It is not often that we see business news like this: Adani Ports & Special Economic Zone (APSEZ) was removed from the Dow Jones Sustainability Indices on April 15 for its business links with the Myanmar military. The regime, that engineered a coup on February 1 and has been shooting hundreds of protestors since, “are alleged to have committed serious human rights abuses under international law,” the S&P Dow Jones Indices said.
This rap on the knuckles is expected to hamper the Adani Group’s ability to raise funds on the international financial market, where environmental, social, and governance risk evaluation has become increasingly important.
Capitalism, the dominant international economic system, is all about private ownership and investment driving business with the object of making profit. There are rules in different markets, but ethics is certainly not high on the list. A ‘good’ business is one that makes money; and a ‘bad’ one is one that fails to survive competition in the market place.
WITHER ETHICS?
However, over the years, public opprobrium has been building up against ‘sharks’—those multinational corporations that have used every trick in the book to profit at the cost of human rights and the environment. These factors now also determine what is a ‘good’ or a ‘bad’ company.
The rise of Adolf Hitler and Nazi Germany was built on a phalanx of corporations that collaborated and profited from the fascist war machine. Some of the big names are well known. Krupp Industries manufactured the steel, built the U-boats, the Panzer tanks, and the artillery for war. Degussa AG produced the infamous pesticide Zyklon B used in Nazi Germany’s gas chambers.
But these are German companies. What about American companies that profited from the rise of Nazism in Europe? Hugo Boss made ‘designer’ uniforms for Adolf Hitler’s infamous S.S. units and youth brigades using slave labour from concentration camps. Coca Cola and Kodak were some of the other willing participants; and so was the news organization Associated Press (AP), that bent itself to spread propaganda on behalf of the Nazi Third Reich.
It’s not that the world learnt from the defeat of fascism. Colonialism as a system fell apart, but financial imperialism kept much of the globe under the tutelage of the developed powers. Friendly regimes were propped up in Africa, Asia, and Latin America, and the independent ones dislodged at short notice. The arms producers and the distribution cartels have been the dirty underbelly of the modern world. By their very nature, corporations that produce and export arms thrive on conflict, destabilization and human suffering.
Take the recent war in Yemen. Largely bank-rolled by the US, Saudi Arabia and 8 other Arab states have carried out air and ground attacks since 2015 to support forces loyal to President Abdrabbuh Mansour Hadi. The other side, the Houthi rebels, backed militarily by Iran, have forced a stalemate. The UN calls the war the world’s worst humanitarian disaster. It has left almost a quarter of a million people dead, more than half from malnutrition and disease.
THE ARMS INDUSTRY
Who profited? Data from the Stockholm International Peace Research Institute (SIPRI) shows that arms sales by the world’s 25 largest arms companies totaled US$361 billion in 2019, an 8.5 per cent increase over their total sales in 2018. In 2019, the top five arms companies were US-based: Lockheed Martin, Boeing, Northrop Grumman, Raytheon, and General Dynamics.
But the others were not far behind. After the USA, there were 3 Chinese companies in the top 10 and China in 2019 had the second largest share of arms sales at 16 per cent. The six West European companies together accounted for 18 per cent. Two Russian companies in the ranking cornered 3.9 per cent. Increasingly, public opinion is appalled at how big corporations are running the foreign policy of many Western countries. Then there are those causing irreversible damage to the environment.
People have begun to question how humanity has turned against itself. And so there is course correction. British oil and gas company, BP, was responsible for one of the America’s largest environmental disasters, when its oil well leaked 4.9 million of barrels of oil into the Gulf of Mexico in 2010. The well was capped and the company had to pay a record $20.7 billion in fines and compensation.
In comparison, Union Carbide paid the princely sum of $470 million (`715 crore) for the killer Bhopal gas leak in 1984 which claimed 3,000 lives. Ever since, there have been protests at the poor pay-back. Finally, in 2010, the Union government moved the Supreme Court for `7,844 crore additional compensation. Again too small? What should be the penalty levied on a corporation for such a large human disaster?
Which brings us back to Adani Ports collaborating with the Myanmar military for building a $290 million container port. S&P Dow Jones Indices has set a good example. Companies should and must be accountable for damage their projects and policies inflict on human beings and the environment. And, hopefully, we are moving closer to an international norm to blacklist and penalize such companies.