The issue of corporate social responsibility (CSR) is receiving increased attention again as a result of the Agenda 2030 for Sustainable Development. Yet the concept and its implementation are controversial.
Companies’ voluntary commitments to design their operations sustainably in line with the CSR framework are the subject of controversy. In Germany, this concept is often characterised as “greenwashing” and the accompanying activities criticised as “inadequate.”
To begin with, we have to remember how the idea of CSR came into being. Environmental movements and social actors, primarily from industrialised countries, criticised transnational companies working in developing countries for the production and working conditions there, and the negative impacts on the environment. The criticism was also directed at governments, which needed to take action to prevent, for example, the complete pollution of rivers or the air. The UN secretary-general then pushed forward the UN Global Compact, which was intended to achieve coordinated voluntary commitments for increased sustainability on the part of the participating states and the large firms. This intensified the international debate and increased the pressure on the companies to act.
What was the reaction? Did industrialised and developing countries react differently?
The developing countries, and particularly the aspiring emerging economies, attempted to maintain and strengthen their sovereignty. They wanted to fend off international influence and especially the influence of non-state organisations regarding the establishment of specific norms. This resulted in a contradiction. On the one side, pressure was being applied, and international companies were often very willing to take action in the direction of CSR. But on the side of the governments in the more important developing countries, this was viewed with much scepticism, because these governments feared an intervention in their affairs by international organisations and large companies.
Why this scepticism?
Due to technological factors and workforce training, companies in developing countries are generally less competitive than similar enterprises in industrialised countries. However, they can compensate for this with lower wages, increased working hours, and fewer environmental-protection costs. All the things that are important factors in sustainable production here – renewable energy, the reduction of water pollution, and so on – result in increased production costs under the conditions in developing and emerging economies, at least over the short to middle term.
In the special issue of the International Journal of Business Governance and Ethics which you edited with Prof. Joachim Betz, the two of you write about a “hidden protectionism” in such contexts.
Protectionism means that duties make imported goods more expensive and thus increase the competitiveness of domestic goods. CSR measures would mean that products from developing countries would become more expensive relative to products from industrialised countries, and less competitive as a result. This would therefore be a form of protectionism – not protectionism in the form of duties, but a rise in the cost of production through sustainability-oriented policy. Ultimately, though, it has the same effect.
How important is CSR in the implementation of the Agenda 2030?
Agenda 2030 imposes responsibilities on all of us – as citizens and as consumers. For example, when consumer demand for organically grown food increases, companies’ interest in producing it increases. If we want to achieve the sustainable development goals, this can’t take place through government regulations only; rather, it has to be advanced by all of the actors involved. This requires a change in the overall normative system, and CSR is of course part of this. The more that CSR becomes a factor in competitiveness and the more that customers positively reward companies for being active in this area, the more worthwhile it is for companies to adopt such measures.
Publication: Prof. Dr. Joachim Betz & Prof. Dr. Wolfgang Hein “Corporate Social Responsibility, Transnational Norm-Building and Emerging Economies”, special issue of the 'International Journal of Business Governance and Ethics', Vol.10 Issue 3/4, 2015.