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Dear colleagues and friends
Today, I'd like to introduce you to a
well-documented and thought-provoking critique of CSR produced by the UK-based
NGO Corporate Watch. Please find below excerpts from the paper entitled "What's
wrong with Corporate Social Responsibility?"
The following issues will
be addressed here:
* CSR as Public Relations sells
* CSR is a strategy
for avoiding regulation
* The market has no morality
* Case Study: Carbon
trading as a solution to climate change
* Can the consumer really change the
market?
* Corporate Citizenship: With responsibilities come rights
* CSR
as Public Private Partnerships
* Access to 'emerging markets'
* It's good
to talk? Why dialogue is not an appropriate response to corporate power
*
What would a [genuinely!] socially responsible company look like?
The
final chapter of the study outlines strategies for activists and concerned
citizens, such as pressuring for corporate accountability and binding
regulation, supporting grassroots action and international solidarity,
challenging the expansion of corporate power, exposing corporate abuse and
shams, and building people-centred alternatives.
Although the paper does
not specifically deal with the tourism sector, I believe it is a must-read for
all those concerned with the `new CSR paradigm' in tourism - particularly tourism activists, CSR professionals, industry and government representatives
and tourists/consumers - because it raises essential questions that need to be
put onto the tourism agenda; for example, CSR supporters' claim that
corporations as currently structured can be part of a shift to a more
sustainable and socially just society.
The full text of the paper,
including a detailed list of notes and references, can be downloaded from the
Corporate Watch website: http://www.corporatewatch.org.uk/?lid=2670
Yours truly,
Anita Pleumarom
Tourism Investigation &
Monitoring Team (tim-team)
----------------------------------------
http://www.corporatewatch.org.uk.
Corporate
Watch, U.K. 2006
WHAT'S WRONG WITH CORPORATE SOCIAL RESPONSIBILITY?
CSR is supposed to be win-win. The companies make profits and society
benefits. But who really wins? If there is a benefit to society, which in many
cases is doubtful, is this outweighed by losses to society in other areas of the
company's operation and by gains the corporation is able to make as a result?
CSR has ulterior motives. One study showed that over 80% of corporate
CSR decision-makers were very confident in the ability of good CSR practice to
deliver branding and employee benefits. To take the example of simple corporate
philanthropy, when corporations make donations to charity they are giving away
their shareholders' money, which they can only do if they see potential profit
in it.
This may be because they want to improve their image by
associating themselves with a cause, to exploit a cheap vehicle for advertising,
or to counter the claims of pressure groups, but there is always an
underlying financial motive, so the company benefits more than the charity.
This section explores how CSR diverts attention from real issues,
helping corporations to: avoid regulation, gain legitimacy and access to markets
and decision makers, and shift the ground towards privatisation of public
functions. CSR enables business to pose ineffective market-based solutions to
social and environmental crises, deflecting blame or problems caused by
corporate operations onto the consumer and protecting their interests while
hampering efforts to find just and sustainable solutions.
CSR as Public
Relations sells
By appealing to customers' consciences and desires CSR
helps companies to build brand loyalty and develop a personal connection with
their customers. Many corporate charity tie-ins gain companies access to target
markets and the involvement of the charity gives the company's message much
greater power. In our media saturated culture, companies are looking for ever
more innovative ways to get across their message, and CSR offers up many
potential avenues, such as word of mouth or guerilla marketing, for subtly
reaching consumers.
CSR also helps to greenwash the company's image, to
cover up negative impacts by saturating the media with positive images of the
company's CSR credentials. As Deborah Doane points out in 'From Red Tape to Road
Signs', CSR enables business to claim progress despite the lack of evidence of
verifiable change.
Since much of the business case for CSR depends on
corporations being seen to be socially responsible, CSR will continue to be
little more than PR for as long as it is easier and cheaper to spin than to
change.
A prominent case against Nike in the US Supreme Court
illustrates this point. When, in 2002, the Californian Supreme Court ruled that
Nike did not have the right to lie in defending itself against criticism, chaos
ensued in the CSR movement. Activist Marc Kasky attempted to sue the company
over a misleading public relations campaign. Nike defended itself using the
First Amendment right to free speech. The court ruled that Nike was not
protected by the First Amendment, on the grounds that the publications in
question were commercial speech.
The case proceeded to the US Supreme
Court. Legal briefs were submitted to the Supreme Court by public relations and
advertising trade associations, major media groups, and leading multinationals,
arguing that if a company's claims on human rights, environmental and social
issues are legally required to be true, then companies won't continue to make
statements on these matters.
