The Arguments Against CSR

Like the iceberg, most CSR activity is invisible…It is often an active attempt to increase corporate domination rather than simply a defensive ‘image management’ operation. CSR is supposed to be win-win.

The companies make profits and society benefits. But who really wins? If there is a benefit to society, which in many cases is doubtful, is this outweighed by losses to society in other areas of the company’s operation and by gains the corporation is able to make as a result? CSR has ulterior motives. One study showed that over 80% of corporate CSR decision-makers were very confident in the ability of good CSR practice to deliver branding and employee benefits. To take the example of simple corporate philanthropy, when corporations make donations to charity they are giving away their shareholders’ money, which they can only do if they see potential profit in it. This may be because they want to improve their image by associating themselves with a cause, to exploit a cheap vehicle for advertising, or to counter the claims of pressure groups, but there is always an underlying financial motive, so the company benefits more than the charity. This section explores how CSR diverts attention from real issues, helping corporations to: avoid regulation, gain legitimacy and access to markets and decision makers, and shift the ground towards privatisation of public functions. CSR enables business to pose ineffective market-based solutions to social and environmental crises, deflecting blame or problems caused by corporate operations onto the consumer and protecting their interests while hampering efforts to find just and sustainable solutions.

CSR as Public Relations

CSR sells. By appealing to customers’ consciences and desires CSR helps companies to build brand loyalty and develop a personal connection with their customers. Many corporate charity tie-ins gain companies access to target markets and the involvement of the charity gives the company’s message much greater power. In our media saturated culture, companies are looking for ever more innovative ways to get across their message, and CSR offers up many potential avenues, such as word of mouth or guerilla marketing, for subtly reaching consumers. CSR also helps to greenwash the company’s image, to cover up negative impacts by saturating the media with positive images of the company’s CSR credentials. As Deborah Doane points out in ‘From Red Tape to Road Signs’, CSR enables business to claim progress despite the lack of evidence of verifiable change. Since much of the business case for CSR depends on corporations being seen to be socially responsible, CSR will continue to be little more than PR for as long as it is easier and cheaper to spin than to change. A prominent case against Nike in the US Supreme Court illustrates this point. When, in 2002, the Californian Supreme Court ruled that Nike did not have the right to lie in defending itself against criticism, chaos ensued in the CSR movement. Activist Marc Kasky attempted to sue the company over a misleading public relations campaign. Nike defended itself using the First Amendment right to free speech. The court ruled that Nike was not protected by the First Amendment, on the grounds that the publications in question were commercial speech. The case proceeded to the US Supreme Court. Legal briefs were submitted to the Supreme Court by public relations and advertising trade associations, major media groups, and leading multinationals, arguing that if a company’s claims on human rights, environmental and social issues are legally required to be true, then companies won’t continue to make statements on these matters. The submission from ExxonMobil, Monsanto, Microsoft, Bank of America and Pfizer contended that ‘if a corporation’s every press release, letter to an editor, customer mailing, and website posting may be the basis for civil and criminal actions, corporate speakers will find it difficult to address issues of public concern implicating their products, services or business operations’. This case simply reinforces the criticism that CSR is nothing more than a PR exercise. Corporations would not be so concerned about potential legal actions if they valued truth, transparency and accountability as much as they claim. The submissions to the court show how important it is for corporate America to defend itself against a legal ruling which would make it more difficult for companies to make false and misleading statements to defend their image. The point is further illustrated by the conflict between what a company says in public and in its dialogue with NGOs, compared to what it is saying behind closed doors when it is lobbying government or through industry mouthpieces like the International Chamber of Commerce or the Confederation of British Industry. That CSR is criticised as being a PR stunt is unsurprising, bearing in mind that most CSR workers in companies sit in the communications and PR departments81, and considering that the strategies of CSR – dialogue with NGOs, codes of conduct, social reports – were all designed and developed by PR companies such as Burson-Marsteller, E.Bruce Harrison and Hill and Knowlton. CSR is a clear part of the industry’s attempts to co-opt the environmental movement. This strategy has been outlined in detail by Ronald Duchin, senior vice- president of PR spy firm Mongoven, Biscoe and Duchin (MBD). MBD works to divide and conquer activist movements. Activists, he explained, fall into four distinct categories: ‘radicals,’ ‘opportunists,’ ‘idealists,’ and ‘realists.’ He outlined a three-step strategy: isolate the radicals; ‘cultivate’ the idealists and ‘educate’ them into becoming realists; then co-opt the realists into agreeing with industry. CSR has created a language shift, a re-brand and a new caring image, but no substance. Like the iceberg, most CSR activity is invisible…It is often an active attempt to increase corporate domination rather than simply a defensive ‘image management’ operation.

