The business of modern-day slavery

Events last week in the UK, where three women were rescued from what appears to be a 30 year-long situation of forced domestic labour situation, have focused a great deal of attention on "modern-day slavery". But it is hardly a one-off. Issues of forced labour, human trafficking and modern slavery are increasingly gaining public attention. Business, however, has been slow to engage in the conversation.

Perhaps this is no surprise given that no company wants to run the risk of being tainted with the spectre of slavery. But most of the big modern slavery stories involve business. From children forced to harvest cotton in Uzbekistan to labourers enslaved to fish in the waters of New Zealand, hardly a week goes by without a new story of extreme exploitation being splashed across the media. The appalling treatment of migrant construction workers in Qatar the build up to the 2022 FIFA World Cup has gained more exposure than most, likely because of the headline claim that construction for the World Cup will leave 4000 migrant workers dead. It is a heart-stopping statistic.

With all this noise around modern slavery, much of it at the hands of campaigners such as Anti-Slavery International, Free the Slaves, and Walk Free (who are responsible for the recently launched Global Slavery Index), governments at least are gradually starting to act. The UK Government is already in the process of drafting a modern slavery bill to make the complex legal situation around the issue more clear for prosecutors. The US has also launched initiatives to tackle human trafficking in the supply chains of companies and government contractors. Canada too now has a national action plan to combat human trafficking whilst Brazil has perhaps gone the furthest of any country in seeking to tackle the problem.

Such measures are to be applauded, but there's still a long way to go in effectively combating the worst forms of human exploitation. And one crucial player that so far hasn't brought much to the party is business. Compared with many other social and environmental issues, modern slavery has not seen much enthusiastic response from the business community. Although virtually all corporate codes of conduct prohibit any kind of forced labour, the issue is rarely given any particular attention. Most businesses simply assume that it doesn't affect them. However, the torrent of news stories across various countries and industries suggests otherwise. Companies just aren't looking hard enough to find their connection to modern slavery.

David Arkless, formerly President of Corporate and Government Affairs at the global temp agency Manpower, is probably the most visible and articulate member of the business community involved in anti-slavery efforts. He said last week that he was "frustrated by the lack of involvement of corporations in efforts to ensure that their supply chains are verified against the use of abused labour and that most of the big corporations of the world have not amended both their financial, expense and human resource policies.” You can understand his frustration. Most business leaders are simply burying their heads in the sand.

This is a major stumbling block because most forms of modern slavery either involve business or affect it in some way. After all, forced labour is a particular way of doing business - a morally regnant one for sure, but a business practice all the same. Even illegal industries such as prostitution and drug cultivation, both of which have had numerous documented cases of trafficking and forced labour, rely on business principles and come into contact with legitimate businesses at some stage. The bottom line is that we have to understand modern slavery as a business if we are to make any real sense of it and take appropriate steps to prevent it.

The research base exploring the business of modern slavery is especially thin. So I was pleased last week to help launch a new report funded by the Joseph Rowntree Foundation on the business models and supply chains found in forced labour in the UK. It was a fascinating project to be involved in, and along with my co-authors, I'm hoping that it really helps to shine a light on the economics of modern slavery in developed country contexts.

One of our main findings is that although forced labour is often described as a hidden crime, it is not as difficult to unearth as many in the UK, including businesses and government, seem to believe. As my co-author Genevieve LeBaron and I say in a recent article for The Guardian: "The problem is not so much that we cannot find forced labour; it is that either we choose not to look where it is most likely to occur or we simply misclassify those being exploited as criminals rather than victims. A new approach to detecting and enforcing forced labour is necessary. To pinpoint its occurrence we need to start by examining the forces of supply and demand."

Much still needs to be done to really understand how these economic forces lead to such extreme forms of exploitation. But the good news is that we're making good progress. The challenge will be getting legislators and business leaders alike to take our findings seriously.

