In a timely follow up to my post yesterday on whether companies need a foreign policy, Google has effectively delivered an ultimatum to China.

The ultimatum essentially says "let us provide uncensored Google in China or we will shut Google.cn". Naturally, no one expects China to accede to Google's wishes.

The background an a good analysis are provided by Imagethief here.

Imagethief does not mention the meeting between Internet business leaders and Hillary Clinton last week, and I cannot help but feel that the timing of this announcement is linked to that meeting even if there are broader events leading up to this. Eric Schmidt is simply too close to the Obama administration to do this on the fly. Certainly to China it will look like it is, and if there is one thing that was acknowledged in that meeting it is that any stand US companies take in relation to human rights in China will be viewed by China as a proxy move by the US.

While Imagethief notes and the Wall Street Journal implies that Google's eventual withdrawal from China on human rights grounds makes it really difficult for Microsoft to remain, I would be very surprised if Microsoft, the State Department and others did not already know of the move before Google dropped today's bombshell.

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US Secretary of State Hillary Clinton held a dinner last week for the tech industry's key leaders. It looks to me like the consolidation of a trend.

I attended a talk a few years back and I am struggling to recall where it was. It was either in Boston or in Washington. Anyway the talk was given by a recently retired general counsel of a mahor corporation - perhaps IBM, perhaps GM. The main argument of the talk was that corporations need a foreign policy. I thought the idea was instantly exciting and terrifying.

Exciting because back then I had recently written a paper on "Legitimacy risks and peacebuilding opportunities for businesses in post-conflict Iraq". The fact is that businesses have presence, relationships and power and they will have an impact on communities and even nations whether they have a policy or not.
 

Terrifying because, as that paper had tried to make clear, legitimacy was key, and in the Iraq situation the absence of inclusiveness and accountability pretty much assured that the reconstruction effort would lack local goodwill. Think about how the reconstruction contracts were allocated, the absence of community involvement in allocation, the lack contract winners of Iraqi origin, then the failure of firms that undertook the work to do so from the outset with a solid local outreach and inclusion approach.

There are plenty of extractive industry firms with a substantial involvement in foreign affairs, too often with dubious and opaque relationships supporting regimes run by corrupt elites.

It is the global technology firm - particularly though not exclusively the internet-based firms - that is new to the art of running aground on foreign policy issues in most recent years. So I was very interested to hear about a small private dinner hosted by Hilary Clinton last week with Google CEO Eric Schmidt, Twitter Co-Founder Jack Dorsey, Microsoft Chief Research and Strategy Officer Craig Mundie. The subject under discussion: how technology can be used to meet the nation’s foreign diplomacy goals.

It is a topic I touched on here during the first major upheavals in Iran when twitter played such a role: Iran, business models and the right to tweet speech. The basic argument of that post - that access to twitter is crucial to freedom of speech - has been echoed in a State Departent blog post which said the agency wanted to use twitter in a contest as a:

"worldwide platform in which people can discuss the meaning of democracy and exchange ideas from diverse perspectives."

My thoughts/questions are these:

1/ Is corporate foreign policy simply an alternate name for existing corporate responsibility issues with a global hue, like climate change or, in the internet company case privacy issues? Or is it - and I believe it is - something more, where corproations are taking on a responsibility to consider their impact on human rights within their sphere of activity in a more accountable, thus perhaps quasi-public way?

2/ how do we assure legitimacy? How can we bring the right kind of transparency and inclusivity to corporate statecraft to ensure that it is just?

3/ global corporations are based in dozens of countries. Is there a question of to which foreign policy it needs to align its own?

Do you have any views?

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Stephen Green, Chairman of HSBC and author of a new book "Good Value", has said in a BBC interview that he feels banks owe the public an apology.

This makes quite a change from the tales of "back to business as usual" emanating from Wall Street and London's Canary Wharf, and much more appropriate to the author of a book with the subtitle "Reflections on Money, Morality and an Uncertain World". I wonder though whether an apology is enough. Here's a reminder from my earlier post about what we can now view as:

the worst financial crisis since the Great Depression: an increase in the number of people around the world in chronic hunger and poverty by over 100 million, to 1.02 billion; between 200,000 and 400,000 more babies could die each year between now and 2015 if the crisis persists; an increase in global unemployment by between 29 million and 59 million people; one in eight US mortgage borrowers is behind on mortgage payments or facing foreclosure at the end of the second quarter 2009; pensioners relying on developed country stock market returns for their retirement incomes have seen their savings fall by 45%.

