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Corporate SocialResponsibility andDevelopment: Towardsa New Agenda?

Report of the UNRISD Conference17�18 November 2003, Geneva

United NationsResearch Institutefor Social DevelopmentUNRISD

Overview

Rapid growth in the number and size of transnationalcorporations (TNCs), their global reach and their vis-ibility in people�s daily lives have heightened societalconcerns about their social, environmental and devel-opmental impacts. In response, an increasing numberof companies are adopting a range of voluntary initia-tives associated with improvements in working condi-tions, environmental performance, and company rela-tions with workers, consumers, local communities,activists and other stakeholders. At the core of this�corporate social responsibility� (CSR) agenda are spe-cific policies and practices involving codes of conduct,environmental management systems, stakeholder dia-logues, community investment and philanthropy, as wellas reporting, auditing and certification related to socialand environmental aspects. In contrast to earlier dec-ades, regulatory responsibility has shifted, to some ex-tent, from state institutions to companies, business as-sociations and civil society organizations (CSOs).

As the CSR agenda has gathered momentum, so toohas an international debate regarding its merits and limi-tations. The United Nations Research Institute for So-cial Development (UNRISD) has been particularly con-cerned with its developmental impacts and implications.As concerns have mounted, there have been increas-ing calls for regulatory approaches that emphasize cor-

porate accountability, binding regulation and interna-tional law to control TNC activities.

To examine these issues, UNRISD organized the con-ference that is the subject of this report, attracting 200participants mainly from United Nations (UN) agen-cies, CSOs, research centres and the CSR service in-dustry. The conference had four main objectives:

! to present findings from UNRISD1 andother research on the developmental im-plications of CSR policies and practices;

! to consider the potential and limits ofnew types of relations with TNCs involv-ing public-private partnerships and non-governmental systems of regulation;

! to discuss the substance and significanceof recent proposals, demands and cam-paigns calling for �corporate account-ability�; and

! to examine the role the UN is playing,or should play, in the emerging corporateaccountability agenda and internationalregulation of TNCs.

11111 Since 2000, UNRISD has co-ordinated an international project,Promoting Corporate Responsibility in Developing Countries: ThePotential and Limits of Voluntary Initiatives, involving research inseven developing countries and thematic studies on TNC regu-lation, the corporate accountability movement and public-privatepartnerships. This work, and the conference itself, were partiallyfunded by the MacArthur Foundation.

ContentsOverview

I. CSR andDevelopment

II. New Relationswith TNCs

III. Corporate Account-ability and International

Regulation of TNCs

IV. Towards aNew Agenda?

Agenda

Speakers andChairpersons

Acronyms

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Corporate Social Responsibilityand Development: Towardsa New Agenda?

This report summarizes the presentations, discussionsand debates in terms of four areas of analysis: thedevelopmental implications of CSR; the assessmentof multistakeholder initiatives (MSIs) and public-pri-vate partnerships; corporate accountability and theregulatory role of the UN; and future directions forthe CSR agenda.2

The conference discussions revealed that a particulardiscourse and selected voluntary initiatives have, indeed,taken off during the past decade. But presentationsfrom researchers examining the scale and impact ofCSR in developing countries questioned the numberof enterprises seriously engaged, the way CSR policiesare imposed on developing countries through TNCsupply chains, and the fact that certain key develop-ment issues are still largely ignored in the mainstreamCSR agenda. These issues include poverty reduction,tax avoidance, transfer pricing and corporate lobbyingfor regressive policies, as well as the limited capacity ofmany micro, small and medium-sized enterprises(SMEs) to raise standards and compete with TNCs.

New types of regulatory institutions, involving so-calledMSIs or non-governmental systems of regulation thatset standards and promote company reporting, moni-toring, auditing and certification, have attempted to ad-dress some of the limitations associated with voluntaryapproaches to CSR. Some such initiatives constitute in-novative forms of regulation adapted to the new reali-ties of globalization and global democratic governance.Yet their future role as effective regulatory institutionsis uncertain, given their cost and complexity, and theirtendency to multiply, diverge and compete. Various par-ticipants called for a more co-ordinated approach,greater emphasis on complaints procedures and sensi-tivity to the reality of SMEs in developing countries.The process of designing and implementing voluntaryand multistakeholder initiatives must also become moreparticipatory in various respects: being more �bottom-up� as opposed to �top-down�; involving stakeholdersfrom developing countries in CSR policy making and

implementation; engaging CSOs that are truly repre-sentative of key stakeholders, such as workers; and en-deavouring to improve not only working conditions,but also workers� rights and empowerment.

Recent demands and proposals promoting corporateaccountability and legalistic approaches to regulationwere seen by some conference participants as an im-portant corrective to the emphasis of the past two dec-ades on deregulation and weaker forms of voluntaryinitiatives. These new approaches also attempt to en-sure that key issues related to corporate power, privi-lege and duties�often ignored in CSR discourse andpolicy�are addressed. However, considerable chal-lenges are faced by the emerging corporate account-ability movement and the Northern non-governmentalorganizations (NGOs) that have assumed a leading role.Not least, they involve mobilizing support and over-coming resistance by building broad-based coalitionsthat include trade unions and Southern CSOs, as wellas allies in government, political parties and business.

Conference presentations by several UN officials andothers highlighted the eclectic nature of the regulatoryrole of the UN vis-à-vis TNCs. The Global Compactgenerated considerable debate, with some participantsseeing it as a useful forum for dialogue and learning,and others concerned that both the Compact and UN-business �partnership� initiatives have crowded out theconsideration of more effective regulatory approaches,and done more to legitimize TNCs and facilitate theirbusiness activities in developing countries than to fun-damentally improve their social and environmental per-formance. The recently drafted United Nations Normson the Responsibilities of Transnational Corporationsand Other Business Enterprises with Regard to Hu-man Rights were generally viewed in a positive light,but there was considerable uncertainty regarding theirpolitical future. The conference discussions gave riseto various proposals for regulatory reform, includingthe effective implementation of existing UN norms andinstruments; using the procurement power of the UNto promote CSR; strengthening the monitoring andinvestigative role of UN bodies; and embarking on thelonger-term task of developing a comprehensive glo-bal regulatory infrastructure to deal not only with la-bour, consumer and environmental protection, but alsowith taxation and competition.

A recurring theme throughout the conference cen-tred on the fact that the scope, scale and quality of

22222 As a means of providing a more comprehensive report of thisUNRISD conference, this document is organized by themes andissues, rather than according to the actual progression of pres-entations and discussions on the meeting�s agenda (see pages24 and 25). In this format, which attempts to provide more analy-sis, the main points or recommendations of speakers are dis-persed throughout the report.

The papers and presentations of the event�s main speakers areavailable at www.unrisd.org.

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Corporate Social Responsibilityand Development: Towards

a New Agenda?

CSR essentially depend on the institutional and po-litical contexts in which companies operate. Despitesome tendencies within the CSR movement to seevoluntary approaches as an alternative to governmentregulation and law, the discussions highlighted thecrucial role of public governance�involving govern-ment policy, civil society activism, international regu-lation and rights-based institutions�in shaping effec-tive CSR practices, as well as the need to betterarticulate voluntary and legalistic approaches. Theyalso emphasized the need for CSR policy makers andpractitioners to be more sensitive to the developmen-tal impacts of TNCs, and the priorities and realitiesof developing countries.

I. CSR and Development

The considerable groundswell of support for CSRfrom governments, international agencies and somesectors of civil society and business suggests that thereis much to commend CSR from a developmental per-spective. As Thandika Mkandawire (UNRISD Direc-tor) observed in his opening address at the confer-ence, the discourse and agenda of CSR are now quitedifferent from those of the 1980s, when TNCs andinternational financial institutions were concernedwith �how to accelerate foreign direct investment byfreeing up trade and investment, with little considera-tion of social, environmental and human rights im-pacts�. Today there is greater recognition of the needto strengthen or create institutions that promote CSRand good governance.

During the past decade, CSR critics and supporters alikehave been concerned with the difficulties of scaling upthe number of companies actively engaged in volun-tary initiatives, and problems of weak implementationof CSR norms. But, as Peter Utting (UNRISD DeputyDirector and CSR Research Co-ordinator) explained,the debate about CSR has evolved considerably. Whilethe polemic of the early 1990s�between those whosaw CSR as a �win-win� proposition and those whosaw it as window-dressing or �greenwash��still per-sists, other issues have emerged. Some companies aremore proactive about CSR and cognizant of the limitsof corporate self-regulation. Critics are concerned notonly about whether companies are doing what they say,but also about how they are doing it. And they ques-tion whether CSR can really make a significant contri-

bution to development, even if many companies be-come more engaged.

Country-level impactsPresentations by researchers from several developingcountries revealed that a particular discourse and se-lected CSR initiatives have, indeed, taken off. Theyquestioned, however, the number of enterprises seri-ously involved, the way CSR policies are often im-posed on suppliers, and the fact that key developmentconcerns�in which TNCs are implicated�are stilllargely ignored.

South Africa

David Fig (University of the Witwatersrand), explainedthat certain South African business sectors, mainlycomprising large export or globally oriented corpora-tions, are adopting CSR initiatives. But this agenda hasnot only been characterized by fairly weak implemen-tation of CSR initiatives; it has also failed to address�the real development issues�. Attempts to deal with�the overriding development question��the social andeconomic exclusion of black South Africans�throughemployment equity and black economic empowermenthave often benefited those who already had access toskills and capital, and have not had significant impactsin terms of poverty reduction. Food security is an-other issue that has received little attention. CSR alsotakes place in a context of double standards where,for example, investment in nuclear energy, geneticmodification (GM) technology and aluminium smelt-ers contradict both government and corporate com-mitments to a sustainable development agenda. Thissituation, however, is not the sole responsibility of thecorporate sector. It is facilitated by the state, whichhas shifted from a neo-Keynesian to a neoliberal strat-egy and has failed to enforce environmental regula-tions. And it is also partly explained by the fact thatcivil society activism in relation to certain issues is rela-tively weak.

Mexico

David Barkin (Universidad Autónoma Metropolitana-Xochimilco) noted the very different response of Mexi-can-based companies in relation to �corporate envi-ronmental responsibility� (CER) and CSR. Many largefirms, from diverse sectors, are active on environmen-tal issues, particularly eco-efficiency. And a host oforganizations, associated with business, government,the non-governmental sector, universities and interna-tional bodies, have emerged to promote CER. SMEs

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have been less active. CSR issues have been largely con-fined to the maquiladora (export assembly) sector, andhave been vociferously raised by consumer and labourgroups in the United States (US) and Canada togetherwith Mexican counterparts. In other sectors CSR isoften defined narrowly in terms of philanthropy. Thelack of attention to CSR issues is largely explained bythe regulatory and policy context within which busi-ness operates:

Firms come to Mexico for its cheap labour andrelaxed administrative framework, and the gov-ernment is attempting to simplify existing re-strictions further and reduce corporate tax bur-dens. In this political environment it is littlewonder that paternalistic systems of corporatecharity are accepted as a substitute for social re-sponsibility. � Environmental issues are a dif-ferent matter�because of the relatively widelyrecognized social benefits and the competitivedemands for enforcement from trading partners.

