Theorizing Global CSR: From Social Responsibility to Global Accountability

1. Theorizing Global CSR: From Social Responsibility to Global Accountability ICCSR 10th Anniversary Conference CSR Futures: Knowledge & Practice Nottingham University Business School Jubilee Campus Nottingham, UK April 26 - 27, 2012 Gwen Alexis, Ph.D. , J.D. Associate Professor Leon Hess Business School Monmouth University W. Long Branch, NJ galexis@monmouth.edu

2. Individuals and groups with a multitude of interests, expectations, and demands as to what business should provide to “society” (a particular society) The Stakeholder Model for Ethical Decision Making Stakeholders • Five Important Stakeholders • Owners (Shareholders) • Employees • Consumers • “Government” – generally means local government • “Community “ – generally means local community

3. Getting from CSR to Global Accountability? • CSR has become indelibly linked to stakeholder theory and thus is generally defined in terms of considering the needs and interests of stakeholders in the particular community or society in which a firm is operating. Stakeholder Theory is basically a localized concept , focused on a particular community or a particularly society. I argue that this makes it somewhat problematic to move from social responsibility (CSR) to “global accountability” – the goal with Global CSR

4. This is because “the government” -- a primary stakeholder – in the less-developed nation in which a firm is operating may have interests and priorities that conflict with what is deemed to be ethical business behavior under emerging global standards.

5. Can the West tell India and China how to run their Industrial Revolutions, all in the name of preserving the environment when its own Industrial Revolution was not hampered by environmental concerns? And, for that matter, can the U.S. and Canada Forbid Mexico from taking advantage of NAFTA by Wooing manufacturers with a low-cost labor force and lax environmental laws?

6. The answer is “Yes”to both questions if we are willing to abandon Stakeholder Theory with its Utilitarian Approachof weighing the interests of various stakeholders at the situs of a firm’s business operations. Goodbye, Stakeholder Theory! • Global Problems crave global solutions! Sweatshop Labor Human Rights Abuses Environmental Degradation

7. Stakeholder Theory is too parochial a notion for today’s interconnected and interdependent world What Global Standards? • Three Phenomena indicate that there is justification for seeking a richer theoretical framework for globalization of the CSR nomenclature. • Corporate Moral Obligation (CM0) – firms replacing stakeholder theory with a more self-reflective viewpoint • Transnational NGOs are becoming a “Global Civil Society” to be reckoned with • MNCs Seeking Legitimacy by Overcoming are embracing Global Standards for Ethical Business Behavior

8. 1. CMO • Corporate Moral Obligation (CMO) -- an emerging phenomenon. • Corporations are taking CSR to the next level by making a personalized commitment to certain core values --valuesthat are deemed to be an integral part of the corporate vision and essential in terms of fulfilling the corporate mission.

9. From Outer Director to Self-Referential • CSR cannot be tied to “place” which is what happens with the stakeholder model . It is outer-directed; i.e., Stakeholders in a particular locale influence how an MNC conducts its business. Advanced Technological Age – Aggressive World Media • Today’s MNC must inculcate values throughout the organization (home office and field offices) that are consistent with its stated mission, with its core values. • Goal is to project a consistent global image. Thus, it must be inner-directed, self-referential.

10. A Global Commitment to the Environment Toyota’s Global Earth Charter “At Toyota we're constantly working to reduce our impact on the environment. Our Global Earth Charterpromotes environmental responsibility across the entire organization. Not just in our products and operations but also through our partnerships with organizations in the communities in which we live and work. The way we see it, the more effort we put in, the less waste we'll use.”

11. “We answer to a higher authority!” BP rules on facilitation payments** “BP policy does not permit so-called ‘facilitation’ or ‘grease’ payments to be made to government officials, even if such payments are nominal in amount.” “Our corporate reputation and brand are based on trust. Bribery and corruption of all kinds undermines trust: they inhibit social and economic development and undermine fair competition.” ** Facilitation payments are not considered bribery under the U.S. Foreign Corrupt Practices Act or under the OECD Anti-Bribery Convention.

