Yahoo facing up to human rights in China?

It's been a heady time for business and human rights recently what with the UN Special Representative, John Ruggie's final report having just been released to general mumurings of support.

His approach of "protect, respect and remedy" makes a lot of sense as an organizing framework, and whilst it falls short of the kind of normative principles and binding regulations that some critics were hoping for, his focus on providing some much needed clarity on what it means for businesses to manage human rights responsibilities is one that we are happy to see. The message that companies do have responsibilities in this arena, and distinct ones from government at that, provides an important mark in the sand in terms of identifying some of the political responsibilities of corporations.

All this is good timing for news to emerge about Yahoo's response to the government censorship issue in China that hit the headlines a few years ago (and that we wrote about in our Business Ethics text). Of course, Yahoo has been mainly drawing attention recently in respect to its battles with Microsoft about their abortive takeover. But the good people at Ethical Corporation recently reported on developments in the censorship issue that have been overshadowed somewhat by all the takeover speculation.

It turns out that following a dressing down by the US authorities, and a lawsuit from the World Organisation for Human Rights (which was eventually settled out of court), Yahoo has made some efforts to enage in what Ruggie would call the "remedy" component of business and human rights - such as paying legal bills for imprisioned Yahoo customers, setting up a fund to support human rights, and lobbying the US government to press for the release of political dissidents imprisioned by the Chinese authorities as a result of Yahoo's release of user information.

Of course, all this does not detract from the continuing responsibility the company should have for protecting the human rights of its stakeholders in the first place. But at least it does show that firms can play a role in pressing for human rights at a political level. This is in marked contrast to the Olympics sponsors, all of which have resolutely refused to discuss the possibility of any political response to events in Tibet. As the Adidas CEO recently said, pressure to issue a statement on human rights in China was an "effort to drag us into politics, and we will not allow that to happen".

Why the difference? Well the main point here is that Yahoo's involvement in human rights comes from people actually using its products - something that, in the parlance of global governance, falls directly within their "sphere of influence". The Olympics sponsors, however, are more removed from the issue, and so can realistically make a case for having rather less influence. After all, people are not going to be arrested for wearing Adidas sneakers. Such assessments though are, of course, a somewhat inexact science. However, these are some of the major issues that UN, Yahoo, Adidas and others concerned with business and human rights will have to grapple with in the years to come.

CSR and democracy in China

This week’s blog comes from Shanghai, where Crane and Matten have been involved in various speaking engagements over the last years at the China Europe International Business School (CEIBS). There are two conferences on CSR in Shanghai this week both of which were fascinating.

CSR is definitely on the agenda here. Not just for big western multinationals, but also for local companies and entrepreneurs. Yes, a lot of what was on display is corporate propaganda, but there is some real evidence of what companies do, too.

The conferences gave a lot of food for thought for our ongoing research work. CSR in China casts some particularly interesting light on the role of CSR and democracy. Examples of how companies conduct stakeholder consultations, attempt at securing participation, protecting property rights or providing access to health, education and security – corporations here in their CSR activities pretty much emulate certain traditional governmental jobs.

But not only that. In fact these companies apply a model of interaction to their stakeholders that treats them basically similar to the status we would associate with citizens in western democracies. The obvious question is: if western companies do their western-style CSR in China, are they not effectively implementing micro spaces of liberal democracy? Stronger even: are CSR-active corporations, at the end of the day, part of some subversive movement towards democracy by operating this approach in the way they conduct their CSR projects with their stakeholders? The jury is out. But the tensions between an inclusive, participatory CSR model on the one hand and a political system that leaves little space for democracy are palpable.

Diversity in diversity management

You may remember that in one of our posts last month we asked what exactly made women different in a business ethics context. One of the big issues here is the "glass ceiling"that hinders women from getting to the top of the corporate ladder. Discrimination is often invisible but incontrovertible to those that encounter it.

To be sure, this is a problem faced by women everywhere, but at the same time, such institutional discrimination also varies quite significantly between countries. In our business ethics book, we reported on evidence of female held directorships in Europe - where female representation in the boardroom ranged from 0% in Portugal to 29% in Norway. So it was with some interest that we read in the Financial Times last week about evidence emerging of female board memberships in the Gulf region - an area not traditionally known as a leader in diversity management.

The picture painted by the report is of a region that, in terms of diversity management, demonstrates much like Europe quite a bit of, well ...diversity. Some Gulf countries are actually emerging as leaders in the region, with women making up 2.7 per cent of boards in Kuwait, and 3% in Oman. This not only compares favourably to other Gulf states, such as Abu Dhabi (0.6%) and Saudi Arabia (0.1%), but also stacks up pretty well against other ostensibly less conservative countries such as Italy (2%) and Japan (0.4%).

Of course, board memberships do not tell the whole story about gender discrimination in business, but it certainly gives a good flavour of the types of challenges facing women looking to secure advancement to the executive suite. So it's good to see some progress being made in the Gulf, and hopefully will act as a further spur for laggard countries in Europe and elsewhere. Who knows, perhaps even Italy's womanizing PM, Silvio Berlusconi will be able to prompt a greater attention to gender among Italy's boardrooms, especially having appointed the former model and (as the media puts it "ex-showgirl") Mara Carfagna, as Equal Opportunities Minister (pictured right).