CSR is a strategy for avoiding regulation

CSR is a corporate reaction to public mistrust and calls for regulation. In an Echo research poll, most financial executives interviewed strongly resisted binding regulation of companies. Companies argue: that setting minimum standards stops innovation; that you can’t regulate for ethics, you either have them or you don’t; and that unless they are able to gain competitive advantage from CSR, companies cannot justify the cost. Companies are essentially holding the government to ransom on the issue of regulation, saying that regulation will threaten the positive work they are doing. CSR consultancy Business in the Community supports corporate lobbying against regulation, arguing that ‘regulation can only defend against bad practice – it can never promote best practice.’ These arguments, however, simply serve to expose the sham of CSR. Why would a ‘socially responsible company’ take issue with government regulation to tackle bad corporate practice? Why would this prevent companies from going beyond the legal minimum? Perhaps the explanation is that companies want to be selective about which areas of ‘bad practice’ they eliminate and want to use their ‘best practice’ to divert attention away from the bad, or that ‘socially responsible’ companies need the bad practice of other companies to be a counterpoint to their own ‘best practice’. If regulation distracts from best practice, then companies cannot be acting ‘responsibly’ because they believe it to be morally right to do so – only because they are trying to get an advantage over their competitors. The argument that regulation would hinder voluntary efforts on the part of the company to improve their behaviour has been readily accepted by a government keen to avoid its regulatory duties when it comes to curbing corporate power. The UK Department for International Development (the department charged with tackling global poverty, not the one set up to defend industry) dismissed the idea of an international legally binding framework for multinational companies saying that it would ‘divert attention and energy away from encouraging corporate social responsibility and towards legal processes.’ As this quotation shows, without any evidence for its effectiveness, the government is choosing CSR over making corporate exploitation and abuse illegal. Regulation, including rules on: how corporations can be structured, as well as on the impacts they can have on the environment and society, and their dealings with their workforce and other stakeholders, is the only way that a democratic society can control what is acceptable and unacceptable in corporate behaviour. Should corporations be able to decide for themselves what is an acceptable level of emissions or what rights workers should be afforded? Leaving corporations to act voluntarily is a dereliction of the duties of government. If the corporation is left to regulate itself then far from curbing it, the corporation gains power. As Joel Bakan puts it, ‘no one would seriously suggest that individuals should regulate themselves, that laws against murder, assault and theft are unnecessary because people are socially responsible. Yet oddly we are asked to believe that corporate persons – institutional psychopaths who lack any sense of moral conviction and who have the power and motivation to cause harm and devastation in the world – should be left free to govern themselves.’

Lobbying against regulation

Business lobby groups have a proud history of destroying attempts to introduce international regulation. Below is simply a flavour of the more high profile examples:

