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Repinted from Ethics & International Affairs 1 6 ,n o. 2.

© 2002 by Carnegie Council on Ethics and International Affairs.

NGO Strategies for Promoting


Corporate Social Responsibility
Morton Winston*

he current era of corporate globaliza- and limited forms of cooperation with will-

T tion has not altered the fundamental


nature of the struggle for human
rights, but it has shifted its context and cre-
ing MNCs.

THE NEW FOCUS ON MNCs


ated new opportunities and challenges for
the global human rights movement. Since At least five factors have contributed to
the early 1990s this movement, which used human rights NGOs’ interest in the business
to focus exclusively on the policies and prac- sector:
tices of nation-states, has begun examining • a perceived shift of power from nati on -
the role of multinational corporations and states to MNCs and international financial
international financial institutions in the institutions such as the World Bank and the
protection and promotion of human rights. International Monetary Fund;
This article describes and evaluates the • the lack of social and environmental
different strategies that have been employed accountability of MNCs under existing
by human rights nongovernmental organi- national and international laws;
zations (NGOs) in attempting to influence • the growing anti-corpora te - gl ob a l i z a ti on
the behavior of multinational corporations movement;
(MNCs). Within the NGO world, there is a • a conclusion on the part of large, interna-
basic divide on tactics for dealing with cor- tional human rights organizations that they
porations: Engagers try to draw corpora- have been too focused on traditional cate-
tions into dialogue in order to persuade gories of civil and political rights while
them by means of ethical and prudential neglecting economic, social, and cultu ra l
arguments to adopt voluntary codes of con- rights; and
• a desire on the part of some people in the
duct, while confronters believe that corpo-
rations will act only when their financial NGO world to enlist MNCs and business
interests are threatened,and therefore take a
more adversarial stance toward them. The *
An earlier version of this paper was presented at the
latter approach is more in line with tradi- meetings of the Comparative International Studies Sec-
tional labor union strategies and tactics,and tion of the International Studies Association in Wash-
ington, D.C., on August 29, 2000. The author gratefully
in fact is often motivated by a desire to acknowledges comments and suggestions provided by
maintain solidarity with union partners. Christian Barry, Simon Billenness, Geoffrey Chandler,
Confrontational NGOs tend to employ Gemma Crijns, George Frynas, Arvind Ganesan,
Rebecca Johnson, Joshua Karliner, and Scott Pegg. The
moral stigmatization, or “naming and
views presented in this article are solely those of the
shaming,” as their primary tactic, while author acting in his private capacity as an independent
NGOs that favor engagement offer dialogue scholar.

71
executives as allies and as potential levers for rights. Some view the aggressive effort to
promoting human rights globally. privilege the rights of investors, banks, and
Undoubtedly the most important factor corporations over the wishes of consumers,
is the perception that political and econom- workers, and national or subnational gov-
ic power has shifted away from governments ernments and communities as a threat not
and toward corporations, in particular only to human rights implementation, but
MNCs. In the developed industrial nations also to economic self-determination, devel-
of the North, mainly the United States, opment, transparency, and democracy itself.
Canada, Europe, and Japan, state and Under the terms of the WTO, governments
national governments are often seen as can invoke economic sanctions against
doing the bidding of their major corpora- other states that fail to protect the trade and
tions. Increasingly, they resemble plutocra- intellectual property rights of corporations,
cies in which corpora ti ons control the but corporations are not in turn subject to
political agenda while also dominating the any binding regulations, let alone formal
marketplace. In the South, large Northern- sanctions, for failure to respect the human
based MNCs often have more economic and labor rights of the people who live in
power than governments, and nominally those states.
democratic crony-capitalist oligarchies con- Indeed, there are currently no generally
tinue to control access to most of the valuable accepted international legal standards artic-
natural resources while maintaining power ulating labor, environmental, or human
over impoverished populations by force. rights obligations that are directly binding
Within NGOs,there is a widely held view on the operations or behavior of MNCs.1
that multinational corporations,already the The only standards that do exist are found in
dominant institutions in contemporary the domestic laws of some countries, and
society, are increasing their influence over they vary greatly in terms of what they
the economic, political, and cultural life of require. By and large,these laws are not well
humanity while remaining almost com- enforced. In countries where such laws do
pletely unaccountable to global civil society. exist and are enforced, MNCs can easily
The boards and chief executives who control evade them by moving their capital, invest-
MNCs are not democratically elected, and ments, and production facilities to other
their delibera ti ons are not transparent. If
they feel accountable to anyone,it is to mar- 1
International law standards governing labor and
ket analysts and investors who, for the most human rights, such as the ILO Conven ti ons and the
part, wish simply to make a quick profit. International Covenant on Economic, Social and Cul-
MNCs play an influential role in major tural Rights, have sovereign states as their subjects.
There are only a handful of instances in which corpo-
international financial and trade organiza- rations have been assigned the status of legal personal-
tions. One of the most significant events of ities in international law. See Multinational
the past decade was the formation of the Corporations and Human Rights (Utrecht: Amnesty
International/Dutch Section and Pax Ch ri s ti , 1998),
World Trade Organization (WTO) in 1995.
chap. II. For a more recent study of the potential for
The most remarkable feature of the WTO is enforceable international legal standards governing
its dispute-resolution and enforcement MNCs, see “Beyond Voluntarism: Human Rights and
powers, and the extent to which its rules the Developing Intern a ti onal Legal Obligations of
Companies,” International Council on Human Rights
could potentially deprive states of their abil- Policy(January 2002); ordering information is available
ity to enforce, protect, and fulfill human online at www.ichrp.org.

