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Week of March 29, 2004

Corporations and common good

Bad publicity, corporate conscience lead some big businesses to emphasize integrity -- lawyer

By BYRON PRICE
Special to the WCR
Calgary

Corporations need to assume some responsibility for the common good. And, in some significant cases, they are doing just that, says a veteran lawyer in the Calgary oil patch.

"Corporations are there to earn money but they also have social responsibility and they have the money to carry out that responsibility," Donna Kennedy-Glans said in a recent talk at St. Mary's College.

In some cases, bad publicity has forced corporations to assume great responsibility for the common good. But, in other cases, businesses are finding that it is to their own benefit to meet the needs of people affected by large corporate projects.

Kennedy-Glans - until recently vice-president with Nexen Inc., formerly Canadian Occidental Petroleum - spoke on corporate integrity at St. Mary's and then was later interviewed for the WCR.

Paradigm has changed

"The old paradigm of doing business has changed," she said. "Corporations have to take into consideration the environment, human rights, lenders, insurers and stakeholders as never before in history.

"Corporate management fears negative publicity as reputations of companies have intrinsic value. A good example of this is the experience of a Calgary company, Talisman. Their operation in the Sudan-Africa was in a hotbed of human rights abuses by the military government. Human rights and other groups put a great deal of pressure on Talisman and they pulled out - 'Sudan Fatigue.'"

Kennedy-Glans poses the question companies are asking themselves these days: "Will investment in a particular operating environment expose our company to the same risks as other companies that have borne the brunt of negative media scrutiny?"

She explained that prior to the Enron fiasco, it was believed that in most cases the individual companies bore the brunt of negative attention. The exceptions were those where a major incident triggered an adjustment in the industry practices.

For example, after the 1984 disaster of Union Carbide's plant in Bhopal, India, a more stringent set of standards was developed by the chemical industry. The standards regarding oil tankers also changed due to the 1989 oil spill of the Exxon Valdez on the Alaskan coastline. We now have double-hulled tankers.

Many sets of "voluntary" guidelines for corporate behaviour have been issued by advocacy groups and industry coalitions such as: best business practices for operating in conflict zones established by the United Nations, human rights expectations set by Amnesty International, and environmental standards set by financial institutions.

Kennedy-Glans attributes the evolution of these guidelines to poor corporate performance, risk mitigation priorities, advocacy of best practices fuelled by critics' raising of public awareness of these poor practices.

It is in this atmosphere that the "Integrity Journey" model can be effective and produce a win for all parties, she said. One crucial principle in this model is the common good. The interpretation of the common good may be different for companies and for the people affected by exploration.

"The Integrity Journey is a listening model, a model that stresses the need to understand the other's point of view and their expectations. In certain cases, old baggage or history must get out of the way so progress can take place."

Off shore drilling

Off shore drilling near Trinidad provides an example of how the model can work.

Kennedy-Glans describes the situation: "The Trinidadians want a 'made in Trinidad' solution. They want employment for their people. They wish to set policy and become part of the new business.

"Birmingham, the company that was drilling in Trinidad, did its risk assessment and then withdrew from the project. However, another company, Occidental, felt it could manage the risk. They believed they could talk the same language of common good, understand it, make money for their shareholders and add to Trinidadians' quality of life."

In contrast, Kennedy-Glans describes a situation where negotiations have become bogged down and where the application of the Integrity Journey model could be of great assistance.

Differing perspectives

Corporations see the common good involved with the proposed Mackenzie Valley Pipeline differently than do the aboriginal people who inhabit those lands. But the corporations cannot just pay some royalties and get on with business. The native people see this as an opportunity to have their people trained in worthwhile jobs for the long haul.

The corporations can no longer simply import all workers, sub-contractors and spin off services from the South; they need to consider the infrastructure and workers of the North. The process is moving slowly.

Kennedy-Glans maintains the Integrity Journey model of listening and understanding the expectations of all stakeholders can help to come to an equitable agreement that will satisfy insurers, investors, stockholders and the interests of the aboriginal people.

Sometimes one has to stop history from working against the common good. Corporations and the aboriginal people have to be willing to take responsibility for the common good and to give concessions in light of the common good, she said.

The ways of the past for corporations are no longer blindly accepted. In an atmosphere of corporate scandals, insider trading, misappropriation of funds and outright bribery, society has become cynical of the corporate world. Kennedy-Glans offers an alternative way of doing business that brings integrity back to the table.

Letter to the Editor - 04/05/04
Letter to the Editor - 04/26/04

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