1 Corporate social principles and actions. Many TNCs also publish a separate annual responsibility report and responsibility devote parts of their website to matters of CSR. Franziska Bieri HISTORICAL DEVELOPMENTS OF CSR

D EFINING CORPORATE SOCIAL CSR is not a new phenomenon. The emergence RESPONSIBILITY of CSR was most significantly defined by grow­ ing interest in responsible business behavior in Corporate (CSR) refers to the United States in the 1960s and 1970s. The business activities that take into account their context of various social movements, including social and environmental impacts. Socially the civil rights, antiwar, and new left move­ responsible companies adopt voluntary codes ments, shaped changes in expectations toward of conduct and promote business practices that TNCs. The divestment from South Africa cam­ are sustainable with regard to nature and the paign, seeking to end the regime by social fabric of local communities. CSR economically isolating South Africa, is particu­ requires the corporation to consider its impact larly noteworthy in the development of CSR on, and responsibility toward, a more broadly norms. One of the key instruments put forward defined group, adding to owners by the campaign was the Sullivan Principles. or shareholders its workers, consumers, the Written in 1977 by Rev. , those concern for the larger public, and the planet. principles required corporations to treat their Four kinds of responsibilities have been workers equally, irrespective of their race. The defined as encompassing CSR: economic, legal, goal was to pressure US companies not to con­ ethical, and philanthropic (Carroll 1979, 1991). duct business in South Africa, where these The economic responsibility of creating profits principles were violated under apartheid rules. is considered the foundation on which all Twenty years later, Rev. Sullivan and former other responsibilities rest. Equally fundamental UN Secretary General Kofi Annan introduced is that companies are law‐abiding and follow the Global Sullivan Principles, which are societal definitions of right and wrong as laid endorsed by about 100 companies worldwide. out in the legal code. The ethical responsibility Similarly, the socioeconomic and political of ­corporations is to avoid harm and to conduct contexts of the 1980s helped shape how compa­ business in a fair and just way. Ethical duties nies defined their goals and responsibilities include following society’s norms and doing toward society. The continued growth of CSR what is expected as opposed to doing merely principles in the United States can be attributed what is required. Finally, good corporate to limited state provisions in the areas of health ­citizens assume philanthropic responsibilities: care and pensions. While in Europe govern­ doing what is desired by society, including con­ ments were providing such services, larger US tributing resources to the community and ame­ companies increasingly extended these social liorating harm inflicted by the company’s benefits to their employees and families (Vogel conduct. These four areas of CSR are reflected 2005). In addition, anti‐corporate sentiments in corporate codes of conduct and responsibil­ became more pronounced in this “Decade of ity statements by corporations. The majority of Greed” (1980s), and corporate wrongdoings large transnational corporations (TNCs) devote also fed those attitudes. The most significant a section in their annual reports to CSR corporate disaster was Union Carbide’s Bhopal

The Wiley-Blackwell Encyclopedia of Globalization, First Edition. Edited by George Ritzer. © 2015 Blackwell Publishing Ltd. Published 2015 by Blackwell Publishing Ltd. 2 explosion, which killed thousands of people finance. Moreover, consumers reward respon­ in 1984. The Nestlé boycott, protesting the sible companies. Therefore firms, especially in ­promotion of infant formula over breastfeed­ retail where reputation vis‐à‐vis consumers ing to mothers in poor countries, also raised matters, can benefit from being responsible. awareness of unethical behavior by a global At the same time, irresponsible companies conglomerate. can suffer financially due to a loss of reputation The 1990s saw tremendous growth of CSR and the declining confidence of consumers, norms, including the proliferation of global workers, and investors. Irresponsible compa­ reporting standards, which are further dis­ nies are targeted by consumer campaigns that cussed in this entry. While in previous decades publicize ethical and environmental violations corporate giving was largely framed in terms of and can pose a threat to corporate well‐being. philanthropy and “doing good,” in the 1990s Examples are the anti‐sweatshop movement arguments of morality and profits blended and targeting Nike, Levis, and Gap or anti‐GMO “doing well by doing good” became a leitmotif. (genetically modified organism) campaigns CSR increasingly became defined in terms of accusing agribusinesses, like Monsanto, of cre­ the – people, planet, profits – ating “frankenfoods.” Awareness campaigns or linking corporations’ responsible behavior with boycotts are particularly problematic for com­ their profit motive. panies with brand name recognition. Such anti‐corporate campaigns frequently lead to the adoption of corporate codes of conduct and MOTIVATIONS FOR CSR a more pronounced commitment to CSR in attempts to restore the company image. There is a range of motivating factors for Particular events such as environmental adopting ethical and philanthropic responsi­ disasters can similarly trigger the adoption of bilities. At times, the adoption of voluntary CSR. A case in point is the Exxon Valdez oil CSR principles is a preemptive strike to avoid spill in 1989. This major natural disaster put more heavy‐handed state regulation, which into motion the creation of the Coalition for would likely be more far‐reaching, requiring Environmentally Responsible Economies and . In other (CERES) and an environmental corporate code instances, altruistic business leaders or social of conduct, the CERES principles. The 10‐ entrepreneurs support and pursue causes that point code has been endorsed by over 70 com­ they genuinely care about. Companies like The panies and CERES has subsequently launched Body Shop, Ben and Jerry’s, or Patagonia have the Global Reporting Initiative (GRI), which to emerged based on responsible principles, date is the most prominent global framework developing “ethical” brand names. These com­ to measure economic, environmental, and panies have frequently performed quite well social performance. The adoption of codes of and blurred the line between altruism and self‐ conduct, even if initially aimed at restoring interest. This, in part, has helped spur CSR by legitimacy and public trust, can translate into associating it with financial profits and mate­ expansive institutional CSR endeavors. rial success (Vogel 2005). Empirical evidence on whether or not CSR Although the empirical evidence on it is not adds to the bottom line is inconclusive (e.g., conclusive, that CSR makes business sense has Porter & Kramer 2006; Margolis et al. 2007), become the quintessential justification for with some research showing extensive finan­ engaging in responsible behavior. What is cial benefits and others reporting negative argued is that responsible companies benefit effects of CSR on financial performance. Most from attracting better workers and retaining studies conclude either no significant relation­ them. Similarly, investors react positively, so ships or moderate positive effects of CSR on that responsible firms can get greater access to profits. Debates on profitability withstanding, 3

fueled by globalization, CSR has emerged Commission’s White Paper Communication on prominently on the agenda of TNCs, states, CSR and the creation of the European Alliance international organizations, and nongovern­ for CSR in 2006. The UN Global Compact, mental organizations (NGOs). established in 2000 by Kofi Annan, involves corporate and civil society actors and specifies CSR principles in the areas of human rights, GLOBALIZATION AND CSR labor, the environment, and anticorruption. To date, over 8000 corporate entities have joined Globalization has helped spur the spread of the initiative. Reinforcing the Global Compact, CSR through two mechanisms. First, economic the United Nations Human Rights Council globalization and neoliberal expansion created endorsed a set of Guiding Principles on Business a fertile environment for CSR. The growing and Human Rights developed by John Ruggie global reach of TNCs as well as their scope and in 2011. size of economic activities around the world There are numerous other significant created the need for new regulations. But global CSR accounting and reporting stan­ increasingly those activities fell outside the dards that have been developed by NGOs: direct scope of states’ regulative mechanism. AccountAbility’s AA1000; the Global Report­ Moreover, global economic institutions like the ing Guidelines; Social Accountability Inter­ WTO liberalized economic activity. This national’s SA 8000; or the International absence of a legally binding global regulative Standardization Organiza­tion’s ISO 26000. In framework on social or environmental matters addition to creating and implementing CSR facilitated the growing prominence of volun­ standards, NGOs have also served as monitors tary CSR. At the same time, economic globali­ of those standards and as corporate watchdogs zation, the growth of TNCs, and overall more generally. Business NGOs and global neoliberalism have led to the emergence of trade associations too have been important in counter‐globalizations, oppositional views to promoting CSR principles across industries. capitalist logics, and the condemnation of Most notably, the International Business TNCs in particular. Blaming TNCs for various Leaders Forum (IBLF), founded in 1990 by the social problems and ills helped redefine corpo­ Prince of Wales, focuses on advancing