The Evolution of Corporate Social Responsibility in a Changing Economic Landscape

1. EU-Japan: Corporate Social Responsibility Changing Wage Systems – The Role of Trade Unions György Széll

2. IntroductionCorporate Social Responsibility as well as Corporate Governance are at the core of today‘s debate on the future of capitalism and the market economy. They are actually at stake, as the former CEO of SHELL, Sir Geoffrey Chandler, put it: “Doing right because it is right, not because it pays, needs to be the foundation of business, with principle, not profit, the point of departure. There does have to be a choice about priorities. … If we are to preserve the most effective mechanism the world has known for the provision of goods and services – that is the market economy with the public limited company its main instrument – then it has to be underpinned by principle. Financial failures can destroy individual companies. Moral failure will destroy capitalism.” György Széll: EU-Japan CSR - Tokyo 26 November 2004

3. CSR is not a new phenomenon. Early bourgeois and capitalists created foundations, were sponsoring charity and welfare, hospitals and kindergarten, schools, universities, housing for their workers, culture, theatres, operas, music, arts, sports etc. Philanthropy can be even characterised as an essential element of modern bourgeois society to overcome part of its contradictions, but also to promote the own class and recruit from the lower classes promising talents. But today’s CSR is not only a new term, but has definitely new characteristics. By the way, the old philanthropy has certainly not died out, as George Soros demonstrates. So, the question stands: Why has it come up over the last ten years ago or so? After the defeat of the Soviet Union, and as Francis Fukuyama proclaimed there seemed to be no alternative to really existing market capitalism. György Széll: EU-Japan CSR - Tokyo 26 November 2004

4. The reforms in still so-called Communist China toward a socialist market economy since 1978 seem to be a proof. Radical privatisation and liberalisation strategies promoted by the IMF and a lesser degree the World Bank opened the Pandora Box of this capitalism. “Enrichissez-vous, enrichissez-vous!”, as Karl Marx put it, became the slogan all over the world, first of all in former socialist countries, but in China as well. Shareholder Value became the other slogan for Corporate Governance. Social Justice, Worker’s rights were put into the waste bin of history. But the end of the Bubble Economy in Japan and elsewhere together with the ecological crises were indicators to the “Limits to Growth”, as the first Club of Rome Report in 1973 was already titled. So, the newspapers are full of scandals, in summer in Italy Parmalat with a bankruptcy of more György Széll: EU-Japan CSR - Tokyo 26 November 2004

5. than 14 billion € set a new landmark, although by far not reaching the one by ENRON,Worldcom etc. By the way Italian Prime Minister, Silvio Berlusconi, earned his first millions - not of Lira but Dollars - with the help of the Mafia through real estate manipulations. The Italians admire his cleverness, and re-elected him, to allow to create special legislation to evade pursuit and prison. Brave New World! However, after ten years fortunately the euphoria around the Shareholder Value has largely disappeared, because it could not fulfil its high promises. So, we are back at the fundamental crossroads. And the EU tries to be on the lead with its Green Paper on CSR in 2001, and follow documents in 2002 and 2003. A Green Paper is not a White Paper, i.e. is a discussion paper. White Paper is a position paper. That means that the position of the EU is still in the making. That is no György Széll: EU-Japan CSR - Tokyo 26 November 2004

6. surprise if we take into account the diversity of its 25 Member States and the Associate Members including Turkey as well. The Lisbon Summit in 2001 promised to make Europe the leading knowledge-based economy in the world - including fair work and sustainability. However, the Kok-Report published a couple of weeks ago reduced the hopes of the Europeans. The European Foundation for the Improvement of Living and Working Conditions in Dublin has published an excellent report based on two studies in 2003. I will come back to it later.In Japan there is also a debate going on on CSR. Nippon Keidanren‘s Committee on Management and Labor Policy came out in 2003 with a “Summary of Position Paper 2004 on Management and Human Resources. Creating Higher Added Value, Utilizing Diverse Human Resources György Széll: EU-Japan CSR - Tokyo 26 November 2004

7. – Employers Sense of Duty and Aspirations are the Key”.Those, who do not know me too well, may have asked, and actually asked: Why wages? Why trade unions?I will try to answer with the following figure, which only roughly and in two dimensions gives a sketch of the complexity of the interrelations and their dialectics. The complexity is also expressed in our questionnaire for the empirical study we started last April. As CSR covers the whole company from human resources management over marketing, public relations, investment etc. the questionnaire has 44 questions with a number of sub-questions and lasts 90 to 120 minutes. The responsible of the Deutsche Bank headquarters, in charge of CSR was surprised that she has to contact so many departments to answer the questionnaire. György Széll: EU-Japan CSR - Tokyo 26 November 2004

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9. The wages are central for internal CSR - as it is the question of the fair distribution of the value added between capital and labour, and eventually landowners. I will not elaborate here too much, although there are striking differences between the wage systems in Europe and Japan, just to refer to the role of bonuses. György Széll: EU-Japan CSR - Tokyo 26 November 2004

