Introduction

Green labels, eco-efficiency, life-cycle manage-ment, environmental and social reporting,triple bottom line, socially responsible

investing, closed manufacturing processes . . . Theseexpressions of corporate social responsibility (CSR)appear regularly in corporate publications, a phenom-enon no one would have predicted 15 years ago.Global corporations did not wake up one morning anddecide to become socially responsible citizens,however. They were instead awakened, sometimesroughly, by the concerted efforts of civil societyorganisations (CSOs), which can today boast a globalreach equal to that of their corporate counterparts.

CSOs are uniquely qualified to monitor theenormous influence of the private sector on publiclife and they are taking on this challenge at a crucialtime: global poverty and wealth disparity areincreasing; child labour remains pervasive; and agrowing amount of work is done in sweatshops. Inthis context the policies and actions of corporationshave significant influence, for good or ill, throughtheir business practices and their influence ongovernments and multilateral organisations.

Since multinational corporations are usually seenas the main actors in the global economy, most ofwhat has been written about CSR provides accountsof how and why businesses are changing and whatthey can do to become more responsible. While thereare case studies of how CSOs have promoted ordemanded corporate responsibility, they have notbeen the focus of much systematic, independentresearch. Who are they? How do they work? Whathave they accomplished? What more can they do?

Definitive answers to these questions are elusivebecause so much basic research still needs to bedone, but we know enough to suggest here aframework for further study and to sketch theimpact of CSOs on both the policies and thepractices of corporations, industries, and govern-ment. There are important differences among both

the goals and the forms of action of CSOs. In thischapter, we draw attention to the distinctionsbetween ‘insiders’ and ‘outsiders’ and between‘Northern’ and ‘Southern’ CSOs. Insiders are thosethat work closely with corporations in helping todevelop socially responsible programmes andpolicies; outsiders are sceptical that profit-seekingorganisations can act responsibly, and tend toemphasise public pressure and government action.Northern CSOs generally act on behalf of others,whether dolphins or children, and exercise leveragein Northern centres of power; Southern CSOs tendto represent the victims of corporate behaviourmore directly. Methods of protest range from directaction to consumer and investor behaviour, topartnerships and monitoring. We argue that globalcivil society needs to combine these varied types oforganisation and forms of protest to be effective. Inthis chapter, we pay particular attention to monitor-ing, since this is a role that civil society is likely toplay for some time.

The chapter concludes with a discussion of thepower-and limitations-of civil society and of howCSOs work with governments and multilateralorganisations in an effort to institutionalise corporatesocial responsibility. In particular, we address thedebate about whether multinational corporationscan be relied on to act responsibly voluntarily orwhether there is a need for national and internationallegislation. We argue that what matters is a changein norms and ways of thinking. While formalregulation is important, not least to provide a tool forCSOs, even the best designed standards and codes willnot work without a public commitment. And that isthe job of civil society.

The historical view

Holding corporate players accountable for theiractions in global economies is not a new idea. In1787, Thomas Clarkson and eleven other men met ina Quaker bookshop in London to form a society toprohibit British companies and shipowners from G

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C h a p t e r 4

WHO’S MINDING THE STORE? GLOBAL CIVILSOCIETY AND CORPORATE RESPONSIBILITY

Melanie Beth Oliviero and Adele Simmons

participating in the slave trade, seeing this as a crucialfirst step in ending slavery throughout the world.Businessmen, clerics, and concerned men and womenof all social classes were involved in the campaign andpublicised the atrocities aboard the slave ships.Members of Parliament kept the issue in the publiceye and writers spread word of a boycott of slave-grown products. By 1792, 400,000 people in Britainwere boycotting slave-grown sugar. Legislationbanning the British slave trade passed one House ofParliament in 1792, but the long war with Franceput everything on hold until both Houses agreed toban the slave trade in 1807. Slavery in the BritishEmpire came to an end in the 1830s, and ThomasClarkson, who had assembled that first meeting 50years earlier, was there to see it.

Another historical example is the work begun byEdmund Dene Morel a century later. In 1897, Morel,a minor official of a British shipping company and afreelance journalist, was in a position to observeships from King Leopold’s Congo load and unload inAntwerp. Rubber came off the ships; weapons wenton. Discrepancies in the shipping figures Morel

collected for his articles eventually led him to KingLeopold’s dark secret: the king’s rubber was extractedby forced labour, his colonial regime was sustained bymass murder, and the king (not the Belgian state)was the corporate profiteer. Belgian scholar JulesMarchal estimates that Leopold’s profit, in today’sdollars, amounted to $US1.1 billion.

In England, Morel launched what was to becomethe first international human rights movement ofthe twentieth century. He crafted his message toresonate with a wide constituency. He told Britishbusinessmen that Leopold’s monopolistic practicesdenied them profits in the Congo. He recruitedclergymen with his reliable and damning reports frommissionaries. His publications informed public opinionand political debate and he was careful to portray themovement as above the partisan political andreligious fray. He well understood the value of mediaattention, and worked hard to mobilise and informjournalists from Britain and abroad.

While Leopold’s shrewd public relations campaignalso had moments of success, in the end his effortswere undone by the facts. As a result of the laboursof Morel and his civil society collaborators throughoutthe world, control of the Congo was transferred fromthe King to the Belgian government in 1908, andthe most egregious abuses eventually came to a halt(Hochschild 1999).

Considered together, the two movements exem-plify many of the components that we recognise inmodern civil society campaigns: a coming togetherof different sectors of society, media coverage, aboycott, parliamentary debate, and reformlegislation. The campaigns inevitably suffered froma lack of CSO infrastructure (each built networks ofactivists from scratch), the difficulty of educatinga public unfamiliar with such campaigns, the dearthof enforcement and monitoring tools, and, of course,the lack of today’s technology.

Corporate social responsibility: why corporationscare

There are over 60,000 multinational corporationsactive today, with over 800,000 affiliates abroad(UNCTAD 2001). While different economists usedifferent measures for determining the relative sizeof multinational corporations, at least 37 of the top100 economies of the world are corporations (Wolf2002). Some economists have found that thecombined sales of the world’s top 200 corporationsG

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Above: Congo reformers often pointed to the Berlin agreementof 1885, one of many broken promises regarding the treatmentof Africans. Cartoon courtesy of Adam Hochschild.

are bigger than the combined economies of all butthe 10 richest countries (Anderson and Cavanagh2000, frontispiece). Needless to say, this representsenormous power in the hands of business.

Yet for all that—or perhaps because of it—a recentsurvey of European elites found that those surveyedtrusted civil society organisationsmore than business, or government.Amnesty International, the WorldWildlife Fund, and Greenpeace out-ranked the leading multinationals inEurope, and are among the top 15most trusted organisations in the US.Respondents cared most about howbusinesses treat employees and theextent to which they are honest(Edelman PR Worldwide/StrategyOne 2002). With this enhancedlegitimacy, CSOs are well positionedto insist on responsible behaviourfrom corporations.

In recent years, public opinion has embraced theconcept that corporations have civic and socialresponsibilities. In a 1999 poll of 25,000 citizens in 23countries, the Conference Board (URL)—a research,analysis, and information-sharing network—and thePrince of Wales International Business LeadersForum—an international CSR advocate—found thattwo-thirds of those surveyed expected companies todo more than simply make a profit and obey the law(Environics International Ltd 1999). A recent Canadianpoll found that 72 per cent of Canadians say businessshould pursue social responsibilities, not just profits,80 per cent say government should set socialresponsibility standards, and most want pension fundsinvested in responsible companies (CanadianDemocracy and Corporate Accountability 2002). Thecomparable US sampling finds 89 per cent of thoseasked expected the companies to do more thanoperate within legal boundaries and almost half hadmade purchasing decisions based on their view of acorporation’s commitment to corporate citizenship(Weiser and Zadek 2000: 24). It is clear that corpora-tions ignore these sentiments at some peril.

Most companies have statements of values andprinciples, but the interpretation of these statementsand the extent to which they are followed varywidely. When it comes to corporate citizenship, thebusiness world presents a broad continuum. On oneend are those with little interest in the concept, someof whom, like the tobacco industry, persist in harmful

practices even after being informed of the dangersor, like former Sunbeam Chief Executive Officer (CEO)Al Dunlop, run their businesses in keeping with theidea that ‘you’re not in business to be liked’. Manybusiness leaders are coming to realise, however, that‘corporate social responsibility is not about being

nice. The potential to limit expend-iture, maintain or improve employeeand community relations, controlrisk and promote reputation meansthat applying corporate socialresponsibility strategies is simplygood business sense’ (Kent 2001). Inthe middle of the continuum are thegrowing number of corporationsthat are in fact responsive to civilsociety pressure but are still unlikelyto initiate change on their own. Onthe far end of the scale are thosebusinesses, sometimes acting withonly minimal prompting by civil

society, whose leadership has changed practicesthroughout an industry. One thing is clear: any givencompany’s commitment to the principles of CSR isdirectly dependent on its CEO’s commitment.

The Aspen Institute’s Business Leaders Dialoguein July 2001 (Aspen Institute 2001) discussed threetypes of corporate citizenship. The first includes thosebusinesses that obey the law, operate in a transparentway, and focus on issues directly related to theirbusiness, in compliance with existing standards. Beinga good corporate citizen at this level is not alwayseasy, but the activity is clearly related to businessand business strategy.

The second type of corporate citizen includesbusinesses that move beyond mere compliance toaddress issues in which there is a synergy between thebusiness and society. Thus, when 80 tanneries inBangkok joined forces to establish their own wastewater treatment facility, there was certainly a directenvironmental benefit, but the tannery owners alsoserved their own bottom line by sharing treatmentcosts (Schmidheiny, Chase, and DeSimone 1997: 21).

The final type of corporate citizenship comprisesbusinesses led by chief executives who address socialand environmental issues that may seem to be farfrom, or even counter to, the interests of thecorporation. These executives understand that thesuccess of the world economy has a long-term impacton their business, and make efforts to understand theneed to support public goods from clean air and a G

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In recent years, public

opinion has embraced

the concept that

corporations have

civic and social

responsibilities.

Corporations ignore

these sentiments at

some peril

safe environment to human rights that provide thebasic infrastructure that in turn allows corporationsto operate safely and effectively. They are not afraidto speak out, even though their shareholders mightquestion the appropriateness of doing so. When BPCEO John Browne called on businesses to addressclimate change, he was seen by some to be taking aposition contrary to BP’s short-term interest, thoughBrowne himself understood the influence it wouldhave on BP’s long-term future. Under his leadership,BP has defined itself not as an oil company but as anenergy company, a redefinition that incorporatesrenewables as well as oil.

This new view of corporate citizenship spreads daily.Business leaders brought together for the 2001 AspenInstitute’s Business Leaders Dialogue ‘voiced their deepseated concerns about the increasing alienation felt bymany vis-à-vis the practices and culture propagatedby globalisation. They felt strongly that businesses mustattend to this alienation or risk facing the desperateactions of the many citizens who feel powerless tomake change’ (Aspen Institute 2001). This approach isreflected in new programmes in business schools fromKorea to Costa Rica which are slowly beginning to offerelective courses on social and environ-mental issues and creating curriculumthat engages communities directly(Beyond Grey Pinstripes URL). Anotherencouraging, if fledgling, developmentis the growing number of environ-mental entrepreneurs who haveestablished small sustainable busi-nesses in countries all over the world.Latin American business leaders arerecognised annually by the WorldResources Institute’s New VenturesForum for the part they play in thisimportant new trend.

