1. Definitions of corporate involvement in global environmental governance

Transcription

1 Corporations Jonatan Pinkse 1. Definitions of corporate involvement in global environmental governance In global environmental politics, the influence of corporations has increased substantially over the past decades (Ruggie, 2004; Vogel, 2008). Corporations used to be seen as an actor that was mainly opposing the governance of global environmental issues by attempts to halt or postpone environmental regulation through lobbying activities (Kolk & Pinkse, 2007). This reactive role has changed quite dramatically, as corporations have moved towards a more proactive mode by taking up a public role through activities that used to be the exclusive domain of governments (Haufler, 2001; Pattberg, 2005; Scherer & Palazzo, 2011). This changing role of corporations as an actor engaged in rule- and norm-setting behavior without a direct involvement of governments has been addressed in several streams of literature within different disciplinary domains. Within the political science and international relations literature on global environmental politics, this changing role has been captured in the concept of private governance (Cutler, 2002; Cutler, Haufler, & Porter, 1999; Falkner, 2003; Haufler, 2001; Pattberg, 2005). Within the management literature, the related concept of political corporate social responsibility (CSR) has emerged (Scherer & Palazzo, 2007, 2011). Private governance has been defined as follows: Private governance emerges at the global level where interactions among private actors, or between private actors on the one hand and civil society and state actors on the other, give rise to institutional arrangements that structure and direct actors behavior in an issue-specific area (Falkner, 2003, pp ). As 1

2 such, private governance emphasizes that corporations can exercise a legitimate form of authority without the explicit backing of government (Cutler, et al., 1999; Haufler, 2001). The main starting point of the debate on private governance is a move away from traditional perspectives in international relations based in regime theory that put the authority of the government central, based on the observation that corporations (and civil society) tend to take over part of the role of the government. While private governance can refer to the rule- and norm-setting behavior that corporations exercise individually through different modes of selfregulation (Haufler, 2001), it tends to highlight the interaction with other state or non-state actors for example through multi-stakeholder partnerships and global public policy networks (Falkner, 2003; Pattberg, 2005). Once corporations become active participants in a highly institutionalized private governance arrangement, they are just as much a political actor as they are a market actor, their more traditional role (Crouch, 2006; Levy & Newell, 2005; Matten & Crane, 2005). The related concept of political CSR has been defined as a movement of the corporation into the political sphere in order to respond to environmental and social challenges such as human rights, global warming, or deforestation (Scherer & Palazzo, 2011, p. 910). Political CSR emphasizes similar roles of corporations in the political arena as private governance, such as self-regulatory behavior and a close cooperation with other state and non-state actors. This cooperation is reflected in the emphasis that political CSR scholars put on the concept of deliberative democracy, which refers to the process of political deliberation between governments, corporations, and civil society in the development of global governance arrangements. In contrast to private governance, political CSR has a different starting point in that it tries to position itself as a different form of CSR. Traditional views on CSR emphasize the instrumental or moral value for corporations to respond to social and environmental issues; that 2

3 is, a proactive stance on such issues will create economic benefits and/or enable corporations to deal with stakeholder pressure and give them a license to operate. Political CSR, on the other hand, sees the move of corporations into the political sphere as an inevitable consequence of the process of globalization and the heightened complexity of global supply chains (Scherer & Palazzo, 2007, 2011). While corporations have stepped up their involvement in global environmental politics, they have done so by employing different governance systems that reflect different forms of authority, including industry self-regulation (Haufler, 2001; Kolk & van Tulder, 2002), international accountability standards (Gilbert, Rasche, & Waddock, 2011; Utting, 2005), global public policy networks (Detomasi, 2007; Reinicke, 1999), multi-stakeholder partnerships (Andonova, Betsill, & Bulkeley, 2009; Bäckstrand, 2006; Biermann, Chan, Mert, & Pattberg, 2007; Börzel & Risse, 2005; Witte, Streck, & Benner, 2003), and non-state market-driven governance (Bernstein & Cashore, 2007; Cashore, 2002). Industry self-regulation emphasizes corporate efforts to curb their environmental impact on a voluntary basis. A key instrument is the code of conduct that corporations use to show their commitment to a set of principles. Corporate codes of conduct tend to be set unilaterally and are thus firm-specific (Gilbert, et al., 2011), but sometimes codes are developed on a multilateral basis as well through industry associations or other types of umbrella organizations, e.g. the FIFA in the sporting goods industry (van Tulder & Kolk, 2001). When corporations adopt codes together with other state or non-state actors, one tends to speak of international accountability standards (IASs) instead, which aim to standardize corporate environmental conduct across a set of corporations. Global public policy networks (GPPNs) emphasize the knowledge sharing aspect of networks between different state and non-state actors. GPPNs are seen as broad networks of 3

