Introduction: Journal of Developing Societies’ Special Issue on Corporate Social Responsibility

Introduction

It would be impossible to avoid corporate social responsibility (CSR) in most of the world now. From the depiction of “united colors” ads, suggesting a celebration of diversity to sports sponsorships, CSR is now ubiquitous. Lacking the usual indicators of military or direct economic flows, CSR has largely fallen beneath the radar of the social sciences. Left to the purview of business scholars, a rich literature built upon increasing awareness of a series of scandals, from Enron to the BP Horizon oil blowout to the 2008 mortgage-based global financial crisis to the latest 737 Max crashes, has emerged, along with increasing attention to CSR in B-school curricula.

Despite the growing attention from business scholars, it is hard to find evidence of clear progress on any of the issues around CSR, including most prominently labor and environmental negligence and destruction. The question of how to move from a “triple bottom line” approach to one that incorporates actors and power in a dynamic setting has yet to move past the standard idea of a stakeholder framework.

In this issue, we seek to offer new ideas about how to proceed in the direction of harnessing CSR to make it accountable and legitimate so that the power and capability of corporations can be reliably directed towards social as well as private good. Undoubtedly, the next phases of the CSR movement require bold steps, ones that will be met with resistance. Yet, the “great disruption” of 2016 reflected by the wave of populist elections is a precursor to structural changes happening in the global political economy, from the rise of China to the disruption of manufacturing through globalization and automation (Hira, 2019). In short, the moment is right for such an evolution, if a road map can be created.

Evolution of CSR Seems Promising, but Changes Are Superficial

To begin to understand how change for a broad social phenomenon can happen, it is first necessary to understand its origins. It is impossible to trace broad social movements to epiphenomenal origins in a linear fashion, however, we can trace the current vogue for CSR to deep roots in the nineteenth century (Eichar, 2017, p. 2). These origins are commonly associated with the “robber baron” period of Western history, when entrepreneurs in the emerging industrial revolution were sometimes able to gain remarkable market power over strategic industries, from electricity to oil. CSR in those early days fit more into the guise of philanthropy, and foundations such as that established by Carnegie persist (Husted, 2014). As Polanyi (1944) pointed out, this early period of industrialization revealed not only the ugly nature of child labor, nasty pollution zones, and union-busting tactics as lamented by Marxists, but also a social response, albeit grudgingly, to start to draw lines around such negative effects of laissez-faire capitalism. Such efforts culminated in the gradual development of the modern social welfare state, but it developed in evolutionary waves punctuated by improvements in social consciousness, from the Triangle Shirtwaist Factory Fire in 1911 to the New Deal to the Great Society extensions of state intervention. While such interventions were questioned over the last five decades as neoliberal ideas about state overreach gained traction, one could argue that the time is ripe for the pendulum to swing back again towards a further evolution. As Hira (2019) and Piketty (2014) point out, increasing inequality, climate change, and xenophobic reactions against immigration are symptoms of a larger malaise within the West.

In this context, CSR global initiatives have accelerated from the 1990s, reflecting increasing activism against prominent companies such as Nike, about labor conditions. In 1992, Business for Social Responsibility was formed, including 51 prominent companies. The term, the “triple bottom line”, including social and environmental along with economic impacts, was coined in 1994. In 1999, the UN feted the launch of the Global Compact. The early 2000s witnessed a flourishing of global CSR standards by the industry, including several backed by the EU and the initiation of the Global Reporting Initiative (GRI) and the Extractive Industries Transparency Initiative (EITI) (Latapí Agudelo et al., 2019; Hira & Benson-Rea, 2017).

Notwithstanding such pressures, the challenges for further evolution of the capitalist system, and with it, CSR, are considerable. For one thing, global supply chains mean that state regulations could potentially simply shift production elsewhere, where there is less scrutiny of labor or environmental practices, or where weak institutions prove themselves to be easy to buy off, generally more cheaply than meeting said regulations. For another, pressures in the West do not translate well onto the increasing number of non-Western corporations, particularly those based in China, where pressure for global human rights enforcement is a non-starter. A final constraint is the well-discussed issue of externalities, whereby pollution created in one area creates costs accrued by everyone, thus incentivizing free riders.

