Corporate Social Responsibility and Globalisation

An Action Plan for Business

Jacqueline Cramer

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351282628
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

Business in a globalised world is no longer only about profit. Companies that operate globally are increasingly being called to account over their social responsibilities to the workforce, local communities and the environment. Companies that take these responsibilities seriously are faced with a plethora of problems and dilemmas. For example, how can companies navigate the sea of tension between observing international rules of conduct and responding to specific local cultural circumstances? How can they ensure social responsibility in the product chain(s) in which they operate? And how can they best contribute to the local economy of developing countries?This book helps companies with good intentions but little experience to find answers to these questions and many others. The book offers concrete guidelines, step-by-step plans and practical examples based on the experiences of 20 diverse, large, medium and small companies that participated in the three-year Dutch programme "Corporate Social Responsibility in an International Context" organised by CSR Netherlands. Corporate Social Responsibility and Globalisation constitutes a guidebook and action plan to enable companies of all sizes to manage risk and seek out opportunities for engagement in their overseas operations.

1
Corporate social responsibility: a global challenge for business

Companies that operate globally are being increasingly asked to act in a socially responsible manner. In addition to achieving financial returns, they are also expected to care for the environment, their employees and the local community. In order to make sure companies observe certain rules of conduct, various international institutions have drawn up guidelines and standards during the last few decades. Observance of these rules of conduct is gaining an ever more important place on the company agenda. A company cannot permit itself to be publicly criticised because of poor working conditions, environmental scandals or a violation of human rights. Such criticism damages a company’s reputation, which may result in a fall in sales figures and employees becoming demotivated. Some companies have turned this threat into an opportunity and now present themselves as socially responsible companies. By being a socially responsible enterprise, they try to increase their market share, innovative power and staff motivation to work for the company. Moreover, they try to achieve cost advantages, while simultaneously shaping their own moral responsibility. This ambition is called corporate social responsibility.

Companies that embrace the concept of corporate social responsibility do not wait until the government imposes particular rules or laws. They look ahead and determine for themselves which environmental and social measures they are able or willing to take. They choose those measures that fit in with their own vision and business strategy. But they also take account of what the outside world asks of them. They have developed an identity that is based on finding a responsible balance between people (‘social well-being’), planet (‘ecological quality’) and profit (‘economic prosperity’) (see Box 1.1). Their attention shifts from gaining purely financial profit to sustainable profit. And finally they want to communicate openly about these things with their employees and with the diverse societal groups that directly or indirectly have a stake in their company (the ‘stakeholders’). That, in a nutshell, is what corporate social responsibility means (Cramer 2003).

Thus, the choices a company makes concerning people, planet and profit depend on the company’s vision and strategy, but it is also important to take what the outside world expects from the company into consideration. This can create tension, particularly in an international context, because not everybody has the same attitude towards problems such as human rights, integrity and care for the environment. Nevertheless, every self-respecting international company has to know how to deal with such dilemmas.

Corporate social responsibility in an international context is not only high on the agenda of large, multinational companies. As a result of economic globalisation, smaller companies are also becoming more involved in a network of international suppliers and customers. Within this network, they are increasingly held accountable for certain activities in their product chains.

However, companies wishing to run an international, sustainable business encounter all sorts of problem. For example:

Box 1.1 The three pillars of corporate social responsibility are people, planet and profit

People relates to a range of subjects, including both internal and external social policies. This concerns not only the company’s own part in the chain, but also the rest of the chain for which the company can take responsibility.

Internal social policy includes the nature of employment, labour/management relationships, health and safety, training and education, as well as diversity and opportunities.

External social policy encompasses three main categories, each with several sub-categories, namely:

1. Human rights issues, including strategy and management, non-discrimination, freedom of association and collective bargaining, child labour, forced and compulsory labour, disciplinary practices, security practices and indigenous rights
2. Society, including community activities, bribery and corruption, financial contributions to political parties, competition and pricing
3. Product responsibility, including consumer health and safety, products and services, advertising and respect for personal privacy

Planet relates to the environmental impact of the company’s production activities: the use of scarce goods (such as energy, water and other raw materials) and the environmental impact in the product chain.

Profit stands for the company’s contribution to economic prosperity in the broadest sense. Here, a distinction is made between direct and indirect economic impact. Direct impact involves the monetary flows between the organisation and its key stakeholders and the impact which the organisation has on the economic circumstances of those stakeholders.

The indirect impact is related to the spin-off from company activities in terms of innovation, the contribution of the sector to gross domestic product or national competitiveness and the local community’s dependence on the company’s activities.

• How can companies find their way through the maze of guidelines and standards that international organisations have drawn up with regard to corporate social responsibility?
• How can they deal with the tension between observing the international code of conduct with regard to human rights, integrity and environmental policy on the one hand and local attitudes towards these themes on the other? Which rules and procedures can they use?
• To what extent does the interpretation of corporate social responsibility depend on the political culture of a certain country?
• How can they organise chain responsibility in the international product chain(s) in which they operate and how far-reaching is this responsibility?
• What contribution is expected from companies that operate internationally concerning the fight against poverty and strengthening the local economy of developing countries?
• What is the future for corporate social responsibility in an international context?

