Given the scope of various ethical scandals in a wide range of organizations over the last several decades, research on organizational ethics and corporate social responsibility [CSR] has grown significantly. Scholars have sought to better understand factors related to ethical awareness, judgment, and action through descriptive, normative, and analytical approaches. Organizations have established extensive policies and practices to enable employees to address the ethical dilemmas that they experience, drawing upon theories of duty, rights, utility, virtue, and care to facilitate compliance and, ultimately, produce aspirational ethics. In recent years, scholars have argued that organizational ethics is not only an individual-level phenomenon but also one influenced by organizational practices and societal expectations. As a result, debates regarding the role of businesses in society have also proliferated under the umbrella term of CSR, with attention paid to business initiatives such as philanthropy, volunteerism, cause-related marketing, and, most recently, strategic CSR. To better understand the opportunities and challenges of CSR, advocates and critics have turned to theories of shareholder value, stakeholder theory, corporate social performance, and corporate citizenship. In doing so, they have reintroduced an age-old question regarding the rights and responsibilities of business in society.
The current era of corporate globalization has not altered the fundamental nature of the struggle for human rights, but it has shifted its context and created new opportunities and challenges for the global human rights movement. Since the early 1990s this movement, which used to focus exclusively on the policies and practices of nation-states, has begun examining the role of multinational corporations and international financial institutions in the protection and promotion of human rights.
This article describes and evaluates the different strategies that have been employed by human rights nongovernmental organizations [NGOs] in attempting to influence the behavior of multinational corporations [MNCs]. Within the NGO world, there is a basic divide on tactics for dealing with corporations: Engagers try to draw corporations into dialogue in order to persuade them by means of ethical and prudential arguments to adopt voluntary codes of conduct, while confronters believe that corporations will act only when their financial interests are threatened, and therefore take a more adversarial stance toward them. The latter approach is more in line with traditional labor union strategies and tactics, and in fact is often motivated by a desire to maintain solidarity with union partners. Confrontational NGOs tend to employ moral stigmatization, or "naming and shaming," as their primary tactic, while NGOs that favor engagement offer dialogue and limited forms of cooperation with willing MNCs.
THE NEW FOCUS ON MNCs
At least five factors have contributed to human rights NGOs' interest in the business sector:
* a perceived shift of power from nation-states to MNCs and international financial institutions such as the World Bank and the International Monetary Fund;
* the lack of social and environmental accountability of MNCs under existing national and international laws;
* the growing anti-corporate-globalization movement;
* a conclusion on the part of large, international human rights organizations that they have been too focused on traditional categories of civil and political rights while neglecting economic, social, and cultural rights; and
* a desire on the part of some people in the NGO world to enlist MNCs and business executives as allies and as potential levers for promoting human rights globally.
Undoubtedly the most important factor is the perception that political and economic power has shifted away from governments and toward corporations, in particular MNCs. In the developed industrial nations of the North, mainly the United States, Canada, Europe, and Japan, state and national governments are often seen as doing the bidding of their major corporations. Increasingly, they resemble plutocracies in which corporations control the political agenda while also dominating the marketplace. In the South, large Northern-based MNCs often have more economic power than governments, and nominally democratic crony-capitalist oligarchies continue to control access to most of the valuable natural resources while maintaining power over impoverished populations by force.
Within NGOs, there is a widely held view that multinational corporations, already the dominant institutions in contemporary society, are increasing their influence over the economic, political, and cultural life of humanity while remaining almost completely unaccountable to global civil society. The boards and chief executives who control MNCs are not democratically elected, and their deliberations are not transparent. If they feel accountable to anyone, it is to market analysts and investors who, for the most part, wish simply to make a quick profit.
MNCs play an influential role in major international financial and trade organizations. One of the most significant events of the past decade was the formation of the World Trade Organization [WTO] in 1995. The most remarkable feature of the WTO is its dispute-resolution and enforcement powers, and the extent to which its rules could potentially deprive states of their ability to enforce, protect, and fulfill human rights. Some view the aggressive effort to privilege the rights of investors, banks, and corporations over the wishes of consumers, workers, and national or subnational governments and communities as a threat not only to human rights implementation, but also to economic self-determination, development, transparency, and democracy itself. Under the terms of the WTO, governments can invoke economic sanctions against other states that fail to protect the trade and intellectual property rights of corporations, but corporations are not in turn subject to any binding regulations, let alone formal sanctions, for failure to respect the human and labor rights of the people who live in those states.
Indeed, there are currently no generally accepted international legal standards articulating labor, environmental, or human rights obligations that are directly binding on the operations or behavior of MNCs. [1] The only standards that do exist are found in the domestic laws of some countries, and they vary greatly in terms of what they require. By and large, these laws are not well enforced. In countries where such laws do exist and are enforced, MNCs can easily evade them by moving their capital, investments, and production facilities to other countries that have lower or non-enforced standards. Since developing countries compete with one another for foreign investment and hard currencies, MNC production and capital mobility can lead to a "race to the bottom" in which states compete to provide MNCs with the least demanding regulatory environment for business. [2] The inaction of governments has created a regulatory vacuum. Social activists have seized this opportunity to place human rights, labor rights, and global environmental concerns on the agenda of global business.
The popular demonstrations against "corporate-led globalization" that took place around the WTO meetings in Seattle in November 1999, and subsequent demonstrations against other multilateral economic institutions in New York, Washington, Prague, Quebec City, and Genoa, provide evidence of growing popular resistance to globalization in its current form. This "anti-corporate activism" has provided some of the impetus for a number of human rights and environmental NGOs to become involved in debates over global economic, trade, and investment policies.