    • The International Chamber of Commerce (ICC) has lobbied against: any binding emission targets in the Kyoto Protocol at the climate summits; the implementation of the Convention on Biodiversity; the inclusion of the precautionary principle in the Biosafety Protocol; and the Basel Convention banning the export of hazardous waste. As a key organisation in the UN Global Compact, the ICC vigorously defended its position that the UN should in no way measure or regulate the way the companies live up to the principles they have promised to follow.
    • Business Action for Sustainable Development (BASD) was launched in 2001 jointly by the ICC and World Business Council on Sustainable Development (WBCSD) to ‘ensure maximum participation of the business community’ in the Johannesburg Earth Summit in 2002. BASD succeeded in thwarting efforts to achieve binding international regulation of corporations through its promotion of voluntary mechanisms. BASD’s chairman Mark Moody-Stuart (former CEO of Shell) argued that promoting a positive image of corporations was urgent, ‘as others see the need for legislation and codes with teeth to make sure that business… is compelled to adopt certain standards and procedures’.
    • More recently the ICC along with the International Employers Organisation (IEO), Confederation of British industry (CBI) and the United States Council of International Business (USCIB), led by Shell’s Vice President for External Relations and Policy Development, Robin Aram, launched a major offensive against the UN Norms on Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights. The UN Norms were to be a major step forward in moving towards binding regulation of multinationals, and set out what the obligations of companies were with regard to human rights. ICC spokesman Stephano Bertasi put the ICC position this way; ‘We have a problem with the premise and the principle the Norms are based on. These Norms clearly seek to move away from the realm of voluntary initiatives’. The business lobby succeeded in persuading governments to reject the Norms when they came before the UN Commission on Human Rights. Instead the Commission called for the appointment of a Special Representative on the issue of transnational corporations and human rights.
    • The CBI and Institute of Directors have opposed all attempts to make CSR in any way mandatory in the UK and have lobbied against the Corporate Responsibility Bill, and against any suggestion of moving away from voluntarism in the European Union White Paper on Corporate Social Responsibility.
        • Investment in major infrastructure to facilitate trade.
        • Replacing national markets with regional markets – reducing the national economic sovereignty of African countries.
        • Streamlining the aid delivery process and involving the private sector.
        • National governments stepping back from ‘those areas in
          which business can better deliver’.
        • Public private partnerships to support small and medium-sized enterprises (profits from which can be sucked out by international investors, or which can then be merged into international firms).
        • To promote societies that are ‘based on the rule of law’ (read: where the people are pliant to the needs of the corporations) and have rules on competition, intellectual property and ‘efficient public sector management’ (read: privatised public sector).
        • That aid money for health, education, agriculture, capacity building and infrastructure should not be dispersed in such a way as to ‘increase public sector dominance’.

      The overwhelming message of the group’s concluding statement was that governments should involve the private sector more in development policy and build partnerships. The statement goes on to commend the Global Compact, which as we have discussed is non-binding and toothless, as a standard to which all companies in Africa should adhere. Since most smaller African companies are not signed up to the Global Compact, multinationals clearly believe that their CSR record should gain them privileged access. For Graham Mackay, Chief Executive of SAB Miller, the importance of increasing private sector dominance in Africa was clear. ‘Aid won’t go on forever,’ he said.

Lobbying for regulation

The latest twist in the tale is that companies are beginning to lobby in favour of regulation. In a recent article, titled ‘A World Upside Down’, George Monbiot commented that ‘the corporations are demanding regulation, and the government is refusing to grant them’. Environmental managers from BT and John Lewis (which owns Waitrose) complained that without tighter standards that everyone has to conform to, their companies put themselves at a disadvantage if they try to go green. ‘All that counts’, the man from John Lewis said, ‘is cost, cost and cost.’ If he’s buying eco-friendly lighting and his competitors aren’t,
he loses. As a result, he said, ‘I welcome the EU’s Energy Performance of Buildings Directive, as it will force retailers to take these issues seriously.’
Yes, I heard the cry of the unicorn: a corporate executive, welcoming a European directive. And from the government? Nothing. Elliot Morley, the minister for climate change, proposed to do as little as he could get away with. The officials from the Department of Trade and Industry, to a collective groan from the men in suits, insisted that the measures some of the companies wanted would be “an unwarranted intervention in the market”. Former Shell CEO Philip Watts put it this way, ‘…having thus prepared themselves it is in those Chief Executive Officers’ interests to advocate societal and governmental changes in the right direction to speed up trends. The smart CEOs not only are going to orient companies towards sustainability, but also are going to orient society towards sustainability.’ Similarly John Browne, CEO of BP, has called for ‘the help of governments to establish the appropriate framework of incentives to move toward climate stabilisation’.
NGOs are finding new allies in countering the lobbying power of the trade associations such as the CBI and ICC in calling for regulation. Jules Peck of WWF commented that companies are ‘showing signs of discontent with trade associations that do not adequately represent their interests. For many pioneering companies environmental regulation or economic instruments would reinforce their competitive position by pushing other companies to internalise more of their environmental costs.’ But before we get too excited at the prospect of companies jumping the fence and joining campaigners in the push for progressive regulation, let’s take a step back and ask a few questions. What kind of regulation do they want? Why do they want it? Will it be effective? Can corporate power really be channelled in such a way as to support efforts to control corporate power? First, there is a difference between regulation and financial incentives. When John Browne calls for government action on climate change, he is talking about carbon trading, a climate mitigation scheme from which BP stands to do very well without having to make any great effort to reduce emissions. (See section on carbon trading). Secondly, these companies are calling for regulation because
CSR does not offer sufficient financial rewards. In some cases this may be because the company did not experience any reduction in criticism as a result of its CSR efforts. In other cases companies trying to source ‘ethically’ were undercut by their ‘less ethical’ competitors. Once companies have put in the investment, they need to see a return, so regulation can help companies to out-compete in a way that voluntary measures have failed to do. Where regulation is being called for it is only in areas that supports the company’s competitive advantage. For example, retailers Boots, Marks and Spencer, H & M and Electrolux have lobbied to support the EU REACH (Registration, Evaluation and Authorisation of Chemicals) Directive. While this has been highly useful in combating the huge lobbying power of the chemical industry (REACH has seen the largest ever corporate lobbying campaign in Europe), the retailers are not lobbying in the public interest any more than BASF and the other chemical companies which have lobbied against the legislation. Instead, the retailers want: to ensure that the costs of REACH are imposed on the chemical producers and not retailers; to push for better regulation to minimise their own financial risk as end-users and retailers of harmful chemicals; to reap the rewards of having already sought to reduce harmful chemicals in their manufacturing processes and retail products in response to consumer demand; and to rebuild consumer trust in chemicals. It is, again, a hard-nosed business position. So companies are likely to support regulation when it supports their business strategy or capitalises on areas where they have invested, but they are unlikely to support the kind of across-the-board regulation called for by the corporate accountability movement. Because companies will only lobby for the type of regulation that makes them more competitive, any regulation they support will be counterweighted by lobbying from competitors who would lose out if regulation is brought in. The powerful trade associations such as the CBI and ICC will tend to come out on the side of the majority of companies who will be against regulation. The supposedly ‘progressive’ companies which are lobbying for regulation remain members of the trade associations because membership protects their broader interests. Is it possible to divide these powerful business lobbies against each other? Truly progressive regulation can only be implemented if public awareness and activism can rival the business lobby. This means mobilising people power on a grand scale to launch a major attack on corporate power.

