The business of ethics.

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			The business of ethics
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	International firms have done a lot to improve their reputations 
in the quarter-century since ITT was investigated by the United States 
Congress for involvement in political subersion. But, having cleaned up 
their act, are they now heading for a fall?

	From Burma to Ecuador, big companies, especially mining and oil 
firms, are being accused variously of raping the environment, uprooot 
local tribes, using child labour or colluding with paradox. Many big 
companies take moral issues more seriously than ever. They have ethics 
committees, ethics officers and ethics codes.

	The trouble arises when they must take huge strategic decisions, 
such as whether to invest in mineral-rich countries that have cruel or 
venal governments.

	In these cases, multinationas are apt to argue that it is for the 
world's governments to identify unsavoury regimes. Their own duty is 
merely to obey the law.

	This division of labour has much to commend it. Comapanies, 
unelected, have no obvious right to throw their weight around in 
politics, whether local or global.

	Also, the allegation that multinations are exploiting the Third 
World is often misguided. Usually, the "exploitation" consists of letting 
developing countries make use of what economists would call sources of 
comparative advantage - cheap labour, say, or a greater tolerance of 
pollution. That is how poor countries grow less poor.

	At certain points - but not, alas, clear ones - white shades into 
grey and then to black. Cheap labour ma be all very well, but what of 
child labour, for instance? A poor country may be unfussy about the 
number of injuries in its factories, but is a Western company right to 
relax its safety standards?

	It is impossible to conceive of a universal standard that would 
settle all dilemmas of this sort. It is almost as difficult to imagine 
governemnts using trade policy to enforce such as a standard disinterestedly.

	But where governments cannot or should not act, the burden shifts 
to the managers of international companies to exercise their 
responsibility as moral individuals.

	What, then, is to be said of the huge energy projects of Unocal 
and Total in Burma and of Royal Dutch/Shell in Nigeria?

	In the eyes of their critics, the sin these firms have committed 
is to have invested massively in countries with repressive regimes, so 
helping to keep them in power. In essence, the firms' reply is that less 
scrupulous firms would take their place if they quit and that foreign 
investment is likelier in the long run to improve than worsen the lot of 
local people. Well, maybe.

	But if they are to defend their presence on these grounds, all 
three firms could do more to improve local conditions.

	With hindsight, Shell did too little to use its influnce as 
Nigeria's biggest oil producer to prevent last year's hanging, after a 
dubious trial, of nine political activists. And in Burma, Unocal and 
Total are said to be turning a blind eye to the use of forced labour by 
the Burmese army.

	It is true that if these companies pulled out of Burma, others 
might take their place. Even so, a threat from Unocal and Total - say, to 
delay the project unless the army stops its use of forced labour - might 
have some effect.

	Then again, it might not. But it would certainly be wrong not to 
have tried.

[ The Economic, The The Age, 22 July 1996].

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