As some of you know, I am leaving Carnegie Council next week to take a senior program position at the Japan Society in New York.
It was a tough decision to leave Carnegie—especially after nearly 5 years of exciting programming and research projects with a fantastic team. Ultimately my decision was formed by a personal desire to help Japan revive.
Over the course of a decade of writing seriously about Asia, my analysis has zeroed in on two empirical sources: data and interviews (rather than theory or conjecture). In my writing on Japan, I have tried my best to convey accurately what Japanese people tell me about their country. As a result, perhaps ironically, the tone of my articles and speeches has become increasingly pessimistic. I recently had dinner with the chief economist of a major bank in Tokyo who asked me, "Devin, what will it take for you to stop being so gloomy about Japan?" My answer was: "I will stop being gloomy when Japanese people stop being gloomy about Japan." It's time to cheer up.
There is an expression in the nonprofit sector: It takes as much effort to find support for a small project as it does for a big one. We might as well aim for the sky. I hope that in a small way at my new post I can help provide a platform for innovation and ideas for positive change in Japan and the US-Japan relationship.
As always, I will look forward to your insights, guidance, and collaboration.
Here is my summary from our "Top Risks" event last month at Carnegie Council, published in The CSR Journal (Volume 5), which is edited by Michael Levine, co-chair of the ABA's CSR Committee. It is republished here with kind permission.
One day after Google's bold decision last month to stop censoring its Chinese search engine and possibly quit its operations in China, Carnegie Council held its annual "Top Risks and Ethical Decisions" panel for 2010. Google's announcement and the earthquake that hit Haiti, two unexpected events with moral consequences, guided much of the panel's discussion.
The salience of the Google announcement was heightened by the foresight of Eurasia Group president Ian Bremmer who had placed U.S.-China relations as the 2010's top risk in terms of likelihood of change. It also highlighted the ethical challenges of doing business in China and globally as well as the positive leadership role businesses can play. Bremmer told me before he presented his full list of risks that he predicted Google would indeed pull out of China given the company's wide range of appeal—from technologists to free marketers to human rights activists—and the Communist country's inability to credibly guarantee security from further cyber-attacks. Google, along with at least 20 other companies, had been hacked in December, and it is widely believed the attacks were in coordination with a Chinese government agency that was attempting to gather information on dissidents. If personal information were compromised, peoples’ lives would be at stake. Business ethics are a very practical matter.
Bremmer wondered whether Google's moral stand might serve as a rallying cry for other companies to follow suit in China. Since Google's announcement, the company has been lauded, and the U.S. government has had to reverse its direction by stepping up its rhetorical pressure on China. In U.S.-China relations, the news came against a backdrop of tensions over possible UN sanctions on Iran, U.S. arms sales to Taiwan, and a Chinese test of a missile interceptor. It also occurs amid the longer-term trends Bremmer sees, specifically the acceleration of divisions between the world's developing and developed countries; free market economies and state capitalist economies; and the U.S.-led and multipolar worlds. Bremmer sees U.S.-China relations as the biggest risk for the year because "U.S. and Chinese economic systems are fundamentally incompatible. Compromise is a possibility but let's not obscure the question." He also noted that it isn't clear how the world will square China's global responsibilities given its limitations and societal pressures.
The Google episode in China also underscores the gap between short-term profit-seeking and longer-term ethical concerns for companies and countries alike. Without an expansion of rights and freedoms in China, the government risks hindering economic development. Without free press, for example, China simply cannot stem corruption. Above all, Google's move has expanded the options and the debate on the Chinese market. Carnegie Council's approach toward exploring international issues has been precisely that: to expand the scope of options and to encourage people to ask ethical questions. In line with Andrew Carnegie's vision, the Council aims to create and disseminate knowledge and understanding in order to facilitate societal transformation toward world peace. The "Top Risks" event is part of an ongoing series that brings companies and civil society together to examine business ethics issues, such as human rights policies, the role of the media, trust in the financial system, green job creation, and the fight against corruption.