Despite the spreading faith incorporate good citizenship, invest-ment analysts are notably unmoved.Corporate leaders have repeatedlycomplained that analysts, whoseinterpretations of a company’s effectiveness influencestock prices, focus on quarterly earnings. The benefitsof investments that are associated with corporatecitizenship are not usually evident in the short term,and analysts are often hard-pressed to pay attentionto much else; and reputational risk, a significantconsideration in corporate board rooms, is not yet onthe list of issues that concern analysts.

The corporate vanguard: business activists

There is perhaps no better indication of the inroadsmade by the notion of corporate social responsibilitythan the fact that many of the world’s corporationshave themselves adopted the language of CSR and inmany cases formed social responsibility-orientedcoalitions. Some, like the Business EnvironmentalLeadership Council, focus on one particular issuewhile others take on a wide range of CSR problems.The number of these coalitions increases yearly,ranging from the Business Environmental LeadershipCouncil, The Prince of Wales International BusinessLeaders Forum, and Business for Social Responsibility,to the Brazilian-based Instituto Ethos (URL) (see Box4.1) and the Israeli group MAALA. ‘Southern’ corpor-ations such as the Indian Bajaj Auto and the SaudiDabbagh Group Holding are frequently partners tothese efforts, but membership is heavily based in theindustrial North, and multinationals such as Shell,Rio Tinto, and Deutsche Bank often provide leadershipin several business coalitions simultaneously.

The 160 member-strong World Business Councilfor Sustainable Development (WBCSD URL), created

to provide business input to the 1992Rio Earth Summit, is among the mostproactive of the business activistgroups. Its members are drawn frommore than 30 countries and 20 majorindustrial sectors, with a regionalnetwork of 35 national and regionalbusiness councils and partner organ-izations located primarily in thedeveloping world. The WBCSD hasbeen a leader in designing multi-stakeholder dialogue processes, witheither an industry or an issue focus.For example, the WBCSD partneredwith the World Resources Institutein 2001 to lead a multi-stakeholderprocess involving over 350 leadingexperts drawn from business, NGOs,governments, and accounting asso-

ciations to develop the Greenhouse Gas Protocol, to‘promote internationally accepted greenhouse gasaccounting and reporting standards through an openand inclusive process’ (WBCSD/WRI 2001). The Protocolhas been road tested by over 30 companies in ninecountries.

In its 2001 report looking at market-drivensustainability, ‘Sustainability through the Market:G

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Business leaders can

have a substantial

impact as unlikely

allies when they speak

up on issues such as

climate change and

working conditions.

They can shift norms

and gradually isolate

those who do not

participate

Seven Keys to Success’, the WBCSD (2001) advocatesthat sustainability will be best achieved through ‘aholistic approach, in which supply and demand areviewed as being part of a single system rather thanseparate entities’. In a recent paper, ‘Shaping a Dealfor the 2002 Johannesburg Summit,’ Claude Fussler,who coordinates the WBCSD’s input into the WorldSummit on Sustainable Development, writes: ‘Europe,

North America and Japan cannot reach sustainabilityin a world that fails. They need to pioneer a moreradical approach that provides sustainabledevelopment for all.’ He stresses the need to focus onpoverty eradication, education and capacity building,innovation and technology development, and theseparation of ‘economic growth and quality of lifefrom the intense use of natural resources’ (Fussler G

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Until recently few demands were placed on Braziliancompanies to be socially responsible (Queiroz 2002).This has been changing, however, as interest in CSRhas been growing (Collier and Waverley 2000), whilethere has also been a rise in the number ofmultinational companies locating there. For example,in 1999 a study sponsored by Catholic Relief Services,Oxfam-GB, Save the Children, and World Visionsurveyed 300 of the most profitable businesses in thenorth-east of Brazil, one of the country’s poorestregions. This found that nearly two-thirds of thesebusinesses engaged in some sort of social activity(Mello 1999). This change is occurring against abackdrop of inequality and poverty as the richest10 per cent of Brazilians receive 48 per cent of thenational income, while the poorest 10 per centreceive only 1 per cent. Within this vast country,81.3 per cent of the population live in urban areasand 22 per cent of Brazilians were estimated to beliving below the poverty line, even though Brazilhad the world’s ninth largest gross national incomein 2000 (World Bank URL).

One of the clearest expressions of the growinginterest in CSR can be seen in organisations ofBrazilian business leaders themselves. An example isthe Ethos Institute, founded in 1998 by business-people to help companies understand their socialresponsibilities and incorporate responsible practicesinto their daily management. Today the EthosInstitute has 544 company members with a collectiverevenue of R$250 billion, 25 per cent of Brazil’s GDP.The Institute’s mission is to spread CSR through:

• the production of guides—focusing on howbusinesses can contribute to the community, forexample to facilitate the rehabilitation ofprisoners, to promote women’s health, and to

implement a programme of voluntary work;• the development of management tools—

including tools for developing an annual CSRreport and balance, and the Ethos Indicators ofCSR for companies to evaluate and monitor theiractivities (Ethos Institute 2001a);

• research for understanding CSR in Brazil—including a survey of 1,002 consumers abouttheir perceptions of business responsibilities(Ethos Institute 2001b); and

• promoting the UN Global Compact initiative inBrazil—by being involved in its launch, providingbusinesses with information, and also ascompanies can sign up to the principles via theEthos Institute

The example of the Ethos Institute demonstrateshow Brazilian companies are increasingly recognisingthe need to consider obligations beyond minimumlegal requirements. Furthermore, this example showshow businesses are beginning to respond to thisneed collectively, leveraging one another to raisestandards across business sectors. An important linkcan be made between the growth of this interestand the rising numbers of multinational corporationslocating in Brazil, bringing with them their ownunderstanding of CSR, partly developed by thepressures and expectations of civil society. Fromwithin Brazil itself, it seems likely that civil society willincreasingly contribute to both the global pressureon multinationals and the focus being given to CSRin Brazil, especially in view of the deep inequalitiesthat the country continues to face.

Jill Timms, Centre for the Study of GlobalGovernance, London School of Economics andPolitical Science

Box 4.1: CSR in Brazil: The case of the Ethos Institute

2001). In addition to projects pertaining to its entiremembership, the WBCSD carries out research andstakeholder initiatives in specific areas such asfinance, mobility, cement, mining and minerals, andelectric utilities.

These business-focused groups have helped tocreate a norm that reinforces those companiesengaged in a variety of CSR practices. Theirpublications give visibility to companies that use bestpractices, and they sponsor partnerships that bringthe views of CSOs into the boardroom.

‘Outsider’ CSOs often criticise corporate effortsas being deceptive window-dressing, worse than noaction at all because they mislead the public. Mostimportant, critics disagree with the presumption thatglobal corporations with a conscience can mitigatethe negative impact of globalisation. They argue thatthe aim of business is, first and foremost, to make aprofit and, even if some companiesbehave responsibly, there will alwaysbe those who can make money bybeing negligent. Such critics insistthat only regulation by governmentsand international institutions canensure social responsibility.

CSO groups closer to the businessworld argue that the global economyis here to stay and laud the efforts ofbusiness activists as important stepstowards a healthier, fairer world.Business activists believe that CSRpractices benefit companies in thelong run, if only by limiting exposureto reputational risk. It is clear thatbusiness leaders can have a substan-tial impact as unlikely allies when theyspeak up on issues such as climatechange, sustainability and working conditions. Themore business leaders are involved in CSR, the greateris the shift in norms, and the more isolated thosewho do not participate become.

Civil Society Involvement

Corporations pay attention to their role ascorporate citizens largely in response to thepressures from, and resulting partnerships with,

civil society. The extent of government involvementin setting standards for corporations is similarly aby-product of civil society activity. Who are the civilsociety actors? And what do they do?

Who are the CSOs?

The number of civil society organisations involvedin promoting corporate responsibility has increaseddramatically in the last five years, and those whohave had significant impact vary considerably inreach, tactics, and interests. Some are formallyconstituted as not-for-profit institutions, while othersmay be less formally structured, taking the shape ofa grass-roots movement or becoming associated withexisting social organisations such as faith groups orworker associations. As explored in Chapter 8, theseorganisational forms are becoming increasinglydiverse, a fact which has had a significant impact onthe way organisations operate and the actions theytake. CSOs have used multiple tools and strategies,often at the same time, sometimes workingcollaboratively but more often independently. No

one formula can be said toguarantee success, and yet successhas not been elusive.

Large international CSOs tendto be Northern-based, but oftenoperate in partnership with localbranches or independent groups.Some organisations focus on aparticular industry (e.g., mining,forestry, apparel), others target asingle company (e.g., NikeWatch)or a specific issue (e.g., Trans-parency International, whichconcentrates solely on corruption).Many countries have CSOs thatbroadly represent consumers: Forinstance, the US-based InterfaithCenter on Corporate Responsibility,funded by churches and syna-

gogues, organises shareholders. Other organisationsconcentrate on a single constituency—children,workers, women—though they may have a broaderbase of support. Finally, some CSOs are associatedwith specific tactics, such as taking legal action,initiating direct action, promoting partnerships, ordeveloping monitoring and/or certification processes.

How CSOs promote change

The vast majority of CSOs can be divided into twocategories: outsiders and insiders. The outsiders seetheir role as stirring up public opinion, sometimesstaging dramatic actions that place an issue on theG

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The South-North

orientation is a

problematic

dimension to civil

society activity: with

the best of intentions,

advocacy in the North

might actually

contravene the

priorities of Southern

actors, especially the

workers

public agenda. The insiders take advantage of publicawareness, using it to work with governments andcorporations to establish programmes for change.Sometimes a single civil society group will have itboth ways, simultaneously working with one multi-national corporation to develop monitoring systemsor strategies for sustainability and leading a world-wide campaign against another corporation. Oftenthe two groups disparage each other. The insiderssee the outsiders as obstructive, sometimes causingmore harm than good; the outsiders dismiss theinsiders as sell-outs—but change usually happenswhen there are effective groups working on bothsides of the barricades.

The insiders need the outsiders to convey amessage of urgency. The threat of direct action haskept many corporations at the table with insiderswhen discussions might otherwise have broken down.While outsiders force a company to agree to change,for example to reduce waste, insiders work over timewith corporations to develop the specifics of a newpackaging programme. Negotiating with corporationsrequires a certain level of trust, and the insiders whoare negotiating need to be able to ‘deliver’ theoutsiders, an assurance that the corporations willget something for their agreement. Sometimes CSOsinformally agree on the roles that each will play in aspecific campaign. Though we can describe acontinuum of actions used by outsiders and insiders,it is important to understand that the civil movement

to increase corporate responsibility depends on theability to use all, or any combination, of these actions.

There is a problematic dimension to civil societyactivity that must be recognised, however, and that isthe South-North orientation. With the best ofintentions, advocacy in the North might actuallycontravene the priorities of Southern actors, especiallythe workers. An anti-sweatshop campaign, for example,might persuade a company to move its operation ratherthan reform its practices, terminating jobs that workersdesperately need even as they seek to improveconditions. Indeed, research shows that the priorities ofsweatshop workers do not always coincide with theNorthern demonstrators’ demands (Global Alliance URL).Innumerable questions are raised by this dynamic:Should global standards apply in all cases? What weightshould be given to local custom and practice? Does afamily in Dacca that would starve but for their 12-year-old’s income appreciate the demands of anti-childlabour demonstrators in London? Can one ask villagersto save trees when selling firewood or harvesting lumberare their only sources of income? And who determinesthese answers? Northern-based CSOs? Local groups?The two, working in tandem? Should governments andcorporations be part of the process? There are fewunequivocal answers to these questions. What isimportant is that CSOs generate a broad-rangingdebate. The tensions within civil society and amongcivil society, corporations, and governments need tobe brought into the open so as to a provide a deeper

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Figure 4.1: How civil society organisations promote corporate accountability

AlliancesSocially

responsibleinvestment

Media/publicawareness

Lawsuits againstcompanies

Confrontationwith

companies

PartnershipDialogueLobbying

governmentShareholderresolutions

Boycotts againstcompanies

Direct action Indirect action Cooperative action

social understanding, which can lay the basis for betterpolicies in the future. In Chapter 2 of this volume, NeeraChandhoke discusses in depth these tensions betweenglobal campaigns and local needs, posing questionsabout where agendas are set and what the implicationsof a developing global civil society are for issues ofrepresentation and political agency.

