Corporate Social Responsibility is not working for workers

See also: “CSR
goes up in smoke
”, Marketing Week 25
January 2007

The Milton
Friedman approach of denigrating all CSR undertakings is a distinctly
position, however. On the Left, there is
a range of opinions from the full-throated rejection evinced by Joel
Bakan (The
Corporation), Russell Mokhiber (Corporate Crime Reporter) and two
British NGOs; War on Want (Fashion Victims) and Christian Aid (Behind
the Mask) to the
wishful thinking typified by (former Clinton official) Gene Sperling in
plea for more trade agreements which protect workers, such as the
US/Jordan Bi-lateral
Trade Agreement. (He must not have read Charlie Kernaghan’s recent
report on Jordan).

While I strongly
agree with Bakan’s critique and the Christian Aid study, these are more
ideological than substantive analyses. Some of the best work on the subject is going on at business
schools. While the overwhelming majority
of CSR studies produced are transparent attempts to cash in on the booming
market for CSR practitioners and/or lucrative consultancies, some scholars have
dug into the nitty-gritty and found labor practices virtually unchanged since
the adoption of corporate codes of conduct back in the early 1990s. See especially Richard Locke (M.I.T./Sloan)
and Ronnie Chatterji (Duke/Fuqua). Locke’s work is interesting because Nike has accorded him unprecedented
access and his research came at a time when the shoe and apparel giant was
making public pretty reliable factory-by-factory audit information (how much is
missed, glossed over or willfully misreported by suppliers is a huge question,
of course).

Just over a year
ago, Locke invited Nike's top Corporate Social Responsibility official, Hannah
Jones, to the Sloan School where she said:

"There's no point in Nike having 96 monitors on a factory
floor day in and day out monitoring overtime, if overtime is being caused way
up the supply chain. So Nike is scrutinizing its own behavior as a buyer. We
must incentivize suppliers to become part of business decision-making."

Jones skipped
over one of the “incentivizing” slides in her Power Point presentation: she apparently did not
understand the obtuse supply-chain-management jargon or could not explain
it. The “forced overtime” issue, many
will remember, was identified as a major concern in Nike contract-factories as
far back as 1989.

This is how the
Sloan website introduces this (hopeful-sounding) Making Globalization Work for
video: "These
speakers share a bleak perspective: A decade's-worth of high-profile efforts to
change sweatshop conditions in overseas apparel factories hasn't worked."

Similarly, in an
interview with Mokhiber, Prof. Chatterji says:

"After years of relative futility and millions of dollars spent,
progressives who are concerned about market failures and their impact on the
common good need to do the responsible thing and end their fixation on
corporate social responsibility. It is time to recognize that most market
failures can only be solved by governments and multilateral agreements, and
progressives need to redirect activist pressure appropriately."

The harsh
reality explained by these business scholars is bound to take some wind out of
the sails for social scientists propounding projects such as "Realizing Labor
Standards" (RLS). As envisioned, the
last decade’s corporate codes and monitoring schemes would build momentum for
steady progress and ever-higher standards.The three proponents of
RLS: Archon Fung, Dara O’Rourke and Charles Sable, outlined their approach in Boston
in 2004, followed by comments from eight activists and
academics.  While RLS is promoted as an aid to - rather than a
displacement of - local labor law enforcement (O’Rourke 2005) he also concedes
that the cases where monitoring assisted local enforcement is "the exception,
rather than the rule." Amongst the
eight commentators, the labor journalist, David Moberg, was most adamant about
enforcing local laws; this mirrors the Mokhiber critique and is most fully
expressed in the writings of Ronnie Lipschutz: “Social activism or CSR cannot
do more than affect behavioral trajectories within
.” (Emphasis in original)

The "getting
government out of the way" rhetoric of neo-liberal and “free-market” orthodoxy
was brought up recently by the International Trade Union Confederation’s Guy
Ryder, when he met with Paul Wolfowitz. A major complaint of Ryder’s is how the World Bank rates countries more highly
if they don’t protect workers. This is
what Stephen Gill calls “the negative ideological function” which is manifested
in the disempowering formulation, “there is no alternative....[this] self-regulation
by business through voluntary codes of conduct” leads to a regulatory “quilt
with many holes.”