AC


Photo by Junaidrao. Reproduced under Creative Commons licence

Cleaning up the "ethical oil" mess

With Stephen Harper's government getting plenty of heat at the Durban climate conference over its decision to relegate Kyoto to the history books,  there is a lot of discussion back home about the merits or otherwise of presenting the Canadian oil sands as "ethical oil". It's something we discussed in the blog earlier in the year, but the XL pipeline decision process has kept the issue very much on the front burner. Factor in a controversial TV spot by Ethicaloil.org comparing so-called "ethical" Canadian oil to "conflict" oil sourced from Saudi Arabia that funds oppression of women, and its no surprise to wind up in a heated debate

Yesterday, CBC, Canada's national broadcaster, featured a segment on ethical oil in its popular morning radio show The Current, and we were happy to be invited to participate, along with Kathryn Marshall, the spokesperson for Ethicaloil.org and Jody Williams, a Nobel Peace Prize winner, who has publicly come out against the tar sands.  You can hear the lively discussion, led by the impressive host Anna Maria Tremonti on the CBC website.

A colleague of ours in the law school here at York University, Stepan Wood, has blogged about the show and takes the time to expand upon some critical points that there was hardly even enough time to raise in the conversation itself. As he says:

"For one thing,[ethical oil's] narrow focus on human rights and the rule of law distracts attention from the massive environmental damage and energy consumption involved in extraction and processing of tar sands oil. For another, the claim that tar sands operations fully respect human rights is debatable, with numerous First Nations claiming that these operations impair their rights to clean water and a healthful environment. It is also hard to miss the xenophobic undertones of the Ethical Oil message–it is no coincidence that most of the countries targeted by the campaign are ethnically, culturally or religiously distinct from the white Canadian majority"

The bottom line, in which we and Stepan agree, is that Canada is very much not a leader when it comes to handling its responsibilities around oil extraction:

"To be a real leader Canada would have to show that it is genuinely committed to progress toward a post-carbon economy and improvement of the human rights records of Canadian companies overseas. This would include holding Canadian oil companies to the same high standards wherever they do business in the world. It is disingenuous to say that oil companies in Canada are ethical leaders if those very same companies are busily pumping oil and propping up those same repressive foreign regimes that the Ethical Oil campaign vilifies."

We don't expect that to happen any time soon, and in fact Canada has been content to be relegated very much to the margins of the Durban conference. When even China is criticizing you for setting a bad example, any claims that the country is a leader in providing "ethical oil" are only likely to fall on deaf ears.

Graphic by jfeathersmith. Reproduced under Creative Commons Licence

Sex, privacy and media ethics

Sex sells. And sex really sells in the media business. With their profitability in free-fall, newspaper businesses especially are always on the look out for a salacious front page story to help them grab some precious market share. Unfaithful soccer stars "playing away from home", celebrity match-ups and break-ups, trysts with prostitutes, or accusations of sexual assault are all highly newsworthy, especially at the tabloid end of the market. But recent events in the UK and elsewhere have led many to question whether the sex lives of celebrities can be afforded some degree of privacy protection from an intrusive media, or whether in the interests of press freedom, and the growing uncontrollability on online social media "reporting", they are simply fair game.

In the last few weeks the Ryan Giggs super-injunction affair in the UK has brought these issues to a head. Why all the excitement? Well until a few days ago, Giggs, one of the UK's best known soccer players, was the mysterious unnamed figure who had successfully been granted a so-called super-injunction by the English courts. The injunction had been given to protect Giggs' privacy in the wake of an attempted kiss-and-tell story by Imogen Thomas, a former reality TV star, who claimed to have had an affair with the married, and previously squeaky-clean, soccer star. It not only prevented newspapers from reporting the story but also from even referring to the injunction or the claimant.

Super-injunctions like the one granted to Giggs have become the legal instruments of choice for individuals and companies in the UK looking to prevent their activities from being reported in the press. They are granted by the courts to protect privacy under the Human Rights Act. The newspaper industry is predictably waging a war of words against them because they shackle some of the traditional freedoms that they are used to and which they rely on to act as the fourth estate. Super injunctions also raise the hackles of the public because with a price tag that starts at something like US $100,000 they appear to allow special legal treatment for the rich and famous. Moreover, as the Giggs affair and the 2009 pollution case of the oil company Trafigura have shown, the rise of social media platforms such as Twitter through which stories can be circulated outside the remit of the formal TV and newspaper industries, the limits of existing legal protections for privacy are being severely tested. Giggs' name was connected to the injunction through Twitter long before the press could report on it, raising legal questions about the culpability of Twitter and it's tweeters for being in breech of the injunction.

