The Economist described corporate social responsibility as “two-faced capitalism,” highlighting the inevitable tensions between making money and doing good. But too many businesses are guilty of political irresponsibility in the Middle East, according to a prominent analyst.
International corporations help bolster the authoritarian status quo that prevails in most of the Arab region through several key elements: arms sales, security and censorship technology, expertise and dual-use knowhow, willing acquiescence to repressive governance, and political influence, both overt and implied. And, always, money, argues Middle East specialist Charles W. Dunne.
Western-based international corporations’ chief fault is not that they necessarily favor authoritarianism from an ideological standpoint, but that market imperatives and responsibilities toward shareholders lead to a certain political agnosticism that has advantaged authoritarian governments. The good news is that it is possible to re-incentivize corporations to change their behavior. Governments, shareholders, and the general public have the means to help reframe corporations’ perception of the bottom line, he argues in an insightful essay, How The Private Sector Supports Authoritarians in the Arab World.
But corporations are not immune to pressure for change emanating from stockholders and the general public, he writes for the Arab Center:
For example, “ethical investing” is a significant phenomenon with a real bottom-line effect; according to The Wall Street Journal, over the last three years $20 billion flowed into so-called sustainable equity funds in the United States, which invest with a social, political, or environmental purpose in mind….. This represents a 25 percent increase from 2014, and inflows in this category significantly outstrip those into traditional mutual funds. Saudi Arabia has been affected by growing pressures to divest from its stock market due to concerns about its behavior, with foreign investors dumping a little more than $1 billion in Saudi stocks in one week of October—among the biggest selloffs since the Kingdom admitted foreign investors in 2015.
Improving corporate governance, a growing concern of investors, implicitly encourages the maintenance of a good business reputation, which can be leveraged to take into account human rights concerns in international business dealings, Dunne adds.
On the plus side, the Center for International Private Enterprise works with many businesses in the region on issues ranging from women’s rights and empowerment and youth entrepreneurship to anti-corruption, business advocacy and democratic governance.
As Dunne appreciates.
Corporations are not, in the end, entirely unaccountable, he adds. By means of a variety of actions—whether driven by governments, investors, or public opinion—the private sector can be encouraged to do more to support free societies and free peoples. RTWT
Charles W. Dunne is a Non-resident Fellow at Arab Center Washington DC. To learn more about him and read his previous publications click here