Читать книгу Conflict Minerals in the Democratic Republic of Congo - Dylan Scudder - Страница 14
ОглавлениеYou are a manager at a company called Pentalemma Inc., which specializes in stakeholder management. The company took its name from the Greek penta (five) and lemma (assumption), the forgotten wisdom of identifying five solutions embedded within a problem and then choosing the best one.1 Pentalemma’s headquarters are near Geneva, Switzerland, with several hundred employees around the world. The most frequent problem that Pentalemma’s clients have is that their stakeholders disagree with each other. Pentalemma’s competitors are often limited in their ability to help clients find creative solutions because they tend not to think beyond dilemmas, which offer only two options.
Pentalemma managers offer a better service because they can see five solutions to stakeholder problems. They find the client’s most difficult problem, usually a disagreement between their stakeholders, and then create five options for them to choose from. Clients try to choose the best “win-win” option for themselves and their stakeholders.
As a Pentalemma manager, you help your clients improve their business performance by working with them to resolve as many ←1 | 2→stakeholder dilemmas as possible. Most of Pentalemma’s clients are big companies with offices in many countries around the world. Some of these offices are in unstable or dangerous places. Your client is California-based Speedy Devices Inc. (SD), a global producer of consumer electronics (see Figure 1.1 below). SD now has a problem at one of its suppliers in Africa, in the Democratic Republic of Congo (DRC).
Figure 1.1: Office locations of Speedy Devices and Pentalemma Inc.
Based in a small town just north of San Francisco, Speedy Devices is the second-largest producer of consumer electronics in the world. Founded in 1973, SD employs nearly 120,000 people all over the world and has an estimated value of $600 billion.
SD has two main product lines; consumer electronics and computer software. Its main hardware products are personal computers and smartphones. Since the 1980s, the company’s customer base has continued to grow at a swift pace. SD reports that “Nearly 20% of the human population uses one of our products every day.”
SD is a global leader in Corporate Social Responsibility (CSR). It currently has just over 300 retail stores in 15 countries. The company ←2 | 3→also has a strong commitment to society and the environment. SD states in its annual report that its mission is “to manage the triple bottom line so that people, planet and profit are always in balance.”
The basic idea of CSR is that a business is part of the community, so the business must act as a member of the community, with rights and responsibilities. The business gains from the community, so it understands that it is important to give something back. It wants to do something good for the community. This means that it should be possible to make a profit and be a responsible corporate citizen at the same time.
However, SD is also one of the world’s largest buyers of the rare “conflict mineral” called coltan, which is vital for the assembly of microchip-based electronic devices. Over the last 20 years, more and more people have complained that consumer electronics companies, including SD, are guilty of allowing a range of serious abuses in the coltan business. SD has asked Pentalemma Inc. for advice on the next steps.
Setting
As a Pentalemma consultant, you will focus on South Kivu, a mineral-rich province in the southeast of the Democratic Republic of the Congo. SD secures most of its coltan from South Kivu, where it employs a largely expatriate team of buyers and managers.
Although the province is one of the most unstable regions in the world, the immediate dilemma facing SD concerns child labor. Simply put, the use of young children as labor in appalling conditions is common in the local coltan mining industry. Western criticism of such practices is mounting, with the arrival of an Australian pressure group and recent legislation in the United States of America (USA) requiring firms to use only “clean” coltan. Many of the mining companies themselves are controlled directly or indirectly by a violent militia. It is an environment in which it seems almost impossible to conduct business without being complicit in some way.
To what extent can SD’s critical strategic need for coltan be reconciled with this moral and legal challenge? This situation is complicated by ongoing security concerns and the sense that the child labor question may not be as important for local people as western observers imagine.
←3 | 4→
In meetings with SD managers, you will help them explore and understand:
1. The notion of a complex risk environment, in which diverse and evolving risks overlap and compete for attention.
2. Attitudes to morality and profit, complicated by the notion that ethical issues may be shaped by culture and local circumstances.
3. The potential for cooperation with competitors to address shared risks.
The many issues for discussion include child exploitation, the US Dodd-Frank Act, complex multi-factional security environments, corruption and graft, reputation management and working with Non-Governmental Organizations (NGOs).