The submission from ExxonMobil, Monsanto,
Microsoft, Bank of America and Pfizer contended that 'if a corporation's every
press release, letter to an editor, customer mailing, and website posting may be
the basis for civil and criminal actions, corporate speakers will find it
difficult to address issues of public concern implicating their products,
services or business operations'.
This case simply reinforces the
criticism that CSR is nothing more than a PR exercise. Corporations would not be
so concerned about potential legal actions if they valued truth, transparency
and accountability as much as they claim. The submissions to the court show how
important it is for corporate America to defend itself against a legal ruling
which would make it more difficult for companies to make false and misleading
statements to defend their image.
The point is further illustrated by
the conflict between what a company says in public and in its dialogue with
NGOs, compared to what it is saying behind closed doors when it is lobbying
government or through industry mouthpieces like the International Chamber of
Commerce or the Confederation of British Industry.
That CSR is
criticised as being a PR stunt is unsurprising, bearing in mind that most CSR
workers in companies sit in the communications and PR departments, and
considering that the strategies of CSR - dialogue with NGOs, codes of conduct,
social reports - were all designed and developed by PR companies such as
Burson-Marsteller, E.Bruce Harrison and Hill and Knowlton.
CSR is a
clear part of the industry's attempts to co-opt the environmental movement. This
strategy has been outlined in detail by Ronald Duchin, senior vice- president of
PR spy firm Mongoven, Biscoe and Duchin (MBD). MBD works to divide and conquer
activist movements. Activists, he explained, fall into four distinct categories:
'radicals,' 'opportunists,' 'idealists,' and 'realists.' He outlined a
three-step strategy: isolate the radicals; 'cultivate' the idealists and
'educate' them into becoming realists; then co-opt the realists into agreeing
with industry.
CSR is a strategy for avoiding regulation
CSR is a
corporate reaction to public mistrust and calls for regulation. In an Echo
research poll, most financial executives interviewed strongly resisted binding
regulation of companies. Companies argue: that setting minimum standards stops
innovation; that you can't regulate for ethics, you either have them or you
don't; and that unless they are able to gain competitive advantage from CSR,
companies cannot justify the cost.
Companies are essentially holding the
government to ransom on the issue of regulation, saying that regulation will
threaten the positive work they are doing. CSR consultancy Business in the
Community supports corporate lobbying against regulation, arguing that
'regulation can only defend against bad practice - it can never promote best
practice.'
These arguments, however, simply serve to expose the sham of
CSR. Why would a 'socially responsible company' take issue with government
regulation to tackle bad corporate practice? Why would this prevent companies
from going beyond the legal minimum?
Perhaps the explanation is that
companies want to be selective about which areas of 'bad practice' they
eliminate and want to use their 'best practice' to divert attention away from
the bad, or that 'socially responsible' companies need the bad practice of other
companies to be a counterpoint to their own 'best practice'.
If
regulation distracts from best practice, then companies cannot be acting
'responsibly' because they believe it to be morally right to do so - only
because they are trying to get an advantage over their competitors. The argument
that regulation would hinder voluntary efforts on the part of the company to
improve their behaviour has been readily accepted by a government keen to avoid
its regulatory duties when it comes to curbing corporate power.
The UK
Department for International Development (the department charged with tackling
global poverty, not the one set up to defend industry) dismissed the idea of an
international legally binding framework for multinational companies saying that
it would 'divert attention and energy away from encouraging corporate social
responsibility and towards legal processes.'
As this quotation shows,
without any evidence for its effectiveness, the government is choosing CSR over
making corporate exploitation and abuse illegal. Regulation, including rules on:
how corporations can be structured, as well as on the impacts they can have on
the environment and society, and their dealings with their workforce and other
stakeholders, is the only way that a democratic society can control what is
acceptable and unacceptable in corporate behaviour.
Should corporations
be able to decide for themselves what is an acceptable level of emissions or
what rights workers should be afforded? Leaving corporations to act voluntarily
is a dereliction of the duties of government. If the corporation is left to
regulate itself then far from curbing it, the corporation gains power.
As Joel Bakan puts it, 'no one would seriously suggest that individuals
should regulate themselves, that laws against murder, assault and theft are
unnecessary because people are socially responsible. Yet oddly we are asked to
believe that corporate persons - institutional psychopaths who lack any sense of
moral conviction and who have the power and motivation to cause harm and
devastation in the world - should be left free to govern themselves.'