China

Monina Wong (Hong Kong Christian Industrial Com-mittee / HKCIC) highlighted the difficulties of gen-eralizing about the effectiveness and impacts of CSRinitiatives, given the sectoral variations that exist. Inthe toy industry, for example, an international cam-paign involving Hong Kong-based NGOs and tradeunions, and international counterparts, has been in-strumental in generating some improvements in la-bour standards. In many other sectors, however, thereare few CSR pressures or incentives. In fact, struc-tural conditions associated with the abundance ofcheap labour prepared to accept �3D� jobs (those thatare dirty, demanding and dangerous); a weak regula-tory environment, where labour law is often unen-forced; and the lack of freedom of association andcollective bargaining mean that �the incentive to notcomply is always bigger than the incentive to comply�.Reporting on her own research on working conditionsin labour-intensive industries in southern China thatform part of international supply chains, Wong re-ferred to three categories of firms. In the first cat-egory, �façade CSR� predominates, with many sup-pliers of some well-known Northern computercompanies, for example, constituting �high-techsweatshops� where neither national labour law norTNC codes of conduct are implemented. In the sec-ond category are those firms whose CSR initiativescan be called �corporate policeman responsibility�;this category includes many toy and apparel manu-facturers. CSR initiatives are implemented in a top-

down manner by TNC buyers, costs of complianceare not shared between buyers and suppliers, andworkers are put under pressure not to reveal real con-ditions to auditors and outsiders. Furthermore, it isdifficult for suppliers to sustain improvements in la-bour standards due to ongoing �race-to-the-bottompricing� and pressures on delivery times exerted bybuyer firms. Wong�s third category consists of CSRinitiatives characterized by a bottom-up approach;greater involvement of NGOs in monitoring and com-plaints procedures; and more attention to workers�education, training and organization. Some TNCs,such as Nike, are moving in this direction. But thisapproach is not without its tensions and limits, forexample, when it involves efforts �to avoid and pre-empt real workers� organizing�.

A narrow agendaThe fact that the mainstream CSR agenda often ignoreskey development issues that relate to TNCs was notedby other participants. Utting pointed out a major con-cern in this regard:

the dominant agenda has tended to focus on fairlynarrow aspects of social and sustainable devel-opment and has ignored some of the basic is-sues to do with corporate size, power and policyinfluence; the negative effects of labour marketflexibilization and economic liberalization; un-sustainable investment and consumption pat-terns; and perverse fiscal and pricing practices.

Some of the fundamental determinants of maldevelop-ment, poverty and inequality do not figure prominently,if they figure at all, on the mainstream CSR agenda.

Deborah Doane (New Economics Foundation / NEF)noted that CSR should be about �how we solve someof the bigger global problems of our times that haveto do with market systems�, rather than simply whatbusiness can do to get a leading edge through socialand environmental initiatives. �[CSR] is quite goodfor the leaders, but there [are] problems with the lag-gards�, which require certain types of regulation. AnnZammit (independent consultant) noted that �if weare talking about development and eliminating pov-erty, then one has to take into account the policy en-vironment� and the way corporations have shaped amacro policy regime that can have perverse develop-mental effects.

Halina Ward (International Institute for Environmentand Development / IIED) noted that CSR can have

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a New Agenda?

negative developmental impacts due to the way inwhich costs and benefits are allocated, sometimespenalizing developing country firms and benefitingdominant players. �Have we unwittingly created anagenda that plays into the hands of big business bycalling for higher and higher standards that the basecan�t meet?�

The issue of taxation prompted several commentariesfrom panellists and participants. The underlying con-cern was that the CSR agenda often ignores issues oftaxation. Eddy Rich (Department for InternationalDevelopment / DFID) noted:

I am a bit surprised to hear again a discussionon CSR and development that spends a lot oftime discussing things like codes of conduct,health and safety and labour standards, whenin fact the�biggest contribution that businesscan make to development is through taxation.� You have companies spending a lot of timedeveloping codes�[while at the same time] em-ploying an army of accountants to try and avoidpaying their full social and economic duty inthe places where they operate. � [T]axation isthe way that the government and the privatesector can start engaging properly�that is themechanism for partnership.

Derek Yach (World Health Organization / WHO) ob-served that the CSR agenda often ignores health issuesas well. This is particularly apparent in the case oftobacco companies that are �very proud of their hu-man rights record, their labour standards and theirenvironmental standards. Pity their product kills halfof its regular users.� He added that many NGOs andthe UN Global Compact have not paid sufficient atten-tion to health issues. If these issues are not addressed,situations will arise where corporations are recognizedas socially responsible when, in fact, their core businessactivities kill or harm people.

Several participants noted that CSR is structurallyconstrained by the fact that it takes place in a contextof neoliberalism and policy frameworks that culti-vate business practices that can have perverse devel-opmental impacts. These include subcontracting, fis-cal incentives and the downsizing or weakening ofthe state�s regulatory apparatus. Barkin observed thatthe problem in Mexico is not the lack of laws, butrather the shift from state inspection and monitor-ing to �self-compliance�. Referring to Peru, RenatoAlva Pino (independent consultant) commented that

given this context, CSR appears more as a way of�decorating� neoliberalism rather than an effectivemeans of allocating or transferring resources for sus-tainable development.

Florian Rochat (Centre Europe�Tiers Monde / CETIM)observed that the issue of corporate responsibility ex-tends well beyond the factory floor. This is evidentnot only in relation to subcontracting, which enablescompanies to externalize risk, but also in relation tothe political strategies of corporations to liberalizetrade and investment regimes, including agriculture,which threaten the livelihoods of millions of peasantproducers.

John Sayer (Development in Practice) noted that discus-sions on CSR tend to pay insufficient attention to thefundamental development issue: how to achieve pov-erty reduction in developing countries. �And when wedo touch on poverty reduction, we seem to do it at themacroeconomic level�[rather than] the micro level.�The challenge is to deal with the impacts of invest-ment and corporate activity on jobs, prices, the afford-ability of basic goods and services, and social equity.

When looking at CSR from a societal perspective, JudithRichter (independent researcher, and author of Hold-ing Corporations Accountable) warned that we need to gobeyond the question of labour standards. It is neces-sary to adopt a broader perspective, starting from avision of what society and development might looklike from the standpoint of human rights and socialjustice, and from there defining what firms should andshould not do.

How broad should the CSR agenda be?Several speakers introduced a note of caution regard-ing the tendency or temptation to add more and moreissues to the CSR agenda.

John Dunning (University of Reading) argued that CSRneeds to be placed within the wider context of the ef-fectiveness of market and extra-market institutions ininfluencing the goals and conduct of firms. He alsoasked panellists whether there is, in fact, an optimumagenda, noting that the content and scope of CSR is�very strongly contextually related to firms, stages ofdevelopment, belief systems and institutional capabili-ties�. Reminding the conference of the past history of�performance requirements� imposed on TNCs, henoted that burdening companies with more and more

6


responsibilities can have unintended consequences, andthat it is important to focus on incentive structures.

Guy Standing (International Labour Organization / ILO)noted that CSR approaches tend to confuse whatshould be done with what can be done. At the com-pany level, CSR needs to start from basics, identify-ing minimum responsibilities related, for example, totraining and hygiene facilities, gradually building up�on the basis of bargaining and capacity�to addressissues of �social equity� and employment security,and finally aspects concerning democratic practiceswithin the firm. Measurable outcomes and impactsare also required.

Referring to the experience of promoting company�triple bottom line� reporting, Dwight Justice (Inter-national Confederation of Free Trade Unions / ICFTU)also reiterated the need for tangible results. �We seemto be moving into areas of greater and greater intan-gibility, and it becomes very hard to measure and quan-tify things in a way that is meaningful and compara-ble.� There is a tendency to promote reporting �forthe sake of it�, rather than reporting that can be tiedto some form of accountability, as is being proposed,for example, by the Publish What You Pay campaign,or requiring companies to report on whom they aresourcing from.

Northern bias and Southern realitiesVarious speakers observed that the CSR agenda is heav-ily influenced by Northern concerns, priorities andperceptions about development in the South. DavidMurphy (New Academy of Business) presented the find-ings of case studies and projects carried out in severaldeveloping countries to bring new and diverse South-ern perspectives to debates about CSR. �Most currentCSR debates are framed at the international organiza-tion or Northern country level with little attention tomany of the particular issues and concerns of South-ern stakeholders.� Home-grown CSR initiatives andapproaches, generally involving micro and small en-terprises, receive relatively little attention in the inter-national CSR discourse, debates and literature, as com-pared to the initiatives of large corporations.

Lorraine Ruffing (United Nations Conference on Tradeand Development / UNCTAD) noted that in many coun-tries SMEs are often excluded from public-privatesector dialogues on CSR, given their relatively weakparticipation in chambers of commerce. Governments

often design their SME policy in a top-down mannerand do little to promote dialogue with this sector.Other constraints also impede SME participation inCSR initiatives. Referring to a public-private partner-ship to promote cleaner production in the tanningindustry in Mexico, Barkin observed that red tape andopposition from larger corporations make it extremelydifficult for SMEs to access the credit they need to beable to participate. He noted that chambers of com-merce associated with some industrial sectors aredominated by large enterprises that can block the flowof benefits to small enterprises:

So the question isn�t simply how to get entre-preneurs [interested in CSR], but how to dealwith the unequal exercise of political and eco-nomic power that is preventing internationalprogrammes from effectively working at theSME level.

Asif Hasnain (United Nations Industrial Develop-ment Organization / UNIDO) observed that unlessenforceable regulatory frameworks are in place, lo-cal politics can easily undermine the implementationof CSR initiatives.

Contradictions in CSR activismSeveral speakers and participants were concernedabout the apparent bias in the mainstream CSR agendatoward large TNCs and labour standards in their coreenterprises when much of the working population indeveloping countries is unemployed and underem-ployed, and when employment and business are heav-ily associated with the self-employed, micro and fam-ily enterprises.

Ajit Singh (University of Cambridge) noted that inIndia and most other countries, the vast majority ofthe working population is in the informal sector. Hewas concerned that the CSR agenda, and some NorthAmerican activists in the anti-sweatshop movement,had not fully taken this fact on board; nor had theyunderstood the developmental implications of theirefforts to improve formal sector labour standards andlabour rights associated with freedom of associationand collective bargaining. Enforcing higher labourstandards in a situation of mass unemployment wouldserve to reduce employment. �Increasing the demandfor labour in both the rich and poor countries wouldbe a much better way of increasing labour standards.�More attention also needs to be focused on basic is-sues of poverty reduction, the prevention of hungerand raising labour standards in the informal sector.

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a New Agenda?

Particularly important is the need to reverse the trendof the past 20 years whereby �developing countrieshave been deprived of policy autonomy� to deal withissues such as foreign direct investment (FDI) andfinancial flows. �The anti-sweatshop movementshould partly change its focus and ask people in theUS treasury and in Wall Street what they are up to.�Singh also emphasized that achieving high rates ofeconomic growth is essential for development. In re-sponse to a question about the possible negative im-plications of a high-growth strategy for sustainabledevelopment, he noted that the only way out of thisdilemma is to change consumer preferences fromproducts and methods of production associated withpolluting activities to those that do not pollute or thatpollute less. The considerable ability shown by North-ern anti-sweatshop activists in changing consumerpreferences in the footwear and apparel sectors couldbe extended to the environmental field.

