Ethical Performance
inside intelligence for responsible business


Let’s not worry too much about a race to the bottom

February 2011

As long as we have strong governance initiatives,China’s move into Africa may well be benign, says Jonas Moberg

There is a growing consensus that companies from the East, in particular China, are gaining an upper hand in the race to control Africa’s oil and minerals. But will that new ascendancy necessarily mean a race to the bottom in terms of ethical standards? There are plenty who will argue ‘yes’, but there are also reasons to believe that this will not be the case. Certainly the experience of the Extractive Industries Transparency Initiative (EITI) indicates that level playing fields can be created, and that more can be done to learn from this experience.

For western companies and stakeholders, let us begin by humbly recognising that the impacts of our activities have not always been what they should have been. It was, for example, not long ago that bribes to foreign officials were tax deductible in most European countries. Indeed, many corporate responsibilty efforts have evolved from a call for mitigation of western companies’ negative impacts in Africa and elsewhere. The EITI is a case in point: it is a CSR effort, in that companies can decide to support it. But it is a lot more than that. It is an openness and accountability standard implemented by governments. Western-based oil, gas and mining companies’ support for the EITI has been critical for the evolution of the organization, and one of the key reasons that its tenets are now implemented in 33 countries, 21 of which are in Africa.

Countries and companies have quickly recognised that for a standard to be effective, it has to apply to all businesses in a territory. This is why when a government, such as in Nigeria, implements the EITI, it is not optional for companies to report in accordance with its principles. In fact, in Nigeria and a growing number of EITI-implementing countries, such reporting has become mandated by law. Regardless of whether a company supports the EITI or not, it therefore still has to report against, and follow, its rules. So far, we have not seen a single incident where  a company based in China or another emerging market has refused to collaborate with a host country implementing the EITI. In fact the opposite is true, with those from emerging markets becoming increasingly involved. For example, the Chinese state-owned company CNPC is now represented on the EITI stakeholder groups in Iraq and Mongolia.  As everyone is involved, the competitive impact of taking part is neutral, while the downside of withdrawing is significant.
This experience with the EITI is another reminder of the importance of collaborative approaches to governance. It took civil society campaigning as well as engagement; it took company leadership; it took representatives from supporting countries to provide facilitation, and it took leaders from implementing countries to take ownership. In my view there is no reason to believe that the arrival of Eastern companes in Africa will have a negative impact on that approach.

Jonas Moberg is head of the international secretariat of the Extractive Industries Transparency Initiative

Extractive Industries Transparency Initiative | Global | Governance

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