Lobbying against regulation
Business lobby groups have a proud
history of destroying attempts to introduce international regulation. Below is
simply a flavour of the more high profile examples:
The International
Chamber of Commerce (ICC) has lobbied against: any binding emission targets in
the Kyoto Protocol at the climate summits; the implementation of the Convention
on Biodiversity; the inclusion of the precautionary principle in the Biosafety
Protocol; and the Basel Convention banning the export of hazardous waste.
As a key organisation in the UN Global Compact, the ICC vigorously
defended its position that the UN should in no way measure or regulate the way
the companies live up to the principles they have promised to follow. Business
Action for Sustainable Development (BASD) was launched in 2001 jointly by the
ICC and World Business Council on Sustainable Development (WBCSD) to 'ensure
maximum participation of the business community' in the Johannesburg Earth
Summit in 2002.
BASD succeeded in thwarting efforts to achieve binding
international regulation of corporations through its promotion of voluntary
mechanisms. BASD's chairman Mark Moody-Stuart (former CEO of Shell) argued that
promoting a positive image of corporations was urgent, 'as others see the need
for legislation and codes with teeth to make sure that business... is compelled
to adopt certain standards and procedures'.
More recently the ICC along
with the International Employers Organisation (IEO), Confederation of British
Industry (CBI) and the United States Council of International Business (USCIB),
led by Shell's Vice President for External Relations and Policy Development,
Robin Aram, launched a major offensive against the UN Norms on Responsibilities
of Transnational Corporations and Other Business Enterprises with Regard to
Human Rights.
The UN Norms were to be a major step forward in moving
towards binding regulation of multinationals, and set out what the obligations
of companies were with regard to human rights. ICC spokesman Stephano Bertasi
put the ICC position this way; 'We have a problem with the premise and the
principle the Norms are based on. These Norms clearly seek to move away from the
realm of voluntary initiatives'.
The business lobby succeeded in
persuading governments to reject the Norms when they came before the UN
Commission on Human Rights. Instead the Commission called for the appointment of
a Special Representative on the issue of transnational corporations and human
rights.
The CBI and Institute of Directors have opposed all attempts to
make CSR in any way mandatory in the UK and have lobbied against the Corporate
Responsibility Bill, and against any suggestion of moving away from voluntarism
in the European Union White Paper on Corporate Social
Responsibility.
Lobbying for regulation
The latest twist in the
tale is that companies are beginning to lobby in favour of regulation. In a
recent article, titled 'A World Upside Down', George Monbiot commented that 'the
corporations are demanding regulation, and the government is refusing to grant
them'.94
Environmental managers from BT and John Lewis (which owns
Waitrose) complained that without tighter standards that everyone has to conform
to, their companies put themselves at a disadvantage if they try to go green.
Former Shell CEO Philip Watts put it this way, '...having thus prepared
themselves it is in those Chief Executive Officers' interests to advocate
societal and governmental changes in the right direction to speed up trends. The
smart CEOs not only are going to orient companies towards sustainability, but
also are going to orient society towards sustainability.' Similarly John Browne,
CEO of BP, has called for 'the help of governments to establish the appropriate
framework of incentives to move toward climate stabilisation'.
But before
we get too excited at the prospect of companies jumping the fence and joining
campaigners in the push for progressive regulation, let's take a step back and
ask a few questions. What kind of regulation do they want? Why do they want it?
Will it be effective? Can corporate power really be channelled in such a way as
to support efforts to control corporate power?
First, there is a
difference between regulation and financial incentives. When John Browne calls
for government action on climate change, he is talking about carbon trading, a
climate mitigation scheme from which BP stands to do very well without having to
make any great effort to reduce emissions. (See section on carbon trading).
Secondly, these companies are calling for regulation because CSR does not offer
sufficient financial rewards.
In some cases this may be because the
company did not experience any reduction in criticism as a result of its CSR
efforts. In other cases companies trying to source 'ethically' were undercut by
their 'less ethical' competitors. Once companies have put in the investment,
they need to see a return, so regulation can help companies to out-compete in a
way that voluntary measures have failed to do.
Where regulation is being
called for it is only in areas that supports the company's competitive
advantage. It is, again, a hard-nosed business position. So companies are likely
to support regulation when it supports their business strategy or capitalises on
areas where they have invested, but they are unlikely to support the kind of
across-the-board regulation called for by the corporate accountability movement.
Truly progressive regulation can only be implemented if public awareness
and activism can rival the business lobby. This means mobilising people power on
a grand scale to launch a major attack on corporate power.
The market
has no morality
'Can we expect every decision made in one's
self-interest, through market mechanisms, to result in the good for all?'
Deborah Doane, Core Coalition.