10. The Trade UnionsI am myself a very committed trade-unionist since the end of the 1960s, because I was and I am still convinced that they have a central role to play for a sustainable future of our societies:Trade Unions are the biggest democratic organisations in our societies, and the production process for goods and services is and will always remain the centre for the power question, i.e. who decides what, where, when, for whom, when will be produced.Therefore I am very glad that quite a few trade unionists take part at this workshop, notably Suzuki Fujikazu from the RENGO Research Institute and Nikolaus Simon from the Hans Böckler Foundation, the science organisation of the German Trade Union Confederation. György Széll: EU-Japan CSR - Tokyo 26 November 2004

11. To be honest,the Trade unions did not always escape the temptationsof capitalism and corruption, just to mention the Teamsters in the USA, but also the scandal around the Neue Heimat, then the biggest construction company in Europe, and recently an Ex-Rengo executive just avoided prison time over dental bribes. With participation in decision-making and co-determination at the heart of corporate governance trade unions have a special responsibility in this regard. However, they woke up rather late to participate in the ongoing debate on CSR. Fortunately just-in-time for this workshop, Transfer - the quarterly of the European Trade Union Institute - has focused in its latest issue on CSR. Eberhard Schmidt will give a good overview over the situation. György Széll: EU-Japan CSR - Tokyo 26 November 2004

12. And also RENGO-RIALS is only now constituting a working committee on this theme.Actually the unions have been active in regard to CSR already since the 1970s and 1980s, however, more on the local and regional level, and in small nations like Belgium and Denmark also on the national level. One outstanding example has been the movement in the U.K. and beyond on socially useful goods, which are linked with the name of Mike Cooley, an engineer and trade union leader with the then big arms producer Lucas Aerospace. The debate around arms conversion - which unfortunately died out instead of really starting with the end of the Cold War - had CSR in its centre. György Széll: EU-Japan CSR - Tokyo 26 November 2004

13. Mike Cooley was able to implement his ideasinto the Greater London Council in the 1980s, until the GLC was dissolvedout of political reasons by Margaret Thatcher.The U.K. is the only country so far, which has since 2001 within the New Labour government a Ministry for CSR, as there the pressure by NGOs has been very strong. However, other experiences continued. Francesco Garibaldo in his presentation will make the case for the Emilia-Romagna Region in Italy, which has become well known its successful regional policies. Belgium introduced a Social Label (cf. Anne Peeters in Transfer 2004/3: pp. 393-400). Also Jacques Vilrokx will refer to the situation there. Denmark is another interesting case, although the focus of government policies went more and more only on employment issues. György Széll: EU-Japan CSR - Tokyo 26 November 2004

14. It seems in the meantime to force companies to respect their own principles via the consumer law than via employees rights, as André Sobczak demonstrated in his article in Transfer 3/2004 (pp. 401-415). Recently the Norwegian Government decided to invest its oil riches only into ‘ethical companies’. (Japan Times, 21 November 2004, p. 16) Social Responsible Investment has become also an issue for trade unions, as the pension funds have become the biggest investors.But I will come back to the regional and local level, as they have become in the last couple of years - especially with the weakening of the nation-states within the EU - more and more important for sustainable social development. György Széll: EU-Japan CSR - Tokyo 26 November 2004

15. I have founded therefore with a number of colleagues - of whom a few are present here - the international network Regional & Local Development of Work & Labour (RLDWL; http://www.fipl.it/rldwl/) in 1999 in Ravello, Italy. In the meantime we had other conferences in Rio de Janeiro, Osnabrück, Durban/South Africa. The next one will take place in Osnabrück again, in September 2006, the following in June 2008 in Montréal. We also created a European network in Bologna in 2003, with a follow-up conference in Rome in April 2004. The outcome are a number of books. I only want to mention a few: György Széll: EU-Japan CSR - Tokyo 26 November 2004

16. Garibaldo, Francesco & Volker Telljohann (eds.) (2000): The Role of Intermediate Institutions: The case of Research Institutes Concerned with Work and Labour, Milano, Franco Angeli.Széll, György & Gian-Primo Cella (eds.) (2002): The Injustice at Work: an International View on the World of Labour and Society. Frankfurt/Bern/New York, Peter M. Lang.Garibaldo, Francesco & Volker Telljohann(eds.) (2004): Globalization, Company Strategies and Quality of Working in Europe. Frankfurt /Bern/New York. Peter M. Lang. Széll, György; Bösling, Carl-Heinrich and Johannes Hartkemeyer (eds.) (2005): Labour, Globalisation and the New Economy. Frankfurt et al., Peter Lang. György Széll: EU-Japan CSR - Tokyo 26 November 2004

17. The ResearchThis workshop is part of a research project which started in April 2004 and goes first until March 2005, however, will be continued within the EUIJ for another two years. It builds on research, which I have conducted over the last 35 years, and which focused on economic democracy, participation, organisational democracy and self-management. The method I developed I called “Research by those concerned”. (For a similar approach cf. to BentFlyvbjerg: Making Social Science Matter. Why Social Inquiry Fails and how it Can Succeed Again. Cambridge, Cambridge University Press, 2001.) György Széll: EU-Japan CSR - Tokyo 26 November 2004