Michele Wucker, head of the World Policy Institute, posed one of these potentially transformational questions. Considering the ecological limits of the planet, how much consumption is enough? China has just become the largest automobile market in the world, but do we really believe that every person in China can own a car? If the United States moves away from naked consumerism, what will take its place? And, how do we avoid policy solutions that hurt the poor? Wucker also pointed to the extreme poverty in Haiti, which exacerbated the devastation from the recent earthquake, highlighting the fact that risk is often increased when more than one factor is in play. Wucker predicted that finding sustainable levels of consumption and a balance between short-term and long-term gains would be the most pressing moral questions facing businesses for the foreseeable future.
A major obstacle to finding this balance, however, relates to the very nature of individuals and institutions, something that strategy+business editor Art Kleiner has been following for years. He identified at least three "meta risks" for 2010. The first is that although the stakes are higher than ever, it is unclear whether governments possess the management capacity to deal with the riskiest challenges, such as climate change and terrorism. The second is what he called "the risk of transitional capability," meaning that not only are changes in the global business environment occurring more rapidly than ever, it is also uncertain whether organizations can adopt the best practices in time to keep up with the changes. Moreover, transition implies unintended consequences and thus more uncertainty. Finally, bringing it to the personal level, there is a plausible scenario in which the world addresses these problems, but it will require individuals to change their behavior. It is becoming increasingly difficult for people to lead a "normal life," so what do you do? Kleiner asked. "To the extent that human survival requires individuals to change, will enough people be willing to do it? Maybe," he said.
"Integration" has already become the buzzword in business and policy circles this year. In applying this concept, Georg Kell, head of the UN Global Compact, explained that integration means companies must be best in class in their products and services but that isn't enough. Companies must also be able to deal with non-financial risk, such as environmental, social, and governance risks. Ethics is the floor or baseline for international business because "going global means going local," and globalization has therefore become a test case for the question, "Can we live with one another?"
Kell was optimistic about humanity's prospects because he believed the 2008 financial crisis brought ethics back into business decisions in at least three ways. First, it highlighted the need to move from short-term to long-term value creation. Second, it showed the importance of bringing non-financial issues into decision-making. Finally, he saw a general shared sense of ethics as underpinning these trends. His research has shown that there is a universal sense of fairness and justice around the world that can also be observed in religious traditions, philosophies, and law. Kell concluded by advocating for the "traditional values," such as cooperation, that made the free market work in the first place.
The panel seemed to agree that only human innovation can pave the path toward global salvation in the face of ecological, security, social, and economic risks. Thomas Stewart, Booz & Company’s chief knowledge officer, somewhat darkly concluded by encouraging people to find the courage to muddle through. He jokingly asked whether it is possible to avoid the future all together. Kleiner quipped, "There is always a way through by the skin of our teeth." The event also highlighted the large moral questions for the upcoming year, thus framing the fourth year of Carnegie Council's Workshops for Ethics in Business series programming, which is currently being expanded into a full-blown corporate membership program. If ethics matter to you and your organization, please contact us to get involved with this unique program.
Stewart is program director and senior fellow at Carnegie Council for Ethics in International Affairs and can be reached at dstewart@cceia.org
NEW YORK, Sept. 29 /PRNewswire-USNewswire/ -- As the United States and China prepare for a bilateral summit on climate change in November, a pair of think tanks--one from each country--said today they have identified five concrete, business-oriented steps their nations could take together to combat climate change while meeting energy needs.
China and the United States--the world's two largest carbon emitters--should identify a handful of "world critical" technologies that address energy production and climate change, according to the China Reform Forum, the Chinese think tank, and the Carnegie Council, a New York-based institution. The two countries should then jointly develop the technologies under a bilateral regime that promotes private investment, project development, and shared intellectual property rights.
Carnegie Council and China Reform Forum said they had developed the proposed measures by convening an expert working group in New York on August 28.
The group identified specific areas in which the two countries could cooperate. Participants at the meeting noted such cooperation will require developing deeper trust. They said, however, finding ways to cooperate will help to build that trust--a reinforcing process. The deeper the level of trust, the more ambitious and successful joint projects will be. Successful cooperation can depoliticize the issue of climate change, allowing U.S. politicians to sell the issue to their constituents and expand the prospects for future bilateral cooperation, participants said.