Hand in hand with pushing for further
deregulation or pushing for favourable regulation (as above), companies are
effectively capturing the issue space around major social and environmental
problems and seeking to propose solutions which fit within a market-centred
worldview. CSR asserts the classic free market line that the market will solve
social problems through each actor acting selfishly in its own best interests.
But since this is the dominant paradigm, shouldn't we then be seeing a
society with greater equality and less environmental destruction? Instead, as
the New Economics Foundation argues 'in everything from the massive corporate
scandals to anti-trust cases to serious environmental degradation we see all
around us, it is obvious that Adam Smith's famous 'invisible hand' cannot be
relied upon to bring us successful or sustainable outcomes'.
What has
instead been created is massive concentration of wealth, entrenched divides
between rich and poor globally and irreversible damage to the ecosystems our
future depends on.
Many pressing social and environmental problems have
very clear, though complex, solutions such as reducing consumption, paying a
price that reflects true costs and extending regulation. Market-based
'solutions' distract us from this. If society's primary approach to tackling
major social and environmental problems is to enable the powerful interests that
caused the problems to profit from their resolution, then the very intention of
solving these problems is subsumed to the interest of profit.
Case
Study: Carbon trading as a solution to climate change
`In the new era of
scarce sky, there will, of necessity, be an economy of sky. Property rights will
be established, prices will be charged, and money will change hands. Owners of
the sky will collect rent that will flow back into the economy.' Peter Barnes
and Rafe Pomerance, 'Pie in the Sky' 2000.
The perversity of market
mechanisms is exemplified by carbon trading: allowing corporations to avoid
reducing their emissions by buying carbon credits. As Tony Blair chillingly said
in his address to the World Economic Forum, 'if we put forward, as a solution to
climate change, something which involves drastic cuts in growth or standards of
living, it matters not how justified it is, it simply won't be agreed.'
By this guiding orthodoxy, real solutions to the climate crisis are out,
and market mechanisms are in. Carbon trading relies on the idea that once a
price is assigned to the earth's carbon cycling capacity, markets will be able
to respond. Negotiations on the Kyoto Protocol quickly moved from productive
discussions about the nature of the climate crisis and the need for action to
the issue of how corporations could profit from 'solutions'.
Rather than
legislating to cut emissions, Kyoto creates property rights: privatising the
earth's capacity to absorb greenhouse gases. These emissions rights have an
estimated market value of $2.345 trillion, the 'largest invention of monetary
assets by voluntary international treaty in history'.
Rights to emit are
handed out directly to the Northern countries based on their historical level of
emissions, meaning that those that have polluted most in the past get the most
free rights to emit. Most nations receiving these rights are in turn passing
large quantities of them, for free, to private companies in heavy industrial
sectors.
In addition, companies can fund energy- saving or carbon
sequestration projects (storing carbon through, for example, planting trees) in
developing countries to 'offset' their carbon emissions and create new carbon
credits.
Campaigners have catalogued a large number of concerns about
the carbon trading system. They have shown that the idea of 'sequestering'
carbon by planting trees to 'offset' emissions from burning fossil fuels does
not equate to keeping the carbon reserves in the ground. Jutta Kill of
SinksWatch argues that 'even in purely economic terms, a market in credits from
`carbon-saving' projects will fail...You simply can't verify whether a power
plant's emissions can be `compensated for' by a tree plantation or other
project. Ultimately investors are bound to lose confidence in the credits they
buy from such projects'.
That governments chose to adopt an untested,
logically flawed and bureaucratically complex international trading system to
address emissions reductions, rather than tried and tested methods such as
taxation and regulation, represents an unprecedented triumph for the corporate
capture of the debate on climate change.
Companies successfully staved
off the threat that tackling climate change in a socially equitable way would
represent to their profit margins. Larry Lohman of The Cornerhouse argues that
'... Kyoto-style carbon accounting systems [tend] to marginalize non- corporate,
non-state and non-expert contributions toward climatic stability. The Kyoto
Protocol's market system... not only cannot succeed in slowing the upward flow
of fossil carbon into the overflowing above-ground carbon dump, but is also
entrenching institutions and procedures that are likely to stand in the way of
constructive approaches to climate change.'
Can the consumer really
change the market?
Many market-based solutions focus on the power of the
consumer to create the necessary shift towards more sustainable markets. There
is a place for choosing to buy products that contribute to local economies and
avoid damaging environmental impacts, however, there are a number of problems
with pushing ethical consumption as the key hurdle in switching to more
sustainable economies.
