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Corporate Social Responsibility

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					Corporate Social Responsibility and Duct Tape
Ann Rappaport, Lecturer, The Fletcher School and Tufts Urban and
Environment Policy Department
IDEAS, May 2008, http://fletcher.tufts.edu/ierp/ideas/default.html

        Glistening with perspiration, arms and clothes caked with black dust, a soot-encrusted
        rag covering nose and mouth, a man rakes a small pile of coal toward the firebox of a
        primitive boiler. The boiler generates steam for ironing finished garments. The factory
        manager explains that a recent switch from oil to coal saves about $250 a day.
                                                      Ho Chi Minh City, Vietnam, January 2008

Can a responsible company use coal in 2008? Does it matter if energy savings are used
to increase wages? Can the company be considered responsible if it provides a generous
death benefit to the family of the man who operates the boiler? There are no definitive
answers to these questions, according to Blowfield, because corporate social
responsibility (CSR) as a discipline has failed to critically examine whether or how
acceptable corporate behavior can be described or measured.1 Even if there were
agreement on these essential questions, the relationship between companies and civil
society is constantly shifting.        Corporate social responsibility, however it’s
conceptualized, appears to be a brilliant temporary repair for gaps that emerge between
societal expectations and company practice. In 1851, for example, the textile company,
Daniel Salt and Sons, built a new factory and community for workers in Bradford,
England away from the unhealthy and polluted city core.2 The British government
eventually enacted environmental regulations so all companies had to improve practices
to the benefit of the population as a whole. Yesterday’s CSR eventually becomes today’s
business as usual. CSR is like duct tape; both are incredibly useful, but neither is a
permanent solution.

Current manifestations of CSR cover a broad spectrum ranging from on-site day care to
extended producer responsibility. Companies use CSR to attract top quality employees,
mollify host communities, and draw customers.

Activists use CSR strategies to leverage change. An example is the Sullivan Principles
addressing apartheid in South Africa. In 1977, the Reverend Leon Sullivan, an African
American minister, articulated a set of principles for multinational companies
continuing to do business under white minority rule in South Africa. The principles
were designed to end discrimination against blacks in the workplace by affirming a
commitment to human rights and equal opportunity.3 Activists took the principles to

1 Michael Blowfield, “Corporate Social Responsibility—The Failing Discipline and Why it Matters for

International Relations,” International Relations vol. 19 no. 2: 2005. pp. 173-191.
2 Ibid.
3 Global Sullivan Principles of Social Responsibility

http://www.globalsullivanprinciples.org/new_page_4.htm accessed 20 February 2008.

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corporate executives and to annual meetings of companies not in compliance and
pressed for their implementation. Because a sufficient segment of the American public
was deeply disturbed by apartheid and the principles were a way of distinguishing
clearly companies that were acting responsibly from those that were not, they were an
effective tool for forcing laggards to change company practices. Some companies left
South Africa altogether, possibly accelerating the demise of the apartheid regime. After
apartheid, government began to address civil society expectations.

In recent decades, activists have called attention to child labor in the chocolate and
handmade rug industries, sweatshop conditions in developing country factories
supplying multinational footwear and apparel companies, dangerous working
conditions and environmental devastation in the mining sector, and appalling working
conditions and extensive pollution in the poultry and meat processing industry, just to
name a few. But despite activist campaigns and vivid images on the internet, the list of
problems seems to be growing, not shrinking. Good corporate practice across these
industries has been elusive and is far from business as usual. It’s worth examining why
this set of problems seems so intractable.

One explanation lies with the response of companies and governments. As gaps
between the expectations of civil society and the actions of companies proliferate, large
companies are institutionalizing their own versions of CSR, implicitly or explicitly
arguing that a government response is not needed because the private sector
understands the problem and is fixing it as fast as possible. This is exactly what
governments want to hear.

