For a blog exploring the intersection of private sector activity and public interests, last week's police-mineworker shootings in South Africa reflect key issues and dilemmas in their starkest -- and saddest -- form.
The widely reported police shooting of over 30 illegally striking workers near Marikana platinum mine northwest of Johannesburg -- unprecedented in the post-apartheid era, but sadly and eerily reminiscent of it -- is still resonating through South African society and politics.
Much has already been written and said; with funerals, trials, public inquiries and attempted mine-reopenings ahead, much is yet to be done and said, including at the level of national politics.
Yet since this is a blog called 'Private Sector - Public World', I feel obliged to offer some further insight. After all:
* The shootings -- and the week leading up to them -- illustrate the complex blurring, by no means limited to South Africa or indeed mining, between what is a labour relations issue (involving government-regulated processes, but in essence a matter between the employer and workers) and a public order one; between an issue managed simply by mining private security and a serious policing issue; between pay-related demands on one particular site and politics-related debates at a national level.
* This area of the country has seen mines develop at a far faster pace than the provision of related social infrastructure; much of what is provided for workers, families and hangers-on comes from the firms themselves. Well before the shootings, the Rustenberg area threw into sharp relief the duties and dilemmas of firms and governments in providing public goods -- in relation to a sector (platinum) highly vulnerable to significant global economic downturn.
[In the most recent post, I'd speculated whether a possible wider downturn across mining sectors would result in increasing frequency and intensity of protest action, as margins narrow (for firms) and expectations are dashed (for existing or want-to-be staff) -- see here].
The above factors suggest Marikana is a test case of what it means for a private firm to operate in the very centre of the spotlight of public concerns.
Yet it is not clear to me what one can sensibly add, in terms of the subject-matter of this blogsite, to the various media and commentator reflections to date on the Marikana shootings.
One risk to avoid is armchair / analyst arrogance. At the office during the last few weeks we've forced ourselves again to note how 'resolving' the Syria crisis is not simply a question of policymakers seeking analytical clarity and then acting accordingly: the issues are hard, hard, hard; events run of themselves, with multiple considerations and variables; we know far less about the future than we like to pretend.
So it is with my thoughts about Marikana for this blog ...
... For clients' purposes, we are obliged to offer what insight we can about what this means, for instance, for near- and longer-term ANC politics, or debates on mining sector transformation in South Africa (on which see past posts on nationalisation and resource nationalism, e.g here).
... For the purposes of this blog, is it enough to say that Marikana shows that, all analysis put aside, the issues arising for private firms operating in an inevitably (sometimes starkly) public world are sometimes just hard, hard, hard?
Admitting as much is not just an act of easy abdication of the role of analyst. It is a reminder of the difference between armchairs and hotseats.
Boardrooms need armchair analysts -- potentially valuable sources of dispassionate objectivity -- but the most visible and vital intersections of business and society will often occur at close range, move quickly, and -- yes -- be truly difficult.
Jo
Sunday, 19 August 2012
Thursday, 9 August 2012
Corporate diplomacy in Africa: austerity and downturn
The effects of the current era of budget austerity on the capacity of state foreign diplomatic services raises interesting questions and dilemmas about corporate diplomacy.
I here mean firms, mainly in the extractive industries, engaging directly with their host governments on major public policy, reform and governance issues -- traditionally the remit of bilateral diplomacy or aid bodies -- and acting (or being perceived) as 'ambassadors' for their home country.*
The issues are ones both for public policymakers and for corporate strategists.
They are by no means new issues, and the idea (or rather fact) of major corporations acting to some extent as foreign policy organs of their home state attracts controversy about the notion of 'private empire' or improper influence, and questions about the proper extent of private authority. It is a topic I covered extensively in doctoral work, but is also closer to the heart: I was born in a country (Zimbabwe) established by a private crown-chartered shareholder company in the late 19th century...
So while the issues are not new, two events in the last week in countries I follow prompted this post:
* Zambia Local mineworkers caused the death of a Chinese supervisor during minimum wage disputes. If only in symbolic terms, this is a significant development in a country where the role of Chinese firms and businesspeople has created diplomatic difficulties for Beijing, with Zambia being seen as something of a 'test case' on the 'China in Africa' debate.
* The Sudans Last week too, news of the intended resumption of South Sudan's oil production (a key sticking point in tense relations with Sudan) came a day after Hillary Clinton's inaugural visit there.
The latter is interesting because while public diplomacy (Clinton, Thabo Mbeki and others) might appear to have broken the oil deadlock, it is equally plausible that this resulted also from pressure from firms invested or interested in the sector. Now in the Sudans these are principally Chinese firms, and distinguishing between public and private -- sometimes hard enough, historically, with major global energy firms -- is often difficult if not untenable in such cases.