The two think tanks urged the United States and China to:
- Identify five to ten top "critical" technologies that would abate climate change while increasing needed energy supplies in the near to medium term;
- Establish a bilateral protocol to spur joint development of these technologies by encouraging investment, development, and protection of intellectual property rights;
- Embark on joint research, perhaps creating laboratories, to develop "leapfrog technologies" beyond the carbon footprint--such as hydrogen fuel-cell vehicles or green buildings--with an eye toward harnessing entirely new infrastructures.
- Implement a joint pilot project in each country--such as carbon capture at a coal-fired electricity plant or smart electrical grid--at the local, state, or regional level.
- Support one another in creating and launching public education campaigns aimed at changing public opinion on climate change, strengthening the sense of individual responsibility, moving beyond a zero-sum notion of climate change obligations, and issuing a set of best practices.
The New York meeting, hosted by Booz & Company, a global management consulting firm, took place shortly after it was announced that President Barack Obama and President Hu Jintao of China would hold a summit meeting in Beijing in November ahead of the multilateral climate change talks in Copenhagen this December.
The China Reform Forum sent the delegation to New York City and included a People's Liberation Army major general and leading climate change and economics researchers. Conference participants hailed from two United Nations agencies, North American think tanks, universities, and corporations, including IBM and Booz & Company.
The Carnegie Council and the China Reform Forum said they plan to reconvene within one year in Beijing with two goals in mind: to further develop a common ethical understanding between the United States and China on climate change and other issues, and to report back on the feedback from their networks on the five suggested areas of cooperation.
The meetings are the first steps in what both sides hope will be a strong, long-term, institutional relationship dedicated to the pursuit of common ethical approaches to problem solving.
To show international leadership on climate change the United States and China must overcome domestic mindsets suspicious of real burden-sharing. It was suggested that both countries should find ways to change public attitudes by, for example, recognizing, celebrating, and incentivizing green entrepreneurs.
For an interview with Joel Rosenthal, President of Carnegie Council, or other participants, please contact Carnegie Council Communications Director Madeleine Lynn at 1-212-838-4120 ext.222.
The Carnegie Council for Ethics in International Affairs (www.cceia.org), established in 1914 by Andrew Carnegie, is an independent, nonpartisan, nonprofit organization dedicated to increasing understanding of the relationship between ethics and international affairs.
SOURCE Carnegie Council for Ethics in International Affairs
Policy Innovations contributor Mikaela Bradbury reports on Victor Cha's talk yesterday at Carnegie Council:
In an intimate gathering last night at the Carnegie Council, Dr. Victor Cha, former Director for Asian Affairs in the White House National Security Council and Director of the Asian Studies program at Georgetown University, addressed what he sees as one of the toughest negotiations in the world: the ongoing dispute with North Korea over its nuclear program. Parsing the discussion into three categories––causes, motivations, and ways forward––Cha attempted to shed some light on this unpredictable nation, where a recent series of muscle-flexing has pushed the DPRK to the top tier of U.S. security concerns.
With respect to potential causes of North Korea's recent behavior, Dr. Cha advocated the most simple explanation: North Korea is developing a nuclear weapons program because it wants a nuclear weapons program and part of the nuclear club. Blaming U.S. policy for North Korean hostilities is no longer valid, both in light of Bush's last minute deal with North Korea, and in light of the Obama administration's willingness to participate in high-level negotiations.
The question of "what North Korea wants" has confounded policy analysts for years. Problematically, Dr. Cha explained, many of the things people claim North Korea desires has already been offered them. And the two things that North Korea is really after, according to Cha, the United States can't give them.
More specifically, North Korea is set on being a nuclear state, and acquiring an agreement with the United States similar to the one India got in October 2008. Ironically, Cha speculated, once given that status, the DPRK would likely engage in mutual nuclear reduction negotiations.
The second and equally impossible item on North Korea's wish list, according to Dr. Cha, is an enhanced security agreement with the international community. The United States has already issued various negative security assurances to North Korea, one of which occurred during the Six-Party Talks, when the United States stated that it would not attack North Korea unless provoked.
