Corporate Leadership in 2016: Intimidation Out, Engagement In

Last week marked the transition from commitments to compliance for a number of companies that have pledged to get deforestation out of their supply chains.  For example, Wilmar International, the world’s largest trader of palm oil, set December 31, 2015 as the deadline for suppliers to adhere to its path-breaking “No Deforestation, No Peat, No Exploitation” policy announced in late 2013.

December 31^st was also Jim Bob Moffett’s last day at work as the chairman of Freeport-McMoRan, the company that developed one of the world’s largest copper and gold mines in eastern Indonesia. The coincidence of these milestones leads me to reflect on the changing norms of corporate leadership, and my brief interaction with Mr. Moffett 20 years ago.

A cascade of commitments to stop deforestation

In 2011, under pressure from buyers and financiers (who in turn had been sensitized by NGO activists such as Greenpeace), Golden Agri Resources (GAR), a large palm oil producer in Indonesia, agreed to stop converting carbon-rich forests into oil palm plantations, and set a target of December 2015 for achieving certification of its operations by the Roundtable on Sustainable Palm Oil (RSPO). 

Since then, a trickle of corporate commitments to stop producing commodities such as palm oil, beef, soy, and paper at the expense of tropical forests has turned into a cascade.  More than 50 companies joined GAR and Wilmar International, along with dozens of governments, indigenous groups, and civil society groups, in endorsing the 2014 New York Declaration of Forests, which committed to working in partnership to end natural forest loss.

Many CEOs have taken on a personal role in negotiating corporate commitments and/or promoting forest protection.  While companies at the manufacturing and retailing end have set a less ambitious deadline of 2020 for removing deforestation from their supply chains, their CEOs have made a point of identifying personally with the cause. Unilever’s Paul Polman and Marks & Spencer’s Mark Bolland – currently co-chairs of the Consumer Goods Forum – were among many corporate leaders who took the opportunity to advocate multistakeholder action to protect forests at last month’s COP21 in Paris.

Franky Widjaja of GAR in 2012 was recognized for his company’s “groundbreaking stakeholder engagement initiatives” with Greenpeace and others.  Kuok Khoon Hong of Wilmar International personally engaged with activists to develop a position of industry leadership after being confronted by his wife, who had seen their accusations on television. 

Jim Bob and me

How different was the reaction of Jim Bob Moffett, then CEO, when I dared to criticize Freeport-McMoRan in 1995.  Based on experience gained during a five-year stint with the Ford Foundation in Indonesia, I was invited by the State Department to participate in an off-the-record briefing for Stapleton Roy, the newly appointed US Ambassador to Indonesia.  At the briefing, I offered the opinion that it was not in the US interest to provide Freeport-McMoRan’s mining investment in Indonesia with a guarantee from the Overseas Private Investment Corporation (OPIC), in light of the company’s poor reputation for protecting the environment and human rights. (See, for example, this 2011 story on NPR.)

Apparently one of the business association representatives present failed to respect the off-the-record terms of the briefing.  Within 24 hours, I received a personal phone call from Mr. Moffett at my office at the World Wildlife Fund.  With his characteristic Southern drawl, he informed me that he didn’t like it when people said bad things about his company to his government, and made it clear that I should think twice before doing it again.  Mr. Moffett was known for threatening legal action against activists, journalists, and academics who got in the company’s way.

Despite really having nothing to fear and little to lose, I was trembling when I hung up the phone.  I imagined the effect of such tactics on more vulnerable critics of the company’s operations, such as those in affected communities in Indonesia, given that the company made payments to Indonesian soldiers and policemen.

Changing norms

Falling commodity prices were what prompted Mr. Moffett’s resignation last week, rather than intolerance of bullying behavior directed at critics.  By no means have all corporate leaders signed up to the new norms of protecting forests and forest peoples.  Some may have done so reluctantly, having concluded that advances in remote sensing  of forest cover change have left them no place to hide.  And even those who have made commitments in good faith continue to face severe implementation challenges on the ground, including lower level managers who haven’t yet gotten the memo that CEO-level pledges are to be taken seriously. 

But while some corporate leaders have actively resisted the entreaties of activists, and some are better on public relations than direct engagement with critics or follow-through, few if any have resorted to threats and intimidation to fend off pressure for change.

Here’s hoping that the transition to 2016 marks a watershed, not only in the transition from commitments to compliance in the no-deforestation agenda, but also in the crystallization of norms regarding how corporate leaders should respond to criticism from civil society. 

Threats and intimidation out, good faith engagement in.