In an economy where
global transportation and communications, along with the international flow of
funds, increase in ease and speed every day, corporations reap the benefits of
international peace and security, free trade, and worldwide standards that allow
them to move operations, resources, and assets quickly from region to region.
International bodies,
including the United Nations, the International Atomic Energy Agency, the World
Health Organization, the International Labor Organization, the International
Organization for Standardization, UNICEF, and many others help maintain a
peaceful and orderly world within which companies can pursue their business
opportunities. Because these international bodies have some, but often limited,
powers to regulate corporations, these corporations’ cooperation is of great
importance. By acknowledging and enhancing the role of these organizations in
creating the network of global public goods upon which they depend for their
prosperity, corporations not only help assure a just and equitable world order,
but also increase their own ability to conduct business profitably.
Themes
The following are the
five major themes by which we assess the strength of corporations’
relationships with their partners in the international communities within which
they operate:
While
other issues are also important in this regard, these five are those which we
believe we can most meaningfully and consistently assess.
Geopolitical
Stability, Nuclear Weapons, Nuclear Power, and International Peace
One
of the greatest threats to humanity and the global environment today is that of
nuclear terrorism and war. Although the nuclear arms race between the United
States and the Soviet Union has now passed, the arsenals of nuclear weapons
maintained by the world’s superpowers have not been dismantled. As of 2004, the
U.S. nuclear weapons arsenals stood at an estimated 4,986 warheads, that of
Russia at 7,730, France 348, the United Kingdom 185, and China some 400. In
addition, India and Pakistan have joined the nuclear weapons club, Israel is
generally acknowledged to have such weapons, and North Korea and Iran have
reportedly taken steps to develop nuclear weapons technology.
In
addition, military spending in general by major powers raises other threats to
international peace. The thriving international trade in conventional arms
fuels internal and regional conflicts around the world. In 2004 the
international arms trade totaled an estimated $19.2 billion and there were 19
internal and regional armed conflicts in the world, including that in Iraq.
Out-of-control spending on military systems and conflicts also diverts funds
from much needed investments on the range of domestic public goods and
international aid that are essential for the creation of prosperous, stable
nations.
The
achievement of nuclear disarmament and international peace
is among the most difficult tasks that governments around the world face today.
We view the involvement of publicly traded corporations in the production of
nuclear and conventional weapons as complicating these tasks, which should be
left to government, and consequently we
do not invest in companies deriving significant revenues from the manufacture
of military weapons.
Similarly, we do not invest in companies that are
significant owners or operators of nuclear power plants, the spread of which,
in many experts’ opinions, is difficult at the current time to divorce from the
proliferation of nuclear weapons.
In an increasingly
global economy, the role of international standards-setting and quasilegal
organizations is of growing importance. Whether the issue is labor, health,
climate change, ozone depletion, product quality, the environment, bribery,
transparency, or children’s rights, these international bodies play an
important role in raising the standards of conduct and in promoting the
provision of public goods essential for growing economies.
Companies that invest in their compliance with such norms help create a
world of improved health, cleaner environments, more satisfying workplaces, and
increased public and private goods. These investments accrue to the long-term
benefit of all, including corporations. We
view positively companies that recognize, support, and take concrete steps to
adhere to these international standards.
Acknowledgement
of Human Rights
As
companies operate in an increasingly global economy, they face the challenge of
accommodating their operations to the varying legal systems of the countries
within which they operate. Where questions of human rights abuses by national governments
arise, these challenges are particularly complex and may involve corporations
in high-profile controversies — especially when the government is also a
client. Whether the question is freedom of speech, the rights of minority
groups, or abusive labor practices, corporations are often forced to make
decisions that mix business and politics in complicated ways and for which no
tested guidelines exist.
We seek companies that
acknowledge the complexities of these situations and make concerted efforts to
confront them in their operations, although we recognize that their decisions
will not always leave them free of controversy. Not only can corporate actions make a substantial
difference to the individuals their policies affect, but they can also set examples
for others to follow. Corporations that neglect or remain indifferent to these
questions, however, not only open themselves up to public controversy, but fail
to help the societies in which they operate achieve the stable and just social
systems that are the foundation for prosperity.
Respect
for Indigenous Peoples and Local Cultures
Few
controversies are as damaging to the long-term reputation of corporations as
those involving the rights and cultures of indigenous peoples. Moreover, these
controversies can complicate relationships with local governments and
populations, and jeopardize a corporations’ ability to operate locally or
regionally. Pitting large faceless corporations against often small and
relatively defenseless communities, such confrontations can frequently be
avoided if companies show initial and ongoing sensitivities to the cultures of
those around them. The value of the diversity that these groups bring is
incalculable and its loss is irretrievable. Responsible corporations can help preserve
unique cultural riches in our world that are all too easily destroyed in a rush
to short-term profit.
We evaluate such controversies
with great care both because we respect the rights of indigenous peoples to
preserve their cultures and because the effect of confrontations between
companies and indigenous peoples can be so harmful to corporate reputations.
Antibribery,
Anti-Money Laundering, and Anticorruption Programs
Corruption in
international trade has been called the Achilles’ heel of capitalism. It costs
hundreds of billions of dollars each year to governments in lost tax revenues,
to honest businessmen in foregone opportunities, to whole economies in
inefficient market operations, and to societies themselves in the loss of
democratic freedoms and practices. Without honest and transparent markets,
societies cannot reap the benefits that the business world is so efficient in
creating — or spread them equitably among their citizens.
We consequently look for
companies that have implemented strong ethics, antibribery, and anti-money
laundering programs, paying particular attention to companies in industries
with a history of such scandals, such as the construction, banking, and
natural-resources extractive industries, and companies with a significant, or
growing, presence in countries with a known history of widespread bribery and
corruption.
