Corporate Social Responsibility and the Shaping of Global Public Policy
Political Evolution and Institutional Change Bo Rothstein and Sven Steinmo, editors Exploring the dynamic relationships among political institutions, attitudes, behaviors, and outcomes, this series is problem-driven and pluralistic in methodology. It examines the evolution of governance, public policy, and political economy in different national and historical contexts. It will explore social dilemmas, such as collective action problems, and enhance understanding of how political outcomes result from the interaction among political ideas including values, beliefs, or social norms institutions, and interests. It will promote cutting-edge work in historical institutionalism, rational choice, and game theory, and the processes of institutional change and/or evolutionary models of political history. Restructuring the Welfare State: Political Institutions and Policy Change Edited by Bo Rothstein and Sven Steinmo Creating Social Trust in Post-Socialist Transition Edited by János Kornai, Bo Rothstein, and Susan Rose-Ackerman Building a Trustworthy State in Post-Socialist Transition Edited by János Kornai and Susan Rose-Ackerman The Personal and the Political: How Personal Welfare State Experiences Affect Political Trust and Ideology By Staffan Kumlin The Problem of Forming Social Capital: Why Trust? By Francisco Herreros States and Development: Historical Antecedents of Stagnation and Advance Edited by Matthew Lange and Dietrich Rueschemeyer The Politics of Pact-Making: Hungary s Negotiated Transition to Democracy in Comparative Perspective By John W. Schiemann Post-Communist Economies and Western Trade Discrimination: Are NMEs Our Enemies? By Cynthia M. Horne Corporate Social Responsibility and the Shaping of Global Public Policy By Matthew J. Hirschland Reconfiguring Institutions across Space and Time: Syncretic Responses to Challenges of Political and Economic Transformation Edited by Rudra Sil and Dennis C. Galvan
Corporate Social Responsibility and the Shaping of Global Public Policy Matthew J. Hirschland, Ph.D.
CORPORATE SOCIAL RESPONSIBILITY AND THE SHAPING OF GLOBAL PUBLIC POLICY Matthew J. Hirschland, Ph.D., 2006. Softcover reprint of the hardcover 1st edition 2006 978-1-4039-7453-2 All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews. First published in 2006 by PALGRAVE MACMILLAN 175 Fifth Avenue, New York, N.Y. 10010 and Houndmills, Basingstoke, Hampshire, England RG21 6XS Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin s Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 978-1-349-53522-4 ISBN 978-0-230-60177-2 (ebook) DOI 10.1057/9780230601772 Library of Congress Cataloging-in-Publication Data is available from the Library of Congress. A catalogue record for this book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: December 2006 10 9 8 7 6 5 4 3 2 1
One cannot help but look back on a project such as this and do anything but think fondly of all those people who have been so pivotal in its crafting and completion. On this list are those who gave their time in discussion of their important work in the trenches forming corporate social responsibility as we know it today; my mentor and friend Sven Steinmo who has provided invaluable guideposts and direction along the way; and my wife Erin whose steadfast support, love, and encouragement have made this a reality and me a better scholar and person. To all these individuals and countless others who have participated in important ways, I am grateful and to them I dedicate this book.