The contradictory effects of some types of anti-sweat-shop activism were also pointed out by Peter Newell(Institute of Development Studies / IDS), who referredto the unintended consequences of certain efforts toeliminate child labour in Bangladesh. He noted, how-ever, that this was less a criticism of the movementthan a reaffirmation that it is the responsibility of thestate to deal with the so-called informal sector.

Activist perspectivesActivists involved in the North American and Euro-pean anti-sweatshop campaigns acknowledged that in-sufficient attention has been paid to the situation ofworkers in the subcontracting chain, including homeworkers. Referring, however, to recent initiatives inNorth America and Australia, Bob Jeffcott (MaquilaSolidarity Network / MSN) noted that this situation isbeginning to change. According to Ineke Zeldenrust(Clean Clothes Campaign / CCC), the issue of the in-formal sector is a major challenge for activists con-cerned with labour standards. In relation to the gar-ment industry, she identified three issues. First, �evenin the so-called formal sector�a lot of workers are,in fact, informally employed� as they have no secu-rity of contract. Second, the nature of informalityvaries considerably throughout the subcontractingchain, and requires different activist strategies. Third,�we need a transformation of the labour movement�,as current trade union structures often cannot addressthe needs of subcontract labourers and women work-ers, in particular, who may want to organize on a com-

munity basis rather than in the workplace. Reform inlabour law is also needed in many countries becauseinformal workers are not covered by current legisla-tion. Regarding activist strategies, she proposed thatthe issue of security of employment be placed firmlyon the agenda, as had been done with the issues of a�living wage� and freedom of association. It is alsoimportant to develop a division of labour that corre-sponds to the realities of globalization, moving be-yond the traditional thinking that divides the worldinto consumers in the North and producers in theSouth. Increasingly, production in the garment indus-try is controlled by TNCs from East Asian countrieswith supply chains in Africa and Central America. Andcountries such as India are becoming important con-sumer markets for companies like Nike and Adidas.

The business case debateThe considerable data that the ILO and others havegenerated from surveys of firms in developing and tran-sitional countries suggest that there is a positive corre-lation between good performance on labour standards,equity and democracy, and good economic perform-ance. Given this apparent �business case� for CSR,Standing asked why more firms are not taking CSR se-riously. In his opinion �market failure�, associated withlack of information, is an important factor.

Others were less convinced of the so-called �win-win�argument. Justice noted that while some companies aretaking the �high road� in terms of CSR, there is notalways a business case for doing the right thing.

Sometimes you need rules. � [A] problem withthe CSR agenda is that so much of it is depend-ent on an almost religious attachment to a busi-ness case idea or a faith that contradicts whatwe have learned about altruism and philan-thropy�we can�t depend on it.

In Doane�s view, the market does not necessarily re-ward good behaviour:

there are a plethora of examples where theopposite would seem to be true. ... [C]ompanies�have to make ends meet and in hard or�ruthless� times, profits must ultimately over-ride any altruistic concerns for society or theenvironment.

The recent withdrawal of Littlewoods from the Ethi-cal Trading Initiative (ETI) is one example. The pres-sures to compete can also fuel a race to the bottom, asevidenced in the pressures on companies to relocatetheir sourcing of garments from Sri Lanka to China.

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II. New Relations with TNCs

A second set of issues addressed at the conferenceconcerned the potential and limits of new types of re-lations that have emerged in recent years between TNCsand other corporate interests, on one hand, and non-governmental and international organizations, on theother. Two panels focused specifically on public-pri-vate partnerships and MSIs associated with standard-setting, company reporting on social and environmen-tal aspects, monitoring, auditing, certification, andstakeholder dialogue and learning. These panels ad-dressed the following kinds of questions.

! Are these new institutional arrange-ments an effective means of deepeningand scaling up CSR?

! Are they overcoming the problemsand limits that characterize corporateself-regulation?

! Can they move from the current phaseof pilot testing and experimentation tobecome a new global system of regulationof corporate activity?

Dara O�Rourke (University of California-Berkeley)noted the rapid expansion of �non-governmental sys-tems of labour regulation� in various sectors and thelack of serious analysis of their role and impact. Thegrowth of these initiatives reflects not only an attemptto go beyond traditional regulatory approaches, but alsochanges in global production processes.

As networks of production extend out alongincreasingly complex supply chains, interestedstakeholders are exploring systems of dispersedbut interconnected regulation over production.These emerging regulatory systems are almostas complex as the supply chains they seek tomonitor.

Standards, procedures and governance arrangementsvary considerably, in some cases involving an advancedform of �privatized regulation� (for example, World-wide Responsible Apparel Production / WRAP), inothers �collaborative regulation� (for example, theETI, the Fair Labor Association / FLA, and SocialAccountability International / SAI), and in others a�fire alarm� or �socialized� model of regulation, in-volving new mechanisms of corporate accountabilityand worker empowerment (for example, the WorkerRights Consortium / WRC). These systems are cur-rently in an experimental phase. Potentially, they can

complement government legislation and constitute animportant response to the adverse impacts of glo-balization. To do so, however, they need to evolvetoward more credible, transparent, accountable anddemocratic systems, and they need to connect in someinteroperable way so that they complement and rein-force each other. The danger is that rather than con-verging toward more complete and democratic regu-latory systems, they will �diverge into a plethora ofinitiatives competing for the hearts and minds of con-sumers, serving only to confuse the public and un-dermine the credibility of non-governmental initia-tives�. Evaluating these initiatives on the basis ofcriteria associated with legitimacy, rigour, accountabil-ity and complementarity is, therefore, crucial.

Zeldenrust also referred to the genesis of MSIs, em-phasizing their intended role as instruments and in-stitutions that could address two fundamental prob-lems: the limits of corporate self-regulation, and the�regulation gap� that has resulted from the fact thatlocal and national governments, as well as internationalorganizations such as the ILO, lack �teeth� and en-forcement capacity. MSIs should also be seen in rela-tion to the fact that trade unions are often repressedor weak; and suppliers, constrained by their relationswith retailers and TNCs, have little room for manoeu-vre when it comes to meeting workers� demands. Adefining characteristic of MSIs is their engagementwith NGOs and trade unions, although �the type ofengagement varies considerably�, with some (for ex-ample, the ETI and the Fair Wear Foundation / FWF)but not all (for example, the FLA) having tripartiteboards. Regarding the experimental nature of MSIs,this should be seen more as an ongoing feature ratherthan a phase, �given the inherent risks and the manymistakes that have been made�.

Stakeholder representation and influenceWho are �stakeholders�, and how credible and demo-cratic are stakeholder dialogues? The discussions onMSIs raised questions about the appropriateness ofthe stakeholders involved, as well as their relationsand relative influence. One concern centred on rela-tions between NGOs and trade unions. Jan AartScholte (University of Warwick) observed that, his-torically, these have been subject to a number of ten-sions. Justice questioned the role of NGOs in repre-senting workers� interests. He noted two fundamentalproblems: first the tendency to �treat NGOs andstakeholders as if they are the same thing when, in

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a New Agenda?

fact, they are not�, and for NGOs to act as surro-gates for certain stakeholders; and second, for busi-ness interests to organize themselves as NGOs andclaim to be part of civil society. Meanwhile, legitimateconstituents of civil society, such as trade unions, aresometimes marginalized and bypassed.

Zeldenrust stressed the importance of including bothNGOs and trade unions in the governance structuresof MSIs, as has occurred in the case of the CCC, theFWF and the ETI. She noted, however, that in thegarment sectors of many countries, where womenworkers predominate, it is difficult to consolidateNGO-trade union relations, particularly where tradeunions are not allowed, where they are corrupt, or

�where existing trade union structures are not gendersensitive�. Referring to the experience of the CCC,she recognized the difficulties involved but stressedthat such problems are often more complicated intheory than in practice: �the key lies in quickly mov-ing these things out of the talk shop and into the re-ality on the ground, and to see where you can andcan�t work together�.

Doane pointed out that some MSIs, such as theMarine Stewardship Council (MSC) and the ForestStewardship Council (FSC), have been fairly success-ful in initiating multistakeholder dialogues, but theirprogress is often constrained by the fact that they donot recognize the differences of power in those rela-

B O X 1CHALLENGES FACING MSIS

There is a need to:

! translate the considerable activity on CSR codes at the international and policy level into�substantial change on the ground�;

! move beyond the first tier of the supply chain;

! focus more on �rights-based issues�, like freedom of association, to complement the focuson more �visible issues, like health and safety�;

! improve the quality of monitoring and verification, reduce the reliance on traditional auditingmethods employed by large auditing firms, and develop local expertise;

! adopt a more sectoral, rather than company-specific, focus, and enhance co-operationamong the MSIs, �structured around an actual work programme on specific issues ratherthan endless debates at the institutional level�;

! enhance the credibility of MSIs through the representation of NGOs and trade unions in bothinternational and local governance structures, as well as the involvement of organizationsthat are truly representative of workers, Southern NGOs and trade unions, and suppliers;

! develop worker training and education programmes and complaints procedures;

! involve more companies; to do so, however, �they will have to be pushed� by civil society,governments and the academic community;

! see MSIs not simply as instruments to fill the �regulation gap�, but as a way �to transform thetraditional regulatory framework so that it can address the massive labour problems in globalsupply chains in a manner that is transparent and democratic, and that gives space toworkers and their organizations to advance their own interests�.

Source: Zeldenrust

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tionships. Dan Gallin (Global Labour Institute) agreedthat not all stakeholders are equal, and stressed thatthe challenge is to create a balance of power. For thisreason, the respect and protection of trade unionrights is essential.

Another concern related to the classification of busi-ness interests as NGOs or �civil society�. In multistake-holder consultations promoted by the WHO, for ex-ample, Lida Lhotska (International Baby Food ActionNetwork / IBFAN) noted that �consumer groups andNGOs want to have a separate space from the privatesector stakeholders�. Referring to an international con-ference organized by the Inter-American DevelopmentBank, Justice reported that organizations closely asso-ciated with business interests had been presented asrepresentatives of civil society. He also expressed con-cern that the activities of the Global Compact in manycountries do not reproduce the multistakeholder ap-proach that this initiative claims to uphold. At the coun-try level, trade unions are often excluded. The multi-stakeholder dialogue approach is potentially useful, butthe rhetoric is often not translated into practice.

Limits of MSIs and partnershipsOther concerns about MSIs and public-private part-nerships were also in evidence at the conference. Doanenoted that their capacity to promote social responsibil-ity is fundamentally limited and constrained, becausethey are based on market principles that assume, incor-rectly, that the market will reward socially or environ-mentally responsible behaviour. In countries such asthe United Kingdom, �ethical consumerism� remainsstubbornly confined to a small minority of consumersand, like socially responsible investment, has sufferedsetbacks in recent years. MSIs and partnerships can alsoimpose pressures on NGOs to dilute their principlesand normative expectations. Some MSIs have accom-modated TNCs by diluting standards and implementa-tion procedures. She cited the withdrawal of the NEFfrom the ETI, partly due to the requirement of someof the corporate members that NGO members sign aconfidentiality agreement if they want to read casestudies. �While there is a place for co-operation, thisshould not mean that NGOs have to give up theirrole as civic guardians in the process.� Partnershipscan complement legalistic approaches but �they areno substitute for adequate legislation�.