The overall situation for CSR thus defaults into one of voluntary compliance amidst good intentions, as reflected by The Global Compact, but with little hard follow-through given a patchwork of voluntary regimes and weak or missing transparency and auditing systems for compliance. The Asian financial crisis of 1997, the global recession of 2008, and the Panama Papers leak of 2016 of huge amounts of well-connected accounts in offshore havens, along with ongoing stories of tax evasion all reveal structural issues around corporate accountability that no amount of voluntary agreement efforts can overcome. Even in the aftermath of scandals, such as the Rana Plaza textile factory collapse or serious corporate efforts to create a positive brand image such as those by Nike, analysts cannot find the blueprints or evidence for lasting change (Locke et al., 2007; Hira & Benson-Rea, 2017). Such issues are not limited to far flung corners of the globe. Automation and casualization of the workforce, such as the reliance of Walmart upon part timers to avoid paying health benefits (Eichar 2017, pp. 307–308), throughout the West, are receiving increasing attention.

CSR: as Currently Conceived, Is Bound to Fail

In this overall context, we can look towards potential catalyzing variables for change. Arguably the most prominent of these are incentives within the capitalist system itself. We should begin with the “doing well by doing good argument”’ that corporations who are socially responsible have higher benefits. This argument falls short in that it has not been empirically proven, so that we cannot find clear patterns that social responsibility improves profits. The same is true for social responsibility indices, which while convenient, lack primary data and thus obfuscate significant on the ground dynamic differences for both host country situations and investors’ varied ethical preferences (Chatterji et al., 2009; Derwall et al., 2011; Gregory et al., 2014; Renneboog et al., 2008; Revelli & Viviani, 2015).

The mushrooming of CSR departments and reports to global regime efforts, such as the GRI and EITI, by which participating companies report key indicators, particularly revenue transfers to governments, attempt to demonstrate their responsible behavior through improved transparency. There are many weaknesses to the indicators ranging from ambiguity to conflict-of-interest auditing (Lim, 2016), however, the biggest issue is that the states receiving huge sums from mining do not have similar reporting requirements, thus corruption can continue unabated. Moreover, measures that are harder to gather and quantify, including labor rights, environmental sustainability, and community benefits, get short shrift. Here again, the good intentions do not equate into a sustainable system.

While there are no systematic data for potential output variables of CSR in regard to whether it has improved local situations, there is a mountain of evidence that the global effects are insignificant. If we take mining, where great CSR efforts have been made, for example, there is no evidence that conflict has declined over time. In fact, ICMM, an industry think tank, reports in 2015 that the number of mining conflict incidents increased steadily across the globe from 2002 to 2012. The Observatory on Mineral Conflict in Latin America (OCMAL) suggests that 277 mineral conflicts were occurring in that region in 2020, and the number of incidents where force was used at mining protests increased from 2 in 2005 to 22 in 2018. Berman et al. (2017) find in their study of violence in African countries from 1997 to 2010 that conflict increased along with the rise in mineral prices. As is well known, minerals have funded civil conflict for several decades now, and the logical responses of reducing government corruption and making supply chains transparent have yet to be put in place.

The pattern is similar in regard to labor disputes. A new database that traces such events from 1930 to 2013 shows no steady decline in the number of labor disputes globally over the period. Instead the number increased in the 1970s and 1980s before declining again over the last two decades (van der Velden, 2015). These patterns roughly hold across regions. The point is that the introduction of the ILO’s founding in 1919 did not lead to a reduction in labor conflict over time, despite the fact that more countries over time formally accepted generally comparable labor standards.

The weaknesses of such systems are easy to find from a logical perspective. Analogous to the quality of democracy, which depends on voter knowledge, checks and balances, including a free press, and transparency and accountability in institutional reporting, CSR as a purely self-reporting system is bound to fail. Given that there are no consequences for failure, that consumers are largely oblivious to the processes of global production, and there are no enforcement systems, it should not be surprising that such systems have failed to address the most systemic violations of norms that most corporations say they are against, let alone move towards collective global issues such as climate change. Moreover, the inability and/or unwillingness of states in the South to enforce basic labor and environmental standards reflects a fundamental weakness in both the conception and execution of CSR. Thus, there is a paradoxical danger that CSR provides mutual cover for both corporations and governments to eschew responsibility for collective public goods (Hamann, 2019). This author has seen this first-hand through recent studies of the textile and mining sectors, where corporations suggested in person that their only real responsibility was delivering set revenues to the government and governments said that corporations had failed to deliver on promises to improve community- and national-level development. The utter failure of global mining to improve community benefits in a significantly perceived way is reflected in the growth of its greatest threat—the explosive proliferation of artisanal and small scale mining (Hira & Benson-Rea, 2017; Hira & Busumtwi-Sam, 2019).

Beginnings of a Research Agenda: Preview of Essays for This Volume

Recognizing the massive lobbying and obfuscating power of corporations could lead one to despair, but we nonetheless believe that there are chinks in the armor of the current system. In the rest of this special issue, we seek to move the conversation forward by offering some insights on ways global CSR systems could be moved forward, with a primary focus on the role of the developing state.