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CONTENTS Preface viii One The New Global Business Regulation Understanding Corporate Social Responsibility 1 Two CSR Practice Meets Theory Global Governance and Global Public Policy Networks 16 Three Managing Global Economic Transformations The History of Regulating the Corporation, Then and Now 32 Four Market Heal Thyself? Socially Responsible Investment Networks 58 Five Wrestling with Pigs Partnerships for Public Policy 87 Six Private Supply Chain Management Code Making and Enforcement Networks 114 Seven A Public Role for Private Actors Conclusions and the Road Ahead 141 Appendices 158 Notes 179 Bibliography 192 Index 200
PREFACE The subject of this research is the dynamic and increasingly important world of civil society action to regulate global business practices in areas ranging from the environment to labor and human rights practices a realm of action that is called corporate social responsibility (CSR). In many respects, the pressure on businesses to conform their behavior to societal demands is not a new phenomenon. However, the methods and context of regulating business today in a world of global commerce does present new challenges. One can trace, as is done here, the various periods of social pressure on commercial interests to change both their policies and practices to bring them in line with societal expectations. This has traditionally been accomplished to greater and lesser degrees by enlisting the regulatory power of the government. Yet we now enter an era where the ability and willingness of governments to act in a forceful or even coordinated way to regulate global commerce is diminished. Into this vacuum of waning government capacity and interest to regulate the parameters of acceptable business behavior, have stepped global public policy networks made up largely of nonstate groups. I became aware of this phenomenon when a colleague, who had moved to London to work with the Prince of Wales International Business Leaders Forum (IBLF), spoke to me about it. This nongovernmental (NGO) organization, established by Prince Charles himself, seeks to educate and bring together businesses in an effort to leverage their power for positive change in the world. Two factors sparked my interest in these activities. The first was the fact that businesses seemed genuinely interested in the IBLF mission. The second was that IBLF brought together NGOs with businesses, and in some cases intergovernmental groups (UN, World Bank, and others), to help craft best practices and carry out their change agenda. In the words of my colleague, you
Preface won t believe who is meeting in our offices and the policies and practices they are crafting and agreeing to. With my interest kindled, I set about digging deeper into this interesting, and what I believe to be promising, arena of international engagement. My own background has been in business both as a small business owner and as a consultant to large multinational firms. Working in and with businesses, I saw the impressive contributions that they could make when motivated by solid values that stemmed from viewing themselves as valuable and participatory members of the communities in which they operated. I was anxious to assess the power and impact of these efforts and was frankly keen to show skeptics how much the business community was capable of doing. My initial investigative efforts into the type of action being taken at the IBLF and elsewhere caused some frustration. Many of the business, NGOs, and governmental groups involved in this type of negotiation, what were and are essentially de facto public policy creation, seemed unwilling to discuss and share more of the specifics about their efforts. At first this proved confusing for I expected a warm welcome for my efforts to analyze what I viewed to be innovative ways of enlisting the power and wealth of the private sector in the delivery of important public goods. The road-blocks I faced began to raise additional and more critical questions about the motives, means, and outcomes associated with this process of private efforts to regulate business behavior when it came to public goods provision. The work here is the result of over three years of focused engagement and analysis of this arena of growing action that sees networks of private groups increasingly engaged in trying to bring about greater CSR. In the chapters that follow, evidence is presented that confirms some of my optimism about the potential for private action to bring about meaningful change in the lives of those affected by the spread of global freemarkets. Simultaneously, other evidence calls into question any excessive optimism I might have had about the possibility of private engagement solving all by itself many of the most pressing problems and challenges facing the world today. Many of these global challenges are the subject of the United Nation s Millennium Development Goals (2000) and their 10-yearlong quest to tackle global poverty, disease, inequality, and environmental degradation. Sadly, at the time of this writing, success in achieving these goals is doubtful. Still, I am confident that the findings presented here will reveal much about the phenomenon of private action to promote CSR, and the business role in the delivery of those much desired public goods to ix
x Preface a world in great need of them. In particular, I hope the story about CSR told herein reinvigorates a dialogue about the manner in which we wish to see global public policy made, and the appropriate role for each sector (government, civil society, and business) in this process. I will feel greatly rewarded if readers learn and feel challenged by the exploration of CSR as much as I have been and continue to be. In light of the challenges we face, more urgent, proactive, and coordinated collaboration is needed among all three sectors to achieve the outcomes that are at the heart of business and societal sustainability we aim to achieve (i.e., the guarantee that all the world s children will have access to opportunities that allow them to live well, happily, and healthily access that is the same as today, or even greater). Taking care of our communities and the natural environment that sustains us is a means to this end, and it requires more from us and our institutions than we have been prepared to give. Matthew Hirschland San Francisco, California USA December 22, 2005