6. Social Responsibility & NGO’s
Gursharn Dhugga

In this report you will learn about the corporate social responsibility of Peru, business ethics, ethical issues in international business and Non-Governmental Organizations in Peru.

Corporate Social Responsibility & CSR in Global Companies
Corporate Social Responsibility (CSR) is defined as the voluntary activities undertaken by a company to operate in an economic, social and environmentally sustainable manner. Corporate Social Responsibility in the Mining Sector in Peru seeks to take a first step towards meaningful dialogue about CSR among the different actors involved to help civil society obtain the highest benefits from CSR policies and actions implemented by government and corporations. A legislative proposal on the topic of corporate social responsibility was introduced in Peru in 2005, but it was never implemented and thus there is still no legislation governing CSR in Peru. Small businesses who deal domestically tend to place much less emphasis on operating responsibly than the major companies who rely mainly on exports. Most CSR initiative in Peru seems to come from international organizations and intermediaries; the Swiss AVINA, Kellog, Interamerican, and Ford Foundations are all examples of the attempt to raise CSR awareness.

Benefits of CSR
Peru’s rapid economic expansion has helped to reduce the national poverty rate by almost 15%, but 44.5% of the population still live below the poverty line. Not all Peruvians share the benefits of the country’s ever-increasing prosperity, while general disregard from the government and lack of infrastructure inhibit growth in Peru’s less developed regions. In 2007, Peru’s real GDP growth was 8.3%, the highest in Latin America. In 2008, it rose to an astounding 9.8%, not only the highest in Latin America, but in the world. Despite its recent success, almost half the Peruvian population remain poor, two thirds being from rural areas such as the Andean highlands and the Amazon basin.

Stakeholder Analysis
The decision to change Peru's policies resulted from increasing levels of anti-malarial drug resistance, as well as complaints from providers that the drugs were no longer working. The context of the change occurred in a time in which Peru was changing national governments, which created extreme challenges in moving the change process forward. Peru utilized a number of key strategies successfully to ensure that policy change would occur. This included a) having the process directed by a group who shared a common interest in malaria and who had long-established social and professional networks among themselves, b) engaging in collaborative teamwork among nationals and between nationals and international collaborators, c) respect for and inclusion of district-level staff in all phases of the process, d) reliance on high levels of technical and scientific knowledge, e) use of standardized protocols to collect data, and f) transparency. By focusing on their stakeholder analysis Peru’s anti-malaria drug was able to change for the better.

Business Ethics
The country has been influenced or lead by multiple empires, including the Inca Empire, which at the height of its power stretched from modern day Colombia down to Chile and Argentina, and later as part of the Spanish-lead territory in South America. Peru’s capital, Lima, itself has a long and storied history. Founded in 1535, the city eventually gained tremendous influence over all of Spain’s South American territory and today houses Peru’s national government. Peru is relatively safe and stable as compared to some of its neighboring countries. However, companies with operations in the region must be mindful of the risks and dangers that come with the increased levels of crime in the country. If you are doing business in Peru, you should take the same precautions that you would take when traveling to other countries in the region, such as monitoring for travel advisory warnings (the U.S. State Department currently does not have a travel advisory warning for Peru), as well as avoid areas prone to higher levels of crime. President Humala was elected in part on a commitment to reduce crime rate across the country. The current high crime rate has had an impact on his approval ratings. Recent news articles on the country’s crime rate range in terms of violence and include such examples as a prison director being shot and killed while eating dinner, all the way to petty crime increasing against both Peru citizens and tourists alike.

Global Ethical Reasoning
The global community has demanded more ethics and integrity in leadership performance and behavior; the proposed research is (1) a quantitative examination of the degree and character of the relationships between the deontological and teleological ethics orientations and intellectual and moral integrity types for the leadership styles evident among Peruvian managers.