The Financial Crisis Inquiry Commission in the US holds out the promise of going beyond apologies and the inevitable return to customary way of doing business. It offers a public space in which public but impotent anger can be channeled into better understanding and a focussed demand for real change, generating and sustaining in its turn the political will for the necessary reforms.

London could do with a comparable public inquiry of its own.

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I was struck on reading about a Scientific American study that rates China's Three Gorges dam as one of the world's 10 best renewables projects.

I have no doubt that in terms of reduced-CO2 emitting energy sources this project deserves the accolade. But the Three Gorges project is infamous for the displacement of over 4 million people, as well as other forms of environmental damage.

There was perhaps no reason why the Three Gorges project should inevitably have led to rights violations. Perhaps it could have been pursued more slowly and on a slightly less ambitous scale and left rights intact. I don't know.

But clearly hard choices between different people's rights are going to have to be made and their conclusion pushed through with vigour. The not-in-my-back-yard attitude that is slowing installation of wind turbines across Europe has to be set against the fact that some 20 million people worldwide have been displaced from their homes by action of climate change. That - as the article points out - is slightly less than the population of Australia.

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Australian investor activists are urging investors to look beyond the headline cash figure when deciding whether a firm is tying pay to performance.

Many companies have said they are freezing or cutting executive compensation in response to the downturn. The devil amy remain in variable pay elements such as short term bonuses and share options.

The real levels of compensation may not be known until next year's report and accounts. The focus now should be on ensuring a tight definition of performance to which executives can be held.

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The Japanese car manufacturer Nissan aims to mass produce electric cars by 2012 with an emphasis on affordability.

It will be releasing its first electric car in Japen later this summer, and in the USA in 2010. The target date for global mass production is 2012.

Nissan is Japan's third biggest car maker. Their EV prototype is discussed in more detail here.

The race is clearly on to produce fully electric cars for the mass market, with Tesla, Toyota and China's Dongfeng Motor Corp all pushing ahead with plans.

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In a rare move, the Chinese environmental regulator has halted the development of a string of hydropower stations in the upper Yangtze.

The hyrdopower developments were ruled illegal as environmental permissions had not been sought.

The developments were being implemented by China's two largest power companies.

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Today, Japan is contributing to our potential for a further reduction in emissions – Martin Bursik, Czech Environment Minister

Solar Heating: Now Subsidized
To fulfill its target to buy 100 million metric tons of Carbon Emission Rights, Japan has bought 40 million metric tons of these rights from the Czech Republic at a cost of $500m. The Eastern European country sold the ‘redundant’ rights it had earned by reducing its carbon emissions by a decent 24% (from 1990), significantly above its pledge (Kyoto) of 8%.

To put the reduction in perspective, Germany reduced its emissions in the same period by approximately 22% but will unlikely engage in a similar trade as its Kyoto pledge was a significantly higher 21%.

The Ministry of Environment, led by Green Party leader Martin Bursik, will use the substantial financial inflow to subsidize Czech households’ building or installing environmentally friendly heating or insulation systems.

The move will not only reduce the country’s energy use and carbon emissions but, perhaps more importantly for the regular Czech household, significantly reduce their heating bill during the current downturn.

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There are stories once again of contaminated baby formula in China: Scient brand milk powder has apparently been found to have 100 times the acceptable level of melamine in it.  The allegations are under investigation and the company has no comment at the moment.  Executives at Scient have good reason to be anxious about the outcome of the investigation: let's not forget that tainted milk is an offense punishable by death in China.

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Starting in 2010, India will begin incorporating measures of natural resource depletion within their measure of national income.

According to the Economic Times, an official from the Ministry of Statistics and Programme Implementation stated that the calculation would incorporate:

"the cost of recovery of polluted resources, which has to be used as a deflator to real GDP. Our green GDP may be significantly lower than real GDP as economic growth is resource-intensive".

China tried to measure a green GDP in 2004, but abandoned it after it triggered infighting between government departments and the political establishment. Environmental degradation had lowered GDP into the red.

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