The recent growth of NGO interest in business reflects an interesting twist on globalization: the concerns of Northern and Southern NGOs are beginning to converge. Large Northern human rights NGOs such as Amnesty International and Human Rights Watch were founded in order to combat violations of traditional civil and political rights, such as abuses of freedom of expression, arbitrary imprisonment, and unfair trials. Southern human rights activists are more keenly aware of the legacies of colonialism and imperialism, and they tend to see the most pressing human rights issues in economic and social rather than only in civil and political terms. For many years Southern human rights activists have complained that Northern human rights NGOs have shown little interest in combating abuses of economic, social, and cultural rights. [3]
During the past decade at least some members of the Northern human rights establishment have found reason to agree with this critique. In its recent annual reports, Amnesty International has stressed the indivisibility and interdependence of human rights and has highlighted their relationship to globalization. [4] In the past several years Human Rights Watch has produced groundbreaking reports dealing with topics such as child bonded labor, mistreatment of maquiladora workers, and trafficking in women and girls. Both Amnesty International and Human Rights Watch have reported on human rights violations linked to the activities of major energy companies in countries such as Nigeria, Burma, India, Colombia, and Sudan. There is now a growing sense within the human rights community that the major human rights NGOs must find ways of effectively addressing abuses of economic and social rights. The recent focus of many human rights NGOs on the activities of MNCs in developing countries has emerged as one way in which this demand is being met.
Another important reason for many human rights NGOs' increased focus on MNCs is a desire to find new allies. Human rights NGOs have traditionally drawn most of their membership and financial support from the better-educated, better-traveled, more cosmopolitan segments of society. Many executives of MNCs fit this profile, and many businesspeople are personally supportive of NGO activities in a variety of fields. Just as NGOs attempt to attract support and expertise from other professional groups, some within the NGO community are actively trying to enlist support from people in the business world. In some cases there may be a role for business executives as potential agents of political influence, for instance, by interceding with host governments to raise human rights issues. Some even think that corporations themselves can be used as levers for progressive social and economic change, rather than just being engines of profit. [5] Several recent studies have cautiously suggested that multinational corporations may have a constructive role to play in conflict prevention and conflict resolution in the world's troubled countries. [6] A contrary view is also widely held. As Marina Ottaway notes, during an earlier era of globalization--empire building--charter companies played a major role in bringing "civilization" to the South. She warns against allowing private corporations to combine their entrepreneurial activities with the role of political and moral reformers. [7] Likewise, not all NGOs believe that MNCs can or should function as agents for the promotion of human rights.
NGOs are diverse in terms of their missions, strategies, methods, and organizational forms, and the NGO world as a whole is anarchic. Quite appropriately, there are a number of distinguishable views and approaches within the NGO world about the appropriate goals, strategies, and tactics for dealing with transnational corporations.
ENGAGING MNCs: THE CORPORATE SOCIAL RESPONSIBILITY MOVEMENT
While MNCs do not generally commit violations of traditional categories of civil and political rights [with some notorious exceptions], they are often indirectly complicit in such abuses, and they are directly and routinely implicated in abuses of many important social and economic rights. MNC managers control employment for millions of people around the world and are in a position to influence directly the enjoyment of the labor rights and economic rights of their own employees, and to influence indirectly those of the employees of their subcontractors and suppliers. Companies also have direct control over health and safety issues in the workplace, worker compensation, and rights to organize and bargain collectively.
Over the past several decades there has been a gradual but steady evolution of the idea that corporations have certain ethical responsibilities toward society. Prior to the 1970s the dominant view was that the only responsibility of businesses is to increase profits for owners and investors. This is a legal obligation only. [8] In the 1970s, in the wake of the Lockheed, ITT, Ford Pinto, and other scandals, the view that businesses must not engage in bribery, fraud, or collusive practices, nor may they interfere in the political affairs of host states, gained acceptance. This led to passage of the Foreign Corrupt Practices Act in the United States, and to the first wave of attempts by the UN Economic and Social Council and other international organizations to regulate MNC behavior. In the 1980s the corporate social responsibility [CSR] agenda was significantly broadened when, in the wake of Bhopal, Exxon Valdez, and other highly publicized environmental disasters, the NGO environmental movement pressed home the idea that MNCs must also protect the environment, thus further expanding the notion that corporations have social responsibilities. From the early 1990s on, human rights NGOs and other voices within civil society have been calling upon corporations to accept responsibility for promoting labor rights, human rights, environmental quality, and sustainable development.
The contemporary CSR movement aims to persuade MNCs to adopt voluntary codes of conduct and implement business practices that incorporate commitments to respect and protect labor rights and human rights as well as the environment. Those who favor the voluntary CSR approach talk about companies paying attention to the "triple bottom line"--the financial account, the environmental account, and the social account--and urge MNCs to embrace these new kinds of ethical responsibilities voluntarily. The voluntary CSR approach is seen by its boosters as a practical response to the current lack of MNC accountability, not as an alternative to government regulation or enforceable international legal standards.
At the present time, however, there is no universal agreement as to exactly what the social and environmental responsibilities of corporations are. In the past decade there has been a proliferation of voluntary codes and guidelines, including the Global Sullivan Principles, the Caux Principles, the Ceres Principles, and others, as well as numerous company codes delineating socially responsible business practices. [9] Recently, the UN Subcommission on the Protection and Promotion of Human Rights has published a set of principles that may become the benchmark for articulating a comprehensive and widely acknowledged set of ethical and legal obligations for MNCs. [10] But none of these guidelines or codes has yet received universal acceptance.
CONFRONTING MNCs: ENACTING ENFORCEABLE LEGAL STANDARDS
The voluntary CSR approach is not the only NGO strategy. Another influential school of thought within the NGO world views MNCs as constitutionally unredeemable and incapable of voluntarily acting in a socially responsible fashion; companies can only be made to be socially and environmentally accountable by means of economic coercion or through binding legal obligations. Those who take this view look toward the development of a mass social movement that will compel governments to enact enforceable international legal standards [EILS] that will make MNCs legally accountable to global society. Private voluntary CSR initiatives are viewed as exercises in corporate public relations and as poor substitutes for strict legal regulation. Often allied philosophically and strategically with unions, NGO activists who take this view may seek to support traditional union organizing efforts to win rights and fair compensation for workers worldwide through collective bargaining agreements with free labor unions.
