New Paper Posted: "China’s Corporate Social Responsibility With National Characteristics: Coherence and Dissonance With the Global Business and Human Rights Project"

(Pix (c) Larry Catá Backer 2014))

Corporate social responsibility, both in its traditional forms and in its current international form as as species of human rights, has become an important issue of corporate governance both in the national and international spheres.But the discourse, and the premises underlying it, are usually based on Western models of corporate governance and the structuring of political states and public order.  While those premises are powerful, and shared among a large number of states, both powerful and substantially less so, they are not shared by all states. 

I have posted a a new paper to the Social Science Research Network (SSRN), China’s Corporate Social Responsibility With National Characteristics: Coherence and Dissonance With the Global Business and Human Rights Project, which considers Chinese approaches to CSR and to its current manifestation in the form of the international business and human rights project.  Those approaches highlight the sometimes substantial differences in foundational premises underlying the global discourse on business and human rights, and the consequences, for states that do not share global premises precisely, for the CSR programs.    While many of the objectives of human rights CSR tends to be similar, there are some substantial differences--especially with respect to the nature of remedies and the role of states.

The abstract and Introduction to the paper follow.

China’s Corporate Social Responsibility With National Characteristics: Coherence and Dissonance With the Global Business and Human Rights Project

Larry Catá Backer

Abstract: This chapter seeks to show how the qualities of social and institutional organization and political culture of China has affected way in which Chinese corporations approach the issue of CSR in general and CSR based human rights responsibilities in particular. Part I examines the global context in which Chinese CSR is framed. Part II analyzes the political context in which CSR operates in China, and the socio-political culture that shapes CSR choices. Notions of socialist modernization, economic development and the importance of building social, economic and political structures with Chinese characteristics largely shape Chinese policy, drive Chinese administrative institutions and shape the context in which Chinese enterprises approach CSR issues. CSR, like Chinese state policy, then, focuses on issues of economic development and prosperity rather than on issues of civil and political rights. Part III then considers the effects of these substantive choices on the operationalization of CSR in China. In China the obligations of both state and enterprise are understood in terms of institutional duty to people rather than in terms of individual rights that may be asserted against institutions. That shapes both the approaches to remediation and the relationship between the state and enterprise in issues of CSR compliance. That seamless connection between (1) substance (tied to socialist modernization) and operationalization (tied to the political premise that the protection of the liberties of individuals are an obligation of the state rather than a right located within an individual) and (2) the state, the Communist Party and business enterprises, frames the “Chinese Characteristics” of CSR It is only by understanding this close connection between state policy and corporate responsibility that one can begin to understand the way in which CSR is internalized within China, and provides an approach for translating global human rights discourse into the Chinese context more successfully.

I. Introduction: Towards a Global CSR Project



The last generation has seen the emergence of corporate social responsibility (CSR) as an approach to corporate governance within systems of law—domestic, international and transnational[1]—and as an important element in the structuring of non-state governance systems.[2] Its emergence has paralleled the rise of globalization as a mechanism for trade[3] and, more importantly, as a stress element in the prior system of governance grounded in the idea that everything was to be ordered within the territorial boundaries of states, and that states were to manage their internal orders through law.[4] Globalization has in turn shed light on the resulting bifurcation of governance[5] between, on the one hand national and international political orders grounded on law,[6] and on the other the rise of functionally differentiated[7] transnational governance systems in the social sphere.[8] The result has been to produce at least three sources of governance from out of which CSR is transposed into the habits and behaviors of enterprises—national, international and private.[9]



The normative element of CSR has also undergone some refinement since the third quarter of the 20th century. Though still subject to heated controversy, there is something of a consensus about the scope of CSR at a general level. CSR refers to the furtherance of social interests, and to the factoring of the effects on such social interests of corporate decisions, beyond a narrow and traditional focus on the maximization of shareholder or enterprise interest as the core basis for enterprise decision-making,[10] and as the foundation for determining the fulfillment, by corporate directors, of their obligations to enterprise and owner.[11] Central to this CSR focus was the objective of substituting a stakeholder for a shareholder (or enterprise) theory of welfare maximization[12] and the common good for profit[13] as the foundation of corporate operation. That substitution could occur within domestic legal orders, or be imposed by international treaty, or developed through the formation of customary international law, or otherwise embedded in the social norm governance framework of enterprises in the transnational sphere. This approach recognizes the importance of both a legal and social license to operate as a basis for the legitimacy of corporate activity.[14]