Firstly statistics suggest that consumers are
not, in fact, consuming ethically, even when they are concerned about the social
impact of products. In a Co-operative Bank survey, 89% of British consumers said
they were concerned about social and environmental impacts, but only 18% said
they reflect this in purchasing decisions.
According to a MORI poll,
fewer than 5% were what they called 'global watchdogs' making purchasing
decisions on primarily ethical grounds. But, even if consumers did primarily
choose products on ethical grounds, this does not address the fundamental issue:
the volume at which we consume and the throwaway culture that goes with our
over-consumption.
The idea of ethical consumption also pre-supposes that
consumers have access to unbiased information, but with millions spent by
companies on advertising, much of the available information is heavily biased.
The principal purpose of advertising is to make the product seem more essential,
more important, more exciting or, in this case, more ethical than it really is.
Since few consumers closely scrutinise a company's ethical claims,
companies are able to get away with misleading messages even when they are
refuted by independent sources. Therefore, consumers are not truly empowered.
Although corporations and government constantly refer to consumer power,
consumers are often poorly informed and isolated; moreover, they have many
vested interests in the system which means that their scrutiny is frequently
limited to comparatively superficial issues.
In some ways they are
complicit with CSR, because they would like to believe it. Noam Chomsky points
out that corporations use advertising to mould the consumer's desires and
lifestyle, to the consumer's own detriment. He says, 'the ideal is to have
individuals that are totally dissociated from one another... whose sense of
value is "Just how many created wants can I satisfy?"'.
So the
disenfranchisement of consumers is a key part of corporate advertising
strategies. Through CSR, companies are trying to appeal to ethical consumers but
also to undermine the principle of ethical consumption. Consumers' primary
concerns are cost and convenience. Because of this, consumers are unlikely to
act on social issues in the same way that enfranchised citizens would if called
on to make democratic decisions about what a corporation should and should not
be allowed to do.
Ethical consumption is often presented as democratic.
Companies are responding directly to the concerns of the public. If the public
were concerned then they wouldn't buy the product. But does this argument stand
up? The idea that consumers will 'vote with their pounds' is actually
anti-democratic. It means that decisions are made on the basis of purchasing
power.
Individuals' access to power is decided according to the size
their wallets. But what about those who are too poor to participate in the
consumer economy? The power to decide what is and is not acceptable in corporate
practice should not reside just with rich consumers, but also workers, producers
and communities globally who are affected by that practice. Focusing on ethical
consumption lets the corporations off the hook. It's easy for corporations to
deflect responsibility for inaction onto consumers who they have pushed into
apathy. But if they use the language of responsibility, then there must be an
associated obligation, with or without consumer demand.
Race to the
top
The limits to voluntary market initiatives are well demonstrated by
the International Institute for Environment and Development (IIED)'s `Race to
the Top' (RTTT) project. This sought to bring together supermarkets and civil
society to create benchmarks and compare the performance of the different
players in the supermarket industry. After a year the project was wrapped up due
to overwhelming obstacles in dealing with the companies.
In a report
detailing the reasons for the collapse of the project, the authors deliver a
sound critique of the supermarkets' analysis of CSR and contend that self
regulation is not sufficient to create a significant shift toward sustainability
in the sector. The authors criticise the supermarkets attempts to conflate
'public good' with 'customer value', to keep ethics as a niche consumer choice
rather than a corporate standard, to use their controlling position in the
market to pass on responsibility and cost for sustainability initiatives down
the supply chain whilst taking the credit.
They conclude that for many
civil society organisations, the demise of RTTT is a signal that only
'command-and-control' regulation can tame the supermarket sector and that at
least 'in such a relentlessly consumer-oriented industry, self-regulation and
voluntary initiatives are only likely to be appropriate for concerns that are
aligned with the mainstream consumer interest.
The RTTT project reveals
that the notion that the consumer will vote with their money is deeply flawed,
that the consumer and the citizen are not one and the same, and that companies
like supermarkets, that are highly consumer-focused, may listen to consumers
when it suits them but the broader concerns of the citizen, in both the North
and in the South, are ignored.
Aside from being distinctly undemocratic,
this model also means that the scope for change is limited to the concerns
related to consumer choice. The demise of the RTTT project is an example of the
fact that market mechanisms and incentives, like consumer pressure for
encouraging corporations to act responsibly, are flawed and susceptible to spin.
When profits are the motive rather than sustainability, how can we expect
sustainability to be the outcome?
Corporate Citizenship: With
responsibilities come rights
Corporations are not citizens, they are
artificial legal persons. The term 'corporate citizen', used to describe
corporations that are attempting to be socially responsible, creates a new image
of the corporation as an entity which has rights, feelings, a legitimate voice
in a democracy, and which behaves in a moral manner. This kind of language shift
creates a tangible shift in attitudes.