The strategic split between NGOs that see themselves as primarily working for voluntary CSR and those that favor moving immediately to EILS creates some tensions within the NGO community, but the combination of the two strategies has shown itself to be effective in at least some cases. Many NGOs see EILS as the ultimate goal, but believe that the widespread adoption of voluntary CSR standards by many large MNCs is a necessary way station on the route to that goal. NGOs following the voluntary CSR approach believe that while enforceable international legal standards for MNCs are desirable and in principle are preferable to voluntary ones, in practice they are not achievable in the present or near future. Many in the NGO world share the view of Noam Chomsky, who told me:
You can force corporations to reform. They don't care about the arguments; they care about the threats. You know like Monsanto started reforming when their stock started going down.... It's like dictatorships. You can threaten a dictatorship so that it becomes more benevolent ... that's good for two reasons: for one thing it helps people, and that's good, but for another it is very educational; it tells you just how far you can go. Take, for instance, slaveowners. You can tell them to treat their slaves more nicely. But if you tell them they have to give up their slaves, then you've hit the limit. And it's important to understand that limit. It's the same with corporations. [11]
While some companies are now willing to accept voluntarily their human rights, labor, and environmental responsibilities, at the present time the limit that Chomsky talks about is reached when one demands that companies give up their freedom of action and submit to enforceable legal standards.
Supporters of the voluntary CSR approach generally believe that fear of public shaming will continue to work as an effective means of moving more companies to embrace voluntary CSR. They worry that working directly for EILS at this stage will lead to a corporate backlash that will undermine efforts to establish a critical mass of CSR companies. Many NGOs also believe that voluntary standards should not be seen as a substitute for enforceable international legal standards, but as a complement to them, since any conceivable future global enforcement system would need to rely in great part on companies monitoring and regulating their own behavior. In this view, voluntary CSR is not just a first step toward legally enforceable standards, it is also a necessary component of any future global compliance regime.
Many NGOs believe that MNCs may now be somewhat more willing to cooperate in the development of international CSR standards. During the 1990s public criticism of their labor practices, security arrangements, and other human rights practices in the global media embarrassed a number of companies. Some MNCs that have experienced these kinds of crises have now begun to consider seriously the human rights implications of their activities and have established private voluntary codes of conduct for overseas offices, subsidiaries, suppliers, and contractors. These voluntary codes generally deal with such issues as compliance with national and local laws; nondiscrimination; adequate wage levels; workplace safety and health; working hours and overtime; freedom of association and the right to organize trade unions; prohibitions on child and forced labor; environmental protection; dissemination of company policies; implementation of company policies by supervisors; and protection for employees who complain about breaches of company policies. In addition, some associations of MNCs have developed joint standards, for instance, the Fair Labor Association for the apparel industry, and Rugmark for handmade carpets.
But critics of the CSR approach see voluntary codes mainly as corporate propaganda and as means of avoiding strict government regulation. This crucial difference in political analysis leads to further differences among NGOs in terms of their tactics in dealing with global corporations.
EVALUATING STRATEGIES: ENGAGEMENT OR CONFRONTATION?
In practice, no NGO acts solely as an engager, nor do any act purely in a confrontational mode; all utilize strategies that fall along an engagement-confrontation spectrum. There are at least eight different tactics that various NGOs have employed with respect to different companies in order to encourage them to accept social responsibilities. Arranged in order from the least to the most confrontational, they are:
* dialogue aimed at promoting the adoption of voluntary codes of conduct--the pure CSR approach
* advocacy of social accounting and independent verification schemes
* the filing of shareholder resolutions
* documentation of abuses and moral shaming
* calls for boycotts of company products or divestment of stock
* advocacy of selective purchasing laws
* advocacy of government-imposed standards
* litigation seeking punitive damages
Most NGOs try to tailor the tactics to the target based upon the specific characteristics of the company's position on corporate social responsibility issues, but there are clear philosophical differences between those that favor dialogue and those on the confrontational side of the spectrum.
ENGAGEMENT AND SUPPORT
Although engagers, such as Amnesty International and Human Rights Watch, also employ negative publicity and stigmatization of particular company practices in some of their reports, they generally try to avoid confrontational tactics and are more willing to enter into dialogue with MNCs. Engagers attempt to use high-quality research, rational persuasion, and moral argumentation with corporate managers to get companies to agree voluntarily to institute human rights principles in their codes of conduct and to implement and monitor their compliance. This CSR strategy is based on the assumption that some corporate managers will respond to a combination of ethical and prudential arguments as to why it is in their company's best interest to embrace CSR.
Making the "business case" for human rights is a primary tactic of engagers. There are in fact a significant number of purely prudential reasons, based on solid business considerations, for companies to adopt good human rights policies and practices. Among the kinds of prudential arguments that can be advanced are that by embracing CSR, companies can enhance their compliance with local and international laws; benefit from better control over their supply chains; protect their reputations and brand images; enhance their risk-management strategies; increase employee productivity, morale, and loyalty; reduce operating costs, enhance financial performance and increase stock value; and improve business relationships with external stakeholders generally. [12]
The philosophical differences between engagers and confronters became evident when the United Nations rolled out its Global Compact [GC]. Secretary-General Kofi Annan launched the idea of a voluntary global compact on human rights, labor rights, and the environment at the Davos Economic Forum in January 1999, where he warned the gathered dignitaries of a popular backlash against globalization if it does not promote human, labor, and environmental rights and if the benefits of corporate globalization are not distributed fairly. Unless people have confidence in the fundamental fairness of the global economy, its long-term sustainability will be placed in doubt and its future prospects "will be fragile and vulnerable--vulnerable to a backlash from the 'isms' of our post-Cold War world: protectionism, populism, nationalism, ethnic chauvinism, fanaticism, and terrorism." [13] On July 26, 2000, Annan appeared with the CEOs of several dozen major corporations that have committed their companies to the terms of the Global Compact. Also in attendance were representatives of several major international human rights organizations, including Amnesty International, Human Rights Watch, and the Lawyers Committee for Human Rights.