4 actors that create a forum for dialogue and debate that aim to be inclusive to actors that might otherwise be marginalized; GPPNs thus mitigate the participation gap and democratic deficit of global politics (Reinicke, 1999). For corporations, the main function of GPPNs is to gain a sense of the expectations stakeholders have of them with regard to a specific environmental issue (Detomasi, 2007). While GPPNs focus on the creation of a forum for open dialogue and debate, multi-stakeholder partnerships refer to non-hierarchical networks of actors that could have many different kinds of objectives, of which knowledge dissemination would only be one. Many partnerships also focus on the rule setting and implementation, capacity building and implementation, or service provision with the ultimate aim to reduce environmental impact (Andonova, et al., 2009; Bäckstrand, 2006; Börzel & Risse, 2005). Finally, non-state marketdriven (NSDM) governance systems are tailored in particular to governing the complex supply chains of corporations. NSDM systems have been defined as deliberative and adaptive governance institutions designed to embed social and environmental norms in the global marketplace that derive authority directly from interested audiences, including those they seek to regulate, not from sovereign states (Bernstein & Cashore, 2007, p. 348). The notable aspect of this type of governance system is that it exclusively focuses on governing corporate transactions in the marketplace to reduce the environmental impact of the global supply chain, but with the consent of the corporations affected. 2. Overview Theorizing the role of corporations in global environmental politics is not new (Falkner, 2003). There is a vast literature detailing corporate political activities, including lobbying, influencing media, and financial contributions to political parties (Hillman & Hitt, 1999), that have also been 4

5 employed in global environmental politics and climate change in particular (Kolk & Pinkse, 2007; Levy & Egan, 2003). During the 1990s, for example, the Global Climate Coalition formed an important lobbying group in the US, representing the interests of large oil and automotive corporations that strongly opposed upcoming regulation to curb greenhouse gas emissions (Levy & Kolk, 2002). This more traditional role of corporations in the political debate, however, still sees corporations as being subject to government regulation and the political activities are there to bias government decision-making (Falkner, 2003; Levy & Newell, 2005). The sea change that has occurred over the past two decades is that corporations have become a more integral part of the fabric of political decision-making on global environmental issues, also without a direct involvement of the state. But why did this role of corporations in the political arena of global environmental issues change? Scholars have argued that an increasing political role of corporations is part of the overarching trend of a reduced power of nation-states (Falkner, 2003; Scherer & Palazzo, 2011). Due to economic globalization, corporations have become political actors with a considerable power that rivals that of national governments (Detomasi, 2007). This power not only stems from the political activities corporations employ, such as taking part in multilateral negotiations on climate change, but also from market-related activities such as the development of environmentally-friendly technologies (Levy & Newell, 2005). In the case of genetically modified organisms (GMOs), for example, Monsanto s aggressive move into developing country markets had a fundamental impact on the political debate on GMOs in many countries. The perceived retreat of the nation-state is especially visible with regard to the governance of global environmental issues, because national governments lack the ability to govern such issues, thus leading to a regulation deficit (Biermann, et al., 2007). Basically, the ecological pressures 5

