On Corporate Social Responsibility

Here are some excerpts from a 20 Dec 08 NYT article I chanced upon while absent-mindedly clicking through the net:

Mr. Siekaczek (pronounced SEE-kah-chek) says that from 2002 to 2006 he oversaw an annual bribery budget of about $40 million to $50 million at Siemens. Company managers and sales staff used the slush fund to cozy up to corrupt government officials worldwide.

The payments, he says, were vital to maintaining the competitiveness of Siemens overseas, particularly in his subsidiary, which sold telecommunications equipment. “It was about keeping the business unit alive and not jeopardizing thousands of jobs overnight,” he said in an interview.

…

[Debevoise & Plimpton] and its partners dedicated more than 300 lawyers, forensic analysts and staff members to untangle thousands of payments across the globe, according to the court records. American investigators and the Debevoise lawyers conducted more than 1,700 interviews in 34 countries. They collected more than 100 million documents, creating special facilities in China and Germany to house records from that single investigation.

Full article here.

Bribes went to people in Venezuela, China, Iraq, Israel, Vietnam, Italy, Argentina, Nigeria, Norway and Russia. The money trail led through Austria, Liechtenstein, Switzerland, Dubai and the British Virgin Islands. There are probably more places left unmentioned by the article.

Ouch. For so many reasons.

Here’s something related. I had the benefit of a chat with a businessman in Singapore last month, one of those older men who laugh at the silly ideals of young rascals like me. He has business links to various parts of Asia and Southeast Asia. He pointed out something darkly funny. We here in Singapore are raised on the values of transparency, accountability and honest business practices. But, he said, that’s not how the world works, especially in the countries around us. Does this set our businesspeople back when they head into the other Southeast Asian countries? Should we really be judging corruption to be an irrevocably bad thing in places that depend on it for some measure of decent living?

I don’t know.

I keep wanting to write about the possibility of the world turning towards a newer form of economics but time disallows me. So, here’s a bit from an IHT article that might tempt you to find out more:

"And signs of a protectionist backlash are multiplying as worries about climate change, the rise of state-run investment funds and the bursting of the recent credit bubble give novel ammunition to those in the West who question free markets and clamor for more shelter from globalization…

When students of economics open their history books in 2030, they might read about 2008 as the year when the groundwork was laid for a re-regulation of certain markets, a more redistributive tax system and new forms of international policy coordination, economists say."

I recently attended a Singapore Compact lecture by Dr Jem Bendell on the luxury industry and he highlighted to us how Beijing has taken down billboards of the luxury brands and how India has raised taxes on luxury items more than 100%. Both actions were direct results of concerns over unrest fomenting due to very perceivable inequalities in society. Looks like there are to be some serious changes coming. I wonder how the corporate world will deal with it.

In other news (full article here), Singapore has tasked an "Inter-Ministerial Committee" to look into sustainable development. Our PM says,

"How do we get economic development and growth, and at the same time, grow in an environmentally friendly way? That’s the idea of sustainable development, where you build into your whole development strategy this awareness of the environment, energy, conservation and efficiency," said PM Lee.

This committee will "seek to build new competencies and facilitate mindshare across the public, private and people sectors to develop Singapore as an "Eco-Hub". The aim is to make Singapore an innovative thought centre and hub for urban and environmental sustainability."

The continued mindless use of the word "hub" and "mindshare" aside, it’s a good piece of news. Let’s hope we go beyond simply environmental sustainability soon, though. Sustainability has so much else to offer.

From Inter Press News:

"I think that we have to fight the Global Compact, not only criticise it, because it is a public relations operation of the big multinational companies," Ziegler told IPS.

"The 500 biggest multinational companies controlled last year 52 percent of the gross world product," the Swiss academic said. 

 And:

Greenpeace’s Mittler took the view that it is not the U.N.’s role to organise business round tables. "It is the job of the United Nations to set binding international standards and ensure that these can be, and are, enforced," he said.

"The world needs action and binding global codes for corporate behaviour," he added. "The Global Compact is not delivering."

Mittler pointed out that an analysis by McKinsey & Co., a management consultancy firm, "showed that only in 10 percent of cases was there any evidence of companies doing something that they would otherwise not have done as a result of being a member of the Global Compact."