Direct action

Successful direct action campaigns work preciselybecause they attract the attention of the media andchallenge the reputation and credibility of thecorporation. And yet the media can be a fickleaudience: a tactic used repetitively can fail to qualifyas ‘news’. Three examples—a sit-in and two boycotts—provide insight into the effectiveness of direct action.

In December 1996, Julia ‘Butterfly’ Hill, an EarthFirst volunteer, climbed into a redwood tree inCalifornia. Expecting to be there forthree weeks, she settled in on aplatform built among the branchesof ‘Luna’ (as her tree came to beknown), 51 metres above the ground.She was there for two years. WhenHill finally came down, an agreementhad been negotiated with PacificLumber to ensure the preservation ofthe tree and the surrounding forest.Civil society organisations madecertain that Hill was as well providedfor as possible, and a parade ofvisiting celebrities ensured regularpress coverage. Pacific Lumber fedthe publicity, sending security forcesto harass Hill, dispatching helicoptersto buzz her lofty position, andrepeatedly threatening to cut Lunadown with Hill in it (Hill 2000).

Sam LaBudde, an environmentalist who signedon as a cook on a tuna boat in 1989, recorded avideotape of dolphins being drowned and crushed bypurse seine fishing nets. That tape launched the Savethe Dolphin campaign in 1990, which included abroad-based boycott of tuna. The result was that thelargest corporations in the industry—Starkist,Bumblebee, and Chicken of the Sea—now sell tunalabelled ‘dolphin-safe’, and laws governing tunafishing are in force in the Eastern Tropical Pacific(Boycott News URL)

While the efforts of international CSOs often winglobal headlines, lesser-known locally based groupsare frequently the force behind successful directactions. For some time, workers at Del Monte’s Kenyanplantation had expressed a number of complaintsagainst their employer: sub-standard worker housing,violence in protecting the facility from a perceivedrisk of theft, disregard for community needs andcustoms. Local CSOs organised around these issuesand, teamed with Italian CSOs, launched a multi-national boycott of Del Monte products in November2000. The company responded swiftly, developing aconsensus-building approach to management-employee relations, reviewing worker pay and all jobdescriptions, and instituting a new housing policy,leading to the cancellation of the boycott in March2001.1

These examples attest to the power of directaction. Many corporations understand that bad

publicity can have a long-lastingeffect. Julia Hill’s name has longbeen absent from the evening news,but people still remember that ayoung woman lived in a tree to fightPacific Lumber. Boycotts of productsnot only have an impact on immedi-ate sales but affect brand loyaltyand consumer choice long after theaction has been called off, as DelMonte was to see in the wake of theKenyan action. Today, the merethreat of a widespread boycott caninduce reform. Note, for example,the threatened boycotts of apparelcompanies in recent years. Onceconsumers were aware of workingconditions in offshore apparelfactories and direct action loomed,

manufacturers accepted responsibility for thepractices of even their subcontractors and set aboutinstituting reforms.

At the same time, enforcing agreements that emergefrom boycotts and occupations of company propertycan be difficult. Pacific Lumber cannot cut down Luna—that is something that cannot be hidden—but it is farmore difficult to check that fishermen are abiding bythe agreement to ensure dolphin-safe tuna. Fishingboats have been moved into areas not covered by thelaws, and US owners have sold their fleets to companies

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1 E-mail to the authors from Toby Kent, 12 March 2002.

Successful direct

action works precisely

because it attracts the

attention of the

media and challenges

the reputation and

credibility of the

corporation - but a

tactic used

repetitively can fail to

qualify as ‘news’

based in nations that have less enforcement capability.Furthermore, agreements are based on trust, and trustis often lacking after a long adversarial campaign. Inorder to ensure that reforms last, civil society hasbecome involved in certification and monitoring (see thesection on monitoring below).

Legal actions and formal complaints

Another route civil society groups have taken toconfront companies directly is the legal system. In thelast 20 years, lawsuits filed by CSOs have addedconsiderable muscle to campaigns to hold corporationsaccountable for their actions in the social, political, andenvironmental arenas. In these suits, internationalCSOs are often the plaintiffs, though they sometimesorganise the legal action forworkers or other civil societyactors affected by the targetedcorporate policy or practice.

While the legal route can becostly and time-consuming, boththe process and the outcomeshave identified further tools thatcan be used to change corporatepractice. Some court challengesproceed along the axis of constitu-tional law. For instance, accord-ing to a Report of the UN SpecialRapporteur on Human Rights andthe Environment (United Nations1994), up to 100 national consti-tutions guarantee rights to a cleanand healthy environment, oroblige the state to prevent environmental harm.

Court cases to test such constitutional provisionshave been successful in holding companies account-able because of contractual arrangements they havemade with governments. In a landmark decision in1991, the Supreme Court of India ruled that everyindividual has the fundamental right to the ‘enjoy-ment of pollution-free water and air’. As a result, thegovernment, state-owned industries, and privatecompanies can be held accountable for environ-mental degradation.2 In 1993 in Costa Rica, theSupreme Court ruled that placing a dump in theplaintiff community’s neighbourhood violated theright to a healthy environment.3 As a result of a

1994 decision of the Philippine Supreme Court,4

provisions of timber licences require loggingcorporations to respect Filipinos’ right to a healthyenvironment.

Provisions of international law have also beeninvoked to expose corporations that violate universalnorms and standards. Suits based on human rightstreaties and International Labour Organisation (ILO)conventions have had some success in this respect.Several oil companies have been sued in domesticcourts by national and international CSOs forviolations of human rights in other countries. In June2001, the US-based International Labor Rights Fundbrought suit in US federal court on behalf of elevenvillagers in Aceh, Indonesia, against the ExxonMobilCorporation for human rights abuses. The suit alleges

that the multinational oil company,the largest in the world, providedbarracks and equipment to statesecurity services who kidnapped,murdered, and tortured villagers inthe embattled Aceh region, wherethe company has a large naturalgas field. The government and Acehresidents have been at odds overself-determination issues fordecades.5

In order for cases derived frominternational law to enter moststates’ domestic legal systems, theremust be enabling legislation. Forexample, the US Alien Tort ClaimsAct (a law dating from 1789) allowsforeign plaintiffs to bring action

against foreign defendants in cases of serious viola-tions of international law. In the United Kingdom,courts have recognised that, in cases of human rightsviolations when the plaintiff cannot act in his owncountry, claims may be brought in the UK if thecompany has its headquarters there (the case

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4 Minors Oposas v. Secretary of the Department of Environment andNatural Resources (Philippines) 33 I.L.M. 173, 1994.

5 This case follows on the still pending cases brought by Burmese andUS NGOs on behalf of Burmese nationals against the UnocalCorporation for torture, forced labour, and extrajudicial killingassociated with the construction of a gas pipeline in violation ofCalifornia’s state constitution and unfair business practice lawNational Coalition Government of the Union of Burma (NCGUB) v.Unocal, Inc. (Myanmar), 176 F.R.D. 329 (C.D. Cal. 1997); John Doe Iet al. v. Unocal Corp. (USA), 963 F. Supp 880 (C.D. Cal. 1997); John DoeI v. Unocal Corp. (USA), 110 F. Supp. 2d 1294 (C.D. Cal. 2000); John DoeI, et al. vs. ExxonMobil Corporation, ExxonMobil Oil Indonesia Inc.,Mobil Corporation, Mobil Oil Corporation, and PT Arun Lng Co. (USA),U District Court, District of Columbia, 2001. While still on appeal, therulings to date have validated the basis for the suits.

While most legal actions

can take years to

adjudicate, they heighten

activist, public and

corporate awareness.

Furthermore, court

judgments can create

precedents and provide

interpretations of the law

that have far-reaching

implications

2 Subhash Kumar v. State of Bihar (India)AIR 1991 S.C.420.3 Constitutional Chamber of the Supreme Court (Costa Rica), Vote

Number 3705, 30 July 1993.

concerned Cape plc for its ‘duty of care’ responsi-bilities to the employees of its South Africansubsidiary). These actions also address the question ofliability on the part of a parent company for theactions of its subsidiaries or partners.

While most legal actions can take years toadjudicate, thus failing to generate the moreimmediate impact that can result from direct actioncampaigns,6 they heighten awareness not only amongcivil society advocates and the publicbut within companies as well.Furthermore, court judgments cancreate precedents and provideinterpretations of the law that havefar-reaching implications.

Information and reputation

The publication by CSOs of reliableand specific information has been apowerful tool in promoting change,increasing public awareness andbolstering an array of direct andindirect civil society action. Informa-tion campaigns target a numberaudiences, from individual consumers to wholegroups of stakeholders: a wide variety of ‘greenguides’ inform the purchasing patterns of individualsor families, for instance, while certain organisationsfocus on uncovering and reporting information aboutthe entire range of corporate activity so thatstakeholders may insist on action en masse.

The not-for-profit Essential Information (URL),founded by Ralph Nader in 1982, publishes ‘Multi-national Monitor’, a monthly that tracks corporateactivity from a standpoint of social responsibility(Multinational Monitor URL). The annual ‘Ten WorstCorporations’ features reports on a selection ofcompanies known to have engaged in abusivepractices over the previous year, with an attempt to

include in the list corporations that have exploitedconsumers, caused environmental harm, defraudedthe government, disregarded labour rights, andso on.

Information based in scientific research can be apowerful tool. Building on a movement launchedin Europe, scientists at the Union of ConcernedScientists (UCS) and Environmental Defense began inthe 1990s to inform the American public of the

extent to which antibiotic additivesin animal feed fosters antibioticresistance among human consumers.Some Americans began to seek outantibiotic-free poultry, and inFebruary 2002 leading chickenproducers Tyson Foods, PerdueFarms, and Foster Farms announcedthat they would remove most of theantibiotics used in their feed.Similarly, fast-food chains such asMcDonald’s and Wendy’s announcedthey would no longer purchasepoultry treated with Baytril, anantibiotic that is particularlyimportant in human medical

treatment. It is important to note, however, thatseveral of the biggest poultry producers in the USwere not parties to these decisions, and the scientistsat UCS and Environmental Defense feel there is stillmuch work to be done (UCS 2002).

The events following UNESCO’s declaration of theLaguna San Ignacio in Mexico a World Heritage Siteprovide another example. Soon after the UN’sdecision, Mitsubishi Corporation and the Mexicangovernment announced plans to use 62,000 acres ofthe reserve for a massive salt plant. The US-basedNational Resources Defense Council (NRDC) broughttogether an international coalition of environ-mentalists, fishermen, scientists, and consumerorganisations. Scientists produced and validatedinformation about the negative impact of the saltplant on the environment; economists demonstratedthat there were better economic uses for the area.Armed with scientifically sound information, NRDCand its allies rallied more than a million consumersto write to Mitsubishi and an array of dignitaries tovisit the site. Ultimately, representatives of Mitsubishiand the Mexican government agreed to meet withCSOs and to change their plans.

