CSR as a New Form of Colonialism? China General Nuclear in Namibia

For my final blog post I take a look at China General Nuclear (CGN) and its CSR efforts in a country that we examined this week in our readings on CSR in different cultural contexts — Namibia. CGN was featured in a New York Times Magazine article this week about the Chinese corporate presence in Africa. That article raised similar questions to the Littlewood (2015) article that we read for class, namely whether or not the corporation’s CSR programs are sustainable and actually benefit the Namibian people and the government.

Littlewood does not mention China or Chinese companies specifically in his article about mining and CSR in Namibia, however, according to the Times, China’s relationship with Africa goes back to the 1960s when it was one of the few countries to invest in CSR programs in the continent such as building a railroad from Tanzania to Zambia. Beijing also backed the black national movement and its struggle against apartheid and South Africa. In the Littlewood article the author does make several references to the legacy and negative impact of apartheid and the relationship with South Africa on modern day mining in Namibia.

Today, companies like CGN pursue CSR development projects that Namibia could not implement on its own. The Times article points out that Chinese companies offer aid without any strings attached, unlike aid coming from most Western countries which require Namibian agreements involving human rights, political ethics, and fiscal restraint. However, some of the Chinese projects are financed via loans that the Namibian people and their government cannot afford pay back, and the projects themselves require that a Chinese company must take the lead, “ensuring that the work, skills and profits are largely kept in the Chinese family” (Larmer, 2017). Plus, recently a number of Chinese nationals have been implicated in a series of scandals within Namibia including tax evasion, bribery, and wildlife poaching.

According to its website, CGN has brought thousands of jobs to Namibia, established foundations to carry out charitable projects supporting Namibian children and women, provided job skills training for local employees, offered scholarships, and supported education initiatives and sports. CGN was the first Chinese company in Namibia to allow a labor union to set up shop at a mine. Independent unions are essentially illegal in China. In this case, a local union, the Metal and Allied Namibian Workers Union, waged a campaign against Chinese companies in Namibia, accusing them of paying Namibians less than Chinese workers and other abuses. CGN met with the union leader and agreed to bring the union into their company.

Of course, Chinese companies operating in Namibia, like CGN, do not like the criticism leveled at them about their business practices in China. Their spokespeople are quick to point out the many positive CSR projects they have implemented and the number of jobs they brought to Namibia. However, the Namibian government is starting to push back against some of the practices that it feels take advantage of Namibia and its people like the foreign loans that have pushed up the level of Namibia’s debt, and pubic anger is growing over some of the business proposals that would have a negative environmental impact.

This article is a nice follow-up to the Littlewood article. At the start of the article the author talks about a definition of sustainable development that is human-centric and pro-poor rather than focused on the instrumental needs of the corporation. In his conclusion, Littlewood makes some recommendations for how the parties involved in mining in Namibia should manage their relationships going forward in order to address some of the power imbalances and the issues with CSR and mining in Namibia. The author specifically recommends more open relationships built on dialog, transparency and trust. Based on what I read in the Times article it appears that at least some of the parties involved are speaking up and trying to re-negotiate their relationships with each other. The Namibian government, in concert with local activists, is trying to enact stronger environmental legislation and increase its ability to ensure that mining companies comply with laws. Other civil social organizations are focused on improving working conditions for local employees. What I gleaned from the Littlewood article is that that also needs to be more joint planning on sustainable development goals and objectives between the all parties involved, and more collaboration between the mining companies. Hopefully, the mining companies, the government, the activists and the community members will work together to find a way to support each other in a sustainable way that is human-centric and pro-poor.

References

Littlewood, D. (2015). Corporate social responsibility, mining and sustainable development in Namibia: Critical reflections through a relational lens. Development Southern Africa, 32(2), 240-257. doi:10.1080/0376835X.2014.984833

Larmer, B. (2017). Is China the world’s new colonial power? New York Times Magazine Retrieved from https://nyti.ms/2pr6ZWJ

Walmart, CSR, Social Justice and Profit Making

Wal-Mart is a very controversial multinational corporation (MNC). Over the years, it has been accused of being the cause of many social and economic problems such as the defeat of local small businesses, poor compensation of its employees, price manipulation, anti-union practices, bribery and corruption (Sethi, 2014). One could think of Wal-Mart as the “anti-CSR” corporation. In fact, the founder of the company, Sam Walton, voiced his disbelief in CSR. He said that the company’s primary duty was to make a profit for its shareholders (Walton and Huey, 1992). However, even Wal-Mart can practice CSR and still make a profit. This blog post is about Wal-Mart’s nontraditional banking business and how it is considered to be a vehicle for economic justice.

