5. The Rationale for Corporate Social Responsibility
The Issue/Event: Does Aids breed terrorism?
The Global Business Coalition on HIV/AIDS (GBC) is the pre-eminent organisation leading the business community’s fight against HIV/AIDS. The Coalition has grown to include over 200 companies worldwide, and presents the current rationale for why its members must intervene in the crisis.
The following extract is the latest position released at the World Economic Forum in Davos, Switzerland, from the discussion paper, AIDS, Economics and Terrorism in Africa (January 2005) by Trevor Neilson, Executive Director of the Global Business Coalition on HIV/AIDS.
‘Terrorist organisations establishing a foothold in Africa will find it rich for recruitment. Sub-Saharan Africa is in the midst of an orphan crisis. UNICEF estimates that 12 million children under 15 in sub-Saharan Africa have lost at least one parent to AIDS and that there will be 20 million AIDS orphans in Africa by 2010. Although little research has been done on the link between the orphan crisis and terrorism, it is undeniable that AIDS, and the deadly conflicts that have ravaged Africa have created a steady stream of orphans that can be exploited and used for terrorist activities.
… In order to protect our country’s future, we must do a far better job of addressing the root causes of terrorism. All of the signs exist that AIDS may create conditions for terrorism to thrive in Africa during the next decade. Yet we are doing precious little to address the symptoms – political, economic, and social – underlying these potential threats. A massive pre-emptive strike against the greatest cause of hopelessness and misery on the African continent will help protect America from the next generation of terrorists in the decade to come’. (1)
Positions:
Early analyses highlighted the effects on the economy of AIDS due to a reduction in productivity on the job or outright absenteeism, and firms and the government losing trained workers and replacing them (2).
DaimlerChrysler revealed that the savings from preventing a new infection in its South African operations ranged from about $25,000 to $280,000, depending on job level (3).
Economists concluded that the economic effect of AIDS was actually only a modest reduction in aggregate rates of growth of –0.3 to –1.5 percentage points a year in the worst affected countries such as South Africa. Furthermore, it was suggested that rising mortality without changes in fertility would reduce the pressure of population on existing land and physical capital, and so actually increase productivity in both the short and the long run resulting in an increase the rate of growth of GDP per capita (3).
These impacts have resulted in policy responses that have been described as ‘tinkering’; namely savings diverted from net investments to provide care and treatment for and to replace infected employees (3).
(c) Long term economic analysis
Shanta Devarajan, chief economist of the World Bank’s Human Development network, and his co-authors have proposed an alternative model which predicts that if nothing is done to combat the epidemic, a complete economic collapse will occur within four generations in highly affected countries such as South Africa. By analyzing how the economy functions over the long term, they seek to show that AIDS not only destroys existing human capital, but also weakens how knowledge and experiences are transmitted from one generation to the next (3). The repercussions of this are far-reaching and require policy responses to be re-thought and to include massive social welfare programmes for orphans and for families affected by HIV/AIDS.
Questions:
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What should be the rationale for corporate social responsibility - social welfare or economic self interest? Why are social welfare and economic self interest perceived to be polar opposites?
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Why do those in a position of responsibility elicit suspicion?
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Can boundaries be drawn around populations for whom corporations have responsibility?
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Are corporations increasingly required to be paternalistic in the fantasy of the public?
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Does the discourse of fear (of terrorism) have greater currency than the language of economics or of charity?
References:
(1) Global Business Coalition on HIV/AIDS discussion paper, AIDS, Economics and Terrorism in Africa (January 2005) by Trevor Neilson, Executive Director of the Global Business Coalition on HIV/AIDS
(2) Thinking About the Long-Run Economic Costs of AIDS, by Clive Bell, Shantayanan Devarajan, and Hans Gersbach, Chapter III of Markus Haacker (ed.), 2004, “The Macroeconomics of HIV/AIDS” (processed; Washington DC: International Monetary Fund).
(3) GBC web site
