Strategy

Lessons for Canada's coming Burma trade

Canadians are finally free to trade with Burma. But tread carefully, or get burned.

Companies cannot succeed in societies that fail, or so argue Daniel Esty and Andrew Winston in Green to Gold, their seminal book on corporate environmental strategy. And by almost every measure, Burma has been a failed society ever since a 1962 military coup. During the six years I spent in Asia implementing social and environmental standards for multinational companies, I visited Burma several times. That’s why I know that Ottawa’s move to allow trade with the country (also known as Myanmar) presents Canadian companies with a real challenge: how to seize the opportunity to invest in what may be Asia’s last frontier market without adding to Burma’s woes—or damaging your own brand.

The Burmese regime’s suppression of human rights is well documented. Yet the country also boasts vast reserves of minerals, timber, natural gas and oil. With nearly 56 million people and little industry today, it is rich in potential and may in time become a thriving consumer market.

While some companies found ways to evade international sanctions and continued to do business in Burma, most are only now taking a serious look. In January, Hitachi and Toshiba joined a high-level Japanese trade delegation, while Ogilvy & Mather has bought a stake in Burma’s top advertising firm. Canadian firms can’t afford to sit on the sidelines. But they’d be well advised to apply the principles of social enterprise, ensuring their projects bring benefits to Burma’s people and economy.

For starters, businesses should abide by international monitoring agreements regarding labour, ethnic rights and environmental protection. They can seek guidance from programs like Better Work, a partnership between the International Labour Organization and International Finance Corp. that helps manufacturers in places like Haiti, Cambodia and Vietnam build competitive businesses and apply ethical labour practices. The Canadian Mining Association could form a similar partnership with Canadian banks, providing training on sustainable practices to Burmese natural resource firms while leveraging the trillions of dollars raised on the TSX for projects that give environmental groups and local residents a say. One company already taking action is Saskatchewan potash exporter Canpotex, which plans to help Burmese farmers improve their crop yields.

There are significant risks for any company entering Burma. Bribery and money-laundering continue to be pervasive, and new foreign-investment policies are made all the more complex by an antiquated legal system.

But as the U.S., European Union and now Canada all lift sanctions, our businesses should support, through investment, the positive forces gaining momentum in Burma. Esty and Winston’s research shows that doing good can be good for business: public companies with strong social and environmental standards have outperformed major stock indexes by an average of 30%. My big lesson? That consumers and markets reward those companies that live their values.

Michael Lavergne has 20 years of global supply-chain experience, including six years working in Asia