There are all sorts of ethical questions arising out of this, but from our point of view, it largely boils down to the question of when our sex lives should be private and when could or should they also be public knowledge? Let's sort out some of the considerations here:

1. Consent
Obviously the starting point here is consensual sex between adults. Coerced sex or sex crimes fall into an entirely different realm of privacy. The media has a legitimate right to publish in these cases provided legal protections for victims and the accused (which differ between jurisdictions) are respected. But clearly Dominic Strauss Kahn's alleged assault on a hotel chambermaid should be held to a different standard of privacy than his consensual affairs. Affairs with subordinate employees, even when supposedly consensual, might fall somewhere in the middle given the power dynamics involved.

2. Public interest
Where there is a potential public interest at stake the media also has a stronger case for investigating and publishing, such as where politicians campaigning on "family values" are accused of marital infidelities, anti-gay advocates are caught with rent boys, or legal enforcers break the law by paying for sex. A weaker but sometimes defensible case can also be made for leaders in a position of authority and trust whose trustworthiness might be questioned when extra-marital affairs come to light. The sex lives of celebrities rarely have a public interest component .... however much the public may be interested in hearing about them!

3. Privacy vs free speech
In the absence of coercion or public interest, there is much less chance of the press claiming a prima facie right to publish. Privacy (and after all sex is pretty private) will usually trump rights to speech unless free speech can lead to other public benefits. It's a matter of avoiding harm being prioritized over some fairly minimal free speech benefits.  The media may claim that the right to privacy is critically weakened in the case of marital infidelities and other ethical infractions. But even the unjust should be able to expect justice.

4. Harms and benefits
Without public interest, for the equation to fall on the side of publishing, there will often have to be some meaningful moral benefits for one or more of the parties to the "private" act. A spurned lover with an illegitimate love child for instance might be looking to tell their side of the story in the media and thereby gain some kind of apology or recompense from a celebrity. Here the ethical equation between speech and privacy should shift more convincingly towards publishing.

5. Reasonable expectation
Where the waters really get muddied is in the question of reasonable expectation. Privacy is typically attributed when there is a reasonable expectation that something will remain so. A telephone call or a conversation in a private residence should reasonably be expected to remain private, for example. That is why the UK newspaper, the News of the World, is in such hot water for it's illegal phone hacking of celebrities. These conversations took place in a reasonable expectation of privacy and should remain that way unless one of the participants chooses otherwise. But phone hacking is a case of the ethics of media tactics. A newspaper offered a story by a willing kiss-and-tell informant is very different. Here it is one of the participants looking to rewrite the "contract " of privacy established between themselves and their sexual partner. And in this case we have to ask ourselves whether soccer stars and other celebrities really have a reasonable expectation that their affairs with glamour models and reality TV stars will remain private. However much they wish it to be the case, there appears to be a lot of evidence to the contrary. Sure, this may be a case of a highly pragmatic interpretation of rights to privacy, but it's in the real world, a world of privacy for sale that we increasingly find ourselves in. Celebrities should be protected from direct intrusions into their privacy by the media. But maybe they should not be protected from their own decisions about who to be "private" with in the first place.

Photo by AtilaTheHun. Reproduced under creative commons licence

Google vs China: upping the ante on industrial espionage

One of the big business ethics stories of the last month has been Google's announcement in mid January of a 'new approach to China' following reported attacks on the company's IT infrastructure from inside the country. Google's announcement spoke of targeted attacks on the email accounts of known human rights activists, both within and outside China, as well as other security breaches of Google and 'at least 20 other large companies'. Whilst the announcement of this degree of hacking would have been cause for concern, the explicit link to the surveillance of advocates of human rights in China was positively incendiary. Google was not just talking about regular industrial espionage here but about state-sponsored spying for political purposes. So suddenly the company had launched itself into a diplomatic row - albeit one between a company and a government - rather than its usual commercial scrapes.

The announcement didn't just make the headlines because of Google's allegations though. The company dropped another huge bomb by declaring that it would no longer continue to operate a censored version of its search engine in China - despite being required to by the Chinese authorities. 'Over the next few weeks' the company announced, 'we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.'

