Dubai’s Disgrace

The Dubai debt crisis has underscored how fragile the global economic recovery is – and how jittery the markets are. It also demonstrates, as if we needed further evidence, how interconnected the world is. Governance and risk management problems in one corner of the world can have an impact on market confidence elsewhere. This column by Indian academic Ajay Shah originally published in Financial Express newspaper offers some insight into Dubai’s predicament. For an inside look at the emirate, you may wish to read this April 2009 report by Johann Hari, a commentator for The Independent newspaper in the UK.


“Just Add Water”

In this 30 November Los Angeles Times opinion piece, our guest this semester, James Workman, calls the international community to carpet for keeping water out of the equation in the run-up to the global climate talks in Copenhagen. Workman writes: “We know fossil fuel emissions matter immensely. But the most volatile chemical compound isn’t methane, nitrous oxide or even carbon dioxide. It’s water. Scientists stress water’s profound link with climate change, and how wise water management could bind global efforts to cool our warming planet with local efforts to absorb its unavoidable shocks. Even the public gets it. Yet our delegates wallow in denial. In a misguided effort to avoid dissent, they have erased water from their working draft, forgetting how water is the planet’s one common denominator.”

Check out Jamie’s essay here.

Brazil’s Lula: “Gringos” Should Pay to Prevent Amazon Deforestation

At a conference on 26 November, Brazilian President Luiz Inácio Lula da Silva called on rich, developed nations to pay Latin American countries not to cut down the Amazon rain forest. “I don’t want any gringo asking us to let an Amazon resident die of hunger under a tree,” Lula said. “We want to preserve, but they will have to pay the price for this preservation because we never destroyed our forest like they mowed theirs down a century ago.” Norway has committed to paying Brazil US$1 billion to prevent deforestation. Other nations including Japan, Germany, South Korea, Sweden and Switzerland are reported to be considering a contribution to the fund.

Do rich nations have a responsibility to contribute?

Human Security Mapping

In our discussions on human security, we looked at the use of mapping techniques to identify areas or regions where risks are greatest – whether it be from the threat of HIV/AIDS, the prevalence of malaria, or the lack of water. Here is a good example of the kind of detailed mapping work that is being done in the field by humanitarian workers to better address problems. In this case, the map shows food security levels across Nepal and was drawn up by the World Food Programme. Mapping high-risk zones in this way can help policymakers understand the threat better and find more effective solutions. In addition, as one of the comments points out, comparing maps allows analysts to draw correlations between, say, conflict and the scarcity of food and water.

Review Session

REMINDER: Please remember that the exam review session will be on Wednesday, 2 December, 2 pm – 3.55 pm, in T7 Meng Wah. We will end earlier than 3.55 pm but I will be available in the classroom to answer questions for as long as necessary.

Supply Chain Transparency

In our class yesterday, Mr William Anderson of Adidas offered some interesting insights on consumer behavior from his perspective, notably that green products are not necessarily as in high demand as educated buyers might think.

Coincidentally, I just received this e-mail broadcast from social entrepreneur and ethics professor David Batstone, founder of the Not For Sale Campaign against human trafficking and slavery, about, a new initiative he is helping launch to provide consumers with a tool that evaluates the labor standards and ethical practices of a company’s supply chain:

Consumers Want Transparency & Honesty

Out of necessity the average consumer has developed a keen sense of what constitutes a good deal. Pre-2008 consumers who rarely thought about how their favorite products were produced are now taking a second look and rethinking their consumption habits. Having an interest in the products one buys can have an unintended side effect: a greater understanding and concern for labor issues and connection to them. Production of one given product can be extremely complex. In an age of globalization it’s not uncommon for one product to cross the Atlantic twice before reaching a consumer. Increasingly consumers are interested in buying responsibly, but that simple task becomes daunting with no credible method to accurately inform the consumer.

Today an entire industry, popularly referred to as “Corporate Social Responsibility,” exists to help companies deal with their supply chain and implementation of codes of conduct. Unless you have an MBA in supply chain management, however, you remain very much in the dark. As a social entrepreneur I saw a need for a tool that could bridge the gap between companies and the consumers looking for an independent and understandable evaluation of a company’s ability to prevent forced labor.

The Not For Sale Campaign has partnered with the International Labor Rights Forum to create a new tool for that very purpose. mediates a widely accepted set of standards that, when followed, ensure supply chain transparency and ethical labor practices. Additionally allows for consumers to share relevant information and support their favorite companies. Companies are rated by a common standard, which evaluates corporate policies, code implementation, employee empowerment, child labor response, supplier impacts, transparency, and (when applicable) industry-specific data, outlining all efforts and shortcomings. Companies are rated from an “A” to “F”, the highest grade, A, goes to brands that champion a living wage and democratic worker organizations. The lowest grade, F, goes to brands that do nothing to review or improve conditions of suppliers. is not another corporate “gotcha” tool for consumers. Instead, Free2Work strives for transparency and engagement with companies to evaluate them on the information they make public. The majority of the fourteen initial companies rated fell within the average range, and while all have a code of conduct and had taken positive action, they lacked a comprehensive approach, and require a deeper level of transparency.

For example, Gap and Apple are leading the way with their system for child labor remediation, but their code of conduct doesn’t reach to all levels of their supply chain in a way that Timberland, Patagonia, and Jansport succeed. Timberland, a company that works to monitor their entire supply chain, could benefit on the other hand from how Apple addresses child labor when uncovered in its supply chain.

Companies and their workers can be severely affected by well intended yet misguided consumer boycotts that lack factual information and don’t engage the company. Rumors of labor violations lead some to act before understanding what that company’s actual policies on labor are. Free2Work offers the connection that has been missing thus far, and will hopefully enhance company transparency and reframe how companies and consumers interact. Without an increased understanding by consumers and a willingness to engage by companies, unintended labor abuses will continue.

So this Friday as the holiday shopping season begins, consider using before embarking for the mall. Learn how that Zhu Zhu hamster on your nieces Christmas list rates and the difference between the GAP sweater you want and the one made by Patagonia.

Will you join me?

David Batstone

Corporate Global Citizenship

Those of you who are interested in the social responsibilities of companies may wish to read this article on corporate engagement in society by Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, which appeared in the January/February 2008 issue of Foreign Affairs. His purpose is to clarify the definitions of different types of corporate engagement in society – corporate governance, corporate social responsibility, corporate social entrepreneurship, corporate charity, and corporate global citizenship. A key point: that the sustainability and effectiveness of any corporate engagement is best if it is aligned with the company’s business model and profit motive.