Shareholders Squeeze Cisco on Human Rights

Comatose51 writes "According to this article at Wired, Boston Common Asset Management, has filed a shareholders resolution asking Cisco to 'adopt a comprehensive human rights policy for its dealings with the Chinese government, and with other states practicing political censorship of the internet.' Cisco so far has asked the SEC to omit this proposal from the agenda for the next annual meeting, claiming that it already has a comprehensive human rights policy in place and that 'Cisco does not participate in any way in any censorship activities in the People's Republic of China ...' However, 'a report from the OpenNet Initiative watchdog group last April singled out Cisco for allegedly enabling the Chinese government's notorious "Great Firewall."' As a shareholder in Cisco, I would like to see this issue discussed and voted on."

Comments

Yawn!

[gearmonger]

Feh, if every company tried to impose its ideas of social justice on the governments it does business with, we'd have one monster of a mess on our hands. Leave the companies to make money and the voters to tell the government how to behave.

Oh, wait.

Re:Yawn!

[bobbis.u]

Leave the companies to make money and the voters to tell the government how to behave

That sounds like a great idea.

Unfortunately, it seems that now some companies have succeeded in making lots of money, they are the ones telling the government how to behave.

Arguably, some power still lies with the people because they are the ones who buy the companies products... but then you remember we are talking about multinational companies with foreign customers. These foreign customers include other governments - meaning that you effectively have foreign governments (i.e. China) wielding power over the US government. Don't you just love capitalism!?

Re:Yawn!

[arkhan_jg]

I've thought about your position, and it seems attractive, but then I remembered a counter-example.

This is exactly the same argument the military equipment and weapons manufacturers use as to why they should be able to sell their guns to anyone with the money, and be able to sell any weapons, such as landmines, to anyone.

Similar arguments are used by companies using what is near slave labour (and in some cases, actual slave labour through contractors) - if they can buy goods for the cheapest possible price, wouldn't they be remiss to the shareholders
to not take advantage of it?

We have a duty, through government, to prevent our national companies from doing significant harm as part of their business plan, and I think shareholders should also have the right, if not the duty, to put pressure on the company they own to also act in a more socially responsible way.

In the end of the day, the shareholders own the company. If a majority of them think not helping censor free speech in china is more important than making the most money possible, then all power to them.

Re:Yawn!

[doc modulo]

Exactly!

If you feel you're one of the good guys, you should always oppose bad guys. And think real hard about what opposing means to you.

Big corporations use all kinds of techniques to limit their badness in the eyes of the public. You know these techniques but may not be completely concious of it because of social influences.

One of these techniques is spin (half-lies). Another is spreading the guilt out over as many people as possible. For example, the nazi death camp machine was kept running by thousands of normal people who all did a little evil thing. HOWEVER, the end result was millions of people tortured and executed.

Do you really think that today there aren't any evil people in the world? Of course people who think like Hitler or Stalin exist today, some of them are even in the news. We are the good guys and everyone agrees (even the bad guys will) that evil and evil people need to be surpressed as much as possible.

YOU are not a good guy if you see evil and don't do anything about it. If you see someone breaking the law then that's something for the police, depending if you agree with that law you should call the cops. On the other hand, police can't be everywhere and not all evil is covered by law. There are evil things people can do without breaking the law. That's where the good guys come in.

A comment here, a small decision there will make a difference in the amount of evil in your society. The problem is that the culture is somehow against good guys in the: "nobody likes a smartass" kind of way. There are ways around that. You can give signals to evil doers in ways that do come across. One of them is mixing the message with something exciting or interesting, like humour or music. Another way is to send your message with conviction, if you really believe what you say and say it in a certain way, that will spill over in to your voice and body language. Show some balls in other words but don't be emotional about it, saying it as "matter of fact" works for me.