72 Morton Winston
countries that have lower or non-enforced that Northern human rights NGOs have
standards. Since developing countries com- shown little interest in combating abuses of
pete with one another for foreign invest- economic, social, and cultural rights.3
ment and hard currencies,MNC production During the past decade at least some
and capital mobility can lead to a “race to the members of the Northern human ri gh t s
bottom” in which states compete to provide establishment have found reason to agree
MNCs with the least demanding regulatory with this cri ti qu e . In its recent annual
environment for business. 2 The inaction of reports, Amnesty International has stressed
governments has created a regulatory vacu- the indivisibility and interdependence of
um. Social activists have seized this oppor- human rights and has highlighted their rela-
tunity to place human rights, labor rights, tionship to globalization.4 In the past sever-
and global environmental concerns on the al years Human Rights Watch has produced
agenda of global business. groundbreaking reports dealing with topics
The popular demonstrations against such as child bonded labor, mistreatment of
“corporate-led globalization” that took maquiladora workers, and trafficking in
place around the WTO meetings in Seattle women and girls. Both Amnesty Interna-
in November 1999, and subsequent demon- tional and Human Rights Watch have
strations against other multilateral econom- reported on human rights violations linked
ic institutions in New York, Washington, to the activities of major energy companies
Prague, Quebec City, and Genoa, provide in countries such as Nigeria, Burma, India,
evidence of growing popular resistance to Colombia,and Sudan. There is now a grow-
globalization in its current form. This “anti-
corporate activism” has provided some of 2
There has been a lot written about the so-called race
the impetus for a number of human rights to the bottom. See especially Terry Collingsworth, “An
and environmental NGOs to become Enforceable Social Clause,” Foreign Policy in Focus 3,
no. 28 (October 1998); Debora Spar and David Yoffe,
involved in debates over global economic, “Multinational Enterprises and the Prospects for Jus-
trade, and investment policies. tice,” Journal of International Affairs 52 (Spring 1999).
The recent growth of NGO interest in See also the more extended treatment by William H.
Meyer on the question of whether foreign investment
business reflects an interesting twist on helps or hurts human rights in developing countries
globalization:the concerns of Northern and in his Human Rights and International Political Econo-
Southern NGOs are beginning to converge. my in Third World Nations: Multinational Corpora-
tions, Foreign Aid, and Repression (Westport, Conn.:
Large Northern human rights NGOs such as
Praeger, 1998).
Amnesty International and Human Rights 3
This critique was persuasively voiced at a conference
Watch were founded in order to combat vio- organized by Henry J. Steiner of Harvard Law School in
lations of trad i ti onal civil and political 1990 that was attended by representatives of Northern
international NGOs and several Southern NGOs. See
rights, such as abuses of freedom of expres- Henry J. Steiner, “Diverse Partners: Non-Governmental
sion, arbitrary imprisonment, and unfair Organizations in the Human Rights Movement. The
trials. Southern human rights activists are Report of a Retreat of Human Rights Activists,” Har-
vard Law School Human Rights Program and Human
more keenly aware of the legacies of colo- Rights Internet (1991), p. 25.
nialism and imperialism, and they tend to 4
See Amnesty International Report 2001, especially the
see the most pressing human rights issues in foreword by Pierre Sané, pp. 5-10. At its 25th Interna-
tional Council Meeting in Dakar, Senegal, in August
economic and social rather than only in civil
2001, Amnesty revised its organizational statute so as to
and political terms. For many years South- allow it to undertake significantly more research and
ern human rights activists have complained campaigning on economic, social, and cultural rights.

NGO Strategies for Promoting Corporate Social Responsibility 73


ing sense within the human rights commu- should function as agents for the promotion
nity that the major human rights NGOs of human rights.
must find ways of effectively addressing NGOs are diverse in terms of their mis-
abuses of economic and social rights. The sions, strategies, m et h od s , and organiza-
recent focus of many human rights NGOs tional forms,and the NGO world as a whole
on the activities of MNCs in developing is anarchic. Quite appropriately, there are a
countries has emerged as one way in which number of distinguishable views and
this demand is being met. approaches within the NGO world about
Another important reason for many the appropriate goals, strategies, and tactics
human rights NGOs’ increased focus on for dealing with transnational corporations.
MNCs is a desire to find new allies. Human
rights NGOs have traditionally drawn most
ENGAGING MNCs: THE
of their membership and financial support
from the better-educated, better-travel ed , C O R P O R ATE SOCIAL
more cosmopolitan segments of society. RESPONSIBILITY MOVEMENT
Many executives of MNCs fit this profile,
While MNCs do not generally commit viola-
and many businesspeople are pers on a lly
tions of traditional categories of civil and
supportive of NGO activities in a variety of
political rights (with some notorious excep-
fields. Just as NGOs attempt to attract sup-
tions), they are often indirectly complicit in
port and expertise from other professional
such abuses, and they are directly and rou-
groups, some within the NGO community
tinely implicated in abuses of many impor-
are actively trying to enlist support from
tant social and economic rights. MNC
people in the business world. In some cases
managers control employment for millions
there may be a role for business executives as
of people around the world and are in a posi-
potential agents of political influence, for
tion to influence directly the enjoyment of
instance, by interceding with host govern-
the labor rights and economic rights of their
ments to raise human rights issues. Some
own employees, and to influence indirectly
even think that corporations themselves can
those of the employees of their subcontrac-
be used as levers for progressive social and
tors and suppliers. Companies also have
economic change, rather than just being
direct control over health and safety issues in
engines of profit.5 Several recent studies
have cautiously suggested that multination-
al corporations may have a constructive role
5
to play in conflict prevention and conflict Debora L.Spar, “The Spotlight and the Bottom Line,”
resolution in the world’s troubled coun- Foreign Affairs77 (March/April 1998), pp. 7-12.
6
Jane Nelson, The Business of Peace: The Private Sector
tries.6 A contrary view is also widely held.As as a Partner in Conflict Prevention and Resolution (Lon-
Maria Ottaway notes, during an earlier era don: Prince of Wales Business Leaders Forum, 2000).
of globalization—empire building—charter See also Virginia Haufler, “Is There a Role for Business
in Conflict Management?” in Chester A. Crocker, Fen
companies played a major role in bringing Osler Hampson,and Pamela Aall, eds.,Turbulent Peace:
“civilization” to the South.She warns against The Chall en ges of Managing International Conflict
allowing private corporations to combine (Washington, D.C.: United States Institute of Peace,
2001), pp. 659-76.
their entrepreneurial activities with the role 7
Marina Ottaway, “Reluctant Missionaries,” Foreign
of political and moral reformers.7 Likewise, Policy (July/August 2001), available online at www.for-
not all NGOs believe that MNCs can or eignpolicy.com/issue_julyaug_2001/ottawayprint.html.