Of course, the effectiveness of any publiceducation campaign depends in no small part on theG

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6 The United States Supreme Court accepted jurisdiction in 2001 of acase against the Shell and BP oil companies instigated in 1996, inwhich the plaintiffs argued that the two companies were consultedbefore two activists were tortured and murdered in Nigeria. The familyof Ken Saro-Wiwa filed suit against Shell’s complicity in the Nigeriansecurity forces’ brutality against Ogoni protesters and the executionof Ken Saro-Wiwa and eight others by a court proceeding under themilitary dictatorship in 1995 (Wiwa et al. v. Royal Dutch Shell, CaseNo. 96-8386, S. D. N.Y., 1996). Chevron has more recently been takento court in 1999 over practices which violate human rights in Nigeria(Bowoto et al. v. Chevron Corporation), Case No. 99-2506 [N.D. Cal,1999]. The cases continue to work their way through the legal system.On 28 February 2002, the Federal District Court rejected Shell’s motionto dismiss the Saro-Wiwa case. The trial is moving forward to thediscovery phase of evidence gathering.

The publication of

reliable and specific

information has been

a powerful tool in

promoting change,

increasing public

awareness and

bolstering an array of

direct and indirect

civil society action

ability of its organisers to threaten the reputation ofa corporation or industry. All too often, those in thecorporate world will initiate real change only whenthe other option is real loss; and the loss of reputationgenerally translates into loss of revenue.

Investor action: socially responsible investing

Religious groups such as the Christian Scientists havelong maintained investment portfolios that excludecompanies or industries engaged in activities theydeem morally untenable—the production of alcohol,cigarettes, military hardware. Investor action firstgained widespread attention in the 1980s, though,when student activists in the United States began todemand that universities sell stock in corporationswith South African operations, and the resultingcampaign led to the withdrawal of more than 100multinationals. Socially responsible investing (SRI)has evolved since, and it now takes two forms. Thefirst focuses on negative screening—refusing to buystock in companies associated with harmfulpractices—whereas the second involves activelyseeking out stock in businesses known for goodpractices or for products that directly contribute tosustainability.

In the 1990s the amount of money invested withsocially responsible funds skyrocketed in the UnitedStates, rising from $40 billion to $2.2 trillion between1985 and 2000 according to the Social InvestmentForum (Balmaceda and Larson 2000: 35). By 2000

one in every ten dollars invested in the UnitedKingdom and in the United States was linked to somekind of social criteria. An infrastructure of researchers,databases, and reports is now in place. Between 1995and 1999, the Domini 400 fund, the best known ofthe US funds, recorded a total return of 575 per cent,outperforming the Standard and Poors 500, whichreturned 463 per cent in the same period. Since 1999,investors in the US have been able to track the DowSustainability Group Index, while investors in the UKcan follow socially responsible companies on theFTSE4good index. The 1995 Pensions Act in the UnitedKingdom required that, as of 2000, pension fundtrustees needed to take into account ‘social, ethicaland environmental issues’ and to report annually onhow they have done so, if at all (Cowe 2001: 8).Clearly the commitment of pension and other mutualinvestment funds to these issues significantlyincreases the impact of SRI. Moreover, these fundsrequire reporting on social responsibility from allcompanies they invest in, whether or not they havecome to the attention of civil society organisers.

Nor are social investment opportunities confinedto the West. The United Global Unifem SingaporeFund was established in 1999 by the SingaporeNational Committee for UNIFEM, the UN fund forwomen, and UOB Asset Management, the largestunit trust fund manager in the country (SocialFunds2002). It not only screens investments for women’sequity but donates a third of its 1.5 per cent annualmanagement fee to UNIFEM. The ability of CSOs to

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Above left: Information campaign against the use of anti-biotics in animal feed, which increases anti-biotic resistance in humanconsumers. © Union of Concerned Scientists.Above right: Laguna San Ignacio, famous for its gray whales, was saved from pollution by a massive salt plant when Mitsubishi waspersuaded to withdraw its investment. © Frank Balthis.

shape investor action is perhaps one of the mostpowerful tools these organisations have. Asshareholders direct more and more of their funds tocorporations that meet certain CSR standards,corporate practices will change.

Investor action: shareholder resolutions

During the South Africa divestment campaign andthe Vietnam War, shareholder initiatives calling forthe withdrawal from South Africa or a cessation ofthe manufacture of chemicals such as napalmattracted considerable popular support and pressattention. The Interfaith Center on CorporateResponsibility (ICCR), a major player in the SouthAfrica campaign in the1980s, remains an activepromoter of shareholder action onglobal issues, and each spring at thetime of annual meetings attractspublicity for one or more of its mainissues. The current priorities of theICCR include issues of corporategovernance and responsibility,environmental sustainability, globalfinance, international health, andmilitarism. Often the group’s resolu-tions call simply for an imple-mentation of a code of conduct orfor the publication of informationabout a certain corporation’sactivities. In 2001, one resolutioncalled on Citibank to report on itsbusiness in Myanmar; another calledon BE Aerospace to implement theMacBride Principles, a set of fair employmentguidelines, in its facilities in Northern Ireland. TheICCR is but one of a number of organisations in theUS and Europe that focus public attention oncorporate behaviour and demand that corporationsexplain and defend their practices in public. Forexample, Responsible Wealth, a network of influentialand affluent Americans, uses shareholder resolutionsto focus attention on fair taxes, a living wage,corporate accountability, and broader assetownership. While few of the shareholder resolutionssucceed, corporations will go to some lengths tohead off such resolutions. The effect is both to changecorporate practices and to restrain corporations fromtaking actions likely to provoke resolutions.

Partnerships

In the past decade, increasing numbers of CSOs andcorporations have seen the wisdom of formingpartnerships to advance social responsibility. Some aremore successful than others, and many are fraughtwith tensions and difficulty. Partnerships vary inform, membership, and purpose. Some promotecommunity development while others are designedto raise specific industry standards, monitor manu-facturing processes, or certify that productionmethods entail no labour or environmental abuse.Many were set up after direct action was taken, orthreatened, by civil society. McDonald’s, for example,formed a waste reduction partnership with Environ-mental Defense after thousands of children mailed to

the company the environmentallydamaging Styrofoam ‘clamshells’ inwhich it formerly packaged itshamburgers. The partnership’s efforthas saved 200,000 tons of waste(McDonald’s 2002).

Some civil society groups arecritical of partnerships, taking theview that, if business is involved, theresults cannot be good. They attackpartnerships as business’ way ofcoopting civil society in the global-isation process. CSO partners arguethat multinational corporations area permanent part of the landscape,and the more responsible corporatepolicies are, the better it will be forworkers and the planet. A further

argument is that partnerships develop extra-governmental standards, and the difficulties inpassing and enforcing legislation in resource-strappedcountries suggest that efforts to change normswithout government involvement makes a differenceand can ultimately lead to legislation.

Increasingly, partnerships involving CSOs aredesigned to bring about industry-wide reform. Themining industry provides one good example, as it iscurrently involved in one of the most comprehensivemulti-stakeholder partnerships. Leaders in the miningindustry concluded that access to both land andcapital, essential to their work, was threatenedbecause of the effective actions of local CSO groupsworldwide. In April 2000, acting on behalf of thegroup of ten international mining companies thatformed the Global Mining Initiative, the WorldG

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The ability to shape

investor action is one

of the most powerful

tools civil society

organisations have. As

shareholders direct

more of their funds to

corporations that

meet certain

standards, corporate

practices will change

Business Council for Sustainable Development(WBCSD) commissioned the International Institutefor Environment and Development (IIED) to undertakean independent research and consultation processon the mining and minerals sector. The Mining,Minerals and Sustainable Development (MMSD)project brought together an unprecedented numberof stakeholders, industry representatives, academics,government officials, and others. The project wassupervised by an assurance group of 25 experiencedindividuals from different stake-holder groups and regions tosafeguard the independence of theresearch. At the time of writing,the MMSD project aimed at havingrecommendations in place for theWorld Summit on SustainableDevelopment in Johannesburg inAugust 2002.

The mining and minerals projectproved to be controversial andcomplex. In some regions and withsome stakeholders there has beenconsiderable engagement and auseful exchange of ideas. In otherplaces and with other interestgroups the response was much lesspositive, and in some cases therehad even been an outright refusal to engage.

Governments have also taken the initiative. Theconcept of partnership was a favourite of the Clintonadministration. The US President’s Council onSustainable Development brought together business,CSOs, and government agencies, and the councilmade a series of recommendations to each.

Pressing his luck, Clinton also convened apparelindustry leaders, civil society groups, and trade unionsin the short-lived Apparel Industry Partnership. Thegroup, reborn as the Fair Labor Association (FLA), gotoff to a difficult start with the withdrawal of theUnion of Needletrades Industrial and TextileEmployees (UNITE) and a handful of other CSOs.Furthermore, it was shortly challenged by the creationof a Washington-based Workers Rights Coalition(WRC), a group widely support by students acrossthe US and generally critical of any organisation thatincluded industry representation. By 2002, however,the two groups had developed a relationship that,while not always easy, has allowed them tooccasionally combine their efforts. The WRC has theindependence to identify abuses and, if necessary,

bring them to the attention of the public. At thesame time, only the FLA has the capacity to establishmonitoring systems and the relationship withcorporations necessary to design and enforceremediation programmes. One hundred and seventyfour universities have joined the FLA, in turn wideningits scope by bringing some of their own licenseesfrom outside the apparel industry to theorganisations.

In the UK, the Blair government launched theEthical Trading Initiative (ETI) in 1998,allying multinational companies withunions and CSOs. Rather than promot-ing a certification process, theInitiative applies best practices anddevelops internal monitoring andexternal verification procedures. Itincorporates social and environmentalbenchmarks in published ‘risk assess-ments’, and members commit tobusiness ethics, corporate responsi-bility, human rights, and workers’rights (including the end of childlabour). The Body Shop, the Inter-national Confederation of Free TradeUnions, and Save the Children areamong ETI’s members.

At the multinational level, theWorld Bank has been a leader, a convener, and apartner. The Bank’s Business Partners for Developmentnow includes a network of 120 organisations, across20 different countries, that aim to support andpromote strategic examples of partnerships involvinggovernment, civil society, and business. The partner-ships are voluntary, and the parties agree on mutualobjectives, pool resources and share risk, and respondto community interests for a more efficientdistribution of resources (Business PartnershipDevelopment 2002: 5). Local CSOs are key to theserelationships because they bring an understanding ofwhat is needed, know how to implement projects atlocal levels, command community respect, and canmobilise large numbers of people.

Partnerships between civil society and corporationsare voluntary and based to some extent on trust.Both parties in the end move forward in an environ-ment outside of government regulation. Thisapproach leads to greater flexibility and generally amore informed perspective on the part of both civilsociety and business. Recent studies by the WorldBank, The Conference Board, and international CSOs G

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The partnership

approach is still a

work-in-progress.

Again, it seems that

both believers and

sceptics among civil

society organisations

are necessary to

ensure that a

partnership brings

significnt reults

are helping to clarify when partnerships work best,what it takes to maintain an effective partnership,and what the added value of such partnerships is.7

Standard setting

Civil society is pushing the concept of partnership yetfurther, attempting to establish social reportinginstruments comparable to the financial reportinginstruments now standard through-out the world. Some CSOs areattempting to establish voluntary,industry-specific reporting mech-anisms that measure the social andenvironmental performance ofcompanies. Other CSOs labour toestablish a process of social auditsand the certification of auditors. Afew CSOs propose an instrumentthat would transcend nationalboundaries and maintain a profes-sional uniformity from country tocountry and business sector tobusiness sector.