The cost of certain MSIs and the complexity of theprocedures they promote were also of concern.

Ruffing pointed out that the question of cost, in par-ticular the cost for SMEs, is often ignored in discus-sions about MSIs. She noted that the InternationalOrganization for Standardization (ISO) 9000 certifi-cation (for quality management) was often in the or-der of $20,000 per certificate. While the costs of so-cial labelling schemes may be lower, they are stillconsiderable. Utting observed that �it is often assumedthat costs will be borne by affiliates or SMEs that arepart of the value chains of Northern corporations.Far less attention has been focused on the issue of�shared responsibility��. He also noted that scaling upMSIs beyond their pilot or experimental phase is con-strained by the sheer complexity of many reporting,monitoring and certification systems that require largeamounts of information gathered (i) from stakehold-ers who may be unable or unwilling to provide it, and(ii) by auditors and others who often lack the skillsand methodologies required.

Zammit spoke about the developmental implicationsof the growing number of so-called partnerships be-tween TNCs and UN agencies. Such partnerships,including the �flagship partnership��the GlobalCompact�are often portrayed as pragmatic instru-ments for mobilizing private sector resources for de-velopment, but they raise serious concerns. To as-sess their developmental impact it is not enough tolook at their provision of skills, money, investment,products or services;

their wider implications for developing coun-tries and poverty reduction, [including] theircontribution to enhancing developing countries�own capacities to deal with their problems, �their impacts on�the concentration of owner-ship�, national ownership, and the level ofcompetition

must also be examined. In these respects, partner-ships can have negative implications. A more funda-mental contradiction involves the fact that partner-ships can enhance the market power and reputationof large TNCs, as well as conditions for increasingtheir influence in international policy-making bod-ies, yet they promote a global policy agenda that manyobservers claim undermines development in muchof the South. The current UN approach to partner-ships has not seriously considered these issues, anddetailed evaluations of the partnership experience arelacking. This situation needs to be corrected. TheGlobal Compact has, indeed, responded to some criti-cisms by broadening its focus away from TNCs to

11


a New Agenda?

firms in developing countries, and calling on partici-pating companies to report on their implementationof all nine of the principles which the Compact pro-motes. But given the well-known weaknesses of com-pany reporting on social and environmental aspects,the limited scope for monitoring compliance, and thefact that there is no assessment of whether partner-ship or CSR activities are compatible with nationaldevelopment and poverty reduction, many questionsremain unanswered.

Jens Martens (World Economy, Ecology and Develop-ment / WEED) commented that any assessment of part-nership initiatives needs to consider not only their di-rect environmental and social effects, but also theirimpact in relation to the underlying interests of cor-porations, including the free market agenda, FDI andmacroeconomic effects. Lhotska questioned the levelof UN agency co-ordination on CSR and partnershipapproaches, and the compatibility of such approaches,noting that while the WHO was embarking on multi-stakeholder consultations to define its policy in theareas of health and nutrition, the United Nations Chil-dren�s Fund (UNICEF) was entering into a fund-rais-ing sponsorship deal with McDonald�s, �which, in myview, runs in the face of what the WHO was doing�.Craig Bennett (Friends of the Earth, United King-dom) noted that the sudden burst of partnership pro-posals at the World Summit on Sustainable Develop-ment in 2002 could be seen as a ploy to fight off thethreat of regulation, partly evidenced by the fact thatmany proposals quickly disappeared once the Johan-nesburg process ended.

III. Corporate Accountability andInternational Regulation of TNCs

Concerns regarding corporate self-regulation and vol-untary initiatives have, in recent years, prompted vari-ous proposals and campaigns calling for �corporateaccountability� and legalistic approaches to regulatingTNCs. In this area, the conference discussions exam-ined three specific questions:

! From a political and developmental perspec-tive, how significant are these proposals?

! Are new international laws and institutionsneeded, or are existing frameworks andinstruments sufficient to curb corporatepower and malpractice?

! What role should UN organizations andinstitutions, old and new, play in the interna-tional regulation of TNCs?

Jem Bendell (independent consultant, and co-authorof In the Company of Partners) identified recent changesin global activism associated with TNCs, in particularthe emergence of new coalitions�or what might beloosely called a �movement��calling for corporateaccountability. The fundamental concern of this move-ment has to do with corporate power and privilege,and their negative impacts on humanity and develop-ment. Instead of urging companies to voluntarily givean account of their activities and impacts, the corpo-rate accountability movement demands that corpora-tions be �held to account��which implies an elementof enforceability. Several contexts and trends are cre-ating potential for progress toward corporate account-ability, including the following:

! the maturing of the anti-globalization move-ment into a movement for global democracyin which protest and criticism have beencomplemented by the search for alternativesand innovative policies;

! the increasing application of human rights lawto corporations;

! the impacts of the dot-com bust and accountingscandals on mainstream beliefs in the capacityof Anglo-Saxon capitalism and corporations todeliver development; and

! the recognition of the limits of the �win-win�proposition, and that it might be in a company�sself-interest to level the playing field upward toavoid being undercut, if indeed it wants to im-prove its social and environmental performance.

These contexts and trends have given rise to NGOcalls for a stronger framework of corporate account-ability, either by testing existing mechanisms, such asthe Organisation for Economic Co-operation andDevelopment (OECD) Guidelines for MultinationalEnterprises, or launching new initiatives, such as thePublish What You Pay and the International Rightto Know campaigns. Bendell suggested that strate-gies for promoting corporate accountability shouldfocus less on devising new instruments and conven-tions, and more on implementing instruments thatalready exist. They should also seek to build alliancesbetween NGOs, governments and UN bodies to sup-port instruments such as the UN Norms on the Re-sponsibilities of Transnational Corporations andOther Business Enterprises with Regard to Human

12


Rights, recently adopted by the United Nations Sub-Commission for the Promotion and Protection ofHuman Rights.

Bennett outlined the objectives of the corporate ac-countability campaign that NGOs had launched in therun-up to the World Summit on Sustainable Devel-opment in 2002. These include both duties and rights:duties, for example, of company directors related tocare for both the environment and stakeholders; andrights of communities to a healthy environment, todecide what business activities should take place intheir locality, and the right of redress in cases of mal-practice. The rejection of this proposal by businessinterests, on the basis that an internationally bindingframework amounted to an inappropriate �one-size-fits-all� approach, is hypocritical�this is preciselywhat is proposed when it comes to strengthening therights of corporations.

The regulatory role of the UNPresentations by several speakers brought out the di-verse nature of UN approaches to regulating largecorporations, both in terms of the sheer number ofinstruments and their approaches. At the �softer� endof the regulatory spectrum are initiatives, such as theGlobal Compact, that emphasize dialogue and volun-tary reporting as key means of cultivating shared val-ues and �corporate citizenship�, and that remind com-panies of their responsibilities under internationallabour, environmental and human rights law. Manyinternational human rights agreements constitute in-ternational soft law that is applicable to governments,corporations and citizens, but without specifying ac-countability mechanisms. Other instruments, such asthe ILO Tripartite Declaration of Principles concern-ing Multinational Enterprises and Social Policy, con-tain provisions for monitoring, complaints and �in-terpretation�, but some implementation proceduresare weak.

Several recent initiatives have paid greater attentionto accountability mechanisms. Referring to the UNNorms on the Responsibilities of Transnational Cor-porations and Other Business Enterprises with Re-gard to Human Rights, Simon Walker (Office of theUnited Nations High Commissioner for HumanRights / OHCHR) pointed out that, if eventually ap-proved in their current form by the UN Commissionon Human Rights, they would constitute a new in-strument with some implementation and monitoring

mechanisms. At the �harder� end of the regulatoryspectrum are treaty instruments, such as the Frame-work Convention on Tobacco Control, which, as Yachexplained, contain some provisions for liability andcompensation. Referring to the Aarhus Convention(Convention on Access to Information, Public Par-ticipation in Decision-Making and Access to Justicein Environmental Matters), Jeremy Wates (United Na-tions Economic Commission for Europe / UNECE)explained that the related Kiev Protocol on PollutantRelease and Transfer Registers adopted in 2003 obligeseach state party to establish a register to record thereleases and transfers of toxic pollutants. This Proto-col calls for mandatory reporting by governmentswhich, in turn, must oblige certain industries and sec-tors to report. �So indirectly it functions as a treaty,which is binding on TNCs.�

Is eclecticism positive or negative?Views varied considerably on the question of whetherthe eclectic nature of UN regulation is positive or nega-tive. Scholte remarked that the existing broad range ofregulatory instruments, institutions and approaches in-dicates a somewhat confused state of affairs, problemsof co-ordination, and that the UN needs to work to-ward a more integrated and coherent regulatory infra-structure. Dunning pointed out that in a context whereworld government does not yet exist, there are obvi-ous limits to international regulation. To deal with glo-balization, trade and FDI, �you need to establish somesort of ground rules. � The best we can do at thispresent juncture is through informal rules, conventionsand contracts.�

Cornelis van der Lugt (United Nations EnvironmentProgramme / UNEP) also pointed out that the UN isnot a world government with a unified position. Rather,it is made up of intergovernmental bodies, which in-evitably have different positions, approaches and ac-tivities. �We have never been given a mandate by gov-ernments to take one particular position.� He notedthat UN agencies have the important roles of examin-ing the strengths and weaknesses of different ap-proaches, developing benchmarks and indicators toensure progress, promoting independent verificationwhen voluntary approaches are adopted, and buildingcapacity to advance the implementation of intergov-ernmental agreements.

Utting agreed that the UN should play multiple roles,but he stressed the need to maintain a sense of bal-

13


a New Agenda?

ance. In practice, the UN is far more active on somefronts than others, paying considerable attention to�best practice learning�, for example, but largely ne-glecting critical research that exposes and analyses cor-porate malpractice. Similarly, in recent years more at-tention has been focused on promoting voluntaryinitiatives than on the consideration of legalistic ap-proaches.

Richter noted the tendency for voluntary approachesto crowd out legalistic approaches. The idea of launch-ing the Global Compact

took the wind out of the sails of the recom-mendations of the 1999 United Nations De-velopment Programme [UNDP] Human Devel-opment Report�[to establish] a binding code ofconduct for multinational corporations,

and some of the Compact�s corporate stakeholdersare now using the Compact to argue against otherregulatory initiatives such as the UN Norms on theResponsibilities of Transnational Corporations andOther Business Enterprises with Regard to HumanRights.

Yach pointed out that different problems require dif-ferent approaches. Referring to the cases of tobaccoand food, he outlined the varied regulatory routes be-ing pursued by the WHO. In the case of tobacco, bothcorporate self-regulation and national laws had failedand an international treaty had become necessary inthe form of the Framework Convention on TobaccoControl, �including liability provisions and the po-tential use of litigation and compensation�. The regu-latory approach recently adopted in the case of thefood and beverage sector is different, focusing farmore on the promotion of corporate self-regulationand multistakeholder approaches. Some commercialactivities, such as marketing to children, need to betightly regulated; others can be addressed throughvoluntary approaches.