(Angola's state-owned oil conglomerate Sonangol is a prime, emerging and African example of the seamless and unsurprising fusion of foreign policy with commercial aims).
However, the Zambia example involved a mine privately run by Chinese nationals. Beijing is conscious that many Africans will attribute the conduct of expatriate Chinese nationals to some grand design, whereas it can by no means be assumed that Beijing has interest in or influence or control over everything Chinese nationals do or dig up in Africa. Still, the mine incident shows how -- for better or worse -- private actors' conduct can affect public diplomatic relations.
Of course many former actual ambassadors and foreign service officials work in government relations for multinationals (part of the blur in this area, probably inevitable, and not necessarily problematic) -- but many corporate employees act de facto as ambassadors either by design or by locals attributing them that status.
For many Western countries, the issue arises sharply in light of the effects of current austerity regimes on the capacity of foreign services. My colleague Tom Wales last week published an interesting brief on how, as their global footprint has broadened, Canadian mining industry executives have increasingly been playing the role of de facto Canadian ambassadors in developing countries (eg technical and governance advice) even as austerity is shrinking Canada's formal presence in many of these countries.
Here one potential 'for better' upside to austerity's effects on public diplomatic capacity is that governments such as Canada's can harness the strengths, resources and influence of major firms in support of objectives from conflict prevention to building governance capacity in host developing countries.
Arguably, it makes sense for public policymakers to look for ways both to 'civilise' the conduct abroad of firms associated with the country, and to encourage firms to contribute to foreign policy objectives such as building local regulatory capacity in resource-rich poorer countries.
However, aside from the public policy risks involved in any such 'outsourcing' are the risks for firms: twin events involving fatalities in Guinea this week are revealing:
* In the north-east, locals protested in effect against the operations of a foreign-owned mine, saying it had attracted criminality to the area.
* In the south-east, locals protested in effect in favour of a foreign-owned mine, albeit aggrieved that its opening date had been postponed and hoped-for jobs not realised.
As we probably now enter a downturn in global commodities demand, the latter situation is more likely to be common and may test firms' diplomatic capacities, especially where they lack formal diplomatic assistance, just as provision of social services by firms can create expectations that prove difficult to manage.
Jo
* I would partly distinguish 'corporate diplomacy' from 'corporate foreign policy' -- though clearly related: see previous post here.
I also do not mean 'private diplomacy' (ripe for its own blog post, the now-prevalent role of private individuals and outfits, such as the Centre for Humanitarian Dialogue in Geneva, in attempting to supplement governments, the UN and other bodies by engaging in conflict prevention / resolution mediation and influence, and other forms of so-called third track diplomacy. For one slightly out of date mapping of these bodies, see here).
PS - Days after this post my good friend Dr Jabin Jacob wrote this on whether Indian and Chinese oil firms might lead (and moderate) the way and ways of their governments: here.
I here mean firms, mainly in the extractive industries, engaging directly with their host governments on major public policy, reform and governance issues -- traditionally the remit of bilateral diplomacy or aid bodies -- and acting (or being perceived) as 'ambassadors' for their home country.*
The issues are ones both for public policymakers and for corporate strategists.
They are by no means new issues, and the idea (or rather fact) of major corporations acting to some extent as foreign policy organs of their home state attracts controversy about the notion of 'private empire' or improper influence, and questions about the proper extent of private authority. It is a topic I covered extensively in doctoral work, but is also closer to the heart: I was born in a country (Zimbabwe) established by a private crown-chartered shareholder company in the late 19th century...
So while the issues are not new, two events in the last week in countries I follow prompted this post:
* Zambia Local mineworkers caused the death of a Chinese supervisor during minimum wage disputes. If only in symbolic terms, this is a significant development in a country where the role of Chinese firms and businesspeople has created diplomatic difficulties for Beijing, with Zambia being seen as something of a 'test case' on the 'China in Africa' debate.
* The Sudans Last week too, news of the intended resumption of South Sudan's oil production (a key sticking point in tense relations with Sudan) came a day after Hillary Clinton's inaugural visit there.
The latter is interesting because while public diplomacy (Clinton, Thabo Mbeki and others) might appear to have broken the oil deadlock, it is equally plausible that this resulted also from pressure from firms invested or interested in the sector. Now in the Sudans these are principally Chinese firms, and distinguishing between public and private -- sometimes hard enough, historically, with major global energy firms -- is often difficult if not untenable in such cases.
(Angola's state-owned oil conglomerate Sonangol is a prime, emerging and African example of the seamless and unsurprising fusion of foreign policy with commercial aims).