Scenario Design
The South Kivu region is arguably the most unstable and dangerous of those covered in the current Pentalemma series. The scenario seeks to demonstrate the complexity of this environment for business, rather than to plunge the readers into the more obvious challenge of dealing with a war. Thus, the war—or its threat—forms a brooding backdrop to the more immediate challenge of child labor. Similarly, there are hints of another dimension of risk; the plight of the lowland gorilla. This is dealt with in a later scenario, but in Chapter One is part of the risk “clutter.” Other questions, such as the problem of staff turnover, affect the bottom line and nag at management teams as they wrestle with the central problem.
Two of the options included appear very similar, but are completely different in substance. For while the suggestion for a wide-ranging review is no more than that, and has at its core an ambition to at least scope some options for addressing Kivu’s problems, the “business as usual” choice is also couched in nebulous terms of “encouraging dialogue.” The intention is to show how language may obfuscate but also to suggest that a decision to effectively ignore substantial risks will hit the bottom line in due course.
The best option here is rooted in real engagement under local conditions, as understood by the local people. By supporting initiatives and business models that make a start at tackling their issues (primarily security, in this case) a better business environment can begin to emerge. Only then can the thorny question of child labor, considering the opposing perspectives held by local people and the NGO’s, begin to be meaningfully addressed. In this way, what seems to be the center-stage risk is, in fact, contingent on broader concerns.
The main learning points here are, therefore, about complexity and risk. In addition, readers should appreciate that morality for business, as anywhere else, appears in shades of grey, depending on the context and viewpoint. To simply insist that SD should have no further involvement in a trade tainted by child exploitation will not solve the problem. In hazardous environments, it can be helpful to cooperate with competitors. The Dodd-Frank Act Section 1502, signed into law in July 2010, requires publicly traded companies to ensure that the raw materials they use to make their products are not tied to the conflict in Congo. Since 2016 the US government has threatened to water down or repeal the act. Even with added uncertainty, the intrusion of such legislation serves as a reminder that political events on the other side of the planet may have a real bearing on businesses trading in Africa. There is a useful analysis of this subject in the “DRC Country Profile” made available by Connie Bernstein.2 Connie is Pentalemma’s main contact at Rapid Response Inc.,3 the company’s worldwide source of intelligence on local developments.
←4 | 5→
Questions to Consider
The following are some suggested questions for use in your sessions with the SD management team. You will devise your own questions, ←5 | 6→including those for individual managers involved in specific areas.
1. Should companies try to find ways to work around the requirements of the Dodd-Frank Act, or is genuine compliance a moral imperative?
2. Are there ways to turn security risks into opportunities to improve the situation?
3. If child labor is acceptable within a local setting but not in a company’s home country, how should it conduct itself?
Significant risks include:
Social: If the child labor issue in Kivu is left unresolved, then SD could be acting legally, yet unethically.
Economic: Failure to handle the social and environmental concerns in the area could harm SD’s reputation, and consequently, its bottom line.
Environmental: The Lowland Gorilla is severely endangered. Unless SD takes measures to protect this rare species, extinction is only a matter of time.
Demographic: Children in Kivu outnumber the adult population. SD needs to accommodate this fact without depending on the exploitation of children.
Political: As the overall security situation in Kivu remains tenuous, SD needs to consider the potential political impact of any decisions.
Defining the Problem
Most of SD’s coltan comes from the DRC, one of the most dangerous and demanding business environments in the world. SD’s DRC main office is in Kinshasa, the capital. However, there are also field offices in South Kivu, closer to mining operations. There are many risks in the area. If these risks are not managed successfully, the company’s global reputation could suffer badly.
Figure 1.2: Forecasted prices for tantalite ore over the next five years.
←6 | 7→
SD faces a dilemma. First, coltan is a mineral that every manufacturer in the electronics industry, including SD, must have. Second, there are compelling reasons not to source coltan in this region. You know that children work under harsh conditions to extract the coltan that SD buys. Also, there are various guerrilla groups in the DRC. On your desk is a report from the SD Field Manager in South Kivu Province.
Field Report
SPEEDY DEVICES INC.
