By Julia Bowling and Neda Said, Contributing Writers
Research conducted under Dr. Jorge Mongay of the Autonomous University of Barcelona
Until a decade ago, the concept of ethics was difficult to find in business school education. Today it appears often in the form of chairs or entire departments. The term most commonly used is Corporate Social Responsibility (CSR). Although these 3 three words are easy to define individually –– together they represent an intriguing but vaguely defined facet of business ethics.
The term CSR helps multinational corporations demonstrate to society, interest groups, shareholders, customers, suppliers and influential allies that they are ethically responsible regardless of where they operate. This assumption is very important when these corporations present the goal of appearing in ethical investment funds, such as Dow Jones Corporate Sustainability Index Group.
But, what does it mean to be ethically responsible? We must start by stating that it is not the same to do the things correctly and to do the correct thing. The first statement refers to the idea of doing things that are legal in certain environments, for example to comply with the local law. The second statement goes beyond, it refers to the fact of doing what managers know is good, correct or desirable even if this reduces potential profitability.
CSR is crucial to ensure that customers, investors and stakeholders take into account companies’ social impact. These groups, crucial to companies’ success, are increasingly avoiding business with companies that damage people or lands, regardless of whether the negative impact is far away from the company’s main markets and country of origin. Several boycotts and embargoes have been created in protest of specific countries and companies due to the ethical implications of their work. These boycotts move quickly by Internet, email, and modern social media. How often do we receive emails alerting us about illegal issues, conspiracies, and evil corporations? In certain environments and for certain brands, the cost of not doing things ethically can be devastating.
Despite recent democratic reforms, Burma has been ruled by one of the most brutal dictatorships in the world. It ranks at 180 out of 182 world countries for corruption and it is the worst country in the world in the following aspects: democratic participation, government efficiency, accountability, human rights, political stability and rule of law (CIFP, University of Carleton, Canada, 2007)(Transparency International, 2012).
It is demonstrated that the government rapes, burns, tortures and kills its own citizens, including children, in a systematic way and on a daily basis. Ethnic genocide has been known to occur in this country of cultural and ethnic diversity. The military junta that controls the country spends billions of dollars in weapons and ammunition while investing an average of 50 cents per person in healthcare. The majority of the population lives in terrible conditions, without access to running water, education or medicines.
Aung San Suu Kyi, the leader of the National League for Democracy, Nobel Prize Winner, and true leader of the Burmese people, has been under house arrest most of her life. She won the general elections of the country in 1990 with 82 percent of the votes, but the military junta did not accept the results. In Burma the utilization of forced labor is commonplace, more than 1 million people have been displaced from their homes, and 2300 political dissidents were still in prisons under inhuman conditions. However, some were released at the beginning of this calendar year. The Burmese government allocates 40 percent of its budget for military expenses while around 1 percent goes to education and health. Despite some recent changes that point to potential for increasingly democratic processes in Burma, the coercive control of the military is still in place and further aided by foreign investment.
Burma is a country with no voice. People whisper in silence for help but the Western world and the UN have not responded. The recommendations by the UN and Aung San Suu Kyi are very clear: boycott companies investing in Burma. An investment in Burma is an investment in the military dictatorship that is actively harming the people. Every company, investment, tourist and dollar that gets into the country strengthens the brutal regime.
In our research, we found that 21.4 percent of companies operating in Burma have Corporate Social Responsibility pledges. These pledges, posted on company websites, claim to prioritize human rights, while in fact they are inevitably cooperating with the brutal military regime. Companies investing in Burma are mainly involved in tourism (17.6 percent), and extractive industries: timber, primarily teak logging (4.9 percent), and oil and natural gas (8.8 percent). While some industries are less directly exploitative of land, resources, and labor, all operations in Burma financially benefit the regime; consequently, all industries further substantiate the junta’s power to oppress the Burmese people.
Extractive industries involve junta security forces, displacement of rural ethnic minority peoples, and forced labor practices. Chinese oil and gas companies China National Petroleum Corp (CNPC), China PetroChemical Corp. (Sinopec), China National Offshore Oil Corporation, Limited, China Oilfield Services, and PetroChina, as well as Chevron (U.S.A), Total (France) and PTTEPP (Thailand), have major investments in pipeline construction. At construction sites, junta soldiers are mandated as security forces, environmental degradation is commonplace, and forced labor, village relocation, and payments to the junta are demanded. The corporate engagement and direct financial support maintain the economic and political power of the military regime. Despite their involvement, Total, Chevron, PTTEPP, and 80 percent of the Chinese oil and gas companies investing in Burma have detailed CSR claims.
The major multinational oil and gas corporations often cooperate with the junta to engage in the atrocities such as the mutually beneficial pipeline construction. While this may seem to be the only major hypocrisy with their overly philanthropic CSR claims, a litany of issues have been recorded. However, in company correspondence with Global Unions, a group that compiled a database with correspondences from companies that invest in Burma many companies claim their investment is minimal or non-extractive and therefore not tied in with the junta. Although the biggest financial investors are the most influential, non-extractive industries give false CSR claims while supporting the junta through less direct means, and any involvement is a violation of such claims. Similar to oil and gas, teak exploitation is ethically and environmentally controversial, as it can involve forced labor and relocation, endangered species extinction, and destruction of the last teak forest habitats. Burma’s teak forests cover 80 percent of the internationally traded teak, escalating the value, foreign interest and internal corruption surrounding teak logging. Tourism seems to cause less harm than extractive industries, as it only occasionally directly demands forced labor. However, Aung San Suu Kyi has repeatedly discouraged tourists from visiting Burma, as the industry still contributes to political and economic power of the junta. Although several companies explain that they only coordinate with locals and avoid corporations, the junta still profits from each visitor’s entrance fee and inevitable purchases in Burma.
The world powers are greatly influenced by powerful multinational corporations, and are therefore hesitant to address the problem of Burma. The European Union cannot exert more pressure on the regime without full support of all European states. Unfortunately, the multinational European corporations with economic power and political sway limit the power of the European common position on Burma. Although the United States’ Burmese Freedom and Democracy Act has outlawed Burmese imports since 2003, shipping, manufacturing, oil and gas, information technology and tourism industries seem to circumvent this act (Burmese Freedom and Democracy Act, 2003). To make a difference in Burma, the multinational corporations that have political weight with influential world powers would have to prioritize human rights in action as well as in written promise. Unfortunately, economic profit surpasses human rights in corporate investment priorities, and CSR statements remain good intentions and empty promises.
Perhaps the most intriguing outcome of our research was the problematic, self-defined CSR statements that prioritized concepts other than human rights. Philanthropic aid to education and health sounds good on paper. However, when aid donations are simply a percentage of profit gained from forced labor, uncompensated relocation, and other human rights violations, this aid is irrelevant. Accountability to investors, stakeholders, business partners, and employees, does not constitute CSR. These statements must be monitored according to consistent legal requirements. In order to be effective, CSR should be adhered to in all environments, for all employees, and in all locations, specifically pertaining to fair wages and working conditions in accordance with human rights. Formal legal validation is necessary to improve the efficacy of CSR claims. Change is possible for Burma, if the multinational corporations that claim corporate social responsibility put their words to action.
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