CSR and Globalisation
The multinational enterprises’ market cornering has been a major step forward in the development of the concept of CSR in that their international activities immediately faced different legal systems and institutions that stimulated the search of new forms of control and legitimacy of their operations, in particular in weak governance regions. The growth of a global economy gave rise to new public opinion demands of social responsibility, sustainability and transparency on the enterprise’s behaviour, in order to counterbalance the negative liberalisation effects.
There are many scopes of application for CSR in the international context, where the corporate socially responsible conduct of the can assure the growth of the public opinion consensus through the achievement of stakeholders’ confidence.
- Environment and Sustainable Development
- Human Rights and Labour Rights
- Economy and Local Society
- Transparency
- Legality
- Consumers
- Supply Chain
• Environment and Sustainable Development
Production and consumption modes play a primary role in those global
phenomena such as pollution, earth overheating, and climate changes
that jeopardize the future of the Planet. It is, thus, urgent to
promote a new model of economic development
“that guarantees the needs of current generations without compromising
the ability of future generations to satisfy their own”, as it has
been stated since 1987 in the report, “Our Common Future” by the
World Commission on Environment and Development (better known as the
“Brundtland
Report” after the name of the Chairman).
Nowadays the state regulations are not always able to assure an
entrepreneurial conduct complying with such development model.
Moreover, in some cases, outsourcing practices can encourage the
adoption of standards lower than those prescribed in the home
Countries.
In this context, the voluntary choices of enterprises
operating at international level are determinant for
turning production into a real advantage for local and global economy;
these choices should concern the energy saving as well as the
eco-compatible production, the adoption of an efficient environmental
management system as well as the application of a reporting system
including environmental performances.
Many analysis and studies demonstrate that, in the middle-term period, these choices turn out to be an economic advantage in terms of:
- row material saving (in particular regarding traditional energy sources);
- introduction of technical innovations in the productive processes;
- innovation in products;
- consumers’ favour (market share).
• Human and Labour Rights
An enterprise, especially a large-sized one, can have a
remarkable influence not only on the economy, but also
on the social and political life of the Country in
which it operates. Therefore, an essential task of a
socially responsible behaviour is to refuse to adopt practices
that are repressive of human rights and be active in their
positive respect.
To this aim, an entrepreneurial strategy based upon CSR demands:
- that the enterprises operating in developing Countries attain standards no lower than those of the home Countries, promoting their achievement in the host community;
- that the enterprises localised in Countries where human and labour rights are respected require their commercial partners to adopt the same right standards.
In particular, an enterprise must protect the fundamental freedoms of its workers, wherever it operates that is:
- to absolutely refrain from making recourse to forced or obligatory labour, and to whatever form of coercion and
- to contribute to the abolition of child labour;
- to assure the respect of the rights of privacy and freedom of opinion, and the exercise of the political rights and of the trade union activities;
- to refrain from whatever discriminatory treatment (for reason of sex, race, religion, political opinion, citizenship or social extraction);
- to provide for a healthy and safe working environment and for shifts allowing the needed rest;
- to assure a fair pay, including compensation for the intellectual properties, letting the workers and their families have dignified existence.
It is controversial however, whether and to what extent the aforesaid protection standards could be justifiably calibrated on the basis of the socio-economic peculiarities of the host Country (e. g. women conditions, average work age, average earning, etc.).
• Local Economy and Society
The positive impact of large international enterprises’ plants on
the socio-economic local development of less developed Countries can be
remarkable, but, often, only so long as they adopt socially
responsible strategic choices. Otherwise, indeed, the existing
structural obstacles – such as, for instance, the gap between
the proposed technology level and the assimilation capacity of the host
region – could frequently prevent local economy from benefiting those
effects and the local entrepreneurship could be crowded out by the
higher competitiveness of the large enterprises.
It is essential, thus, to involve the stakeholders in
the relevant firm’s decisions and in the search of solutions that, by
effectively contributing to the territory’s development, do encourage
that local consensus that also reduce the investment risk.
Some typical examples of responsible conduct of
multinational firms towards the local economy of less developed
Countries are listed below
- the technology transfer;
- the grant of licenses for the use of intellectual property rights at costs compatible with the local market;
- the training activity for the development of local skills and for the implementation of local R&S programmes;
- the development of new products by means of local know-how and skills;
- the creation of durable forms of collaboration with local partners, encouraging their access to the global market;
- the corporate venturing investment in the local start-up capital.
Under a more specifically social profile, many international
enterprises promote a kind of initiatives that goes under the
denomination of “social responsibility in action”
assigning part of their profit to the realisation of infrastructures
(schools, hospitals, roads), as well as making available to the local
community part of their own production or human resources.
Even if it is controversial that in the aforementioned cases it is
correct to call it “CSR” rather than “philanthropy” (link), the
advantage of these initiatives is related to the
global market - in terms of feedback and business
reputation – as well as to the settlement itself, in that it
allows consolidating the enterprise presence in the
host community.