The Global CompactWhat regulatory role should the Global Compact play?Views on this question were sharply divided. Richtersuggested that the Global Compact may do less �tohold corporations accountable to the peoples of theworld [than to] help corporations rule the world�, andthat it should be disbanded. Not only is it crowdingout other regulatory options, she said, but its compli-ance mechanisms are weak and it opens up spaces forTNCs to gain influence in public affairs.

Alison Linnecar (Geneva Infant Feeding Associa-tion / GIFA) felt that the Global Compact under-mines efforts to promote enforceable national legis-lation in relation to the marketing of breast-milksubstitutes. Instead of legislation that involves moni-toring and sanctions, there has been a shift �towardthis very �touchy-feely��arrangement that is theGlobal Compact�. The voluntary approaches pro-moted by such initiatives facilitate the efforts ofNestlé and some other companies that adopt theirown codes instead of complying with the interna-tional code or national law.

Dunning stressed that the Global Compact shouldbe seen as an instrument that can strengthen theground rules for globalization, trade and investmentthrough informal arrangements, and that such a roleis important in a context where �world govern-ment� and corresponding regulatory instrumentsdo not exist. Justice argued that the potential con-tribution of the Global Compact is not in estab-lishing rules��better codes of conduct and rulesfor companies already exist�; rather it should con-stitute a forum or mechanism for dialogue betweenbusiness, trade unions and other stakeholders. Vander Lugt claimed that, given existing governancegaps, the Compact provides a means of engagingnon-state players in the implementation of inter-national laws. How exactly this should be done isstill being worked out, but it is for precisely thesereasons that the Compact is constituted as a dia-logue and a learning forum.

Referring to the Global Compact�s role in promot-ing dialogue, Zammit said that the key issue revolvesaround what the dialogue should be about. Shouldit centre only on human rights, labour and envi-ronmental issues? She noted the quite legitimatecalls from some quarters for the inclusion of edu-cation, health and other development dimensions.Furthermore, she argued, basic questions about thedesirability and purpose of partnerships are alsomissing from the agenda. Another participant notedthat by focusing on the behaviour of individualfirms and specific issues such as labour standards,the Compact ignores some of the �wider issues�.In the cocoa industry, for example, there is a greatdeal of attention to improvements in labour stand-ards in the supply chain, �but not what actuallydrives commodity prices down and what keepsthose labour standards low�.

14


Dunning observed that patterns of ownership, a firm�saccess to resources and its capabilities are important,but he emphasized the role of institutions.

It is these norms of behaviour, governance, cul-tures, conventions and codes of conduct whichdetermine the way in which the firm (and otherparticipants in society) �play the game�. In a glo-balizing economy, the CSR of TNCs is espe-cially influenced by the content and quality oftheir internal institutions and those of the otherorganizations of global capitalism with whomthey have associations.

The implications of this institutional analysis are that(i) the content and quality of CSR are likely to varyconsiderably by country, sector and firm; (ii) given in-

IV. Towards a New Agenda?

Conference discussions on how to construct an agendathat effectively addresses the limitations of CSR and vol-untary approaches were wide-ranging, but centred on fivesets of issues: the role of institutions; bottom-up and�South-centred� approaches; the need for a more nuancedunderstanding of the relationship and complementaritiesbetween voluntary and legalistic approaches; a new regu-latory infrastructure; and the politics of regulatory change.

The importance of institutionsThe scope, scale and quality of CSR essentially dependon the institutional and political context in which com-panies operate.

B O X 2OTHER WAYS TO PROMOTE CSR AND ACCOUNTABILITY

How proactive can UN agencies be in promoting CSR and corporate accountability? In addition tosetting norms, and promoting policy dialogue and best-practice learning, other concrete suggestionsemerged at the conference.

Follow-up by UN SecretariatsBendell suggested that UN agencies and officials should be constantly reminding member states oftheir commitments under international law. Some have already adopted a leadership role in this re-gard, but others remain far more cautious. Yach agreed that the role of UN agencies and internationalcivil servants needs to be reviewed: �too many agreements�get agreed between member states andthat is seen as the end of the road. � The hope is that the Secretariat will be too weak or too reluctant,or too financially stretched, to do anything with them�.

Using the UN�s procurement and investigative powerThe UN could employ its procurement system to influence business behaviour. Further to a questionfrom George Starcher (European Bahá�í Business Forum) as to whether the UN uses its buying powerto promote CSR, Zeldenrust stressed the importance of engaging large institutional buyers, and ofdeveloping a UN strategy of purchasing from companies that comply with Global Compact and otherprinciples and norms. The UN �needs to start mapping its own supply chains�if we demand that ofany given retailer, I don�t see why we shouldn�t demand it of the UN system�. Drawing parallels withthe WRC, she also proposed the establishment of �a whistle-blower complaints mechanism� and aninvestigative procedure; and, in proven cases of malpractice, the UN should to use its leverage tosecure improvements in company performance.

Putting information in the public domainAnother proposal centred on greater transparency. O�Rourke suggested that the information gener-ated, for example, by the ILO on standards and practices of specific companies, which is confidential,should be publicly available. �It is critical to move beyond this as an academic and anonymous exer-cise to something that would allow key stakeholders to evaluate and compare the performance offirms and brands.� Standing noted that a proposal is currently being considered to issue certificatesof good conduct on the basis of the information acquired through the ILO surveys, which could beused for various purposes, including tendering.

15


a New Agenda?

creasing interconnectivity, cross-border alliances andnetworks, CSR is being strongly influenced by devel-opments associated with the global institutional infra-structure; and (iii) there are different institutional routesor approaches to CSR. In short, �a �one-size-fits-all�approach is unlikely to succeed�.

Amalia Waxman (WHO) noted various institutionalfactors underpinning CSR in her comments on the en-gagement of food and beverage corporations with theCSR agenda and, more specifically, with issues relatedto diet, nutrition and health. Such factors include in-creasing pressure from the media, politicians, consumergroups and public health organizations; increasing riskof litigation and pressure from financial institutions;and government and international regulation, or thethreat thereof. She noted the evolution of levels andforms of corporate resistance to assuming greater re-sponsibility. Initial resistance�for example, to acknowl-edging the scale of the problem in developing coun-tries, or recognizing advertising to children as an issuerelevant to public health and diet�has declined, andsome TNCs are now exploring approaches for dealingwith obesity. The preferred approach of business, how-ever, centres on corporate self-regulation as opposedto MSIs or working in tandem with other regulatoryapproaches. And some companies are not reassessingtheir business strategies to deal with the challenge ofnon-communicable diseases and obesity:

[T]he shift in approach required from the in-dustry is to fully recognize that a paradigm shiftis needed from seeing diet and physical activityas a personal responsibility, to [seeing these as]a broader responsibility of the community atall its levels.

Referring to Mexico, Barkin argued that progress in re-lation to corporate responsibility depends crucially onthe institutional and regulatory context in which it takesplace, and that this context is contingent on whetherone is dealing with social or environmental dimensions.

Progress in relation to corporate social respon-sibility will require an alternative governmentpolicy that does not sacrifice labour standardsfor the goal of job creation, or neglect certainregions of the country. Progress in relation tocorporate environmental responsibility needs togo beyond a narrow eco-efficiency approachand take into account the environmental dan-gers that result from the changing productivestructure that promotes industrialization in thenorthern arid and semi-arid regions.

Richter was critical of the tendency of many in theCSR community to attribute CSR practices to corpo-rate leadership, without recognizing the broader con-text, including regulatory and civil society pressures:�it is very important to refrain from giving anycredit�without having looked at all the contribut-ing circumstances�.

These and other comments also reminded conferenceparticipants of the importance of historical contextand analysis for understanding the trajectories and pros-pects for CSR. Fig brought this out clearly in his pres-entation on CSR in South Africa. And Hasnain agreed:�we really seem to be suffering from collective amne-sia when the latest fashion hits the road�. He recalledthat in some Southeast Asian countries both the publicand the private sectors play an important role in pro-viding social services, such as education. To understandtheir roles, it is necessary to take on board historicaland cultural aspects concerning state-private sector re-lations, as well as social cohesion and conscience.

Bottom-up and South-centred approachesSeveral conference speakers emphasized the role oflocal actors and institutions, and the need for greaterparticipation of stakeholders from developing coun-tries, in shaping the CSR and corporate accountabilityagendas. Some noted not only that workers and tradeunions need to be more directly involved in CSR deci-sion-making, but also that one of the purposes of CSRshould be to empower workers and strengthen work-place democracy.

Murphy stressed this �bottom-up� approach when re-ferring to action-research conducted by the NewAcademy of Business. The CSR agenda needs to drawfar more on developing country concerns, and onexisting innovative experiences. �A philosophy ofservice and solidarity, not patronage, is important forfuture work on ethical trade.� Codes of conduct re-quire new design and implementation procedures�or �participatory workplace appraisal��that empha-size the priorities of workers, engage workers in theirelaboration and monitoring, and involve incentivesfrom retailers. A project on social marketing in Ghanafound that success and sustainability require not onlyan effective message, but also a multistakeholder ap-proach involving workers; government bodies; local,national and international sponsors; and the use andmobilization of local skills and enterprise. Work inCentral America, focusing on ways to involve women

16


workers in the design and implementation of codesof conduct, found that

codes of conduct are currently failing to meettheir potential to improve the lives of manyworkers because they are not being developed,implemented and monitored in partnership withtheir intended beneficiaries.

Issues of concern to women workers�such as age andsex discrimination, harassment, freedom of associationand collective bargaining�are often included in codes,but are poorly implemented. Implementation and moni-toring are currently failing due to limited training ofworkers and management; the fact that management isforewarned of visits; and little consultation with, andinvolvement of, workers. In some countries, however,the emergence of local monitoring groups that useparticipatory workplace appraisal methods seems tobe a positive development.

Janelle Diller (ILO) emphasized the importance ofencouraging broad-based industry-level partnershipsthat contribute to the development of local institutions.Referring to the example of an ILO programme toeliminate child labour in the cocoa sector in five WestAfrican countries, she noted:

these partnerships can engage enterprises,employers� organizations, unions, co-operatives,governments and related CSOs in programmesthat combine globally agreed values, local poli-cies, and monitoring and certification capacities.

Dunning observed that there is a constructive rolefor both top-down and bottom-up approaches. Top-down initiatives, such as the Global Compact, as wellas legislation, are more likely to reduce bad behav-iour, whereas bottom-up approaches are more likelyto foster good behaviour. At the same time, he recog-nized that different stakeholders�particularly gov-ernments of developing countries�might have dif-ferent views on the contribution of CSR to theireconomic and social objectives; and of the appropri-ate top-down and bottom-up policy and other insti-tutional measures required to achieve these objectives.

