Corporate Social Responsibility (CSR): a Vehicle for International Solidarity?

Issue No : 75  April - June 2010

By Hilde Van Regenmortel

CSR gaining ground

 CSR is an old phenomenon and covers quite a diverse field of action, from environmental issues, to community or labour rights. The last decade, however, it has gained the attention and cooperation of plenty of NGOs, governments and international institutions. Indeed, many CSR mechanisms and instruments evolved following the consumer pressure in the West, who started using the companies’ Codes of Conduct to hold them accountable or to measure progress.  Gradually also they were able to raise these standards. These efforts led to a proliferation of practices, instruments and stakeholders.

 We have to acknowledge that a number of gains have been reached after nearly two decades of experimenting with ever more sophisticated instruments and mechanisms, usually with regard to the environment, to health and safety or other tangible working conditions. The most advanced form of CSR, namely the multi-stakeholder initiatives (MSIs¹), claim to have an impact on core labour issues, such as freedom of association and collective bargaining.² All the glossy yearly reports of the stakeholder meetings must show how serious they are about respecting workers’ rights.  Many private auditing and monitoring companies jumped in to play a role in the implementation of CSR: it became an industry, worth US$31.7 billion³ in 2007.

Hence, CSR has currently become one of the best accepted forms of international solidarity: one between consumers in the West and producers in the South via the involvement of well-known brands. The reason for its success is attributed to its win-win approach; indeed CSR claims that a business gain can be combined with better social practices, in particular with better labour practices.

CSR is gaining ground thanks to the heavy promotion by its proponents. Many international institutions or governments buy in and put huge development budgets aside for CSR initiatives. Indeed CSR fits perfectly in ‘good governance’, the current conditionality of development aid.  Today, many companies embrace one or more CSR instruments, preferably without any involvement of consumer groups. It has become a norm to do so, even though most companies, and especially at the bottom of the supply chains, do not adhere at all to the CSR claims. CSR did win the battle of ideas.

Yet, the lack of real teeth, the cost-efficiency, the sustainability and the potential for replication remain major issues for CSR experts to tackle.  The consumer activists are the first to acknowledge the flaws; so they engage again with the stakeholders in order to improve the system.

Underlying issues of CSR

But in our meeting, the participants avoided to get lost in the technicalities of such challenges. Instead we focused on the broader impact of CSR in our societies. A number of worrying issues came up.

First the participants brought up the differences between CSR defence mechanisms and trade union defence instruments. Basically, independent collective bargaining based on solidarity between workers - the cornerstone of trade union rights and the basis of workers’ power – is either avoided or undermined when CSR is being put in place.

Because the human resource department is – directly or indirectly – involved in organizing at the workplace, workers can no longer act independently from them. The so-called workers committees, which are the common CSR-driven proxy for genuine trade unions in China, are typical in this respect. Issues are collected from the workers, and then solved through cooperation between their representatives and management. Yet, these representatives act under the wings of the management: they depend on them for their information, have no legal protection and do not have a back-up by union federations or a grassroots labour movement.  They would face risk of dismissal or non-reengagement if there is a problem, or need to resist status or career prospects.  In CSR approaches, solutions to labour disputes are therefore easily manipulated by the human resources office. 

More importantly, the workers’ representatives slowly become integrated in the human resources department. Having to apply the win-win approach, but without adequate information, they contribute more to the welfare of the company than of the workers. Their identity is being built around the company’s goals, rather than around a free and independent union, let alone working class. They become a mediator who sells the company’s policy measures, rather than a real workers’ delegate.

This leads to another effect: the pressure mechanism, namely the possibility of collective action based on solidarity between workers, can not be a part of the CSR toolbox.

All this sounds like the practices of a yellow union; yet - under the name of CSR – it is considered a legitimate ‘good practice’. Not surprisingly, such unions are likely to step into CSR approaches, as it constructs their credibility.

The glossy CSR brochures consequently mention freedom of association as a core impact.

But where are the teeth that workplace-level CSR instruments need to put it in practice?