74 Morton Winston
the workplace, worker compensation, and the environmental account, and the social
rights to organize and bargain collectively. account—and urge MNCs to embrace these
Over the past several decades there has new kinds of ethical responsibilities volun-
been a gradual but steady evolution of the tarily. The voluntary CSR approach is seen
idea that corporations have certain ethical by its boosters as a practical response to the
responsibilities toward society. Prior to the current lack of MNC accountability, not as
1970s the dominant view was that the only an alternative to government regulation or
responsibility of businesses is to increase enforceable international legal standards.
profits for owners and investors. This is a At the present time, however, there is no
legal obligation only.8 In the 1970s, in the universal agreement as to exactly what the
wake of the Lockheed, ITT, Ford Pinto, and social and environmental responsibilities of
other scandals, the view that businesses corporations are. In the past decade there
must not engage in bribery, fraud, or collu- has been a proliferation of voluntary codes
sive practices, nor may they interfere in the and guidelines, including the Global Sulli-
political affairs of host states, gained accept- van Principles, the Caux Principles, the
ance. This led to passage of the Foreign Cor- Ceres Principles, and others, as well as
rupt Practices Act in the United States, and numerous company codes delineating
to the first wave of attempts by the UN Eco- socially responsible business practices.9
nomic and Social Council and other inter- Recently, the UN Subcommission on the
national organizations to regulate MNC Protection and Promotion of Human Rights
behavior. In the 1980s the corporate social has published a set of principles that may
responsibility (CSR) agenda was significant- become the benchmark for articulating a
ly broadened when, in the wake of Bhopal, comprehensive and widely acknowledged
Exxon Valdez, and other highly publicized set of ethical and legal obligations for
environmental disasters, the NGO environ- MNCs.10 But none of these guidelines or
mental movement pressed home the idea codes has yet received universal acceptance.
that MNCs must also protect the environ-
ment, thus further expanding the notion
CONFRONTING MNCs:
that corporations have social responsibili-
ties. From the early 1990s on, human rights ENACTING ENFORCEABLE
NGOs and other voices within civil society LEGAL STA N DARDS
have been calling upon corporations to
The voluntary CSR approach is not the only
accept responsibility for promoting labor
NGO strategy. Another influential school of
rights, human rights,environmental quality,
and sustainable development.
The contemporary CSR movement aims 8
See Milton Friedman, “The Social Responsibility of
to persuade MNCs to adopt voluntary codes Business Is to Increase Its Profits,”New York Times Mag-
of conduct and implement business prac- azine, September 13, 1970.
9
For a c omprehensive review of codes of conduct see
tices that incorporate commitments to Oliver F. Williams, ed., Global Codes of Conduct:An Idea
respect and protect labor rights and human Whose Time Has Come(Notre Dame,Ind.: University of
rights as well as the environment. Those Notre Dame Press, 2000).
10
Proposed Draft Human Rights Code of Conduct for
who favor the voluntary CSR approach talk
Companies, U.N. Doc.E/CN.4/Sub.2/2000/XX (2001),
a bo ut companies paying atten ti on to the available online at www1.umn.edu/humanrts/links/
“triple bottom line”—the financial account, principles11-18-2001.htm.

NGO Strategies for Promoting Corporate Social Responsibility 75


thought within the NGO world views about the threats. You know like Monsanto
MNCs as constitutionally unredeemable started reforming when their stock started
and incapable of voluntarily acting in a going down . . . . It’s like dictatorships. You can
socially responsible fashion; companies can threaten a dictatorship so that it becomes more
benevolent . . . that’s good for two reasons: for
only be made to be socially and environ-
one thing it helps people, and that’s good, but
mentally accountable by means of econom-
for another it is very educational; it tells you
ic coercion or through binding legal
just how far you can go. Take, for instance,
obligations. Those who take this view look slaveowners. You can tell them to treat their
toward the development of a mass social slaves more nicely. But if you tell them they
movement that will compel governments to have to give up their slave s ,t h en you’ve hit the
enact enforceable international legal stan- limit. And it’s important to understand that
11
dards (EILS) that will make MNCs legally limit. It’s the same with corporations.
accountable to global society. Private volun- While some companies are now willing to
tary CSR initiatives are viewed as exercises in accept voluntarily their human rights,labor,
corporate public relations and as poor sub- and environmental responsibilities, at the
stitutes for strict legal regulation. Often present time the limit that Chomsky talks
allied philosophically and strategically with a bo ut is reached when one demands that
unions, NGO activists who take this view companies give up their freedom of action
may seek to support trad i ti onal union and submit to enforceable legal standards.
organizing efforts to win rights and fair Supporters of the voluntary CSR
compensation for workers worldwide approach generally believe that fear of pub-
through collective bargaining agreements lic shaming will con ti nue to work as an
with free labor unions. effective means of moving more companies
The strategic split between NGOs that see to embrace voluntary CSR. They worry that
themselves as primarily working for volun- working directly for EILS at this stage will
tary CSR and those that favor moving lead to a corporate backlash that will under-
immediately to EILS creates some tensions mine efforts to establish a critical mass of
within the NGO community, but the com- CSR companies. Many NGOs also believe
bination of the two strategies has shown that voluntary standards should not be seen
itself to be effective in at least some cases. as a substitute for enforceable international
Many NGOs see EILS as the ultimate goal, legal standards, but as a complement to
but believe that the widespread adoption of them, since any conceivable future global
voluntary CSR standards by many large enforcement system would need to rely in
MNCs is a necessary way station on the great part on companies monitoring and
route to that goal. NGOs following the vol- regulating their own behavior. In this view,
untary CSR approach believe that while voluntary CSR is not just a first step toward
enforceable international legal standards for legally enforceable standards,it is also a nec-
MNCs are desirable and in principle are essary component of any future global com-
preferable to voluntary ones,in practice they pliance regime.
are not achievable in the present or near Many NGOs believe that MNCs may now
future. Many in the NGO world share the be somewhat more willing to cooperate in
view of Noam Chomsky, who told me:
You can force corporations to reform. They
11
don’t care about the arguments; they care Personal communication, April 18, 2000.

