The world’s business leaders have suddenly been stricken with a conscience.

After the disappearance and suspected murder of journalist Jamal Khashoggi from the Saudi Arabian consulate in Istanbul, executives who’d been lined up for the “Davos in the Desert” Future Investment Initiative conference in Riyadh this month are getting cold feet.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon and his peer at Blackstone Group LP Steve Schwarzman, along with BlackRock’s Larry Fink, Uber Technologies’s Dara Khosrowshahi and Richard Branson have all sent in cancellations. Credit Suisse Group AG CEO Tidjane Thiam and HSBC Holdings Plc’s John Flint became the latest to shun the forum on Tuesday.

It remains to be seen if this born-again sense of ethics extends to other gatherings of the world’s great and good-ish. After all, until now the conference crowd hadn’t been put off by the fact that it’s being hosted at Riyadh’s Ritz-Carlton, which was turned into a high-class jail for purged members of Saudi Arabia’s ruling class just days after Schwarzman, Fink, Branson and others checked out after the 2017 event.

Nor were they overly concerned by the way Saudi-led blockades of Yemen’s ports and bombing of its infrastructure have fueled a famine that’s left some 18 million people at risk of starvation. That insouciance is hardly surprising, since the US, UK, and other western countries have aided the Saudi coalition with arms, personnel and logistical support.

More to the point, we’re yet to see any public cancellations for the next meeting of Beijing’s Boao Forum for Asia scheduled to take place in Seoul next month. That’s despite the fact that China this month disappeared the President of Interpol Meng Hongwei; has used its visa process to drive journalists out of Beijing and Hong Kong; and is imprisoning as many as a million Uighurs in re-education camps in its western Xinjiang region.

The double standard is hardly surprising. Making money has required a certain flexibility on moral issues ever since Joseph taught Pharaoh how to profit off a seven-year famine. Being ethical in business is difficult because being unethical is often lucrative.

In many ways we’re all complicit. Saudi Arabia has a particularly vital role in the oil market -- but at least 60 percent of the world’s crude production comes from countries classified as “not free” by Freedom House. Any time we fill up our gas tank, fly a plane or use plastic we’re helping in a small way to fill the coffers of an authoritarian government. Going electric won’t necessarily help: Tesla Inc. uses share capital invested by Riyadh and cobalt mined from the kleptocratic Democratic Republic of Congo to earn sales revenue from China, after all.

This isn’t meant to excuse investors and business leaders for making deals with the devil. Quite the opposite.

The right response to the sudden and instinctive revulsion at the apparent killing of Khashoggi isn’t so much to mock its selectiveness as to welcome its existence. Democratic values and human rights seem to be in retreat across the world at present, and many business leaders appear untroubled as long as the money keeps flowing. For those who count Saudi Arabia as a current or potential investor, listening to the call of conscience comes at a real, if worthwhile, cost.

That’s a lesson to all of us. If you’re an investor, you should look a bit deeper at how your money is being put to work. Just buying something with an ESG label on it isn’t enough: In the MSCI KLD 400 Social Index, one of the longest-standing benchmarks for ethical investments, the number two and three weightings are Facebook Inc. and Alphabet Inc. The first has been accused of inciting genocide in Myanmar, while Google’s parent is developing a censored search engine for the Chinese market.

If you’re the leader of a government, it means remembering that authoritarian behavior can often backfire. China’s dreams of becoming a leader in the semiconductor industry have likely been put back years by evidence of its theft of trade secrets and hacking of server motherboards. Foreign direct investment into Russia all but dried up in the wake of its invasion of Crimea in 2014. Prince Mohammed bin Salman’s ambitions for Saudi Arabia to outgrow its oil dependency aren’t well-served by the country’s increasingly bloody international image.

If you’re an executive, it means reconsidering whether your overtures to lucrative, rights-abusing regimes are really worth the trouble. That means more than just returning some gold-edged conference invitations -- after all, appearing on a stage for a boring panel debate doesn’t really do a lot of harm, except to your sense of self on the dinner-party circuit.

The bigger challenge is the oldest one in business: how to earn a profit without selling your scruples in the process. Making money from weapons, addiction, pollution and the means to conceal ill-gotten wealth may smell better than shaking the hand of a dictator -- but it almost certainly does more harm in the world.


David Fickling
David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. -- Ed.

(Bloomberg)