Last month marked the symbolic anniversary of the ‘Arab Spring’. If the geopolitical events of 2011 have shown global firms and brands anything, it may be the significance of having a coherent principled position explaining where they stand when bigger issues -- democracy, human rights, human security, and the rule of law -- are acutely at stake.
That is, such firms increasingly need a ‘corporate foreign policy’: not just a strategy for operating in various countries -- aside from contingency plans, firms always need to negotiate and sometimes compromise with host governments -- but a considered and clearly communicable position on where they stand should great controversy arise, or good conscience lay some claim.
These dilemmas are particularly acute in countries with weaker democratic credentials, but many firms respond in an ad hoc fashion, risking either their reputation with customers or their relations with governments, or both. This is an interesting and evolving aspect of the work we’re developing, and the subject of an unpublished paper by Prof Tim Fort and my colleague Dr Stephanie Hare. They focus on the choices faced by internet and social media companies -- whose services are used by activist, opposition and civil society groups as a platform for protest and publicity -- when governments seek to close down such virtual (and often virtuous) public spaces:
- They document how Google coded a ‘speak to tweet’ application for Twitter, a notable part of the social protests, while Facebook carried postings of text and images from protesters in Cairo’s Tahrir Square.
- They contrast Vodafone and France Telecom, who complied with government requests to shut down their network, and later re-opened the network, allowing the government to send mass text messages to customers of these networks, attempting (unsuccessfully) to counter protest sentiment.
CARS AND CRANES
I’ve been meaning to blog on this for months...:
· Then yesterday came a report that General Motors has settled a civil suit brought in the US as part of the long-running ‘apartheid reparations’ set of cases by South African claimants. These groups allege that major companies which did not sever commercial relations with the apartheid regime ought to be considered liable for human rights abuses committed by the South African government, including on the basis that their operations helped the state self-finance.
· This week too the US Supreme Court has been hearing arguments in the Ogoniland (Nigeria) cases of whether a corporation (there, Shell) can be held liable for human rights violations under a US statute giving jurisdiction in US courts for civil wrongs committed in violation of international law -- such as torture -- wherever these occur.
The jurisprudence on these issues is vast and complex, and they're covered exhaustively elsewhere. For many firms, the practical prospective question is how to avoid incurring liability at all -- whether in some future court, or in the court of general public opinion, where corporate reputations are made and lost.
Recently, US states that apply the death penalty turned to Danish chemicals firm Lundbeck AS for supplies of sodium pentobarbital and other chemicals used in lethal injections after the British government barred its firms exporting chemicals for such use. Lundbeck requested US authorities not to use its products thus, but argued that it was impractical for it to boycott certain markets (trace how its chemicals are used). The point here is mainly that Lundbeck staff probably had no sense that they would suddenly be thrust in the spotlight, or a thorough policy position on the death penalty.
A more recent prompt for finally penning this blog also concerns the death penalty. It was seeing a photo in the Sunday Times of February 26 showing a public hanging in Iran: a man dangling from a commercial crane arm. In the context of concerns about the Iranian penal system, the practice of using cranes for state executions there has forced foreign crane-building firms to reconsider Iran as an export market.
SOUTH AFRICA TO SWAZILAND
The issue has already arisen twice this year in the region I cover most closely, southern Africa:
· Among Coca-Cola’s largest bottling operations in Africa is its Swaziland one. When the firm ran a birthday message for King Mswati III -- the continent’s last absolute monarch -- exiled Swazi democracy activists criticised its perceived explicit support for the king during ongoing suppression of free political activity in Swaziland.
· South Africa’s continentally-active mobile phone firm MTN is now in the spotlight on allegations that in order to win a tender for running a state-owned phone network in Iran, it sought to influence the South African state’s foreign policy position on Iran in the UN Security Council and elsewhere. A defeated Turkish bidding firm made the allegation that MTN asked Pretoria to ensure a relatively soft stance was taken on nuclear and other issues.
Both MTN and Coca-Cola are no strangers to the challenges of operating in a wide range of places with all manner of host governments. MTN vigorously denies any wrongdoing, and Coke’s Swazi operations support livelihoods for many locals at a time of particular economic hardship in the kingdom; operating there requires cordial relations with the royal household (and can conceivably enable a moderating influence on regime conduct). The cases don’t so much say anything about the particular firms as they do about the significance of firms ensuring they accept (and can readily and persuasively explain) the reputational and other risks they run by choosing to operate wherever they do. Things can change quickly in hitherto peaceful investment climates.
POLICYMAKERS?
There is a somewhat troubling dimension -- a theme mentioned in my first ever blog -- to the ‘corporate foreign policy’ idea: isn’t part of the concern that the private sector already has too much influence on government policy in ways that the public does not always see or understand? On a strict view, elected governments make ‘policy’ -- corporations have business strategies. Also, giving ‘corporate foreign policy’ a name should not obscure that many global firms have wrestled with these issues for decades (as indeed the apartheid divestment campaigns in the 1980s showed).
But what we’re talking about here is globally-operating firms (especially brand-sensitive ones) thinking strategically about what their position is, and should be, on controversial positions taken by foreign governments in countries in which they operate; many of these will not be democratic countries in the above pure policymaking sense. And while these dilemmas are not new ones for companies, the instant / social / mobile media age increases the fallout radius and urgency of corporate ‘foreign policy’ foul-ups.
Global brands are operating in ‘the worthiness age’ (see Bassi et al’s Good Company, BK, 2011). It is one reason for setting up this blog; so while it is important to monitor inappropriate blurring of corporate and governmental foreign policy, the more firms that adopt a considered view of their operations and attempt worthy outcomes, the better. And it feels good to advise those firms open to asking these questions.
Jo Ford
Ps – I note that a blog called ‘corporate foreign policy’ exists, although I don’t necessarily agree with all its views.
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