76 Morton Winston
the development of international CSR stan- fall along an en ga gement-confrontation
dards. During the 1990s public criticism of spectrum. There are at least eight different
their labor practices,security arrangements, tactics that various NGOs have employed
and other human rights practices in the with respect to different companies in order
global media embarrassed a number of to encourage them to accept social responsi-
companies. Some MNCs that have experi- bilities. Arranged in order from the least to
enced these kinds of crises have now begun the most confrontational, they are:
to consider seriously the human ri gh t s • dialogue aimed at promoting the adoption
implications of their activities and have of voluntary codes of conduct—the pure
established private voluntary codes of con- CSR approach
duct for overseas offices, subsidiaries, sup- • advocacy of social accounting and inde-
pliers, and contractors. These voluntary pendent verification schemes
codes generally deal with such issues as • the filing of shareholder resolutions
compliance with national and local laws; • documentation of abuses and moral shaming
nondiscrimination; adequate wage levels; • calls for boycotts of company products or
workplace safety and health; working hours divestment of stock
and overtime; freedom of association and • advocacy of selective purchasing laws
the right to organize trade unions; prohibi- • advocacy of government-imposed standards
tions on child and forced labor; environmen- • litigation seeking punitive damages

tal protection; dissemination of company Most NGOs try to tailor the tactics to the
policies; implementation of company poli- target based upon the specific characteristics
cies by supervisors; and protection for of the company’s position on corporate
employees who complain about breaches of social responsibility issues, but there are
company policies. In addition,some associ- clear philosophical differences between
ations of MNCs have developed joint stan- those that favor dialogue and those on the
dards, for instance, the Fair Labor confrontational side of the spectrum.
Association for the apparel industry, and
Rugmark for handmade carpets. Engagement and Support
But critics of the CSR approach see vol-
Although engagers, such as Amnesty Inter-
untary codes mainly as corporate propagan-
national and Human Rights Watch, also
da and as means of avoiding strict
employ negative publicity and stigmatiza-
government regulation. This crucial differ-
tion of particular company practices in some
ence in political analysis leads to further dif-
of their reports, they generally try to avoid
ferences among NGOs in terms of their
confrontational tactics and are more willing
tactics in dealing with global corporations.
to enter into dialogue with MNCs. Engagers
attempt to use high-quality research, ration-
E VA LUATING STRAT E G I E S : al persuasion, and moral argumentation
ENGAGEMENT OR with corporate managers to get companies to
C O N F R O N TAT I O N ? agree voluntarily to institute human rights
principles in their codes of conduct and to
In practice, no NGO acts solely as an implement and monitor their compliance.
en ga ger, nor do any act purely in a con- This CSR strategy is based on the assump-
frontational mode; all utilize strategies that tion that some corporate managers will

NGO Strategies for Promoting Corporate Social Responsibility 77


respond to a combination of ethical and pru- porations that have committed their com-
dential arguments as to why it is in their panies to the terms of the Global Compact.
company’s best interest to embrace CSR. Also in attendance were representatives of
Making the “business case” for human several major international human rights
rights is a primary tactic of engagers. There organizations, including Amnesty Interna-
are in fact a significant number of purely tional, Human Rights Watch, and the
prudential reasons, based on solid business Lawyers Committee for Human Rights.
considerations, for companies to adopt Amnesty International and Human
good human rights policies and practices. Rights Watch, along with several other
Among the kinds of prudential arguments NGOs,“welcomed” the Global Compact ini-
that can be advanced are that by embracing tiative, but deliberately stopped short of for-
CSR, companies can enhance their compli- mally endorsing it, mainly because of its lack
ance with local and international laws; ben- of independent verification and enforce-
efit from better control over their su pp ly ment mechanisms. They saw affiliation with
chains; protect their reputations and b rand Global Compact as a first step on the path
images; enhance their risk-management toward global corporate social responsibility,
strategies; increase employee productivity, rather than the end of the journey.
morale, and loyalty; reduce operating costs, At the same time, a coalition of other
enhance financial performance and increase human rights and environmental NGOs,
stock value; and improve business relation- including Corporate Watch, Institute of Pol-
ships with external stakeholders generally.12 icy Studies, Green pe ace International, the
The philosophical differences between Third World Institute and several others,
en ga gers and confronters became evident issued a press release blasting the GC as
when the United Nations rolled out its threatening the mission and integrity of the
Global Compact (GC). Secretary-General UN. Joshua Karliner of Corporate Watch,
Kofi Annan launched the idea of a voluntary for one, charged that the “Global Compact
global compact on human rights, labor partnership and the Guidelines for Cooper-
rights, and the environment at the Davos ation do not ensure the integrity and inde-
Economic Forum in January 1999, where he pendence of the United Nations and allow
warned the gathered dignitaries of a popu- business entities with poor records to ‘blue-
lar backlash against globalization if it does wash’ their image by wrapping themselves in
not promote human, labor, and environ- the flag of the United Nations.” 14
mental rights and ifthe benefits of corporate
12
globalization are not distributed fairly. See John Weiser and Simon Zadek, “Conversations
Unless people have confidence in the funda- with Disbelievers: Persuading Companies to Address
Social Challenges,” Ford Foundation, November 2000.
mental fairness of the global economy, its 13
See www.unglobalcompact.org. The site contains a
long-term sustainability will be placed in full list of the participants in the launch as well as the
doubt and its future prospects “will be frag- text of the Global Compact.
14
The term “bluewash” is presumably a cognate of
ile and vulnerable—vulnerable to a backlash
“greenwash,” which was coined by Jed Greer and Kenny
from the ‘isms’ of our post-Cold War world: Bruno in their book Greenwash: The Reality Behind
protectionism, populism, nationalism, eth- Corporate Environmentalism(New York: Apex Press,
nic chauvinism, fanaticism, and terror- 1996),in which they developed the thesis that corpora-
tions began cozying up to environmental NGOs as a
ism.”13 On July 26, 2000, Annan appeared public relations strategy designed to create the myth of
with the CEOs of several dozen major cor- good corporate citizenship.