However, the Zambia example involved a mine privately run by Chinese nationals. Beijing is conscious that many Africans will attribute the conduct of expatriate Chinese nationals to some grand design, whereas it can by no means be assumed that Beijing has interest in or influence or control over everything Chinese nationals do or dig up in Africa. Still, the mine incident shows how -- for better or worse -- private actors' conduct can affect public diplomatic relations.
Of course many former actual ambassadors and foreign service officials work in government relations for multinationals (part of the blur in this area, probably inevitable, and not necessarily problematic) -- but many corporate employees act de facto as ambassadors either by design or by locals attributing them that status.
For many Western countries, the issue arises sharply in light of the effects of current austerity regimes on the capacity of foreign services. My colleague Tom Wales last week published an interesting brief on how, as their global footprint has broadened, Canadian mining industry executives have increasingly been playing the role of de facto Canadian ambassadors in developing countries (eg technical and governance advice) even as austerity is shrinking Canada's formal presence in many of these countries.
Here one potential 'for better' upside to austerity's effects on public diplomatic capacity is that governments such as Canada's can harness the strengths, resources and influence of major firms in support of objectives from conflict prevention to building governance capacity in host developing countries.
Arguably, it makes sense for public policymakers to look for ways both to 'civilise' the conduct abroad of firms associated with the country, and to encourage firms to contribute to foreign policy objectives such as building local regulatory capacity in resource-rich poorer countries.
However, aside from the public policy risks involved in any such 'outsourcing' are the risks for firms: twin events involving fatalities in Guinea this week are revealing:
* In the north-east, locals protested in effect against the operations of a foreign-owned mine, saying it had attracted criminality to the area.
* In the south-east, locals protested in effect in favour of a foreign-owned mine, albeit aggrieved that its opening date had been postponed and hoped-for jobs not realised.
As we probably now enter a downturn in global commodities demand, the latter situation is more likely to be common and may test firms' diplomatic capacities, especially where they lack formal diplomatic assistance, just as provision of social services by firms can create expectations that prove difficult to manage.
Jo
* I would partly distinguish 'corporate diplomacy' from 'corporate foreign policy' -- though clearly related: see previous post here.
I also do not mean 'private diplomacy' (ripe for its own blog post, the now-prevalent role of private individuals and outfits, such as the Centre for Humanitarian Dialogue in Geneva, in attempting to supplement governments, the UN and other bodies by engaging in conflict prevention / resolution mediation and influence, and other forms of so-called third track diplomacy. For one slightly out of date mapping of these bodies, see here).
PS - Days after this post my good friend Dr Jabin Jacob wrote this on whether Indian and Chinese oil firms might lead (and moderate) the way and ways of their governments: here.
Thursday, 2 August 2012
Responsible investing and corporate form
How does the form that a business or investment vehicle takes affect the likelihood and effectiveness of it pursuing and achieving responsible investment goals?
Last week the Johannesburg Stock Exchange (JSE) held a discussion on trends in responsible investment. The JSE is acknowledged as a world leader in developing listing and reporting requirements that in principle promote better achievement on (or at least attention to) non-financial performance (social impact, carbon footprint, and so on).*
Ostensibly, the publicly-listed company (especially in a bourse like the JSE) is the vehicle most susceptible to formal regulation and reputational harm and most likely to pursue a responsible investment agenda. In a previous post on 'The Public Company as Public Good' I questioned whether onerous listing and reporting requirements might drive commercial people to choose alternative business vehicles and ventures that are harder to scrutinise.
However, it can't be assumed that unlisted firms are less effective at or prone to responsible or impact investment choices (any more than it can be assumed that state-owned firms are more susceptible to regulation on such things).
At work we've done a study on the growing interest of non-traditional investors ('High Net Worth Individuals' and 'Family Offices') in African growth opportunities. Such (by definition unlisted) investors are usually highly mobile and opportunistic. With such investors there is often a far greater interest in explicitly pursuing, alongside decent returns, worthy social agendas. The highly private investor may be very interested in a legacy of public good through their investment choices, and have far greater direct control of their vehicle than the CEO of a listed company.
Of course, at the opposite end of worthy publicly-listed firms are the ultimate private enterprise -- organised crime. The point to ponder is whether enough research has been done (alongside all the business school research on what drives pursuit of sustainability within corporate governance practice, and the relationship between corporate responsibility and financial performance), on how the form of incorporation of a business shapes its capacity to pursue a responsible investment agenda.
Jo
* The notion of stock exchanges are regulators of public interest goals is fairly well covered in the literature. For a primer, see Hall and Biersteker (eds) The Emergence of Private Authority in Global Governance (Cambridge, 2002). My very first post talked of the regulatory pluralism and its potential.