Amnesty International and Human Rights Watch, along with several other NGOs, "welcomed" the Global Compact initiative, but deliberately stopped short of formally endorsing it, mainly because of its lack of independent verification and enforcement mechanisms. They saw affiliation with Global Compact as a first step on the path toward global corporate social responsibility, rather than the end of the journey.
At the same time, a coalition of other human rights and environmental NGOs, including Corporate Watch, Institute of Policy Studies, Greenpeace International, the Third World Institute and several others, issued a press release blasting the GC as threatening the mission and integrity of the UN. Joshua Karliner of Corporate Watch, for one, charged that the "Global Compact partnership and the Guidelines for Cooperation do not ensure the integrity and independence of the United Nations and allow business entities with poor records to 'bluewash' their image by wrapping themselves in the flag of the United Nations." [14]
The charges have turned out to be unfounded: Nike has not begun stitching UN logos on its tennis shoes; public opinion has not concluded that the UN has sold out to big business; and joining in the GC initiative has not turned out to be a "free ride" for companies. At the same time, some changes have been made in the terms of the GC since it was launched. The main change is that the companies that join the initiative are no longer called "partners" or even "signatories". Interested companies are asked to have a letter sent by their CEOs expressing their acceptance of the principles and their intent to put them into practice. There is still no independent verification or monitoring system; instead, participating companies are asked to submit a case study every year detailing an activity or initiative they have undertaken to promote one or more of the nine principles that make up the GC. The International Labor Organization has set up a database on its Web site--the Business and Social Initiative Database [BASI]--that lists topics, companies, and NGOs and allows users to search for reports by participating organizations. [15] Many more companies, including many from the South, have since joined in the GC, and there are more than 1,000 organizations affiliated with the initiative. Its popularity rests on its being an entry-level standard, one that is not too demanding.
SOCIAL AUDITING AND REPORTING
The social auditing approach holds that corporations cannot be trusted to self-monitor their compliance with their own voluntarily adopted ethical codes and argues that corporate social performance needs to be independently audited on a regular basis by credible outside auditors. Some of the main NGOs taking this approach are the Fair Labor Association [FLA] and Social Accountability International [SAI], which has developed a comprehensive and rigorously auditable social responsibility standard for retail manufacturing businesses called SA8000. [16]
The FLA grew out of an initiative by President Clinton in 1996 called the Apparel Industry Partnership [AIP]. Created in order to address the problem of sweatshop labor practices, AIP's original membership included major U.S. apparel retailers such as Liz Claiborne, Nike, Reebok, Tweeds, Patagonia, and L. L. Bean; business associations such as Business for Social Responsibility; trade union organizations such as the Union of Needlework and Industrial Textile Employees [UNITE]; and NGOs including the Lawyers Committee for Human Rights, the Interfaith Center on Corporate Responsibility, and the Robert F. Kennedy Memorial Center for Human Rights. This group labored for several months and came up with a code of conduct for workplace practices and a set of principles for monitoring compliance. [17] However, before they could conclude their work on a standard, a split opened up between the corporations and some NGOs and unions over the issue of the living wage; in November 1998 the apparel union UNITE and several other labor and religious organizations dropped out. They complained that the agreement granted corporations too much control over the monitoring process and lacked strong provisions on the right to organize, and that the code did not provide for a living wage but only for "the minimum wage required by law or the prevailing industry wage, whichever is higher." UNITE went on to organize United Students Against Sweatshops [USAS], a campus-based movement designed to link student activists concerned about sweatshop conditions worldwide to the demands of the U.S.-based unions. Some of the labor-oriented NGOs supported UNITE and left the partnership, but other human rights NGOs such as the Lawyers Committee and the RFK Center stayed on, saying that they believed that AIP had made significant progress, even if the final agreement was not all they had hoped for. The FLA has continued to develop its code and auditing practices, but it has predictably continued to draw criticism from the trade unions and NGOs that dropped out. [18]
SA8000 was developed in 1997 by a multi-sectoral advisory board consisting of experts from trade unions, businesses, and NGOs, along with several academics and representatives of accounting firms. Based on the principles of international human rights and ILO conventions, SA8000 covers eight essential workplace issues--child labor, forced labor, discrimination, discipline, health and safety, working hours, compensation, and the right to free association and collective bargaining. A ninth element on management systems adds specific requirements for demonstrating ongoing compliance with the eight normative elements of the standard, thereby helping to ensure full institutionalization of the company's commitment to the standard.
Social auditing in this scheme works by means of a two-tier system in which SAI trains and accredits auditors and auditing firms in the SA8000 standard. Large brand-name retailers become signatories to the standard and then require their subcontractors' and suppliers' factories in developing countries to be audited against it. If the auditors discover noncompliance problems they give the factory managers warnings and some time to correct them, return to reinspect, and if satisfied can issue an SA8000 certification that is good for three years.
Unlike the FLA standard for the apparel industry, SA8000 contains a provision concerning the payment of a "living wage," and auditors are guided by a detailed set of specific procedures and criteria in making their inspections and issuing certificates of compliance for each supplier, not just for a sample. But both the FLA and SA8000, in keeping with the social accountability approach, rely on companies to adopt these ethical guidelines voluntarily. They also assume that large companies with complex supply chains cannot become socially responsible overnight, and therefore set out a process by which companies that are willing to commit themselves to CSR can practice continuous improvement in this field and be recognized for making demonstrable progress, even if some problems remain in some supplier facilities.