Since the furor over Google's announcement blew up a couple of weeks ago, numerous commentators have offered their view on what's going on. Many have focused on Google's ongoing troubles in securing in market leadership in China, (suggesting that the human rights concerns have been used as a smokescreen behind which to withdraw gracefully from a commercial failure), while some have presented it as a belated switch to principled behavior. Some have even reckoned that Google is using the publicity around the announcement to build awareness and brand loyalty in China. Working out the motivations of the company in picking such a huge fight in one of the world's most important markets is never going to be easy.

Three things that have particularly stood out for us though in all this are these, and we think they offer some salutary lessons for the brave new world of business ethics that is starting to emerge.

1. Google the 'political corporation'. Google clearly feels big enough and powerful enough to pick a fight with one of the most powerful governments in the world.... over human rights. On the one hand, this is great in that it means that we don't have to just rely on the government to protect our human rights. Some big companies (whatever their motivations may be) may also be willing to do some of the heavy lifting from time to time (at least when when it suits them). In some of our writings, we've refereed to this as the corporate administration of citizenship rights (yes, not the catchiest phrase we'll admit, but it does the job). On the other hand, isn't this an issue that national governments - especially the US Government - should be leading on, rather than, as Hilary Clinton did, simply backing-up Google once it has broken cover. Still, whatever one thinks about this Google is clearly feeling big and important ... and perhaps also starting to feel the heat that comes with such size. It could just be getting in quick before the ethical backlash over its mammoth reach begins in earnest. With its fingers in all kinds of free speech, privacy and intellectual property issues, Google is fast becoming the essential political corporation of the 21st century.

2. One step forward, two steps back for the Global Network Initiative. The global what??! If you've not heard of it, well you're not alone. In the latest bout of Google vs China, the initiative hardly even scored a mention in the media storm. However, the GNI was launched back in 2008 to much fanfare, and was promoted as the new approach that internet companies were going to deal with censorship issues after getting their knuckles rapped by the US government for bowing to the Chinese government's demands. Well, the 'new approach' before the latest new approach of course. As a partnership between Google, Microsoft, Yahoo and a score of NGOs and academic institutions, the GNI held out considerable promise for delivering a more responsible approach to a tricky ethics problem that frankly, was not going to go away fast. Fast forward to January 2010 and GNI advocates could well point to Google's announcement as proof that the initiative is starting to have a significant effect. After all, one if its members is making a major song-and-dance about its commitments to internet freedoms. The trouble is though, no one at Google thought to mention the GNI, or suggested that it played a role in its decision. More worryingly, one of Google's main partners in the initiative, Microsoft, publicly criticized the company for it stand in China. Oops, hardly a hallmark of a strong partnership.

3. Industrial espionage goes up a level. First, spies worked for governments, just like in the old movies. Then they worked for companies ... in fact just like in the (new) movies, such as the 2009 Julia Roberts' release Duplicity. But some of the big news stories now in industrial espionage involve both companies and governments. It's a kind of semi-industrial espionage. The Google story was just the latest and best known incident of this government-business espionage, but clearly its becoming an increasingly prominent feature of the contemporary business landscape. Just this last weekend, the Sunday Times in the UK reported on a leaked British security service document accusing China of bugging, bribing, and blackmailing UK business executives in an attempt to secure commercial secrets. Notably though, here the warning came not from a multinational corporation, but from the national security service (the irony of MI5 warning against spying was not lost on many of the newspapers' readers who commented on the story). Either way though, as these incidents suggest, the stakes being played in industrial espionage have been significantly raised. The question, of course, is how best to respond ... and whether governments or companies should be leading the line.


Photo by Mykl Roventine. Reproduced under Creative Commons Licence

A step forward for technology companies and internet freedoms

If you've been following, as we have, the story of internet companies being implicated in human rights abuses around privacy and freedom of expression - see one of our earlier blogs here - then you'll be interested to see that Yahoo, Microsoft and Google, three of the companies most in the firing line on these issues, have launched a new multi-stakeholder program, the 'Global Network Initiative' aimed at tackling the problem.

