Corporate Social Responsibility: From Buzzwords to International Action
October 22, 2018
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.
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).”
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.”
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 
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.
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.
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. The chart below demonstrates a basic overview of the practices of the public sector.
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. 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:
- To ensure a safe working environment in the Bangladeshi garment industry
- Implementing independent inspection programs
- Public disclosure of all of the factories, the inspection reports, and “corrective action plans” (CAP)
- For the signatories to ensure funds to remediate and “maintain sourcing relationships”
- Elected health and safety committees in factories
- Training programs, complaint mechanisms, and right to refuse unsafe work for the factory workers.
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.”
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.”
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.
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.
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