Political activity and

global governance
Alessia Contu
Alessia.Contu@umb.edu

Outline of Lecture
Conceptual tools to make sense of political activity
Business as political actors: Scherer and Palazzo
argument. Active in shaping global governance the
example of Rana Plaza

Political actors: Civil Society Organisations, NGOs &

Social Movements

Two examples of political activities

From Corporate Responsibility to Corporate
Accountability
Direct NGO Activism

Business Responses
Business
As
Leader

Based on Bower, Leonard and

Paine, 2011

Stakeholder Analysis
It is part of every managers job
Process to identify relevant stakeholders and
analyze their interest and power

Asks 4 key questions:

Who are the relevant stakeholders?
What are the interests of each stakeholder?
What is the power of each stakeholder?
How are coalitions likely to form?

1-4

Stakeholder Analysis Question 1

Who are the Relevant Stakeholders?
Answer this question by drawing market and nonmarket
stakeholder maps

Recognize that not all of groups are relevant to every

situation

Examples:
Some businesses sell directly to the public and will not have
retailers
A certain stakeholder may not be relevant to a particular
decision/action

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Stakeholder Analysis Question 2

What are the interests of each stakeholder?

Analyzing stakeholder interests includes addressing:

What are the groups concerns?
What does the group want/expect from their relationship with
the firm?

Examples:
Stockholders have an ownership interest, they expect to

receive dividends and capital appreciation

Customers are interested in gaining fair value and quality in
goods and services they purchase
Public interest groups advance broad social interests
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Stakeholder Analysis Question 3

What is the power of each stakeholder?

Stakeholder power is the ability of a group to use resources to
make an event happen or to secure a desired outcome

There are 4 types of stakeholder power:

Voting power
Economic power
Political power
Legal power
Informational power
Also possible to use:
French and Raven (1959) theory of power sources: 5 different sources
of power (check which one the stakeholders can mobilise!!)
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Stakeholder Analysis Question 4

How are stakeholder coalitions likely to form?

Stakeholder groups often have common interests and will form

temporary alliances to pursue these common interests

Coalitions are very dynamic (can change at any time)

Coalitions are increasing international
Internet has enabled coalitions to form quickly, across political
boundaries

International alliances, coupled with media interest, can be a very

powerful strategic force for corporations but also for other stakeholders

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Stakeholder Salience and

Mapping
Salient It regard something that stands out from a

background; that it is seen as important, or draws attention

Stakeholders stand out (i.e., are salient) to managers when

they have power, legitimacy, and urgency

Managers can use the salience concept to develop a

stakeholder map a graphical representation of the

relationship of stakeholder salience to a particular issue

A stakeholder map is a useful tool, because it enables

managers to see quickly how stakeholders feel about an issue

1-10

Figure
Stakeholder Map
1.4

1-11

The Dynamic Environment of

Business
The external environment of business is dynamic and ever
changing

The purpose of the firm is not simply to make a profit, but to

create value for all its stakeholders a successful business
must meet both its economic and social objectives

Six dynamic forces powerfully shape the business and society

relationship:
Changing societal expectations
Growing emphasis on ethical reasoning and actions
Globalization
Evolving government regulations and business response
Dynamic natural environment
Explosion of new technology and innovation

1-12

Figure Forces that Shape the Business

1.6
and Society Relationship

1-13

So far
Focusing on the economic environment and the
relationship between business and government
(two sectors framework) = synergistic corruption
taking advantage of opportunities for
irresponsibility (e.g. Enron, the financial crisis)
Results: some winners but lots of losers
Middle class
Workers
Consumers
Shareholders
Communities

Les Jeux Sont Faits

So is that it?
Not really

A shift in perspective

Corporate agency is not

It is shaped
The organizational field sets of organizations
that,and
in the
(only) efficiency seeking
influenced by the
aggregate, constitute
rational actions
field in and
a recognized area of institutional life;organizational
key suppliers, resource
which
theother
firm organizations
is situated
product consumers, regulatory agencies,
and
that produce similar services or products

A political institutional
perspective:
The field is part of a broader institutional domain with
laws, customs and morals which specify a way of life
which has formed historically and is sustained by routine,
legitimate, normal practices of accepted conduct =
historic bloc

The domain is uneven, open and antagonistic, the solidity

and continuity one sees (in norms, rules, values, taken for
granted way of life etc) is the result of power dynamics
and specifies the configuration of power relations.