This has come in a little under the radar, as there has not been much news of these developments in the business press leading up to the launch, but it appears to have arrived as a pretty well worked out program. With a tagline of "Protecting and Advancing Freedom of Expression and Privacy in Information and Communications Technologies", the initiative is a partnership between tech companies, human rights groups, academic institutions, and other institutions involved in media and communications freedoms. It has a set of principles, guidelines on implementation, including a commitment to human rights impact assessments, and a built-in review process. Most importantly, there is also a commitment to institute independent monitoring of companies' compliance with their commitments (though not, as far as we can tell, a commitment to report publicly).

It is, it has to be said, a difficult area to navigate for technology companies. Dealing with overseas governments can raise a host of problems that they are ill prepared to deal with, especially when they are operating overseas through a subsidiary or joint venture. So the initiative is certainly welcome. It establishes a clear framework for action that should make a meaningful difference to decision makers inside the organizations concerned. Of course, the devil will be in the detail of how such principles will be realized in practice. Especially interesting in this respect for us are the commitments to actively lobby governments to shift their expectations and demands:

"Participating companies will encourage governments to be specific, transparent and consistent in the demands, laws and regulations (“government restrictions”) that are issued to restrict freedom of expression online.

Participants will also encourage government demands that are consistent with international laws and standards on freedom of expression. This includes engaging proactively with governments to reach a shared understanding of how government restrictions can be applied in a manner consistent with the Principles.

When required to restrict communications or remove content, participating companies will:

• Require that governments follow established domestic legal processes when they are seeking to restrict freedom of expression.
• Interpret government restrictions and demands so as to minimize the negative effect on freedom of expression.
• Interpret the governmental authority’s jurisdiction so as to minimize the negative effect on to freedom of expression."

There are so many tricky details in that one passage alone, but it is heartening to see that the participants seem to be fully aware of the complications. As the Wall Street Journal blog, China Journal, put it:

For the most part, however, members decided not to include specific rules on issues such as where to host servers — outside servers can keep data out of problematic territories — because they felt that fast-changing technology might make them quickly irrelevant.

“The idea is that we believe the guidelines will need to be reviewed, and we will have to revise them as we take into account the actual experience,” says Sharon Hom, the executive director of Human Rights in China, which also helped develop the framework over two years. “It envisions an ongoing process of learning and sharing best practices,” she says.

So, there is still a lot to work out as the initiative unfolds. Let's just hope that Microsoft, Yahoo and Google can stay friends long enough to do all that mutual learning and sharing before they fall out with one another again...

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.

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.

Good news from China

We have been talking about China quite a bit recently. Not only on this blog, but also in numerous discussions and emails with our current and former students, various issues around the Olympics have come up. One of the sentiments voiced particularly by our Chinese readers was that it is quite hard to be Chinese these days. With all these critical questions asked about the politics of the country the debate can all too easily sound as if it is about bringing an entire country and its people wholesale into discredit.

Believe us, with one of the authors of this blog coming from a country with quite a notorious legacy in the 20th century, we can empathize with that feeling. Therefore, the more we are happy to report some interesting news on China and business ethics this week.

On Thursday, it was front page news in the New York Times that Chinese authorities successfully broke up a child labor ring in southern China’s Guangdong Province. More than 100 children between 13 and 15, often kidnapped from other parts of the country, were liberated from ‘captive, almost slavelike conditions and minimal pay’.

The article demonstrates a growing concern for human rights among Chinese authorities. It also provides an interesting perspective on the ethical issues involved. One factor is the sheer size of the country, which makes it tricky to enforce even the best intentions of the central government. Furthermore, it highlights that despite China’s economic boom, considerable parts of the population are still living in relative poverty and that cheap labour from rural China is in much demand from coastal regions feeling the pinch of rising costs.

These things take time, as we in the west should know all too well. In our business ethics book (p.298) we discuss Tom Donaldson’s argument that in applying human rights to a situation, the general context of economic development has to be taken into account. One or two centuries ago, European or North American children indeed played a key role in contributing to the family income, just think of Charles Dickens’ novel ‘Oliver Twist’.

The article also puts this governmental crack down in the context of the Olympics. As unpleasant as all this international criticism might be – it obviously has an effect. And as predicted earlier in our blog, businesses are in the front line if it comes to the locus of change. Perhaps most heartening of all though is that details of the child labour ring were uncovered by the Chinese media, not the usual suspects from overseas.