Oliver Classen, media officer for The Berne Declaration, one of Switzerland’s oldest non-governmental organisations, called on U.N. Secretary-General Ban Ki-moon to "fundamentally rethink the ‘accord’ with big business."

Mittler, in turn, asked Ban "to disassociate himself from ‘greenwashing’ by the coal and nuclear industries through the Global Compact."

"The UN’s Global Compact is been a mockery because several companies violating human rights have been free to join and remain in the Global Compact, (thus) benefitting from an association with the UN," said Aftab Alam Khan, ActionAid’s head of trade. 

What do you, think, dear reader?

On the one hand, I think this has some truth in it. On the other hand, I think not everyone takes well to harsh criticism, no matter how true they are. Thus, while the aggressive stance taken by Greenpeace and other suchlike groups are extremely helpful (and really, really admirable), more moderate institutions are needed to bridge the uncomfortable gap between the critic and his findings and the companies in question. The Global Compact provides a possible platform for such a thing to happen, but it only works if it is used in that manner. I guess for now, the Global Compact is still evolving. It will find its teeth sooner or later, but be they canines, incisors or molars is really what we would like to know.

Really, hasn’t the UN as a whole been criticized for just about the exact same reasons? It has no teeth and it panders to the stronger nations, so it has been said. The Global Compact faces the same problem, doesn’t it? Not everyone can agree on how to run things, and the companies are sovereign in themselves. The UN cannot bind them to agreements so simply just as it cannot easily bind sovereign states.

Still, as is stated, 10% of companies in the McKinsey & Co. study did perform socially responsible acts as a result of joining the Global Compact. While it is very low, it’s better than 0%. Add to that what groups like Mittler’s Greenpeace do and you’ll have more than 10%. The more coaxing and pressure on companies the better. A culture will gradually develop that will make companies regulate themselves. Takes time.

Ok, here’s something else other than the problems of the Global Compact. There is an interesting article here about how technology exported from China to the USA goes back to China as e-waste which is then exported back to the USA as toxic jewellery which has caused at least one death. I think I’ll post a bit more about this if I have the time. Responsible globalization is a very important topic with this sort of thing happening more and more.

Things are looking, in Tony Blair’s words, "optimistic", as the World Economic Forum’s annual meeting ended yesterday with corporations commiting themselves to concrete developmental projects.

Some of the projects include:

• The formation of a new international partnership of seven organizations to establish a generally accepted framework for climate risk-related reporting by corporations.
• The establishment of a joint Israeli-Palestinian business council, to encourage and facilitate constructive cooperation between Israeli and Palestinian business leaders to reinforce economic relationship and help peace building efforts by a credible and legitimate voice.
• An alliance of leading companies with the objective to bring power to villages in Sub-Saharan Africa. Sub-Saharan Africa has the lowest electrification rate with three out of four people lacking access.
• An agreement by the heads of the Big Four Accounting firms (Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers) to work with the World Economic Forum Partnering Against Corruption Initiative (PACI) to support the global fight against corruption. Together, PACI and the accounting firms will explore the development of a framework for companies to benefit from independent reviews of their anti-bribery programmes.

Still, it was quite disappointing to see less corporate consensus and commitment on climate change than expected.

Nevertheless, as the WEF’s MD says:

"These projects may range in scope and ambition from the local to the global, but they are all examples of the growing interest of companies to work in partnership with governmental or civil society organizations to advance progress on critical challenges. Multistakeholder alliances such as these illustrate an important aspect of the "shifting power equation" that was the theme of our Annual Meeting this year – a new geometry of collective action and collaborative governance in a world characterized by growing dispersion of economic and political influence"

So yay :)

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"The European Commission and UNDP have launched a new initiative to support corporate social responsibility (CSR) in new and prospective EU member countries.

Under the US$1.36 million project, UNDP will work with enterprises and other stakeholders in eight countries – EU members Bulgaria, Hungary, Lithuania, Poland and Slovak Republic, as well as in candidate countries Croatia, Macedonia, and Turkey. The project will assist the integration of social and environmental concerns in business operations and in corporate interaction with government, trade unions, business associations and communities on a voluntary basis."

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Fortune names Google as the best company to work for (in America, I assume). An amazing debut for Google!