Despite the significance of this overture, it does not address North Korea's concern over regime security. Namely, if North Korea were to open itself up for reform, it would still require international support in order to survive. In light of North Korea's human rights record, such external backing is unlikely. Given this deadlock, Dr. Cha struggled to find "good options." The proximity of North and South Korea rules out any military intervention. North Korea has stated that any transport sanctions or inspections of suspicious cargo at sea would constitute an act of war.
The remaining possibilities are neither comprehensive nor guaranteed to work. In the past, financial sanctions has proven somewhat effective in penalizing the North Korean elite. The United States could also work with various port countries to increase customs inspections, or persuade China and Russia to restrict their airspace.
With respect to China, Beijing claims to have little influence on the peninsula. Yet, in reality, it has both material influence and access to the leadership, making it the most critical player moving forward. Any pressure from China would have to be exerted covertly as to avoid appearing a lackey of the West, as Dr. Cha has overheard North Koreans previously say of Beijing.
In the end, Dr. Cha bleakly stated "nuclear non-proliferation is under assault." The recent emergence of North Korea's potential alliances with Syria only makes the threat more dire. In significant language, Secretary Gates has recently said that "the transfer of nuclear weapons or material by North Korea to states or non-state entities would be considered a grave threat to the United States and our allies." . As Dr. Cha warns, the "red line" for how much the United States is willing to tolerate may be approaching.
The current leadership transition occurring between Kim Jong-il and his youngest son leaves the future even more uncertain. On paper, this instability is the perfect condition for radical change. However, as Dr. Cha stated, internal "fluidity" often manifests in external belligerence.
As a testament to how little we know about the DPRK, the international community is still unclear about where we are in this leader transition–– whether it is "smoke before or after a fire," as Cha so eloquently put it. The same could be said about North Korea's erratic behavior. Signs of more to come or the last cries of a faltering dictator?
It has been an eventful week. On Wednesday, I participated in the Japan Society's panel on Digital Social Responsibility: Search for a Sound, Responsible Information Society with Charla Griffy-Brown of Pepperdine, Jun Kurihara of Harvard, and Harriet Pearson of IBM. This conference could not have been better timed: It took place hours after Google, Yahoo, and Microsoft agreed to new guidelines that would aim to protect human rights, privacy, and free expression. From the Scientific American:
The three software giants today (Oct. 29) announced creation of the Global Network Initiative designed to persuade oppressive governments to allow their citizens to freely express opinions, via the Web in particular, without fear of retribution.
Participating companies must agree to "respect and protect the freedom of expression rights of their users when confronted with government demands, laws and regulations to suppress freedom of expression, remove content or otherwise limit access to information and ideas in a manner inconsistent with internationally recognized laws and standards," says the new group's guidelines.
The guidelines were a response to criticism from NGOs about Internet companies cooperating with the Chinese Government. From InformationWeek:
Yahoo helped launch the initiative after becoming one of several technology companies criticized for how they deal with restrictions on speech in foreign countries. Yahoo was accused of giving the Chinese government information about users that led to the jailing of dissidents. Google has been criticized for filtering search results to comply with demands from the Chinese government. MSN and Yahoo also filter search results to comply with Chinese government restrictions...
GNI members said they commit to protect freedom of expression and privacy, partner with others for collective governance and accountability, and spread their objectives around the globe. They agreed to require governments to put information requests in writing and to interpret those requests as narrowly as possible.
As expected, there is already some skepticism about the initiative. From SA again:
Don't expect any radical chances results any time soon: companies joining the initiative (at a cost of $100,000) have two years from the time they sign on to prove they're following the guidelines. It is unclear, however, the consequences a company faces if they join the initiative but fail to meet these guidelines.
Several themes emerged from the Japan Society panel. The overall theme is that companies and Internet users must build a foundation of trust in order to fully exploit the benefits of Web 2.0. That means stewardship of the Internet and of information will become a big focus--information stewardship happens to be something that IBM has been thinking about since the late 1960s. Some other big themes from the panel:
1. A "ubiquitous network society" or "collective intelligence" is emerging from the Internet and Web 2.0, allowing for better and quicker response to crises and problems. The use of crowd sourcing is one such example. With so much information out there, will the global economy begin to put a higher premium on other skills, such as empathy? (BusinessWeek has made this argument, too.)