My previous post hinted at the idea that, taken on their own, reporting requirements may serve to distort strategic planning and implementation on responsible business issues -- in the same way that, in my experience of working in an international development agency, consciousness of reporting cycles sometimes obscured attention to achieving objectives, even if it also disciplined us towards those objectives too.
Last week the Johannesburg Stock Exchange (JSE) held a discussion on trends in responsible investment. The JSE is acknowledged as a world leader in developing listing and reporting requirements that in principle promote better achievement on (or at least attention to) non-financial performance (social impact, carbon footprint, and so on).*
Ostensibly, the publicly-listed company (especially in a bourse like the JSE) is the vehicle most susceptible to formal regulation and reputational harm and most likely to pursue a responsible investment agenda. In a previous post on 'The Public Company as Public Good' I questioned whether onerous listing and reporting requirements might drive commercial people to choose alternative business vehicles and ventures that are harder to scrutinise.
However, it can't be assumed that unlisted firms are less effective at or prone to responsible or impact investment choices (any more than it can be assumed that state-owned firms are more susceptible to regulation on such things).
At work we've done a study on the growing interest of non-traditional investors ('High Net Worth Individuals' and 'Family Offices') in African growth opportunities. Such (by definition unlisted) investors are usually highly mobile and opportunistic. With such investors there is often a far greater interest in explicitly pursuing, alongside decent returns, worthy social agendas. The highly private investor may be very interested in a legacy of public good through their investment choices, and have far greater direct control of their vehicle than the CEO of a listed company.
Of course, at the opposite end of worthy publicly-listed firms are the ultimate private enterprise -- organised crime. The point to ponder is whether enough research has been done (alongside all the business school research on what drives pursuit of sustainability within corporate governance practice, and the relationship between corporate responsibility and financial performance), on how the form of incorporation of a business shapes its capacity to pursue a responsible investment agenda.
Jo
* The notion of stock exchanges are regulators of public interest goals is fairly well covered in the literature. For a primer, see Hall and Biersteker (eds) The Emergence of Private Authority in Global Governance (Cambridge, 2002). My very first post talked of the regulatory pluralism and its potential.
My previous post hinted at the idea that, taken on their own, reporting requirements may serve to distort strategic planning and implementation on responsible business issues -- in the same way that, in my experience of working in an international development agency, consciousness of reporting cycles sometimes obscured attention to achieving objectives, even if it also disciplined us towards those objectives too.
Monday, 23 July 2012
Rio fallout (or The Post that Should Have Been)
It becomes a post on 'reader saturation' to itself be short.
In the previous post I had promised that this one would try to sort, for reader interest, through the waves of post-Rio+20 commentary, especially as it related to Africa; but the sheer bewildering volume of it put me off.
The flowering of many perspectives and initiatives on issues of the corporate role in sustainable development is a good thing. However, the Rio aftermath and the related informational and analytical saturation had me wondering whether some larger, singular, guiding message risks being obscured by the myriad of things policymakers and advocates need to follow just to keep a grasp on these evolving debates across all aspects of social and economic development.
I know few colleagues who read even a fraction of what they think they need to read. I know many who feel spread thin across the many dimensions of current trends of sustainable-responsible-corporate-development-stuff. I spoke recently to a senior sustainability executive at a global branded foodstuffs firm who said his staff spend so much time reporting and reacting to the many initiatives and campaigns that they seldom stopped to ask simple questions about what they could do more of and less of in terms of mitigating their social and environmental footprint and creating shared value.
At the African Mining Indaba in Cape Town in February, I heard a senior executive from a global mining firm list (exhaustively) and then bemoan the huge variety of sector-specific and general multistakeholder and other schemes and initiatives and campaigns on which his staff tried to satisfy reporting obligations and expectations. Does the mining firm faced with multiple schemes really become a better and more proactive corporate citizen, or is there a risk that its energies (and the talents of its individual staff members) get diverted and dispersed down multiple channels?
This short post offered no insights or comprehensive overview into Rio+20 events and outcomes and implications. Yet we all mainly know what the gist of it is. Let the work begin, let the words be thin?
Jo
In the previous post I had promised that this one would try to sort, for reader interest, through the waves of post-Rio+20 commentary, especially as it related to Africa; but the sheer bewildering volume of it put me off.
The flowering of many perspectives and initiatives on issues of the corporate role in sustainable development is a good thing. However, the Rio aftermath and the related informational and analytical saturation had me wondering whether some larger, singular, guiding message risks being obscured by the myriad of things policymakers and advocates need to follow just to keep a grasp on these evolving debates across all aspects of social and economic development.