6 stemming from ozone depletion and climate change have created an issue area of global commons that prevents national governments to effectively regulate these issues unilaterally (Falkner, 2003; Ruggie, 2004). While the regulation deficit might explain the advent of civil society filling the gap left by governments (Vogel, 2008), it does not necessarily explain why corporations would feel obliged to take on increased responsibilities for environmental issues as well (Scherer & Palazzo, 2011). This sense of responsibility is seen as a direct outcome of the increased power of corporations (Falkner, 2003). Their foreign direct investment (FDI) and vastly expanded global supply chains might have granted them more economic power and a more outspoken political role (Detomasi, 2007; Scherer & Palazzo, 2011), but, at the same time, this has also made them fall victim to the scrutiny of non-governmental organizations (Falkner, 2003). Due to the globalization of social activism, it has become more difficult for corporations to operate in a regulatory vacuum as local and international NGOs fulfill a watchdog role (Teegen, Doh, & Vachani, 2004). Hence, corporations involvement in global environmental politics could be seen as a response to increasing civil society pressure (Detomasi, 2007). A related explanation, however, which is based in a neo-gramscian perspective on politics, argues that corporations reach out to governments and civil society to proactively protect their powerful position (Falkner, 2003; Levy & Egan, 2003). Taking part in environmental governance allows corporations to steer the institutional arrangements in a direction that makes them more beneficial to their vested interests. A case in point is the important role of corporations in the development of the global carbon market (Newell & Paterson, 2010). While the involvement of corporations in global environmental politics has been heralded as a way to deal with the regulation deficit and as at least a valuable complement to state 6

7 authority (Falkner, 2003), there are also more critical voices with regard to their effectiveness (Bäckstrand, 2006; Hahn & Pinkse, 2014). That is, the non-hierarchical, networked nature of many private governance systems bears several risks. Doubts have been raised about the consequences of the voluntary nature of corporations joining a multi-stakeholder initiative, for example, when a strict enforcement mechanism is absent. Without enforcement it is unclear whether firms will stick to the institutional arrangement, and whether the private governance system will have a lasting effect (Haufler, 2001). Recent findings on the Global Reporting Initiative, a private governance system that has institutionalized guidelines for corporate sustainability reporting, show mixed results in this context. In terms of adoption, the GRI has been a major success as the number of corporations adopting the GRI guidelines for their sustainability report has grown exponentially over the past decade. In part, this adoption success has been the result of the institutionalization process in which sustainability reporting has become a governance system with a distinct identity, fundamentally different from financial reporting (Etzion & Ferraro, 2010). At the same time, the effectiveness of the GRI has been criticized, because the GRI-based sustainability reports are not being used as intended. The information in GRI reports neither seems to influence valuation decisions by investors, to generate value for corporations, nor to be useful for NGO for scrutinizing corporate behavior (Levy, Brown, & De Jong, 2010). Hence, while there is an effect of the private governance system on corporate practices, it is not the effect that was intended originally. There is also the question how private governance systems deal with the issue of accountability. Without state control, accountability becomes a more diffuse concept, because the non-hierarchical structure creates a setting where there is no principal actor holding participating actors accountable for their behavior. Therefore, other forms of accountability such 7

8 as reputational, market or peer accountability have been proposed (Bäckstrand, 2008; Witte, et al., 2003). In addition, whether a private institutional arrangement is seen as legitimate, granting the actors involved private authority, depends considerably on the stance of the government towards such arrangements (Cutler, et al., 1999) and to what extent private authority is exercised in the shadow of hierarchy where the state and public actors exercise authoritative decision-making (Bäckstrand, 2008, p. 84). A case that has been studied extensively in this regard is the Forest Stewardship Council, which has become one of the most proliferated NSDM systems. Early empirical findings show that there were large differences in the decision of forest corporations to grant the FSC legitimacy or opt for a competing standard instead. Among other factors, the position of corporations depended on the extent to which they tried to sell their products in foreign markets and whether forestry practices were a policy issue for the government in the regions where they operated (Cashore, Auld, & Newsom, 2003). And finally, while the ultimate aim of many private governance systems might be to reduce environmental impact, it is very difficult to assess whether these systems indeed make a significant contribution in this respect (Bäckstrand, 2006). It seems that the role of corporations in private governance mechanisms is not necessarily aimed at solving the issue for which it has been designed, but to gain or maintain legitimacy for their business practices instead (Hahn & Pinkse, 2014). In a recent study on two cases about tiger shrimps and conflict minerals, the corporations involved in private institutional arrangements indeed seemed to be worried more about gaining legitimacy in the political arena than about solving the issues at hand. The corporations admitted that their understanding of the issues and their resources to address them were limited and that they mostly relied on other non-state actors in finding solutions (Rotter, Airike, & Mark-Herbert, 2014). These preliminary findings suggest that even though the role of 8

