Socially responsible behavior on the part of corporations probably does not strike most investors as a priority issue. Corporate behavior, though, is getting more attention as more firms move production to developing countries or rely on suppliers in such places. Naturally, most folks would prefer that the companies in which they invest aren't pillaging developing nations. But one of the reasons that corporations take an interest in poorer countries is precisely because those nations are poor and have large pools of cheap labor. When companies invest in developing nations, they are simply seeking out the best return for shareholders.
Nevertheless, investors would do well to be conscious of firms that seek to manage their relationship wisely with the developing world. While corporations can be a force for social stability in poorer countries by providing much-needed jobs, they can also contribute to unrest, sometimes even when they are trying to do good. ChevronTexaco
A smarter approach may be the chocolate industry's planned program in cocoa-growing areas in West Africa. Stability in this region is extremely important for chocolate companies, a fact driven home when violence erupted last year in Ivory Coast and caused a spike in cocoa prices. To mitigate the risk of more disruption, Hershey
Corporations may not think of social policy as a pressing concern. But in an increasingly interconnected and interdependent world, companies may not have any other choice, especially in poor countries with weak governments. Consequently, it's worthwhile for investors to keep track of how firms manage their relationships in developing countries.
For a related story, see "Cocoa Crisis?"
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