The reasons I'm saying this, well Cisco is saying, we're only doing this little thing and recently they've tried to supress the information about a security vulnerability in their router OS. Just so they could sit on it so they could spend the least amount of money. The great thing is, one guy showed balls and told everyone they were in danger. He got sued and the FBI were sicced on him (probably as an between-the-lines threat) but he knew that in advance and he still did the right thing. In his presentation he even said something like: "this will get me sued and fired but I want people to know about this". You should hire this guy because he proved he can be trusted.

Now I want YOU to do something to send a message to the evil in people's minds. Even though the people in Cisco individually might not be such bad guys, together they did end up doing the wrong thing in at least two instances. There are other ways of getting a good router for your network aren't there? Other brands, other kinds of solutions than a big router box, things like Eddie.

I'm not asking you to become an activist or something but let's admin this organization called "society" in the best possible way, us smart and aware people know the right way, all we have to do now is act on it. Do a little small thing here and there and bring it in the right way. I made this post and I'm stopping here so I don't get get overwhelmed but I DID do something as the submitter and slashdot editor did their things. Good luck doing your thing and enjoy it when you've done it.

Re:Yawn!

[dangitman]

They're not the government. If China comes to Cisco and says, we'll trade you these millions of dollars for your routers, they have an obligation to the shareholders to say OK. I mean, if they don't do it, then Juniper will do it. China is the one that is responsible for their misdeeds against their people,

Do you feel the same way about IBM's collaboration with the Nazis, where their technology was used to track Jews and other undesirables for extermination or punishment? Or any of the other American businesses who collaborated with Nazis? What a company that sold medical equipment that was used for torture to Saddam? After all, it was just business. IBM just saw an opportunity to profit from fascism.

And isn't the desire for profit one of the major motivations of fascism? Business is not politically neutral. Businesses have effects on society, and should live within the laws and values of a society. Excusing such actions because it happens outside the US is like approving of human rights violations because they did not happen on US soil. How can a country ask another country to abide by its standards on human rights, if it is not willing to hold companies that operate from that country, to participate in said violations of human rights?

Finally.

[FusionDragon2099]

In every other discussion on /. about companies in China, we're told that it's the shareholders that force them to operate there. It's nice to see someone who's socially responsible for once.

Re:Finally.

[Keruo]

Sadly socially responsible =! financially profitable.
Explains why rich shareholders push operations towards China.
And lets not forget, once China gets their human rights issues resolved, there's tons of profit to be made.
It is after all the largest market area in the world, and currently growing at fastest pace compared to the rest of the world.

Re:Finally.

[Dogtanian]

And lets not forget, once China gets their human rights issues resolved, there's tons of profit to be made.

There's tons of profit to be made *without* them resolving their human rights issues. If you're implying that profit will improve Chinese human rights, I'm not convinced of that, for the reason I've just given.

I didn't get the impression you were saying that Western companies could wait until China had resolved its human rights issues before investing and reaping profit...

It is after all the largest market area in the world, and currently growing at fastest pace compared to the rest of the world.

And although many westerners can see a vast pool of profit in the Chinese market, the Chinese government and friends (i.e. the strata for whose benefit the country is run; let's not kid ourselves that China today is *anything* but an uber-capitalistic plutocracy) have a vested interest in keeping that money and power for themselves.

You and everyone else ...

[El Cubano]

As a shareholder in Cisco, I would like to see this issue discussed and voted on.

And as executives, the members of the board would like to see this swept under the rug as quickly and quietly as possible. Remember that such a resolution would impede the company's ability to do business in the single fastest growing tech market in the world.

IIRC, I read in a recent issue of IEEE Spectrum that Cisco was also a winner of one of six huge contracts to rebuild China's Internet infrastructure. I highly doubt the Chinese government would have chosen Cisco if they did not have the ability to sensor as the Chinese government on it. If you can lay your hands on that copy of Spectrum, they specifically discuss the censorship issue and speculate as to whether or not Cisco is party to it.

i concur

[Anonymous Coward]

Me and all 10 of my shares would like to see something done about this!

Et tu, Microsoft

[Black Parrot]

You probably won't hear it on the evening news in the USA, but Microsoft is also actively engaged in helping China with political censorship.