That normative consensus has also undergone substantial development, especially since the start of the 21st century. At least among many of the larger multinational enterprises and the international organizations that have begun to embrace the project of CSR, there has been a move away from the premise that CSR sits above and beyond the core notion of profit making atop of which are placed higher value but general notions of legal, ethical and philanthropic responsibilities (the pyramid, moral or social obligation approach and the like).[15] In its place is a conceptual scheme grounded on an assumption that CSR, that is that corporate responsibility, must evolve in parallel with the development of the state duty to protect its inhabitants, and that this evolution is reflected in the emerging consensus and structures of international law and norms along with the transnational private or hybrid standards that build on this consensus.[16] Thus in place of national pyramids of responsibility, an international legal-normative framework has emerged as the foundation for approaching the responsibilities of enterprises in the social, cultural, economic, civil and political sphere, and increasingly, in the environmental sphere as well.[17] As a consequence, and certainly with increasing vigor since the start of the second decade of the 21st century, the discussion of the characteristics of CSR have revolved around the human rights responsibilities of enterprises (along with the state duty to protect these human rights through their domestic legal orders) and its implementation methodologies in disclosure, market regulation, international law, non-state governance systems, and national law.[18] This movement might be said to have been crystalized with the endorsement, in June 2011, of the U.N. Guiding Principles for Business and Human Rights,[19] the culminating product of a project led by John Ruggie as Special Representative to the U.N. Secretary General on human rights and transnational corporations and other business enterprises.[20] One of its core underlying premises is that both state’s in the fulfillment of their duty to protect individuals resident in their territories and enterprises in their “social” responsibilities ought to be guided by developing international and transnational norms and standards.[21]



Most of these developments have occurred in and around the cluster of critical actors centered within developed states—the large multinational enterprises and their trade groups, the global civil society organizations mostly headquartered in developed states and representatives from developed states as well, led principally by European States, with the United States a sometimes and usually reluctant participant. These discussions tend to center on the premises underlying both national approaches to business responsibility beyond law (the social, civil, and cultural dimensions)[22] and the baseline assumptions of legitimate organization of state and legal orders within free market globalization that tend to take as their model the operating premises of developed Western states and their political ideologies.



Still, virtually every state has signed on to the current project of corporate responsibilities grounded in human rights.[23] But none Western states are sometimes different in some respects in their social, political and cultural organization, and these differences may produce substantially different approaches to both CSR and its internationalization in their domestic legal orders.[24] Though all states may share common objectives, generally understood, that path to those objectives may not be entirely compatible with the operational premises underlying CSR and business and human rights projects emerging from developed states.[25] It is that difference that has produced a certain tension between the vanguard elements of the business and human rights project, on the one hand, and important developing states.



China is a particularly important example of both harmonization and tension. It is a state whose political organization is founded on Marxist Leninist principles and which is organized on party-state principles.[26] Its vanguard Chinese Communist Party has developed a strongly instrumental approach to governance grounded in principles of socialist modernization[27] that aims to produce a moderately well off and harmonious society.[28] It is focused on scientifically developing[29] a legal and normative system that is compatible with global norms but which have distinctive Chinese characteristics.[30] It has a strong state sector though it is committed to globalization and its basic premises.[31] China was among the states that endorsed the Guiding Principles, but it is also committed to developing CSR with a sensitivity to its own internal social, civil, political and cultural context.



