Strategic CSR - Caterpillar

Sometimes, it is hard to understand how risk assessment/risk management decisions are made inside firms. The article in the url below, for example, announces Caterpillar’s decision to halt trading with Iran via its non-U.S. subsidiaries:

“Caterpillar, the construction equipment group, has become the latest US company to bow to a "name and shame" campaign by influential lobbyists by announcing steps to sever trading links with Iran.”

This means that, until this March, Caterpillar was deliberately trading with Iran, in spite of the well-known nature of the regime and its difficult relations with the international community. Did Caterpillar’s executives think no-one would notice? Alternatively, did they think the firm’s stakeholders would not mind or have sympathy for the firm’s need to maximize profits? It is difficult to imagine the thought processes inside Caterpillar’s executives’ minds that recognize the controversy surrounding Iran, acknowledge U.S. law that makes it illegal to trade directly with Iran, but conclude that the firm is going to go ahead and circumvent the spirit of the law anyway:

“As part of the Caterpillar campaign, the pressure group this month erected a roadside billboard near the company's Peoria, Illinois, headquarters that pictured one of the company's diggers alongside Mahmoud Ahmadi-Nejad, Iranian president, and the slogan: "Today's work, tomorrow's nuclear Iran.”

Clearly, Caterpillar is not alone in evaluating this risk in the same way and concluding that the potential profits outweigh any risks to business:

“As western pressure mounts at the United Nations for a new round of global sanctions against Tehran over its nuclear programme, UANI and other lobbyists have targeted 200 US and non-US companies whose business with Iran is legal under US and international law.”

Take care
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)
© Sage Publications, 2011
http://www.sagepub.com/strategiccsr2e/

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Caterpillar bows to pressure and severs its trading links with Iran
By Harvey Morris in New York
401 words
1 March 2010
Financial Times
USA Ed1
01
http://www.ft.com/cms/s/0/30d15d3c-24d2-11df-8be0-00144feab49a.html
or
http://www.ftchinese.com/story/001031492/en