Articulating voluntaryand legalistic approachesVarious speakers outlined deficiencies in the way therelationship between voluntary and legalistic ap-proaches is currently framed in the mainstream CSRagenda. Justice criticized the simplistic notion that CSRis about going beyond minimum binding norms

through voluntary approaches. Such an interpretationis flawed on various counts. First, it assumes that therealm of what is binding has already been agreed upon,which is not the case. Second, some voluntary initia-tives actually constitute a mechanism for redefiningresponsibilities downward. Third, the distinction com-monly made between �voluntary� and �binding� ap-proaches is often misplaced. Societal norms and rulesare sometimes enshrined in law and are binding; some-times they are expressed informally and involve non-binding expectations. But this does not mean that theyare �optional�. At the international level, instrumentsof TNC regulation such as the OECD Guidelines forMultinational Enterprises and the ILO Tripartite Dec-laration of Principles concerning Multinational Enter-prises and Social Policy are non-binding, but they arenot optional; rather, they are �applicable�, in the sensethat they apply to all relevant companies.

Richter emphasized that voluntary approaches can beused to suppress the consideration of legalistic ap-proaches, reminding the conference of the findings ofthe Commission on Global Governance in 1995:

In order to democratize global governance, oneof the major tasks is to subject �the rule of ar-bitrary power�economic, political and mili-tary�to the rule of law within global society�.It is amazing to see how the discussions aboutCSR-based initiatives continue to divert atten-tion from the fact that UN member states areneglecting such a crucial part of their mandate.

To address this situation, she said, new attitudes andapproaches are required (see box 3).

In relation to calls for stronger regulation, a partici-pant reminded the conference that one of the rea-sons why the CSR discourse and agenda have takenoff in the first place is due to widespread concernsthat governments are �not working� and that there isa need to engage other parties. Legal complianceshould not be seen as anathema to the business com-munity. In fact, it is an important component of thebusiness case for CSR, along with other aspects suchas risk management, brand reputation and humancapital development.

Wates noted that many TNCs affected by toxic releaseand pollution registers in the United States and Eu-rope �ended up welcoming [them] because [they] es-tablished a level playing field�. Regulatory approaches,therefore, need not be adversarial.

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a New Agenda?

Wong was of the opinion that the only way to avoidthe �privatization� of corporate responsibility, and�selective reporting, selective responsibility and se-lective engagement�, is through a dynamic combina-tion of voluntary and regulatory approaches. The lat-ter include regulation through independent workers�organizing, regulation through civil campaigns and�naming and shaming�, and regulation by the state,particularly in relation to the implementation of na-tional and international labour law and regulation ofinvestment liberalization.

Mia Horn af Rantzien (Ambassador, Ministry for For-eign Affairs, Sweden) observed that a large numberof norms and instruments already exist, and that thereis a need to understand how all the different parts ofthe system work together, which parts work well,which do not, and which legal frameworks and in-struments need to be further developed.

The possibilities of articulating voluntary and legalapproaches were outlined by several speakers. Wardobserved that the scope for articulating voluntary andlegal approaches is more favourable today than in thepast, partly due to the reassessment of the role of thestate as a regulatory institution by key internationalplayers such as the World Bank.

Referring to the debates on CSR and the work ofthe ILO, Diller noted that a �key issue has been how

to build bridges between self-regulation and govern-ment policies to ensure that the effects of CSR trulycomplement national efforts�. To do this, it is nec-essary to align �the targets within codes, reportingand certification systems, and the criteria adoptedby socially responsible investment funds�with [a]universally agreed framework of goals and priori-ties� to prevent �picking and choosing�. The meth-ods for achieving this consist of social dialogueamong �freely chosen representatives of those af-fected�, accountability mechanisms such as grievanceprocedures and training, and corrective action andremedies. To be development friendly, CSR needs tocontribute to, and not undermine, the developmentof SMEs, institutions of industrial relations such aslabour inspectorates, trade unions that also repre-sent women workers, and social dialogue mecha-nisms. When assessing the effectiveness and legiti-macy of new CSR and corporate accountabilityinstitutions, it is important to judge them in relationto three yardsticks. Are they serving to strengthenlocal institutions? Are the participants those mostconcerned? Are international standards determiningthe reference points? These features are fundamen-tal to the ILO Tripartite Declaration of Principlesconcerning Multinational Enterprises and SocialPolicy��the mother of all CSR benchmarks��andhave also been embraced in the recent work of theWorld Commission on the Social Dimension of Glo-balization in its consideration of CSR issues.

B O X 3NEW ATTITUDES AND APPROACHES

UN agencies and member states should support an agenda that:

! �create[s] space for open, honest debate on the relationship between initiatives basedon so-called corporate social responsibility and approaches which�see [corporations]as actors who have a fiduciary duty to make profit for their shareholders�;

! �discard[s] false dichotomies from documents and UN discourse��for example, label-ling critics of CSR and partnerships as adversaries when they are simply advocatingthat corporations should be kept at �arm�s length�, and �pitting �voluntary� against legallybinding regulations�; and

! support[s] moves to establish binding regulation for TNCs.

Source: Richter

18


Referring to the World Investment Report 2003 � FDIPolicies for Development: National and International Perspec-tives, Ludger Odenthal (UNCTAD) outlined the pos-sibilities for linking concerns for �good corporate citi-zenship� with international investment agreements(IIAs) (see box 4). One of the underlying concernsthat has prompted UNCTAD�s work in this area isthe fact that the CSR agenda has often sidelined eco-nomic development dimensions.

The articulation of voluntary and legalistic instru-ments may also be said to occur when regulatorymechanisms and institutions are developed in stages.Singh proposed that an �international competition au-thority� be developed in stages, as a means of mak-ing such an authority more politically acceptable. Ini-tially it may have no coercive powers, but simply beable to monitor and report on abuses of dominantmarket positions and mergers. Over time, nationscould work toward greater co-operation by giving thisauthority more power to enforce its rules.

Dunning observed that informal rules and social con-ventions often constitute a preliminary phase in thedevelopment of regulatory institutions��a first step�.Scholte also noted that voluntary approaches consti-

B O X 4EMBEDDING CSR IN INTERNATIONAL INVESTMENT AGREEMENTS

! �Good corporate citizenship principles� could be embedded in international agreements,such as the OECD Guidelines for Multinational Enterprises.

! Bilateral investment treaties could call on companies domiciled in countries that havesigned on to the OECD Guidelines to adhere to them.

! The preambles of IIAs could contain references to corporate citizenship objectives; whilenot linked to operational provisions, �it clearly helps or affects the interpretation of theprovisions and the objectives�.

! Some bilateral investment agreements, as well as the OECD Guidelines, could requestsignatory governments to create procedural obligations and mandatory follow-upmechanisms.

! Legally binding provisions could be incorporated into IIAs, as has occurred in certainareas such as technology transfer.

Source: Odenthal, referring to the World Investment Report 2003

tute a stop-gap measure that can play a role, albeitquite limited, until more effective binding approachescan be developed.

The relationship between voluntary and legalistic ap-proaches is also apparent in other respects. The merethreat of legalistic regulation often prompts TNCs toadopt voluntary CSR initiatives. Yach pointed out thatthis occurred when the WHO was engaged in effortsto establish the Framework Convention on TobaccoControl. �While we were doing this, what were thecompanies doing? They were embarking on one ofthe most extensive campaigns to try and recast them-selves using the corporate social responsibility lan-guage.� Utting noted that some international codes,which are voluntary in the sense that they are neitherbinding nor prescribe penalties, articulate with legal-istic approaches at the national level. The InternationalCode for the Marketing of Breast-Milk Substitutes,for example, calls on governments to internalize itsprovisions in national law.

The need for a newregulatory infrastructureVarious presentations adopted a more visionary per-spective, emphasizing the need for new regulatory

19


a New Agenda?

bodies to deal with globalization and corporate domi-nation of the global economy, as well as the concernraised by Ward and others that emerging instrumentsor proposals involving litigation, national legislation,the UN Norms on the Responsibilities of Transna-tional Corporations and Other Business Enterpriseswith Regard to Human Rights, and the Global Com-pact are insufficient or weak.

According to Justice, there is a

big imbalance between global rules�in theeconomic area and in the social area. Trying tobalance intergovernmental agreements con-cerning property rights with voluntary initia-tives�concerning human rights is only goingto end in tears.

Singh stressed the major contradictions between theinterests of multinationals and those of developingcountries that need to be addressed through the crea-tion of new regulatory authorities. A fundamental prob-lem hinges on the principle of national treatment,�which amounts to saying that corporations should havethe right to establish any business, anywhere, withoutany hindrance, unless similar restrictions are imposedon a host country�s firms�. This impedes the capacityof developing countries to strengthen their own firmsand to follow the path and policies pursued in the pastby today�s developed countries. It can also impede eco-nomic efficiency, competition and development, notleast through transfer pricing and cartel-type price-fix-ing mechanisms that have siphoned billions of dollarsfrom developing countries. To address this situation,he said, it is important to establish an internationalcompetition authority with powers to prevent multina-tional firms from abusing their dominant positions andto keep international markets contestable, both nowand in the future.

Scholte supported the establishment or strengtheningof five regulatory bodies at the international level. Inaddition to what he called a �global competition (oranti-trust) authority�, they include a global consumerprotection agency, a global labour organization, a glo-bal environmental organization and a global tax author-ity. Competition and consumer protection could fallwithin the remit of the World Trade Organization(WTO), but this organization would need to be inte-grated into the UN system. He admitted that such pro-posals are visionary, if not utopian. Their viability de-pends, to a large extent, on strengthening the capacity,

competencies and democratic credentials of the UnitedNations and its agencies. Progress toward such a regu-latory system also depends on overcoming resistancefrom both TNCs opposed to regulatory mechanismsthat might constrain their activities, and neoliberal stateauthorities opposed to the construction of social de-mocracy on a global scale and the transfer of authorityto global institutions. Furthermore, there is

as yet no strong public constituency to resistthis opposition and press for new or upgradedglobal institutions�few amongst�the so-called anti-globalization and alter-globalizationmovements�are actively campaigning forthe[se] kinds of bodies.

Newell raised the concern that the centralization ofdecision making in global institutions carries with itthe risk that business can �capture� the decision-mak-ing process. And given the lobbying influence ofTNCs, he asked, is it realistic to suppose that effec-tive regulatory institutions or a corporate accountabil-ity convention will ever be approved? This raises thequestion, therefore, of whether other political proc-esses need to be considered.

Also visionary was Ward�s suggestion that two of thebasic tenets of international and company law need tobe questioned. One involves the fact that the complexglobal structure of TNCs makes it very difficult to iden-tify which entity has responsibility for malpractice.

Legal mechanisms and intergovernmental co-operation based on the notion of territorialsovereignty�where governmental jurisdictionmostly ends at national borders�do not matchthe reality of how TNC networks operate.

The other, she said, relates to

the principle of limited liability, the central or-ganizing notion for the allocation of risk withincorporations, [which] generates incentives toallocate risk in ways that leave workers, com-munities and the environment without mean-ingful redress. While we see an active debatetaking place on international trade rules andsustainable development, no such debate cur-rently exists in relation to company law and itsimplications for sustainable development.