78 Morton Winston
The charges have turned out to be Accountability International (SAI), which
unfounded: Nike has not begun stitching UN has developed a comprehensive and rigor-
logos on its tennis shoes; public opinion has ously auditable social responsibility stan-
not concluded that the UN has sold out to big dard for retail manufacturing businesses
business; and joining in the GC initiative has called SA8000.16
not turned out to be a “free ride” for compa- The FLA grew out of an initiative by Pres-
nies. At the same time, some changes have ident Clinton in 1996 called the Apparel
been made in the terms of the GC since it was Industry Partnership (AIP). Created in
launched. The main change is that the com- order to address the problem of sweatshop
panies that join the initiative are no longer labor practices, AIP’s original membership
called “partners” or even “signatories.” Inter- included major U.S.apparel retailers such as
ested companies are asked to have a letter sent Liz Claiborne, Nike, Reebok, Tweeds, Patag-
by their CEOs expressing their acceptance of onia, and L. L. Bean; business associations
the principles and their intent to put them such as Business for Social Responsibility;
into practice. There is still no independent trade union organizations such as the Union
verification or monitoring system; instead, of Needlework and Industrial Textile
participating companies are asked to submit Employees (UNITE); and NGOs including
a case study every year detailing an activity or the Lawyers Committee for Human Rights,
initiative they have undertaken to promote the Interfaith Center on Corporate Respon-
one or more of the nine principles that make sibility, and the Robert F. Kennedy Memori-
up the GC. The International Labor Organi- al Center for Human Rights. This group
zation has set up a database on its Web site— labored for several months and came up
the Business and Social Initiative Database with a code of conduct for workplace prac-
(BASI)—that lists topics, companies, and tices and a set of principles for monitoring
NGOs and allows users to search for reports compliance.17 However, before they could
by participating organizations.15 Many more conclude their work on a standard, a split
companies, including many from the South, opened up between the corporations and
have since joined in the GC, and there are some NGOs and unions over the issue of the
more than 1,000 organizations affiliated with living wage; in November 1998 the apparel
the initiative. Its popularity rests on its being union UNITE and several other labor and
an entry-level standard, one that is not too religious organizations dropped out. They
demanding. complained that the agreement granted cor-
porations too much control over the moni-
Social Auditing and Reporting toring process and lacked strong provisions
on the right to organize, and that the code did
The social auditing approach holds that cor-
not provide for a living wage but only for “the
porations cannot be trusted to self-monitor
minimum wage required by law or the pre-
their compliance with their own voluntarily
vailing industry wage, whichever is higher.”
adopted ethical codes and argues that cor-
porate social performance needs to be inde-
15
pendently audited on a regular basis by BASI can be accessed at oracle02.ilo.org/dyn/basi/
vpisearch.first.
credible outside auditors. Some of the main 16
Available online at www.sa-intl.org.
NGOs taking this approach are the Fair 17
Available online at www.dol.gov/dol/esa/public/
Labor Association (FLA) and Social nosweat/partnership/report.htm.

NGO Strategies for Promoting Corporate Social Responsibility 79


UNITE went on to organize United Students they give the factory managers warnings and
Against Sweatshops (USAS), a campus- some time to correct them, return to rein-
based movement designed to link student spect, and if satisfied can issue an SA8000
activists concerned about sweatshop condi- certification that is good for three years.
tions worldwide to the demands of the U.S.- Unlike the FLA standard for the apparel
based unions. Some of the labor-oriented industry, SA8000 contains a provision con-
NGOs supported UNITE and left the part- cerning the payment of a “living wage,” and
nership, but other human rights NGOs such auditors are guided by a detailed set of spe-
as the Lawyers Committee and the RFK cific procedures and criteria in making their
Center stayed on, saying that they believed inspections and issuing certificates of com-
that AIP had made significant progress, even pliance for each supplier, not just for a sam-
if the final agreement was not all they had ple. But both the FLA and SA8000, in
hoped for. The FLA has continued to devel- keeping with the social accountability
op its code and auditing practices, but it has approach, rely on companies to adopt these
predictably con ti nu ed to draw criticism ethical guidelines voluntarily. They also
from the trade unions and NGOs that assume that large companies with complex
dropped out.18 supply chains cannot become socially
SA8000 was developed in 1997 by a multi- responsible overnight, and therefore set out
sectoral advisory board consisting of experts a process by which companies that are will-
from trade unions, businesses, and NGOs, ing to commit themselves to CSR can prac-
along with several academics and represen- tice continuous improvement in this field
tatives of accounting firms. Based on the and be recognized for making demonstrable
principles of international human ri gh t s progress, even if some problems remain in
and ILO conventions, SA8000 covers eight some supplier facilities.
essential workplace issues—child labor,
forced labor, discrimination, discipline, Shareholder Activism
health and safety, working hours, compen- A third approach that is compatible with
sation, and the right to free association and voluntary CSR seeks to influence corporate
collective bargaining. A ninth element on policy by means of shareholder resolutions.
management systems adds specific require- This technique has been used successfully for
ments for demonstrating ongoing compli- more than thirty years by the Interfaith Cen-
ance with the eight normative elements of ter on Corporate Responsibility, which
the standard, thereby helping to ensure full mainly represents faith-based organizations’
institutionalization of the company’s com- pension funds in shareholder actions against
mitment to the standard. companies.19 Areas addressed in such resolu-
Social auditing in this scheme works by tions include health and safety, tobacco,
means of a two-tier system in which SAI weapons, environment, discrimination,
trains and accredits auditors and auditing labor and human rights issues, and issues of
firms in the SA8000 standard. Large brand- corporate governance. Since large pension
name retailers become signatories to the funds often hold large numbers of shares in
standard and then require their subcontrac- many major companies,they can often exert
tors’ and suppliers’ factories in developing
countries to be audited against it. If the 18
See www.fairlabor.org.
19
auditors discover noncompliance problems See www.iccr.org.