CSR rate responsibilities in the age of globalization. practices in emerging economies. Second, globalization has bolstered global Jointly, these global governance efforts creat­ organizational structures, communication net­ ing voluntary guidelines to corporate behavior works, and global consciousness. Via these cul­ facilitate the continued growth of CSR norms tural and political processes, CSR norms have around the world. TNCs and their managers increasingly become institutionalized globally. are taught to value CSR as a significant compo­ A growing number of international organiza­ nent of their corporate activities and are tions promote CSR by creating, disseminating, instructed on how to become more moral and and implementing new standards on how to ethical executives. Despite this significant conduct business. For instance, the OECD’s growth of CSR‐related institutional efforts, CSR Guidelines for Multinational Enterprises, ini­ norms and practices are not uncontroversial. tially created in 1976 and most recently revised in 2011, define global CSR principles and stan­ dards. The Tripartite Declaration of Principles DEBATING CSR concerning Multinational Enterprises and Social Policy was adopted by the International Labour CSR is by no means an uncontested phenome­ Organization in 1977 and was updated in 2006. non. There is a wide range of arguments made The EU has formalized its commitment to by CSR supporters on its beneficial effects. CSR with the publication of the European Some perceive the potential benefits to society 4 and the planet as quite extensive, while less SEE ALSO: A ccountability; Consumer move­ optimistic proponents are skeptical about the ments; Economic globalization; ; extent of positive impacts and the voluntary Multinational corporations; Neoliberalism; nature of CSR. Still others view voluntary CSR Sustainability; Sweatshops; Transnational corpo­ codes of conduct as a better alternative to more rations; Transparency. heavy‐handed state enforcement. But critics suggest that CSR has negative REFERENCES consequences for society. On the one hand, CSR skeptics argue that by jeopardizing the Carroll, A.B. (1979) A three‐dimensional concep­ most essential corporate responsibility – prof­ tual model of corporate performance. Academy of Management Review 4 (4), 497–505. itability – companies end up doing more harm Carroll, A.B. (1991) The pyramid of corporate social than good. A business’s key function is to cre­ responsibility: toward the moral management of ate profits for its shareholders, and losing sight organizational stakeholders. Business Horizons of this goal harms productivity and economic July/August, 39–48. output. Based on this logic, former OECD chief Henderson, D. (2001) The case against “corporate economic officer David Henderson (2001) social responsibility.” Policy 17 (2), 28–32. argued that as a consequence CSR inflicts soci­ Margolis, J.D., Elfenbein, H.A. & Walsh, J.P. (2007) etal harm, including lower incomes, less Does It Pay to Be Good? A Meta‐Analysis and employment, and more poverty. Redirection of Research on the Relationship While these critics object to CSR because it between Corporate Social and Financial hampers the bottom line, there are those who Performance. Working Paper, Ross School of Business, University of Michigan. lament precisely the opposite: the problem Porter, M.E. & Kramer, M.R. (2006) Strategy and with voluntary corporate responsible actions, society: the link between competitive advantage they argue, is that they are profit driven and and corporate social responsibility. Harvard not based on genuine ethical and moral moti­ Business Review 84 (12), 78–92. vations. CSR commitments by companies are Vogel, D. (2005) The Market for Virtue: The Potential smokescreens and codes of conduct are self‐ and Limits of Corporate Social Responsibility. serving promises that are rarely fulfilled. In Brookings Institution Press, Washington, DC. addition, skeptics argue that CSR distorts real­ ity because companies may do many signifi­ FURTHER READING cant irresponsible things in the pursuit of profit, while touting their image with minor Campbell, J. (2007) Why would corporations behave responsible acts. in socially responsible ways? An institutional the­ Particularly because it is difficult to quantify ory of corporate social responsibility. Academy of Management Review 32 (3), 946–967. or empirically determine the precise effects Clarkson, M.B.E. (1995) A stakeholder framework of CSR, this debate will likely continue. for analysing and evaluating corporate social per­ Nevertheless, given the cultural, political, and formance. Academy of Management Review 20 institutional efforts regarding CSR, corpora­ (1), 92–117. tions will find it increasingly difficult to ignore Ruggie, J.G. (2013) Just Business: Multinational social and environmental responsibilities, forgo­ Corporations and Human Rights. Norton Global ing the endeavor of good corporate citizenship. Ethics Series. W.W. Norton & Company, New York.