Before there is another Holocaust

“Those who cannot remember the past are condemned to repeat it”                        George Santayana

In the 1930’s Adolf Hitler’s Nazi party began to pass a number of laws aimed at discriminating against Jews in Germany. These laws expanded into sterilizing those deemed unworthy to reproduce followed by using them for medical experiments and forced euthanasia. The late 1930’s saw the increased development and use of concentration camps. In particular, Jews would be loaded onto trains, crowded together, and transported to labor camps where they would be literally worked to death. In the end, it is estimated that the Nazis exterminated between 5 and 6 million Jews, over 3 million non-Jewish Poles, and almost 2 million soviet prisoners of war. 

All of us familiar with the atrocities of the Holocaust rightly condemn the shocking treatment of Jews and others by Nazi regime. Yet a number of today’s well-known organizations did business with Hitler’s government, and profited from their indirect or direct support. The laws were known to all. The persecution was known to most. The concentration camps were known, and what was going on was suspected. And yet a number of U.S. companies continued to do business with the regime. I do not bring this up to condemn those companies; only to note that they either knowingly participated or turned a blind eye to the evil that was occurring in Germany, Poland, Austria, etc. If asked, we would likely say that we would never have participated in these activities nor condoned them in any way. I am sure that the CEOs of most companies, boards concerned about ESG, and all the leaders of the Business Roundtable calling for stakeholder capitalism would say that they never would have done business with the Nazis. Yet, is that true? 

The atrocities of discrimination, taking away rights, funneling people on trains to take them to “re-education” camps where they engage in involuntary labor that took place in Germany in the 1930’s and 40’s have been alleged to exist in China in 2020. While much attention focused on the protests in Hong Kong, far less has been paid to the persecution of Uighur Muslims. Experts estimate that between 1 million and 3 million of them have been funneled into “re-education camps.” Insiders have reported that a number of these Uighurs have been used for organ harvesting. They also report that a number of brand name products sold in the U.S. (and around the world) have been produced by those forced into labor. 

So, what does corporate social responsibility look like regarding China?

Investigate. I do not suggest that all the allegations about what the Chinese government is doing are true. In fact, I do not know if they are true. But corporations doing business in China have the moral responsibility to investigate them. This investigation has to go beyond asking the government, who will no doubt deny them. They must support and possibly participate in independent investigations to determine what human rights violations may be occurring. 

Influence. If the allegations are true, corporations must actively influence the Chinese government to stop the activities that violate the human rights of their citizens. I know that many companies seek to influence government policy by being good corporate citizens who have credibility and influence because of their contributions to the country. Certainly, more heft comes from being present than absent. But the influence should go beyond issuing grandiose statements, to express the very real threats of exiting the country or province. 

Invest Elsewhere. If unable to influence, I believe firms must consider exiting. This extreme action may lead to a significant loss of investment and thus will come at the expense of shareholders. However, the Business Roundtable’s statement in support of “Stakeholder” as opposed to “Shareholder” capitalism combined with firms’ increasing emphasis on “Environment, Social, and Governance” (ESG) provide justification for cutting ties with governments that violate human rights. In addition, if a company is found to be at all complicit with such violations, the reputational hit to share price may negatively impact shareholders more than the lost financial investment. 

Dietrich Bonhoeffer is alleged to have said "Silence in the face of evil is itself evil. Not to speak is to speak. Not to act is to act." Companies that were later revealed to have ties to the Nazi regime suffered reputational losses. Fifty years from now, will some of today's companies suffer the same fate because of their failure to speak and act today?