Codes of conduct are one form of response to public concerns; some codes are
developed by industry groups and others are collaborative efforts of companies and
other stakeholders. The chemical industry was among the first to act collectively,
implementing a Community Awareness and Emergency Response (CAER) program in
the wake of the 1984 Bhopal disaster and later rolling out a comprehensive industry
code on Earth Day 1990.4 Called Responsible Care, the chemical industry code was
designed to improve relationships with host communities, provide information useful to
first responders, upgrade environmental practice, and enhance product stewardship.
Another effort, the Fair Labor Association, is a collaborative effort of companies, non-
government organizations and over 190 universities.           Launched in 1998, FLA
established a code for the apparel and footwear industries, attempting to eliminate
sweatshop conditions in the global supply chain.5

Codes are attractive to companies because they can influence the definition of good
practice.6 In addition, codes can deflect onerous government intervention and can be a
source of product differentiation or competitive advantage. Companies can legitimately
claim they are going beyond government requirements, pursuing the triple bottom line
of social, environmental and economic gains. Customers and investors will in theory

4 Jeffrey F. Rayport and George C. Lodge, “Responsible Care,” Harvard Business School case 9-391-135,

March 18, 1991.
5 Fair Labor Association http://www.fairlabor.org/ accessed 6 February 2008.
6 Blowfield, pp. 173-191.



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reward responsible businesses with their dollars, thus demonstrating a willingness to
pay for increased responsibility and creating a virtuous circle. But in reality there’s
emerging evidence that corporate-driven CSR simply isn’t working for customers,
workers, or the common good, and isn’t even working well enough for companies.

At present, companies may benefit to a degree from defining CSR their way, but they
also may struggle to profit from CSR. It’s difficult to protect against specious claims of
responsibility from competitors, and some CSR programs are impossible to distinguish
from marketing campaigns. Factory workers in Asia may benefit from improvements in
working conditions brought about by consumer pressure on multinational brands, but
at least in the apparel and footwear industries, some of the improvements can have a
downside that goes largely unacknowledged. Many multinational brands have
established upper limits on regular and overtime hours in supplier factories, a move
designed to protect workers. However, workers complain that together with measly
wages, these limits reduce their paycheck to a point where their livelihood is
unsustainable. Large companies under siege for a range of environment, health and
human rights issues are starting to look, in a figurative sense, like a car with its bumper
strapped on with duct tape, trunk held shut with duct tape, and a neatly crafted duct
tape door panel.

Spot checks by independent organizations periodically reveal compliance failures in
supplier factories. In response, some multinational companies develop additional
policies or codes of their own and employ a cadre of compliance staff to audit suppliers’
operations. Third party auditing firms are also retained. When persistent compliance
problems go uncorrected, multinationals terminate contracts with suppliers. But even
these redundant systems are unable to ensure responsible practice. Such was the case in
fall 2007 when child labor was discovered in factories under contract to Gap in India.7
Also, 2007 was a year marked by sensational headlines about tainted products imported
from China including pet food, toothpaste and toys.

Perhaps these problems are inevitable when government is an impotent or missing
party in negotiating the relationship between business and civil society. According to
Reich it’s unrealistic, especially in today’s intensely competitive global economy, to
expect companies to voluntarily practice social responsibility; his proposed solution is to
codify good practice in government laws and regulations.8 It’s easy for Reich to say, but
difficult to accomplish. At present, government standards are so low in some countries
that even when they are exceeded, protections are still inadequate and fail to inspire
confidence. And the government-set minimum wage in countries such as Vietnam and
India is so paltry that beginning workers hover near the World Bank reference line for
poverty of $2.00 per day.



7 Dan McDougall, “Indian ‘slave’ children found making low-cost clothes destined for Gap” the Observer,

Sunday October 28, 2007. http://observer.guardian.co.uk/world/story/0,,2200590,00.html accessed 6
February 2008.
8 Robert B. Reich, “Supercapitalism: The Transformation of Business, Democracy, and Everyday Life.”

(New York: Knopf) 2007.