From: Karen Adams, Field Manager, Kindu, South Kivu Province
Subject: Field Report—Child Labor in South Kivu Province
The situation here is complicated. We buy coltan through local suppliers. They should not buy coltan from guerrillas, but we cannot control everything they do. The government seems stable. Our staff is not in danger now, but the future is uncertain. In addition, an Australian NGO called “Kids in Crisis” (KIC) has recently opened a small office ←7 | 8→in Kindu town. They say they will work with the local community, the authorities, suppliers and foreign businesses to fight against child labor in South Kivu.
KIC’s goal is “elimination of child labor from the materials used by multinationals.” So, I suppose they are here to persuade SD to make sure that children are not used to extract the coltan that SD buys. This would not be easy, because we would have to check where all the coltan comes from. Do we want to cooperate with KIC on this, or not?
There is some background information to think about.
First, in this culture, it is normal for children to work hard from an early age. That is how many families survive here. Second, child labor is not illegal in the DRC, but we need to research the effect of US law. Third, various guerrilla groups are controlling the local coltan industry.
I am meeting with KIC next Tuesday. I need your input before that meeting.
Karen Adams
Field Manager
Applying the Pentalemma Model
It seems that your biggest problem may be the issue of child labor. Of course, SD would never exploit children. Such rules of conduct are written in the company’s CSR policy. However, critics such as KIC say indirect exploitation is just as bad as direct exploitation.
This kind of criticism is a huge problem because it damages the company’s global image. SD is getting nervous about this, so there is intense pressure on you to propose a solution. The Pentalemma method of problem-solving creates five solutions to the problem. The first solution satisfies one stakeholder, but not the other. For example, it satisfies the shareholders, but not the local communities. The second solution is the opposite of the first solution; it satisfies the local communities, but not the shareholders. The next three solutions are in-between—waiting to decide, compromising between the two main stakeholders or somehow satisfying all stakeholders.
In business, and in the case of SD, this means that you can create five solutions and try to satisfy as many stakeholders as possible. To do ←8 | 9→this, you need to explore all the possibilities and try to create a win-win situation. By looking at this range of possibilities, the client company can put together a plan, discuss it with everyone and create a win-win for the business as well as its stakeholders.
The head of your planning department, Keith Poulter, sends you the below email with some ideas about how to do this.
Pentalemma Inc.: BOARD BRIEFING PAPER
Client: Speedy Devices Inc.
Subject: Child Labor in South Kivu Province, DRC
Author: Keith Poulter, Head of Planning, Africa and Asia
Staff Turnover
SD needs 23 staff members in the province. It is difficult to find local people with the required skillsets. Ten foreign employees have resigned in South Kivu due to stress-related reasons so far this year. SD should consider better pay and better security for staff in South Kivu.
European Electronics Child Protection Plan
European Electronics (EE) is another multinational corporation (MNC) that buys coltan in South Kivu. Last week, EE announced a new worldwide “Child Protection Plan.” SD should monitor this situation closely.
Gorilla Movie
German filmmaker Andreas Brandt plans to create a documentary on the Central African gorillas. Coltan mining is one factor causing their population to decline rapidly. Brandt is famous for his criticism of big business.
DRC Military Situation
Ms. Adams is correct that South Kivu has recently become more stable. The government seems to have control within the area, but rebels could ←9 | 10→challenge them again over the next six months. This could increase security costs for SD. It could also put rebels in control of more coltan mining. SD staff may even have to leave the area.
Keith Poulter
Head of Planning, Africa and Asia
The Simple Dilemma
Poulter, Adams and SD representatives initially concur that SD has a choice between prioritizing either profit (you call this Option A) or the environment (Option B). SD managers lean toward Option A as being more realistic than Option B. You begin to analyze these two paths.
Option A—Get Coltan Elsewhere
Getting coltan from South Kivu is becoming very expensive and risky. Sooner or later, war will return to this area. While SD is here, how can it get coltan that has no connection with guerrillas or criminals? It seems impossible to be sure about these things. US law (the Dodd-Frank Act) prohibits dealing in conflict minerals. Coltan is a conflict mineral. Coltan is also connected to child labor and environmental destruction. SD should act according to US law, and we must protect its image. The company may need to acquire coltan from a more peaceful region or country.