The market has no morality

‘Can we expect every decision made in one’s selfinterest, through market mechanisms, to result in the good for all?’ Deborah Doane, Core Coalition Hand in hand with pushing for further deregulation or pushing for favourable regulation (as above), companies are effectively capturing the issue space around major social and environmental problems and seeking to propose solutions which fit within a market-centred worldview. CSR asserts the classic free market line that the market will solve social problems through each actor acting selfishly in its own best interests. But since this is the dominant paradigm, shouldn’t we then be seeing a society with greater equality and less environmental destruction? Instead, as the New Economics Foundation argues ‘in everything from the massive corporate scandals to anti-trust cases to serious environmental degradation we see all around us, it is obvious that Adam Smith’s famous ‘invisible hand’ cannot be relied upon to bring us successful or sustainable outcomes’. What has instead been created is massive concentration of wealth, entrenched divides between rich and poor globally and irreversible damage to the ecosystems our future depends on.
Many pressing social and environmental problems have very clear, though complex, solutions such as reducing consumption, paying a price that reflects true costs and extending regulation. Market-based ‘solutions’ distract us from this. If society’s primary approach to tackling major social and environmental problems is to enable the powerful interests that caused the problems to profit from their resolution, then the very intention of solving these problems is subsumed to the interest of profit.

