Saturday, July 30, 2011

Harmonization and Control: A Convergence of Soft Corporate Social Responsibility Standards and the Rise of the Toolbox

Over the last decade, corporate social responsibility has become more accepted among investors, non-governmental communities and consumers in developed states.  
 Corporate social responsibility (CSR) has become a fairly well-established concept, with a vast if inconsistent literature developing over the last 15 years. As applied to corporate entities, CSR suggests that organizations can do well by doing good, but there is no single commonly accepted definition. Most would agree that CSR implies something more than corporate philanthropy, and usually refers to a bundling of substantive efforts in the areas of the environment, human rights and labor. For many, the scope of CSR is co-extensive and interchangeable with the "people, planet, profits" mantra of sustainable business practices; others would argue that CSR is closely related to sustainability, but steers clear of the financial viability of the organization that is accepted in "triple bottom line" sustainability thinking. (Ira Feldman, ISO 26000 Social Responsibility Guidance StandardThe INECE Newsletter, Vol. 15 Summer 2007).
As a consequence, there has been a proliferation of corporate social responsibility standards produced by states (as best practices; securities exchanges, non-governmental organizations, public international organizations and hybrid organizations.  Because there is no monopoly on governance power with respect to adherence to these standards, something like a market for standards has developed.  Success is measured not merely by the ability to prod governments into some form of recognition of the standards.  Perhaps more importantly, it is measured by the willingness of companies to adopt the standards, non-governmental organizations to use the standards as a basis for monitoring compliance, information media to presume the standards legitimate  and important in determining the importance of conformity as news items. investors to adopt the standards as a measure of investment quality, and consumers to use information about conformity to the standards to determine their willingness to consume products. 

But competition also produces tendencies to imitate "winners" and avoid "losing" efforts.  That produces a move toward convergence.  In addition, increasing market share and voice within markets produces a tendency toward harmonization of standards.  Lastly, the proliferation of standards and market competition, especially where the taste for standards differ within distinct sectors of the global community  also creates incentives toward divergence, as standards are custom fitted to the needs and tastes of consuming sectors.   See, Larry Catá Backer, Luc Fransen: "Why Do Private Governance Organizations Not Converge?" Law at the End of the Day, June 2, 2011. 

The possibilities of harmonization by organizations with distinct but converging standards are nicely illustrated in the context of the U.N. Global Compact and the ISO 26000: Guidance Standard on Social Responsibility. 
The release of “ISO 26000: Guidance standard on social responsibility” gives a boost to ongoing efforts by the UN Global Compact to establish widespread common understanding of corporate responsibility principles. ISO 26000 and the UN Global Compact are connected by a fundamental belief that organizations should behave in a socially responsible way.

Given the operational reach of the ISO organization, ISO 26000 can help to build local capacity to advance universal principles in business – particularly in developing countries – which is a critical step in mainstreaming the business-so- ciety agenda everywhere and achieving a level global playing field for all businesses.

This short publication provides a high-level overview of the key linkages between the UN Global Compact’s Ten Principles and the core subjects of social responsibility defined by ISO 26000 (human rights, labour practices, the environment, fair operating practices, consumer issues, community involvement). While not an exhaustive review of the numerous areas of alignment between the two initiatives, this publication shows that there is clear consistency – and that all UN Global Compact Principles are included in ISO 26000. (From U.N. Global Compact and International Standard 26000, An Introduction to Linkages Between UN Global Compact Principles and ISO 26000 Core Subjects, 2010).
The UN Global Compact welcomed the new guidance standard and has signed a Memorandum of Understanding with ISO to this effect, and had the Linkages document endorsed by Global Compact Local Networks in 2010.  See, Larry Catá Backer, Harmonizing Transnational Corporate Governance--Communication Among CSR Soft Law Framework Systems, Law at the End of the Day, Jan. 15, 2011.

Yet, there is substantial activity in the standards development and implementation sector beyond public sector activity.  As interesting are private efforts at harmonizing standards through managed amalgamation.  European governance managers have become quite good at the construction of governance "toolboxes" which bring together a host of standards in an organized and directed manner that can then be systematized and organized for use by companies and stakeholders.  One of the more interesting is that put together by organizations representing public-private governance partnerships.
 One is CSR Europe.
CSR Europe is the leading European business network for corporate social responsibility with around 70 multinational corporations and 29 national partner organisations as members. The organisation was founded in 1995 by senior European business leaders in response to an appeal by the European Commission President Jacques Delors. It has since grown to become an inspiring network of business people working at the very forefront of CSR across Europe and globally.

The Largest CSR Network in Europe

CSR Europe’s network of national partner organisations
brings together 28 membership-based, business-led
CSR organisations
from 25 European countries. In total,
the network reaches out to more than 3,000
companies throughout Europe. (From CSR Europe - About Us).

CSR Europe has produced a toolbox integrating CSR frameworks in a way that permits a corporate entity to maximize the utility of these standards for its operations. 

