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Non-Governmental/Citizen
Organization Efforts While governments can
certainly help to promote corporate social responsibility, citizen movements are even more
important actors pressuring both governments and TNCs to implement and institutionalize
this objective. In fact, there exists a rich history in many countries of such citizen
involvement, originating primarily in unions, religious groups, farm groups, environmental
organizations, consumer groups and women's organizations.
Citizen organizations have attempted to foster corporate
social responsibility through a variety of methods, including targeting the board of
directors, generating negative publicity for the corporation, instituting law suits,
pressuring governmental agencies, engaging in dialogue with company officials and
mobilizing communities. This section will focus on three particularly interesting and
successful tactics that citizen groups have undertaken: organizing corporate boycotts,
formulating corporate codes of conduct and pursuing alternative investment strategies.
Corporate
Boycotts
One of the most salient and successful tactics citizen
groups have undertaken is the corporate boycott. For example, as previously mentioned, in
the 1980s, consumer groups organized the famous boycott of infant formula manufacturer
Nestlé for its practices of marketing and distributing this product. Through the boycott,
these citizen organizations successfully compelled Nestlé to change its harmful practices
and convinced the World Health Organization to promulgate its International Code of
Marketing of Breast Milk Substitutes. Citizen organizations, particularly religious
groups, were also formative in organizing the crippling boycott of apartheid South Africa
and successfully convinced numerous companies to divest from the country. Citizen groups
in the United States persuaded 27 states and 101 cities to enact sanctions on South
Africa; as a result of the boycott, two thirds of all US-based companies sold off their
equity shares in their South African operations.176 Citizen groups organized yet another successful boycott of the
Heinz Company: environmentalists forced this company to terminate its policy of catching
tuna in nets that snared dolphins.
Codes of
Conduct
Citizen groups have also attempted to promote TNC social
responsibility by formulating codes of conduct. The Coalition for Environmentally
Responsible Economies (CERES) has promulgated a particularly effective code entitled the
CERES Principles, which emerged in 1989 from the Exxon/Valdez disaster off the coast of
Alaska.177 This coalition attempts to foster co-operation between
environmental organizations and the business community and to convince corporations to
adhere to the voluntary CERES Principles. Companies that endorse this code of conduct
commit themselves to follow responsible practices in a number of environmental arenas,
including the protection of the biosphere, the sustainable use of natural resources, the
reduction and disposal of natural waste, energy conservation and environmental
restoration.178 As of 1994, dozens of companies had endorsed these Principles,
including the Sun Oil Company and General Motors.179 It is important to note, however, that the CERES Principles are
not legally binding. Companies endorsing this code are responsible for evaluating their
own compliance by completing a detailed CERES report that the Coalition for
Environmentally Responsible Economies then disseminates to the public.
Japanese-based citizen groups have also formulated a code
of conduct for transnational corporations. The "Guidelines for Restricting the
Activities of Japanese Companies Abroad" cover a wide range of issues. They require
Japanese transnational corporations to conform with domestic and international law,
respect social and cultural values, disclose relevant information, maintain safe working
conditions, promote consumer and environmental protection, and refrain from political
activity.
The Australian-based International Organization of
Consumer Unions constitutes another citizen group dedicated to promoting corporate social
responsibility through a code of conduct. At the 1994 International Conference on Fairplay
in Global Business held in India, this organization suggested the establishment of
Guidelines for Global Business. Participants in this symposium discussed the ways in which
existing codes and charters could be synthesized to produce a streamlined code of conduct
for transnational corporations.180 Because the United Nations has shelved discussions on the United
Nations Code of Conduct for Transnational Corporations, efforts to promulgate the
Guidelines for Global Business could replace and expand upon previous attempts by the
disbanded United Nations Commission on Transnational Corporations.
Alternative
Investment Strategies
Non-governmental organizations have also attempted to
promote corporate social responsibility through creative investment strategies. Such
tactics have assumed two primary forms. First, numerous groups have emerged promoting
socially responsible investing practices. Such private organizations screen opportunities
for potential investors to ensure that their clients' money contributes only to companies
engaging in socially responsible activities. These investment groups attempt to
demonstrate that corporate social responsibility and profit-making are not mutually
exclusive endeavours. There exists significant debate, however, as to whether socially
responsible investment strategies offer returns as high as traditional investment tactics.
Second, citizen organizations have attempted to promote
TNC social responsibility by introducing shareholder resolutions. Instead of advocating
change from outside the company, citizen groups acquire shares in a corporation so that
they can promote change from within the company. During the past few years, the
influence of shareholders over the corporate process has been increasing, aided by the
concentration of shareholder power in institutional investors.181 Active investors are increasingly seeking to change corporate
policy by using the public process to educate shareholders and to propose alternatives to
the policies of the incumbents.182
The Interfaith Center on Corporate Responsibility has
emerged at the forefront of this shareholder resolution movement. Founded in 1971 and
dedicated to merging social values with investment decisions, this organization is a
coalition of nearly 250 health care corporations, pension funds, as well as Protestant,
Jewish and Roman Catholic orders, denominations, agencies and dioceses. This centre not
only sponsors shareholder resolutions but also conducts dialogue with corporate
management, applies social screens to investors' portfolios, divests stock, publishes
special reports, testifies at the United Nations, leads consumer boycotts and letter
writing campaigns, advises socially responsible mutual funds, and acts as a clearinghouse
for alternative investments and community economic development.