In the first essay, Haslam examines the complexities of the developing state-transnational company relationship. He offers a new taxonomy for understanding the variants of state roles, depending on their capacity and unity. His contribution allows us to move beyond the tried dichotomy of “strong” versus “weak” states in resource bargaining. More importantly, Haslam pushes us to see the possibility for an active state, even when its capacity is weak, and that such capacity can improve over time. In this sense, he suggests correction to the static approach of current CSR regimes, that take states as given entities, with whom formal contract negotiations should suffice. Any number of mining conflicts that have erupted after such formalities should put such assumptions to rest. In reimagining the State–TNC relationship as a “co-production,” Haslam points to the joint responsibility and potential roles of each partner for both stable economic working conditions and the production of collective good and bad as benefits and costs of the enterprise. In doing so, Haslam alludes to the need to improve bureaucratic capacity and coordination on the part of the state in the South over time, as reflected in regulatory capacity.

Hira’s essay focuses on this very variable of state capacity, putting the emergence of “mixed regimes” of international organizations, NGOs, and TNCs under scrutiny for their neglect of the former. In fact, the construction of mixed regimes reflects a form of a “white flag” of surrender by TNCs to the real task of improving state capacity so that they have a partner that can help ensure stability for their operations, something no outside actor, lacking state authority, could pull off. Examining mixed regimes of great repute, such as the forest sustainability certification, the textile regime set up after Rana Plaza, and the fair-trade regime, Hira finds that all come up short in regard to creating viable large-scale systems for co-production. Beyond the lack of state authority and representation of the community, there are multiple coordination issues around a lack of shared standards and concepts, rife conflicts of interest in auditing systems, and no real follow through in regard to enforcement. Even where extensive brand efforts are made, such as the case with Nike (Locke et al 2007), without local regulatory and political capacity, no amount of external audits are able to overcome the culture of evasion and non-compliance. The real conundrum, then, is given the interests of factory owners aligned with political interests of the state and the lack of enforced labor rights, what can push the state in the South towards capacity-building and enforcement of labor and environmental codes? Here, the suggestion is to move towards using mixed regimes as both a capacity building apparatus and just as importantly as a way to wield pressure upon states in the South to follow through on their domestic regulations to build towards changing local norms and behavior in the direction of decent work and sustainable operations.

Pike’s essay that follows drills down into the question of building labor standards regulator capacity in the South through two mini cases based on her own field research in South Africa and Lesotho. As she points out, there are multiple weaknesses beyond bureaucratic capacity in the operating environment that deserves more attention. One of these is to ensure unity of purpose among the primary stakeholders, including not just the government but also the industry associations, major domestic and global companies, and capacity-building international partners such as the ILO. Furthermore, the legal systems for hearing labor complaints fairly and enforcing decisions are still weak. Even the ability to conduct basic inspections of worksites is inhibited by lack of personnel, training, and support. Beyond these suggestions, Pike points to the possibilities for coordination among key stakeholders, such as creating a bargaining council that provides overall assessments of labor standards regulatory capacity on a sectoral, regional, and national level. This would, in turn, help to promote harmonized codes and enforcement. In this sense, Pike points to the unity of purpose among actors beyond the state and TNC, including nascent unions, required to push forward palpable improvements in standards.

The final essay, by Rioux and Vaillancourt, moves us back to a more global lens, recognizing the shortcomings of current mixed regimes, but proposing a means to improve them, in order to move beyond the inherent limits of self-regulation. Their proposal is straightforward but potentially game-changing, namely to use access to the large purchasing markets in the West as a lever to ensure labor standards compliance in the Southern exporting country. They point to recent trade agreements including the USMCA (update of NAFTA) and the CPTPP (Trans-Pacific Partnership Agreement), which demonstrate incremental attention to labor rights provisions. The USMCA, for example, pushes Mexico much harder to enforce collective bargaining rights. The CPTPP creates obligations for the parties to respect ILO conventions. The authors suggest such has already lead to improvements in labor enforcement in Vietnam. These efforts could eventually be incorporated into wider multilateral vehicles, such as the GSP (Generalized System of Preferences). However, in the meantime, they argue that real traction is possible on a national and subnational level, citing examples such as the Canada-Colombia Labor Agreement, California’s Transparency in Supply Chains Act, and new responsibilities upon parent companies in France for the standards of their subcontractors.

The overall tone of the volume is far from utopian, despite its ambitions to offer new ideas about how to improve global labor standards. Rather, each author offers innovative solutions that are pragmatic and feasible, within the existing framework and using already available resources. Implementing any of these ideas could shift the considerable investments in global CSR toward effectiveness and change environmental outcomes and daily living conditions for workers around the world dramatically.