Engagement vs. Divestment

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Britain's Premier Oil (PMO.L) also left Myanmar partly under pressure. At the time of leaving, it had implemented programs to provide training in human-rights monitoring to the military and to government employees. It also financed community investment projects, managed by Save the Children USA, that are among the best-run such programs I have ever evaluated. And it had engaged with opposition leader Aung San Sui Kyi, who agreed that responsible business would have a critical role to play in rebuilding the country when democracy returned.

The business vacuum in Myanmar was highlighted in May when the country was hit by a devastating cyclone. Around the world, responsible businesses often work with humanitarian partners to deliver relief after natural disasters. Having such networks in place could have made a big difference in Myanmar, whose ruling junta initially refused assistance from the U.N. and Western countries. Instead, a handful of companies, including French oil group Total and express-delivery company DHL, found themselves battling the odds to deliver humanitarian relief via their limited channels. If Western business had stayed and maintained a diligent approach to human rights, thousands might now have decent jobs, to the benefit of their families and communities.

BOUNDARIES OF RESPONSIBILITY

China presents a different kind of dilemma. Unlike Zimbabwe and Myanmar, there's little chance that multinationals will leave this booming economy. Yet with the Beijing Olympic Games about to begin, top corporate sponsors are in the spotlight.

One example is General Electric (GE). As the official Olympics provider of water treatment services, it recently announced it would donate two treatment systems to provide clean drinking water for more than 60,000 residents in Dongguang City and its environs. GE says the project "will strengthen our ability to further help China and other nations leapfrog traditional infrastructure challenges to deliver clean water to hundreds of millions of people in the world's remote communities." Such initiatives, which apply the company's core competencies to address sustainable development, clearly show why responsible business should be encouraged to engage with governments, even when we disagree with those governments on human-rights issues.

GE is also working with other companies, including Honeywell (HON), United Technologies (UTX), and IBM (IBM), to help the Chinese government design and install one of the most comprehensive public surveillance systems in the world. The system, which will be deployed at Olympic venues and in the subway and airports, uses GE's powerful VisioWave technology, which automatically alerts security personnel to suspicious and fast-moving objects.

Clearly, protection of Olympic athletes and visitors is paramount. However, it's not hard to imagine that the Chinese authorities, with their well-documented track record of detaining journalists, lawyers, activists, and religious practitioners, could use this technology to infringe on citizens' rights. This underlines the need for responsible business. GE has as its overarching goal for 2008 implementing human-rights considerations in GE's operating cycles. In line with this, Bob Corcoran, vice-president for corporate citizenship, says GE "secured the US export licenses and worked with the Chinese customer to make sure that the equipment is used for its intended purpose, during and after the Olympics."

PART OF THE SOLUTION

How far should the boundaries of corporate responsibility extend? There are no easy answers. But responsible business clearly has a role to play in high-risk emerging economies. Across-the-board divestment makes neither economic sense nor humanitarian sense. Companies, if they stay, can become part of the solution by following these recommendations:

• Develop business principles based on the U.N. Global Compact

• Establish a human-rights policy supported by training and monitoring systems and empowering of local managers.

• Create an ethical supply-chain management system.

• Work with expert third parties to audit activities and suppliers.

• Engage on human-rights dilemmas and solutions with internal and external stakeholders.

• Build relationships with employees and address humanitarian flash points, such as hunger or disasters.

• Develop sustainable social investment programs with employees' families and local communities.

• Engage in dialogue with host governments to promote transparency.

• Build trust with home-country government and avoid communicating with politicians via the media.

• Communicate regularly with civil society organizations and the media in Europe and the U.S.

Warhurst is chair of Strategy and International Development at Britain's Warwick Business School, a member of the faculty of the World Economic Forum, and a founding director of social enterprise and advisory firm Maplecroft. She has advised companies including De Beers, Shell, DHL, TNT, Unilever, Nestle Waters, Premier Oil, and Standard Chartered Bank, as well as international humanitarian and human rights organizations on global risks and corporate social responsibility.