Case Study: Carbon trading as a solution to climate change

‘In the new era of scarce sky, there will, of necessity, be an economy of sky. Property rights will be established, prices will be charged, and money will change hands. Owners of the sky will collect rent that will flow back into the economy.’ Peter Barnes and Rafe Pomerance, ‘Pie in the Sky’ 2000. The perversity of market mechanisms is exemplified by carbon trading: allowing corporations to avoid reducing their emissions by buying carbon credits. As Tony Blair chillingly said in his address to the World Economic Forum, ‘if we put forward, as a solution to climate change, something which involves drastic cuts in growth or standards of living, it matters not how justified it is, it simply won’t be agreed to'[my italics]. By this guiding orthodoxy, real solutions to the climate crisis are out, and market mechanisms are in. Carbon trading relies on the idea that once a price is assigned to the earth’s carbon cycling capacity, markets will be able to respond. Negotiations on the Kyoto Protocol quickly moved from productive discussions about the nature of the climate crisis and the need for action to the issue of how corporations could profit from ‘solutions’. Rather than legislating to cut emissions, Kyoto creates property rights: privatising the earth’s capacity to absorb greenhouse gases. These emissions rights have an estimated market value of $2.345 trillion, the ‘largest invention of monetary assets by voluntary international treaty in history’. Rights to emit are handed out directly to the Northern countries based on their historical level of emissions, meaning that those that have polluted most in the past get the most free rights to emit. Most nations receiving these rights are in turn passing large quantities of them, for free, to private companies in heavy industrial sectors. In addition, companies can fund energy-saving or carbon sequestration projects (storing carbon through, for example, planting trees) in developing countries to ‘offset’ their carbon emissions and create new carbon credits. Campaigners have catalogued a large number of concerns about the carbon trading system. They have shown that the idea of ‘sequestering’ carbon by planting trees to ‘offset’ emissions from burning fossil fuels does not equate to keeping the carbon reserves in the ground. Jutta Kill of SinksWatch argues that ‘even in purely economic terms, a market in credits from ‘carbon-saving’ projects will fail…You simply can’t verify whether a power plant’s emissions can be ‘compensated for’ by a tree plantation or other project. Ultimately investors are bound to lose confidence in the credits they buy from such projects’. That governments chose to adopt an untested, logically flawed and bureaucratically complex international trading system to address emissions reductions, rather than tried and tested methods such as taxation and regulation, represents an unprecedented triumph for the corporate capture of the debate on climate change. Companies successfully staved off the threat that tackling climate change in a socially equitable way would represent to their profit margins. Larry Lohman of The Cornerhouse argues that ‘… Kyoto-style carbon accounting systems [tend] to marginalize non-corporate, non-state and non-expert contributions toward climatic stability. The Kyoto Protocol’s market system… not only cannot succeed in slowing the upward flow of fossil carbon into the overflowing above-ground carbon dump, but is also entrenching institutions and procedures that are likely to stand in the way of constructive approaches to climate change.’

Can the consumer really change the market?

Many market-based solutions focus on the power of the consumer to create the necessary shift towards more sustainable markets. There is a place for choosing to buy products that contribute to local economies and avoid damaging environmental impacts, however, there are a number of problems with pushing ethical consumption as the key hurdle in switching to more sustainable economies. Firstly statistics suggest that consumers are not, in fact, consuming ethically, even when they are concerned about the social impact of products. In a Co-operative Bank survey, 89% of British consumers said they were concerned about social and environmental impacts, but only 18% said they reflect this in purchasing decisions. According to a MORI poll, fewer than 5% were what they called ‘global watchdogs’ making purchasing decisions on primarily ethical grounds. But, even if consumers did primarily choose products on ethical grounds, this does not address the fundamental issue: the volume at which we consume and the throwaway culture that goes with our over-consumption. The idea of ethical consumption also pre-supposes that consumers have access to unbiased information, but with millions spent by companies on advertising, much of the available information is heavily biased. The principal purpose of advertising is to make the product seem more essential, more important, more exciting or, in this case, more ethical than it really is. Since few consumers closely scrutinise a company’s ethical claims, companies are able to get away with misleading messages even when they are refuted by independent sources. Therefore, consumers are not truly empowered. Although corporations and government constantly refer to consumer power, consumers are often poorly informed and isolated; moreover, they have many vested interests in the system which means that their scrutiny is frequently limited to comparatively superficial issues. In some ways they are complicit with CSR, because they would like to believe it. Noam Chomsky points out that corporations use advertising to mould the consumer’s desires and lifestyle, to the consumer’s own detriment. He says, ‘the ideal is to have individuals that are totally dissociated from one another… whose sense of value is “Just how many created wants can I satisfy?”’. So the disenfranchisement of consumers is a key part of corporate advertising strategies. Through CSR, companies are trying to appeal to ethical consumers but also to undermine the principle of ethical consumption. Consumers’ primary concerns are cost and convenience. Because of this, consumers are unlikely to act on social issues in the same way that enfranchised citizens would if called on to make democratic decisions about what a corporation should and should not be allowed to do. Ethical consumption is often presented as democratic. Companies are responding directly to the concerns of the public. If the public were concerned then they wouldn’t buy the product. But does this argument stand up? The idea that consumers will ‘vote with their pounds’ is actually anti-democratic. It means that decisions are made on the basis of purchasing power. Individuals’ access to power is decided according to the size their wallets. But what about those who are too poor to participate in the consumer economy? The power to decide what is and is not acceptable in corporate practice should not reside just with rich consumers, but also workers, producers and communities globally who are affected by that practice. Focusing on ethical consumption lets the corporations off the hook. It’s easy for corporations to deflect responsibility for inaction onto consumers who they have pushed into apathy. But if they use the language of responsibility, then there must be an associated obligation, with or without consumer demand.