During the cold war, progressive political leaders such as the famous Willy Brandt were vilified for their ‘change through rapprochement’ politics between West and East. Arguably, by hindsight this was a key element in bringing down the Iron Curtain. It seems that with China, the same strategy might work. That’s why hosting the Olympics, maintaing close economic ties, and encouraging media freedoms, could be key for the journey ahead.

On a more personal note, Crane and Matten had other good news from China this week. Brokered by one of our students, a leading Chinese University Press has taken up discussions with our publisher to prepare a Chinese translation of ‘Business Ethics’! We keep you posted on these developments. But no promise yet that we will ever master a Chinese blog for that one…

Giving olympic sponsors a sporting chance?

For those of you that have been following our entries on the upcoming Beijing Olympics, we thought this article, "Navigating Olympic Sponsorship: Marketing Your Brand without Alienating the World" from the Wharton School of the University of Pennsylvania might be of interest (thanks to Elizabeth Watson for alerting us to this one). It gives a good overview of some of the issues that the Olympics' corporate sponsors will have to juggle in the face of the political protests. As one of the Wharton professors comments in the article:

"Corporations that want to sponsor the Games have to navigate the political undercurrents ... I wouldn't be surprised if many underestimated the potential for [the Games] to turn into an international issue and thought instead, 'We can reach a billion eyeballs; the political stuff will just go away. But politics isn't about money. It's about hope and fear and common purpose and identity."

As the article rightly says, it is hardly surprising that the Games are a political focal point, and indeed, they often have been over the years. The difference now though is that the politics are far more embedded in economics than they once were. What with China being such an important trading partner for many corproations, not to mention the huge sponsorship deals involved, the incentives to avoid rocking the boat are there for all to see.

As we've already said, it's a little too early to tell what the consequences are going to be for the corporate sponsors, but one potential outcome mooted in the Wharton article may just be rattling a few nerves at Coca Cola, McDonalds, Volkswagon and the other sponsors. As anyone who has visited China will be aware, broadcasters in the PRC have a definite proclivity to black-out broadcasts at the slightest suggestion of anything controversial. After spending billions on sponsorship, the last thing the multinationals will want to see is a blank screen. Well, that's not counting the potential for "an unlucky photo or video clip of, say, Chinese police cracking a protester over the head in Beijing with a General Electric, Johnson & Johnson or Visa logo in the background". Unlucky? Or it just part and parcel of the heady brew of business, politics and sport?

Nike, China, and the Olympics

It looks like the 2008 Beijing Olympics are shaping up to be a major occasion for discussion of all kinds of social, ethical, and environmental issues. From human rights, to pollution, climate change, and a whole host of other issues, campaigners and activists are using the global pulling power of the Olympics to focus on some of the darker sides of the Chinese economic miracle. We've already had the Hollywood movie director Steven Spielberg resigning from his role in the games in protest against China's support for Sudan in the wake of the Darfur crisis. And, with corporations taking an ever greater role in global sporting events like these, we can expect the anti-corporate movement to get in full swing for a summer of olympian protests.

Some companies though are taking the lead in getting their story straight early. Nike is one of the forerunners here with the recent publication of a China supplement to its corporate responsibility report, 'Innovate for a Better World'. It makes for interesting reading.

To begin with, the report makes it clear that Nike and China's fortunes are inextricably linked. Not only are a third of all Nike shoe's produced in China, but China has also become the company's second biggest market. Mark Parker, the Nike CEO and President has this to say in his introduction to the report:

"For Nike the Beijing Olympics provide an opportunity to share China’s importance to our business. China produced 35 percent of Nike’s footwear in fiscal 2007 and is a substantial sourcing market for our apparel and equipment. This year we’re on course to achieve $1 billion in sales – making China our second largest market outside the U.S. China is key to our continued growth and success. Nike and China will succeed together."

Make no mistake, Nike needs China right now, probably more even than China needs Nike. So for Nike it is critical for the integrity of their hard won, newly minted reputation for corporate responsibility that the Olympics do not go seriously awry when it comes to ethical issues. And getting their defence lined up before the criticisms come flying in looks to be a good strategy at this stage. Nike isn't just sitting hoping that it doesn't get fired on, but is actually putting its head above the parapet and publishing data to show whats going right with their China operation. OK, so its less expansive about what's going wrong, but that's hardly much of a surprise. And taking the step to publish the report in the first place - and to make sure it is based on documented evidence - is interesting in itself as a strategy to try and diffuse the potential problems that might arise as the world starts focusing its attentions on China during 2008.

