Global Policy Forum

By Simon Zadek

"The only people that won't be connected to the web will be a few Yak herders in Outer Mongolia," commented scientist and science fiction writer Arthur C. Clarke recently on BBC World TV.

It is strange and unfortunate how Mongolia has come to represent the ‘other' place and people. Mr Clarke's unconscious rehearsal of this age-old discrimination was all the more striking since I happened upon the televised snippet while sitting in a friend's apartment in Mongolia's capital, Ulaan Baator.

I had just wound up a two-week whirlwind tour (sometimes literally) through parts of the Gobi Desert, topped and tailed with my speaking at a seminar on corporate responsibility.

For the uninitiated, a word or two on Mongolia (Outer, that is). With a land area about half that of India's, Mongolia's population is about 2.6 million people, or about quarter the population of Greater London. Mongolia is home to the world's largest nomadic community, roughly 40 percent of its total population.

Previously a semi-autonomous client state of the Soviet Union, Mongolia joined the capitalist fold with a bang after 1989, involving accelerated access to the WTO, the usual IMF-style liberalisation package and a privatisation track that will extend to public services in the coming year.

Mongolia's measured GDP per capita is just US$400 a year, with its main exports being meat (it has at least 34 million animals roaming the Steppes), mining (copper, phosphate, gold and maybe oil), cashmere (20 percent of the world's supply of raw cashmere) and tourism (although the warm period lasts only 3-4 months, whereupon temperature can fall to an unappetising –30o C.

For the record, Mongolia's historic claim to fame was its vast, although ultimately ephemeral, empire created in the early 13th century by Chinggis Khan and stretching at its peak from Budapest to China's eastern shores.

Spreading the word

The seminar on corporate responsibility was kindly hosted by Oyun Sanjaasurengin, chair of the pro-democracy, anti-corruption organisation The Zorig Foundation (Zorig having been the leading figure in the pro-democracy movement in the nineties and likely candidate for prime minister advocating a strong anti-corruption line, before he was assassinated by unknown assailants in 1998), a member of parliament and leader of one of the country's emerging political parties.

The mainly business and student participants listened attentively to my (translated) presentation on the historical roots of corporate responsibility, its current manifestations and likely future directions. I suggested that corporate responsibility initiatives in mining could be particularly relevant to Mongolia, as were the lessons from fair, ethical and organic trade as it related both to their meat and cashmere exports.

Social and sustainability reporting and non-financial public procurement conditions, I continued, might be relevant to some parts of their economy, particularly to those increasingly dominated by the international business community. All good stuff, or so I hoped.

Rot setting in

Then came the moment of truth – comments and question time. Privatisation was proving a disaster, I was told. Corruption on a grand scale, the consensus of the meeting's participants reported, was creating an enriched few from both the public and private spheres with little to show in terms of real investment, services or overall improvement in the quality of life for the majority.

Just a thousand or so people, participants suggested, had ended up owning the vast bulk of the 400 or so companies that had been privatised to date. Furthermore, the implementation of the recently-passed land privatisation act would, some suggested, have the long term effect of undermining the very basis on which the nomadic herdsmen and their 34 million livestock provided livelihood to one quarter of the country's population and a source of accessible nutrition and exports.

Political opposition, civil society organisations and the media were either weak or else themselves compromised by their own dealings. International organisations such as the World Bank and the IMF turned a blind eye or – worse still – advocated a pace and style of economic transformation that was at best unhelpful.

Adult literacy, once 97 percent (extraordinary for so poor a country), was in steady decline. Alcoholism and suicides, just two of many measures of a society in unease, were up and still rising. In the face of this, aid donors and diplomatic bodies were unable or unwilling to voice open concern let alone take concerted action to stem the rot.

Then came the question – could corporate responsibility help?

The ensuing discussion offered much food for thought, certainly for me and hopefully for the other participants. Everyone agreed that corporate responsibility was a crucial ingredient for nurturing a healthy and balanced society.

But there was general agreement that addressing the ethical behaviour of the domestic public sector was a precondition for any meaningful corporate responsibility initiatives, and that this in turn required a far more active, informed and expert assembly of civil society organisations.

Beyond this, there was great concern that the pace and form of liberalisation of international trade and investment established when Mongolia joined the WTO would offer no chance for nurturing a strong domestic business community. And there were strong views on the need to revisit the way in which Mongolia joined the global marketplace.

Without dealing with these broader issues and dynamics, both the business and non-business participants concluded, corporate responsibility would be unlikely to play a meaningful role in Mongolia's development.

Broader framework conditions

Mongolia is perhaps best thought of as lying at the ‘edge of the empire', drawing from Isaac Asimov's Foundation Trilogy. More obviously, sitting in a ger (tent) in the middle of the vast expanse of the Gobi landscape certainly makes one feel at the edge of a global community that most readers of Ethical Corporation inhabit at its cosmopolitan centre. Less obvious, perhaps, is that this place offers a vantage point to view our urbane lives in quite different ways.

The test of corporate responsibility is its effectiveness in Mongolia, not Manchester. What this means, if you hear what I was politely told at the Zorig Foundation in Ulaan Baator, is that those advocating corporate responsibility have to take up the cause of establishing the necessary preconditions.

These are first and foremost about public sector accountability, nurturing the ability of civil society to challenge state and business practices, and about ensuring that the rules of the game established by international agencies offer nations like Mongolia the opportunity to draw on the lessons from elsewhere in planning when and how to liberalise and privatise their economies.

Corporate responsibility cannot just be about what individual companies do, but must include the broader framework conditions. Most of all, the message from Mongolia is that those of us working in the field of corporate responsibility have to take on parts of agenda that are tricky, uncomfortable and, dare I say it, deeply political.

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