9 corporations in global environmental politics might be increasing, the responsibility they are willing to take upon themselves is still fairly limited. 3. Outlook The increased involvement of corporations in global environmental politics has been studied from different theoretical domains, including political science, international relations, legal studies, environmental science, and management. As a consequence, it is very difficult to get a good grasp of the literature because each theoretical domain tends to use its own vocabulary and understanding of this phenomenon. While this potential confusion in the use of concepts might be seen as a burden, it also creates the potential to move the understanding of the phenomenon as a whole forward because one domain can learn from the other. Within political science and international relations, for example, the focus has been on classifying different private governance systems and the specific nature of the institutional arrangements, such as how such systems are able to exercise authority. A question that has been addressed to a lesser extent, however, is how effective the involvement of corporations in environmental governance is in terms of reducing actual environmental impact (Bäckstrand, 2006). Before one could come to conclusions whether private governance is either a substitute or complement to state authority, a thorough understanding of their environmental effectiveness seems pertinent. Another important direction for future research is to gain more insight into the underlying motivations for firms to play a proactive role in global environmental governance and how they tend to behave once they are part of certain institutional arrangements. While a general trend that firms seem to be more cooperative is clearly observable (Scherer & Palazzo, 2011), a certain reservation about the motivation of corporations to do so remains. Within the political science 9

10 and international relations literatures, corporations are often still seen as just one of the non-state actors that have gained a more central role in environmental governance. The for-profit nature of corporations makes them a fundamentally different type of organization than many other nonstate actors such as non-governmental organizations. Hence, more insight is necessary into the consequences of corporate behavior, which tends to be driven by competition, on the functioning and outcomes of private governance systems for global environmental issues. 4. References Andonova, L. B., Betsill, M. M., & Bulkeley, H. (2009). Transnational Climate Governance. Global Environmental Politics, 9(2), Bäckstrand, K. (2006). Multi-stakeholder partnerships for sustainable development: Rethinking legitimacy, accountability and effectiveness. European Environment, 16, Bäckstrand, K. (2008). Accountability of networked climate governance: the rise of transnational climate partnerships. Global Environmental Politics, 8(3), Bernstein, S., & Cashore, B. (2007). Can non-state global governance be legitimate? An analytical framework. Regulation & Governance, 1, Biermann, F., Chan, M.-S., Mert, A., & Pattberg, P. (2007). Multi-stakeholder partnerships for sustainable development: Does the promise hold? In P. Glasbergen, F. Biermann & A. P. J. Mol (Eds.), Partnerships, Governance and Sustainable Development - Reflections on Theory and Practice (pp ). Cheltenham: Edward Elgar. Börzel, T. A., & Risse, T. (2005). Public-private partnerships: Effective and legitimate tools of transnational governance? In E. Grande & L. W. Pauly (Eds.), Complex sovereignity: 10

11 Reconstituting political authority in the twenty-first century (pp ). Toronto: University of Toronto Press. Cashore, B. (2002). Legitimacy and the Privatization of Environmental Governance: How Non State Market Driven (NSMD) Governance Systems Gain Rule Making Authority. Governance, 15(4), Cashore, B., Auld, G., & Newsom, D. (2003). Forest certification (eco-labeling) programs and their policy-making authority: explaining divergence among North American and European case studies. Forest Policy and Economics, 5(3), Crouch, C. (2006). Modelling the Firm in its Market and Organizational Environment: Methodologies for Studying Corporate Social Responsibility. Organization Studies, 27(10), Cutler, A. C. (2002). Private international regimes and interfirm cooperation. In R. Bruce Hall & T. J. Biersteker (Eds.), The emergence of private authority in global governance (pp ). Cambridge: Cambridge University Press. Cutler, A. C., Haufler, V., & Porter, T. (Eds.). (1999). Private authority and international affairs. Albany: State University of New York Press. Detomasi, D. A. (2007). The multinational corporation and global governance: Modelling global public policy networks. Journal of Business Ethics, 71(3), Etzion, D., & Ferraro, F. (2010). The Role of Analogy in the Institutionalization of Sustainability Reporting. Organization Science, 21(5), Falkner, R. (2003). Private environmental governance and international relations: Exploring the links. Global Environmental Politics, 3(2),