Ethical Reasoning in International Business
Environmental Issues:
Peru has been facing an ever increasing number of protests (some of them violent) by smaller local communities and NGO’s claiming big extractive companies are demolishing historical monuments, polluting rivers and streams that provide clean drinking water, and destroying the environment. Amongst Peru’s major environmental issues: * Deforestation from a variety of sources; logging, oil exploration, chemical spraying to eradicate coca production, and internal migration and farming. * Desertification * Soil erosion * Air pollution in urban centres * Pollution of rivers and coastal waters from municipal and mining wastes * Depletion of fisheries as a result of overfishing
Massive deforestation is currently underway in the Madre de Dios region of the Amazon jungle. The high price of gold has caused mining companies to flock to the area, where it is believed approximately 30,000 miners are carrying out business, legal or not. Thus far, close to 220 km2 have been lost of a jungle biologists refer to as “the world’s enclave of biological diversity.” The damage is so extensive that Peru’s environmental minister is calling for 80% of the Madre de Dios region to be closed to miners. In addition, mercury used in the gold extraction process is being left to poison the flora and fauna in rivers and lagoons, eventually finding its way into the food chain. It is estimated that up to 40 tonnes of mercury are dumped in the area yearly.
Sweatshops:
Authorities in Brazil have rescued 17 Peruvians from slave-like conditions in a textile workshop in São Paulo, leading officials to warn Peru may become the country's next major source of forced labor. A site inspection revealed the workers -- among them minors -- were working 17-hour days stitching clothes for a local fashion chain. The Peruvians were mainly young adults recruited from the towns of Arequipa, Cuzco and Puno with promises of well-paid jobs. On arrival, the workers found themselves locked into debt bondage as they were told they had to pay back the costs of their travel. While some workers later began to earn a small wage -- about $10 a week -- the workshop owners still retained their identity documents, kept them under surveillance and restricted their movements.
The Peruvian owner of the workshop has been arrested, reported EBC.

Corporate Corruption
Corruption is a serious problem for businesses in Peru, with irregular payments, bribes and the favouritism of government officials in awarding contracts being particularly common. Corruption is criminalised through Decree No. 635 of the Peruvian Penal Code (in Spanish), which covers attempted corruption, extortion, passive and active bribery, money laundering and bribery of foreign officials. The official procedure of accepting gifts and small courtesies is not specified, so it also represents a risk. Peru’s Penal Code does not criminalise facilitation payments. Alan García, who was president from 1985-90 and then from 2006-11, and Alejandro Toledo, who led the country from 2001-06, are both hoping to return to office. Both are caught up in scandals involving the purchase of homes in two of Lima’s priciest neighbourhoods.

Dumping
Peru's experience in the application of antidumping and safeguard measures is characterized by a radical change in the philosophy and procedures of trade at the beginning of the 1990s, and by an increasing use of these mechanisms. The application of antidumping duties was approved for 29 of the cases investigated. Only two cases of safeguard investigations were recorded, one of which (Chinese textile clothing articles) is still in the negotiation phase. This paper reviews that case experience in detail, concluding that Peru has clearly differentiated between unfair competition and dumping on the one hand, and damage and safeguards on the other, and has applied strict technical criteria to the former and broader political considerations to the latter.

Poverty
Peru’s rapid economic expansion has helped to reduce the national poverty rate by almost 15%, but 44.5% of the population still live below the poverty line. Not all Peruvians share the benefits of the country’s ever-increasing prosperity, while general disregard from the government and lack of infrastructure inhibit growth in Peru’s less developed regions. In 2007, Peru’s real GDP growth was 8.3%, the highest in Latin America. In 2008, it rose to an astounding 9.8%, not only the highest in Latin America, but in the world. Despite its recent success, almost half the Peruvian population remain poor, two thirds being from rural areas such as the Andean highlands and the Amazon basin. In these regions, the extent of social inequity is evident; poor water quality (or complete lack thereof), lack of education, and chronic malnutrition, especially among infants. In children under the age of five, 25% have stunted growth, this number catapults to 66% amongst the country’s poorer areas. These inequalities are usually the reason there tends to be so much hesitation from smaller communities when faced with new extractive companies. Corrupt local governments mean that most of the profit turned from major mining, oil and gas industries is spent unfairly, thus poverty levels remain high in the affected regions.

NGO’s in Peru
Outreach Peru: An NGO in nurturing hope and faith for a better life, promotes projects in nutrition, health, education and sustainable development, supports the life of the Church, and provides aid to vulnerable people.
Medlife Peru: an eight year old NGO focusing on health and education. In Peru, Medlife has chosen Lima and Cusco as its two focus points, representing the densely populated coast and the impoverished highlands. The NGO focuses on improving healthcare and education, and therefore bringing about sustainable development for the poor in these countries.
Living Heart: is a registered Peruvian charity and official UK Charity supporting remote, impoverished highland communities above the Sacred Valley in Peru. Our challenge is to continue to support over 2,500 vulnerable children, abandoned elderly, women and men to help provide a better quality of life & a brighter future. Our ambition is to help more people in such communities.

By now you must have a clear understanding of Peru and its Social Responsibility as well as the NGO’s existing to help Peru. You must also have gained a clear understanding of Peru’s corporate social responsibility of Peru, business ethics, and ethical issues in international business.

Work Cited

http://www.livingheartperu.org/

http://www.business-anti-corruption.com/country-profiles/the americas/peru/snapshot.aspx

http://www.cim.org/en/CIMSubSites/CenterForExcellence/Country-profiles/Peru/Peru-overview.aspx

http://www.insightcrime.org/news-briefs/sweatshop-raid-raises-concern-over-peru-to-brazil-human-trafficking