Talk or action on these fronts is often dismissed as�radical� or is, in the case of the limited liability is-sue, off-limits entirely. But is it so radical, she asked,to want to find a solution to real-life situations where,for example, a company in the United Kingdom is

20


obliged to close down health-threatening mercuryoperations but then relocates these activities to a de-veloping country where health impacts are worse?�There is a rights-based argument and a fundamentalpoint of principle here, but we don�t yet have themechanisms for addressing this.�

Human rights law

Regarding the task of developing new regulatory in-struments and institutions, various speakers referredto the actual and potential role of the UN humanrights machinery and human rights law, in particularthe Norms on the Responsibilities of TransnationalCorporations and Other Business Enterprises withRegard to Human Rights. Walker outlined their con-tent (see box 5) and status, as well as the role of dif-

ferent UN human rights entities in relation to CSRand corporate accountability. The functions of theSub-Commission for the Promotion and Protectionof Human Rights include undertaking studies on is-sues relevant to human rights and making recommen-dations to the Commission on Human Rights. Hav-ing facilitated the process of designing the Normsthrough a working group of experts, the Sub-Com-mission also proposed a monitoring role through theworking group, whereby it could receive and analyseinformation concerning the negative impact of busi-ness activities. For the Norms to acquire politicalweight and legitimacy, however, they must be ap-proved by the Commission on Human Rights, whichis composed of selected member states. Until theCommission undertakes formal consideration of the

B O X 5THE UN NORMS ON THE RESPONSIBILITIES OF TNCS AND OTHERBUSINESS ENTERPRISES WITH REGARD TO HUMAN RIGHTS

�The Norms set out four areas of human rights obligations�the right to equal opportunity and non-discriminatory treatment, the right to security of persons, rights of workers, and respect for nationalsovereignty and human rights. Further, the Norms include obligations with regard to consumer pro-tection and environmental protection. The Norms also provide for their implementation and have asection on definitions. Key elements of those provisions include:

�First, business entities shall ensure equality of opportunity and treatment with a view to eliminatingdiscrimination based on sex, race, religion and other recognized categories of individuals. The princi-ple of non-discrimination is a basic principle of human rights law�international human rights treatiesrecognize the responsibility of private actors not to discriminate. However the Norms go further andascribe direct responsibility for ensuring equality and protecting against discrimination.

�Second, business entities shall not engage in or benefit from war crimes, crimes against humanity,genocide, torture, forced disappearances, forced or compulsory labour and a range of other abusesof the right of the security of the person. This provision is important given cases at the domestic andregional levels considering the collusion of businesses with the action of security forces in Myanmarand Nigeria.

�Third, business shall recognize the right to collective bargaining. While this might seem fairly obvi-ous to a human rights audience, many of the voluntary codes of conduct on corporate social respon-sibility do not include recognition of collective bargaining�yet from a human rights perspective, thisis critical.

�Finally, the sections on consumer protection and environmental protection are relatively novel ininternational human rights law. Significantly, both sections require business to comply with theprecautionary principle, which is traditionally a principle of environmental law rather than humanrights law.�

Source: Walker

21


a New Agenda?

Norms, the role of the OHCHR remains limited toproviding administrative support to the Sub-Commis-sion, mediating debates and disseminating informa-tion.3 This role is particularly important in relationto bridging the knowledge gap and communicationdivide between governments, business and civil soci-ety�and can serve to �highlight the legitimacy ofthe concerns of different communities while at thesame time dispelling some myths�. Currently, imple-mentation of the Norms depends crucially on theroles of both NGOs and business: NGOs, for ex-ample, can use them to hold business accountable, asAmnesty International has done. They can also workwith business to pilot the Norms, and companies canadopt them as the basis for a code of conduct.

The potential and limits of the UN Norms on theResponsibilities of Transnational Corporations andOther Business Enterprises with Regard to HumanRights were discussed by several participants. Richterand Bendell considered it essential to build up a po-litical momentum to get the Norms approved and ef-fectively implemented. Others were more cautious.Justice noted that while the drafting process had man-aged to improve their content, problems remain, par-ticularly regarding the fairly weak implementationclauses and the reporting guidelines that do not specifywhat type of reporting.

The politics of CSRThe conference discussions revealed that CSR is verymuch an arena of political contestation, both in the�macro� sense of defining relations between the mar-ket and the state, and between different actors andsocial groups, and in relation to participation in deci-sion making.

Who participates and who decides?

A crucial challenge for the future is how to democra-tize CSR decision making. A major concern regardingCSR centres on its top-down, Northern- and �expert�-driven character. Various speakers pointed out that thekey issue is not simply what is on the agenda, andwhether policy statements become operational, but

how the agenda is negotiated and who participates inits design and implementation.

At the company level, Standing stressed, the CSRagenda needs to be based on bargaining and negotia-tion involving management, workers and civil societygroups. In relation to international MSIs, Ward notedthat CSR tools, such as codes of conduct, labellingand certification, are being developed fairly rapidly,but less attention is given to developing effective gov-ernance mechanisms. �They are largely driven by con-sumers based in the North. � [Participatory] gov-ernance structures�are largely unevolved.�

Several participants noted some important differencesbetween the ILO Tripartite Declaration of Principlesconcerning Multinational Enterprises and SocialPolicy, and other international instruments, such asthe OECD Guidelines for Multinational Enterprisesand the UN Norms on the Responsibilities of Trans-national Corporations and Other Business Enterpriseswith Regard to Human Rights. Justice emphasized theimportance of drawing up international standards onthe basis of negotiations involving representativestakeholders. Diller observed that the �built-in premise[of the ILO Declaration is] that MNEs cannot actresponsibly in isolation�. Regarding the process ofdeveloping new international agreements, she noted,�there need to be safeguards to ensure transparencyand representative processes�.

The challenge is not only to create forums and insti-tutions where various interests and stakeholders arerepresented, but also to ensure that representation isgenuine and, once at the negotiating table, that thestakeholders involved have real bargaining power.

Alva Pino pointed out that in some developing coun-tries spaces for multistakeholder dialogue and con-sultation have opened up, but the negotiating andbargaining power of various stakeholders is veryweak. �This situation raises some fundamental ques-tions regarding �stakeholder theory�.� Furthermore,the stakeholder model is undermined by the fact thatit is often the companies themselves that select thestakeholders involved.

Richter observed that the mainstream CSR agenda andcorporate public relations serve a political function,which involves attempting to set the agenda and en-gineer a shift from stronger regulatory approaches to-

33333 Subsequent to the UNRISD conference, the Commission onHuman Rights met in April 2004. It affirmed that the Sub-Com-mission should not perform any monitoring function. It also re-quested the OHCHR to compile a report setting out the scopeand legal status of existing initiatives and standards relating tothe responsibilities of TNCs and related enterprises with regardto human rights.

22


ward self-regulation and voluntary initiatives. Activiststrategies must not only shift the balance of socialforces, but also expose the financial and political linksthat enable corporations to influence public decisionmaking. A common thread running through severalpresentations and commentaries concerned the needto counteract corporate power by strengthening al-ternative centres of power.

Strengthening public governance

A recurring theme throughout the conference centredon the relationship between corporate behaviour andthe roles of the state and civil society. The importantquestion is how these two sets of actors and institu-tions combine to promote effective public governance.

Referring to South Africa, Fig pointed out that

any �new agenda� requires structural changes, inwhich partnerships only become meaningful whenco-ordinated and led by a transformative state aspart of a wider developmental plan. Under cur-rent conditions, this requires an exceptionallyactive and vigilant civil society, able to demandaccountability from corporations and the state. Asin the case of AIDS and antiretroviral treatment,we are only beginning to see what is required�.

Several speakers reminded conference participants ofthe serious constraints that affect the capacity ofNGOs and consumers to exert social and marketpressure. Reflecting on the campaigning experienceof Friends of the Earth in relation to corporate mal-practice, Bennett highlighted the frustrations thatarise given the scale of the problems, the limited re-sponse of TNCs and the relatively weak capacitiesof NGOs. �For groups like us�the moment you feelthat you have given [the corporations] a good goingover, you have to start again.� He also noted thatconcerned consumers are faced with an impossiblesituation of having to acquire information aboutwhich of the thousands of product lines in super-markets have been produced in an environmentallyand socially sound way, and which brands and labelscan be trusted. For these reasons, voluntary ap-proaches confront major limits and suggest the needfor regulatory approaches.

In its regulatory armoury the WHO has a range ofinstruments including treaties, conventions, resolu-tions and codes. According to Yach, politics partlyexplains the limited adoption of such instruments�and the types of instruments actually adopted.

B O X 6BROAD-BASED COALITIONS

The challenges facing the corporate accountability movement are considerable, not least becauseresistance to international regulation is likely to be even stronger today than in the past, given theconsolidation of neoliberalism and corporate property rights in recent decades through, for example,the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the General Agree-ment on Trade in Services (GATS) and the North American Free Trade Agreement (NAFTA). It is nec-essary, therefore, to build or strengthen coalitions that embrace:

! managers and companies interested in �shifting CSR out of its current Pharisaic mentality,where companies try to show how good they are� to more meaningful efforts to tackle theproblems of the world; and

! groups and interests in developing countries, in order to overcome the present situationwhere such actors are often poorly represented in corporate accountability initiatives.

The academic community should engage with efforts to �shape decisions that shape people�s lives�rather than limiting its action to the generation of knowledge. �I�m beginning to think that we don�t lackthe knowledge�we lack the courage.�

Source: Bendel l

23


a New Agenda?

The International Code of Marketing of Breast-Milk Substitutes�was actually intended to bea treaty, but due to extreme lobbying by certainmultinationals and countries [in] the late 1970sand early 1980s, it came out to be what is theweakest form of international agreement�aresolution.

Furthermore, diverse constituencies resist regulation.

The public health community distrusts lawyers;the corporate world doesn�t want regulation; andmany officials who are within the WHO sys-tem see this as being unnecessarily messy andcomplex�.

Moreover, corporate sectors that face regulatorythreats adopt a range of tactics to thwart the policyprocess, such as disseminating �deceptive science�and infiltrating public policy institutions. He empha-sized that the adoption of international regulatoryinstruments related to health depends crucially notonly on government support, but also on civil soci-ety mobilization.

Another feature of public governance involves�policy autonomy�. Referring to public-privatepartnerships in developing countries, Zammit em-phasized the need to reassert national ownership ofdevelopment strategies and to create mechanisms toensure that CSR and partnership initiatives are com-patible with the policy frameworks, and developmentand investment priorities, established by the countryconcerned.

To deal with the problems of paternalism, windowdressing and coercion that often characterize CSRinitiatives, Standing stressed the importance of amodel, currently being applied by the ILO, based onseveral principles and processes. These include bar-gaining and stakeholder pressure; efforts to improvethe position of the worst-off and reduce gross in-equalities in income differentials; and strengtheningthe regulatory environment.

Ward summed up the importance of public governance.

It is increasingly recognized, and it has certainlycome across rather clearly in this conference, thatvoluntary corporate social responsibility worksbest where government and the public sector iseffective, predictable and clear; �where citizensand workers are empowered and human rightsare respected; and where principles and institu-tions of justice�, public participation and ac-cess to information are all recognized.

