CSR in Africa: be part of it!

Today we have another guest post from our long-term friend and collaborator, Laura Spence, who is just back from the African Academy of Management Conference and had some reflections we thought would be good to share.
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Given the laudable aims of corporate social responsibility protagonists - I guess, roughly speaking, to make the world a better place - you have to wonder why so much time and effort is put into understanding social responsibility in places where really, let’s face it, the social problems are not really that big.

Should we be stressing about which company sponsors school sports equipment, or would we be better occupied to worry about schools which have no books? Is corporate lobbying one of life’s big issues or could it rather be the conflation of corporations and governments, systemic bribery, corruption and nepotism? Should we be fretting about diversity training in head offices or focusing on situations where gender, race, class, caste, religious and tribal differences mean staggering inequalities in opportunities are ingrained? It paints a pretty miserable picture when you think about it.

For all this, understanding developing and emerging countries need not be a miserable enterprise. I have just come back from the fabulous African Academy of Management (AFAM) Conference in Botswana, with renewed understanding of social responsibility – or at least a whole new set of questions to ask.

Discussion around the conference was not so very different in many respects to other Academy events, but one thing kept surfacing – we might list the relative importance of issues in developing country contexts, but is there a different philosophical starting point? Are the frameworks based on Western capitalist systems of any real help outside of the ‘West’?

As is the way of things sometimes, a glimmer of an answer came for me in one of the few moments we had to get outside of the conference. We visited, by chance, a small exhibition of local artists’ work relating to the fight against HIV/AIDs. It was produced under a cross-sector partnership between government and a local NGO with the Tswana strap line ’Nna le sea be’. This roughly translates as ‘Be part of it’.

It is just a tourist-eye view of mine of course, but this felt different to me, not an approach I would expect to see elsewhere. There is something special about the local push for the acceptance of problems and drive to pull people together to join in and be a part of the solution, reflected through a local saying used in equal measure to help someone pick up something they have dropped, or work together to reduce the tragedy of HIV/AIDS. Surely this has implications for CSR in Africa.

Alongside this, another important realisation was the different pace in Botswana. Time and again when waiting for some service or other to be provided, one is met with ‘It’s coming’ or better still ‘Tomorrow’. It is a reminder how hung up some cultures are with everything being just so, preferably yesterday. When the pace of life slows, this does seem pretty absurd, but it also acts as a reminder that transferring expectations from one part of the world is a misguided approach to just about anything, not least CSR. It is likely to be far more helpful to learn from local perspectives, achievements and solutions. But patience might be needed.

My reason for being in Botswana was as part of the team offering a PhD training workshop and a stream on small and medium sized enterprises and social responsibility in developing countries funded by the UK Economic and Social Research Council. We have six seminars planned for 2014 and 2015, a book and as a result of the fascinating time had at AFAM 2014, we will be wrapping up our project at AFAM2016 in Ethiopia.

Nna le seabe.

Laura J. Spence

Top 10 corporate responsibility stories of 2013

Plus ça change in corporate responsibility. If nothing else, 2013 provided ample evidence that, contrary to popular belief, corporate responsibility issues, even the huge stories that dominate the media, do not exactly come out of nowhere. So many of the top CR stories of the year, like the Rana Plaza disaster, Apple's tax problems, and JP Morgan's huge fine, were already prefaced by the big stories of the previous year. Among our top 10 of 2012 were a Bangladesh factory fire, corporate tax avoidance, criticism of tech companies, and prosecutions in the financial sector. So the writing was already on the wall for most of the big stories of 2013. It would appear, as Ethical Corporation editor Toby Webb said recently, that with all the excitement about new opportunities and win-wins, companies are underestimating the importance of sound ethical risk management in the corporate responsibility equation. So, if you want to know what CR risks lie ahead for 2014, you could do worse than checking through our list of the big stories of 2013.