Corporate citizenship buys
companies access to public finance for risky projects abroad. Companies which
sign up to the OECD guidelines and complete environmental impact assessments
gain finance and export credits through public bodies such as the World Bank's
International Finance Corporation or the European Bank for Regional Development.
Corporate citizenship also legitimises the presence of corporations in
international forums and, often, their lobbying activities. Corporations have a
presence at all the important world summits from the G8 to the WSSD. Their
involvement is bought by their 'commitment' to CSR and 'sustainability', and
gives them the opportunity to dominate the agenda and put across their view of
how the world should be run. The power and resources of the corporate citizen
are such that real human citizens' concerns are marginalised.
CSR as
Public Private Partnerships
Many CSR activities can be defined as
public-private partnerships (PPP). PPPs encompass a variety of arrangements
where companies pool their resources with governmental, intergovernmental and /
or civil society organisations. Examples relevant to CSR include running
community development projects, sponsoring school playgrounds or providing
healthcare. These projects blur the boundary between the role of governments and
the role of companies.
CSR is in itself a privatisation of a public
function, since deciding what is appropriate behaviour for companies and
regulating that should be the responsibility of a democracy and not of the
companies themselves. CSR has shifted the ground towards privatisation.
As Nigel Twose from the World Bank Group put it, 'with the private
sector increasingly centre stage, questions are being raised around prior
assumptions that global public goods can only be tackled (ethically and
practically) by the public sector.' CSR makes government/corporate relationships
acceptable, generates contacts and builds trust and reputation to smooth the
transition towards private ownership and control. Through privatisation to
government by corporations 'Governments are a fundamental actor in governance,
but increasingly non-state actors from business and civil society are seen to
play key roles.'
The old adage from Milton Friedman that 'the business
of business is business' is proving untrue. Increasingly the business of
business is power and control. While this has always been the case, the means
and reach are now greater. As social commentator Leslie Sklair put it, 'global
capitalism has to be politically active to maintain its project'.
CSR is
taking us on a trajectory towards increased private takeover of government
functions. It is not simply a form of PPP but a progression towards corporations
taking on the role of governance.
Access to 'emerging markets'
'Emerging markets' is the current business jargon for developing
countries. The terminology betrays the fact that they view these countries
purely in terms of economics. Corporate partnerships with both Northern and
Southern governments represent an opportunity for both policy influence and
market penetration, with companies that lead in CSR gaining preferential access
to developing country markets. The term 'corporate social innovation' has been
coined to describe business practices aimed at 'supporting' sustainable
development.
Case Study: Business Action for Africa
The 2005 G8
Summit saw unprecedented corporate involvement. In the run up to the Summit,
Tony Blair set up the Commission for Africa (CfA) to advise the G8 on promoting
development in Africa. A key part of the CfA was the business contact group,
Business Action for Africa, a lobby group of the leading multinationals in
Africa including Shell, Anglo American, SAB Miller, British American Tobacco,
Diageo and others.
Just as BCSD, and later BASD, shifted the debate at
the Earth Summit and World Summit on Sustainable Development from how to solve
global environmental problems to how to make them a business opportunity, BAA
has succeeded in turning debate from how to eradicate poverty in Africa to how
corporations can benefit from the aid money being invested in the continent.
This comes as little surprise since government and business attitude to
'development' comes from the same ideological standpoint - that poverty can be
tackled by increasing economic growth and attracting foreign investment that
will trickle down to the poorest; while the negative impacts of corporate
activity can be controlled, or conveniently ignored, through a public commitment
to corporate social responsibility.
Business did well at the G8. As
Haiko Alfeld, director for Africa of the World Economic Forum put it, `business
has an enormous interest if $25 billion per year is to flow into Africa...
clearly that will unleash enormous potential and business opportunities on the
continent.' BAA's carefully worded recommendations to the G8 and African leaders
included:
<>Investment in major infrastructure to facilitate
trade.
<>Replacing national markets with regional markets - reducing
the national economic sovereignty of African countries.
<>Streamlining
the aid delivery process and involving the private sector.
<>National
governments stepping back from 'those areas in which business can better
deliver'.
<>Public private partnerships to support small and medium-
sized enterprises (profits from which can be sucked out by international
investors, or which can then be merged into international firms).
<>To
promote societies that are 'based on the rule of law' (read: where the people
are pliant to the needs of the corporations) and have rules on competition,
intellectual property and 'efficient public sector management' (read: privatised
public sector).