In closing the conference, Utting stated that the richdiscussions on what works and what does not, and onalternative approaches, indicate that much unfinishedbusiness lies ahead. It is also clear, he said, that thereare multiple roles that the UN can or should be playingto promote corporate accountability. They include normsetting and international regulation, inter-agency co-ordination; best-practice learning; engaging differentstakeholders in dialogue and concrete initiatives; andcritical research, monitoring and oversight. Althoughthe UN is active on several fronts, some significantimbalances in the relative importance assigned to thesedifferent roles need to be corrected. The ideas and con-cerns that surfaced at the conference�on ways of ar-ticulating voluntary and legalistic approaches, a newregulatory infrastructure, greater sensitivity to devel-opmental issues, the role of civil society mobilization,and the politics of CSR�suggest some of the crucialavenues along which UN thinking, policy and practiceshould proceed.

24


Monday, 17 November 2003

OPENING0945 � 1015 Thandika Mkandawire � United Nations Research Institute for Social Development

Peter Utting � United Nations Research Institute for Social Development

SESSION 1 CSR AND DEVELOPMENT: RESEARCH PERSPECTIVES

P A N E L 1 W H AT D I F F E R E N C E D O E S C S R M A K E T O D E V E L O P M E N T ?1015 � 1145 ! How significant are CSR initiatives in terms of their contribution to social

and sustainable development?

! What are the tensions and contradictions between CSR and development?

! What developmental issues are being ignored in the current CSR agenda?

C H A I R Asif Hasnain � Private Sector Development Branch, United NationsIndustrial Development Organization, Austria

SP E A K E R S David Fig � University of the Witwatersrand, South Africa

David Barkin � Universidad Autónoma Metropolitana-Xochimilco, Mexico

Monina Wong � Hong Kong Christian Industrial Committee, Hong Kong

David Murphy � New Academy of Business, United Kingdom

D I S C U S S I O N 1 What difference does CSR make to development?1145 � 1230

SESSION 2 NEW RELATIONS WITH TNCS

P A N E L 2 M S I S

1400 � 1500 ! Are multistakeholder initiatives an effective means of deepening and scaling up CSR?

! Are they overcoming the problems and limitations that characterize corporate self-regulation?

! Can they move from the current phase of pilot testing and experimentation to become a newsystem of regulation for corporate activity?

C H A I R Lorraine Ruffing � Enterprise Development Branch, United Nations Conferenceon Trade and Development, Switzerland

SP E A K E R S Deborah Doane � New Economics Foundation, United Kingdom

Dara O’Rourke � University of California-Berkeley, United States

Ineke Zeldenrust � Clean Clothes Campaign International Secretariat, Netherlands

D I S C U S S I O N 2 MSIs1500 � 1530

P A N E L 3 U N - B U S I N E S S PA R T N E R S H I P S

1600 � 1700 ! In terms of social and sustainable development, what has been the added valueof UN-business partnerships?

! What are the tensions and contradictions associated with UN-business partnerships?

! How have current partnership arrangements responded to criticisms and concernsabout their developmental and governance implications?

C H A I R Cornelis van der Lugt � Division of Technology, Industry and Economics,United Nations Environment Programme, France

SP E A K E R S Ann Zammit � Independent ConsultantJohn Dunning � University of Reading, United KingdomAmalia Waxman � World Health Organization, Switzerland

D I S C U S S I O N 3 UN-business partnerships1700 � 1800

Agenda

25


a New Agenda?

Agenda

Tuesday, 18 November 2003

SESSION 3 BEYOND CSR?

P A N E L 4 C S R F R O M A D E V E L O P M E N TA L P E R S P E C T I V E

0900 � 1000 ! How might the contradictions between TNC and developing country interests be managed?

! Is a new CSR agenda necessary? If so, what would a CSR agenda look like from adevelopmental perspective?

C H A I R Francisco Magno � La Salle Institute of Governance, Philippines

SP E A K E R S Ajit Singh � University of Cambridge, United Kingdom

Guy Standing � International Labour Organization, Switzerland

D I S C U S S I O N 4 CSR from a developmental perspective1000 � 1030

P A N E L 5 CO R P O R AT E AC C O U N TA B I L I T Y A N D I N T E R N AT I O N A L R E G U L AT I O N O F TNC S

1100 � 1200 ! From a political and developmental perspective, how significant are the recent proposalsand reforms associated with corporate accountability and international regulation of TNCs?

! Are new laws and institutions needed or are existing frameworks and instruments sufficientto curb corporate power and malpractice, and improve the developmental impacts of TNCs?

C H A I R Ambassador Mia Horn af Rantzien � Ministry for Foreign Affairs, Sweden

SP E A K E R S Jem Bendell � Independent Consultant

Janelle Diller � International Labour Organization, Switzerland

Dwight Justice � International Confederation of Free Trade Unions, Belgium

Halina Ward � International Institute for Environment and Development, United Kingdom

D I S C U S S I O N 5 Corporate accountability and international regulation of TNCs1200 � 1300

P A N E L 6 T H E R O L E O F T H E U N I T E D N AT I O N S I N C O R P O R AT E A C C O U N TA B I L I T Y

1415 � 1530 A N D I N T E R N AT I O N A L R E G U L AT I O N

! What role should UN institutions, old and new, play in the international regulation of TNCsand corporate accountability?

C H A I R Peter Utting � United Nations Research Institute for Social Development, Switzerland

SP E A K E R S Jan Aart Scholte � University of Warwick, United Kingdom

Judith Richter � Independent Researcher

Simon Walker � Office of the United Nations High Commissioner for Human Rights, Switzerland

Derek Yach � World Health Organization, Switzerland

Ludger Odenthal � United Nations Conference on Trade and Development, Switzerland

D I S C U S S I O N 6 The role of the United Nations in corporate accountability and international regulation1530 � 1630

26


David BARKIN � Universidad Autónoma Metropolitana-Xochimilco, Mexico

Jem BENDELL � Independent Consultant

Janelle DILLER � International Labour Organization, Switzerland

Deborah DOANE � New Economics Foundation, United Kingdom

John DUNNING � University of Reading, United Kingdom

David FIG � Sociology of Work Unit, University of the Witwatersrand, South Africa

Asif HASNAIN � Private Sector Development Branch, United Nations IndustrialDevelopment Organization, Austria

Mia HORN AF RANTZIEN � Ambassador, Ministry for Foreign Affairs, Sweden

Dwight JUSTICE � International Confederation of Free Trade Unions, Belgium

Francisco MAGNO � La Salle Institute of Governance, Philippines

Thandika MKANDAWIRE � United Nations Research Institute for Social Development, Switzerland

David MURPHY � New Academy of Business, United Kingdom

Ludger ODENTHAL � United Nations Conference on Trade and Development, Switzerland

Dara O’ROURKE � University of California-Berkeley, United States

Judith RICHTER � Independent Researcher

Lorraine RUFFING � Enterprise Development Branch, United Nations Conferenceon Trade and Development, Switzerland

Jan Aart SCHOLTE � University of Warwick, United Kingdom

Ajit SINGH � University of Cambridge, United Kingdom

Guy STANDING � International Labour Organization, Switzerland

Peter UTTING � United Nations Research Institute for Social Development, Switzerland

Cornelis VAN DER LUGT � Division of Technology, Industry and Economics,United Nations Environment Programme, France

Simon WALKER � Office of the High Commissioner for Human Rights, Switzerland

Halina WARD � International Institute for Environment and Development, United Kingdom

Amalia WAXMAN � World Health Organization, Switzerland

Monina WONG � Hong Kong Christian Industrial Committee, Hong Kong

Derek YACH � World Health Organization, Switzerland

Ann ZAMMIT � Independent Consultant

Ineke ZELDENRUST � Clean Clothes Campaign, International Secretariat, Netherlands

Speakers and Chairpersons

27


a New Agenda?

AIDS Acquired Immunodeficiency Syndrome

CCC Clean Clothes Campaign

CER corporate environmental responsibility

CETIM Centre Europe�Tiers Monde

CSO civil society organization

CSR corporate social responsibility

DFID Department for InternationalDevelopment (United Kingdom)

ETI Ethical Trading Initiative

FDI foreign direct investment

FLA Fair Labor Association

FSC Forest Stewardship Council

FWF Fair Wear Foundation

GATS General Agreement on Tradein Services

GIFA Geneva Infant Feeding Association

GM genetic modification

HKCIC Hong Kong Christian IndustrialCommittee

IBFAN International Baby Food ActionNetwork

ICFTU International Confederationof Free Trade Unions

IDS Institute of Development Studies

IIA international investment agreement

IIED International Institute forEnvironment and Development

ILO International Labour Organization

ISO International Organizationfor Standardization

MNE multinational enterprise

MSC Marine Stewardship Council

MSI multistakeholder initiative

MSN Maquila Solidarity Network

NAFTA North American Free TradeAgreement

NEF New Economics Foundation

NGO non-governmental organization

OECD Organisation for EconomicCo-operation and Development

Acronyms

OHCHR Office of the United Nations HighCommissioner for Human Rights

SAI Social Accountability International

SMEs small and medium-size enterprises

TNC transnational corporation

TRIPS Trade-Related Aspects ofIntellectual Property Rights

UK United Kingdom

UN United Nations

UNCTAD United Nations Conferenceon Trade and Development

UNDP United Nations DevelopmentProgramme

UNEP United Nations EnvironmentProgramme

UNECE United Nations EconomicCommission for Europe

UNICEF United Nations Children�s Fund

UNIDO United Nations IndustrialDevelopment Organization

UNRISD United Nations ResearchInstitute for Social Development

US United States

WEED World Economy, Ecologyand Development

WHO World Health Organization

WRAP Worldwide ResponsibleApparel Production

WRC Worker Rights Consortium

WTO World Trade Organization

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The United Nations Research Institute for Social Development (UNRISD) is an autonomous agencyengaging in multidisciplinary research on the social dimensions of contemporary problems affecting development.Its work is guided by the conviction that, for effective development policies to be formulated, an understandingof the social and political context is crucial. The Institute attempts to provide governments, development agencies,grassroots organizations and scholars with a better understanding of how development policies and processesof economic, social and environmental change affect different social groups. Working through an extensivenetwork of national research centres, UNRISD aims to promote original research and strengthen researchcapacity in developing countries.

Current research programmes include: Civil Society and Social Movements; Democracy, Governance and HumanRights; Identities, Conflict and Cohesion; Social Policy and Development; and Technology, Business and Society.

A list of the Institute�s free and priced publications can be obtained by contacting the UNRISD ReferenceCentre, Palais des Nations, 1211 Geneva 10, Switzerland; phone 41 (0)22 9173020; fax 41 (0)22 9170650;[email protected]; www.unrisd.org.

UNRISD work on Corporate Social Responsibility, and the conference itself, were partially funded by theMacArthur Foundation. UNRISD thanks the governments of Denmark, Finland, Mexico, Norway, Sweden,Switzerland and the United Kingdom for their core funding.

This UNRISD Conference News was written by Peter Utting, with assistance from Désirée Abrahams andAnita Tombez.

United Nations Research Institutefor Social Development (UNRISD)Palais des Nations1211 Geneva 10, Switzerland

Phone 41 (0)22 9173020Fax 41 (0)22 [email protected]

Printed in Switzer land GE.04-01814-July 2004-2,200 UNRISD/CN13/04/1 ISSN 1020-8054

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