Ethical Performance
inside intelligence for responsible business


Foreign policy needs to support responsible business practice

September 2008

Ethical investors maintain lists of countries flouting human rights in order to avoid putting money into companies with operations there. Democratic governments keep similar lists and, on occasion, seek to intervene.
Concerned about human rights abuses by the Mugabe regime in Zimbabwe, the UK government recently took the unusual step of writing in confidence to 16 companies asking them to sign a voluntary agreement to uphold human rights in the country (see page one). All have refused to do so (although at least one is to stop sourcing Zimbabwean products). Are they right?
The question brings to mind Robin Cook’s memorable pledge on becoming foreign secretary in 1997 that the UK government would adopt an ethical stance and ‘put human rights at the heart of our foreign policy’.
But companies make awkward instruments of foreign policy. The nature of their involvement varies, as do their social responsibilities. And so do the consequences of their actions. Importing perishable vegetables from Zimbabwe is not the same as having spent five years building a platinum mine in the country. Unsurprisingly, the Mugabe regime countered with the threat of taking over the mine, if Anglo American were to quit. Wholesale withdrawal could make matters worse, not better.
All businesses operating in Zimbabwe face human rights challenges, notably in employment, where discrimination against regime opponents amounts to complicity in abuse. But many UK-based companies working in sensitive parts of the world have effective human rights risk management systems and are in a better position to make judgements than the Foreign Office. Paradoxically, that department has closed its specialist unit for corporate responsibility issues. Government concern over human rights in other countries would ring truer if the unit were reopened at once.
For these reasons, companies in this instance were right to resist official pressure, which came to light thanks to Freedom of Information legislation. But that may not always and everywhere be  the case. Complicity in human rights abuses is a material business risk. Coping with it would be helped if government policy were consistent. If Zimbabwe, why not China, Saudi Arabia or the West Bank (see page two)? When allegations of bribery and corruption were brought against BAE Systems in connection with the Al-Yamamah arms deal, the government aborted the inquiry.
The UK has historic responsibilities to Zimbabwe. Many of the UK companies operating there would probably be only to happy to leave on commercial grounds, but reasonably believe it would do more harm than good.

Peter Mason | UK & NI Ireland | Government role


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