18. This project builds also on the work of the Research Committee 10 “Participation, Organisational Democracy and Self-Management”, whose president I have been for many years. I organised for this RC in Osnabrück already in 1985 a conference The State, Trade Unions and Self-Management. Issues of Competence and Control. ( The proceedings were published in 1989 together with P. Blyton and C. Cornforth.) The main issues, i.e. competence and control, are still valid for CSR. But also our Congress “Ways to Social Peace in Europe” at the occasion of the 350th anniversary of the Westphalian Peace Treaty in Osnabrück in 1998 is closely related to the topic. I summarised my conclusions under the heading:‚Europe with a human face’ [Secolo, 2000: 319-335]. György Széll: EU-Japan CSR - Tokyo 26 November 2004

19. The members of the research team are:·Prof. Dr. György Széll (leader), IER & EUIJ, Hitotsubashi University & University of Osnabrück, Germany ·Prof. Dr. Miyamoto Mitsuharu, Department of Economics, Senshu University, Kawasaki·Prof. Dr. Uemura Hiroyasu, International Graduate School of Social Sciences, Yokohama National University·Yamada Shuji, Senior Lecturer, Bunkyo University, Dept. of International Studies, Chigasaki-shi, Kanagawa·Dr. Stefan Hochstadt, Ass. Prof., University of Applied Sciences Dortmund, Dept. of Architecture, Germany·Suzuki Akihiro, B.A. Bunkyo University·Cécile Horstmann, cand. Europ. Studies, University of Osnabrück & Chuô University·Denis Wanke, cand. Europ. Studies, University of Osnabrück & Chuô University György Széll: EU-Japan CSR - Tokyo 26 November 2004

20. As empirical base we selected case studies of companies, approximately 10 – equally from Japan and Europe. They will be complemented by a number of interviews with experts from industry and academia – approximately 15 to 20. The first interviews and experts have been already conducted, however, the access has proved to be much more difficult than imagined. One hurdle has been - in spite of globalisation - the language barrier. The interview guidelines were written in English, but it seems to be necessary to translate them into Japanese resp. Other European languages. So, against our hopes I am not able to present already substantial first research findings of our empirical investigations. György Széll: EU-Japan CSR - Tokyo 26 November 2004

21. The following table gives a good summary of the different approaches, used in CSR research: • Table 1: CSR – Variety of approaches* • fragmented vs. systematic • voluntary vs. regulatory • centre vs. periphery • pro-active vs. reactive • Following European Foundation for the Improvement of Livingand Working • Conditions (2003): Towards a sustainable corporate social responsibility. • Dublin: pp. 21f. György Széll: EU-Japan CSR - Tokyo 26 November 2004

22. When we differentiate the first approach, we arrive at four different forms of action: Table 2: CSR – fragmented versus systematic approaches *- Low level of interaction - relatively peripheral activities - all stakeholders on certain issues- all stakeholders connected to all aspects of activities* Following European Foundation for the Improvement of Living and Working Conditions (2003): Towards a sustainable corporate social responsibility. Dublin: pp. 21f. György Széll: EU-Japan CSR - Tokyo 26 November 2004

23. There are four main-forms of CSR, depending of the direction of the initiation and the internal or external focus:Figure 2: CSR-typesDirection internal external Top-down Management GovernmentBottom-up Trade unions NGOs György Széll: EU-Japan CSR - Tokyo 26 November 2004

24. CSR-types according to countries & regions- management-driven: USA, Japan- government-driven: Denmark- trade union.driven: Emilia Romagna, Greater London, Germany, Norway- NGO-driven: Austria, Belgium, Germany, Hungary, The Netherlands, U.K. György Széll: EU-Japan CSR - Tokyo 26 November 2004

25. The measurement problemOne of the main problems in CSR and its connected research is how to measure CSR. Often CSR is related to qualitative aspects. Just take the issue of citizenship. Human rights violations can be counted. But in far away places they are difficult to document, especially in authoritarian regimes. And there is a tendency to count a human life in a Third World country less valuable than one in the industrialised world. The discrimination or oppression of trade unions, on which scale to measure. György Széll: EU-Japan CSR - Tokyo 26 November 2004

26. The Workshop ProgrammeI will not go into details, as You have the programme in hand, and the session organisers will introduce the different papers. In so far just a short summary. It seems to me a good mix of contributions from six EU-countries - unfortunately mainly the Old - Europe and Japan, with quite a diversity of topics, covering the whole width of CSR. Although we had two last minute cancellations, there will be 21 papers during the two days, quite a dense programme. And therefore I am grateful if presenters will stick to the 20 minutes, to leave room for some discussion. I also would like ask the session organisers to be strict, as the papers have been distributed or downloaded, and are available. György Széll: EU-Japan CSR - Tokyo 26 November 2004

27. ConclusionsI am sure that the following two days will bring a lot of good papers and discussions, and will contribute substantially to our research project. The whole will be published about in six months as a book.So, I wish all of You and myself a productive and challenging conference, and a pleasant and fruitful stay here in Japan. György Széll: EU-Japan CSR - Tokyo 26 November 2004

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