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Corporate Social Responsibility: From Buzzwords to International Action

October 22, 2018
The collapse of Rana Plaza, killing more than 1,100 garment workers in Dakha, Bangladesh in April 2013, brought attention to the dire working conditions of the Bangladeshi people. Bangladesh’s textile industry is the 2nd largest in the world, with annual export earnings upwards of $28 billion in 2016 yet in contrast, the workers have the lowest wages of the garment manufacturing countries. An estimated 31% of its population lives below the national poverty line, which is defined as $2 per day. A report by Oxfam showed that “a top fashion industry CEO earned in four days the lifetime pay of a factory worker.”[1] Ultimately, the fashion industry relies on cheap labor, quick turnaround time, and export oriented industrialization and those brands which exploit the working conditions for these reasons in Bangladesh include, but are not limited to: Hugo Boss, GAP, Zara, and H&M.[2] This article will demonstrate how the responsibility to ensure improved working conditions in countries such as Bangladesh is at the intersection between private, public, and consumer based initiatives.

It is inevitable that a corporation shapes and is shaped by the surrounding world; whether it be due to elevating or stifling economic growth, job creation, air pollution, and so on. Evidently, these effects can be positive or negative, which is why the idea of corporate social responsibility (CSR) becomes so relevant today.

Defining CSR

Though the idea first germinated in the 1920s, it took root in 1951 when the chairman of the board for Standard Oil in New Jersey, Frank Abrams, wrote in the Harvard Business Review that it was the responsibility of a business:

“to conduct the affairs of the enterprise to maintain an equitable and workable balance among the claims of the various directly interested groups, a harmonious balance among stockholders, employees, customers, and the public at large (Frederick, 2006).”[3]

Since then, the ideas regarding corporate social responsibility have evolved with time, but there is still no standard definition. A good template, however, would be one provided by the World Business Council for Sustainable Development (WBCSD):

“[t]he commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.”[4]

This definition is markedly different from that of Mr. Adams in that it highlights the concept of “sustainable economic development,” rather than simply describing a balance of “interested groups.” This departure shows a shift in focus toward placing a higher value on the actual development of the company and the active role of the company in this process. Rather than overseeing compromises between various involved groups, it assigns to the corporation a responsibility to work toward increasing the quality of life of its workers—which is now what is commonly thought of when describing CSR. 

Guidelines for CSR

The International Organization for Standardization (ISO) released in 2010 a set of guidelines for social responsibility. It defines the 7 core subjects as:

  • Organizational Governance
  • Human Rights
  • Labor Practices
  • The Environment
  • Fair Operating Practices
  • Consumer Issues
  • Community Involvement and Development [5]

These subjects, and further, the guidelines set forth by the ISO, go hand in hand with the conventions of the United Nations’ Global Compact implemented in 2000, which derives 10 principles from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption. These principles fall under 4 broader categories: human rights, labor, environment, and anti-corruption.[6]

The UN’s involvement in this issue demonstrates the direct partnership between private and public entities. Though the responsibility to uphold these outlined practices is on the corporation, the guidelines are set forth by an international entity, which is generally tasked with the oversight of governments.

Image: 17 Sustainable Development Goals, Source: Wikimedia CommonsImage: 17 Sustainable Development Goals, Source: Wikimedia Commons

Key Roles of the Public Sector

Public engagement is also vital to the growth and development of CSR in the private sector. In order to fully understand the needs of an effective public and private partnership in CSR, it is important to grasp the role of the public sector in overseeing the implementation of CSR policies within companies. A 2002 report by the World Bank Group defines 4 key roles of the public sector in CSR as mandating, facilitating, partnering, and endorsing.[7] The chart below demonstrates a basic overview of the practices of the public sector.

Term

Definition

Example of Public Role

Mandating Governments are tasked with setting minimum standards for performance Regulating or inspecting corporations to ensure proper compliance
Facilitating Enabling/incentivizing companies to participate in CSR initiatives Creating incentives or raising awareness for the campaign
Partnering  Public bodies acting as “participants, conveners, or facilitators” Engaging stakeholders and consumers
Endorsing  Political support and public endorsement Publicizing or praising the initiative

 

Zara, H&M, and an International Accord

In reaction to the collapse of Rana Plaza, both Zara (owned by Intidex) and H&M, among others, signed on to an international accord aimed at preventing such tragedies in the future. As well-known brands in the fashion industry and beneficiaries of the low labor costs of Bangladeshi production, these companies joined an international effort to improve working conditions.[8] It is not a legal responsibility for a company to rectify conditions such as these, so signing onto the accord was voluntary. It becomes clear here that corporate social responsibility falls at the intersection between public, private, and consumer based initiatives.

