, but also to make itself sustainable and profitable.

After the 2015 conference, I have thought hard about the government’s role in applying GNH in business. Since the consequences of business are public policy matters that require political decisions, the government has a role in transforming business to support socio-economic and other development goals. In keeping with history and tradition in Bhutan, it will be the government’s responsibility to promote GNH in business for the collective wellbeing.

Problems of the Current Business Model

I need not tell this gathering the inadequacy and problems of the present business model, one that is based on a principle of privatizing profit and socializing loss. Even at the risk of being redundant, let me share with you some of the problems and urgency to have a new business model.

Sixty-nine of top 100 economies of the world listed in Fortune Global 500 are multi-national corporations. In the top ten is Walmart, a multinational retail chain that beats the economies of some even developed countries like Australia and South Korea. This is the power of the corporate world.

As we know, throughout the corporate world, the overarching propose of  business is to make profit for shareholders. But, should this be the only responsibility? Should business work solely for profit?Or should they also bear social and ethical responsibility?

Though, the responses for these questions have been fiercely debated in both corporate and academic forums, the fact of the matter is that the magnitude of impact of business engagements is felt in spheres beyond its traditional spheres.

We observe that economic benefits of this model are often concentrated on a limited section of society, causing high inequalities. Income inequality levels have remained at historically high levels. According to the Nobel Laureate Joseph Stiglitz, the top one percent of the population own 40 percent of the wealth in the US.

It is sad to note that businesses remain insufficiently aware of the real issues surrounding their operations. In most cases, the impacts are often unaccounted since the assessment is based solely on financial considerations.

Businesses will have to understand that prosperity at the expense of environment and community is not sustainable. Their inclination towards the inefficient use of human and ecological capital may give rise to social conflict and turmoil as vital stakeholders are shut out from sharing the fruits of growth.

The business world holds tremendous power with huge impacts, and it has become critical for it to change its vision by embracing societal wellbeing, in addition to profit making.

For this to occur, business first need to take the interests of stakeholders, stakeholders like workers, communities, customers and suppliers involved, not just the shareholders. Engaging stakeholders will be a good starting point for building a social consensus about where businesses are heading.

Next, we need to start evaluating businesses by their ability to promote the health and happiness of the communities. We need to accurately measure the business outcomes in terms of its broader responsibilities.

We need a better reporting system to fix broader accountability and an assessment that can capture holistically the business’s shortcoming and achievements.

Traditionally, Corporate Social Responsibility (CSR) with its triple bottom line of people, planet and profit, is a common assessment tool. Pursuing CSR or philanthropic activities is not equal to incorporating GNH into businesses. Generous business or philanthropy is not a substitute for running a business in a culturally, socially and environmentally responsible way. In fact, CSR initiatives are too often used to boost brand value rather than to deliver real change. Some so-called CSR companies are being criticized for “green washing” by spending millions on advertising and marketing to make more green claims than they actually are. So, CSR is increasingly seen as a marketing strategy that misleads consumers. For Bhutan, the wisdom of GNH is the solution.

Applying GNH in business will require the business to move from a donation mindset to an operation mindset, and to go beyond philanthropic action. It will require the business to invest in risk mitigating activities in community and find innovative operations to improve societal wellbeing. Integrating GNH will require businesses to be assessed based on a holistic GNH framework.

Proposed GNH of Business

The case for engaging in GNH business is clear and it is unmistakable. It is for this reason that I have requested the Centre for Bhutan Studies to develop an assessment framework to certify Bhutanese businesses. The proposed GNH of Business that has been developed and presented to this conference will be used to transform the contents and landscape of the businesses in Bhutan.

What is a Proposed GNH of Business? It is simply a euphemism for a GNH Certification Tool for Business.

It is a tool for systematic assessment of businesses using the GNH framework. The objective is to certify business establishments based on their scoring across a range of GNH indicators. It evaluates 49 indicators at two levels: ‘worker happiness’ and ‘organizational conditions for happiness’.

The tool will require the business to account for non-financial aspects, along with financial matters, in corporate strategies and decisions, and develop a GNH-integrated reporting. The tool will allow business to provide tangible social and economic outcomes of what it really means for business to integrate GNH-based indicators.

Overall, the tool will try to involve business for common good and to share a common value. The process will provide a platform for interested business establishments to be certified by going through a rigorous certification process to receive a GNH certificate. But certification is not its main purpose. We want to witness changes in business values and objectives.

What are its benefits?

In the current businesses model, if an arrow hits the bulls eye of the target (the bulls eye represents the profit), it is considered as a success. That is the end goal. The GNH certification will shift the business to a new model in which the arrow will hit not necessarily the bulls eye, but many different parts if the target.

Second, to integrate GNH is to make the business holistic by integrating GNH indicators, thereby increasing worker’s happiness and improving organizational conditions for happiness.

Third, GNH business will attract investment, employers and customers who value GNH values, and make businesses more sustainable and profitable.

Today’s consumers in increasing number hold companies to a higher standard and look for more than just material products or quality services when choosing a company to work with.