2. The Web is allowing companies and operations to move from an international model to a multinational model to a truly global model in which data are processed in multiple places, through cloud computing, for example. As John Ruggie mentioned at the Carnegie Council this week, the speed and scope of business has surpassed traditional governing organizations like states. How do we keep up
3. Web 2.0 can help mitigate risk (as well as create new risks) in many areas, including supply chain, brand, and public relations. Lines between competition and cooperation are blurred as are those between friends and enemies. How do we better facilitate these interactions, for example to boost the "integrity of the crowds," as I would put it. This point was brought up by Andrew Zolli at our Web 2.0 panel at the Carnegie Council.
4. Finally, ethical leadership or "courageous leadership," as Kurihara put it, will be needed to resolve the paradoxes and ethical dilemmas posed by Web 2.0. Zolli made a similar point at our panel by saying that ethical leadership is the fastest mover affecting brand value. The others are about stewardship--social and environmental.
(Photo collage from Japan Society of Kurihara, Griffy-Brown, Pearson, and me.)
Harvard Professor John Ruggie spoke at the Carnegie Council this week on the future of his project on business and human rights. Below is a short summary Carnegie Council intern Sheila Oviedo helped me put together. The big points are that Ruggie sees a dramatic shift in public attitudes in favor of government regulation, as a result of the financial crisis. Government is no longer just "the problem," in the public mind.
Also, Ruggie could see a more ethical capitalism emerging not by instilling ethics in people per se but by creating incentives based on an ethical framework. The temptation to be corrupt is too big, for example, and therefore people need the incentives to be good.
Business and Human Rights (Summary of the Ruggie presentation)
This week, John Ruggie, the Special Representative of the Secretary-General on Human Rights and Transnational Corporations and Other Business Enterprises, visited the Carnegie Council and shared insights not only on his mandate, but also on the way forward for business and human rights as well as ethics and capitalism in the post-crisis global economy.
The Framework for Business and Human Rights
Released in April 2008 and unanimously accepted by the Human Rights Council in June, the Ruggie report, "Protect, Respect and Remedy: A Framework for Business and Human Rights" rests on three core principles: the state duty to protect against human rights abuses by third parties, including business; the corporate responsibility to respect human rights; and greater access by victims to effective remedies. In less than a year after its release, the framework rapidly gained traction among business and human rights groups, corporations, and even governments. The Human Rights Council agreed to renew Ruggie's mandate for another three years, which allows him to move forward with operationalizing the framework.
The formulation of the Framework was, according to Ruggie, informed by three broad approaches. First was the pyramid of correlative duties adapted from the work of John Knox. The pyramid suggests that the current international human rights regime is still largely state-centered, but with no specific requirements for state compliance with human rights laws or strict enforcement mechanisms. "Where most cases (of human rights abuses) are, enforcement is weakest," Ruggie noted. The alternative is to "flesh things out at the bottom" by providing states with tools to uphold and enforce human rights law.
The second area that informed the Framework is the "collision of norms" in the international system. The system consists of clusters of laws, codes, and norms that often clash because there is no hierarchy. Human rights law, Ruggie said, does not generally trump other laws. The Framework therefore makes policy arguments rather than legal arguments to integrate human rights into business.
The third area that informed the Framework is what Ruggie calls the "political economy of human rights." There is a "vast misalignment" of corporate activities and government capabilities, which results in governance gaps. "Human rights violations are a result of these governance gaps," Ruggie noted. The Framework prescribes pragmatic measures that can be done to bridge these gaps.
In general, the Framework follows what Ruggie calls an approach of "principled pragmatism." It is guided by the principle to strengthen the current human rights regime and is pragmatic on how to get there, he explained.
The New Mandate
Ruggie's extended mandate from 2008 to 2011, presents an opportunity to operationalize the Framework at both the state and corporate levels. At the state level, he aims to offer governments useful tools to be able to monitor and enforce human rights law through a range of mechanisms such as a country's investment policies and corporate laws.
