Fair play in a global market

By Simon Longstaff

This article was published in Living Ethics: issue 55 autumn 2004

As Julian Disney noted in issue 42 of Living Ethics , contributors to the debate about globalisation rarely adopt a uniformly consistent position. Some deplore the evolution of global markets and the way modern corporations take up the commercial opportunities that this creates. Harsh critics reject 'globalisation' as a licence to exploit vulnerable people and as a threat to the welfare of humankind. Yet these same people are likely to be ardent supporters of the 'globalisation' of human rights, labour and environmental standards.

Others celebrate the globalisation of markets as an opportunity for increased profits and prosperity. Yet these same people are likely to be uncomfortable about the 'globalisation' of human rights, labour and environmental standards. As Disney argued, people are fairly selective, both in terms of their praise and condemnation of globalisation as a concept. It all seems to depend on 'context".

While people might disagree about the answers to critical questions about the risks and opportunities of 'globalisation", they more or less agree on the question "to what extent are corporations obliged to act responsibly in their dealings with the social and natural environments in which they operate, wherever that happens to be in the world?"

Answers are not always obvious. For example, campaigns for 'fair trade' have been attacked by some of their supposed beneficiaries and denounced as a thinly disguised ploy to protect jobs in the developed economies. Similarly, some corporations are vilified for operating in countries governed by oppressive regimes - only to find the local community pleading with them not to leave, lest the people lose even the limited 'protection' afforded by the company's continuing presence and the restraint that this can engender.

The challenge is to develop robust methods for managing the extended lines of ethical obligation that flow out from every corporate head office and through all parts of the 'value chain' from which profits are generated. This challenge increases along with the extent to which corporations 'outsource' their activities. While many functions can be contracted out to others, a company's ethical obligations cannot.

Some businesses have learnt this lesson the hard way. Manufacturers of sporting goods risked the destruction of their most lucrative markets when it was found that their products were being produced by contractors who were grossly exploiting their vulnerable workers. Learning the lesson is easy - working out what to do about it is more difficult. Fortunately, leading businesses are becoming adept at managing the extended relationships on which their prosperity is built. Others simply ask, "why bother"?

After looking at the experience of some companies caught in the glare of critical public opinion, some might say that the management of extended ethical obligations is just a question of enlightened self-interest. Is this all there is to the argument? Or is there something deeper to be discerned about the proper purposes of business and the means employed to achieve them?

Ultimately, these are questions for the owners of business - in mature economies, the vast number of shareholders and superannuants in whose name business is conducted. That is, these are questions for 'us'!

Imagine the following scenario:

A company discovers that a change in the laws of an obscure country in which it operates will allow the corporation to cut back its expenditure on occupational health and safety.

By lowering standards to comply with the strict letter of the law, savings equivalent to an extra three cents in the dollar payable as a dividend to shareholders will be generated, alongside an average of five additional, fatal accidents in the workplace each year.

What should the corporation decide to do? Would the answer be any different if the question arose in the case of a contractor to whom the work had been outsourced? How might we vote if asked to decide as owners of the business?