The remainder of this chapter will consider China’s place in the global CSR movement, and its relationships with emerging consensus on the responsibilities of enterprises. It will suggest that while the core objectives of the global CSR movement, especially in its modern and transnational human rights (social, economic, civil and cultural rights oriented, including environmental rights) are compatible with the Chinese governance system, the distinct governing ideology of China poses some difficulties of “translation”. Thus, though CSR is not generally alien to Chinese political culture, nor to the culture of business operations, the language of CSR as developed in the West may be. But more importantly, the cleavages between Chinese and Western-internationalist human rights oriented CSR may be explained, in some respects, by the difference in approach to governance.[32] While Western CSR is largely grounded in an individual rights oriented approach that seeks to constrain state power, Chinese CSR musty necessarily be grounded on the duty of the state (and the enterprise) to ensure individual welfare that seeks to expand administrative state power in the furtherance of CSR. Part II, which follows, briefly suggests the operational context within which CSR is received and understood. State policy operationalizing the CCP’s political commitment to socialist modernization and the building of socialist democracy[33] largely shape Chinese policy, drive Chinese administrative institutions and shape the context in which Chinese enterprises approach CSR issues. CSR, like Chinese state policy, then, focuses on issues of economic development and prosperity rather than on issues of civil and political rights. Part III then considers the Chinese approach to CSR and suggests points of harmony and tension with the global CSR agenda. To understand the normative framework within which Chinese policy is expressed, constructed and implemented, it is important to understand the framework from which it arises. That framework is not identical to the one used in the West. Though the functional results may often be the same, the differences can best be understood as arising from a difference in normative perspective.



NOTES:


[1] Discussed in Larry Catá Backer, Multinational Corporations, Transnational Law: The United Nation’s Norms on the Responsibilities of Transnational Corporations as a Harbinger of Corporate Social Responsibility as International Law, 37 Columbia Human Rights Law Review 287-389 (2006).

[2] See, e.g., Gunther Teubner, “Societal Constitutionalism: Alternatives to State-Centered Constitutional Theory?”, in Constitutionalism And Transnational Governance, Christian Joerges, Inge-Johanne Sand and Gunther Teubner, eds., Oxford Press, pp. 3-28, 2004; Saskia Sassen, Local Actors in Global Politics, Current Sociology 52(4): 649–670 (July 2004).

[3] Compare Thomas L. Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Farrar, Straus and Giraux, 2000) with Joseph E. Stiglitz, Globalization and Its Discontents (New York: WW Norton 2003).

[4] Discussed in Larry Catá Backer, Governance Without Government: An Overview, in Beyond Territoriality: Transnational Legal Authority in an Age of Globalization 87-123 (Günther Handl, Joachim Zekoll, Peer Zumbansen, editors, Leiden, Netherlands & Boston, MA: Martinus Nijhoff, 2012)

[5] Discussed in Larry Catá Backer, The Structural Characteristics of Global Law for the 21st Century: Fracture, Fluidity, Permeability, and Polycentricity, 17(2) Tilburg Law Review 177-199 (2012).

[6] Discussed in Larry Catá Backer, Private Actors and Public Governance Beyond the State: The Multinational Corporation, the Financial Stability Board and the Global Governance Order, 18(2) Indiana Journal of Global Legal Studies 751 (2011)

[7] Discussed in Larry Catá Backer, Multinational Corporations as Objects and Sources of Transnational Regulation, 14 ILSA Journal Of International & Comparative Law 499-523 (2008).

[8] Discussed in Larry Catá Backer, Transnational Corporations’ Outward Expression of Inward Self-Constitution: The Enforcement of Human Rights by Apple, Inc.,, 20(2) Indiana Journal of Global Legal Studies 805-879 (2013).

[9] See, e.g., Adrian Cadbury, Corporate Social Responsibility, Twenty-First Century Society: Journal of the Academy of Social Sciences 1(1):5-21 (2006).

[10] Cf. Milton Friedman “The Social Responsibility of Business is to increase its Profits”, New York Times Magazine September 13th, 32-33, 122, 126 (1970).

[11] See, e.g., Elisabet Garriga and Domènec Melé, Corporate Social Responsibility Theories: Mapping the Territory, Journal of Business Ethics 53(1-2);51-71 (August 2004). Consider as an early example of the conventional late twentieth century approach to CSR Archie Carroll’s pyramid of social responsibility, which the economic responsibilities of the enterprise (be profitable) are constrained by three levels of the enterprise responsibilities—legal (obey the law), ethical (do the right thing), and philanthropic (contribute to the community). See, Archie B. Carroll, The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, Business Horizons 34(4):39-48 at 42 (July/August 1991).