<>That aid money for health, education, agriculture,
capacity building and infrastructure should not be dispersed in such a way as to
'increase public sector dominance'.
The overwhelming message of the
group's concluding statement was that governments should involve the private
sector more in development policy and build partnerships. The statement goes on
to commend the Global Compact, which as we have discussed is non-binding and
toothless, as a standard to which all companies in Africa should adhere.
Since most smaller African companies are not signed up to the Global
Compact, multinationals clearly believe that their CSR record should gain them
privileged access. For Graham Mackay, Chief Executive of SAB Miller, the
importance of increasing private sector dominance in Africa was clear. `Aid
won't go on forever,' he said.
It's good to talk? Why dialogue is not
an appropriate response to corporate power
In his 2004 report on CSR for
Christian Aid, Andrew Pendleton argues that through entering into dialogue with
companies, NGOs may have 'unwittingly enhanced company images and market
profiles, despite their efforts to avoid public association with the companies
involved... This might not matter if it had helped secure lasting benefits to
the poor.'
Dialogue has become the key way that NGOs interact with
companies, while more confrontational approaches have, in some quarters, been
abandoned as old-fashioned. NGOs have been flattered into thinking that a word
in the right ear will limit the destructive impacts of corporations, but they
often fail to challenge the power structures that make these impacts so
ubiquitous and immune to reprisals.
Proponents of dialogue see it as the
best chance we have, faced with the reality of corporate dominance. But this is
only true if other realities cannot be conceived of and brought into being. CSR
is only the best that society can hope for if we do not visualise and struggle
for anything more.
NGOs report that it is usually companies that are the
instigators of dialogue. This should ring alarm bells. Dialogue with NGOs is an
issues management strategy. International PR consultant Rafael Pagan, Jr., at a
1985 address to the Tenth Public Relations World Congress, advised companies
that `if a company opens itself up to dialogue with critics of conscience, seeks
support and understanding through openness and dialogue with news media and UN
staff members, and acknowledges a broad responsibility for the more remote
effects of its marketing practices in the Third World, it can gain respect for
its essential decency, legitimacy and usefulness'.
Through dialogue with
NGOs, companies are able to: fight pressure groups and manipulate the debate;
assess the threat posed by NGOs and gain intelligence; delay taking action; and
divert attention from more pressing issues. So can a genuine partnerships
between companies and NGOs really exist and who really gains from dialogue?
Partnerships between NGOs and corporations require some common ground.
An organisation motivated purely by concentrating wealth in the hands of a few
already rich individuals cannot have any common ground with an organisation set
up to defend the social good and threatened ecosystems, particularly when those
very interests are under attack from that same corporation. How can the NGO
develop a relationship of trust with such an entity? A partnership requires some
form of power equality, yet the corporation dwarfs the NGO both in terms of
political influence and resources.
What would a socially responsible
company look like?
What does social responsibility mean? That is for
society to decide rather than corporations. Social responsibility must at least
mean not damaging society, responding to critical social problems and acting in
the social interest. Let's raise the bar a little. A socially responsible
company would have to:
<> Address climate change - Climate change
is the major ecological crisis of our time. David King, the UK government's
scientific adviser dubbed it 'a greater threat than terrorism'. A socially
responsible company would have to reduce emissions of greenhouse gases by
cutting energy consumption, use renewable energy and cut reliance on
oil.
<> Not sell products which are intrinsically harmful - The
tobacco industry is arguably the only legal industry where consumers die through
the correct use of their products. The arms industry profits from war, death and
torture. Fast food companies profit from obesity and ill health. A socially
responsible company would have to stop producing products that are intrinsically
harmful. For some industries this would mean ceasing to exist.
<>
Stop manipulating the public - Why do we buy so much stuff that we don't need? A
company acting in the social interest would have to only sell goods that were
needed, could be afforded, and not manipulate consumers into spending beyond
their means or promote over-consumption beyond levels the planet can
manage.
<> Internalise costs - When companies talk about
'efficiency' and 'minimising costs' they are generally talking about
'externalising' the true cost of their operations onto wider society. A company
working in the social interest would cover these costs rather than, as in the
capitalist model, seeking all possible ways to externalise them.
<>
Pay taxes in full - Paying taxes is both required by law and a key part of
contributing to society as a responsible 'citizen'. Yet tax minimisation is seen
as one of the prime duties of company directors to protect the revenue of their
shareholders. A truly socially responsible company would be transparent in terms
of the levels of taxes it is paying in each of the countries in which it
operates and would see paying tax as part of its responsibility to society
rather than seeking to avoid it.