Nine in 10 consumers expect companies to not only make a profit, but also to operate responsibly to address social and environmental issues. Eighty-four percent of global consumers seek responsible products whenever possible.

Fourth, GNH certification is a branding process. A GNH certified business is a brand that may save some advertising and marketing.

Fifth, it is an individual or business’s contribution, even if it is a drop in the ocean, but knowing that ocean is an accumulation of drops, to address the global climate change and poverty issues.

Sixth, it will make the business more stable and profitable in the long run as it gets established on core values.

And finally, the business will support the government’s socio-economic goals, and help improve the wellbeing and happiness our people.

Results of the Pilot Survey

We conducted a pilot survey. In the pilot survey, the certification tool was administered to 540 workers and 41 business establishments based in five districts in Bhutan: Thimphu, Chukha, Paro, WangduePhodrang and Punakha. The businesses ranged from small-scale enterprises to large companies; 50 percent of them were from the service sector and the rest was from the production sector.

The objective of this pilot survey was to test the rigour and relevance of the assessment methodology and indicators, and to get a picture of the business environment from the happiness standpoint.

 

 

So, what is the picture?

Not a single business establishment managed to earn the GNH certificate. The Centre for Bhutan Studies has set a threshold, a sufficiency threshold for each indicator and a qualifying threshold for certification. You can see that the threshold set by the Center for Bhutan Studies has a stream of high standard for not a single business establishment has been certified as GNH friendly. Yet, I agree with him that we should set even higher thresholds so that we create more rooms for improvement.

The Way Forward

In absence of an accreditation body, the Royal Government is pleased to appoint the Centre for Bhutan Studies as a certification agency.

In the next few months, CBS will improve the certification tool based on the inputs and feedback of this conference, and in discussion with stakeholders. The tool will have to be continuously reviewed and refined to test its validity, reliability and relevance.

We will start by assessing the public corporations under Druk Holding and Investments, and identify areas of improvements so that all of have them pass the GNH certification process. Once this is done, it is our hope that private companies and businesses will follow suit. If there is a credible evidence of certification process improves worker happiness and organizational conditions for happiness, the government can link the certification to fiscal incentives and subsidies in future.

Challenge

We expect the whole certification process to be quite challenging, but we are committed to making it a success.

The first challenge, I think, will be from the businesses since it is easy to misunderstand the process as an imposition of new conditions that will affect their profitability and balance sheet. This misunderstanding needs to be corrected.

The second challenge is technical, as the CBS researchers must have faced in developing the framework. It is a near impossible to develop ‘one-size-fits-all’ tool to assess the whole range of businesses from a family-run business to large companies.

The third challenge is the holistic nature of GNH with hundreds of indicators that have to be promoted in a GNH business. Businesses might find it challenging to fulfil all these conditions.

However, these challenges must not deter our efforts. We should not undermine the importance of cultivating an attitude and commitment amongst businesses to create resources that will lead to societal wellbeing and happiness.

Conclusions

I believe that success in integrating values like GNH into business will depend on three conditions: leadership, education, and framework.

I can say with certainty that there is no shortage of leadership who embraces GNH values and principles at the national level in Bhutan. However, there might be a short leadership gap in the business world as they are mostly run on the old business model.

We need to change that. The government is committed to changing the old business model.

We expect the Royal University of Bhutan to develop a curriculum on GNH business for its affiliated college and train a generations of young Bhutanese leadership with GNH values. Similarly, we need to introduce GNH values into national curriculum so that we not only produce GNH leaders, GNH workers and consumers, but also more importantly GNH citizens.

As for the framework, we have the first version of ‘GNH Certification Tool for Business’. This is the first step towards incorporating GNH into business. I request all of you to help us improve it.

I urge every business in the country to join us in this initiative. It is only by joining forces that we will succeed in achieving happiness for all our people.

In thinking about business one tends to think of big companies with thousand of employees. We have to be mindful of the big businesses of small companies. Small companies form the vast majority of businesses in most countries and employ a significant percentage of the global workforce. The World Bank estimates that Small and Medium Enterprises forms around 95 percent of the businesses and employ 60 percent of private sector workers. Hence, the business establishments of every size and kind are a powerful force that ought to be mobilized to effect the change.

I understand that integrating GNH into business will be a long-term endeavour but we will have to make a start now. I am hopeful that a few years from now, GNH of Business will no longer be discussed by academics alone but will be a topic for boardroom decision-makers.

I am glad to observe that the conference has brought together government, civil society, and members of the business sector under a single umbrella. It is in this space that collaboration can be initiated to explore solutions to our many challenges.

I want to thank all the participants for joining us in this important conference to discuss and share your experience. I look forward to the learning and to the recommendations from the conference.

In conclusion, I want to thank the researchers of the Centre for Bhutan Studies, led by Dasho Karma Ura, for organizing this conference. More importantly, I want to thank them for developing the  GNH Certification Tool for Business within a short notice.

 

Thank you all and Tashi Delek!

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