I know few colleagues who read even a fraction of what they think they need to read. I know many who feel spread thin across the many dimensions of current trends of sustainable-responsible-corporate-development-stuff. I spoke recently to a senior sustainability executive at a global branded foodstuffs firm who said his staff spend so much time reporting and reacting to the many initiatives and campaigns that they seldom stopped to ask simple questions about what they could do more of and less of in terms of mitigating their social and environmental footprint and creating shared value.
At the African Mining Indaba in Cape Town in February, I heard a senior executive from a global mining firm list (exhaustively) and then bemoan the huge variety of sector-specific and general multistakeholder and other schemes and initiatives and campaigns on which his staff tried to satisfy reporting obligations and expectations. Does the mining firm faced with multiple schemes really become a better and more proactive corporate citizen, or is there a risk that its energies (and the talents of its individual staff members) get diverted and dispersed down multiple channels?
This short post offered no insights or comprehensive overview into Rio+20 events and outcomes and implications. Yet we all mainly know what the gist of it is. Let the work begin, let the words be thin?
Jo
Sunday, 24 June 2012
Rio+20: Corporates and 'The Future we Want' (II)
My pessimistic tendencies are really to be understood as a mindset calculated to ensuring that optimism is sustainable over time.
There are no medals for pointing out the many ways in which the Rio+20 Conference on Sustainable Development -- which ended yesterday -- fell short of what many had hoped for in terms of bold and clear leadership from governments.
In next week's post I will try to screen the huge amount written and said about Rio for what may briefly be said relevant to this blog's subject: the role and regulation of the private sector in achieving public goals, especially in Africa.
Wading through this now, I'm taking the easy route by offering only a reflection on the words used for the summit's outcome document 'The Future we Want'. Whatever its many paragraphs, I wonder if there is something significant in this not having been called 'The Future we Need'. You can imagine an activist arguing that the global development and environmental challenges 'we' all face are not matters merely of want, but of (dire) need.
Well this is just one (optimistic, perhaps counter-intuitive) thought, but could one argue that referring to 'needs' in such cases holds less potential than referring to 'wants'?
On the corporates side -- and while not all sustainable development issues can be explained in terms of commercial incentives -- describing an issue in terms of what consumers and potential consumers want (desire) often gets attention going in a way that reiteration of staple needs perhaps does not. One only has to reflect on how investors have 'discovered' the African urban consumer to appreciate this.
For governments -- especially those that tend to neglect their citizens needs -- framing something in terms of wants (demands) might also trigger a different nerve, and perhaps greater responsiveness. This is especially so as governments continue to absorb what 2011's Arab uprisings mean for cases where populations want their needs met far more quickly and inclusively than governments might have thought.
Ahead of next week's review of the Rio+2o fallout, I also include a link to 'The Future we Want' report our firm produced for the UN Global Compact ahead of the Corporate Sustainability Forum that preceded Rio: here.
Jo
There are no medals for pointing out the many ways in which the Rio+20 Conference on Sustainable Development -- which ended yesterday -- fell short of what many had hoped for in terms of bold and clear leadership from governments.
In next week's post I will try to screen the huge amount written and said about Rio for what may briefly be said relevant to this blog's subject: the role and regulation of the private sector in achieving public goals, especially in Africa.
Wading through this now, I'm taking the easy route by offering only a reflection on the words used for the summit's outcome document 'The Future we Want'. Whatever its many paragraphs, I wonder if there is something significant in this not having been called 'The Future we Need'. You can imagine an activist arguing that the global development and environmental challenges 'we' all face are not matters merely of want, but of (dire) need.
Well this is just one (optimistic, perhaps counter-intuitive) thought, but could one argue that referring to 'needs' in such cases holds less potential than referring to 'wants'?
On the corporates side -- and while not all sustainable development issues can be explained in terms of commercial incentives -- describing an issue in terms of what consumers and potential consumers want (desire) often gets attention going in a way that reiteration of staple needs perhaps does not. One only has to reflect on how investors have 'discovered' the African urban consumer to appreciate this.
For governments -- especially those that tend to neglect their citizens needs -- framing something in terms of wants (demands) might also trigger a different nerve, and perhaps greater responsiveness. This is especially so as governments continue to absorb what 2011's Arab uprisings mean for cases where populations want their needs met far more quickly and inclusively than governments might have thought.
Ahead of next week's review of the Rio+2o fallout, I also include a link to 'The Future we Want' report our firm produced for the UN Global Compact ahead of the Corporate Sustainability Forum that preceded Rio: here.
Jo
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