But antagonism and contestation are always present

sometimes more than others this is what one can call the
political environment

The Political Environment Civil Society and

NGOs

Civil Society
Area of association and actions independent of
the state and the market in which citizens can
organise to pursue purposes that are important
to them individually or collectively
(Brown et al. 2000:275)

NGOs
NGOs are private, non-profit organizations that aim to
serve particular societal interests by focusing advocacy
and/or operational efforts on social, political and
economic goals, including equity, education, health,
environmental protection and human rights
Social Purpose NGOs
Club NGOs: business associations, unions and churches
etc.

Give voice and provide services/goods when the market

does not step in and the government cant or will not:
the poor, or those marginalized, discriminated etc.

Advocacy NGOs

Give voice and provide access to insiders (direct to

decision makers) and outsiders (direct to public
opinion) strategies
Representing at decision making tables/events
Lobbying
Doing research
Organizing conferences
Monitoring and exposing action/inaction
Disseminating information
Setting/defining agenda
Developing/supporting code of conducts
Organizing boycotts and direct actions

An example:
The Video:

https
://act.greenpeace.org/ea-action/action?ea.client.id=1844&ea.campaig
n.id=
29989
The Campaign since July 2014

https://act.greenpeace.org/ea-action/action?ea.client.id=1844&ea.ca
mpaign.id=
29635

https
://secure3.convio.net/gpeace/site/Advocacy?cmd=display&page=User
Action&id=
1665

The Resolution:
http://www.triplepundit.com/2014/10/lego-end-partnership-shell-contra
ct-expires
/

Operational NGOs
Provide services and goods
Technical knowledge and expertise
Great reach and penetration

Hybrids NGOs
From service delivery to capacity building:

Training
Know how and learning
Resource access

They also engage in:

Promotion of institutions and norms: The
creation of codes of conduct for example

They campaign to create buy-in and

partnerships and then help to write the codes
and help enforcing them with monitoring,
reporting, etc. (our case today)

In summary
NGOs activism has been responsible for major
changes in corporate behavior and governance
(The Economist 2003)

The emergence of NGOs that seek to promote what

they perceive to be more ethical and socially
responsible business practices is beginning to
generate substantial changes in corporate
management, strategy and governance

(Doh and Teegen, 2003)

Global governance
Example UN Global Compact http://www.unglobalcompact.org/

Ways to institutionalize corporate social responsibility at the

global level through the creation of norms, rules and
standardized procedures for responsible and sustainable
business practices

Key engine = lack of enforcing agents as transnational

regulatory body lack the force of national law so this requires
political action of such bodies and NGOs and CSOs to engage
MNCs and firms in voluntary actions

Push to move from

Responsibility to Accountability
Corporations impact on outcomes of employment, consumption,
environmental quality, and social inequality.

The post-2008 era of financial crisis has taught an important lesson: the
limited liability of the privately owned corporation has re-emerged as
the collective liability of society.

What responsibilities society places on the corporation itself in

exchange for the legal privilege of limited liability?

From statements of intent, internal policies and codes to show with hard
facts actual responsibility = move to accountability

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What Does it Mean To be Accountable?

Corporate accountability refers to whether a corporation is
answerable in some way for the consequences of its actions

What
It Is...

Key
Facts

Crane and Matten, Business Ethics, 2nd edition

Critics of corporate responsibility argue that firms

exclusively accountable to their shareholders (i.e.
accountability)

Accountability calls for transparency of corporate actions

related to its financial bottom line, but also social and
environmental issues

The expanded view on accountability is called for because of

the increasing influence of corporations on social and
environmental issues

are
financial

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Accountability Constituting Parts

29

Key parts of increasing

accountability
1. Transparency: provision of accessible and timely information,
and the opening up of organizational processes and structures

2. Evaluation: process by which an organization monitors and

reviews its progress against goals
3. Complaint & Response: processes by which an organization
enables stakeholders to address complaints
4. Participation: process through which an organization enables
key stakeholders to play an active role in decision-making

Supporting Management
Processes for Accountability

1. Accounting

2. Auditing

External Assurance
e.g. 3rd party
to bridge credibility gap

3. Reporting

Financial / Social / Environmental Issues

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Who Uses Corporate Responsibility Reports?