12 Gilbert, D. U., Rasche, A., & Waddock, S. (2011). Accountability in a global economy: The emergence of international accountability standards. Business Ethics Quarterly, 21(1), Hahn, T., & Pinkse, J. (2014). Private environmental governance through cross-sector partnerships: Tensions between competition and effectiveness. Organization and Environment, 27(2), Haufler, V. (2001). A public role for the private sector - Industry self-regulation in a global economy. Washington D.C.: Carnegie Endowment for International Peace. Hillman, A. J., & Hitt, M. A. (1999). Corporate political strategy formulation: A model of approach, participation, and strategy decisions. Academy of Management Review, 24(4), Kolk, A., & Pinkse, J. (2007). Multinationals' political activities on climate change. Business & Society, 46(2), Kolk, A., & van Tulder, R. (2002). The effectiveness of self-regulation: Corporate codes of conduct and child labour. European Management Journal, 20(3), Levy, D. L., Brown, H. S., & De Jong, M. (2010). The Contested politics of corporate governance the case of the global reporting initiative. Business & Society, 49(1), Levy, D. L., & Egan, D. (2003). A neo-gramscian approach to corporate political strategy: Conflict and accommodation in the climate change negotiations. Journal of Management Studies, 40(4), Levy, D. L., & Kolk, A. (2002). Strategic responses to global climate change: conflicting pressures on multinationals in the oil industry. Business & Politics, 4(3),

13 Levy, D. L., & Newell, P. (2005). The Business of Global Environmental Governance. Cambridge, MA: MIT Press. Matten, D., & Crane, A. (2005). Corporate citizenship: toward an extended theoretical conceptualization. Academy of Management Review, 30(1), Newell, P., & Paterson, M. (2010). Climate Capitalism - Global Warming and the Transformation of the Global Economy. Cambridge: Cambridge University Press. Pattberg, P. (2005). The institutionalization of private governance: How business and nonprofit organizations agree on transnational rules. Governance: An International Journal of Policy, Administration, and Institutions, 18(4), Reinicke, W. H. (1999). The other world wide web: global public policy networks. Foreign Policy, Rotter, J. P., Airike, P.-E., & Mark-Herbert, C. (2014). Exploring Political Corporate Social Responsibility in Global Supply Chains. Journal of Business Ethics, In press, Ruggie, J. G. (2004). Reconstituting the Global Public Domain Issues, Actors, and Practices. European Journal of International Relations, 10(4), Scherer, A. G., & Palazzo, G. (2007). Toward a political conception of corporate responsibility: Business and society seen from a Habermasian perspective. Academy of Management Review, 32(4), Scherer, A. G., & Palazzo, G. (2011). The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy. Journal of Management Studies, 48(4),

14 Teegen, H., Doh, J. P., & Vachani, S. (2004). The importance of nongovernmental organizations (NGOs) in global governance and value creation: An international business research agenda. Journal of International Business Studies, 35(6), Utting, P. (2005). Corporate responsibility and the movement of business. Development in Practice, 15(3-4), van Tulder, R., & Kolk, A. (2001). Multinationality and corporate ethics: codes of conduct in the sporting goods industry. Journal of International Business Studies, 32(2), Vogel, D. (2008). Private global business regulation. Annual Review of Political Science, 11, Witte, J. M., Streck, C., & Benner, T. (2003). The road from Johannesburg: What future for partnerships in global environmental governance? In T. Benner, C. Streck & J. M. Witte (Eds.), Progress or Peril? Networks and Partnerships in Global Environmental Governance. The Post-Johannesburg Agenda (pp ). Berlin: Global Public Policy Institute. 5. Recommended literature Falkner, R. (2003). Private environmental governance and international relations: Exploring the links. Global Environmental Politics, 3(2), Levy, D. L., & Egan, D. (2003). A neo-gramscian approach to corporate political strategy: Conflict and accommodation in the climate change negotiations. Journal of Management Studies, 40(4),

15 Levy, D. L., & Newell, P. (2005). The Business of Global Environmental Governance. Cambridge, MA: MIT Press. Pattberg, P. (2005). The institutionalization of private governance: How business and nonprofit organizations agree on transnational rules. Governance: An International Journal of Policy, Administration, and Institutions, 18(4), Scherer, A. G., & Palazzo, G. (2011). The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy. Journal of Management Studies, 48(4),