In 2007, Wal-Mart opened 1,000 in-house Money Centers targeting consumers who do not have traditional bank accounts and who rely on check-cashing services and payday moneylenders for their financial needs. The Wal-Mart Money Centers charge low fees for their services compared to check-cashing services and payday lenders. Wal-Mart also offers pre-loaded Visa credit cards, and an international money transfer service with fees that are considerably less expensive than those of its competitors like Western Union.

Approximately forty-four percent of the Hispanic/Latino population of the U.S. does not have access to a traditional bank account (Intae and InSoo, 2010). As a result, they are vulnerable to paying high fees at check-cashing services, becoming victims of predatory lending practices, and becoming criminal targets due to carrying large sums of cash or keeping cash at home because of a lack of a bank account or a credit history. The following table illustrates how widespread the problem was back in 2004.

Wal-Mart’s Money Centers enable consumers to not only safely and more cheaply manage their financial transactions, but as Intae and InSoo (2010) discuss in their article on Wal-Mart and CSR, Wal-Mart’s competitive prices in the international remittance service industry helped to lower fees throughout the industry, enabling Hispanic/Latino consumers to transmit money that helps contribute to wealth redistribution, and economic justice in Latin-American countries. Funds sent from immigrants act as a lifeline for the receiving families and communities. According to Lowell (2004), approximately 75% of the money received is spent on necessities such as food, medicine or clothing. A portion of the rest of the money is either saved or invested. Thus, the money saved on fees by remitting funds via the Wal-Mart Money Centers gives more money to the families and communities.

remittance

Wal-Mart declines to provide information regarding how much money it makes from financial services (Martin & Clifford, 2011), but the company clearly has a profit-making motive behind the Money Centers. Many of the customers that use the Money Centers stay and shop in Wal-Mart after cashing their checks or transferring their funds.

This case reminded me of some of our discussions around the Nike Corporation and its sport-focused social justice programs (Hayhurst and Szto). Nike and Walmart are both offering a form of social justice. In Wal-Mart’s case, the money saved by immigrant workers that use the Money Center’s financial services helps to provide more money to workers’ families, promotes the well-being of communities, supports micro investments, and helps to improve social conditions in Central and South America. Further, Wal-Mart has used its considerable size and power to force its competitors to lower fees throughout the industry. Wal-Mart, like Nike, clearly believes that CSR should benefit people, but should also be profitable for a corporation.

That said, I am somewhat skeptical about Inate and InSoo’s claim (2010) that Wal-Mart’s Money Centers are represent a true CSR initiative. I think that Wal-Mart set out to establish a new profit-making venture that would draw more customers into its stores and that the economic justice piece was a by product of that venture. However, I do not disagree with the author’s assessment that the Money Centers are helping publics who are underserved by traditional banks and helping to transmit money that is desperately needed to people and communities in under developed countries.

References:

Intae, Y., & InSoo, C. (2010). Wal-Mart’s nontraditional banking business and corporate social responsibility. Social Responsibility Journal, (4), 551. doi:10.1108/17471111011083437

Lowell, L. (2004), ‘‘Immigrant remittances: trends and impacts, here and abroad’’, PowerPoint slides presented at the Federal Reserve Bank of Chicago’s Financial Access for Immigrants: Learning from Diverse  Perspectives,  April,  available  at:  http://www.chicagofed.org/news_and_conferences/conferences_and_events/files/financial_access_for_immigrants_lowell.pdf (accessed October 11,2007).

Martin, A., & Clifford, S. (2011, November 8). High bank fees give Wal-Mart a money aisle. New York Times, p. 1.