Coalition for EnvironmentallyResponsible Societies (CERES) is theauthor of one standard-setting initiative. CERES,which came to prominence in the wake of the 1989Exxon Valdez disaster in Alaska, is a coalition ofenvironmentalists, corporate executives, andconcerned citizens who have promoted an agenda forenvironmental sustainability. Its Global ReportingInitiative (GRI) emerged in response to the increasingnumber of examples of environmental and humanrights abuses committed by corporations, incidentswhich have resulted in no penalty or even challengeby national or international agencies. The GRI, whichis supported by major corporations and professionalassociations in the Americas, the European Union,Asia, and South Africa, is building a consensus for avoluntary standard of corporate reportingrequirements that transcends specific industrial orgeographic sectors (GRI 2000).

The international trade union movement plays a vitalrole in the drive for uniformity. In the area of workers’rights in particular, labour unions and the ILO areseeking to harmonise standards. The ILO is uniqueamong intergovernmental agencies in that it iscomprised of representatives from government, civilsociety (labour), and the private sector each withequal votes.

With so many kinds of groups working on socialresponsibility issues, tensions amongthem are inevitable. Conflicts arisenot just between advocates of directaction and advocates of partnerships,but among rival local groups servingdifferent constituencies, amonginternational groups with differentworld views, and between advocatesof international standards andcommunities for whom a corporatepresence may mean the differencebetween a regular wage and hunger.One of the greatest challenges beforecivil society will always be tocontinually strike a balance amongthe legitimate needs of the variousconstituencies and audiences, while

trying not to allow the inevitable tensions to standin the way of getting important work done.

Monitoring: A Case Study ofCivil Society in Action

Of course, having standards that reliably indicatesocial and environmental conditions is only thefirst step. The auditing process employed must

also be a valid and reliable methodological approach.Perhaps the most significant business-CSO interactionsin the last decade have occurred in developing systemsfor monitoring and certifying corporate performance.This section focuses on the monitoring methods thathave evolved in response to civil society demands forcorporate accountability. It also sounds the cautionarynote that having a monitoring system in place doesnot necessarily mean that corporate practice is reliablyand consistently regulated.

Why monitoring?

When one examines the phenomenon of global civilsociety, the parallels to the growth of multinationalcorporations in an integrated global economy areG

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Perhaps the most

significant business-

civil society

interactions in the

last decade have

occured in developing

valid and reliable

systems for

monitoring and

certifying corporate

performance

7 The World Bank’s ‘Learning to Partner: Engaging Civil Society’ can befound at its website by clicking through to ‘NGOs and Civil Society’ andthen to ‘Key Documents’ (World Bank URL). Information regarding TheConference Board’s ‘Innovative Public-Private Partnerships’ series isavailable at the TCB website by clicking on ‘Corporate Citizenship’ andscrolling down to ‘Publications’ at http://www.conference-board.org. TheInternational Labor Rights Fund, with other analysts, has explored avariety of approaches in a collection titled ‘Workers in the GlobalEconomy’ which can be accessed on their websitehttp://www.laborrights.org.

manifest. As companies operate through extensiveproduction chains involving a series of suppliers,processors, and distributors, so are workers,consumers, rights advocates, and environmentalistsfrom different countries similarly allied as stake-holders in these companies’ operations. To the degreethat private companies have a direct impact on airand water quality, the safety and health of workers,and the vitality of the local economy, it is in thepublic interest for companies to beheld accountable.

Monitoring may take severalforms, but at the core it is thedelivery mechanism for the trans-parency so essential to any societythat aspires to be open and free. Theprocess usually focuses on two broadareas: working conditions, includingfreedom of association, and theenvironment. Effective monitoringdepends primarily on three elements:agreed standards, usually set throughconsultation among CSOs, govern-ment, and a company or industry; agenuinely transparent and inclusiveprocess; and monitors who have credibility withcorporations as well as workers and theirrepresentatives.

Civil society has assumed a central role inmonitoring the implementation of agreed standards.Global CSOs can, working with local counterparts,report on the extent to which companies or wholeindustries are enforcing codes and standardsadopted in several countries. When developingcountries are strapped for financial and humanresources, they often do not have the capacity tomonitor companies on a regular basis. Moreover,monitoring is still a work-in-progress and, as lessonsare learned about how best to monitor the varietyof corporations and industries in a number ofcountries, the flexibility of civil society is anadvantage. While civil society is filling an importantgap through its role in monitoring and standardsetting, in a perfect world this work might be led byofficial international agencies or governments.

Monitoring of what?

How do we know that a company is following agreed-upon standards in carrying out its businessoperations? That question drives civil society activists

concerned with the measurement of corporatebehaviour. One need only to look at the Enron scandalin the United States to see that even institutionalisedmethods of accountability (e.g., compliance withdomestic regulations and oversight by a board ofdirectors) and the presence of an active andunfettered press can fail to prevent massive fraud anddeception. Civil society faces a daunting task, notthe least part of which is establishing what should be

monitored and what constitutescorporate responsibility.

Standards, which include codesof conduct, certification schemes,laws, and regulations seeking toensure socially responsible corpor-ate practice, cover a variety ofsubject areas. Some standards arebroadly generic, seeking to ensureadherence to certain measures ofdisclosure and reporting. Otherstandards are more specific,requiring multinational corpora-tions to report that certain bench-marks have been met. Companycodes of conduct, for example, have

increasingly incorporated ‘triple bottom line’accounting principles, measuring performance bysocial and environmental criteria, in additional totraditional financial parameters (Elkington 1998). Itis important to keep in mind that such codes arevoluntary pledges, however. The standards to whichthey aspire have, to date, been loosely defined. Thishas led to numerous efforts to develop more preciseindicators that can measure social and environ-mental performance.

Most businesses publish a company code ofconduct. These internal monitoring guidelines may bearticulated as a set of values woven into companypractices or explicitly embodied in formaldocumentation of company guidelines. Companycodes of conduct typically address fundamentalvalues such as freedom of association and the rightto collective bargaining, rights codified in ILOconventions and international human rights treaties.But there remains a considerable distance betweenaspiration and achievement. Civil society pressurehas closed the gap somewhat by insisting that thecompany’s suppliers and subcontractors, often locallyor regionally owned and managed factories, alsorecognise those basic rights. The challenge ofmonitoring working conditions in urban slums or G

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Effective monitoring

depends primarily on

three elements:

agreed standards; a

genuinely transparent

and inclusive process;

and monitors who

have credibility with

corporations as well

as workers

remote rural areas remains but, thanks to CSOs, theresponsibility for ensuring that monitoring takesplace—even in remote locations—is increasingly amatter which multinational companies must address.Codes of conduct can also be industry-wide. TheAmerican Apparel Manufacturers Association createdits Worldwide Responsible Apparel ProductionCertification Program (WRAP) in 1998 in the wake ofheightened public scrutiny of sweatshop conditionsin the apparel and footwear industries. As with manyindividual company codes, the focus is on standardlabour practices such as forced labour, child labour,compensation and benefits, health and safety, andfreedom of association. Other sectors have adoptedsimilar frameworks, such as the chemical industry’sResponsible Care plan (triggered by the Union Carbidedisaster in Bhopal, India), and bilateral agreementssuch as the US-UK code governing their mining andextraction sectors.

While these industry codes specify core labour andsafety issues addressed at the international level,multinationals routinely apply compliance with locallaws as their standard—another practice with whichcivil society groups take issue. Many developing nationshave weak judicial and legislative branches, and theirlaws do not meet international standards. The lessrigorous labour requirements and lack of enforcementof international standards can be an effectiverecruitment tool for governments seeking foreigninvestment, and multinational corporations respondbecause using local law and practice as a benchmark canbe advantageous to a company’s financial bottom line(see Box 4.2). The competition among low-wage nations,in effect, has produced a ‘race to the bottom’, and avictory by any one state may not last long.

A monitoring system can also be established as acorollary to an independent set of standards mutually

agreed upon by companies, CSOs (which may includeemployees), and/or government. A major difficulty liesin developing criteria that are scientifically valid. Ifthe initial work is done without input from workerson the shop floor or members of the community,there is considerable danger that the monitoringprocess will not convey the true impact of corporatepractice on working conditions or the physicalenvironment.

The most common manifestation of suchstandards are certification schemes. The ForestStewardship Council (FSC), for example, was foundedin 1993 through the leadership of international CSOssuch as the World Wildlife Fund and Greenpeace.Headquartered in Oaxaca, Mexico (soon to move toEurope), it has a presence in more than 50 countries.The certification targets both the management ofthe forest resource and the production of lumber.Certification is based on ten principles and criteriaagreed upon by a broad constituency. They includeconservation goals (e.g., selective cutting rather thanclear cutting), preservation of wildlife habitat, andrespect for the rights of indigenous peoples and thewell-being of local communities.

Similarly, the Marine Stewardship Council targetsthe sustainability of managed fisheries and seeks togenerate a market demand for certified products.The International Federation of Organic AgriculturalMovements developed an accreditation programmein 1992 to qualify certifiers of organic products, aprogramme that has been credited with a hugeincrease of the market share of organic products.The Fair Trade Labeling Organizations International,which concentrates on cooperatives of smallproducers (e.g., coffee growers), targets importersand works to guarantee a minimum purchase priceand advance partial payment to growers againstfuture sales.

Certification works best where the products aremarketed in economically strong consumer societies,but the process can be undermined by industrygroups bent on confusing consumers. In response tothe successful inroads of the Forest StewardshipCouncil, for example, three industry groups in Europe,Canada, and the US have established opposing andweaker standards, notable for their lack oftransparency (Conroy 2001: 8).

Both civil society groups and corporations(particularly in the apparel industry) have raisedconcerns that certification falls short as an effectivesystem for monitoring labour practices. Manu-G

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Above: A supermarket selection of certified products. © DenyseKowalske.

facturers point out that they contract with thousandsof different factories all over the world and it isimpractical, if not impossible, to certify each one.CSOs know that certification of a factory does notprevent banned practices from being put back inplace after the plant has passed muster.

Governments are also engaged in standard-settingand monitoring through both local laws and theirobligation to ensure that organisations operating ina country are working within the framework ofinternational agreements. A number of formerCommunist countries still have labour laws that areconsistent with those sought by most internationalgroups, while many other countries have very weaklaws. The problem, however, is that manygovernments do not have the capacity or the will toenforce even existing legislation.

The impact of international laws and treaties variesfrom country to country. Governments can—andsome do—implement ILO standards in domestic laws

that apply to companies, obliging them to comply.CSOs can strategically target government to act onbehalf of society to hold companies accountable.

For example, women worker groups throughoutCentral America mobilised in the mid-1990s around acampaign for their own ethical code to apply to ExportProcessing (free trade) Zones. The Maria Elena CuadraWomen’s Movement in Nicaragua secured some 30,000signatories endorsing the campaign’s list of labour andother human rights protections. These included non-discrimination provisions, health and safety standards,job security, rights to organise and bargain collectively,registration with the social security system, and respectfor minimum wage and overtime laws. This effortculminated in the promulgation of a ministerial decreefrom the Nicaraguan Labour Ministry in 1998 adoptingthe code as law, and the next day all 23 maquiladoras(duty-free assembly-for-export factories in Mexico andCentral America characterised by low wages and weakor non-existent environmental and labour regulations)in the zone signed an agreement to abide by the code.While this law covers only manufacturing for export, itsexistence provides an opening for further advocacy toextend the law’s benefits to domestic marketproduction.