1. Rana Plaza building collapse
Back in April 2013, more than 1100 people, mostly garment workers, died when the Rana Plaza building collapsed near Dhaka in Bangladesh. It was probably the single worst garment factory disaster yet, in an industry that has suffered more than its fair share of needless fatalities. But Bangladesh had already seen a series of major industrial accidents leading up to Rana Plaza, which had been met with little tangible response from business and government leaders. Rana Plaza looks to have at last changed that. The Accord on Fire and Building Safety in Bangladesh, signed by nearly 100 global retailers, as well as labour unions and NGOs is a legally binding agreement to ensure worker safety through independent factory inspections, mandatory repairs, financial support, and sanctions for noncompliance. More than 2m vulnerable Bangladeshi garment workers are already covered by the Accord. A competing agreement, signed by Walmart, Gap, Target and other North American companies was criticized for having weaker enforcement and failing to involve labor unions. Nonetheless, both pacts are evidence that factory safety in Bangladesh is finally getting the concerted attention it deserves.

2. Apple's tax avoidance
Corporate tax avoidance had been a growing story in the UK and elsewhere prior to 2013, as evidenced by our top stories listing of 2012. But the issue exploded onto the public consciousness when Apple's CEO Tim Cook was forced to testify to a Senate committee in Washington back in May of this year. The company had avoided paying literally billions of dollars in tax by exploiting various loopholes in international tax treaties and funnelling its European profits through a shell company in Ireland. All completely legal, of course, but hardly what the public expects of a good corporate citizen. Now that attention to corporate tax avoidance has gone global, and with inequality and government debt the two biggest global risks today, the obvious questions are which country will be next in taking aim and which company will be in the firing line? Corporate tax reform is also undoubtedly going to loom even larger in the coming year.

3. NSA spying
Without doubt, Edward Snowden's whistleblowing on the US National Security Agency's (NSA) mass surveillance programs was the story of 2013. Nothing else even got close. However, the corporate responsibility dimensions still remain somewhat murky, which is why it doesn't quite make it to the top of our list. We do know, however, that telecoms companies like Verizon are required to hand over all call records  (or "metadata") to the NSA about cell phone calls made in the US. We also know that none of these companies ever sought to challenge the legality of the action. Another revelation was that the secret PRISM spying program allows the NSA to tap into the servers of internet companies like Google and Microsoft to access customer data. We also know that NSA pays millions of dollars to these same companies. We do not yet know exactly how complicit tech companies have been in the whole mess but one thing for sure is that they now realize that the NSA spying story is undermining their customers' trust and are calling for government reform. Expect much more to come in 2014.

4. JP Morgan's $13bn misconduct settlement
Our annual list of major corporate responsibility stories would not be complete without an entry from the finance industry. As we predicted at the beginning of the year, 2013 was marked by the return of government and some major financial sector scalps. None of these was bigger than the whopping $13bn fine landed on JP Morgan for misleading investors in the same of mortgage backed securities in the lead-up to the financial crisis. To date, it is the settlement ever between the US government and a corporation, and will come as some (though probably not enough) relief to those who have viewed most of the finance sector giants as getting away with the crisis relatively unscathed. On the other hand, JP Morgan is probably pretty sore about catching the flack for misconduct that was less about their own practices and more down to firms like Bear Stearns that they were encouraged by the US government to acquire at the height of the meltdown. No one comes out of this looking good.

5. Europe's horse meat scandal
At the beginning of the year, the big news was all about horse meat turning up in products it wasn't supposed to be in. Like those clearly labelled as "beef". The scandal started in the UK, quickly spread to a suspect supplier in Ireland, and soon rocked much of Europe. Customer trust rapidly evaporated as it became clear that effective oversight of the food industry was sorely lacking. Companies acted quickly to withdraw potentially contaminated products and shore up confidence but further revelations of large scale criminal activity in the food supply chain will do little to restore trust in a thoroughly compromised industry.