[12] See, e.g., James E. Post, Lee Preston, and Sybille Sachs, Redefining the Corporation: Stakeholder Management and Organizational Wealth (Stanford University Press, 2002); Antonio Argandoña, The Stakeholder Theory and the Common Good’, Journal of Business Ethics 17, 1093–1102. (1998).

[13] See, e g., Jacob Dahl Rendtorff, Responsibility, Ethics and Legitimacy of Corporations, (Copenhagen Business School Press, 2009); Domènec Melé D. “Not Only Stakeholder Interests. The Firm Oriented toward the Common Good”, in S.A. Cortright and M.J. Naughton (eds.), Rethinking the Purpose of Business, Notre Dame, IN, University of Notre Dame Press, 190-214 (2002).

[14] See, e.g., James E. Post, Lee Preston, and Sybille Sachs, Redefining the Corporation: Stakeholder Management and Organizational Wealth (Stanford University Press, 2002).

[15] But note that there remains an influential group of CSR stakeholders who tend to cling to the older view. See, e.g., U.S. Congressional Human Rights Caucus. Davis et al., The Responsibility Paradox: Multinational Firms and Global Corporate Social Responsibility, www.isr.umich.edu/carss/projects/davis-whitman-zald1013.pdf (“achieving commercial success in ways that honor ethical values and respect people, communities, and the environment”, Id., at n.1).

[16] Discussed in Larry Catá Backer, Realizing Socio-Economic Rights Under Emerging Global Regulatory Frameworks: The Potential Impact of Privatization and the Role of Companies in China and India, 45(4) The George Washington International Law Review 615-680 (2013).

[17] John H. Knox, Human Rights Obligations to Protect the Environment, Human Rights Council, 25th Session (11 March 2014), available http://lcbackerblog.blogspot.com/2014/05/may-newsletter-from-john-knox.html.

[18] The recent interventions of the European Commission are instructive.

The Commission puts forward a new definition of CSR as “the responsibility of enterprises for their impacts on society”. Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of:–maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large;–identifying, preventing and mitigating their possible adverse impact.

See, Communication From The Commission To The European Parliament, The Council, The European Economic And Social Committee And The Committee Of The Regions, A renewed EU strategy 2011-14 for Corporate Social Responsibility COM(2011) 681 final, Brussels, Oct. 25, 2011, at p. 6, ¶3.1. Available http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0681:FIN:EN:PDF.

[19] U.N. Guiding Principles on Business and Human Rights, HR/PUB/11/04 (Geneva and New York, 2011). Available http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf.

[20] U.N. Office of the High Commissioner for Human Rights, Special Representative of the Secretary-General on human rights and transnational corporations and other business enterprises. Available http://www.ohchr.org/EN/Issues/Business/Pages/SRSGTransCorpIndex.aspx. See John R. Ruggie, Just Business: Multinational Corporations and Human Rights (New York: WW Norton, 2013).

[21] See, e.g., European Commission, A renewed EU strategy 2011-14 for Corporate Social Responsibility, supra. Pp. 6-7.

[22] This discussion extends into those areas where the relationship of business to government are sometimes inverted, a state of affairs mad possible under the logic of economic globalization and the embrace of notions of regulation as a managerial and disciplinary tool rather tan an integrated system of command. See, e.g., Katharyne Mitchell and Katherine Beckett, Securing the Global City: Crime, Consulting, and Ratings in the Production of Urban Space, Indiana Journal of Global Legal Studies 15:75-99 (2008).

[23] The Guiding Principles on Business and Human Rights were endorsed by all state party members of the U.N. Human Rights Council.

[24] The discussion has been particularly acute in the controversy over the existence and nature of Asian values as a variation or distinct species of human rights in contrast to conventional human rights discourse and norms, which in some quarters is understood as a western Project. See, e.g., Jack Donnelly, Human Rights and Asian Values: A Defense of “Western” Universalism, in Critical Perspectives on the “Asian Values” Debate 60-87 (Joanne R. Bauer, Daniel A. Bell, eds., Cambridge University Press, 1999); Jack Donnelly, The Relative Universality of Human Rights, Human Rights Quarterly 29(2):281-306 (2007).