Orzoco, M. (2004), ‘‘Markets and financial democracy: the case for remittance transfers’’, PowerPoint slides presented at the Federal Reserve Bank of Chicago, IL, April 14, available at: http://www.chicagofed.org/news_and_conferences/conferences_and_events/files/financial_access_for_immigrants_orozco.pdf  (accessed October 2, 2007).

Prakash, S. (2014). The Wal-Mart affair – where implausible deniability is the coin of the realm. Corporate Governance, (3), 424. doi:10.1108/CG-10-2013-0112

Walton, S. and Huey, J. (1992), Sam Walton, Made in America: My story, Doubleday, New York, NY.

IKEA’s Road to CSR

IKEA is the world’s largest, multinational, flat-pack home furnishing retail chain. It operates over 300 stores in 48 countries worldwide. IKEA’s highly successful business model is based on low prices, which it achieves by directly controlling strategic resources (e.g., wood, labor) through a large network of suppliers, many of whom are located in developing countries. IKEA has long been a target of environmental activists and NGOs who scrutinize its business practices because of its low cost business model and its use of suppliers in developing nations. In fact, NGOs and other external stakeholders have helped drive the development of IKEA’s CSR programs.

IKEA’s CSR policy was formulated in the 1980s and 1990s because of increased global attention on social justice issues and environmental disasters. In 1990, IKEA hired its first Manager of Environment, and in 1993, the company introduced an official environmental policy.  However, in 1994 IKEA was associated with two alarming documentaries revealing the extensive use of child labor in carpet production among IKEA suppliers in South East Asia. IKEA responded to that crisis by including a strong focus on human rights perspectives in its CSR policy, and partnering with UNICEF for advice and assistance regarding child labor issues in IKEA’s supply chain in India. For my case reflection, I choose to focus on two aspects of IKEA’s CSR experience – its reactive use of CSR in response to crisis and criticism, and IKEA’s partnership with UNICEF.

In my presentation, I mentioned that IKEA has been nicknamed the ‘Teflon Company’ because it reacts quickly when its image or reputation is challenged. For example, in the 1980s, poisonous substances were found in IKEA particleboards sold in Europe. That same year, IKEA partnered with a trade union IFBWW (the International Federation of Building and Wood Workers), introduced new requirements for its suppliers, and implemented large-scale testing of its products (Maon, 2010).

The IKEA Corporation appears to be a classic example of the type of company that Vanhamme and Grobben (2009) discuss in their article on the effectiveness of CSR history in countering negative publicity. The authors conducted a study that showed that companies with a long history of involvement in CSR could cautiously use CSR communication as part of their crisis communication strategy. One can point to the long-standing partnership that IKEA has with UNICEF, and the millions of euro that IKEA has dedicated to improving the lives of children worldwide, and say that IKEA has built a very strong CSR reputation.

In researching IKEA’s CSR programs and activities with UNICEF, I came across relevant information on the IKEA Foundation website, in a blog, in IKEA’s annual sustainability report, and in numerous YouTube videos, and social media sites. Consumers, however, will not typically find any mention of IKEA’s CSR programs in its advertising and marketing materials, including the famous IKEA catalogs. IKEA prefers to keep a low CSR profile in its stores and its marketing efforts in order to avoid becoming the target of anti-globalization organizations (Maon, 2010 ). This approach fits in with the Vanhamme and Groben (2008) study that found that Americans considered information about CSR activities that they gain from third-party sources to be more credible than information provided by the company itself. Although IKEA positions the issues of child poverty and child labor as a charity case, IKEA and UNICEF actually do focus a lot of attention, money, and CSR activities on the underlying causes of the issues, unlike the Nike Corporation and its CSR program on Native health (Hayhurst and Szto, 2016). To read more about the IKEA Foundation and its partnership with UNICEF visit the IKEA Foundation website at — https://www.ikeafoundation.org/.

Hayhurst, L. C., & Szto, C. (2016). Corporatizating activism through sport-focused social justice? Investigating Nike’s corporate responsibility initiatives in sport for development and peace. Journal Of Sport & Social Issues, 40(6), 522-544.

Maon, F. (2010). Ikea’s road to corporate social responsibility. The Retail Digest, 74.

Vanhamme, J., & Grobben, B. (2009). ‘Too good to be true!’. The effectiveness of CSR history in countering negative publicity. Journal of Business Ethics, 273.