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IBM/U4 Topic 9 Recent development in CSR and Policy Implications

Recent developments influencing the application of social responsibility concepts to international business derive from many different sources that comprise the stakeholders of TNCs, as well as from the corporations themselves. The major new development, at least in developed countries, is a proliferation of groups representing general public or specific issue interests that utilize a wide array of public pressure tactics, intermingled with instances of more direct dialogue, to promote an activist view of TNC duties towards an expanding agenda of social responsibility objectives. An expanding number of private enterprises are creating and/or revising individual statements of business principles or codes, although this group would still constitute only a small percentage of the total TNC community. Collective business organizations have adopted a mixed approach. Some sectoral groups actively responded to social responsibility pressures with industry-specific initiatives, while most organizations take a more cautionary approach, with the notable exception of a new statement on environmental principles.

Governments continue to use international organizations to promote guidelines or codes of conduct on issues or in sectors in which international consensus is insufficient to support more precise legal standards. Only occasionally do national governments individually endeavour to develop TNC social responsibility initiatives.

  1. Increased Activities by Civil Society Groups

A major development, particularly evident over the past decade, is the expanding number, range, coordination and activism among parts of civil society on issues relating to TNC social responsibility. Although some groups organize around very specific products, such as tobacco or nuclear energy, most activism focuses on a relatively small set of major issue themes that are then exemplified and addressed in terms of specific products, companies or events.

As mentioned before, the issues most prevalent over the past decade involve labour rights and working conditions, the environment and human rights, reflecting primarily a developed country perspective on TNC social responsibility (box 2). Some groups choose to focus principally on one of these areas, such as Greenpeace on the environment or Amnesty International on human rights. Others, such as religious organizations or other socially-directed institutional investors, may be active across a spectrum of social issues. Although most groups originate in the developed countries and draw their most involved membership from that base, an increasing number of organizations is emerging in developing countries as well. Where interests and perspectives are shared, groups may forge ties internationally through affiliated networks, conferences, newsletters and an exponential growth in relatively inexpensive Internet linkages.

In fact, the emergence of the Internet is virtually unparalleled in its impact, both on increasing international communication among elements of civil society and on facilitating these groups’ outreach to media channels that can focus instant attention on TNC activities worldwide.

This section offers only an illustrative description of the growth, activism and impact of these groups relative to TNC social responsibility developments, but informative examples can suggest the diverse and evolving nature of their activities. For instance, a particularly comprehensive set of social responsibility standards has been developed by several religious organizations and issued by the

Ecumenical Committee for Corporate Responsibility as international benchmarks that could be used in TNC codes and against which TNC performance might be measured. This set of standards draws from a number of ILO conventions and other documents to address issues related to a broad range of TNC stakeholders, including employees, customers, suppliers, contractors, shareholders, community relations and the environment (Wild, 1998).

Another recent initiative aimed directly at monitoring TNC performance on social responsibility issues is the Council on Economic

Priorities Accreditation Agency (CEPAA), established in 1997 by the Council on Economic Priorities (CEP). An advisory board that included participants from unions, universities, human rights groups, corporations and accounting firms helped draft a Social Accountability standard (SA 8000), conceptually mirroring the ISO 9000 quality standard that has been widely accepted within the international business community. Drawing from provisions of selected ILO conventions and human rights principles, the drafters of SA 8000 constructed a set of specific standards addressing many labour and work condition issues, including child labour, health and safety, freedom of association, collective bargaining, discrimination, work hours and wages. Signatory companies can be measured, audited and accredited under SA 8000, which might provide labelling or reputational advantages if the standards are met. Several international accounting firms are closely associated with this undertaking while some other companies have indicated their intention to use this programme.

Trade unions actively participated in the development of several international standards relating to TNCs, including the OECD

Guidelines and, principally, ILO instruments (conventions, recommendations, the Tripartite Declaration and the Declaration on Fundamental Principles and Rights at Work). Union concerns encompass both operational conditions in the workplace and process rights such as freedom of association and collective bargaining.

Trade unions occupy a somewhat different position than other civil society groups, however, due to their traditional economic Human rights groups such as Amnesty International and Human Rights Watch are sometimes aligned closely with labour groups because a number of human rights principles pertain to labour relations and working conditions, exemplified by some of the recent high-profile cases involving forced labour, child labour, restrictions to freedom of association and the right to collective bargaining, as well as abusive “sweatshop” working conditions. Other human rights issues extend to cases involving political oppression, where the relationship to TNC operations may be indirect rather than causal. Following from experiences with the successful fight against apartheid in South Africa, many of these groups employ similar tactics and standards in pressing for socially-responsible business behaviour in other countries in which human rights abuses exist.

Goals may extend from respecting and preserving employees’ human rights in the workplace and beyond, in order to not take advantage of the situation in these countries, to intervening actively to promote change in political conditions, or discontinuing business ties with the offending country.

A range of measures may be employed to urge TNCs to adopt a human rights agenda among their social responsibility obligations, with an evolving list of countries as applied targets for action.

Recent activities have focused on generating public as well as private commercial sanctions on TNCs that continue an involvement with regimes that significantly abuse human rights. This approach is exemplified by the steps taken by some United States’ state and metropolitan governments to enact selective procurement bans on products from such companies. Business organizations oppose this use of purchasing sanctions, and a number of governments accept that such regulations violate WTO trade rules (Kline, 1999).

Debates involving human rights standards and TNC social responsibility usually revolve around two fundamental issues. The first concerns who should decide whether and when significant human rights violations are occurring in a specific country. The second issue is determining the appropriate relationship between human rights obligations and the actions that business entities (particularly foreign-based TNCs) might take to influence a host country’s domestic political affairs. Failure to achieve a broad consensus on these issues, perhaps backed by the institutional processes of a relevant international organization, risks placing corporations in a difficult position. Target TNCs can be caught between competing value standards of political non-interference in a country’s domestic affairs and the pursuit of either activist involvement in such politics or a penalizing withdrawal from the country aimed at forcing changes in the host government’s policies.

Civil society groups have been particularly successful “drivers” of environmental concerns (UNCTAD, 1999). Recent activities by environmental NGOs have focused primarily on urging governments to adopt and improve international and regional accords related to the protection of the environment. Some of this emphasis undoubtedly stems from the relative success of international negotiations of the Montreal and Kyoto Protocols, with their attendant need for a resource commitment to follow-up activities. Nevertheless, efforts continue to define and apply social responsibility concepts to TNC environmental practices, ranging from the Ceres Principles (box 2) developed in the aftermath of the Exxon Valdez oil spill to various initiatives related to forestry management and the protection of sensitive rain forest regions (IRRC, 1999c). TNCs may also be targeted more individually as particular events or actions unfold, such as Shell’s Brent Spar decision. This particular case is noteworthy because Shell altered its course of action under concerted pressure from environmental groups, even though the company’s original plans had been approved by the Government of the United Kingdom.

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