80 Morton Winston
considerable economic as well as moral pamphlets entitled Visions of Ethical Busi-
influence at annual shareholder meetings. nessthat make the business case for CSR by
These kinds of resolutions do not usually highlighting the practices of the most CSR-
succeed in attracting a majority of votes, but f ri en dly companies. 23 Most NGOs avoid
they do get the attention of the board of praising corpora ti ons for good behavior
directors and top managers, who often enter out of fear it will undermine their own rep-
into negotiations with the sponsors in order utations for independence, but virtually all
to resolve the issues. Shareholder activism NGOs that are active in the field of CSR
makes use of the accountability of corpora- employ moral shaming to some extent.
tions to their investors in order to widen the
sphere of corporate accountability to other Economic Pressure Tactics:
stakeholders, and is regarded by a number of Boycotts and Divestment
NGOs as an effective way in which to influ- A still more confrontational approach holds
ence corporate policy and practice. that corporations will not voluntarily accept
their social responsibilities, but can be per-
Moral Stigmatization and suaded to do so if they fear adverse effects on
Shaming what they view as their primary economic
The most widely employed NGO tactic is mission, to return a profit on investment.
moral shaming and stigmatization of cor- Proponents of economic pressure tactics
porations for bad behavior. There is abun- point to the successful boycotts against Nes-
dant evidence that corpora ti ons are tle, Nike, Starbucks, and others as examples
sensitive to such public criticism, particu- of how consumer boycotts can be powerful
larly when it links their brand name and levers for influencing corporate behavior.24
corporate reputation to unsavory environ- Adoption of boycotts as a tactic is generally
mental and social practices. The acknowl- seen as moving an NGO from the engager
edged leader in the field of corporate into the confronter camp. Company boy-
s ti gm a ti z a ti on is a Washington-based cotts have been used extensively by labor
m on t h ly magazine founded by Ralph unions and some NGOs, but not by groups
Nader called Multinational Monitor, which such as Amnesty International or Human
each year publishes a list of the Ten Worst Rights Watch. Engagers generally eschew
Corporations.20 Corporate Watch ,b a s ed in such tactics on the grounds that they often
San Francisco, produces a Web site that harm workers, they are hard to start and
specializes in reporting corporate mis- stop, and they only work against companies
deeds, as does Global Exchange.21 On the with large retail businesses and lots of con-
opposite side of the fence, there are now
several publications that specialize in high- 20
Available online at www.essential.org.
21
l i gh ting corporate “best practi ce s” in the See www.corpwatch.org and www.globalexchange.org.
22
See www.ethicalperformance.com.
areas of social and environmental respon- 23
See www.business-minds.com.
sibility. One of the leading publications of 24
For a comprehensive study of the Nestlé infant f or-
this kind is the London-based Ethical Per- mula campaign,as well as a persuasive argument for a
fo rm a n ce Best Practi ce .22 The Fi n a n ci a l global regulatory approach,see Judith Richter, Holding
Corporations Accountable: Corporate Conduct,Interna-
Times, in assoc i a ti on with the Warwick tional Codes, and Citizen Action (London: Zed Books,
Business Sch oo l , also offers a series of 2001).

NGO Strategies for Promoting Corporate Social Responsibility 81


sumer exposure. Proponents of boycotts attorneys general, and some people in the
and divestment campaigns argue that they NGO world were confident that the conser-
speak in the only language that corporations vative U.S. Supreme Court would uphold
really understand—money. the states’ rights to determine their own pur-
chasing policies.
Selective Purchasing Laws But on June 19, 2000, the U.S. Supreme
Court issued a unanimous ruling upholding
A stronger form of economic pressure is
the Appeals Court ruling that struck down
exerted through selective purchasing laws.
the Massachusetts Burma Law. Justice David
An interesting example of this approach is
Souter, who wrote the Supreme Court opin-
the 1996 Massachusetts Burma Law, a selec-
ion,argued that “the state law is at odds with
tive purchasing law that penalized compa-
the president’s intended authority to speak
nies that continued to do business with the
for the United States among the world’s
repressive regime in Myanmar by adding a
nations in developing a comprehensive,
surcharge to contracts with the Common-
multilateral strategy to b ring democracy to
wealth of Massachusetts. Shortly after the
and improve human rights practices and the
Massachusetts law was enacted, the federal
quality of life in Burma,”and denied the par-
government enacted its own anti-Burmese
allels with the divestment laws of the 1980s.25
trade sanctions. In 1998 the National Foreign
This Supreme Court decision was a blow to
Trade Council (NFTC), an umbrella group
NGOs and their allies. But the ruling was
representing a coalition of corporations,
narrowly drawn, saying only that the U.S.
sued the Massachusetts secretary of admin-
federal sanctions preempted the Massachu-
istration and finance to block the selective
setts law. The Court did not rule on whether
purchasing law, contending that it unconsti-
state and local selective purchasing laws
tutionally interfered with the federal for-
were per se unconstitutional infringements
eign-relations powers, violated the foreign
on the federal government’s foreign-policy
commerce clause of the Constitution that
powers or on the power of Congress to reg-
gives Congress the right to regulate foreign
ulate foreign trade. The ruling did not elim-
commerce, and was preempted by the later
inate the possibility that states and local
federal sanctions on Myanmar. Supporters
governments could use their purchasing
likened the Massachusetts law to those used
power to influence corporations on human
in the 1980s to bring about divestment in
rights issues.
apartheid South Af ri c a , and argued that
cities and states have the right to base their
purchasing decisions on moral considera- 25
See Simon Billenness, “Burma Law on Trial: Case
tions. But in 1998 the U.S. District Court in Threatens Anti-Apartheid Legacy,” Investing for a Better
Boston backed the NFTC’s arguments, as World (April 1999), p. 1; USA*Engage, “Amicus Briefs
did the First Circuit Court of Appeals. Mass- Filed in Support of the National Foreign Trade Council,”
available online at www.usaengage.org/background/
achusetts appealed the case to the U.S. lawsuit/ProAmicusBriefs.html; Public Citizen/Global
Supreme Court, hoping to clarify the limits Trade Watch ,“ Federal Appeals Court Rules Against MA
on a state or local government’s authority to Burma Law” (June 23, 1999), www.citizen.org/pctrade/
burma/update2.htm; judgment in the case of National
draw up its own procurement rules. Amicus
Foreign Trade Council v. Natsios and Anderson, United
briefs were filed on behalf of Massachusetts States Supreme Court, June 19, 2000, available online at
by numerous NGOs and several other states’ www.supremecourtus.gov.