According to the Interfaith Center on Corporate
Responsibility, as of early 1994, there were at least 286 socially responsible shareholder
resolutions outstanding.183 These resolutions cover an extraordinarily wide range of subjects
including alcohol and tobacco sales, marketing and advertising; labelling; corporate
governance; executive compensation; corporate philanthropy; development lending; community
reinvestment policies; the environment; energy conservation; employee equality; indigenous
peoples; labour policies; pharmaceuticals; weapons sales; Myanmar; and Northern Ireland.184 Sponsors include the Pension Fund of Minnesota, the United
Brotherhood of Carpenters, the Calvert Social Investment Fund and the Friends of the
Earth.
Specific resolutions, for example, request that Time
Warner and Knight Ridder analyse whether advertisements in their publications encourage
minors to smoke; that Chase Manhattan and Citicorp establish human rights, social,
political and ecological criteria for extending loans in developing countries; that
Pepsico promote packaging reduction and recycling systems; that Exxon report on the impact
of its mining operations on indigenous peoples; and that SPRINT establish a committee on
plant closings with employee and community representatives.185 |
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Conclusion
The era of the transnational corporation has clearly
arrived. As national governments increasingly lose power to these global economic entities
and as the free-market ideology becomes even more predominant, TNCs remain some of the
most powerful economic, social and political agents in the world. The expanding array of
global opportunities for transnational corporations to transfer money, capital and
technology around the world renders more difficult the reconciliation of the long-term
public interest with short-term TNC interests. Furthermore, the increased leverage of
transnational corporations has allowed them occasionally to play nations and communities
off against one another in an effort to receive the most advantageous benefit package, a
dynamic that generates a "downward harmonization" of labour, consumer and
environmental standards.
Although transnational corporations could potentially play
an important role in social development, their current impact on this process is moderate
at best. While these entities certainly provide jobs, the quality of such jobs is often
low and TNCs have demonstrated little proclivity towards protecting job security. While
transnational corporations certainly produce important consumer goods, their marketing and
distribution tactics sometimes produce harmful health ramifications. They are sometimes at
the forefront of developing technology for protecting the environment, yet transnational
corporations have historically followed ecologically irresponsible practices and have
plundered the natural resources of developing countries. While TNCs provide taxes that can
be used to fund social programmes, these entities are constantly using their expansive
powers to lobby against such taxes and engage in manipulative transfer pricing policies
designed to avoid paying governments the revenues they are due. Transnational corporations
develop and employ important technological innovations, but they rarely transfer this
technology to developing countries and the technology they do employ in developing
countries is often inappropriate. While TNCs might foster economic growth, it is even less
clear whether this alleged economic growth produces socially beneficial results. Finally,
transnational corporate activity can sometimes perpetuate disparities in standards of
living. Instead of creating a global village, these firms are weaving webs of production,
consumption and finance that offer benefits to only a small minority of the world's
inhabitants. Most people are marginalized, excluded or hurt by these webs of activity.
As described above, transnational corporations sometimes
unintentionally advance social development as a by-product of their profit maximizing
activities. However, with the exception of corporate philanthropy and a few self-imposed
codes of conduct, they rarely consider themselves obligated to advance such social goals.
TNC officials often advance disingenuous and morally suspect arguments against corporate
social responsibility. In fact, recent developments in bilateral investment treaties,
multilateral trade agreements, privatization efforts, weakened national regulations and
the predominance of the free-market ideology reinforce this perspective by minimizing TNC
responsibilities while expanding their rights.
The extent to which a trend exists towards or away from
greater corporate social responsibility is difficult to assess. On the one hand, some
business associations have emerged espousing the importance of socially responsible
activities and some individual firms have unilaterally pursued (and often marketed) such
policies. On the other hand, however, transnational corporations have been heavily
involved in promoting and lobbying for an international economic environment that expands
their rights while minimizing their responsibilities.
Because of the current environment in which TNCs operate
as well as their profit maximizing nature, it is important that both governments and
citizen organizations continue to pressure TNCs into advancing socially responsible goals.
Sub-national and national governments can achieve such objectives through their
traditional regulatory efforts and creative trade-related investment measures. However,
because the GATT limits the regulatory power of sub-national and national governments and
because transnational corporations are increasingly able to play communities and nations
off against one another, international governmental regulation is crucial. In addition, an
international code of conduct for transnational corporations could be beneficial. However,
the real burden for fostering corporate social responsibility lies with citizen
organizations. They must continue to pressure both governments and transnational
corporations to institute more socially responsible policies. Available and effective
tactics include consumer boycotts, codes of conduct, shareholder resolutions and socially
responsible investment practices. Such efforts are crucial if the power of transnational
corporations is to be harnessed towards achieving positive social change.
176 76. Shuman, op. cit..
177 77. Information for this section comes from CERES (1994).
178 78. Ibid., pp. 4-5.
179 79. Ibid., p. 3.
180 80. Asher, 1994, p. 8.
181 81. Pound, 1993, p. 1008.
182 82. Ibid., p. 1007.
183 83. Interfaith Center on Corporate Responsibility, 1993, p. 2.
184 84. Ibid.
185 85. Ibid., pp. 9-11.
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