6. India's new CSR law
The world's largest democracy now has the world's most extensive CSR legislation. But that is not necessarily a good thing. Under the new Companies Act, passed by the Indian Parliament in August 2013, large Indian companies must spend at least 2 per cent of their net profits on CSR each year from 2014 onwards. It also requires firms to set up a CSR board committee and institute a CSR policy. The new CSR legislation has met with a mixed reaction, especially as it seems to institutionalize a somewhat backward looking approach to CSR which emphasizes philanthropic giving whilst ignoring the core strategic business of the firm. It will also be incredibly hard to enforce in a country already hamstrung by an overburdened legal system. On the plus side, the legislation does force many of India's laggard companies to finally take some responsibility for the various social problems faced by the country's citizens. For better or worse, CSR is no longer something that can be ignored in India.

7. Chevron's Ecuador pollution case
It has been a big year for Chevron and Ecuador in their long-running, aggressively-fought pollution case. In November, the Ecuadorean high court made its long-awaited appeal decision which upheld the original 2011 judgement requiring Chevron to pay $9bn to compensate for contaminating the rainforest during crude oil extraction over two decades ago. Chevron has never operated in Ecuador but inherited the lawsuit and its toxic legacy when it took over Texaco, the original operator, in 2001. For its part Chevron continues to dispute the legality of the ruling and has refused to pay. The appeal was at least partially successful for Chevron by halving the original $18bn damages bill, but not in overturning the decision. Chevron is now awaiting the outcome of a counter-suit heard last month in the US against the plaintiff's main lawyer, who the company claims engaged in bribery and fraud to secure the conviction. Meanwhile, attempts by the plaintiffs to seize Chevron's assets overseas to pay the fine also had their ups and downs in 2013. For example, Canada first denied them the rights of enforcement in May, only for a judge to overturn the decision on appeal in December. Other actions are underway in Brazil and Argentina. This has fast turned into a test not only of the Ecuadorean legal system, but of the global legal system's appetite to prosecute international legacy corporate responsibility issues.

8. Rosia Montana mining protests 
2013 saw major protests against mining operations all over the world, including Australia, Canada, Columbia, Greece, Niger, Peru, even Tibet. But the biggest of the lot was probably in Romania, which saw a mass protest movement arise in response to plans to mine around the town of Rosia Montana. If approved, it would be Europe's largest gold mine but critics claim that it would inflict untold social, environmental and cultural damage. Mass street protests erupted after the government proposed a new law that would enable the Rosia Montana Gold Corporation (majority owned by the Canadian mining company Gabriel Resources) to finally start operations after years of failing to acquire the necessary environmental permits. At stake here then is not just the proposed mine but the legitimacy of the democratic process, which protesters feel has been fatally undermined by the hastily forced through legislation. As one protester put it: "People today confront a corrupted political class backed up by a corporation and a sold out media; and they ask for an improved democratic process, for adding a participatory democracy dimension to traditional democratic mechanisms."

 9. New UN Global Compact 100 Index
There were several entrants to the new corporate responsibility standards and guidelines category in 2013, with the G4 guidelines of the Global Reporting Initiative probably being the most talked about. But September's launch of the Global Compact's new stock market index, the Global Compact 100, for us represented the most significant development. First, as John Entine noted, it offered a welcome new development in a social investing field "hungry for innovation and dogged by ideological correctness". But more than that it showed just how far the UN was willing to push the needle on its voluntary approach to corporate responsibility that heavily prioritizes incentives rather than enforcement. While many are still criticizing the Global Compact for not having sharp enough teeth to weed out laggards and green washers, the new index makes it abundantly clear that the UNGC is moving in a very different direction. Ten years ago it would still have been unthinkable, but the reality is that the UN is no longer just in the business of accords, declarations, and principles but is now also firmly in the finance industry.

