Investment-hungry Indonesia must fight corporate locusts

Budi Widianarko, a professor at Soegijopranata Catholic University, Semarang, and a member of The Water Dialogs, a London-based Global Multistakeholder Dialog on Water and the Private Sector responded to my 24 March Oped with this piece on 3 April, 2006.

He's very gracious and right – lots of the mining companies are locusts. But, at the risk of getting my metaphors very mixed up, these locusts are also usually underdogs in the sense that they are quite helpless in the face of PR-savvy individuals and activists. See one of my previous articles (Defense against the Dark Arts) for a grasp of how Goliaths can fall in the wake of nimble Davids.

I took pleasure in reading Ong Hock Chuan's column in this newspaper (March 24, 2006) that commented sympathetically on the Indonesian Chamber of Commerce and Industry's statement defending the interests of foreign mining investors against the despotism of the political elite. He advised that if the pressure on investors continued there would be a great chance that this country would lose its foreign investors. This, of course, sounds very reasonable and in favor of everybody's interests.

Ong's line of reasoning is well thought out and straightforward. Frankly, Ong's article has enriched my understanding of the beauty of diversity, something that we should cherish in this current age of post-modernism. However, I am truly amazed by Ong's stance with regard to the nature of corporations, including those he calls "big boys".

Reading through his arguments, one will certainly get the impression that big foreign corporations operating here are merely helpless creatures and defenseless when facing criticism from the political elite.

Actually, with experiences gained throughout the course of existence, the corporations have been forced to devise for themselves a multitude of strategies to cope with external pressures. In this respect, corporations resemble living organisms and behave accordingly. In his book The Chrysalis Economy (2001), John Elkington ingeniously divides corporate environmental strategies into four kinds of organisms: the locusts, caterpillars, butterflies and honeybees. The grouping is based on a two-dimensional character of a corporation, i.e. the nature of its resources utilization combined with the corresponding level of impact.

In terms of resource utilization, corporate locusts are classified as a degenerative model with a high impact on the environment. They are part of the "decreasing return" world, where the more they do, the worse things become. The characteristics of the corporate locusts are they use a highly unsustainable business model; have a tendency to swarm, overwhelm habitats; destroy various forms of capital; practice zero cross-pollination; and turn a blind eye to early warnings.

Corporate caterpillars are also representative of a degenerative model. However, they are usually more difficult to spot than locusts. Some traits of corporate caterpillars are: longer-term, unsustainable business models; high "burn rate"; relatively local impact; and potential to switch to a regenerative model.

Two regenerative models are represented by corporate butterflies and corporate honeybees. They are part of the "increasing return" world.

The first model is characterized by a sustainable business model; strong commitment to corporate social responsibility or sustainable development (CSR/SD), high visibility, loud voice; may publicly attack locusts; a wide network; and commercial lightweight.

The second model have the following traits: sustainable business practices; strong business ethics; constant innovation, cross-pollination; capacity for heavy lifting; strategic use of natural capital and other resources; sophisticated technology; and multiple capital formation.

Unfortunately, most mining giants fall under the category of corporate locusts. An infamous example of this model is Russian Aluminum, the world's second largest aluminum producer. According to Elkington (2001), based on a lawsuit filed in New York, the firm has been accused of a series of crimes, including murder, death threats, fraud, bribery, and money laundering. Elkington's long list also includes Freeport-Mc Moran Copper and Gold which is operating in Papua.

Given their common attitudes, it seems safe to assume that it is nothing new for big mining corporations to deal with social and environmental protests. In dealing with such pressures, Sharon Beder in her contentious book Global Spin (2000), points out that big international corporations have been developing a special technique known as corporate activism.

With their massive financial resources and power the corporations defy claims made by environmentalists to reshape public opinion and to persuade politicians against tightened environmental regulations. In the western world, corporate activism which began in the 1970s and rejuvenated in the 1990s has enabled corporate agenda to win most debates about the condition of the environment and what should be done about it. While numerous alternatives are available, two most perilous, and yet most common methods of environmental activism are the setting up of front groups, and public relations.

Basically, the first model is like putting your words in someone else's mouth. When corporations intend to fight against environmental rulings, or promote environmentally destructive development, they may do so openly. But, strategically it is far more effective to form a group of citizens or experts — and preferably a coalition of such groups — which can publicly endorse the corporations' interests whilst claiming to speak on behalf of the public.

When such groups do not exist, the corporations can hire public relations firms to form them. The use of such front groups enables corporations to get involved in public debates and government hearings behind a cover of public interests.

The second model is based on the "therapeutic alliance" — a technique commonly used by psychiatrists when dealing with an irrational patient — as described by Lindheim (1989) (see Beder, 2000).

Corporations can build a therapeutic alliance with the public, which they often consider reacts irrationally and emotionally to environmental and social risks. Corporations, thus, must use their communications resources to demonstrate their commitment to solving environmental problems, and improving the environment.

These two models of corporate activism are not new in the environmental arena. Clearly, corporate activism may endanger the ability of democratic societies to respond to environmental threats. It is therefore very crucial for the political elite, NGOs, the media and concerned individuals to constantly voice a critical account of the behavior of corporations — be they domestic or foreign investments. This country should certainly welcome the butterflies and honeybees but reject the caterpillars and locusts.

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