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IfilIZf Business
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Beforeyouread
Doyou think multinationalcompaniesoperatingin pooror developingcountrieshavea dutyto
improvethe quatityof people'slivesin thesecountries?Why (not)?
Reading
Readthis articlefrom lhe Financialnmes andanswertheouestions.
Takea goodlookatthelocalissues
by sarahMurray
1 Because business has access to
financial resources and modern
managemenlmethods,it might seem
a logical canalidateto contribute to
tbe development of poor
communities h the countries i-E
which it operates. with social
responsibiliw on corporate minds.
the will to participate certainly
exists. However,since companiesare
not e8)erts in hedth or educatiorr.
and many lack staff equipped to
manage social programmes, they
need to treaal extremely carefi.rlly to
ensure that those programmes do
not backfire.
2 Ttre issue is most contendous in
the extractive industries, whose
companies create vast footprints
wherever they invest ard whose
operations are often located in
countries run by oppressive and
corrupt regimes. Here. the thorniest
issue is defrning the limits of
responsibility. If an oil company
builds hospitals and schools for
communities iDmediately su$ound-
ing its operations,conflicts can arise
with neighbouring vilages that feel
left out. Yet if companiesdo nothing,
they will be operating in what
Richard Sandbrook, special adviser
to the United Nations Development
Programme, calls 'an oasis of
affluencein a desert of need'.
; Alother danger is that, by
improving life for those arcunaltheir
operations, multinationals can
create a culture of dependence.The
question then arises as to what
happens to the programmes com-
panies have funded or the townships
they have built when a mine needsto
be closed or conllict forces
investments to be with&awn. In
-!E
recent years, however, many ha!€
becomebetter equippealto deal with
such issues. Big mining companies,
which often work in remote areas
populated by indigenous people,
now employ sociologists and
anthropologists.
Multinationals have learned to
work wittr local gQvernments,
unions and non-governmental
organisations (NGOS)in roling out
social programmes, and many con-
duct social-impact stualies before
even embarking on an investEent.
'The large mini.ng compa.uiesI've
dealt with have become so experi-
enced at this that they have com-
munity plans, closure plans for their
mines al1dthe whole thing is ilone on
a basis that is so much more
thorough than it used to be,' saysMr
Sandbrook.'But there are still plenty
of companiesthat do just abandon a
place ard leavea mess.'
Even for less controversial
businesses working in more stable
parts of the world, community
investments or philanth.ropic pro-
grammes must be approached in a
measured way. 'The first thing is to
understand the local conditions,'
says Adrian Hodges, managing
director of Intemational Business
Leade$ Forum. 'Then ]rou must be
clear about what it is you have to
offer - and cash is probably not tfie
arswer.'
Suchresourcesinclude technology,
office space and business expertise.
Accenture, the technology and
consultirg company, for example,
offers its services to NGOS in
alevelopingcountries at an affordable
price via Accentue Development
Partnerships, a non-proflt group.
When companies offer theiT own
skills or services. however.
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transparency is essential.A software
company partnerirg with an
education establisbment to promote
better schooling,for example,may be
also selling software to that institu-
tion. 'The danger is that it's seen as
self serving,' says John Kline,
professor in international business
diplomacy at GeorgetownUniversity.
'So it's important that there is a
partner group that's separate from
the company so there's credibiliry to
Often, companies' day-to-day
business has unforeseen benefits.
Pfrzer,the pharmaceuticalscompany,
is tryfurg to map what it calls 'value
transfer' tb.roughout the business.
Nancy Nielsen, Pfrzer's senior direc"
tor of corporate citizenship, cites the
example of construction sites where
the company has imposed safety
standards requiring, for example,
worke$ to wear hard hats and shoes.
a practice that has subsequentlybeen
adoptedelsewhere.
If orgadsations focus on spreading
the benelits of their investment
outwards - through, for example,
local sou.rcing they car mahe
substantial contributions.'Unilever
in Vietnam employs about 4,500
peopledircctly, but has created800to
1,000small businessesin support as
weU sothe numbers get really quite
big,' says Mr Sandbrook. 'In ttle past
15 yea$, everlthing has been
concentrated on the environmental
story and to some degree on the
social story, rather forgetting that
actually the biggpst contribution
companiescan make to development
is the economic story, Rightly, the
penalulum is now swinging back
to$ards that one.'
FINANCIALTIMES
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Limited
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If,filil Businessethics

Readthe wholearticle.Accordingto the article,which 5 Readparagraphs7 and 8 and saywhetherthesestatements

industriesandcompanies havedonethe following? aretrueor false.
a) providedhealthand educationfacilitiesfor the local a) Pfizerknewthat their safetypolicywould be beneficial
communitv outsidethe companyas well.
b) builthomesfor theirworkers b) [Jnileverworkswith up to onethousandsmall
c) workedwith specialistsin isolatedindigenous businesses in Vietnam.
populations c) RichardSandbrookbelievesthat the most importantrole
d) doneresearchinto the impactof their operationson the ofcompaniesis to help countriesdevelopeconomicatly.
community
e) offeredtheir servicesto non-profitorganisationsat a Overto your
reducedDrice
Whattypeofinformation mighta miningcompanywantto
f) createdsaferworkingenvironments
includein a social-impact
study?whatimpactcouldthe
g) givencontractsto localbusinesses
closureofthe company haveonthe localcommunity?What
Readparagraphsl and 2. Findthe wordsand expressions mighta closureplaninvolve?
whichmeanthe following.
a) don't haveenough Overto youz
b) plansto improvethe qualityof people'slives
Whatdoyouthinka multinational company
wo]kingin a
c) be verycautiousaboutwhat is donein a difficult
developlng countryshoutdprovidefor
situation .ltsstaffi
d) havethe oppositeeffectto the one intended . lts staff'sdependents;
e) causingalot of disagreementbetweenpeople . thewidercommunlty;
f) companies obtainingrawmateria[s, suchas oilandcoal, . thecountryasa whole?
from underthe ground
g) havean enormousimpact
h) the mostcomplicatedand dimcult probtem
Overto you3
D beginto happen Whattypeof socialpmgnmmesaresomewell-known
- multlnatlonal
companiesinvolved
with?UsetheInternetto
D sensethat you are not acceptedor included
helpyouffndout.whichprogrammes doyoullkemostand
Readparagraphs3 and 4 andfind the verbswhichare used
why?
with thesenouns.Putthe verbsin the infinitive.
a) life
b) a cultureofdependence
c) (social)programmes(2 vetus)
d) investments/aninvestment(2 verbs)
e) social-impactstudies
f) a place
g) a mess

Readparagraphs5 and 6. Findthe phraseswhichhavea

similarmeaningto the following.
a) donein a carefulandcontrolledmanner
b) providingmoneyfor communityproiectsmight not be
the bestsolution
c) it must be clearto everyonethat what the companyis
offeringis fair and honest
d) to hetpdevelopimproved educational standards
e) it appears that a companyis onlydoingsomething to
gainsomeadvantagefor itself
f) it canbe believedand trusted

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