Option B—Cooperation
NGOs have two main concerns. The first is that children are being exploited in order to supply coltan to big foreign companies. If military groups are involved, then coltan becomes a conflict mineral. Their second concern is the effect on the environment, especially on endangered gorillas. The solution to both issues is communication, better understanding and cooperation. MNCs should cooperate with KIC and the local authorities to improve the lives of young people. The same applies to the gorilla problem. Businesses can work together with environmental groups and the authorities if they build trust with each other ←10 | 11→through regular communication. SD must also avoid buying any coltan that provides funding for the local conflict. However, even if all this is done, there remains a major risk that SD’s image could be damaged by a media focus on child abuse.
The DRC and Conflict Minerals
With these two options on your desk, you make sure that everyone on the advisory team and the SD management team has read a recent report from Rapid Response Inc. (RRI), one of the world’s leading risk management specialists.
COUNTRY PROFILE:
THE DEMOCRATIC REPUBLIC OF THE CONGO (DRC)
by Connie Bernstein
RAPID RESPONSE INC.
In terms of natural resources, the DRC is probably the richest country in the world. However, the country has a long history of war, corruption and poverty. It will be a long time before the DRC has a normal business environment.
Many companies believe the country is too risky for doing business, but other companies do have operations there.
RRI risk rating: SEVERE
DRC Summary
| GDP | $17.7 billion |
| Unemployment | Labor force 35.9 million—unemployment rate not known—population below poverty line: 71% |
| Currency | Congolese Franc |
| Ethnicity | Over 200 ethnic groups Bantu people (Mongo, Luba, Congo) and Hamitic Mangbetu-Azande 45%, others 54%, Pigmy (aboriginal people) 1% |
| Religion | Christian 85% (50% Catholic, 20% Protestant, 10% Kimbanguist, 5% other Christian), Muslim 10% and Animist 5% |
| Population | 75.5 million estimated |
←11 | 12→
Politics and Government
The president is head of state, but there is almost no functioning government in many parts of the country. In the areas under government control, there is a democratic system.
A problem in some areas is that foreign businesses must cooperate with rebel groups. This can be expensive, dangerous and illegal. The Dodd-Frank Act is designed to prevent companies from purchasing minerals directly from guerrilla groups. Although the situation is complicated, some companies have proven that it is possible to do business in the DRC.
Economy and Business
The DRC was once a vibrant, industrialized nation. Today, after years of conflict, it still has enormous potential but suffers from poverty and violence. 90% of the DRC’s income comes from selling minerals. There is very little long-term planning. There is almost no manufacturing. Education levels are low, and unemployment levels are high. The DRC is an essential and potentially profitable part of the world, because of its vast mineral riches. However, infrastructure is weak. In most parts of the country, international companies have to provide their own communications systems. The same is often true for electricity and water.
Natural Resources
This part of Africa has the largest deposits of many rare minerals that modern industry requires, including coltan, cobalt and tungsten. The electronics industry cannot operate without these minerals. There are also huge deposits of oil, iron, copper and gold. Water is another resource. The Congo River system has the potential to provide half of Africa’s electricity. Agriculture is another major industry. If there is peace, a new ecotourism industry could be developed.
←12 | 13→
Security
Companies should know that the DRC is a difficult place to work and live because of the hot climate and many health risks. More important, there is frequent fighting between local tribes and guerrilla groups. There are currently 14,000 UN soldiers in the country to keep the peace. The threat of new fighting in the DRC is the main security risk for business.
Conflict Minerals in the DRC
A special update by RAPID RESPONSE INC.
Introduction
The DRC government cannot always control access to rare minerals. Coltan, for example, is often supplied by groups that use the income to buy weapons for conflict or criminal activities. That is the reason why such minerals are called “conflict minerals.” The Dodd-Frank Act was passed into US law to discourage trade in conflict minerals. It applies to US companies and companies trading in the USA.
Also, many of the local mining and processing operations have been using child labor. Accordingly, the DRC government has passed laws aimed at ensuring that only “clean” minerals (those not related to war funding, child labor, slavery or other criminal activities) are traded.
There are practical ways of doing clean business, but companies buying rare minerals from the DRC will face ethical, political and legal issues.