Cisco is not a business of social activism.

[blcamp]

It is a business of network equipment. It has the primary goal of turning over as much equipment as it can, and make as much money as it can... what's the phrase? "Maximizing Shareholder Value".

It's not Cisco's prerogative to try and tell ANY government how to draw up policy... all they need to do is keep selling hardware... at a profit.

If a couple shareholders don't like it, buy them out and tell them to move on. Seriously.

I mean, puh-leeze...

Re:Cisco is not a business of social activism.

[dbarclay10]

It is a business of network equipment. It has the primary goal of turning over as much equipment as it can, and make as much money as it can... what's the phrase? "Maximizing Shareholder Value".

You misunderstand the stock market system. The stock market system is about making the executive and management of a company responsible to a large number of stakeholders. It's easy to hold them responsible to a small number of people, but once you get millions of stakeholders, it's a bit more difficult.

In a way though, you're right - it all gets down to "maximizing shareholder value." Except it's the shareholders who decide what they value - not you (likely an armchair stock analyst without any Cisco stock), the executive, the management, or the employees.

If some shareholders feel that protecting their freedoms is valuable, and they feel that one of the ways Cisco can do that is by refusing to allow those freedoms to be curtailed - at least on such a massive scale as China - using their technology, then the appropriate course of action would attempt to bring the issue to a vote.

Re:Cisco is not a business of social activism.

[gilroy]

Blockquoth the poster:

Again, I say... Cisco is not in the business of telling governments how to run their affairs.

And again, this is not what's going on. If this passes, Cisco isn't telling China not to censor. It's telling China that Cisco won't be a part of it.

also consider that if Cisco did, someone else will surely step in to sell their own hardware

This is the convenient cop-out that often allows people to justify their participation in the nefarious deeds of others. Maybe "someone else" would sell the routers. Heck, there'd be a market, right? But neither Cisco nor Cisco's shareholders are responsible for what "someone else" does. They are responsible for what Cisco does. That's what is at issue here.

If Cisco bowed out and "someone else" stepped in, well, at the very least, the routers would be more expensive (because the supply is smaller, as the major supplier is not selling). This impacts the Chinese policy, at least a little. Maybe at some point someone in China would decide that the monetary cost wasn't worth it. Meanwhile, activists would see that their policy could work, and might use a similar one to force the "someone else" to stop working with China, too. As well, it's not outrageous to think that a "boycott complicits" movement will lead to local governments and universities and so on buying only from companies that don't aid in Chinese censorship. And bam! Now Cisco is deriving an actual monetary benefit from their policy.

It's not as cut-and-dried as you want to make it seem. The process seems in fact to be handling the concerns of the shareholders quite well -- at least, until the execs at Cisco get the SEC to allow them to muzzle the proposal.

But then, that would be ironically appropriate, wouldn't it?

Dance with the Devil long enough and you grow cloven feet, too.

plausible deniability

[SuperBanana]

claiming that it already has a comprehensive human rights policy in place and that 'Cisco does not participate in any way in any censorship activities in the People's Republic of China

Oh, of course they don't. But I bet they help wash the dishes. Excerpt from the Chinese translation of the Cisco Stonewaller 3000:

Dishwashing function:

The Stonewaller 3000 features extensive "dishwashing" capabilities. For example, if you would like to block all "dishes" from a certain "dish maker", execute:

dishwash add [dishmaker's website URL] [peasant | party member | chairman] (allow||deny) [notify]

Note: notify sends notification upon use of "dirty" "dishes" to assist you in maintaining clean "cupboards".

------

On a more serious note- Cisco just has to maintain some plausible deniability. Clothing companies have this down pat. They set up a policy that looks great to consumers, and then promptly hire a subcontractor who runs sweat shops.

When a human rights company figures out what is going on, it's nearly impossible for them to come up with hard evidence management at the company knew about the subcontractor's sweat shops; the company releases a press release saying "gosh, we're so sorry, this is all the fault of our contractor." The contractor is fired, the contractor disappears off the face of the earth, and a new contractor with a different name pops up and suddenly out of the middle of nowhere, scores a big contract with a famous clothing company.