SHAREHOLDER ACTIVISM
A third approach that is compatible with voluntary CSR seeks to influence corporate policy by means of shareholder resolutions. This technique has been used successfully for more than thirty years by the Interfaith Center on Corporate Responsibility, which mainly represents faith-based organizations' pension funds in shareholder actions against companies. [19] Areas addressed in such resolutions include health and safety, tobacco, weapons, environment, discrimination, labor and human rights issues, and issues of corporate governance. Since large pension funds often hold large numbers of shares in many major companies, they can often exert considerable economic as well as moral influence at annual shareholder meetings. These kinds of resolutions do not usually succeed in attracting a majority of votes, but they do get the attention of the board of directors and top managers, who often enter into negotiations with the sponsors in order to resolve the issues. Shareholder activism makes use of the accountability of corporations to their investors in order to widen the sphere of corporate accountability to other stakeholders, and is regarded by a number of NGOs as an effective way in which to influence corporate policy and practice.
MORAL STIGMATIZATION AND SHAMING
The most widely employed NGO tactic is moral shaming and stigmatization of corporations for bad behavior. There is abundant evidence that corporations are sensitive to such public criticism, particularly when it links their brand name and corporate reputation to unsavory environmental and social practices. The acknowledged leader in the field of corporate stigmatization is a Washington-based monthly magazine founded by Ralph Nader called Multinational Monitor, which each year publishes a list of the Ten Worst Corporations. [20] Corporate Watch, based in San Francisco, produces a Web site that specializes in reporting corporate misdeeds, as does Global Exchange. [21] On the opposite side of the fence, there are now several publications that specialize in highlighting corporate "best practices" in the areas of social and environmental responsibility. One of the leading publications of this kind is the London-based Ethical Performance Best Practice. [22] The Financial Times, in association with the Warwick Business School, also offers a series of pamphlets entitled Visions of Ethical Business that make the business case for CSR by highlighting the practices of the most CSR-friendly companies,z3 Most NGOs avoid praising corporations for good behavior out of fear it will undermine their own reputations for independence, but virtually all NGOs that are active in the field of CSR employ moral shaming to some extent.
ECONOMIC PRESSURE TACTICS: BOYCOTTS AND DIVESTMENT
A still more confrontational approach holds that corporations will not voluntarily accept their social responsibilities, but can be persuaded to do so if they fear adverse effects on what they view as their primary economic mission, to return a profit on investment. Proponents of economic pressure tactics point to the successful boycotts against Nestle, Nike, Starbucks, and others as examples of how consumer boycotts can be powerful levers for influencing corporate behavior. [24] Adoption of boycotts as a tactic is generally seen as moving an NGO from the engager into the confronter camp. Company boycotts have been used extensively by labor unions and some NGOs, but not by groups such as Amnesty International or Human Rights Watch. Engagers generally eschew such tactics on the grounds that they often harm workers, they are hard to start and stop, and they only work against companies with large retail businesses and lots of consumer exposure. Proponents of boycotts and divestment campaigns argue that they speak in the only language that corporations really understand--money.
SELECTIVE PURCHASING LAWS
A stronger form of economic pressure is exerted through selective purchasing laws. An interesting example of this approach is the 1996 Massachusetts Burma Law, a selective purchasing law that penalized companies that continued to do business with the repressive regime in Myanmar by adding a surcharge to contracts with the Commonwealth of Massachusetts. Shortly after the Massachusetts law was enacted, the federal government enacted its own anti-Burmese trade sanctions. In 1998 the National Foreign Trade Council [NFTC], an umbrella group representing a coalition of corporations, sued the Massachusetts secretary of administration and finance to block the selective purchasing law, contending that it unconstitutionally interfered with the federal foreign-relations powers, violated the foreign commerce clause of the Constitution that gives Congress the right to regulate foreign commerce, and was preempted by the later federal sanctions on Myanmar. Supporters likened the Massachusetts law to those used in the 1980s to bring about divestment in apartheid South Africa, and argued that cities and states have the right to base their purchasing decisions on moral considerations. But in 1998 the U.S. District Court in Boston backed the NFTC's arguments, as did the First Circuit Court of Appeals. Massachusetts appealed the case to the U.S. Supreme Court, hoping to clarify the limits on a state or local government's authority to draw up its own procurement rules. Amicus briefs were filed on behalf of Massachusetts by numerous NGOs and several other states' attorneys general, and some people in the NGO world were confident that the conservative U.S. Supreme Court would uphold the states' rights to determine their own purchasing policies.
But on June 19, 2000, the U.S. Supreme Court issued a unanimous ruling upholding the Appeals Court ruling that struck down the Massachusetts Burma Law. Justice David Souter, who wrote the Supreme Court opinion, argued that "the state law is at odds with the president's intended authority to speak for the United States among the world's nations in developing a comprehensive, multilateral strategy to bring democracy to and improve human rights practices and the quality of life in Burma" and denied the parallels with the divestment laws of the 1980s. [25] This Supreme Court decision was a blow to NGOs and their allies. But the ruling was narrowly drawn, saying only that the U.S. federal sanctions preempted the Massachusetts law. The Court did not rule on whether state and local selective purchasing laws were per se unconstitutional infringements on the federal government's foreign-policy powers or on the power of Congress to regulate foreign trade. The ruling did not eliminate the possibility that states and local governments could use their purchasing power to influence corporations on human rights issues.
GOVERNMENT-IMPOSED STANDARDS
A seventh tactic assumes that only national governments have sufficient power and authority to force companies to adopt ethical practices that protect human rights and the environment. NGOs accepting this view tend to focus their efforts on enacting legislation at the national or, preferably, the international level, by imposing enforceable legal obligations on MNCs. NGO activists would like to see multilateral trade and investment agreements such as NAFTA, and the failed Multilateral Agreement on Investment, incorporate strict and enforceable standards on labor rights, human rights, and environmental protection. But there are other legislative initiatives in the works.