The Accord on Fire and Building Safety in Bangladesh has garnered over 200 company signatures; collectively overseeing more than 1600 factories and 2 million workers. Signed on May 15th, 2013, the Accord was created within weeks of the Rana Plaza disaster. The 5-year legally binding agreement is composed of 6 primary goals:

  1. To ensure a safe working environment in the Bangladeshi garment industry
  2. Implementing independent inspection programs
  3. Public disclosure of all of the factories, the inspection reports, and “corrective action plans” (CAP)
  4. For the signatories to ensure funds to remediate and “maintain sourcing relationships”
  5. Elected health and safety committees in factories
  6. Training programs, complaint mechanisms, and right to refuse unsafe work for the factory workers.[9]

This year marks the end of the legal obligation maintained by the accord which garners a need to analyze its effectiveness. A report by the Center for Global Workers’ Rights (CGWR) at Penn State indicates that while the effects on wages, hours, and work intensity has been minimal, the impact on building safety has been “dramatic.” The scope this change is can be measured by the 97,000 identified and eliminated hazards in more than 1600 factories. The report states:

“At the start of the Accord, some 969 factories had inadequate circuit breakers, a crucial potential cause of fires. By March 2018, 82.8 % of these cases were fully remediated. And while 97% of Accord factories in 2013 lacked safe means of egress due to lockable or collapsible gates, by March 2018, 96.5% of factories had addressed this issue.”[10]

While many issues still remain, it is clear that the Accord has made significant positive changes that can be attributed in part to the active participation and patronage of companies within the accord. As the 5-year term comes to a close, the Accord is being replaced with the “2018 Accord,” which builds on its predecessor and includes a new aim of functioning as a national regulatory body in the future and a release from responsibility if the corporation has “not sourced from a covered factory for 18 months and commits to not source from such factory for an additional 24 months.”[11]

Conclusion

Corporate social responsibility, while it may seem like a jumble of “buzz words,” is a beneficial initiative on behalf of corporations, the government, and the public. The company gains press coverage and positive image, the government can support private efforts rather than sustaining its own, and the public is able to benefit directly from the initiative. The tragedy that occurred in Rana Plaza, and the corporate response it garnered, is a prime example of such an initiative. Since the accident, a group called IndustriALL which organizes on behalf of living wages for garment workers has also been a prime factor in the Accord on Fire and Building Safety, which has overseen more than 1,500 factory inspections. Its fund for Rana Plaza has even reached $30 million.[12]

This feat of global partnership not only reveals the true impact of corporate social responsibility, but also shifts its focus as a public relations strategy to a necessary partnership of public and private sectors united to improve global social causes.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

  [1]http://www.ipsnews.net/2018/02/bangladeshs-garment-industry-boom-leaving-workers-behind/

  [2]www.businessinsider.com/big-brands-in-bangladesh-factories-2013-5

  [3]http://repository.upenn.edu/od_theses_mp/9

  [4]http://documents.worldbank.org/curated/en/284431468340215496/pdf/346550CSR1CSR1interior.pdf

  [5]www.iso.org/news/2011/03/Ref1558.html

  [6]https://www.unglobalcompact.org/what-is-gc/mission/principles

  [7]http://documents.worldbank.org/curated/en/284431468340215496/pdf/346550CSR1CSR1interior.pdf

  [8]www.bbc.com/news/business-22520415

  [9]http://bangladeshaccord.org/about/

  [10]http://lser.la.psu.edu/gwr/documents/copy_of_CGWR2017ResearchReportBindingPower.pdf

  [11]http://bangladeshaccord.org/wp-content/uploads/2018-Accord-full-text.pdf

  [12]www.industriall-union.org/action-on-bangladesh

PENN WHARTON PPI
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  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>