Race to the top

The limits to voluntary market initiatives are well demonstrated by the International Institute for Environment and Development (IIED)’s ‘Race to the Top’ (RTTT) project. This sought to bring together supermarkets and civil society to create benchmarks and compare the performance of the different players in the supermarket industry. After a year the project was wrapped up due to overwhelming obstacles in dealing with the companies. In a report detailing the reasons for the collapse of the project, the authors deliver a sound critique of the supermarkets’ analysis of CSR and contend that self regulation is not sufficient to create a significant shift toward sustainability in the sector. The authors criticise the supermarkets attempts to conflate ‘public good’ with ‘customer value’, to keep ethics as a niche consumer choice rather than a corporate standard, to use their controlling position in the market to pass on responsibility and cost for sustainability initiatives down the supply chain whilst taking the credit. They conclude that for many civil society organisations, the demise of RTTT is a signal that only ‘command-and-control’ regulation can tame the supermarket sector and that at least ‘in such a relentlessly consumer-oriented industry, self-regulation and voluntary initiatives are only likely to be appropriate for concerns that are aligned with the mainstream consumer interest. The RTTT project reveals that the notion that the consumer will vote with their money is deeply flawed, that the consumer and the citizen are not one and the same, and that companies like supermarkets, that are highly consumer-focused, may listen to consumers when it suits them but the broader concerns of the citizen, in both the North and in the South, are ignored. Aside from being distinctly undemocratic, this model also means that the scope for change is limited to the concerns related to consumer choice.
The demise of the RTTT project is an example of the fact that market mechanisms and incentives, like consumer pressure for encouraging corporations to act responsibly, are flawed and susceptible to spin. When profits are the motive rather than sustainability, how can we expect sustainability to be the outcome?

Corporate Citizenship: With responsibilities come rights

Corporations are not citizens, they are artificial legal persons. The term ‘corporate citizen’, used to describe corporations that are attempting to be socially responsible, creates a new image of the corporation as an entity which has rights, feelings, a legitimate voice in a democracy, and which behaves in a moral manner. This kind of language shift creates a tangible shift in attitudes. Corporate citizenship buys companies access to public finance for risky projects abroad. Companies which sign up to the OECD guidelines and complete environmental impact assessments gain finance and export credits through public bodies such as the World Bank’s International Finance Corporation or the European Bank for Regional Development. Corporate citizenship also legitimises the presence of corporations in international forums and, often, their lobbying activities. Corporations have a presence at all the important world summits from the G8 to the WSSD. Their involvement is bought by their ‘commitment’ to CSR and ‘sustainability’, and gives them the opportunity to dominate the agenda and put across their view of how the world should be run. The power and resources of the corporate citizen are such that real human citizens’ concerns are marginalised.

CSR as Public Private Partnerships

Many CSR activities can be defined as public-private partnerships (PPP). PPPs encompass a variety of arrangements where companies pool their resources with governmental, intergovernmental and / or civil society organisations. Examples relevant to CSR include running community development projects, sponsoring school playgrounds or providing healthcare. These projects blur the boundary between the role of governments and the role of companies. CSR is in itself a privatisation of a public function, since deciding what is appropriate behaviour for companies and regulating that should be the responsibility of a democracy and not of the companies themselves. CSR has shifted the ground towards privatisation. As Nigel Twose from the World Bank Group put it, ‘with the private sector increasingly centre stage, questions are being raised around prior assumptions that global public goods can only be tackled (ethically and practically) by the public sector.’ CSR makes government/corporate relationships acceptable, generates contacts and builds trust and reputation to smooth the transition towards private ownership and control.