[25] Discussed in Larry Catá Backer, Private Actors and Public Governance Beyond the State: The Multinational Corporation, the Financial Stability Board and the Global Governance Order, 18(2) Indiana Journal of Global Legal Studies 751 (2011).

[26] Discussed in China, State Council, White Paper on China’s Political Party System, available http://www.china.org.cn/english/news/231852.htm#. See also, Zhining Ma, The Structure and Roles of China’s Party-State System in Industrial Relations: An Updated Review, China: An International Journal 7(2):370-384 (2009), Ming Xia, The Communist Party of Chinas and the ‘Party-State’, The New York Times, http://www.nytimes.com/ref/college/coll-china-politics-002.html.

[27] “Modernization is a comprehensive and systematic process that includes all aspects of economic and social development.” Liu Yunshan, Working Out a Path of A Socialist Modernization with Chinese Characteristics, Quishi Journal (English edition) Vol. 3(2) April 1, 2011. Available http://english.qstheory.cn/politics/201109/t20110924_112568.htm.

[28] “Chinese President Hu Jintao has instructed the country's leading officials and Party cadres to place "building a harmonious society" at the top of their agenda. . . . What are the main characteristics of a harmonious society? It will put people first and make all social activities beneficial to people's subsistence, enjoyment and development. In a harmonious society, the political environment is stable, the economy is prosperous, people live in peace and work in comfort and social welfare improves.” Harmonious Society, The 17th National Congress of the Communist Party of China, September 29, 2007. Available http://english.people.com.cn/90002/92169/92211/6274603.html.

[29] See, Joseph Fewsmith, Promoting the Scientific Development Concept, China Leadership Monitor, No. 11 (Summer 2004) (“The idea behind the scientific development concept—but not the term itself—was endorsed by the Third Plenary Session of the 16th Central Committee, which convened in Beijing on October 11–14, 2003. The plenum decision did say that it was necessary to “take people as the main thing [yiren weiben], establish a concept of comprehensive, coordinated, sustainable development, and promote comprehensive economic, social, and human development.” This sentence has since been invoked by Chinese media as the locus classicus of the idea of scientific development.” Id., 1-2) Available http://media.hoover.org/documents/clm11_jf.pdf

[30] See, e.g., Hu Jingtao, Report to the 18th National COngerss of the Communist Party of China, Nov. 8, 2012. available http://english.people.com.cn/90785/8024777.html (“We have strived to ensure and improve the people's wellbeing, promoted social fairness and justice, worked to build a harmonious world, and strengthened the Party's governance capacity and advanced nature. We have thus upheld and developed socialism with Chinese characteristics from a new historical starting point.” Id., at II)

[31] See, The USA China Law Group, Western and Chinese Perspective of Corporate Social Responsibility (2008) (“There are two key differences between CSR with Chinese Characteristics and the western idea of CSR. First, CSR in China has largely been approached through a mandatory imposition by the government. . . . The second is the concept of ‘social harmony.’”), available http://www.usachinalaw.com/blog/article-resources/western-and-chinese-perspective-of-corporate-social-responsibility/.

[32] See, The USA China Law Group, Western and Chinese Perspective of Corporate Social Responsibility (2008) (“There are two key differences between CSR with Chinese Characteristics and the western idea of CSR. First, CSR in China has largely been approached through a mandatory imposition by the government. . . . The second is the concept of ‘social harmony.’”), available http://www.usachinalaw.com/blog/article-resources/western-and-chinese-perspective-of-corporate-social-responsibility/.

[33] On socialist democracy, see Hu Angang, China’s Collective Presidency (Springer 2013), discussed in Larry Catá Backer, Crafting a Theory of Socialist Democracy for China in the 21st Century: Considering Hu Angang's (胡鞍钢) Theory of Collective Presidency in the Context of the Emerging Chinese Constitutional State (May 15, 2014). Available at SSRN: http://ssrn.com/abstract=2432393.