The same disciplining rationale lies behind the pronouncements of
“authoritative” voices such as economist Robert Feenstra. His explanation (to
the New York Times’ Daniel Altman in 2003) of the imperative of
outsourcing minces no words: “It’s the only way that your firms and industries
are going to stay competitive. It’s just got to be done”.

Can citizens
resist being ruled like sheep? This was the question of the influential sociologist Max
Weber when he wrote “How are freedom and democracy possible in the long run
under the domination of highly developed capitalism?”

A main attraction for business to participate in CSR programs is because it
protects them from public regulation.  In
view of this fact, some NGO partners may be in a reassessment mode, as
described by researcher Deborah Doane, in The
Myth of CSR
(Stanford Social
Innovation Review
, 2005):

"We should be asking ourselves whether or not we’ve in fact been
spending our efforts [on CSR] promoting a strategy that is more likely to lead
to business as usual. Direct regulation
of corporate behavior…may be more likely to deliver the outcomes we seek".

Stanford’s David P. Baron calls this phenomenon ”private politics” which may be
traced, in no small measure, to the frustration of activists challenging
unresponsive governments.  He quotes the former head of Greenpeace, Paul
Gilding: “The smart activists are now saying, ‘OK, you want to play markets?
Let’s play.’” And Baron avers that demands directed at corporations “can
be viewed as a specific instrument through which society expresses its
preferences over the conduct of both markets and individual firms.” Prof.
Baron also writes: “The use of private orderings appears to have grown over the
past decade as a result of private politics…In the wake of protests against
sweatshops in Asia, activists and footwear and
apparel companies formed the Fair Labor Association…”

As elucidated by
Robert Boyer and Daniel Drache over a decade ago, private voluntary regulation
(“market-based social regulation”) does nothing to alter basic rules of the
political economy.

While the record
is replete with governments’ failure to protect workers, private regulation is
not the only available option.  Regarding the U.S.-based electronics
companies operating in Malaysia, for example, efforts were made (1991-94) to
draw attention to the feeble response of the U.S. Trade Representative’s office
to well-documented complaints filed under the Generalized System of Preferences
(GSP), an amendment to the 1974 Trade Act which calls for an annulment of
tariff reductions if the beneficiary country is not “taking steps” to comply
with internationally recognized labor rights standards.  In a recent paper
by McMaster University’s Don Wells, several cases
were cited where, “suspension of GSP benefits [was] a product of US economic
and political interests instead of labor rights concerns”. While many cases of
labor law reform may be traced to the filing of GSP complaints, he says, these
changes had only superficial impacts on labor relations in those states.  Susan
Collins of Brookings points out that Indonesia
may be an important exception, given the research of two economists who
explore, “a novel aspect of globalization's impact on labor standards,
empirically examining effects of foreign pressures on compliance with minimum
wage laws in Indonesia”. (Referring to work by Ann Harrison &
Jason Scorse.)

At the global institutional level, the world’s unions made an effort to change
trade laws to accommodate workers’ rights. According to Stuart Hodkinson:

"The ICFTU [now the ITUC, following merger with the World
Confederation of Labor] believed that by simply changing the rules managing
trade, globalization could be given a ‘human face’. Hence its longstanding
campaign, backed by US and EU governments, for a ‘workers’ rights clause’,
which would make membership of the WTO conditional on respect for ‘core labor
standards. "

Failure at the WTO meant that workers had to direct their energies
toward national governments; only in rare cases were unions in non-OECD states
capable of fighting off further flexiblization and liberalization legislation.

Click here to listen to Jeff's recent interview with Public Radio in Chicago.

About Jeff: "Had a nice life as an int'l labor bureaucrat but chucked it all for a mad run at
Nike.  Currently doing a PhD fellowship at McMaster Univ. under the tutelage of
a few professors whose aim is to explore how workers in developing countries
can build effective unions".

Skype ID: Jeff.Ballinger

Email: jeffreyd [at]




re: Corporate Social Responsibility is not working for workers

British Petroleum became obsessed with image campaigns that diverted money and management attention from its core business with tragic consequences for its workers, the environment and shareholders. BP should have put money into safety and maintenance, not glitzy PR; their real responsibility is to safely and effectively produce oil

re: Corporate Social Responsibility is not working for workers

Thank you for all the great posts from last year! I look forward to reading your blog, because they are always full of information that I can put to use. Thank you again, and God bless you in future.