Nike has had to learn the hard way that defensiveness and secrecy in the face of ethical criticisms isn't always the best option, so we shall see if this new approach to transparency works out the way they're hoping. There is always the danger of course that by drawing attention to their operations in China, Nike just ends up as the main focus of attack - or even that it spurs their critics to dig even further to find some bad news. But, from where we are sitting now, it looks like a good way to start getting ready for a summer of considerable heat.

Like many other texts, our new CSR textbook includes a case on Nike's adventures in Asia, so it will be interesting to see how this next chapter turns out, and whether the Olympics comes to be regarded as a case study of Nike's increasing confidence in this arena, or an own-goal that teaches us all something new about the perils of conducting responsible business in China

Mining is bad! Or is it…

This last Saturday, there was the annual ‘Business and Human Rights’ conference of Amnesty International in Toronto. It was an inspiring event. The turnout of 150 activists and interested citizens was quite amazing (given it was a Saturday, with piles of snow and freezing temperatures in Toronto…) and was vivid proof of business ethics issues being at the core of what ‘normal people’ worried about this day and age.

The day focused on the mining industry, one of the strongest part of the Canadian economy. Canada has the biggest number of mining companies in the world most of which are active in developing countries. Amnesty International (AI) is in no short supply to provide examples of blatant environmental disasters and human rights abuses committed by these So it came to no surprise that our panel, next to a Schulich professor, featured an activist from a Canadian group, Mining Watch, and Ulises García from Peru whose father was assassinated six years ago while leading a campaign against a project by the Canadian mining multinational Manhattan Minerals Inc. (check out his movie 'Tambogrande - Mangos Murder Mining').

In a situation like this it becomes overly obvious that there are no easy answers to most business ethics questions. The activist’s presentations left little doubt that the ethical record of the mining industry is pretty dismal. It appears, that most of the commodities extracted within the last decades from, in this case, Latin America have been dug out largely without any concern for the environment, property rights, health, economic development and safety of local communities. So, the diagnosis was pretty clear, but what were the solutions presented?

The predominant feeling in the room appeared to be that mining is intrinsically bad and should be stopped – period. However, to call for this sitting in a spanking new and shining conference centre in Canada most of which is in some way or the other a result of mining is somewhat, say, daring. It is certainly elitist, given the fact that most of the living standard of countries in the Global North is based on mining in some way or the other. Refraining from mining then would not only be somewhat impractical but would also deny any economic development to the Global South, where mining often is the only potential source of income for local communities.

Ulises’ suggestion was to allow mining only if the mines are wholly owned by the workers. As brilliant as it sounds, this is ridden with problems as well. After all, mining is high tech business and – loathe it or hate it – multinational mining companies are the only ones who have that technology. This became overly clear in the context of the newly elected Bolivian president attempting at expropriating western oil multinationals a couple of months ago. So corporations – as in many other areas such as pharmaceutical research or environmental technology, have a role to play.

But which one? Here comes the point where you always feel a bit flaky as a business ethicist. In a complex, globalized world there are no easy solutions! For starters, NGOs like Amnesty and others are vital in drawing attention to what corporations do and to put them under pressure. Without this pressure, nothing will move and we need more of it. It is encouraging to see how multifaceted their approach is – from direct action, over shareholder activism up to global education and campaign initiatives: there is an entire arsenal of approaches to address these issues. We also need more aware and socially conscious managers; many of these corporate decisions are taken at office desks in the Global North without any awareness of the ethical, social and environmental impacts on the ground.

But we also still need strong and accountable governments. It is frustrating to see how little, for instance, the Canadian government seems to care about regulating and holding to account their domestic companies. It is very unlikely that these companies will leave Canada if the government stepped up its regulation – the more it is incomprehensible why the government acquiesces in this situation. And there need to be more pressure on host country governments, as many of these ethical problems often occur because local governments are corrupt and disregard the interests of their people.

There are many more things which could be done. Why dont you tell us your ideas on this issue!