Companies must examine users, not just suppliers

March 30, 2012

Yesterday Apple vowed to change its ways after the Fair Labor Association issued a report citing numerous labor and safety problems in its supplier factories. Meanwhile, on the other end of the value chain, it is not how products are being made but how they are being used that is attracting needed scrutiny. This is the next frontier of corporate liability and responsibility, and deserves as much attention from companies, consumers, regulators and civil society as supply chains do.

The latest story about troublesome product use comes courtesy of Reuters, which surprised Microsoft, HP, Cisco, Dell, and other hardware and software companies with a report last week that a Chinese company packaged their products for sale to the Iranian government for surveillance of phone and Internet communications. The week before, The New York Times revealed that Bain Capital took over the video-surveillance division of Uniview Technologies, which enables China’s extensive monitoring of its citizens.

In both cases, some of the companies involved have already denied responsibility for how their products are used. But companies cannot abdicate that responsibility when their products uniquely enable human rights abuses.

Cisco could hardly have been surprised: Last year it was hit with two lawsuits alleging that it helped the Chinese government build computer systems used to track and prosecute dissidents. Cisco has responded that it sells the same equipment in China that it sells in other countries around the world. Maybe so. But should it?

In 2006, GE came under fire from Indian activists drawing attention to its ultrasound technology being used to facilitate female sex-selective abortions. Of course, ultrasound has multiple beneficial applications and is not in and of itself the cause of female feticide; nor is GE the only manufacturer of such technology. But GE nonetheless strengthened processes for customer certification, requiring sales staff to cut off clients even suspected of wanting the machines for gender screening. The company went beyond the Indian government’s attempts to pose similar obligations on manufacturers and contributed to public campaigns that promote girls’ education and equality.

GE states that it has “a social and ethical responsibility” to “address the negative implications of product misuse by customers, and an interest in averting the threats to the business posed by these situations.” Those potential threats are multifold, from lawsuits alleging complicity to reputational damage.

So what should be done to prevent unethical or even criminal product use?

For starters, companies should put appropriate processes in place. After Yahoo earned a public flogging for helping the Chinese government find and jail journalist Shi Tao, it instituted human rights impact assessments before launching new products in new markets to assess potential threats to free expression and privacy and to propose modifications. Yahoo is also a founding member of the Global Network Initiative, a collaborative effort of companies, investors, NGOs and academics to develop a common framework for such activities.

Governments also have a role to play. Sanctions are complex: They can be valuable for single-use products like weapons, but bans on dual-use products like ultrasound and internet infrastructure could cause even greater harm.

Requiring disclosure of potential dual use may be a helpful first step. Web security company Blue Coat admitted in its 2011 SEC filing that “our end user customers may filter content in a manner that is unlawful or that is believed or found to be contrary to the exercise of personal rights. If this occurs, our ability to distribute and sell those products as presently designed or as customers desire to use them may be affected and our reputation may be harmed.” Such an admission calls for questions about what processes they have in place to manage these risks, but some credit is due for transparency.

To be sure, there must be a threshold of reasonableness for determining liability for product use, lest we devolve into tort ridiculousness (like the warning on Nytol sleeping pills that they “may cause drowsiness”). Should a hammer manufacturer be held liable for a murder committed with that tool? Probably not. But where companies provide equipment that uniquely enable a crime to be committed, they should bear responsibility.

Just as companies have taken ownership for human rights abuses in their supply chains, they must now turn their attention to the impacts of their products. The business community has generally embraced the notion that its products should not cause environmental damage. Now it’s time for companies to assume a similar duty of care to make sure they’re not directly empowering human rights abusers and to modify or withhold their products if that turns out to be the case.

PHOTO: A Chinese lantern hangs underneath a security camera affixed to a light pole that looks into the studio of dissident Chinese artist Ai Weiwei in Beijing, January 17, 2012.  REUTERS/David Gray


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another liberal cost on capitalism… unbelievable…

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“a day of shame”) re our administration seems more applicable to Mitt Romney himself as a Bain investor in the Chinese camera Surveillance company,( Uniview Tecnologies) which was no doubt used to destroy human rights activist Chen’s life.


C. Antelline.

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