The dangers of working in war zones, online privacy and how to mix philanthropy and profit

Conflict zones: tread carefully

Doing business in conflict zones is not a new phenomenon. Since antiquity, armies have worked hand in glove with commerce to get what they need to kill the enemy and feed soldiers. Some companies willingly collude. Most don’t. But that doesn’t make them innocent.

This challenging paper serves as a wake-up call to businesses that consider their hands to be clean. The forms of indirect influence are myriad, it turns out. In conflict zones, everything from paying royalties to sharing profits with joint venture partners could be considered aiding and abetting.

Lack of prosecutor pressure partly explains why corporate complicity is a complex criminal case to crack. Second, companies claim to be acting under coercion. Third, they claim exemption from the reach of the International Criminal Court, which is authorised only to try “natural persons”. A company can be considered a person, but it’s not technically natural.

Now prosecutors are beginning to toughen up. Voluntary codes of conduct won’t help companies avoid legal liability. Instead, they should be aware of “what they should not do, what they must do, and what they can do”. Guidelines exist. The best is probably the due diligence framework provided by Prof John Ruggie under the aegis of the United Nations.

Banning business activity in war zones does not work. Instead, companies operating in a zone of conflict must accept that they are often “only a few steps away from committing grave abuses”. That way they can identify their legal liability risks and avoid the charge of complicity.

“Business in Armed Conflict Zones” by Salil Tripathi, Politorbis, January 2011.

IT industry: is privacy corporate responsibility?

If you’re a Google or Microsoft or Infosys, what should be your core corporate responsibility concern? Carbon emissions? Fair labour standards? Community involvement? While all are valid, there’s an elephant in the room: online security.

This comprehensive paper analyses how the world’s largest IT companies are responding to this emerging issue. What Pollach’s empirical research of almost 100 firms finds is a very mixed bag. Only 30 make any mention of privacy in their corporate responsibility discourse. Of those, a mere 13 explain the relevance of the issue. The reasons focus on an acknowledgement that internet users have privacy rights and that the company has the responsibility to protect the data it gathers from web users. There’s also a sense that respecting privacy will help the company win trust. All seems reasonable enough.

Even so, Pollach can identify only a handful of leaders who treat the issue with the seriousness it requires. Regrettably, their identities are not revealed. At least half of those surveyed voice a moral responsibility to address privacy questions, but few go beyond basic compliance. Measures that are internal (such as employee training and reporting of violations), external (such as user guidance) and collaborative (such as membership of industry groups such as the Electronic Privacy Group or the Liberty Alliance) mark the other areas of possible action. Rare is the IT company that actually stimulates stakeholder dialogue on the topic.

The principle problem is that there is no driver for action: laws are sluggish and users are disinterested. The paper looks forward to a maturity in the IT industry from an “ethics/compliance focus” to a more “responsive, proactive focus”. Till then, user privacy is set to continue its “minor role as a CSR”.

“Online privacy as a corporate social responsibility” by Irene Pollach, Aarhus School of Business, Business Ethics: A European Review, January 2011.

Social venture capitalism

Acumen is a clever name for a clever concept. The New York-based non-profit group straddles the gap between philanthropy and capitalism. How so? By making targeted investments in health-related start-up ventures in the developing world. It was the first of what management scientists and development experts are now calling “social venture capitalism”, or SVC.

This illuminating and well-informed essay tells the story of Acumen. It starts back in 2002 with an initial $325,000 investment in a Tanzanian mosquito net manufacturer. Since then, another fifty or so investments collectively worth $48.6m have followed. Some have succeeded: A to Z Textile Mills, the net manufacturer, is now one of Tanzania’s largest companies. Others have fared less well.

It is the insights from Acumen’s experience about the dos and don’ts that make this paper a worthwhile read. After several failed ventures, for instance, the SVC fund twigged that it made more sense to invest in late-stage enterprises than in early-phase technologies. Opting for disciplined investment structures, such as debt and equity, also turned out to have a greater effect than traditional grants.

There are valuable lessons from Acumen’s story, not just for its SVC peers, but also for all those donors looking to make their charitable investments go further and hit harder.

“Market Minded Development” by Hima Batavia et al, Social Innovation Review, Winter 2011.

Campus news

Canadian infrastructure company Corix Utilities is providing a $2m endowment to the University of Oklahoma to help set up the new Corix Institute for Water Resources and Sustainability at the university.

Global asset management firm BNY Mellon will invest $1m over the next decade to develop corporate responsibility programmes and education at the University of Pittsburgh. The grant will fund student fellowships, faculty research fellowships, annual CSR forums and case-study competitions.

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