10. South Korea's nuclear corruption scandal
GSK's corruption scandal in China may have got most of the headlines, but in our book, the corruption scandal that has engulfed South Korea's nuclear industry this year tops it for potential impact. Two short years after Japan's Fukishima disaster, neighbouring South Korea is also facing a devastating loss of confidence in its nuclear industry which supplies about a third of the country's energy needs. The scandal has centred on a swathe of faked safety certificates that have been issued for critical nuclear reactor parts over the years, and the bribes that have allegedly been paid to look the other way. Most commentators pin the blame on the closed structure of the nuclear industry in South Korea with only a single national operator and close ties between the operator, suppliers and testing companies. The prime minister has likened the industry to the mafia. A number of reactors have been shut down, trust in the industry has plummeted, a national energy shortage is underway, and now some 100 officials have been indicted for their part in the scandal. Corruption that compromises the safety of the nuclear industry is probably about as bad as it gets. And its unclear yet whether South Korea can really turn this one around.

Photo by rijans. Reproduced under Creative Commons licence

The business of modern-day slavery

Events last week in the UK, where three women were rescued from what appears to be a 30 year-long situation of forced domestic labour situation, have focused a great deal of attention on "modern-day slavery". But it is hardly a one-off. Issues of forced labour, human trafficking and modern slavery are increasingly gaining public attention. Business, however, has been slow to engage in the conversation.

Perhaps this is no surprise given that no company wants to run the risk of being tainted with the spectre of slavery. But most of the big modern slavery stories involve business. From children forced to harvest cotton in Uzbekistan to labourers enslaved to fish in the waters of New Zealand, hardly a week goes by without a new story of extreme exploitation being splashed across the media. The appalling treatment of migrant construction workers in Qatar the build up to the 2022 FIFA World Cup has gained more exposure than most, likely because of the headline claim that construction for the World Cup will leave 4000 migrant workers dead. It is a heart-stopping statistic.

With all this noise around modern slavery, much of it at the hands of campaigners such as Anti-Slavery International, Free the Slaves, and Walk Free (who are responsible for the recently launched Global Slavery Index), governments at least are gradually starting to act. The UK Government is already in the process of drafting a modern slavery bill to make the complex legal situation around the issue more clear for prosecutors. The US has also launched initiatives to tackle human trafficking in the supply chains of companies and government contractors. Canada too now has a national action plan to combat human trafficking whilst Brazil has perhaps gone the furthest of any country in seeking to tackle the problem.

Such measures are to be applauded, but there's still a long way to go in effectively combating the worst forms of human exploitation. And one crucial player that so far hasn't brought much to the party is business. Compared with many other social and environmental issues, modern slavery has not seen much enthusiastic response from the business community. Although virtually all corporate codes of conduct prohibit any kind of forced labour, the issue is rarely given any particular attention. Most businesses simply assume that it doesn't affect them. However, the torrent of news stories across various countries and industries suggests otherwise. Companies just aren't looking hard enough to find their connection to modern slavery.

David Arkless, formerly President of Corporate and Government Affairs at the global temp agency Manpower, is probably the most visible and articulate member of the business community involved in anti-slavery efforts. He said last week that he was "frustrated by the lack of involvement of corporations in efforts to ensure that their supply chains are verified against the use of abused labour and that most of the big corporations of the world have not amended both their financial, expense and human resource policies.” You can understand his frustration. Most business leaders are simply burying their heads in the sand.

This is a major stumbling block because most forms of modern slavery either involve business or affect it in some way. After all, forced labour is a particular way of doing business - a morally regnant one for sure, but a business practice all the same. Even illegal industries such as prostitution and drug cultivation, both of which have had numerous documented cases of trafficking and forced labour, rely on business principles and come into contact with legitimate businesses at some stage. The bottom line is that we have to understand modern slavery as a business if we are to make any real sense of it and take appropriate steps to prevent it.

The research base exploring the business of modern slavery is especially thin. So I was pleased last week to help launch a new report funded by the Joseph Rowntree Foundation on the business models and supply chains found in forced labour in the UK. It was a fascinating project to be involved in, and along with my co-authors, I'm hoping that it really helps to shine a light on the economics of modern slavery in developed country contexts.