In January 1999, the European Parliament passed a Resolution on Standards for European Enterprises Operating in Developing Countries. The resolution calls on the European Union to establish legally binding requirements on European companies to ensure that these MNCs comply with international law relating to the protection of human rights and the environment. The resolution proposes that European MNCs be monitored by a panel composed of independent experts and representatives from European businesses, international trade unions, environmental and human rights NGOs, and the developing world. It also calls on the European Commission to ensure that MNCs acting on behalf of, or financed by, the European Union act in accordance with basic requirements for human rights and environmental protection. However, this resolution was not approved by the Commission and did not become a law. Instead, in June 2001 the Commission issued a green paper on Promoting a European Framework for Corporate Social Responsibility, whose provisions, however, are not legally binding.
In the United States, the Corporate Code of Conduct Act [H.R. 2782] has been introduced into the 107th Congress by Representative Cynthia McKinney [D-GA]. It would require all U.S.-based corporations that employ more than twenty persons in a foreign country to implement a corporate code of conduct establishing a number of core human and labor rights standards specified in the bill, and would also require that the code apply to all of the companies' subsidiaries, subcontractors, affiliates, joint ventures, partners, and licencees. A similar bill, H.R. 4596, failed to make it out of committee during the 106th Congress, and at present the chances of enactment of this or other comprehensive legislation along these lines are slim.
A more successful legislative initiative is represented by the passage in late 2001 by the U.S. House of Representatives of H.R. 2722, the Clean Diamond Trade Act, by a vote of 408 to 6. The Senate passed a similar piece of legislation, and a presidential signature in early 2002 seems likely. Although weaker than what NGO proponents had wanted, the bill passed by the House permits the president to prohibit the import of rough diamonds into the United States from countries that are not implementing verifiable controls. The passage of this legislation represents a victory for the 1998 Conflict Diamond campaign launched by a small human rights NGO, Global Witness, designed to stop the trade in illicit diamonds that gave rise to grave human rights violations in Angola and Sierra Leone. [26] De Beers and the world diamond industry became involved in the negotiating process at a relatively early stage, because diamond retailers were understandably unhappy about having their products associated with amputated limbs.
LITIGATION
An eighth tactic being used against some corporations involves holding them accountable in U.S. courts for human rights violations committed by them or their business partners. Examples of this adversarial approach are the suits against Unocal for its role in Burma, a suit against Texaco for its operations in Ecuador, and suits against Chevron and Shell for their alleged involvement in human rights abuses in Nigeria. [27] These suits are based upon the provisions of the Alien Claims Torts Act of 1789 [ACTA] that gives U.S. courts jurisdiction over torts claimed by aliens resulting from violations of jus cogens norms of international law such as piracy, torture, and slavery.
The most famous of these cases is John Doe v. Unocal Corporation, in which the plaintiffs, a group of Burmese refugees presently residing in California, alleged that Unocal is liable for torts committed against them in connection with security operations carried out by the Myanmar military during the construction of the Yadana oil and gas pipeline from Myanmar's eastern Tenasserim region to Thailand. Unocal is a joint venture partner in this project along with the French oil company TotalFinaElf, the National Petroleum Company of Thailand, and the military government of Myanmar, known as the SLORC, or more recently as the SPDC. The plaintiffs, who are Tenasserim villagers whose identities have been concealed in order to protect their families from reprisal, alleged that the Myanmar military forced them to leave their villages under threat of violence and to work for weeks at a time on the building of army barracks and helipads and clearing roads along the proposed pipeline route. They also claimed that they were subjected to numerous acts of violence in connection with this forced labor and forced relocation, including violations of international human rights law such as torture, rape, and murder.
In March 1997 Judge Richard Paez of the U.S. District Court of California issued a ruling that denied a motion by Unocal Corporation to dismiss the suit, finding that Unocal could be sued by these plaintiffs in California under the ACTA. [28] However, on August 31, 2000, Judge Ronald Lew rendered a decision granting summary judgment in favor of Unocal, dismissing all of the plaintiff's claims. [29] His decision found that because Unocal had not "actively participated" in seeking to employ forced or slave labor, it was not liable for the plaintiffs' injuries. The lawyers for the plaintiffs have recently filed an appeal, but its prospects in the appeals courts remain uncertain.
THE CORPORATE RESPONSE
The fact that there is such a wide array of strategies and tactics available to NGOs is fitting in light of the range of company attitudes NGOs encounter. Some major companies are engaged in fighting the ideas of social responsibility and environmental sustainability and cling to the classical view that the only social responsibility of business is to make money for investors. Others are basically passive and have no considered position on CSR issues. Still others have begun internal discussions about CSR and human rights issues as they affect their businesses, and are moving cautiously in the direction of embracing greater social responsibility for their own operations and supply chains. In addition, there are a few leading companies that have turned the corner by formally and publicly accepting the view that they should base their business practices on international human rights and labor standards, and adopting codes of conduct or business principles that embody this commitment. Finally, a few companies have made serious attempts to implement such commitments by educating their own employees, identifying and operationalizing performance benchmarks, communicating their standards to their suppliers and business partners, carrying out internal audits, and in some cases seeking external independent auditing to verify their social performance to external stakeholders. What progress has been made on CSR thus far is largely the result of NGO activism.
On the positive side one can see the engager/confronter split as an example of a good cop-bad cop interrogational strategy in which the confronters push MNCs to put human rights onto their agendas by means of stigmatization and economic pressure, while the engagers pull them further toward corporate social responsibility by means of ethical and prudential reasoning. This combination of "push" and "pull" tactics appears to have worked in several cases. Since the confronters make it their business to dig up and publish embarrassing revelations, their work provides impetus for lagging companies to move in the direction of greater CSR.
But it is also possible to view the split between engagers and confronters within the NGO community as the result of a deliberate divide-and-rule strategy by corporations. To the extent that corporations can successfully split the NGO community into "responsible" and "radical" groups, they can use the difference as the basis for public relations campaigns designed to deflect criticism of their behavior. Joshua Karliner argues that many corporations now look favorably on partnerships with environmental NGOs because "such partnerships are seen as part of a strategy to divide and conquer the environmental movement," since by co-opting the mainstream, moderate groups, the corporations delegitimize the more radical and progressive elements of the movement. [30] A similar strategy is being used in the human rights field. At the 1997 Shell Annual General Meeting, several groups, including Friends of the Earth and the Nigerian group MOSOP, were planning to stage demonstrations in front of Shell's headquarters. But the company countered by announcing the day before that it had agreed with Amnesty International and Pax Christi to adopt human rights principles in its business code. This public relations ploy may have allowed Shell temporarily to deflect criticism of its human rights record in Nigeria, but did not prevent it from being sued by relatives of Ken Saro-Wiwa.