Et tu, Google et Yahoo

[El Cubano]

So does Google and so does Yahoo!. But then, Google is held in such high regard here that we can only say such things about them in hushed tones.

They're missing the point

[melted]

Cisco does not engage in censorship. They simply make equipment which can be used to engage in censorship. Similarly to a company that makes matches that can be used for arson, or Proctor and Gamble whose Clorox bleach can be used as poison.

There is no way to tell Chinese government what they can and can not do at this point. It would be nearly fatal to impose stiff tariffs, too. So bend over and hand the Chinese that bottle of vaseline.

You, as a shareholder have a say too

[drgonzo59]

If their policy doesn't agree to what you believe the best way to protest is to sell your shares and invest in other company. Nothing speaks louder than $$$. Cisco can put out ads on TV how much they support human rights, they can sponsor human rights campagns for the PR and so on but as long as the Chinese give the $$$ it will also sponsor censorship. It is an entity that exists for the sole purpose to make money. Therefore the best way to control it is to stop investing in it and thus reduce its potential of making money.

I often see people in US, the most capitalistic country in the world (this might start a flame war but I'll say it anyway, that is how I see it), who believe that somehow all these companies have morals and are actually trying to change the world for the better even if it means taking a loss. They view companies as they would like to view individuals: honest, charitable, friendly and in general, very nice. Companies will go to great lengths to project that image onto the public. But the reality is that their only goal is to make money. If something doesn't make money - it is not worth doing, it has nothing to do with morals or principles. Even Cisco's self-imposed resolution to not cooperate with oppresive governments is there to keep people like you happy and investing in them, if they can also get away with cooperating with China and make money off of that, they'll do that too.

Sometimes the goverment or the people (through legislature) step in and put "the smack down". Have you noticed how Phillip Morris started airing all these "smoking is bad for you" ads - it is not because they are nice and want to help and educate, they are just "making the public aware" as to avoid paying another settlement, they know that those who are addicted and smoke will not look at the ad and say, "oh crap, so this is actually bad for me! I better quit right now!".

Is anything more important than money?

[reporter]

such a resolution would impede the company's ability to do business in the single fastest growing tech market in the world.

Yet, are there things that are more important than money?

Fortunately, many of my peers in the United States of America feel that some things are more important than money. Consider the case of Stanford University. It is probably the most commercial of the elite universities and has strong ties to industry. Yet, Stanford University recently divested its investments in Chinese companies like PetroChina, which is commited to indifference to the Sudanese victims of human-rights abuses.

What surprises me about the lead article in this discussion is that Boston Common Asset Management, which (to my knowledge) is not an official advocate of socially responsible investing, has done such a clearly socially responsible act. Does anyone know of any funds managed by Boston Common Asset Management? I want to invest a significant amount of my 401K monies into those funds.

Like Stanford's Board of Trustees, I too am committed to the cause of human rights. I invest exclusively in socially responsible mutual funds.

By the way, there is a significant and measurable difference between Western society and non-Western society. In the West, you will often see incidents of this kind, where shareholders actually demand that companies support human rights. Cisco will change. Reebok has already changed and is now an official supporter of Amnesty International. Can anyone find examples of such shareholder activism in, say, the Chinese province of Taiwan?

Re:geez,

[Whafro]

No, if you're talking guns and murders, it would be more like this conversation between a gun salesman and a customer:

Customer: "I'm looking for a gun, can you suggest one?"
Salesman: "Okay, well, what do you need to use it for?"
Customer: "My wife has been having an affair, and I need to off the bastard who's getting on her."
Salesman: "Oh, good, well, I have the perfect choice right over here..."

Respect for national sovereignty?

[vga_init]

The Chinese are their own country. It's their prerogative to make their own rules and manage their own country, and I oppose self-righteous attempts of foreign capitalist entities of exerting control through economis.

