Voluntary CSR initiatives: the honeymoon is over

Last week Rajesh Chhabara published an article in Ethical Corporation Magazine about voluntary CSR initiatives. According to Mr. Chhabara, "The explosion in voluntary initiatives and codes of conduct for sustainability in the past 10 years has increased global awareness of corporate responsibility. But concerns have been raised about the effectiveness, motives, credibility and transparency of many initiatives. Add to this thousands of codes of conduct introduced by companies themselves and the sheer number of sustainability clubs open to modern business is mind-boggling."

With regard to the UN Global Compact, Mr. Chhabara writes the following:

"Apart from the perils of proliferation, voluntary initiatives also face criticism about inadequate transparency and credibility. Many initiatives are accused of allowing 'free riders' where companies join the initiative to boost their own PR but not really living by the standards.

The UN Global Compact was recently criticized by more than 80 civil society organizations for allowing PetroChina, the publicly traded arm of China National Petroleum Corporation, to become a member. Campaigners accuse the company, which is Sudan's largest oil industry partner, of being complicit in genocide by financially supporting the Sudanese government. The Global Compact had been previously criticized when it was discovered that several companies which joined it had not provided any report on their performance on the Global Compact's principles. The criticism prompted the compact to flag hundreds of companies as 'inactive'.

The Global Compact's spokesman Mathias Stausberg says: 'The commitment to [our] principles is the first step, but the real challenges are implementation and appropriate disclosure. We provide as much practical guidance as we possibly can, working through local networks and with other stakeholders to translate the Global Compact principles into action. Ultimately, creating motivation requires showing that it is in the best business interest to act responsibly.'"

The article is available here.

Does the Global Compact contribute to CSR strategies in the telecom industry?

In the February 2009 issue of the Journal of Business Ethics, Hens Runhaar and Helene Lafferty published an interesting article about the contribution of the UN Global Compact to CSR strategies in the telecommunications industry. The authors conclude that the Global Compact is "only one of the many initiatives" that the companies included in the case study examination employ in shaping, implementing, and reporting about their CSR strategies, and that the role of the Compact "is at most modest".

Here is a short abstract:

CSR has become an important element in the business strategy of a growing number of companies worldwide. A large number of initiatives have been developed that aim to support companies in developing, implementing, and communicating about CSR. The Global Compact (GC), initiated by the United Nations, stands out. Since its launch in 2000, it has grown to about 2900 companies and 3800 members in total. The GC combines several mechanisms to support CSR strategies: normative principles, networks for learning and co-operation, and communication and transparency about CSR activities. However, up to now only a few empirical evaluations of the contribution of the GC to CSR strategies have been conducted that however have not differentiated between different types of companies (regarding type of industry or regarding the maturity of CSR). This paper aims to partly fill this knowledge gap by a case study examination of three frontrunner companies in the telecommunications industry. The results show that the GC is only one of the many initiatives that these companies employ in shaping, implementing, and reporting about their CSR strategies, and that its role is at most modest. There are two important reasons. One is that many of the CSR issues that these companies deal with are industry specific and are hence addressed in specific networks. The second reason is that the GC principles are perceived as minimum requirements that do not provide many incentives to the three case study companies to perform better. A differentiation of norms for GC members is expected to enhance the contribution of the GC to CSR strategy employment, not only for frontrunner companies but as well for other categories of companies.

The article can be purchased here.

© Photo by Brajeshwar Oinam.

Who said what in April 2009

"In the spectrum of CSR initiatives the Global Compact is best characterized as a promotional endeavor. It relies on voluntary compliance and self-policing on the part of its corporate participants, and does not entail any mechanisms of external monitoring, verification or sanctioning to ensure the latter are actually living up to their commitments and claims." - Graham Knight and Jackie Smith, in an article titled The Global Compact and its critics: activism, power relations, and Corporate Social Responsibility.

"It still is troubling to me to find the United Nations allowing itself, as a protector of the voice of the people, especially of the poor, to subordinate itself institutionally to a kind of market-driven vision. I would hope that in the future the Global Compact and the CEO Water Mandate would see its real home as belonging here at the General Assembly in the United Nations, rather than as controlled and influenced by the major water companies." - David Andrews, senior adviser to the President of the General Assembly on Food Policy and Sustainable Development, at a press conference at the UN headquarters in New York.

"Mr. Chey […] was indeed pardoned. He is a change agent. SK Electronics is THE conglomerate in Korea which has brought most change on the corporate citizenship agenda about, and he was proposed and chosen by the Korea Network, which is very strong, because we are a learning platform, and no better way of learning then to learn from mistakes." - Georg Kell, executive director of the Global Compact, on Chey Tae-won's appointment to the Global Compact Board. Mr. Chey was sentenced to three years in prison in 2003 for inflating the 2001 profit of the SK Group's trading arm, SK Global, by 1.5 trillion won (US$1.25 billion).

"In the category of UN departments that don't merely waste space, but actually make the world a worse place, consider the UN Global Compact housed in the annex on the other side of First Avenue. Set up by then Secretary-General Kofi Annan as the United Nations' interface with private business, it has become a platform for agribusiness giant Monsanto to talk at a 'VIP' luncheon about how it is solving the food crisis and for Microsoft's 'ambassador to Africa' - who just happens to be the brother of the United Nations' caretaker special adviser on Africa - to meet with African heads of state." - Matthew Russell Lee, in an article in Foreign Policy about his work as a correspondent at the UN headquarters in New York.

"[…] we are surprised that Foreign Policy, as it appears, did not exercise due diligence when fact-checking the claims made in Mr. Lee’s contribution. […] As far as Mr. Lee’s troubled relationship with facts is concerned, his rant against the United Nations is par for the course. Far more troubling is that he fails to understand the fundamental nature of the Global Compact as a platform for critical, yet constructive dialogue and learning." - Georg Kell, in a letter to the editors of Foreign Policy.

© Photo by Tommy Ga-Ken Wan.