In the short term, NGOs involved in the corporate social responsibility movement should combine stigmatization and other pressure tactics, such as shareholder resolutions and boycotts, with parallel attempts to change corporate thinking about human rights by means of dialogue, rational persuasion, and the sharing of best practices. The tactics employed should be geared to the particular company being targeted, with the more adversarial tactics reserved for the laggards and the more cooperative ones used with the industry leaders. But NGOs must not be seen as getting too close to corporations; they need to guard their independence so as to avoid being viewed by their primary activist constituencies as "dining with the devil." This means, among other things, that even for engagers, voluntary company commitments to CSR principles should not be seen as buying companies immunity from criticism. However, from the point of view of the engagers, it is also important to recognize those companies that have turned the corner on CSR, and treat them differently from those that have not. By rehearsing endlessly the past abuses and mistakes of companies like Shell, BP, Nike and others that have now embraced CSR, confronters ensure that no good deed goes unpunished. Confrontational tactics can easily become counterproductive. When they are not used skillfully they produce a backlash within both the business and the NGO communities.
Confrontation and public accusation are distinctively Western ways of behaving and are generally regarded as uncivil in many Asian cultures, where a higher value is placed on acting skillfully in interpersonal relations so as to preserve reputation and social harmony. Unfortunately, the evidence so far suggests that changes in corporate behavior regarding environmental and social issues have been brought about mainly by means of public stigmatization. Corporations respond to damage to their reputations and brand image, and to their bottom lines, not primarily to moral persuasion. This general conclusion is amply supported by recent developments in a variety of industry sectors, most notably the pharmaceutical industry, which bowed to public pressure to allow generic versions of proprietary HIV/AIDS drugs to be made available to developing countries. In the future, more companies may seek to avoid the risks associated with such negative publicity by adopting and implementing a comprehensive human rights code of conduct before they have been spotlighted and publicly shamed.
CONCLUSION
NGOs cannot really force corporations to do anything, and their attempts to influence corporate behavior by means of any combination of strategies and tactics are unlikely to be successful in the long run unless they are able to mobilize two other important constituencies: consumers and governments. Recent studies of consumer preferences have consistently found that consumers are motivated to avoid purchasing products that they know are being made under abusive labor conditions. However, as the authors of one of these studies conclude:
"The implication is that firms can lose greatly from having their products identified as being made under bad conditions but have only limited space to raise prices for products made under good conditions--unless consumers see competing products as made under bad conditions. The differential consumer response to information about good and bad conditions helps explain ... the behavior of activists and firms in the market for standards]." [31]
As long as the majority of consumers remain either ill informed or indifferent to the labor and human rights conditions under which corporations produce the goods they deliver to the marketplace, no amount of NGO pressure is going to produce sustainable reform.
In the last analysis it is the responsibility of national governments to enact and enforce global labor, human rights, and environmental standards for multinational corporations, and governments must be persuaded that they need to accept and act on these responsibilities. Governments could and should be doing a great deal more than they currently are, not only in the process of standard setting and negative regulation, but also in providing tax and other regulatory incentives that will reward corporations for good behavior. The NGO-led corporate social responsibility movement must now move the CSR agenda from voluntary compliance to "soft law" approaches, and finally to rigorous national and international enforcement regimes; but it is unlikely to be able to do so unless it can mobilize support for greater corporate social accountability from informed consumers, concerned government officials, and progressive companies.
The struggle for environmental sustainability and global social justice will continue to be waged on many fronts. The current corporate social responsibility movement may one day lead to the adoption of globally enforceable legal standards that bind MNCs to their social and environmental responsibilities. But for this to happen, MNCs and NGOs will need to continue to learn from their current encounters and negotiations and cooperate in placing corporate social accountability on the political agenda of nation states.
[1] International law standards governing labor and human rights, such as the ILO Conventions and the International Covenant on Economic, Social and Cultural Rights, have sovereign states as their subjects. There are only a handful of instances in which corporations have been assigned the status of legal personalities in international law. See Multinational Corporations and Human Rights [Utrecht: Amnesty International/Dutch Section and Pax Christi, 1998], chap. II. For a more recent study of the potential for enforceable international legal standards governing MNCs, see "Beyond Voluntarism: Human Rights and the Developing International Legal Obligations of Companies," International Council on Human Rights Policy [January 2002]; ordering information is available online at www.ichrp.org.
[2] There has been a lot written about the so-called race to the bottom. See especially Terry Collingsworth, "An Enforceable Social Clause," Foreign Policy in Focus 3, no. 28 [October 1998]; Debora Spar and David Yoffe, "Multinational Enterprises and the Prospects for Justice; Journal of International Affairs 52 [Spring 1999]. See also the more extended treatment by William H. Meyer on the question of whether foreign investment helps or hurts human rights in developing countries in his Human Rights and International Political Economy in Third World Nations: Multinational Corporations, Foreign Aid, and Repression [Westport, Conn.: Praeger, 1998].
[3] This critique was persuasively voiced at a conference organized by Henry J. Steiner of Harvard Law School in 1990 that was attended by representatives of Northern international NGOs and several Southern NGOs. See Henry J. Steiner, "Diverse Partners: Non-Governmental Organizations in the Human Rights Movement. The Report of a Retreat of Human Rights Activists," Harvard Law School Human Rights Program and Human Rights Internet [1991], p. 25.