At the corporate level, Ruggie aims to push companies to carry out their commitment to human rights. Companies say they respect human rights, he said, "but most of them don't have (systems) in place to prove they are respecting human rights." In the next three years, Ruggie's challenge is to inspire companies to operationalize the corporate responsibility to protect human rights to mitigate further rights abuses.
Another key challenge is to improve public access to remedial measures. "The need for judicial remedy is the most problematic," Ruggie acknowledged. Hence, the Framework prescribes alternative non-judicial remedial mechanisms in areas where judicial mechanisms are weak or in cases where companies can deal with complaints in an objective manner.
The Future of Business and Ethics
Ruggie sees the current global financial crisis as a catalyst for a shift in attitudes toward globalization and regulation. He expects increased government regulation in the post-crisis future, and perhaps more acceptance of the significant role of government and the state in the economy.
The post-crisis era has room for ethical financial capitalism, but only if ethics is used as a basis for developing new incentives. Ethics can't be relied upon to balance an incentive structure that encourages excess and irresponsible risk-taking.
This summer, China hosted the 2008 Olympics without a major incident, but barely a month after the Olympic curtains fell, Beijing was scrambling to contain one of the worst cases of milk contamination in recent history. These two events mirror the gap between two images of China. On one side is China as a confident power, rapidly opening not just to foreign trade and investment, but also to ideas, values, and norms from the outside world. On the other side is the developing, more uncertain China, driven by a growing capitalist culture that is filling a moral vacuum created by the Cultural Revolution.
A recent Carnegie Council delegation to Beijing days after the Olympics found that the Chinese want to bridge this gap, and ethics is high on the agenda.
The delegation traveled to Beijing from Sept. 21 to 26, 2008, to lay the groundwork for China-Japan-U.S. dialogues on ethics, energy, climate change, and faculty development. The group included Joshua Eisenman, Asia Studies Fellow at the American Foreign Policy Council and Ph.D. candidate at UCLA; Jonathan Gage, a Carnegie Council Trustee and Principal of Booz & Company, where he also publishes its magazine strategy+business; Harry Harding, University Professor of International Affairs at the George Washington University; Devin Stewart, Director, Global Policy Innovations, Carnegie Council; and Alex Westlake, Managing Director of ClearWorld Energy in Beijing.
Meetings with senior academics, businesspeople, and think tank and government officials revealed that Chinese interest in ethics in international affairs is more cosmopolitan than many may assume. In particular, there is genuine interest in ethical business, in ethics relating to climate change and energy security, and in reconciling Western discourse with China’s traditions. Intellectuals believe that indeed, the tainted milk scandal, which hit a pitch while the delegation was in Beijing, has helped to increase the urgency for an ethical dialogue not only within the country but also between China and other countries, such as the United States. As one of the world’s most important political and economic players, many Chinese feel a growing sense of responsibility and are increasingly willing to talk with other global partners to carry out their global obligations.
As Harry Harding put it, China and the United States both justify their policies on moral grounds; they are ethical powers. China has a long ethical tradition, although the sense that China’s transition from a closed to an open economy and the quest for profits has led to “moral degradation” is widespread. Frustration is growing over the erosion of traditional values, and discussions in Beijing indicate a desire to use these values to create a new culture that can adopt from the outside and adapt to the globalized era, as Alex Westlake put it.
Yet there is also hesitation over what some see as a double standard and the West’s apparent lack of willingness to take into the account the point of view of developing nations. China and the United States, for example, share many values, although they place emphasis on different priorities, as Harding said. China’s involvement in Africa, a topic that Josh Eisenman is investigating, is a case in point. China’s association with the government of Sudan has made it the target of international criticism. Yet some have expressed doubt about American ethical commitments, such as those on climate change.
Many of the themes heard in Beijing indicate increased international engagement for China and increased world involvement in paving China’s next road to reform and a pluralist approach to ethics, based on consensus and compromise. The China Reform Forum is hosting a symposium on the next step to China’s reform next month. The topics include options for general reform as well as reforms in its market-oriented economy, society and government. All topics present opportunities to promote ethics in Chinese reforms.