But whatever progress is made in Italy or Kuwait, though, such countries will still remain far, far behind the leaders in female board membership. Right now, the place to go for high flying women is Norway, where women now make up 40% of board positions. But we're not talking voluntary social responsibility here; Norway's female friendly pattern is a result of good old fashioned regulation. As the International Herald Tribune reported a couple of months ago, it's not been a easy transition for Norway, but with appropriate mentoring, training schemes, support mechanisms and enforcement, a genuine change in attitudes seems to have accompanied the 2003 law that forced Norwegian companies to fill 40% of board seats with women. Such positive discrimination isn't always popular, but as the chart from the IHT shows, it certainly makes a difference.

Getting an ethics fix

This week’s blog is a bit late. Sorry, but there is an excuse: Crane and Matten have recently been introduced to the TV series ‘The Wire’ and, though we are somewhat behind the rest of the civilized world in this, have been avidly watching the third season on DVD. This stuff is so addictive that one of us even managed to watch all 12 episodes in 2 ½ days. Well, sometimes you need to stop writing, and just starting watching…

The Wire is set in Baltimore and introduces us to the world of drugs, smuggling, crime, dodgy police and sleazy backroom local politics. As far as we’re concerned it’s probably one of the best TV serials ever made. The storylines are gripping, the plot credible and the acting is just superb. Each series operates between two ‘camps’. ‘The Law’ is basically the police, prosecutors, lawyers and local politicians. On the other side, there is the ‘The Street’: the local drug trade, constituted by various rivaling gangs.

There are many reasons for the popularity of the show, one of which is the apparent amorality with which the two camps are displayed. Unlike in many standard cop shows, the ‘good guys’ are actually not quite that good. And the ‘bad guys’ are even at times fairly decent: despite the drug dealing and murdering, there are strict rules, very clear notions of fairness and an honor code among the gangsters. Most of all, nearly all characters are so likeable. If bad things happen, they are mostly the result of ‘the system’ – be it the police bureaucracy, politics or the power relations within and between gangs.

Now – some of you might be wondering by now what all this has to do with business ethics – or if it does, why Crane and Matten can’t even have the least bit of fun without bringing their ethics perspective into everything. Fair enough, so let us just say this much: ‘The Wire’ is absolutely superb if you want a lively laboratory of what we call ‘context related factors’ in ethical decision making (Chapter 4 of our business ethics book). The show gives a pretty vivid account of why it is that normal people end up doing some pretty bad things. This is what the Stanford University psychology professor Philip Zimbardo (of the infamous Stanford Prison Experiment) calls the ‘Lucifer Effect’ in his latest book: how personal morality is fundamentally shaped by social context.

And, besides, the link to business here is by no means artificial either. Stringer Bell, one of the gang leaders in the Wire, is actually doing a business degree part-time in the show, and he brings to bear some of the lessons from the classroom to his business on the street. Mind you, we doubt that he’ll have spent much time in any ethics classes. But that’s a shame. Not only could he have learnt more about why ‘The Street’ and ‘The Law’ behave the way they do, but he could also have provided us with some knowledge in the other direction. As some of our European colleagues have discussed recently, we can learn a thing or two about CSR from the way that organized crime outfits like the Sicilian mafia offer very instrumentalized forms of philanthropy to survive and flourish in governance vacuums. Oh, yes, but that was another show…

Time for multinationals to step up to the mark in Burma

The debate about the role of multinational corporations propping up Burma's oppressive regime has been a long and fractious one. It's something that we in have discussed in our business ethics book, and which has been widely documented elsewhere. But with the country suddenly in the midst of a huge natural disaster that has already claimed some 22,000 lives, now is clearly the time to go beyond debate and for any companies still doing business there to start rolling up their sleeves.

Many commentators have claimed that Wal-Mart's major ethical turning point came when it launched a massive aid operation in the face of the Hurricane Katrina disaster in 2005. So is Cyclone Nargis going to be the catalyst for any of the hundreds of multinations doing business with Burma to demonstrate some concrete proof that their business links can bring positive social benefits to the Burmese people? After all, the common argument used by companies involved in Burma is that they can benefit ordinary people more by investing there than divesting. So this is a real opportunity to finally show the world that this whole argument is more than just a lame excuse for profiting from human rights abuses.

The International Trade Union Confederation (ITUC) latest list of companies doing business with Burma includes Caterpillar (USA), China National Petroleum Corp. (CNPC), Daewoo International Corporation (Korea), Siemens (Germany), Gas Authority of India (GAIL), GlaxoSmithKline (UK), Hyundai (Korea), and Total (France). If anyone is going to be having a Wal-Mart moment in response to Cyclone Nargis, surely it should be one of these. For once, a bit of "disaster capitalism" could actually do some good.