[4] See Amnesty International Report 2001, especially the foreword by Pierre Sang, pp. 5-10. At its 25th International Council Meeting in Dakar, Senegal, in August 2001, Amnesty revised its organizational statute so as to allow it to undertake significantly more research and campaigning on economic, social, and cultural rights.
[5] Debora L. Spar, "The Spotlight and the Bottom Line," Foreign Affairs 77 [March/April 1998], pp. 7-12.
[6] Jane Nelson, The Business of Peace: The Private Sector as a Partner in Conflict Prevention and Resolution [London: Prince of Wales Business Leaders Forum, 2000]. See also Virginia Haufler, "Is There a Role for Business in Conflict Management?" in Chester A. Crocker, Fen Osler Hampson, and Pamela Aall, eds., Turbulent Peace: The Challenges of Managing International Conflict [Washington, D.C.: United States Institute of Peace, 2001], pp. 659-76.
[7] Marina Ottaway, "Reluctant Missionaries," Foreign Policy [July/August 2001], available online at www.foreignpoficy.com/issue_julyaug_2001/ottawayprint.html.
[8] See Milton Friedman, "The Social Responsibility of Business Is to Increase Its Profits" New York Times Magazine, September 13,1970.
[9] For a comprehensive review of codes of conduct see Oliver F. Williams, ed., Global Codes of Conduct: An Idea Whose Time Has Come [Notre Dame, Ind.: University of Notre Dame Press, 2000].
[10] Proposed Draft Human Rights Code of Conduct for Companies, U.N. Doc. E/CN.4/Sub.2/2000/XX [2001], available online at www1.umn.edu/humanrts/links/ principles11-18-2001.htm.
[11] Personal communication, April 18, 2000.
[12] See John Weiser and Simon Zadek, "Conversations with Disbelievers: Persuading Companies to Address Social Challenges" Ford Foundation, November 2000.
[13] See www.unglobalcompact.org. The site contains a full list of the participants in the launch as well as the text of the Global Compact.
[14] The term "bluewash" is presumably a cognate of "greenwash," which was coined by Jed Greer and Kenny Bruno in their book Greenwash: The Reality Behind Corporate Environmentalism [New York: Apex Press, 1996], in which they developed the thesis that corporations began cozying up to environmental NGOs as a public relations strategy designed to create the myth of good corporate citizenship.
[15] BASI can be accessed at oracleoz.ilo.org/dyn/basi/ vpisearch.first.
[16] Available online at www.sa-intl.org.
[17] Available online at www.dol.gov/dol/esalpublic/ nosweat/partnership/report.htm.
[18] See www.fairlabor.org.
[19] See www.iccr.org.
[20] Available online at www.essential.org.
[21] See www.corpwatch.org and www.globalexchange.org.
[22] See www.ethicalperformance.com.
[23] See www.business-minds.com.
[24] For a comprehensive study of the Nestle infant formula campaign, as well as a persuasive argument for a global regulatory approach, see Judith Richter, Holding Corporations Accountable: Corporate Conduct, International Codes, and Citizen Action [London: Zed Books, 2001].
[25] See Simon Billenness, "Burma Law on Trial: Case Threatens Anti-Apartheid Legacy," Investing for a Better World [April 1999], p. 1; USA* Engage, "Amicus Briefs Filed in Support of the National Foreign Trade Council" available online at www.usaengage.org/background/ lawsuit/ProAmicusBriefs.html; Public Citizen/Global Trade Watch, "Federal Appeals Court Rules Against MA Burma Law" [June 23, 1999], www.citizen.org/pctrade/ burma/update2.htm; judgment in the case of National Foreign Trade Council v. Natsios and Anderson, United States Supreme Court, June 19, 2000, available online at www.supremecourtus.gov.
[26] See "Conflict Diamond Report," available online at www.one.world.org/globalwitness/reports/conflict.
[27] See Morton Winston, "John Doe vs. Unocal: the Boardroom/Courtroom Battles for Ethical Turf," Whole Earth Magazine [Summer 1999], pp. 17-19; Eyal Press, "Texaco on Trial," The Nation [May 31, 1999], online at www.thenation.com. Also see Peter Waldman, "Nigerian's Suit Alleges Chevron Backed Attacks that Violated Human Rights," Wall Street Journal, May 28, 1999, p. B2.
[28] See Order granting in part and denying in part defendant Unocal's motion to dismiss in case of Doe v. Unocal Corp., U.S. District Court for the Central District of California, March 25,1997, www.yale.edu/lawweb/avalon/diana/unocal/31198-1.htm.
[29] Doe v. Unocal Corp., 110 F. Supp. 2d 1294, August 31, 2000.
[30] Joshua Karliner, The Corporate Planet: Ecology and Politics in the Age of Globalization [San Francisco: Sierra Club Books, 1997], pp. 189-90.
[31] Kimberly Ann Elliott and Richard B. Freeman, "White Hats or Don Quixotes? Human Rights Vigilantes in the Global Economy," National Bureau of Economic Research [January 2001], working paper 8102, available online at www.nber.org/papers/w8102.
Morton Winston *
* An earlier version of this paper was presented at the meetings of the Comparative International Studies Section of the International Studies Association in Washington, D.C., on August 29, 2000. The author gratefully acknowledges comments and suggestions provided by Christian Barry, Simon Billenness, Geoffrey Chandler, Gemma Crijns, George Frynas, Arvind Ganesan, Rebecca Johnson, Joshua Karliner, and Scott Pegg. The views presented in this article are solely those of the author acting in his private capacity as an independent scholar.
Morton Winston is Professor of Philosophy at the College of New Jersey. He is the author or editor of several books, including The Philosophy of Human Rights [1989]; Society, Ethics, and Technology [2000]; and On Chomsky [2001], and has written on bioethics, cognitive science, and human rights theory. Winston was a member of Amnesty International USA's national Board of Directors from 1991 to 1997 and served as Chair of the Board from 1995 to 1997. He is currently the Chairman of AIUSA's Business and Economic Relations Group and is also a member of the Advisory Board of Social Accountability International.