I. Before you read, answer the questions:

• Do you think multinational companies operating in poor or developing countries have a duty to improve the quality of people’s lives in these countries? Why (not)?

II. Reading

Read this article and fulfill the tasks below.

TAKE A GOOD LOOK AT THE LOCAL ISSUES

1 Because business has access to financial resources and modern management methods, it might seem a logical candidate to contribute to the development of poor communities in the countries in which it operates. With social responsibility on corporate minds, the will to participate certainly exists. However, since companies are not experts in health or education, and many lack staff equipped to manage social programmes, they need to tread extremely carefully to ensure that, those programmes do not backfire.

2 The issue is most contentious in the extractive industries, whose companies create vast footprints wherever they invest and whose operations are often located in countries run by oppressive and corrupt regimes. Here, the thorniest issue is defining the limits of responsibility, if an oil company builds hospitals and schools for communities immediately surrounding its operations, conflicts can arise with neighbouring villages that feel left out. Yet if companies do nothing they will be operating in what Richard Sandbrook, special adviser to the United Nations Development Programme, calls ‘an oasis of affluence in a desert of need.’

3 Another danger is that, by improving life for those around their operations, multinationals call creates a culture of dependence. The question then arises as to what happens to the programmes companies’ have funded or the townships they have built when mine needs to be closed or conflict forces investments to be withdrawn. In recent years, however, many have become better equipped to deal with such issues. Big mining companies, which often work in remote areas populated by indigenous people, now employ sociologists and anthropologists.

4. Multinationals have learned to work with local governments, unions and non-governmental organisations (NGOs) in rolling out social programmes, and many conduct social-impact studies before even embarking on an investment. ‘The large mining companies I’ve dealt with have become so experienced at this that they have community plans, closure plans for their mines and the whole thing is done on a basis that is so much more thorough than it used to be,’ says Mr. Sandbrook. ‘But there are still plenty of companies that do just abandon a place and leave a mess.’

5. Even for less controversial businesses working in more stable parts of the world, community investments or philantropic programmes must be approached in a measured way. ‘The first thing is to understand the local conditions,’ says Adrian Hodges, managing director of International Business Leaders Forum. ‘Then you must be clear about what it is you have to offer and cash is probably not the answer.’

6 Such resources include ice technology, office space and business expertise. Accenture, the technology and consulting company, for example, offers its services to NGOs in developing countries at an affordable price via Accenture Development Partnerships, a non-profit group. When companies offer their own skills or services, however, transparency is essential. A software company partnering with an education establishment to promote better schooling, for example, may he also selling software to that institution. The danger is that it’s seen as self serving,’ says John Kline, professor in international business diplomacy at Georgetown University. ‘So it’s important that there is a partner group that’s separate from the company so there’s credibility to it.^’

7 Often, companies^’ day-to-day business has unforeseen benefits. Pfizer, the Pharmaceuticals company, is trying to map what it calls ‘value transfer’ throughout the business. Nancy Nielsen, Pfizer’s senior director of corporate citizenship, cites the example of construction sites where the company has imposed safety standards requiring, for example, workers to wear hand hats and shoes, a practice that has subsequently been adopted elsewhere.

8 If organisations focus on spreading the benefits of their investment outwards - through, for example, local sourcing - they can make substantial contributions. ‘Unilever in Vietnam employs about 4,500 people directly, but has created 800 to 1,000 small businesses in support as well so the numbers get really quite big,’ says Mr. Sandbrook. ‘In the past 15 years, everything bas been concentrated on the environmental story and to some degree on the social story, rather forgetting that actually the biggest contribution companies can make to development is the economic story. Rightly, the pendulum is now swinging back towards that one.’