Written by Miranda Marquit
Photo: seccad, Creative Commons, Flickr
For the most part, French companies haven't been overly concerned with what others are doing. If there's profit, often that's good enough. And that seemed to be the case with regard to a recent deal in the works between the French supermajor, Total (TOT), and Iran.
Total was going to develop natural gas fields in the Middle Eastern country, but in the end pulled out. The big reason was all the pressure on companies and countries to shun Iran after it began test firing missiles that could reach Israel. BloggingStocks offers this assessment of Total's reasoning:
The CEO basically reasoned that if they went ahead with the deal, people would say that Total has no principle whatsoever and that they would do anything to make a buck. The Total case makes it apparent that whom one deals with is starting to make a difference in the business world. Companies are being held up to ethical standards, and need to be concerned about their images. Obviously, making a deal with a government that most Western countries view as unreasonable, irascible and a possible cause of increased regional instability is seen as something of an image problem. Western companies are gearing up to boycott -- and governments lining up to sanction -- Iran, and Total doesn't want to be included in that mess.
As for Iran, we already know that the government doesn't much care what the West does or thinks. But losing the Total deal sets the natural gas field production back about a decade, according to MarketWatch. This means that Iran will have trouble increasing its gas exports for another 10 years.
This should cause companies to stop and think. We are increasingly moving toward a world in which non-business actions are attached to business consequences.
Disclosure: I do not invest in TOT.