The Problem with Corporate Social Responsibility

John Hilary, Executive Director of War on Want spoke on Corporate Social Responsibility (CSR). These are a few notes from his speech, following some information on their past campaign to improve corporate accountability. 

The globalisation of the world’s economy means corporations have gained more and more power. Too often, multinational companies harm local communities, damage the environment and violate workers’ rights in the course of doing business – and there is no effective way of holding them to account when they do.

Business is ethically unequipped to deliver for people and the environment. In the modern world, companies should be required to serve the interests of society as a whole – not just rich shareholders.

“We must do what we can to encourage corporate responsibility. But we cannot leave companies to regulate themselves globally, any more than we can do in our own national economies.”

Rt Hon. Jack Straw MP, September 2001

War on Want’s Corporate Accountability campaign has been challenging Governments who set the rules of the world economic game to end the economic oppression that people in the developing world face. We want to reduce the power of those who use the unfair rules – corporations. The link between the poverty that millions of people in developing countries suffer and the lack of effective rules on corporations is clear.

Britain could lead the way in making corporations accountable for their activities by putting in place effective regulations and making the case internationally. But they will only do it if we pressure them to do so.

With the passage of the Companies Act in November 2006, War on Want helped secure an important victory because firms must now consider their impact on their employees, the environment, and local communities. They must also report on their relations with suppliers, including those overseas. Whilst an important step forward, the Act does not allow workers or communities abroad to seek redress in the UK if they are hurt by UK firms.

 The problem with CSR is that there is a vast difference between company rhetoric and company actions. CSR developed alongside globalisation and the growth of trans-national corporation power. The tension between companies and the general public/political activists began to increase as corporate power surged (e.g. the hiring mercenaries by BP in Colombiato assassinate trade union members opposed to new pipe lines). Companies faced a choice between tighter control and regulation, or putting something back to communities and the people; they chose the latter option and began to exercise CSR. This idea became fully established at the UN Summit for Sustainable Development (2002). Corporations began to be seen as the solution, not the problem. Gordon Brown’s ‘Business Call for Action’ is a good example of this behaviour – it placed absolutely no requirements on the businesses that were involved in the scheme – firms with poor human rights/labour exploitation records were happily included. The Responsible Business Summit is soon to have its 10th anniversary – members include Nestle, BAE Systems and British American Tobacco Company. NGOs also speak alongside these companies – it helps them to receive funding and business support. The Ethical Trading Initiative is another example. By joining NGOs are forced into secrecy, preventing any exposure of company’s poor behaviour. Such partnerships are created so firms can hide behind these organisations – if any problems arise, the companies do not speak, and their ‘ethical’ organisation speaks for them. The magazine ‘Ethical Corporation’ is devoted to avoiding responsibility.