• Transparency
The effectiveness of an entrepreneurial socially responsible
strategy is closely tied to its “accountability”, term
that indicates the reliability degree of an enterprise, measured on the
basis of its attitude “to render account” of its objectives, its
activity and its achieved result. It is a very important function,
because through this type of declarations the enterprise holds
responsibility of what it decides and of what it does, and to
some extent, it avoids acting arbitrarily.
Until recently enterprises have used a type of report (traditional
budget) that was only designed for shareholders and which sole content
was the achieved profit; but in the last few decades issues linked to
liberalisation (corruption, economic unfairness, environmental
problems, uncertainty) have generated a new demand for
accountability. Its addressees are not shareholders anymore,
but all stakeholders, considered as bearers of rights
and interests, i.e. employees,investors, consumers, public
institutions, NGOs. Also the contents of this demand are new, in that
are not circumscribed to economic performance, but extended to
paths followed and to resources utilised to achieve
them.
As pointed out in the
Green Paper of the European Commission, the civil society expresses
a new demand of corporate social responsibility and the enterprises
“are increasingly aware that corporate social responsibility can be of
direct economic value. Although the prime responsibility of a company
is generating profits, companies can at the same time contribute to
social and environmental objectives, through integrating corporate
social responsibility as a strategic investment into their core
business strategy, their management instruments and their
operations”.
Therefore, the need for a new type of transparency
towards society has arisen: a transparency that provides information on
economic aspects - according to law provisions in the fields of
disclosure, budget, and account books – and on the social
goals realised by the enterprise as well. To this aim, today,
enterprises willing to communicate the level of their CSR performances
have at disposal an increasing number of internal voluntary
instruments (ethical code, social report, etc).
• Legality
The observance of the regulations in force is the minimal
requirement and the prerequisite of the CSR, that in its
specificity demands to go beyond the law provisions in order to
contribute to the establishment of a fair and sustainable development.
Therefore, it is clear that a socially responsible enterprise
refuses to choose illegal practices such as unfair competition,
corruption and tax evasion, that jeopardize the growth and
development perspectives of the societies.
The enterprises that choose a CSR strategy declare to the public
opinion and to the stakeholders that they do not participate to illegal
phenomena of financial market manipulation and insider
trading, as well as tax evasion through the practices of
transfer-pricing, facilitated by their transnational structure.
Moreover, above all in the Countries whose institutions are
weak, they commit themselves to use much precaution regarding
practices such as lobbying that, although legitimate, in their
insufficient transparency could compromise the protection of those
assets that CSR is aimed to protect.
• Consumers
Since the first environmental movements took stand in the ‘60s, and
then, above all, in the following decade, the consumers’
movements have begun to assert themselves at international
level, with the increasing support of the scientists who
denounced the harmfulness of some productions for the mankind and the
environment.
Consumers’ organizations point out the importance of an aware
consumption and, therefore, the necessity of having at their
disposal reliable information on the conditions of production
and sale of the products, including any indication on the potential
risks arising from their use and consumption.
All enterprises know that their reputation and, therefore, their
success depends on their commitment towards consumers, but those that
have chosen a social responsible behaviour not only watch the
consumer-stakeholder as a client, but also as a “collaborator” in
pursuing their CSR strategy,
The aware consumption represents, therefore, a new approach to the
social responsibility of enterprise and of consumers, that are
acquiring growing importance in the market by promoting a production
that is safe and compatible with a sustainable, fair development. The
consumers’ demands not only concern health and eco-sustainability of
the goods and of all the productive phases, but also the
attestation that they are not produced by means of exploitation of human resources.
• Supply Chain
Due to market globalisation, supply chains have become very
complex, often outsourced in Countries where human right
protection is low and/or there are
no environmental regulations. This situation
represents a critical point for enterprises that have chosen to adopt a
social responsible conduct, because it is difficult to face the
economic competition when competitors use labour supplied in critical
conditions and neglect to protect the environment.
If this is so, it is equally true that the media and NGOs’ activity, as
well as the growing importance of the ethic and aware consumption, have caused the development of the
Socially Responsible Investing, that is an investment
strategy for privates and institutions placing their financial
resources only on enterprises that comply with several social and
environmental behaviours. The lack of ethical control on the supply
chain, often denounced also by an un-requested social rating, is
therefore becoming a not only a commercial risk, but also a financial
one.
On the contrary, companies able to guarantee the observance of
ethical behaviours through the whole productive cycle,
binding all their partners of the supply chain to their own ethical code, may have
many positive effects in terms of:
- improvement of the reputation on the market, through specific certifications or quality labels guaranteeing the ethics of the company or of the product, or an echo-sustainable product;
- confidence from the ethical inventors and of the consumers;
- good relationss with institutions and social
organizations (trade unions, NGOs, etc.).