One of our main findings is that although forced labour is often described as a hidden crime, it is not as difficult to unearth as many in the UK, including businesses and government, seem to believe. As my co-author Genevieve LeBaron and I say in a recent article for The Guardian: "The problem is not so much that we cannot find forced labour; it is that either we choose not to look where it is most likely to occur or we simply misclassify those being exploited as criminals rather than victims. A new approach to detecting and enforcing forced labour is necessary. To pinpoint its occurrence we need to start by examining the forces of supply and demand."

Much still needs to be done to really understand how these economic forces lead to such extreme forms of exploitation. But the good news is that we're making good progress. The challenge will be getting legislators and business leaders alike to take our findings seriously.

AC


Photo by Junaidrao. Reproduced under Creative Commons licence

Rob Ford should stay

Toronto, that once sleepy capital of Canadian business, ‘New York run by the swiss’, a city widely seen as boring and ugly (esp. compared to its once-competitor Montréal) – has made global news: A crack smoking mayor! Match that, London, New York or Berlin! All the mainstream media here (and globally) are pretty unanimous in their call for Rob Ford’s resignation, or at least for him taking a break.

That in itself is a reason for suspicion. In my business ethics course this week I had a vivid exchange with my students. We were discussing discrimination and how it is unethical to apply criteria such as race, gender, sexual orientation, recreational habits etc. to job qualifications and hiring. On that note, calls for Ford’s resignation are not very convincing. After all, on many accounts, he has done a good job as Toronto’s major. The city’s finances are healthy; public services are running smoothly, key infrastructure projects, such as the construction of new subway lines have finally taken off; and the major successfully tamed the beast of an otherwise dysfunctional federal/provincial/municipal layered bureaucracy to get even more public infrastructure projects off the ground. This alone, in a city whose infrastructure is stuck somewhere in the 1970s, is reasonable ground to consider him a success on his job.

Of course, there were other things in the past, where arguably Ford violated the terms of his job. Toronto Star investigative reporter Daniel Dale – a former student of us - digged out a number of occasions where the mayor took advantage of his role for personal issues. But nothing really stuck.

As much as some have made an ethical case here against the mayor, I do not think these arguments really touch the heart of the controversy.

Two things spring to mind to any reflective observer. First, much of the vitriol directed at Ford in my view is just based on the persistent WASPy (as in White Anglo Saxon Protestant) subculture of North America. Ford likes to use recreational drugs, has all the wrong, politically incorrect friends and, yes, is probably an alcoholic. Mind you, at least it was not about sex. But in some ways his fate resembles the one of Bill Clinton or Elliot Spitzer: Ford does not live up to the public morality and style, which is deemed politically correct in Canada. It is worth noting that although possession of crack is illegal in Canada, the lack of concrete proof (in terms of physical substance) means that prosecution is unlikely. But the fact that Ford admits to it in public and simply continues with his job just infuriates all those who either have succumbed to this pubic consensus of stuffy morality or otherwise suppress it and live it out in private. After all, Canada’s alcohol consumption is twice the global average and him talking about his ‘drunken stupors’ as a regular occurrence probably just represents an average recreational practice in this country.

Little surprise of course, that much of the hunt on Ford – representing the right wing Progressive Conservative Party – is coming from the ‘liberal’ press here. It not only shows how small ‘c’ conservative even Canada’s liberal elites are but also reveals that all those who hated Ford as a mayor to begin with now take whatever moral resource as their disposal to finally finish him off.

This points to a second observation. Rob Ford epitomizes the aches and tensions of a country which has been the most relaxed and forward looking in terms of immigration. His constituency are the ‘905ers’ based on the area code of Toronto’s suburbia. That is also where he is from. These are mostly people with a first generation immigrant background coming from south and east asia. The other lot,  who hate him and are currently fanning the flames of ousting Rob Ford are the ‘416ers’, those who live in the core downtown of Toronto. None of them voted for Ford and they never felt represented by a fat, white, uneducated, loud bloke from the suburbs.