It is very difficult to be sure if a mineral comes from a “clean” source, so many MNCs have stopped buying DRC minerals or are considering such a retreat.
Media Coverage
During your SD assignment, it is essential to keep track of media attention on the company and the environment in which it operates. You ←13 | 14→can’t help but notice a newspaper story under the title “MNCs Plan to Pull Out.” The article continues:
Several of the largest electronics companies are thinking about leaving South Kivu province in the Democratic Republic of the Congo. They say that the main reason is the safety risk. South Kivu is a center for trading in coltan. Critics say that there is child slavery in the coltan mines. There are also reports of environmental destruction. If the MNCs stop buying coltan, will the children and the wildlife of South Kivu province have a brighter future?
When this story is brought to the attention of SD headquarters in California, the CEO is angry.
“If nobody invests in that region,” he says, “the children have no future at all! Unemployment and poverty will only increase.” He calls Option B the “business as usual” approach that really ignores the child labor problem. He immediately asks you to help build a more creative range of options.
Brainstorming
Several intense meetings follow, first involving your Pentalemma colleagues, then including SD managers. Detailed discussions cover possible strategies to satisfy SD’s interests, improve the situation for children and protect the environment. Who are SD’s stakeholders? Does SD have positive relations with them? What are the ethical and legal issues?
Your team develops three new options for SD to consider.
Option C—Review
We have a complicated and risky situation, so we should start with a careful study. Coltan is an important mineral for the economy, but the child labor issue is a problem. It is always difficult to know what is really happening at the mines.
Everybody—NGOs, the local authorities and global companies—wants to cooperate on these problems. But they need objective and ←14 | 15→reliable information. A comprehensive study, with information from all parties, is the only way to address this. This should be our first step. A study may not eliminate child slavery, but the world will see that we are trying to do the right thing.
Option D—Preserve and Protect
Ending child labor and protecting the environment should be long-term goals. The situation can be improved by doing the following:
1. Provide primary school education, using resources from NGOs and MNCs operating in the area;
2. Improve health and safety at coltan mines and
3. Establish wildlife reserves in South Kivu.
These initiatives could be the foundation for a more sustainable coltan industry in the region. Success would require continued peace in the region. Considering all these points, this is the right thing to do.
Option E—Village Cooperatives
Without solving the security issue, long-term progress will be difficult. That is why it is important for the MNCs and NGOs to support political stability. Step one is for the MNCs and NGOs to cooperate with the local authorities to build a government and police force that people can trust. This is one way to reduce guerrilla fighting and criminal activity.
Then SD can design an economic model that serves local people, delivers the coltan required for business and reduce environmental damage. Village-based cooperatives would manage the local extraction of coltan and sell directly to the MNCs. MNCs and NGOs would invest in improved extraction techniques, education and training.
Searching for a Win-Win
With five options to consider, you arrange a conference call that includes SD headquarters in California, the South Kivu team and your team in ←15 | 16→Kinshasa. The advantages and disadvantages of each option are vigorously discussed.
Option A—Leave South Kivu
The risk of working in South Kivu is too high because of the environmental and child labor issues, and because violence will probably continue in the region. Moving to a new location would make employees happier because they would not have to worry about the company being criticized all the time.
Some feel that changing locations may reduce shareholder confidence in SD’s ability to maintain a reliable supply of coltan. Also, if other MNCs leave the area, the local economy will surely suffer.
Option B—Active Stakeholder Engagement
Some participants argue that improving communication with its stakeholders is the only action SD should take. They are especially worried about the effect of media stories about the child labor situation, and Andreas Brandt’s gorilla movie. The media reaction will undoubtedly be negative if SD fails to do anything concrete. Its reputation and share price will certainly suffer as a result.
Option C—A Coltan Industry Review
SD does not have enough reliable information about its suppliers. Rather than hastily taking action, SD should cooperate with NGOs and government authorities to do a detailed study of the situation. SD could also cooperate with other MNCs on this. The best way to protect the company’s reputation would be to improve the status of all MNCs in the region.
This would also be a better way to improve staff morale. Critics of this approach complain that merely studying the situation avoids solving the problems.
←16 | 17→
Option D—Preserve and Protect
