A little kindness goes a long way. (View from the City).

The ruthless, man-eat-man attitude of some multinationals could prove their downfall. International shareholders are now demanding that corporations demonstrate that their activities benefit the societies in which they operate.

In today's fast-changing world, true multinational corporations (MNCs) should have dual objectives. Firstly, improving shareholder value through greater efficiencies thereby providing higher returns on capital and assets; and secondly, pursuing the goal of 'corporate social responsibility' (CSR) i.e. embracing the economic, environmental and social aspects of business.

Those MNCs successfully able to integrate the twin goals of profitability with CSR would command more respect from shareholder investors, as well as stakeholders such as customers, employees and local communities. Companies with a genuine concern for the wider society, it is believed, are in better position to improve their long-term competitive advantage over rivals as a more caring attitude can result in higher profits. As the Nigerian President, Olusegun Obasanjo, neatly puts it: "There is a need to balance quick returns with the social imperative of improving quality of life."

Two recent surveys have found evidence of increasing demand for a good corporate 'socio-code' and creating a caring society. An Environics International survey of 1,000 people in 25 countries revealed a near consensus that companies should deploy their expertise and high technology to tackle socio-economic problems. Another survey, of executives at the global accountancy firm PriceWaterhouseCooper, revealed that 70% believed that CSR was a key to their company's profitability.

The European Commission in Brussels has also noted: "CSR creates value for society by contributing to a more sustainable development." Essentially, CSR improves public image, encourages better recruitment and promotes sales to growing environmentally conscious consumers.

PUBLIC RELATIONS 

The international oil companies, (IOCs) operating in west Africa, where the potential for untapped oil and gas reserves are immense, all make claims to operate ethically. In November 1995, Royal Dutch/Shell was at the centre of local and world-wide criticism following the execution of Ogoni environmental activist, Ken Saro-Wiwa by the notoriously corrupt and brutal regime of the late military dictator Sani Abacha.

In recent years, however, Shell Petroleum Development Company of Nigeria (which produces about 40% of the country's total oil output) is making determined efforts to become a good 'corporate citizen' by investing in socially responsible projects and leading the search for alternative sources of clean energy. The company employs about 10,000 indigenous people, of which 40% are full-time staff.

Ron van den Berg, the managing director of Shell said: "We remain focused on our social responsibility toward host communities with an increase in our community investments budget from $52m in 1999 to $60m in 2000." Since 1998, Shell has diversified its aid-programme to include healthcare, education, water-supply and micro-lending schemes for small viable businesses and farmers. Last year, the company repaired 54 steel pumps in the Niger River Delta (the heart of Nigeria's oil wealth) and funded scholarships to 13,000 high school and 1,900 college students. Further example of social investment is a nature park on Bonny Island, where some rare and endangered species like hippopotamuses can swim in peace.

Nigeria Liquefied Natural Gas (NLNG), the joint venture between the Nigerian National Petroleum Corporation and oil majors (Shell, TotalFinaElf and Agip) is developing the park. NLNG has substantial expansion plans for its $3.8bn plant in Bonny Island. There are of course continuing problems of large-scale pollution in the Niger Delta. The responsibility for the cleanup operations rests with both the Ministry of Environment and the IOCs who make handsome profits thanks to lower production costs.

DISTURBING LOCAL COMMUNITIES

There has been much heated debate over the World Bank-supported Chad-Cameroon oil pipeline because of its environmental spill-over effects. The $4bn project, operated by ExxonMobil in partnership with ChevronTexaco and Petronas, is scheduled to be completed by late 2003 and will run 660 miles from Chad's Doba basin through virgin rainforests, to an offshore Kribi terminal in Cameroon. But local activists argue that the pipeline will benefit mostly big companies and may fail to promote community development. Non-governmental organisations, such as the Centre pour l'Environnement et le Development (Cameroon), commented: "The environmental and social risks outweighed the project's potential rewards," and "there are not enough indirect benefits to the economy.

The World Bank strongly defends the pipeline, where revenues to Chad over a 25-year production period will be $2bn (from royalties, taxes and dividends), while potential rewards for Cameroon are estimated at $500m from transit fees. Moreover, the Bank points out that the southern Chad region, where three oilfields containing total reserves of 1,000m barrels are located, will also benefit from increased spending on basic infrastructure and social programmes. Shahbaz Mavaddat, of International Finance Corporation, said: "Without oil, it would take Chad 35 years to double its gross domestic product. This is Chad's only chance to lift itself out of extreme poverty."

ExxonMobil is spending about $8m on compensating for farmlands destroyed by the 1,050km pipeline and for resettlement, as well as agreeing to observe global environmental and social standards. Interestingly, the World Bank argues that the largest-ever private infrastructure investment in sub-Saharan Africa could, in fact, encourage greater democracy. "The broad consultation process undertaken for the project was unprecedented in Chad and opened the way for increased civil society participation in public debates over broad policy issues," says the Bank. ExxonMobil reported that there were 900 public consultation meetings in over 300 villages during the course of project planning.

ETHICAL INVESTMENT

Socially-conscious people in more advanced countries prefer investing in listed-companies whose core activities are mostly 'green investments'. Therefore, ethical investors avoid businesses such as nuclear power, armaments, alcohol and tobacco and even avoid investing in those countries with poor human rights records, like today's Burma or previously, South Africa under the apartheid era and Chile during the long repressive rule of General Augusto Pinochet.

The principle underpinning ethical investing is whether it is good for the society. The volume of funds in socially responsible investment (SRI) products has grown significantly. Last year, before the stock-markets' meltdown, the sum of professionally-managed SRI funds had reached $2.3 trillion in America and between $175bn-$200bn in Britain.

John Browne, chief executive of the oil giant BPplc, Britains largest company, has commented: "One strongly argued view is that in poorer countries the role of international corporations is exploitative, environmentally damaging, hostile to human rights and democracy, and divisive because of the way large commercial organisations interact with established communities. Such views are profoundly mistaken. Indeed, they are dangerous." BP's head also added: "Those who argue against globalisation are effectively denying the world's poor the means of escape and the chance to share in the prosperity they enjoy themselves. This is morally unacceptable."

Despite improved private-public participation, those MNCs with major operations in developing countries face significant challenges ahead in fostering long-lasting community relations, based on respect for the environment and human rights.