As this review of monitoring mechanisms suggests,there are multiple routes to measuring corporatesocial responsibility—and therein lies anotherdilemma. The profusion of standards can create greatconfusion as well as opportunity for deliberateobfuscation. As Table 4.1 depicts, codes as varied asthe United Nations ‘Global Compact’ and theinternational faith-based CSOs’ ‘Principles for GlobalCorporate Responsibility: Benchmarks’ seek to trackessentially the same things. And this comparison isonly a snapshot; it is by no means exhaustive. Giventhe variability of these overlapping and oftencompeting standards, it is important to recall thatCERES’s Global Reporting Initiative (described above)does not replicate existing approaches but aims toharmonise them under a single framework ofreporting. The GRI is the inheritor of previous cross-sectoral efforts and appears to be the only onepositioned to establish comparability among themyriad of approaches.

Monitoring by whom?

The monitoring of these multiple and various codesis performed by four different kinds of monitors:internal company personnel; external personnel hired G

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One notable case of civil society attacking thepractice of placing production where wages are lowand standards are lax is the 1999 lawsuit filed by acoalition of CSOs alleging abuses of apparel workers.

The US trade union, UNITE, and NGOs GlobalExchange, Sweatshop Watch, and the Asian LawCaucus brought a suit against 18 apparel companiesoperating in the Mariana Islands in the westernPacific, a US protectorate, which in turn meant thatthe case would be tried in US courts. The companies,including Donna Karan and J. Crew, were accusedof violating a law that prohibits the use of forcedlabour, and laws restricting overtime, and wronglyadvertising their products as sweatshop-free, amongother things. In two associated cases, class actionsuits have been filed involving 30,000 garmentworkers, most of them women from China,Philippines, and Bangladesh who were kept underconditions of indentured servitude. A settlement wasreached with a majority of the companies whichprovides for compensatory payments and ongoingmonitoring. The Gap, Levi Strauss, and Target, amongother retailers, continue to contend that they shouldnot be held responsible for the actions ofsubcontractors. The case is scheduled to go to trialbefore a US federal court in 2002.

Box 4.2: Combating the race to the bottom

to provide a monitoring service; external monitorswho undertake independent evaluations; and publicinterest watchdogs.

Internal monitorsAs most codes are self-imposed standards, companiesconsider monitoring compliance as an internalroutine process. In recent years these issues havetaken on a higher profile within companies and wholenew divisions have been created. British Telecom-munications has a Corporate Reputation and SocialPolicy division, Shell has a Social Accountability Team,and Nike has a Vice President for Corporate SocialResponsibility.

CSOs regard the claims ofinternal monitors as unreliable,however, arguing that, if companiesare confident that they are meetingstandards of accountability onlabour, health and safety, andenvironmental protection, then theyhave nothing to lose and onlypositive reputation to gain if theirfindings are validated by anindependent third party. Corporateclaims that independent monitorswould jeopardise trade secrets arehard to take seriously given theexperience of the apparel industry,where rival companies often sharethe same subcontractor. Rather thanfear violations of confidentiality,three major footwear manufacturersare even cooperating to assert their combined cloutin empowering workers to press local factory ownersto protect health and safety on the job (see Box 4.3).

Non-independent external monitorsIn the face of demands from civil society forindependent verification, corporations often hire anoutside firm to perform the service. With the growthin awareness about CSR, a burgeoning industry hasdeveloped in the fields of social auditing, riskassurance, and needs assessment for a variety ofenvironmental and social standards. Major financialaccounting firms such as PricewaterhouseCoopers(PwC) and KPMG have viewed this as a naturalextension of their auditing and consulting expertise.They offer advisory services on such issues assustainability, global warming, and climate change,

and they perform assessments of supply chains andmanagement systems.

CSOs see a number of problems with this approachto monitoring. Regardless of the fact that theauditing company has been brought in from outside,the hiring corporation still determines the terms ofreference. Furthermore, a firm that is qualified toperform financial audits is not necessarily skilled atsocial auditing; social variables often cannot bereduced to a quantitative calculation. Finally, as theArthur Anderson-Enron case shows, the desire toretain the corporation as a client compromises thechances of an independent investigation.

CSO scepticism of an auditingfirm’s ability to monitor socialresponsibility is based on more thantheory. In 2000, a CSR researcheraccompanying Pricewaterhouse-Cooper’s auditors on inspectionvisits in China and Korea detailed anumber of violations of labour lawsand codes of conduct that the PwCteam had overlooked (O’Rourke2002). PwC failed to catchviolations of wage and overtime,recommended a way to circumventpaying overtime wages, and failedto note that workers were exposedto hazardous chemicals with noshoes, gloves, or eye protection.They interviewed only workersidentified by managers, and insome cases it was the managers

who filled in wage and hour data in the PwCspreadsheets.

Independent external monitorsAs the PwC critique indicates, the criteria for effectivemonitoring are fairly well identified. True independ-ence from the company being monitored, familiaritywith local languages, and knowing when and where toconduct interviews, are just some of the key factors.Taking nothing at face value is equally important: Thefact that factory workers have access to first-aid kitsis meaningless, for instance, if the kits are empty.

For more specialised expertise, training is required.The UK-based Institute for Social and EthicalAccountability has established a set of professionalcredentials which a certified social auditor mustpossess. These process standards, known as theAccountability 1000 (or AA1000), have been derivedG

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True independence

from the company

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Accountability

Transparency • • • • • • • •Stakeholders/stakeholder engagement • • • • •

ReportingPerformance related to standard • • • • • •Environmental performance • • •Human rights issues • •

Monitoring verificationPerformance related to standard • •Environmental performance • • •Human rights issues • • • •

Standard applies toCompany • • • • • • •Business partners • • • • •

Business Conduct

General CSRCompliance with the law • • • • • •Competitive conduct (e.g., price fixing,collusion, anti-trust) • • • • •Corruption and bribery •Political activities • • •Proprietary information/intellectual property rights • • • •Whistleblowers • •Conflicts of interest •

Community Involvement

Broad/general reference • • • •Community economic development • • • •Employment of local and/or underutilised workers • • • •Philanthropy • • •

Corporate Governance

Broad/general reference • • • • •Rights of shareholders • • •

Table 4.1: Comparison of selected corporate social responsibility-related standardsa

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Environment

Broad/general reference • • • • • • •Precautionary principled • • • •Product life cycle • • •Stakeholder engagement on environmental issues • • •Appoint designated person or peoplewith responsibility for environment/provide employee training • •Establish environmental managementsystem/environmental code of conduct • •Public policy on environmental issues • •

Human Rights

Broad/general reference • • • • • • • •Health and safety • • • • • • •Child labour • • • • • •Forced labour • • • • • •Freedom of association/ • • • • • •collective bargainingWages and benefits • • • • • •(including ‘living wage’)Indigenous peoples’ rights • • • •Appoint designated person or peoplewith responsibility for human rights • •Discipline • •Use of security forces • •Working hours/overtime • •

Marketplace/Consumers

Broad/general reference • • • • •Marketing/advertising • • • •Product quality and/or safety • • •Consumer privacy •Recalls •

Table 4.1 continued: Comparison of selected corporate social responsibility-related standardsa

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Workplace/Employees

Broad/general reference • • • • •Non-discrimination • • • • • • •Training • • •Downsizing/lay offs • • •Harassment/abuse • •Child/elder care •Maternity/paternity leave •

Table 4.1 continued: Comparison of selected corporate social responsibility-related standardsa

a The APEC Business Code of Conduct is an initiative of business leaders in the APEC countries. The Caux Principles for Business

is proposed by the Caux Roundtable, a self-identified group of North American, European, and Japanese senior business

executives. The Global Reporting Initiative is an outgrowth of the Coalition of Environmentally Responsible Economies (CERES),

which is inclusive of NGOs, corporations, academicians, and other analysts. The Global Sullivan Principles are the US Reverend

Leon Sullivan's contribution, modelled on the principles for divestment from apartheid South Africa. The OECD Guidelines for

Multinational Enterprises is a product of the member states. The Principles for Global Corporate Responsibility: Benchmarks is

the conceptualisation of the Interfaith Center of Corporate Responsibility (US), Taskforce on the Churches and Corporate

Responsibility (Canada), and the Ecumenical Council for Corporate Responsibility (UK). The SA 8000 is the system devised by

the Council on Economic Priorities, subsequently spun off and renamed Social Accountability International. The Global Compact

is an initiative of the UN Secretary General's office.

b BSR did not approach the comparison of the standards with a pre-established list of topics. Rather, the list of issues included

for comparison was developed in an iterative fashion, stemming from both the commonalties and differences in issues

referenced by the selected standards. The main topic headings (e.g., Accountability, Business Conduct) are ordered alphabetically.

With the exception of the first section on Accountability, within each main topic area ‘broad/general reference’ is always listed

first, with the remaining issues listed in descending order based on the number of standards that reference the particular issue.

Where multiple issues are referenced by the same number of standards, the issues are listed in alphabetical order.

c The Global Reporting Initiative (GRI) differs from the other standards compared in this chart in being a reporting standard

with recommendations on what indicators companies should use in reporting social, environmental, and economic performance.

It does not include recommendations for specific standards of performance, policies, or practices.

d For the purposes of this report, the ‘precautionary principle’ refers to the notion that the burden of proof for determining

the environmental consequences of an action lies with the company to definitively prove environmental safety rather than

environmental harm.

Source: Business for Social Responsibility (2000)

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from a widely diverse consultative process. They stressthat no social evaluation can be adequatelyundertaken without the full participation of allstakeholders—employees, vendors, consumers,communities, shareholders. To be accredited as asocial auditor under the AA1000 system, an individualmust master the skills of stakeholder dialogue(Institute of Social and Ethical Accountability URL).

Other groups, like the Canada-based MaquilaSolidarity Network (URL), a solidarityand labour rights network, helpprovide local women’s groups andworkers’ associations with specialisedmonitoring skills. The Asia Monitor-ing Resource Centre (URL) in HongKong, along with Hong KongChristian Industrial Coalition (HKCIC)and the Chinese Working Women’sNetwork (see Box 4.3) are involved inhealth and safety training withworkers that includes code-relatedtraining. In Central America, theCommission for the Verification ofCodes of Conduct (COVERCOGuatemala) and the El Salvador-based Independent MonitoringGroup (GIMES), which have workedfor major corporations in the appareland coffee industries, have built local capacity forsocial auditing.

Another independent monitoring approach isexemplified by US-based Verité, which monitors thepractices of subcontractors who fill productionorders for multinational corporations at the end ofthe supply chain. Verité often works with locallybased CSO partners in creating monitoring teams(Verité URL). Independent monitors go beyond thetypical factory tour and examination of payrollrecords. They investigate living conditions, checkthe availability of food and water, and solicitinformation from workers at meetings held off-site,not in the factory. Unions also represent anexperienced resource for workplace monitoring.They have established procedures for collecting andverifying worker claims, and as they are generallyself-funded they are a cost-effective alternative inbuilding capacity for social auditing.

Public interest watchdogsIn addition to professional monitors, civil society oftenbenefits from the work done by public watchdogs,

investigators who operate with the cooperation ofcompanies or more covertly. In some cases journalistsmonitor company practices in service of the public’sright to know. The much-criticised corporate behaviourof Shell and Nike, for instance, first came to light asa result of media coverage, including biting satire inthe syndicated US cartoon strip ‘Doonesbury’.