82 Morton Winston
Government-Imposed Standards rate Social Responsibility, whose provisions,
however, are not legally binding.
A seventh tactic assumes that only national
In the United States, the Corporate Code
governments have sufficient power and
of Conduct Act (H.R. 2782) has been intro-
authority to force companies to adopt ethi-
duced into the 107th Congress by Represen-
cal practices that protect human rights and
tative Cynthia McKinney (D-GA). It would
the environment.NGOs accepting this view
require all U.S.-based corpora ti ons that
tend to focus their efforts on enacting legis-
employ more than twenty persons in a for-
lation at the national or, preferably, the
eign country to implement a corporate code
international level, by imposing enforceable
of conduct establishing a number of core
legal obligations on MNCs. NGO activists
human and labor rights standards specified
would like to see multilateral trade and
in the bill, and would also require that the
investment agreements such as NAFTA,and
code apply to all of the companies’ sub-
the failed Multilateral Agreement on Invest-
sidiaries, subcontractors, affiliates, j oi n t
ment, incorporate strict and enforceable
ventures, partners, and licencees. A similar
standards on labor rights, human rights,and
bill, H.R. 4596, failed to make it out of com-
environmental protecti on . But there are
mittee during the 106th Congress, and at
other legislative initiatives in the works.
present the chances of enactment of this or
In January 1999, the European Parliament
other comprehensive legislation along these
passed a Resolution on Standards for Euro-
lines are slim.
pean Enterprises Operating in Developing
A more successful legislative initiative is
Countries. The resolution calls on the Euro-
represented by the passage in late 2001 by the
pean Union to establish legally binding
U.S. House of Representatives of H.R. 2722,
requirements on European companies to
the Clean Diamond Trade Act, by a vote of
ensure that these MNCs comply with inter-
408 to 6. The Senate passed a similar piece of
national law relating to the protection of
legislation, and a presidential signature in
human rights and the environment. The res-
early 2002 seems likely. Although weaker
olution proposes that European MNCs be
than what NGO proponents had wanted,
monitored by a panel composed of inde-
the bill passed by the House permits the
pendent experts and representatives from
president to prohibit the import of rough
European businesses, international trade
diamonds into the United States from coun-
unions, environmental and human rights
tries that are not implementing verifiable
NGOs, and the developing world. It also
controls. The passage of this legislation rep-
calls on the European Commission to
resents a victory for the 1998 Conflict Dia-
ensure that MNCs acting on behalf of, or
mond campaign launched by a small human
financed by, the European Union act in
rights NGO, Global Witness, de s i gn ed to
accordance with basic requirements for
stop the trade in illicit diamonds that gave
human rights and environmental protec-
rise to grave human rights violations in
ti on . However, this resolution was not
Angola and Sierra Leone.26 De Beers and the
approved by the Commission and did not
become a law. In s te ad , in June 2001 the
Commission issued a green paper on Pro- 26
See “Conflict Diamond Report,” available online at
moting a European Framework for Corpo- www.one.world.org/globalwitness/reports/conflict.

NGO Strategies for Promoting Corporate Social Responsibility 83


world diamond industry became involved in villages under threat of violence and to work
the negotiating process at a relatively early for weeks at a time on the building of army
stage, because diamond retailers were barracks and helipads and clearing roads
understandably unhappy about having their along the proposed pipeline route. They also
products associated with amputated limbs. claimed that they were subjected to numer-
ous acts of violence in connection with this
Litigation forced labor and forced relocation, includ-
ing violations of international human rights
An eighth tactic being used against some cor-
law such as torture, rape, and murder.
porations involves holding them accountable
In March 1997 Judge Richard Paez of the
in U.S. courts for human rights violations
U.S. District Court of California issued a
committed by them or their business part-
ruling that denied a motion by Unocal Cor-
ners. Examples of this adversarial approach
pora ti on to dismiss the suit, finding that
are the suits against Unocal for its role in
Unocal could be sued by these plaintiffs in
Burma, a suit against Texaco for its operations
California under the ACTA.28 However, on
in Ecuador, and suits against Chevron and
August 31, 2000, Judge Ronald Lew rendered
Shell for their alleged involvement in human
a decision granting summary judgment in
rights abuses in Nigeria.27 These suits are
favor of Unocal, dismissing all of the plain-
based upon the provisions of the Alien Claims
tiff ’s claims.29 His decision found that
Torts Act of 1789 (ACTA) that gives U.S. courts
because Unocal had not “actively participat-
jurisdiction over torts claimed by aliens
ed” in seeking to employ forced or slave
resulting from violations of jus cogens norms
labor, it was not liable for the plaintiffs’
of international law such as piracy, torture,
injuries. The lawyers for the plaintiffs have
and slavery.
recently filed an appeal, but its prospects in
The most famous of these cases is John
the appeals courts remain uncertain.
Doe v. Unocal Corporation, in which the
plaintiffs, a group of Burmese refugees
presently residing in California,alleged that THE CORPORATE RESPONSE
Unocal is liable for torts committed against
them in connection with sec u ri ty opera- The fact that there is such a wide array of
tions carried out by the Myanmar militar y strategies and tactics available to NGOs is
during the construction of the Yadana oil fitting in light of the range of company atti-
and gas pipeline from Myanmar’s eastern
27
Tenasserim region to Thailand. Unocal is a See Morton Winston, “John Doe vs. Un oc a l : the
Boardroom/Courtroom Battles for Ethical Turf,”Whole
joint venture partner in this project along
Earth Magazine (Summer 1999), pp. 17-19; Eyal Press,
with the French oil company TotalFinaElf, “Texaco on Trial,” The Nation (May 31, 1999), online at
the National Petroleum Company of Thai- www.thenation.com. Also see Peter Waldman,“Niger-
land,and the military government of Myan- ian’s Suit Alleges Chevron Backed Attacks that Violated
Human Rights,” Wall Street Journal, May 28, 1999, p. B2.
mar, known as the SLORC, or more recently 28
See Order granting in part and denying in part defen-
as the SPDC. The plaintiffs, who are dant Unocal’s motion to dismiss in case of Doe v. Uno-
Tenasserim villagers whose identities have cal Corp., U.S. District Court for the Central District of
California, March 25, 1997, www.yale.edu/lawweb/aval-
been concealed in order to protect their on/diana/unocal/31198-1.htm.
families from reprisal, alleged that the 29
Doe v. Unocal Corp., 110 F. Supp. 2d 1294 , August 31,
Myanmar military forced them to leave their 2000.