Cencorship constitutes a gray area in politics. Can you prove to me that their censorship violates human rights? If it's gone too far, can you show me how far is too far and prove to me that the lives of the people are worse because of this? I don't want theories or political arguments--I want data. We have cencorship in the United States, you know, but you don't see Cisco turning on our government, do you?

Socially Responsiblie Investing

[Misch]

It's called "Socially Responsible Investing". One of the interesting things I learned at the Great Hudson River Revival is that there are many different mutual funds out there that invest in socially and environmentally responsible companies.

And yes, some of these funds do "beat the street" when it comes to performance. It may take a little work, but you might be able to convince your employer to make it possible for you to put pre-tax money into these funds. (For a 401(k) for example)

Google search: SRI investing

Re:Why do they care?

[tkrotchko]

Shareholders are allowed to care about whatever they want. It's their company.

Re:geez,

[TheGavster]

The interesting similarity is this pair of conversations:

China: I need a router.
Cisco: What sort of router?
China: A router that can filter all mention of free thought and democracy.
Cisco: Ah, you want the UberWhip9000.

Parent: I need a router.
Best Buy: What sort of router?
Parent: A router that can block off large portions of the internet.
Best Buy: Ah, you want the SuperRouter9000.

So, really, the Chinese government is one giant safety mom, with a billion kids. That minivan must get really poor gas milage.

as someone that actually lived in china...

[jjn1056]

for 18 months I can tell you the great firewall is a serious problem. Not only does it block news and political sites (as well as tons of other stuff that can only makes you say huh?) but the increased latency makes VoIP and IM quite spotty.

It slows down the entire internet outside of china, even if the website is not being blocked.

Even if you pay for a proxy server outside of China, this is a serious pain that impairs any Internet related business.

I will never buy Cisco products, or any other company that is involved in it.

Perhaps it would be better to boycott companies that are big buyers of Cisco products? This worked pretty well in Forcing the South African Aparteid Goverment to change.

Anyway, after living in China I am not convinced they are on their way to a huge bubble and collapse. Sure, I see tons of new buildings and businesses, but there are also tons of scams and empty buildings. I wonder if they will not soon overdevelop beyong their capacity to use? Well, I guess we will just see.

So now it is US companies also?

[cdrguru]

You folks complain about the US government sticking its nose into the business of other countries. Now you want US corporations to try to dictate internal policy to other countries as well? Why? Who made Cisco into World Policemen, Jr.?

What about the log in your own eye?

[zakkie]

US shareholders would do best to get their own government's act cleaned up before getting all uppity over China...

Prefer private firms

[abulafia]

This is one of the reasons I prefer privately held firms, in both my personal and professional life. You simply get better service. If I go to an owner with a problem (be it that the product/service sucks, or that you don't like that they're dumping oil down the sewer (true story)), they actually listen to you. As an owner of a private company, I know I do - that's my dinner you're threatening when you bitch to me about something you didn't like, so I'm going to do anything reasonable (and some things that aren't) to make you happy.

Add public trading to the mix, and the importance of customer service is diluted. Short term value extraction becomes the most important thing, and goals of course shift, as you note.

Of course, some functions need the capital that (almost always) only an IPO can provide, and many industries are the sorts in which a failure to IPO means you're doomed. Cisco is certainly in this category. But when buying Cisco (or Walmart), one should remember that you're implicitly funding their behaviour. What that means to you? I dunno. For me, I don't shop with either of them. Does this mean I pay more for soap? Probably. It also led to me learning how to make soap. I don't do it any more, but it was neat to learn. I also build network hardware for clients most of the time - they don't need Cisco gear, and I'm good enough at it now that it actually works out cheaper to use OpenBSD on decent hardware. For places where redundancy and optimization is important, we bid it out for the client (Cisco included), and Cisco almost never wins on cost benefit.

Lesson? Small, hungry companies provide better service and product, and the attitude of dealing with the devil you know just means you don't learn anything new. Oh, and that economics dictates everything, but that doesn't invalidate rational exploration of alternatives - heck, some people even call that 'innovation'.