Secondly, the participants debated the use of labour law and other legislation, versus private codes of conduct. On this issue it was more difficult to reach consensus. Indeed, at first sight we would opt for a legal instrument rather than a voluntary standard, as it offers more teeth to workers’ rights defence. But what if the voluntary standard is better than the law, or the law lacks any serious implementation due to corruption or any other reason? Then both instruments have but the same poor potential for overall rights improvement. We agreed that there is little hope that local labour laws will be ‘improved’ under CSR influence.  As a matter of fact, companies might do worse because governments’ attention and resources shift to engagement with CSR programmes rather than to labour law enforcement. Should labour law improvement and enforcement then become the aim of local workers’ struggle? For some of us the answer is obviously yes, both from a tactical consideration as well as from an ideological one. State regulation is to be preferred above the privatization of labour law enforcement – as this is what CSR comes down to. Others in the meeting were more doubtful; within a capitalist system, the fight for the best possible labour regulation and enforcement becomes too technical, confirms the commodification of labour and depoliticizes workers’ struggle in the long term. What is important is that collective bargaining in the workplace is taking place; one does not necessarily need a law first to do so, nor should workers stick to what the law prescribes: many collective bargaining agreements are much better than the law.  By extension, such bargaining should take place beyond the workplace if we want to push for more comprehensive solutions to all social issues.

This debate brought the participants to a deeper problem in Asia: is CSR contributing to a further democratization of our societies? Indeed, workers who have been exposed to CSR instruments, such as their codes of conduct or labour training, did generate a degree of rights awareness. Yet, if we understand democracy as something more far-reaching than participation, then we are certainly facing another problem with CSR now becoming the norm in a number of countries. As we saw above, participation in a CSR context comes down to becoming part of a company’s human resource management. Workers are made ‘co-responsible’ for the company’s good economic performance. On a higher level, this serves a country’s economic performance more generally and helps to create a favourable investment climate: one in which social peace prevails and core workers’ claims – such as wages – are easily turned down. No wonder that even the World Bank has now put CSR on its agenda. Does Asia want to continue to be the paradise for global investors with cheap and obedient labour on the one hand, and a huge democratic deficit on the other?

So, what type of labour movement does Asia need at the moment? Aren’t we better off with a civil society that, via its actions, can influence the course that their political leaders are setting out? But this is not what CSR promotes. On the contrary, and in spite of its name: it subsumes the labour movement to an economic agenda. History tells us that genuine labour movements have been instrumental in the democratization of societies. With CSR, so the participants thought, we are on the wrong track.

While in multi-stakeholder initiatives there is still some mutual pressure to uphold the standards, we should remind ourselves that the majority of CSR-inspired companies devise and uphold standards purely according to their own insights.⁴ 

More commonly, companies demonstrate their CSR in the form of philanthropy: a school, a road, a donation to some local social service, …  a welcome contribution to poverty eradication which shows nicely on the yearly reports (see Box 1). Not seldom do the contributions go to local authorities, exactly there where the company has a presence. In a context with a huge democratic deficit, this practice ties the authorities to the company, and the area virtually becomes the company’s territory. The company can thus easily avail of the services they require: from bringing in sufficient labour force, and granting all kinds of permissions and licences, to lobbying the national level instances on their behalf. The borderline between such practices and corruption is very thin.

But most of all: the livelihoods of the local communities become ever more dictated by corporate power, rather than by democratically chosen political leaders. More generally it sets in motion a type of development that maximizes profits rather than a sustainable exploitation of natural resources, the provision of decent and safe employment and the fulfilment of the real needs of the local population. This CSR practice goes hand in hand with the decentralization of political power, a move that is motivated by promotion of good governance, but in reality enables corporations to penetrate more easily into the economic agenda of developing countries.

A wolf in sheep’s clothes 

Collating all the points of critique, we could not conclude otherwise than that corporate-driven CSR in Asia serves to increase corporate power over political and social agendas, simply because it tips the power relations between corporations and social movements further to the advantage of the corporations. Corruption generates the same effect, but CSR has an additional advantage: it provides corporations with the necessary legitimacy in their search for the easiest profits. Moreover, national and international institutions, but also consumer groups, environmental activists or big international NGOs, contribute to the cover-up by labelling such practices as ‘good governance’, ‘non-confrontational industrial relations’, or ‘the way forward’. Companies are praised for extending their economic power in the social and political spheres, and the NGOs involved are praised for being ‘cooperative’. So we are dealing with a wolf in sheep’s clothes indeed! (See ALU issue No. 60 (July – September 2006) regarding ‘CSR in China’).