84 Morton Winston
tudes NGOs encounter. Some major com- and publish embar rassing revelations, their
panies are engaged in fighting the ideas of work provides imp etus for lagging compa-
social responsibility and environmental sus- nies to move in the direction of greater CSR.
tainability and cling to the classical view that But it is also possible to view the split
the only social responsibility o f business is between engagers and confronters within
to make money for investors. Others are the NGO community as the result of a delib-
basically passive and have no considered erate divide-and-rule strategy by corpora-
position on CSR issues. Still others have tions. To the extent that corporations can
begun internal discussions about CSR and successfully split the NGO community into
human rights issues as they affect their busi- “responsible” and “radical” groups,they can
nesses, and are moving cautiously in the use the difference as the basis for public rela-
direction of embracing greater social tions campaigns designed to deflect criti-
responsibility for their own operations and cism of their behavior. Joshua Karliner
supply chains. In addition, there are a few argues that many corporations now look
leading companies that have turned the cor- favorably on partnerships with environ-
ner by formally and publicly accepting the mental NGOs because “such partnerships
view that they should base their business are seen as part of a strategy to divide and
practices on international human rights and con qu er the environmental movement,”
labor standards,and adopting codes of con- since by co-opting the mainstream, moder-
duct or business principles that embody this ate groups, the corporations delegitimize
commitment. Finally, a few companies have the more radical and progressive elements of
made serious attempts to implement such the movement.30 A similar strategy is being
commitments by educating their own used in the human rights field. At the 1997
employees,identifying and operationalizing Shell Annual General Meeting, several
performance benchmarks, communicating groups, including Friends of the Earth and
their standards to their suppliers and busi- the Nigerian group MOSOP, were planning
ness partners, carrying out internal audits, to stage demonstrations in front of Shell’s
and in some cases seeking external inde- headquarters. But the company countered
pendent auditing to verify their social per- by announcing the day before that it had
formance to external stakeholders. What agreed with Amnesty International and Pax
progress has been made on CSR thus far is Christi to adopt human rights principles in
largely the result of NGO activism. its business code. This public relations ploy
On the positive side one can see the may have allowed Shell tempora ri ly to
engager/confronter split as an example of a deflect criticism of its human rights record
good cop–bad cop interrogational strategy in Nigeria, but did not prevent it from being
in which the confronters push MNCs to put sued by relatives of Ken Saro-Wiwa.
human rights onto their agendas by means In the short term, NGOs involved in the
of stigmatization and economic pressure, corporate social responsibility movement
while the engagers pull them further toward should combine stigmatization and other
corporate social responsibility by means of pressure tactics, such as shareholder resolu-
ethical and prudential reasoning. This com-
bination of “push” and “pull”tactics appears 30
Joshua Karliner, The Corporate Planet: Ecology and
to have worked in several cases. Since the Politics in the Age of Globalization (San Francisco: Sier-
confronters make it their business to dig up ra Club Books, 1997), pp. 189-90.

NGO Strategies for Promoting Corporate Social Responsibility 85


tions and boycotts, with parallel attempts to rily to moral persuasion. This general con-
change corporate thinking about human clusion is amply supported by recent devel-
rights by means of dialogue, rational per- opments in a va ri ety of industry sectors,
suasion, and the sharing of best practices. most notably the pharmaceutical industry,
The tactics employed should be geared to which bowed to public pressure to allow
the particular company being targeted, with generic versions of proprietary HIV/AIDS
the more adversarial tactics reserved for the drugs to be made available to developing
laggards and the more cooperative ones countries. In the future, more companies
used with the industry leaders. But NGOs may seek to avoid the risks associated with
must not be seen as getting too close to cor- such negative publicity by adopting and
porations; they need to guard their inde- implementing a comprehensive human
pendence so as to avoid being viewed by rights code of conduct before they have been
their primary activist constituencies as “din- spotlighted and publicly shamed.
ing with the devil.”This means,among other
things, that even for engagers, voluntary
C O N C LU S I O N
company commitments to CSR principles
should not be seen as buying companies NGOs cannot really force corporations to
immunity from criticism. However, from do anything, and their attempts to influence
the point of view of the engagers, it is also corporate behavior by means of any combi-
important to recognize those companies nation of strategies and tactics are unlikely
that have tu rn ed the corner on CSR, and to be successful in the long run unless they
treat them differently from those that have are able to mobilize two other important
not. By rehearsing endlessly the past abuses constituencies: consumers and govern-
and mistakes of companies like Shell, BP, ments. Recent studies of consumer prefer-
Nike and others that have now embraced ences have consistently found that
CSR, confronters ensure that no good deed consumers are motivated to avoid purchas-
goes unpunished. Confrontational tactics ing products that they know are being made
can easily become counterproductive. When under abusive labor conditions. However, as
they are not used skillfully they produce a the authors of one of these studies conclude:
backlash within both the business and the
“The implication is that firms can lose greatly
NGO communities.
from having their products identified as being
Confrontation and public accusation are made under bad conditions but have only lim-
distinctively Western ways of behaving and ited space to raise prices for products made
are generally regarded as uncivil in many under good conditions—unless consumers see
Asian cultures, where a higher value is placed competing products as made under bad condi-
on acting skillfully in interpersonal relations tions. The differential consumer response to
so as to preserve reputation and social har- information about good and bad conditions
mony. Unfortunately, the evidence so far helps explain…the behavior of activists and
suggests that changes in corporate behavior firms in the market for standards.”31
regarding environmental and social issues
31
have been brought about mainly by means of Kimberly Ann Ell1iott and Richard B. Freeman,
public stigmatization. Corporations respond “White Hats or Don Quixotes? Human Rights Vigi-
lantes in the Global Economy,” National Bureau of Eco-
to damage to their reputations and brand nomic Research (January 2001), working paper 8102,
image, and to their bottom lines, not prima- available online at www.nber.org/papers/w8102.

86 Morton Winston
As long as the majority of consumers the CSR agenda from voluntary compliance
remain either ill informed or indifferent to to “soft law ”a pproaches, and finally to rigor-
the labor and human rights conditions ous national and international enforcement
under which corporations produce the regimes; but it is unlikely to be able to do so
goods they deliver to the marketplace, no unless it can mobilize support for greater
amount of NGO pressure is going to pro- corporate social accountability from
duce sustainable reform. informed consumers, concerned govern-
In the last analysis it is the responsibility of ment officials, and progressive companies.
national governments to enact and enforce The struggle for environmental sustain-
global labor, human rights, and environ- ability and global social justice will continue
mental standards for multinational corpora- to be waged on many fronts. The current
tions, and governments must be persuaded corporate social responsibility movement
that they need to accept and act on these may one day lead to the adoption of global-
responsibilities. Governments could and ly enforceable legal standards that bind
should be doing a great deal more than they MNCs to their social and environmental
currently are, not only in the process of stan- responsibilities. But for this to happen,
dard setting and negative regulation, but also MNCs and NGOs will need to continue to
in providing tax and other regulatory incen- learn from their current encounters and
tives that will reward corporations for good negotiations and cooperate in placing cor-
behavior. The NGO-led corporate social porate social accountability on the political
responsibility movement must now move agenda of nation states.

NGO Strategies for Promoting Corporate Social Responsibility 87