Other civil society sectors have formed watchdogCSOs whose mission it is to track specific industries

or even a single company. The CleanClothes Campaign in Europe has tenautonomous national officesbridging coalitions of consumerorganisations, trade unions, humanrights and women rights organisa-tions, researchers, solidarity groups,and activists. They monitor sweat-shop complaints and other labourand human rights violations aroundthe world.

Global civil society—or thoseparts with access to the necessarytechnology—can be galvanised in amatter of hours through informa-tion technology. CorpWatch, a US-based CSO, monitors lawsuits anddirect action campaigns directed atcompanies. It functions as an Inter-

net clearing house for information that can beaccessed all over the world (CorpWatch URL).

Civil society activism has revealed the inadequacyof internal company approaches to monitoring, ithas charted ways for responsible monitoring ofcorporate practice, and it has established thelegitimacy of civil society actors as monitors. Equallyimportant in raising standards for corporatebehaviour has been the momentum CSOs haveprovided to lawmakers to incorporate and safeguardfundamental ILO standards and other internationallegal norms in local laws. Companies that resisttransparency will continue to find ways to deny thefindings of independent monitors’ reports and disputethe necessity of remedial action, but if laws areestablished to codify codes of conduct this behaviourbecomes much more difficult. Legislation, however,can be a deeply inadequate weapon if enforcementlags behind.

Ultimately the goal of voluntary approaches is toso routinise compliance that new norms can be madelaw with genuine cross-sectoral support. As PhilKnight, Nike’s CEO and Chair, notes: ‘A more effective

Civil society also has

other windows on

corporate social

responsibility issues in

the form of public

watchdogs:

organisations as well

as journalists who

operate both with the

cooperation of

companies and more

covertly

international regulatory framework can lead todistinct cost-savings . . .We believe in a global systemthat measures every multinational against a core setof universal standards using an independent processof social performance monitoring akin to financialauditing. This would bring greater clarity to theimpact of globalisation and the performance of anyone company’ (Zadek 2001: 97).

Making a Difference?

Corporations that damage the environment,mistreat workers, or collude with militarydictatorships increasingly have trouble doing

business. Each day sees the commitment of morecorporate resources to citizenship activities and moreshareholder money in funds with social responsibilitycriteria. Civil society is often credited withestablishing new norms, but determining the overallimpact of CSOs on levels of corporate socialresponsibility is difficult. Governments, the thirdplayer in this powerful triangle, can through lawsthat they enforce ensure that standards are consist-ently applied to all businesses.

Civil Society: achievements and opportunities

While no one has yet attempted to assess the overalleffect of the CSR movement, there are manyindicators that demonstrate that corporations areacting more responsibly. Apparel companies havetaken responsibility for the conditions in theirsubcontractor’s plants, a development that wasunthinkable ten years ago. Themining industry is taking verifiablesteps toward sustainable develop-ment. Starting from virtually nomeasurable forest management aslate as 1995, the rate of growth ofcertified forest acreage worldwidestands at nearly 70 million acres,or more than 5 per cent of workingforests. The marketplace alsoprovides a quantifiable measure ofsuccess: demand for certified forestproducts, for instance, is exceedingsupply (Conroy 2001). Somefinancial institutions are playing arole as well: Deutsche Bank refusedto provide financing for the Three Gorges Dam inChina and, after completing an environmental

impact review at the request of environmental CSOs,withdrew financing from an oil pipeline in Equador.A more indirect measure of the effect of CSOs isthe number of new CSO networks that havestrengthened the movement, reduced duplication ofeffort, and opened space for more strategicprogramming (see Box 4.4).

Ultimately what may win over the corporate worldis the profit motive. Profits are affected by bothnegative and positive publicity, and in the case of theformer it seems that, even if the publicity does nothave a great impact on sales, it can still alter thecorporate mindset. The Economist (21 April 2000) hasreported that Shell did not actually suffer monetary lossover the boycotts in reaction to the Brent Spar andOgoniland, Nigeria, incidents, but its corporateworkforce was so demoralised and its reputation sobadly tarnished that the company was moved to revampits strategic processes, regardless. Today, Shell isconsidered by many to be a model of corporatecitizenship. For a growing number of companiesreputational risk is considered as important as the riskof fire or physical catastrophe (Cowe 2001: 6).

The argument that CSR is good for profits is a longway from being taken as self-evident in the corporateworld, but the argument, once made almost exclusivelyby CSO leaders, is now heard even in some businesscircles. There is a growing body of evidence that that‘doing well by doing good’ has been achieved at somecorporations, that above-average social performanceleads to above-average financial performance(Balmaceda and Larson 2000). Arguing that ‘Corporatesocial responsibility is a serious business with serious

implications for shareholders’ (Cowe2001: 6), a recent publication by theAssociation of British Insurers citesexamples of companies that increasedshareholder value while payingattention to principles of CSR (Cowe2001: 31–4), and, in Built to Last,Collins and Porras (1994) claim thatthose companies that have effectiveprogrammes for corporate responsi-bility have a rate of return that is 9.8per cent better than other companiesover a ten-year period. The businesspress has begun to publish withincreasing frequency articles con-firming the correlation between good

business practices (particularly in the environment) andfinancial success, drawing on new studies and exploring G

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Corporations that

damage the

environment, mistreat

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the issues from various perspectives (Goodman, Kron,and Little 2002: 26–40). Until this message carries theday, however, many corporations are still likely to stagecontinuous and crafty battle against the adoption orimposition of CSR principles.

While much civil society focus has been on individualcorporations or specific industries, CSOs have alsosuccessfully lobbied for changes in policy, such as theBritish Pension Fund legislation and the USgovernment’s regulations relating to the energyefficiency of electrical appliances; civil society activityin India, Zimbabwe, Guatemala, and as many as 50other countries has led to the enactment of newdomestic laws adopting provisions of the InternationalCode of Marketing of Breastmilk substitutes. In fact, the1992 Infant Milk Substitute, Feeding Bottles and Infant

Foods Bill adopted by India actually empowerswatchdog groups, not just government or victims, tobring charges of violations. Most sustainable practicesand workplace improvements can be effected bylegislation that either broadly demands greateraccountability, as in the case of labour law, or specifiesoutcomes, such as automobile fuel efficiency.

What civil society cannot do

The leverage civil society has is mostly limited tolarge and visible companies with brand names (Cowe2001: 6) There are a host of corporations (e.g.,financial services, ‘no-name’ manufacturers) that arenot susceptible to public shaming through consumer-led action. In other cases, the corporation is so largeG

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For many, China represents all that is problematicabout globalisation. Critics argue that the country’svast supply of cheap labour, lax enforcement ofregulations, and suppression of labour and humanrights make it both a magnet for socially irresponsiblemultinationals and a troubling model for developingcountries seeking to attract foreign investors.Furthermore, traditional strategies of civicparticipation—political parties, free trade unions, andNGOs—continue to be controlled or blocked by theChinese government.

Activists thus wonder whether production inChina can be socially responsible or whether newstrategies and mechanisms need to be developed toadvance the rights of workers. Facing increasingpressure in the US and Europe, leading multinationalcorporations themselves are asking how they canmanage their suppliers more responsibly in China, andhow to guarantee that their workers are treatedsafely and fairly.

Towards these ends, a range of stakeholders havecome together over the last two years to focus onimproving workplace health and safety conditions inChinese contract factories for major multinationalfootwear manufacturers. This cooperative effort hassought to support local participation in identifyingand resolving problems inside the factories, and in

advancing broader systems of monitoring andcorporate accountability. Key participants includethe Asia Monitor Resource Center (AMRC), ChineseWorking Women Network (CWN), Hong KongChristian Industrial Committee (HKCIC), Hong KongConfederation of Trade Unions (HKCTU), representa-tives of adidas, Nike, and Reebok, managers of threeTaiwanese contract factories (Pegasus, KTS, and YueYuen II) located in Guangdong Province, China, andfactory employees.

Project coordinators from the US (including stafffrom the Labor Occupational Health Program at UC-Berkeley, the Maquiladora Health and Safety SupportNetwork, and MIT) began the project with a series ofinterviews and needs assessments with workers, CSOs,and companies. They then conducted a four-daytraining programme to build the capacity of healthand safety committees, and to involve shop-floorworkers in identifying, evaluating, and controllinghealth and safety hazards. Each factory created orexpanded a health and safety committee after thetraining, and began a series of initiatives inside theplant. The training was followed by a six-monthevaluation and technical assistance process involvingworkers, managers, and outside stakeholders. TheHong Kong CSOs have played a critical role insupporting worker participation in the committees.

Box 4.3: CSR in China: Building worker health and safety committees in China

that one division may be doing something praise-worthy while another is doing something question-able. BP, for example, is a leader on the issue ofclimate change, but its ARCO division advocatesdrilling in the Arctic refuge, which is unanimouslyopposed by environmental groups.

In still other cases, a CSR campaign aimed at asingle company often stops there, failing to result inindustry-wide changes of standards. The NationalResources Defense Council (NRDC), for example,worked with Dow’s Midland Michigan plant andachieved a significant reduction in emissions as wellas the development of a new product recovered fromthe smoke. The NRDC was disappointed, however,when Dow did not institute the changes company-wide, a move which might have inspired other

corporations to follow suit, and as a result they nowenter into partnerships only in cases that are likely tolead to significant policy changes.

Furthermore, there are some CSR campaigns thepublic refuses to embrace. Americans continue tobuy highly inefficient sports utility vehicles, manu-facturers are unrepentant about making them, andelected representatives resist imposing higher gasolinetaxes and increasing automobile fuel efficiencystandards.

And even when corporations do respond, theirefforts may not be enough to achieve true reform.The subcontractors of some multinationals are nowrequired by their contracts to follow certain standardsin terms of wages and working conditions. Subcon-tractors can evade those requirements, however, by G

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For example, AMRC and HKCIC helped monitor aunion election in one factory, and are now providingtraining on how to run worker committees, andCWN staff have conducted follow-up assessmentswith workers at all three plants.

This initiative, while still young, has resulted in thecreation of first-of-their-kind worker-managementcommittees, including one committee supported bya democratically elected union. These committees arethe first step in building systems for workerparticipation and monitoring health, safety, andenvironmental conditions inside the factories. Thenext step would be transferring this information tofactory managers, brand managers, and CSOs outsidethe factories. Committees are working to developnew and safer mechanisms for workers to reportand resolve problems, and new systems of corporateaccountability.

There have been several keys to the progress ofthis initiative. First has been the participation andcooperation of different stakeholders who havetaken risks to participate. Adidas, Nike, and Reebokpushed their Taiwanese contractors to participateand sat across the table from critics. The contractorsrisked opening their facilities to CSOs. And the CSOsrisked PR exposure by working with the multinationalcorporations. In the end, all of the participants

gained from the cooperation. Second has been thecentrality of workers to the process. All of thestakeholders have agreed that building workercapacity is beneficial to improving conditions. Thefocus on worker empowerment has moved theprocess beyond past debates about codes andmonitoring. Finally, the initiative has benefited from,and supported in a small way, the development ofcivil society actors in China. The increasedconnections between the CSOs and factory workersoffer an interesting example of a potential wayforward for civic participation in China.

This first phase of the project has focused squarelyon capacity-building and learning. The longer-termvision is to build on these pilot initiatives to advancelarger-scale efforts to develop systems of monitoringand worker participation. The experience of initiatingand assisting health and safety committees in thesethree factories may be the basis for developing moreextensive systems of worker participation andexternal processes of corporate accountability inChina.

Dara O’Rourke, Assistant Professor, UrbanStudies and Planning, Massachusetts Institute ofTechnology

hiring out some of the work into homes or informalsettings where conditions may be patently unsafe.And the subcontractor reform movement has thus fartouched mostly products with daily relevance forNorthern consumers, such as apparel and automobiles. The manufacturers of products more distantfrom the daily lives of consumers—i.e. elevators,freight cars, generators—have not been subject tosimilar scrutiny.