This book helps companies to find answers to these questions. It is based on the experiences of 20 large and smaller companies, which operate globally. Almost all of these companies have their head office in the Netherlands (see Appendix 1). The book is mainly aimed at companies wishing to be socially responsible with respect to their international activities, but which are not sure how to go about this. It is of particular interest to two groups of companies.

First, the book has been written for companies with branches in foreign countries and which are confronted with differences in political culture, morals and legislation concerning social and environmental policies. They must steer between internationally accepted guidelines and standards and what is accepted locally. Traditionally, it has mainly been international companies that have had to deal with these problems. However, as an increasing number of small and medium-sized companies now also cross international borders, it is also becoming a problem for this group of companies.

Second, the book is intended for companies wishing to be socially responsible in the international product chain(s) in which they operate. They are faced with the question of how to organise this chain responsibility and whom they must involve in it. As a result of the continuing internationalisation of product chains, these problems play a role in both large and smaller companies.

The book offers concrete guidelines, step-by-step plans and practical examples of company experiences and provides an insight into the importance of the corporate social responsibility in an international context subject. Using this book, companies can practise corporate social responsibility in an international context. Corporate social responsibility in a global world is therefore not a threat, but rather a challenge for business.

2
Observing international rules of conduct

2.1 A maze of international rules of conduct

The number of international rules of conduct with regard to corporate social responsibility has grown steadily, particularly since the end of the Second World War. The creation of these agreements has been linked to the globalisation process, which has become increasingly evident.

The first generation of international agreements were mostly decided on during the 1970s (Jenkins et al. 2002). These agreements were mainly intended to support governments in developing countries to control multinational companies that operated on their soil. Since the local legislation of these countries offered little footing, an international code of conduct was very helpful in those days.

The second generation of international agreements stems from the 1990s. Privatisation, free-trade agreements and continuing economic integration led to a change in attitude on the part of the governments of developing countries. Instead of controlling multinational companies, there was fierce competition between countries to attract such companies. At the same time, globalisation led to increased attention to corporate social responsibility. This was linked to a shift in power between national states, businesses and citizens. The market’s influence was increased as a result of globalisation of economic activities. More power meant greater responsibility. Citizens now also had more opportunities to exert their influence, partly as a result of the emergence of digital technology, which made it easier for them to communicate with each other worldwide and to expose scandals via the media. As a result, companies were forced to take the wishes and demands of the different stakeholders into consideration more often. Openness and transparency became keywords.

Internationally operating companies could not permit themselves to be criticised by the public with regard to child labour, terrible working conditions or environmental scandals. This was harmful to their reputation and gave no proof of corporate social responsibility. In order to ensure that companies observed certain rules, various international institutions, trade organisations, multi-stakeholder organisations and even individual companies have drawn up guidelines and standards concerning corporate social responsibility. A guideline contains guiding principles, while a standard states the output which is expected from companies.

All the guidelines and standards that have been drawn up are intended to offer guidance when giving shape to corporate social responsibility. Most of these rules of conduct are not legally binding, but they contain a moral obligation to act accordingly and can be disciplinarily enforced within a company. The intention and contents of these agreements do not differ greatly but, in practice, this maze of guidelines and standards often appears to be counterproductive, as people are no longer able to see the wood for the trees.

To create some order, a diagrammatical overview of the most important guidelines and standards has been made (see page 26). Based on this, a plan of action has been drawn up. Next, company examples will be used to illustrate that the further elaboration of this plan of action should be attuned to the specific context of the company at stake.

2.2 Plan of action

The plan of action consists of two actions, which are explained below.

To start with, companies are recommended to obtain an initial impression of their current situation regarding corporate social responsibility in an international context within their own company. This zero-assessment does not need to be too detailed. A rough assessment will suffice. After reviewing the available guidelines and standards, the OECD Guidelines for Multinational Enterprises (2000) turned out to be the best guidelines to start with. The UN Global Compact is a useful addition to this (www.unglobalcompact.org). Both are all-encompassing guidelines, which show many similarities. Action 1, therefore, is as follows:

Action 1: Assess the business’s current state of affairs regarding corporate social responsibility in an international context based on the OECD guidelines and determine priorities and a code of conduct based on this. Communicate these priorities and the code of conduct to the stakeholders.

The OECD (Organisation for Economic Co-operation and Development) guidelines are subscribed to by governments of the OECD member states and a growing number of other countries were added as a result of co-operation between the business world, the trade union movement and other social organisations. Governments subscribing to the OECD guidelines are expected to encourage companies to give shape to their activities both at home and abroad in a socially responsible way. The most important recommendations for companies, stated in the OECD guidelines, are summarised in Box 2.1.

The OECD guidelines ...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of boxes, tables and figures
• Preface
• 1 Corporate social responsibility: a global challenge for business
• 2 Observing international rules of conduct
• 3 Tension between observing international rules of conduct and local circumstances
• 4 Corporate social responsibility in different political cultures
• 5 Chain responsibility in an international context
• 6 The contribution made by international companies to the local economy of developing countries
• 7 The future of corporate social responsibility
• 8 Ten key practical experiences
• APPENDIX 1 The 'Corporate Social Responsibility in an International Context' programme
• APPENDIX 2 Main guidelines and standards for international corporate responsibility
• Abbreviations
• References
• Index