NGOs foresee better business ethics

Aug. 31, 1998
Petroleum companies increasingly find they are expected to behave in foreign countries just as well as they do at home. A major headache for international operators is conflict with nongovernmental organizations (NGOs), most of which think companies do not care about ethical standards. A survey of 133 NGOs around the world, by the University of Notre Dame, South Bend, Ind., and Price Waterhouse, London, revealed that 62% think global companies do not care about ethical standards, while 64%
David Knott
London
[email protected]
Petroleum companies increasingly find they are expected to behave in foreign countries just as well as they do at home.

A major headache for international operators is conflict with nongovernmental organizations (NGOs), most of which think companies do not care about ethical standards.

A survey of 133 NGOs around the world, by the University of Notre Dame, South Bend, Ind., and Price Waterhouse, London, revealed that 62% think global companies do not care about ethical standards, while 64% think they do not play by the rules of fair competition under existing laws.

While many petroleum firms have put a great deal of time and effort into tightening their ethical standards and attempting to boost their public image, George Enderle, Notre Dame professor of international business ethics, and Glen Peters, partner at Price Waterhouse, reckon there is still much to do.

"If transnational corporations do not reassess their global responsibilities as a matter of urgency," wrote Enderle and Peters, "they cannot gain the trust of local communities where they operate."

Antagonism

In their report on the survey, Enderle and Peters said 41% of NGOs polled think their current relationship with international firms is antagonistic.

A further 47% of NGOs said their relationship with the companies is nonexistent: "NGOs have developed an extraordinarily high level of self-reliance in a hostile environment."

Yet the outlook is not all gloomy, since NGOs were optimistic that their relationship with companies will improve. They cited a direct link between corporate behavior and shareholder value.

Because of this link, 82% of NGOs believe that a cooperative relationship with transnational corporations is possible, despite 88% considering their present relationships as noncooperative.

Optimism

The authors said they anticipated the harsh analysis by NGOs of present relationships with companies, but were surprised by their hope for the future.

"This change of perspective is encouraging," said Eberle and Peters, "and a sign of hope for an improved world. We can observe among NGOs today a tentative shift from skepticism to trust.

Despite the hard work of petroleum companies to date, Eberle and Peters said the onus is still on transnational corporations to show their pursuit of profit will not be at the expense of ethical standards.

NGOs have become significant business organizations in their own right, said Eberle and Peters, and should be recognized by companies as barometers of public opinion. Also, NGOs can work with companies to improve their ethical practices.

"Satisfactory cooperation between NGOs and corporations is essential if future global business is to be conducted along mutually acceptable lines," they concluded. "Are these the beginnings of a strange affair?"

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