All this is already enough for the labour movement to worry about, but the story doesn’t end here. The most important impact of CSR is its divide-and-rule effect. This plays out on various levels.

In the workplace, genuine free and independent unions are further stigmatized as trouble-makers (repression is but the next step) and find it ever more difficult to compete with yellow unions for the right to negotiate. Once workers have been involved with workers’ committees, it becomes an obstacle to gaining their confidence in the real union.

In communities, where the members once lived in relative harmony, the common identity is often being lost once a company is present. Some groups will benefit through jobs, gifts or trade opportunities, while others won’t. Some are even disadvantaged, such as when they have to give up their land. When livelihoods are at stake, such differences are hard to bridge.

Within the national and Asian labour movements the fracture between believers and non-believers in the ‘benefit’ of CSR is ever-widening. It is a reality that lack of resources is often what drives labour NGOs to cooperate with CSR initiatives.

On the global scene, workers in the North and South become less and less likely to reach out to each other, as they get co-opted by multi-stakeholder initiatives and become invested in them, rather than in seeking the solidarity of other workers (see Box 2 on page 13).

Isn’t it ironic? So many labour activists in the North, with the genuine intention to practice international solidarity, get stuck in the one-way drive of CSR as the best practice for workers’ rights improvement. They take time to listen to and legitimize the soothing commitments of corporations to improve labour conditions in the South, which actually cause the empowerment of workers in the South to regress. All this of course further adds to the loss of bargaining power of the labour movement overall, as defenders of rights in the workplace, and as a political force in our societies.

Turning the wheel

We all agreed that a strong message should be given about the true nature of CSR. But at the same time, we were all worried whether we are not simply contributing to the ongoing polarization of the debate between pros and cons. Indeed, we must be frank to ourselves and acknowledge how we have been played apart.

Our first and main task is to continue building a solid, independent and politically aware workers’ base at the grassroots level, but on a global scale. Making workers and labour activists aware of the dangers of CSR should become part of their basic training. At the same time we need to construct solidarity linkages between them which are equally free, independent and politically aware. There is a lot of thinking to do in this respect: international solidarity has for much too long been at the level of lip-service and showing limited benefit to local labour movements.

Secondly, we must engage in a discussion with the fence-sitters and those who swim in the waters of CSR and try to change the system from within. This is a worthwhile debate; can we change the terms of engagement of labour NGOs in CSR? If freedom of association and collective bargaining are made part of the corporate codes of conduct, what are the criteria against which to measure its implementation? Can we raise the bar and avoid the pitfalls? Independence from the company management and from the state, adherence to the rule of law, free access to information, protection of labour leaders, and letting go of the win-win prerequisite for solving labour disputes, could be considered as the criteria for labour activists to judge the implementation of CSR and decide whether to engage in it. Under what conditions can workers’ committees be turned into progressive organizations? The recent initiative of a number of Hong Kong-based NGOs who are active in China is very encouraging in this respect (See Box 3 on page 15). 

AMRC will certainly pick up the ideas of this meeting and start concretizing them. As for the participants, they were our inspiration and motivation to continue our work against corporate power. This is certainly not our last article on CSR.

Endnotes

      1. In MSIs, all stakeholders try to reach, through ‘constructive dialogue’, an agreement that must lead to improved working conditions for workers, usually in the supply chains. The implementation is given to independent parties, often audit companies. Labour NGOs and some trade unions are involved to verify the working conditions or to give labour training.  In some cases workers’ committees are formed to represent workers’ interests. Pressure from the outside, often via a positive or negative rating, gives an additional push or incentive for a company to adhere to CSR.

     2. ‘Urgent Appeals’, even though they make use of the same pressure mechanisms, are different from MSIs in the sense that they are reactive to a non-adherence to the brand’s codes of conduct and take a confrontational approach, while MSIs consist of a pro-active approach whereby all parties must come to an agreement. 

     3. http://csr-news.net/main/2007/04/10/the-boards-eye-view-of-corporate-res...

     4. It should be noted, moreover, that most companies are not even thinking of considering CSR; it is after all, voluntary.