<> Stop lobbying against the
public interest - Corporate lobbying works against democracy. Corporations are
able to influence policy making at all levels and have privileged access to
decision-makers. Companies which claim to be socially responsible still lobby
against the public interest, make donations to political parties for which they
expect payback, and even use their position as supposed 'socially responsible
corporate citizens' to gain access to international forums tackling global
issues such as poverty, sustainable development and climate change, successfully
capturing the agenda and undermining moves towards real change.
<>
Democratise the workplace - 'Socially responsible' labour practices when applied
top down by a corporation are ineffective in tackling sweatshop labour. Workers
need the space for collective bargaining where they decide their rights and
demand them. A socially responsible company would be run for the benefit of
people. Workers would be recognised not as 'human resources' who must be
efficiently put to use by the company, but as the people who create the worth of
the company and as such should determine their conditions of
labour.
<> Reduce consumption and limit growth - The current rate
of degradation of the natural systems that are vital for our survival, forests,
oceans, soil, fresh water and the earth's capacity to absorb pollution, can only
be stemmed by an urgent reduction in consumption. Less consumption means lower
profits for companies, yet if a company were truly socially responsible it would
have to accept this ecological imperative.
CONCLUSION
Since
companies cannot act in any wider interest than the interest of profit, CSR is
of limited use in creating social change. Since CSR is also a vehicle for
companies to thwart attempts to control corporate power and to gain access to
markets, CSR is a problem not a solution.
Efforts to control
corporations' destructive impacts must have a critique of corporate power at
their heart and a will to dismantle corporate power as their goal, otherwise
they reinforce rather than challenge power structures, and undermine popular
struggles for autonomy, democracy, human rights and environmental
sustainability.
If CSR is the wrong strategy then the million dollar
question is, which strategies will be effective in this struggle? Answering this
question is beyond the scope of this report, but certain strategies clearly
stand out.
<> Regulation - Regulation is a key step in achieving
this power shift. But it will happen only when the pressure is greater for
governments to regulate than it is for them to listen to the corporate lobby.
Campaigns pushing for binding regulation of corporations cannot be successful in
isolation from confrontational campaigns attacking the corporate power
base.
<> Grassroots action and international solidarity - Some of
the most effective activism currently taking place is by Southern communities
directly fighting for their lives and livelihoods in the face of corporate
abuse. This includes networks such as: the international peasant movement, Via
Campesina, the Brazilian Landless Workers' Movement (MST), Oilwatch (the South
to South network opposing oil companies), activists internationally opposing
privatisation of services from Bolivia to South Africa and taking control of
their own basic needs, Argentinian workers taking over abandoned factories,
Indian farmers shutting down Coca Cola bottling plants, and hundreds of other
diverse campaigns across the world. These uncompromising struggles reflect
popular outrage, and call for international solidarity to strike at abusive
companies in the world's financial centres, and not to be sold out by Northern
NGOs which claim to act on their behalf. Our campaigns must take a
confrontational approach, not challenging companies to make reforms but
attacking their legitimacy and license to operate.
<> Challenging
the expansion of corporate power - Through international trade rules on
services, intellectual property, competition, procurement and investment,
corporations are pushing to extend their power base. Corporate involvement in
international summits and multistakeholder fora is motivated purely by an
interest in extending the reach of corporate influence, accessing markets and
asserting their dominance. At all stages this must be resisted. Similarly the
trend towards corporate concentration represents further centralising of
power.
<> Exposing the corporation - Information is power. The
disinformation that pervades our society through the mass media - which tells us
that capitalism is the only way of organising our societies, that corporations
are socially responsible, that consumption will make us happy - is a foundation
stone of our consent to corporate domination. Dismantling these myths through
research exposing corporate crime, corruption, exploitation and greed is the
only way to awaken wider society to the need for new ways to organise our
societies that assert people's rights to control over their economies and
resources.
<> Building alternatives - Fairtrade, local and organic
food, permaculture, seed swaps, low-impact design, community renewable energy
projects, co-operatives, limited liability partnerships, social enterprises,
community organisations, people's juries, non-hierarchical organising, consensus
based decision making, and countless other initiatives and ways of organising,
each in their own way represent alternatives to corporate dominated society,
enabling people to have autonomy over their livelihoods, meet their needs, and
participate in decisions which affect them. Building alternatives helps to
create new societies in the shell of the
old.
--------------------------------
NOTE: The articles introduced in
this Clearinghouse do not necessarily represent the views of the Tourism
Investigation & Monitoring Team (tim-team).
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