12. 2. Transnational NGOs as “Global Civil Society” An Emerging Global Civil Society? A consortium of 53 transnational environmentalist NGOs filed suit against the EPA Agency to get it to take regulatory action to halt marine pollution by cruise ships. ATCA lawsuits have been filed against Coca-Cola for deaths of union organizers, Shell Oil over contamination of local water supply and land farmed by Ogoni people of Nigeria and Monsanto for development and sale of Agent Orange (spread in Viet Nam fields)

13. The NGOization of the global public policy arena Less Developed Nations (LDNs) are likely to have weak environmental laws and feeble enforcement of the laws that do exist. • “Many of the people and communities left behind by the development and globalization projects look to nongovernmental organizations (NGOs), rather than to states or international agencies, to represent them and to meet their needs. Indeed, we are currently in a phase of 'NGOization,' in that national governments and international institutions have lost much of their legitimacy, and NGOs take considerable initiative in guiding grassroots development activities.” ..... Philip McMichael, Development and Social Change

14. Using an 18th Century Law to Express Global Moral Outrage Alien Tort Claims Act (ATCA) 28 U.S.C. §1350 “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” Filártiga v. Peña-Irala, 630 F.2d 876 (2nd Cir. 1980) - Paraguayan victim of torture and murder. Suit filed by NGO consortium on behalf of surviving relatives.

15. 3 Jurisdictional Requirements of ATCA Lawsuit • An alien plaintiff (filed by NGO in name of plaintiff) • Victim of a tort (civil wrong or injury) • Violation of a law of nations • UN Declaration of Human Rights • UN Declaration on Environment and Development • Montreal Protocol (reduce CFCs) • UN Convention on the Law of the Sea (UNCLOS) • Sarei v. Rio Tinto, PLC, 456 F.3d 1069 (9th Cir. 2006) • Declaration of the UN Conference on the Human Environment

16. Center for Constitutional Rights (CCR) CCR is dedicated to advancing UN Universal Declaration of Human Rights and U.S. Constitution NGOs find the Alien Tort Claims Act (ATCA) to be a useful tool in fulfilling their missions. ILO is dedicated to bringing decent work and livelihoods, job-related security and better living standards to the people of both poor and rich countries. “ATCA provides remedies for earth rights abuses around the world.” EarthRights International (ERI) has filed amicus briefs with CCR, ILO and the EarthJustice Legal Defense Fund .

17. 3. Overcoming “Foreignness” • MNCs face the additional problem of foreignness and hence need to establish and maintain legitimacy in today’s global marketplace • Global CSR is “good corporate citizenship” and imbues the MNC that engages in CSR with credibility • CSR allows MNC to amass moral capital in communities and societies in which it operates

18. Global Public Goods Kenneth Chenault (CEO, AmEx) emphasizes the “social compact” in which society permits the corporation to exist because it contributes to the “common good”: A socially responsible company strives to meet a standard that’s higher than the bottom line.... We must remember that corporations exist because society says they can — and society assumes that we’ll contribute to the common good. That’s the bargain we strike. The social compact (Chenault, Commentary 2006)

19. Global Ethical Norms Various stakeholders in the corporate enterprise are advancing a global CSR agenda for the multinational corporation (MNC). • Global Institutions cultivating global ethical norms for business • United Nations Environmental Programme Initiatives • International Organization for Standardization (ISO 14000, et al.) • CERES (“Valdez Principles”) • SA 8000 European Union definition of CSR: “going beyond minimum legal requirements and obligations stemming from collective agreements”

20. UN Environmental Programme (UNEP) UNEP Initiatives • Montreal Protocol – universally ratified treaty (as of 2009) to phase out use of CFC’s, harmful chemicals that resulted in hole in the ozone layer (leading to skin cancer and cataracts) • Global Compact –under which MNCs hailing from around the globe agree to subscribe to 10 universal principles, 3 of which involve environmental issues • Global Reporting Initiative (GRI) – GRI developed the most widely used sustainability reporting framework in the world, and entails measuring and reporting on 3 areas of performance: • Economic • Environmental • Social AKA Triple Bottom Line (TBL) Reporting

21. Social Accountability 8000Administered by Social Accountability International (SAI)** • For a company to obtain SA 8000 certification, it must undergo an audit by a “Certification Body” that will assess its practices on the following issues: • Child labor • Forced labor • Health and safety • Freedom of association and Right to Collective Bargaining • Discrimination • Discipline • Working Hours • Compensation • Management Systems **”SAI is a non-governmental, international, multi-stakeholder organization dedicated to improving workplaces and communities by developing and implementing socially responsible standards.” SAI Website Link

22. Moral Imperialism? • If the global marketplace results in standardized norms for corporate behavior, should these norms be based upon the Western notion of Corporate Social Responsibility (CSR)? Home Country Norms and Values Host Country Norms and Values