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Consider the CSR examples cited earlier: factory siting in England; multinational
companies doing business in South Africa; and chemical companies in the US. In each
of these cases, governments enacted new laws after receiving signals from leading
companies that they were amenable to addressing the gap between the old legal regime
and new societal expectations. The 1986 amendments to Superfund, known as SARA,
were modeled in part on the chemical industry’s CAER program. Government actions
closed the gap between public expectations and practice in a way that applied to all
companies, not just those that chose to act voluntarily. The solution moved from the
realm of CSR to general practice, replacing the duct tape with a more enduring fix.

That was decades ago. It’s worth exploring whether there is an appetite for government
action today. Governments rely heavily on companies to fuel their development by
providing jobs and generating revenue streams. As a consequence, it’s widely believed
that governments are either unwilling or unable to regulate company operations to favor
social and environmental dimensions. China offers an interesting case. As if the toy, pet
food and toothpaste problems weren’t enough, reports now link deaths in the US to
blood thinner made in a factory not certified by Chinese regulators to manufacture
pharmaceuticals.9 As the summer 2008 Olympics approach, the media are airing
stories about how athletes will manage the severe pollution, and whether endurance
athletes, such as marathon runners, will even compete. The Chinese government has
taken truly draconian measures, such as moving whole factories to outlying provinces,
in a desperate attempt to reduce air pollution in Beijing for this summer’s games.
China’s failure to adequately regulate companies has created enough embarrassing
spectacles just in the last year that it should serve as a catalyst for new laws and
regulations. Surely anticipatory government action would be more dignified and
effective.

Government failures are not limited to booming Asian economies. The US has been on
an ideological binge since the Reagan era, nurturing a belief that less government is
better. Companies fanned the flames. The Environmental Protection Agency (EPA)
morphed from a regulatory agency to an organization whose new programs encourage
participation in a suite of voluntary efforts.10 There are signs that this is changing. State
governments sued EPA for failing to regulate greenhouse gases from the transportation
sector that contribute to global warming. In April 2007, the US Supreme Court decided
in favor of the states.11 Even before that landmark decision, industry leaders were
preparing for regulation so they could function effectively in the global marketplace,
creating voluntary carbon reduction and trading schemes, making it clear that they will
be helped, not hurt by government action to regulate climate-altering gases. Companies
that have to rely too heavily on CSR to mend gaps are operating outside their comfort


9 Walt Bogdanich and Jake Hooker, “China Didn’t Check Drug Supplier, Files Show” New York Times,
February 16, 2008. p. 1.
10 For a discussion of domestic voluntary programs see Richard MacLean, “Do Voluntary Programs

Work?” The Environmental Forum, March/April 2008. pp. 24-28.
11 Massachusetts et al. vs. Environmental Protection Agency et al. April 2, 2007.

http://www.supremecourtus.gov/opinions/06pdf/05-1120.pdf accessed 19 February 2008.


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zone and will begin to look a lot like that loser cruiser whose bumper, trunk and door
are kept together with duct tape. It’s functional, but it’s not a substitute for a real fix.

Many of the CSR-related partnerships among activists, NGOs, companies and other
stakeholders have made contributions in improving environmental and social practice.
Indeed, CSR can serve a vital role as a laboratory for public policy innovation. But in
many industry sectors, CSR reaches only a small coalition of the willing. It is unrealistic
to think that voluntary action through CSR will ensure respect for basic human rights,
eliminate discharge of harmful pollutants, and create safe working conditions in all the
factories making all the goods we consume. A missing element is recognition on the
part of companies, governments and the activist community that CSR is an interim step
in an iterative process, not an end point. Only when governments regularly consolidate
gains with upgraded laws and regulations that apply to all companies in their
jurisdictions, not just innovators and early adopters, can we expect a virtuous cycle to
begin operating.




             Center for International Environmental and Resource Policy
                                  The Fletcher School
                                   Tufts University




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