Through privatisation to government by corporations

‘Governments are a fundamental actor in governance, but increasingly non-state actors from business and civil society are seen to play key roles.’ The old adage from Milton Friedman that ‘the business of business is business’ is proving untrue. Increasingly the business of business is power and control. While this has always been the case, the means and reach are now greater. As social commentator Leslie Sklair put it, ‘global capitalism has to be politically active to maintain its project’. CSR is taking us on a trajectory towards increased private takeover of government functions. It is not simply a form of PPP but a progression towards corporations taking on the role of governance. SustainAbility argues that CSR has evolved as a ‘pragmatic response where government has failed or been weak’. But CSR has been a mechanism in the weakening of government. It is a strategy borne out of the Thatcher/Reagan era of minimising government intervention and of policies driven by and on behalf of the corporations. CSR both weakens and sidelines democratic decision making. It announces that democratic decision making in the form of regulation is unnecessary, and replaces the (dis)enfranchised citizen with the ‘stakeholder’. (See section on dialogue). SustainAbility’s report, ‘Gearing Up: From Corporate Responsibility to Good Governance and Scalable Solutions’, argues that a window of opportunity is opening up for corporations, through their corporate responsibility initiatives, to take on a governance role in achieving sustainable development. The report claims to ‘assess examples of private sector leadership in preparing the ground or timely and effective public policy responses’ and envisages greater corporate involvement in decision-making at the international level. According to the report, we can expect to see a shift from specific CSR projects to wider governance impacts and a change in the relationships between government, business and civil society. Case studies include carbon trading and Anglo American’s programme of providing anti-retroviral treatment to staff. These examples show how, in the context of emasculated state power, unaccountable corporations are gradually gaining influence over governance and decision-making, as well as taking over of the delivery of services. The authors of the report see a turning point where business will either embrace this opportunity, or suffer the backlash against corporate globalisation. Campaigners should be aware of the role CSR plays in positioning companies to capitalise on this. ‘The gap between the market and the community will be closed. The only question is how and in which direction… rollback, a shift away from globalisation, is the more likely outcome unless we manage to strengthen the fabric of global community. Ironically nobody is better positioned or has better capacity to play the lead role today than business itself.’

Access to ’emerging markets’

‘Emerging markets’ is the current business jargon for developing countries. The terminology betrays the fact that they view these countries purely in terms of economics. Corporate partnerships with both Northern and Southern governments represent an opportunity for both policy influence and market penetration, with companies that lead in CSR gaining preferential access to developing country markets. The term ‘corporate social innovation’ has been coined to describe business practices aimed at ‘supporting’ sustainable development.

Case Study: Business Action for Africa

The 2005 G8 Summit saw unprecedented corporate involvement. In the run up to the Summit, Tony Blair set up the Commission for Africa (CfA) to advise the G8 on promoting development in Africa. A key part of the CfA was the business contact group, Business Action for Africa, a lobby group of the leading multinationals in Africa including Shell, Anglo American, SAB Miller, British American Tobacco, Diageo and others. Just as BCSD, and later BASD, shifted the debate at the Earth Summit and World Summit on Sustainable Development from how to solve global environmental problems to how to make them a business opportunity, BAA has succeeded in turning debate from how to eradicate poverty in Africa to how corporations can benefit from the aid money being invested in the continent. This comes as little surprise since government and business attitude to ‘development’ comes from the same ideological standpoint – that poverty can be tackled by increasing economic growth and attracting foreign investment that will trickle down to the poorest; while the negative impacts of corporate activity can be controlled, or conveniently ignored, through a public commitment to corporate social responsibility. Business did well at the G8. As Haiko Alfeld, director for Africa of the World Economic Forum put it, ‘business has an enormous interest if $25 billion per year is to flow into Africa… clearly that will unleash enormous potential and business opportunities on the continent.’

BAA’s carefully worded recommendations to the G8 and African leaders included:

      • nvestment in major infrastructure to facilitate trade.
      • Replacing national markets with regional markets – reducing the national economic sovereignty of African countries.
      • Streamlining the aid delivery process and involving the private sector.
      • National governments stepping back from ‘those areas in
        which business can better deliver’.
      • Public private partnerships to support small and medium-sized enterprises (profits from which can be sucked out by international investors, or which can then be merged into international firms).
      • To promote societies that are ‘based on the rule of law’ (read: where the people are pliant to the needs of the corporations) and have rules on competition, intellectual property and ‘efficient public sector management’ (read: privatised public sector).
      • That aid money for health, education, agriculture, capacity building and infrastructure should not be dispersed in such a way as to ‘increase public sector dominance’.
          The overwhelming message of the group’s concluding statement was that governments should involve the private sector more in development policy and build partnerships. The statement goes on to commend the Global Compact, which as we have discussed is non-binding and toothless, as a standard to which all companies in Africa should adhere. Since most smaller African companies are not signed up to the Global Compact, multinationals clearly believe that their CSR record should gain them privileged access. For Graham Mackay, Chief Executive of SAB Miller, the importance of increasing private sector dominance in Africa was clear. ‘Aid won’t go on forever,’ he said.
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