Asset Owners /
Asset Managers

Risk Management / Investment Decisions

Consumers /
NGOs (Civil
Society)

Critical Screening of Companies /

Identification of Problems

Governments

Identification of Contractors for Public

Contracts / Enhancing Market Transparency

Assurance Standards /
Bodies
Cover auditing, assurance/auditing, reporting certification or
advice:
AA1000 AS; Accountability 1000 Assurance Standard; GRI: Global
Reporting Initiative; G3: Sustainability Reporting Guidelines Version
4.0; IAASB: International Auditing and Assurance Standard Board;
IFAC: International Federation of Accountants; ISA: International
Standard on Auditing; ISAE 3000; International Standard on Assurance
Engagement 3000; ISEA: The Institute of Social and Ethical
Accountability.

UNEP, national governments, business and industry associations (e.g.

World Business Council for Sustainable Development and UE Chemical
Industry Council Responsible Care Programme) all involved with advice
on reporting guidelines.

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Mission: to make sustainable reporting

A standard practice for all organizations

Sustainable Reporting is the practice of measuring, disclosing and

being accountable to internal and external stakeholders for
organisational performance towards the goal of sustainable
development

i.e. meet the needs of the present without compromising the ability of
future generations to meet their own need

https://www.globalreporting.org/Pages/default.aspx

Regulation on Non-Financial Reporting

Hard Law
Started in Western Europe in 1970s.
France the law 77/69 of 1977
introduced an obligation to publish
social reports for enterprises with
more than 750 employees; in 1982
this obligation was extended to
enterprises with more than 300
employees.

Soft Law
Global Reporting
Initiative sets out
principles and
indicators that
organizations can use
to measure and
report on their social
and environmental
performance

South Africa: listed companies have to

produce integrated report (since June The third and forth
2010)
versions, the G3/G4
guidelines, were
Denmark: listed and state-owned
launched as free
firms have to report (since January
standards in
2009)
reporting.
UK: British Companies Act requires
listed firms to report (since 2008)

Nestl: a PR Disaster

(March

2010)

http://www.youtube.com/watch?v=2ExNmhDLsIk
http://www.greenpeace.org/international/en/new
s/features/Sweet-success-for-Kit-Kat-campaign/

Discussion in Team
What are the symptoms of the problem at hand?
(Description)

Who are the key agents, their aims/interests and

strategies? (Description + initial analysis)

What are the root-causes of Nestl problem?

(Analysis) (Use the stakeholder analysis to work it
out)

What actions/strategies would you put in place to

solve the problem(s)? (Analysis and
Recommendation)

What happened next

Short term strategy:
Nestle suspended sources from Sinar Mar, the Indonesia supplier
Had talks with Greenpeace to share information on their supply chain and what to do next
Long term strategy:
Have all palm oil supply certified as sustainable by 2015; no deforestation and complete
traceability target by 2020
Medium term strategy:
May 2010 join the Roundtable For Sustainable Palm Oil (made up of suppliers and buyers and
NGOs)
Partnership with Forest Trust, a non for profit organization which had know-how of the supply
chain and auditing
2011 New Post as Global head of digital and social media Peter Blackshaw. He created the
digital accelerated team to monitor and liaise with interested parties 24 hours a day.
2012 Partnership also with Golden Agri Resources the new main supplier of palm oil to
develop a business model based on sustainability principles:
Having a clear source policy, respecting the local and national law, zero palm oil development
on peat and high conservation value land and no exploitation of high carbon stock forest
land

Conclusions
Irresponsibility and synergistic corruption brings to the
forefront the crisis of our historic bloc = we are facing the
collective liability of corporations limited liability.

Political ferment: Civil society, activism and demands for

new rules and new norms including a shift from declaration
of responsibility to corporate accountability

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Conclusions 2
3 management mechanisms to support
accountability = accounting, auditing (3rd party
assurance), and non-financial reporting.

the pressure is still on and the playfield is open,

with a myriad of initiatives, campaigns and
actions of multilateral, UN, NGOs, CSOs,
universities and MNCs etc.
.Our best chance as citizens, workers and
managers is to engage the pessimism of the
intellect keeping alive the optimism of the will