Our discussions in Beijing illustrate two overarching ethical principles: the Golden Rule and the Golden Mean. Several sources, for example, suggested that China find the best elements from its historical traditions, from the outside world, and from socialist thought, implying a pluralistic mean between the three. The Golden Mean, a theme found both in the Confucian tradition as well as in Indian, Greek, and other philosophies, also could lay the foundation for equity or fairness in negotiations, ranging from trade to climate change. Moreover, a fairer negotiation process is likelier to bring about lasting solutions.
Finally, theses solutions should be based on reciprocity, respect, rights, and responsibility—captured nicely in the nearly universal concept of the Golden Rule. The Carnegie Council looks forward to helping further this dialogue.
(Photos: Carnegie Council delegates meet officials at the Chinese Academy of Social Sciences, top, at Renmin University School of International Studies, and at the Central Committee of the Communist Party of China)
This summary was prepared by Sheila Oviedo and Devin Stewart.
As my Carnegie Council colleague Evan O'Neilnoted in this space nearly a year ago, "Agriculture ... persists as the millstone around the neck of international trade negotiations, grinding the process to a halt." Now it looks likely that there will soon be movement on the so-called Doha round of trade talks at the WTO and it is agriculture that is providing the spark.
The Wall Street Journal's John W. Miller reports this morning that the European Union's recent temporary elimination of import tariffs on cereal may be the first step toward a restructuring of developed-world subsidies for agriculture (permanent link to story here).
The world's scramble for affordable food is tearing at the patchwork of agricultural tariffs that governments have long used to control trade - and offering a glimmer of hope to those trying to kick-start a stalled global trade deal....So far, the situation hasn't forced a rethinking of subsidies that farmers in the developed world receive. But some say that is an inevitable consequence of higher global food prices.
While rising food prices and crumbling trade barriers may mean good news for farmers in the developing world, there is, of course, the potential for downside. In Policy Innovations recently, Christina Madden pointed out the negative relationship between food prices and food aid.
With food prices in the United States rising at the fastest pace in 17 years, the biggest losers are developing nations. The United States is the world's leading food aid donor, but this year aid was cut to less than half of what it was in 2000. Director-General Jacques Diouf of the United Nations Food and Agriculture Organization cautioned that soaring food prices could make it harder for the international community to meet the Millennium Development Goals of halving extreme poverty and hunger by 2015.
Fundamental tradeoffs such as this are responsible for economics' reputation as the dismal science. It is tempting to think of these things as the economic equivalent of Newton's 3rd law: For every action, there is an equal and opposite reaction. But it is precisely in this that economics diverges from the hard sciences: The opposite reactions are often not equal. In this case, poor farmers in the developing world may be better off, and food-poor populations may be worse off, but it is unlikely that they will be so in equal measure. One group's benefit or loss is likely to be out of proportion to the other. Meaning that the possibility exists for an absolute increase in well-being. Which is, after all, the point.
Goldman Sachs has recently been lauded for its risk mitigation systems, taking actions months before the sub prime mess broke out. Some people have said that Goldman had a more integrated exposure risk mitigation system, while others attributed Goldman’s success to the use of realistic, hardnosed analysis, unclouded by rose colored glasses. What about companies trying to mitigate against brand risk? After all, brand is where much of the value of firms is tied up.
Conroy said that a revolution in standards certification is underway and has been fueled by successful "market campaigns" by NGOs, the development of outside certification systems, the presence of champions for change within companies, and the growing market for ethical products. Market campaigns call attention to social and environmental problems in a corporate supply chain, problems that go beyond the jurisdiction of the WTO.
The growing power of corporate brands is two-sided. While a brand can help establish a company’s dominance in a particular industry, it also makes a company vulnerable to attacks from the public on that brand. A brand value can be estimated as the total value of a company minus its physical assets. Conroy estimated that McDonald’s brand is about 70 percent of its value and that figure is about 64 percent for Coca Cola.
Certification systems are a set of principles, criteria, and indicators negotiated by all stakeholders impacted by a company’s operations. The result of these negotiations is the highest politically accepted standard. These standards allow consumers and civil society to be more nuanced in signaling their preferences to companies—beyond just saying, “Stop what you are doing!”
The relationship between civil society and corporations allows companies to positively mitigate against brand risk. Certification systems are risk management systems against future attacks on brands, says Conroy.