Ford’s approval ratings have soared in the aftermath of him admitting his drug use. This is no surprise. He represents people who struggle to make ends meet; who are sick and tired of commuting to work in a city with the longest commuting time by far; who get little kick out of taxes being spent on things that do not relate to their everyday struggles; and who know from their own experience that fighting your way out of, say, Bangladesh to Brampton (a 905 suburb) – yes – takes determination, hard work and not too much concern for what their then constituency back home thought of them. Rob Ford, the small time entrepreneur, in his stubbornness just represents them.

So what does this amount to? On day one of his election I thought Rob Ford was a disaster. Mostly because I believe in Toronto’s potential as a great global city that deserves a mayor of a different stature and outlook. But at the same time I also believe that a mayor has to represent the city that voted him in. And boy, Rob Ford fits that bill. So rather than trying to get this ugly representation of what Toronto actually looks like out of sight, the real smart reaction to this scandal would be to say that Rob Ford – with all his preposterous faults – is the one that the people of Toronto chose to represent them. So lets allow him to continue to represent us. And if we don’t like what we see - until we can vote him out - maybe we find the courage to address the underlying issues. Rather than killing the poor guy who currently just displays them.

DM

Photo by Eric Parker, reproduced under the Creative Commons license.

Corporate social responsibility in a global context - a new free download

The new edition of our textbook on CSR, Corporate Social Responsibility: Readings and Cases in a Global Context, written with our colleague Laura Spence, hit the shelves a few weeks ago - just in time for the new academic year. And we're pleased to see that it's flying off those shelves pretty fast too. In its first month alone, the book sold almost a 1000 copies, which is pretty good going - and a big uptick on like-for-like sales from last time around.

The second edition is quite a change from the first. It's still based around readings of classic and recent articles on CSR, but we've updated more than half of these, written three brand new cases, and overall it has a much more textbook-like feel to it. Along with Routledge, the publishers. we've worked hard at refreshing the design and contents to make the text much more user friendly, more lively and engaging, and with a great new companion website to help students and instructors make the most of the book. This includes a whole bunch of annotated links to CSR in practice which help readers see where theory in the book turns into practice as well as links to career resources for budding CSR professionals. Of course, there are also all the usual instructor resources like powerpoint slides and teaching notes, as well as a cool new "Case Club" which has suggested cases for each of the chapters in the book. It really is as close to the complete package for a CSR course kit as we could get it.

To mark the launch of the book, we are making available, completely free, a download of the first chapter, "Corporate social responsibility: in a global context", over at the Social Science Research Network. This is the exact same version as you'll find in the book, downloadable as a pdf. You don't need to sign in, register, or anything. Just go to the right page and click "Download This Paper". It's that simple.

The chapter is a good basic CSR 101 for anyone trying to get their head's around the subject. Among other things, it includes discussion on the nature and definition of CSR, and its emergence in different national contexts (including developing and transitional economies) and even different organizational contexts (such as small and large firms, and public, private and nonprofit organizations). As with the previous edition, although we discuss a whole bunch of different definitions of CSR, we don't introduce a new one. Instead we try and capture what is common across CSR definitions in order to determine the main unique features of the phenomenon. We call these the six core characteristics of CSR, which are shown in the Figure below.

Six core characteristics of CSR

Reproduced from Crane, A., Matten, D., and Spence, L.J. (2013), "Corporate social responsibility: in a global context." In Crane, A., Matten, D. and Spence, L.J. (eds), Corporate social responsibility: readings and cases in a global context, Abingdon: Routledge (p. 9).

As we are often heard remarking, CSR is a field of "conceptual anarchy". Hopefully by reading the introduction, and who knows, maybe reading more of the book in class, at the library, or just for your own enjoyment and education, we can hopefully help you navigate through some of the confusion to reach a clearer, if no less complex, understanding of a sometimes elusive idea.

See also: Our top 10 tips for teaching CSR