CSR Europe's Toolbox includes information, ideas and advice designed to help companies and their stakeholders address socio-economic and environmental challenges and integrate corporate social responsibility (CSR) into mainstream business practice. The Toolbox is based on the first results of the CSR Laboratories, cross-sectoral business-stakeholder cooperation projects under the umbrella of the European Alliance for CSR.

The first results of the Laboratories were launched in December 2008 as part of CSR Europe's Toolbox. In 2009-2010, CSR Europe's national partners organised a Toolbox Roadshow with events around Europe to present and build upon the outcomes of the Laboratories. (From CSR Europe,  CSR Europe's Toolbox, Equipping Companies and Stakeholders for a Competitive and Responsible Europe).
The toolbox is divided into five parts:  (1) Integrated workplace; (2) Human Capital; (3) (R)Evolutionary Business Models; (4) Sustainable Production and Consumption; (5) Communication and Transparency. (Id.). The toolbox provides a useful window on private sector  approaches to the management and exploitation of CSR in Europe.  It also provides an important window on the assessment by multinational corporations of the expected changing political, social, demographic, cultural and political landscape of Europe over the next several decades.  
The toolbox also provides a powerful means of managing of CSR instruments and standards. Tools can have significant governance effects by the nature of their form and the way in which tools embody meaning by emphasizing some aspects of meaning and reducing the power of others.  The Labour Rights and Responsibilities Guide provides a useful categorization of these tools by type:
  In order to enhance coherence, the selected tools have been classified predominantly according to the guidance material categories used by the Office of the  UN Global Compact. The categories under which each tool is classified are indicated under the heading "type" in the evaluation sheets:  
Benchmarking: These tools provide indicators that serve to measure continuous progress and allow the comparison of performance results with other companies. See e.g. the BITC CR Index (Business in the Community).

General Guidance: The tools provide information about human and labour rights and may highlight specific issues. They may include policy advice or case studies or serve as resource documents. See e.g. the Labour Principles of the UN Global Compact (International Labour Organisation, Office of the UN Global Compact).

Human Rights Compliance Assessment: Compliance Assessments measure the performance of companies against the legal framework of human and labour rights. They can be conceived as self-assessments or conducted by external consultancies. See e.g. Human Rights Compliance Assessment (Danish Institute for Human Rights).

Human Rights Impact Assessment: These tools are specifically designed to help users in assessing and measuring the concrete risks of their business operation or project for corporate stakeholders. They usually contain specific questions for identifying possible interferences with human rights and may give advice on how to mitigate adverse effects. See e.g. IBLF Guide to Human Rights Impact Assessment and Management (International Business Leaders' Forum, International Finance Cooperation, UN Global Compact).

Human Rights Risk Assessment: Risk Assessments measure the potential operational and reputational risks of becoming involved in human rights violations. They help to detect general human rights risks e.g. in a country or region or a certain sector. Compared to human rights impact assessments, they do not guide the company in assessing the specific human rights impact of particular projects or company conduct. See e.g. Country Risk Assessments (Danish Institute for Human Rights), Maplecroft tools (Maplecroft).

Human Rights Training: These tools give, for example, advice on how to conduct successful workshops. See e.g. IPIECA Human Rights Training Toolkit (International Petroleum Industry Environmental Conservation Association). Moreover, trainings can also be part of human and labour rights monitoring systems. See e.g. BSCI process.

Human Rights Reporting and Monitoring: The tools support, for instance, the preparation of a company report. Moreover, specific monitoring and auditing systems such as SA 8000 are equally classified as human rights reporting because they entail regular reporting or auditing obligations. See e.g. SA 8000 process (Social Accountability International). (From "Definition of a LARRGE “tool”).
Each of these forms of implementation can effectively rework the standards to serve the entity utilizing the tool.  True, the framework itself will limit flexibility--the tools cannot be use dot undo the standard, but the tools themselves permit a broad enough range of application that can effect local divergence even within a framework of global convergence.
By serving as the clearinghouse for a mechanics of application, cooperative ventures like CSR Europe can serve as a significantly important consumer of standards and instruments. Consumption function on this scale can have an effect on the shape of the standards developed, or more importantly, those that acquire a larger market share (and thus a greater scope of legitimacy among public and private actors).  The producers of standards will tend to be sensitive to the desires of large scale consumers (or entities that can influence consumption) in producing their standards. More importantly, consumer clearinghouses like CSR Europe can have an important effect on retail consumption--that is on the way in which end users will approach CSR and the consumption of CSR standards--determining the way that these standards are understood and applied.  Large scale application (and the control of that application) can also have an affect on the understanding of the standards and an acceptance of what constitutes acceptable implementation.  At its very best, the toolbox itself can become the standard, without changing a word of the instruments from which the standards are derived. This is convergence of a completely different sort, on ein which practical implementation might well affect the meaning of the substantive standards sought to be applied..

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