It was a fascinating discussion and certainly a tribute to the growing power of NGOs. The audio from this event will be up on the Carnegie Council's online magazine Policy Innovations, a project that Conroy also was instrumental in helping to start.
That torrential rain storm and the tornado in Brooklyn yesterday proved that Manhattan is indeed a fragile ecosystem. Floods halted the the nation's largest transit system. In my neighborhood, the Second Avenue bus line had lines of people stretching around the block. People were waiting for buses, not free ice cream.
Today, we just finished an excellent public forum on the Ethics of Climate Change at the Carnegie Council with RSA's Robin Thompson. In my mind some of the main ethical questions related to climate change cover the burden and solutions:
Burden: Distributing the burden of climate change, but on whom? On rich countries? On those most affected? On those with a history of polluting? On those with the ability to address the problem? Or shall we think about the actors that can help--countries, companies, or individuals? As one person said in the conference, it is probably all of the above.
Solutions: Kyoto has been criticized as being insufficient, but you have to start somewhere. What about the role of technology and transfer? The world has at its disposal much more advanced technologies now compared with those available during the Industrial Revolution. Or, as Peter Singer has suggested, how about dividing up the world's population to get a country's right to pollute and then trading polluting rights between countries based on need?
Some of the main points articulated during today's meeting include:
The importance of educating the public, of having accurate information, and considering what the data mean for the future.
Importance of interconnectedness, which can help people to change in faraway places, having a ripple effect.
The need to change the culture, to redefine environmental awareness as not just ethical but also cool. Al Gore is now considered a rock star--that's a good start.
The approach must be sane--we shouldn't panic or beat ourselves up. Sane and calm action needed.
Unintended consequences abound--a taxi driver who chooses an energy saving cab can use that money to put his kids through school, presenting odd tradeoffs like gas vs. education.
Think small, scale up, and imagine the possibilities. Get involved, push for political action before it is too late.
Finally, people and organizations must cooperate to put human development first.
The Wall Street Journal ran an interview with London Business School senior fellow Craig Smith, who also leads a project with the European Academy of Business in Society to get CSR into mainstream business courses. Smith says the biggest obstacles to getting MBA courses to teach ethics effectively is a lack of case studies, which business schools often use as a main part of their curriculum in general.
"We did an audit and found that about 1,000 cases out there with something on corporate responsibility, but many are not usable because they're dated or because social responsibility is only tangential to the case," Smith said.
Smith also said many professors simply feel reluctant discussing ethical issues because it is out of their "comfort zone," but he recommends professors use discussions to spark debate.
Getting people to think about ethics is what the Carnegie Council is all about. Our program Global Policy Innovations publishes Policy Innovations online magazine, which features innovative solutions to ethical problems in the context of economic globalization. We have a section devoted to these Innovations here. You could call them case studies in global civil society solutions.
Our program has also launched a workshop series that serves as a dialogue between corporations and civil society. At these workshops, participants learn about corporate and civil society approaches to shared ethical problems. Read about and listen to the first iteration with BP, GE, the Business and Human Rights Resource Centre, and the Interfaith Center on Corporate Responsibility here.
The BBC just reported that China is considering a new law to protect private property, suggesting more openness, transparency, and reform in China. From the IHT:
"China's Parliament began debating landmark legislation to protect private property on Thursday following a rare and lengthy public consultation that suggests the Communist Party may be willing to allow more scrutiny of controversial government policies."
The Chinese government is constantly innovating and reinventing itself. It seems China has wisely taken into consideration the role of private property protection in economic development, an issue often associated with Peruvian economist Hernando De Soto, who wrote in the New York Times a few years ago:
"The single most important source of funds for new businesses in the United States is a mortgage on the entrepreneur's house. These assets can also provide a link to the owner's credit history, an accountable address for the collection of debts and taxes, the basis for the creation of reliable and universal public utilities, and a foundation for the creation of securities... Third World and former communist nations do not have this representational process. As a result, most of them are undercapitalized..."
Read Christian Barry's interview with De Soto at the Carnegie Council here and De Soto's Carnegie Council Morgenthau lecture here.
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