A recent amendment to the Company Act (公司法) thoroughly revised Article 1 and added business ethics, public interest and social responsibility to the law’s legislative purpose. Unfortunately, many business leaders do not seem to have the slightest idea of the ongoing paradigm shift to business logic that capitalism is facing in this new era.
Over the past few decades, whenever private interests have come into conflict with the public interest, business operators and big shareholders have treated the pursuit of maximizing shareholder profits as imperative. During environmental impact assessments, developers have often obstinately refused to sacrifice shareholders’ profit for the interests of local communities and the environment, lest they contravene Article 1 of the act, which defined a “company” as “a corporate juristic person” established “for the purpose of profit making.”
Once the amended act is announced and takes effect, businesses will no longer be able to use it as an excuse to refuse to make any concessions. Instead, they will have to strike an appropriate balance between social responsibilities and short-term profit.
Faced with the global trend toward environmental protection, supply-chain management is attaching increasing importance to a sustainable forest industry, and Forest Stewardship Council certification is to cover 20 percent of the market by 2020. Although consumption of paper products is increasing, modern consumers do not want to be the cause of logging. The paper manufacturing industry, which makes logging its business, also has the obligation to refrain from using primitive rain forests to make pulp, to comply with environmental regulations and not to disturb the market order in the retail sector.
Following a toilet paper stockpiling frenzy earlier this year, the Fair Trade Commission imposed a NT$3.5 million (US$113,947) fine on a distributor, and environmental groups have indicated that paper manufacturing businesses are big polluters that consume large volumes of water and energy.
The nation’s three major toilet paper suppliers have been heavily fined over the years, the worst one being Cheng Loong Corp (正隆紙業). Its paper factory in Taichung’s Houli District (后里) has spread foul odors to neighboring communities for many years, and in 2015 and last year, the company only spent NT$600 million on equipment to prevent pollution after it had been given fines totaling almost NT$50 million from 2014 to last year.
Last year, after China tightened its environmental regulations, the company simply shut down its factory in Shanghai and increased investment in its Vietnam branch, a good example of how operations deploying transnational capital exploit the Earth.
The importance of papermaking to the industry’s profit is gradually decreasing, as manufacturers accumulating huge capital surpluses turn to the financial industry and speculative real-estate investments. As the manufacturing industry, which is haggling over every dime, enters the financial industry and starts speculating in real estate, it is unlikely to stick to business ethics.
When YFY Inc (永豐餘控股), a papermaking conglomerate, entered the financial industry, it was allegedly involved in fraud and embezzlement, and Cheng Loong Corp, which has been meddling in the real-estate business in recent years, buying large parcels of land, is suspected of making exorbitant profits from its involvement in several urban renewal projects.
Cheng Loong is expected to make NT$2 billion in profit from its involvement in urban renewal projects on Taipei’s Hangzhou S Road, equivalent to the company’s combined annual profit for the past two years. Despite owning less than 5 ping (16.5m2), the company took the lead in a project covering more than 800 ping, more than 60 percent of which was publicly owned land. The development project will affect three protected trees, one of which is the 100-year-old Xingding (幸町, the name of a Taipei administrative district during the Japanese era) banyan tree.
As procedures are incomplete, the tree will be subjected to root-pruning and transplantation, giving rise to the third instance of tree-hugging protests in Taiwanese history. This incident represents a great irony, as the covers of Cheng Loong’s recent annual reports have used green environment and Earth themes.
Even the most cunning thieves follow their principles and conform to certain standards. Cheng Loong, a company boasting its social responsibilities, should not pay mere lip service to “going green.”
Eight years after Cheng Loong chairman Cheng Su-yun (鄭舒云), the third generation of the Cheng family to run the business, took office, the choice between cutting down more trees to make money or fulfill its corporate social responsibilities by modifying its urban renewal project design to preserve old trees is an inevitable test of its business ethics.
Pan Han-chiang is the chairman of the Trees Party. Pan Han-shen is the executive director of the Association of Taiwan Tree-huggers.
Translated by Chang Ho-ming.
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