Moreover, dramatic announcements about thesuccesses of civil society campaigns often maskimportant negative trends. The Free Burma Coalitionannounced its success in persuading two dozen UScorporations to stop doing business in Myanmar atjust about the same time as the US CommerceDepartment reported that the value of goodsimported from Myanmar to the US had increasedfrom $107 million in 1996 to $470 million in 2000(Chicago Tribune, 6 January 2002).

Finally, many multinationals clearly remain wilfullyoblivious to shifting attitudes among the generalpublic. The US tobacco industry, for example, supportsworthy youth programmes—but spends double itsprogramme budget just advertising the programmes.More important, tobacco companies have no qualmsabout marketing cigarettes to people of any age inany country that will let them, in spite of the fact thatthe industry has spent billions of dollars settling suitswhich made public its early knowledge of theaddictive nature of nicotine. If Philip Morris had beenmore attuned to the winds of change, it might nothave publicised the findings of a 2000 report to theCzech government about the impact of smoking onhealth care costs. It is truly hard to believe that noone at the company understood the implications ofa report that said that a cigarette smoking populationwould save the Czech government money becausepeople who smoke die earlier than those who do not.

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The fight against the aggressive marketing of infantformula by Nestlé and other manufacturers is one ofthe most prominent examples of cross-sectoralcoalition building. The Nestlé Boycott, launched inthe 1970s and continuing today, was a key factor inthe development of the first-ever UN code to controlinappropriate marketing practices. A North-SouthCSO network emerged to support code development,implementation, and monitoring. But, after 25 yearsof campaigning, the boycott is also a cautionarytale: Years of work can pay off, but patience isrequired.

Bottle feeding under poverty conditions—a lackof clean water, poor sanitation, illiteracy—can lead tocontaminated, diluted infant food. Yet this deadlyrecipe competes with breast-feeding, and the WorldHealth Organization (WHO) and UNICEF estimatethat up to 1.5 million babies die every year as aresult.

After years of advocacy by health professionals,consumer advocates, shareholders, and legislators,the International Code of Marketing BreastmilkSubstitutes, developed under WHO and UNICEF, wasadopted by the World Health Assembly (WHA) in

1981. The code focuses on marketing practices thatcontribute to the abandonment of breast-feeding.Advertising and promotion tactics are prohibited.Instructions and images on the labels for infantformula are also covered by the code. Eveneducational information must conform to codestandards. But the code is not law; rather, it is a setof minimum requirements meant to be translatedinto national law.

Every WHA member state has endorsed the codeat varying levels of commitment. Even the UnitedStates, the only country to vote against it in 1981,has supported recent WHA resolutions aimed atfurther implementation. To date, more than half theworld’s population lives in countries that haveadopted laws which codify significant aspects of thestandards.

This could never have been achieved without theefforts of the International Baby Food ActionNetwork (IBFAN), a North-South CSO which hasgrown to include some 150 groups in over 90countries. IBFAN translates code into law; trainsgovernment officials on implementation, coordinatesmonitoring efforts; and compiles a biennial

Box 4.4: Staying the course: CSOs and the campaign against baby formula marketing

Even so, the achievements of civil society to dateare truly impressive and very encouraging. CSOs havetrained a spotlight on crucial issues, changing publicperceptions and expectations; effected changes inthe practice of individual corporations; helped toestablish industry-wide standards; and introducedsignificant policy changes around the world. But inthe end no one sector can alone create the massivechanges still necessary for a sustainable and justworld. Effective local, state, and international laws areessential, and, while some new legislation has alreadybeen written (much of it the result of CSO action),more is needed. Governments must also stand behindand rigorously enforce these laws for them to haveany real impact.

What governments must do

Unfortunately, the corporate or industry-widechanges that result from CSO action can be tempor-

ary. A new CEO or a relaxation of regular monitoringcan lead to backsliding. Ultimately, the impact ofcivil society groups is greatest when translated intolegislation and international codes. In cases wherechange clearly involves additional costs, only amandate from government can bring it about. Airbags, for example, add significantly to the cost ofautomobile manufacture, and it was only whengovernments required all manufacturers to add totheir cost that air bags were installed in allautomobiles. It is governments that can ensure thatchange is institutionalised and applied to all actors.

Governments must be willing and able to do theirpart, however, and many are not. Thus it becomes thetask of CSOs to pressure governments to enforce andamend national and international law. An encour-aging example is the evolution of the ILO TripartiteDeclaration of Principles Concerning MultinationalEnterprises and Social Policy (1977, amended 2000;ILO 2000) and the OECD Guidelines for Multinational G

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compendium of company practices and violations. Itis organised as a decentralised network, and regionalgroups take leadership for selected tasks. Thissuccessful model has been followed by others suchas the Pesticide Action Network and Third WorldNetwork (URL).

Yet, despite all this, Nestlé and other companiescontinue marketing practices designed to circumventrestrictions. ‘Baby clubs’ are still being established asconduits for promotional material, and contact withmothers is made through the Internet and toll-freehotlines offering ‘infant feeding advice’, even thoughthe code prohibits direct contact with mothers.Hospitals and clinics are still supplied with, andencouraged to distribute, free supplies.

Change, often incremental, takes a long time andrequires hard work. What is impressive is the abilityof CSOs to keep the issue at the forefront of publichealth agendas. New models have emerged whichincrease the pressure on the companies: For example,Brazil recently passed a law requiring companies toremove pictures of babies, bottles, or toys fromformula and baby food labels and to add warningsthat the product is not to be used before a baby is

six months old. It has been reported to IBFAN thatboth Gerber and Nestlé have complied.

A troubling footnote: soaring HIV rates in someSouthern countries have provided an opportunityfor manufacturers to claim that they are providinga service by donating formula and public educationprogrammes as part of the effort to reduce virustransmission through the breast-milk of HIV-positivemothers. Nestlé is actively courting African health-care systems with funds for research and educationalprogrammes. Meanwhile, IBFAN advocacy hascontributed to the adoption of written recom-mendations by WHO, UNICEF, and UNAIDS that anydonations must be made in conformity with codestandards. CSOs such as IBFAN will surely need tomonitor this complex health crisis with sensitivity sothat it is not exploited for commercial gain.

Leah Margulies, public interest attorney, NGOrepresentative to International Code of MarketingBreastmilk Substitutes negotiations, and formerlegal adviser to UNICEF’s Baby Friendly HospitalInitiative.

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Enterprises (1976, updated June 2000; OECD 2000).While these codes are not so legally binding oncompanies or their officials as international criminallaw, both have emerged as crucial precursors tointernational labour law that is binding on privateactors.

Both the ILO and the OECD specifically incorporaterespect for human rights as a fundamental tenet oftheir guidelines. Likewise, the UN’s UniversalDeclaration of Human Rights holds that ‘everyindividual and every organ of society’ is obliged touphold these rights, and parts of the Declarationhave been recognised as legally binding on states.Significantly, applications that were originally non-binding on multinationals are evolving fromvoluntary standards to legal obligations. The UN Sub-Commission on the Promotion and Protection ofHuman Rights is currently working on a DraftUniversal Human Rights Guidelines for Companies(International Council of Human Rights Policy 2002).

The UN’s Global Compact, a high-profile voluntaryinitiative of the Secretary General, was established toreinforce joint governmental and private sectorresponsibility for human rights, as well as environ-mental and labour standards. This gives greater weight

to voluntary promotion of universal standards, andcomplements the movement towards legally bindingcodes of the ILO and the OECD. The reactions ofdeveloping country governments have been mixed.Some embrace the association with the UN asproviding legitimacy for the difficult task ofdemanding corporate accountability. Others fear thatthe compact is exclusionary of national policy, andmay drive away investment. At a time when the UNitself seeks strategic partnerships with powerfulplayers, the compact is a unique route for companiesthat are willing to make a commitment to corporateresponsibility to get increased visibility.

At the regional and national levels, much morecan be done. The UK and US governments haveinstituted a set of Voluntary Principles on Securityand Human Rights covering the mining, extraction,and chemical industries, but other states haveadopted regulations that go further. The Australianand New Zealand governments, for example, have aProcurement Agreement that includes ethicalrequirements. (Government of Australia 2002).

CSR can also be promoted by governmentincentives. Tax incentives can encourage the use ofrenewable energy, anti-bribery legislation can level

Above: The campaign targeting petrol-guzzling sports utility vehicles (SUVs) is not catching on in the US © Union of ConcernedScientists.

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the playing field for all businesses, and governmentregulations of pension fund investments caninfluence corporate behaviour. Trade agreementsstructured with social clauses are also a useful tool.One such agreement recently signed by the US andCambodia increases the export quota of goods madein Cambodia by 14 per cent, contingent uponevidence that local labour laws are being honoured(USTR 2000). The need to harmonise domestic lawwith WTO rules is yet another opportunity forgovernments to lay down baseline standards forcorporate practice.

Conclusion

Global civil society has made tremendousprogress in the last decade, but the size ofthe problems at hand, already enormous,

grows daily. ‘Two thirds of the world’s fisheries arebeing harvested beyond sustainability’, reportsJonathan Lash of the World Resources Institute.‘Forest loss in poor regions is accelerating and soildegradation is widespread . . . The squalid slums ofthe sprawling cities of the poorest parts of the worldare expanding by a million people aweek’ (Lash 2001: 1789). 1.2 billionpeople around the world currentlylive on less than a dollar a day.

To continue to be effective inaddressing social responsibility issues,CSOs will need to continuously evolve,developing ever more sophisticatedtechniques, as they confront theresources at the disposal of multi-nationals. As discussed in Chapter 8,this is a matter of survival for thewhole range of civil society groups astheir organisational environmentcontinues to be increasingly complex.CSOs already play a crucial role in setting standards andmonitoring—no other sector has stepped forward to fillthe obvious gap between regulation and reality on theshop floor—and that role will grow in years to come. Itis imperative that CSOs find greater success inleveraging governmental action, particularly in theenforcement of existing domestic and internationalstandards. They must also find ways to persuadelegislators to institute and enforce social incentivesand disincentives, and to play a role in internationalstandard setting. The more laws and standards crossnational borders, the more impact they will have.

CSOs would also benefit from better assessments ofpast campaigns, analyses of what has worked andwhat has failed. Alliances of all sorts, with other civilsociety groups, with companies, with scholars, andwith government officials, add an inestimable volumeof skills and resources to the fight, and may one dayaccumulate a critical mass for systemic change.

Finally, CSOs must be careful not to lose theirgreatest source of leverage: the legitimacy that flowsfrom the respect and trust that citizens place inthem. While standards within civil society groupsare not uniform—and there have been examples ofsloppy work—for the most part CSOs have maintaineda high standard, relying on science to inform theirwork in health and the environment and the bestdata available in their work on labour conditions.Their strength lies in their ability to challenge thereputation of corporations; to continue in this rolerequires scrupulous attention to the reputation of thecivil society organisations themselves.

In the end, of course, social values and norms willhave to change if the world is to become a safer,healthier place, and it is here that CSOs will alwaysplay one of their most important roles. Multinational

corporations will not institutechange, nor will governments legis-late it, if the public does not care. Bychanging the way that people thinkabout the world and their place in it,civil society organisations arecreating the conditions under whichhuman rights, environmentalintegrity, and social progress may befully realised.

The authors wish to thank JohnConroy, Emily Hauser, and Jill Timmsfor their valuable assistance.

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