Briefing Paper No. 3
APRIL 2002 Towards Global Corporate Social Responsibility Malcolm Keay
As the 'battle at Seattle' reminded us, attitudes towards trade liberalization and globalization are polarized. Are they forces for good or evil? Do they benefit economies by generating growth and employment, promoting development and transferring skills? Or do they destroy the environment and undermine local communities without supplying a sustainable alternative? At international governmental level such questions are being grappled with in the new trade round emerging from the World Trade Organization (WTO) discussions in Doha. Can trade liberalization be made compatible with sustainable development? If not, the whole process of globalization may increasingly be called into question.
The issue engages everyone with an interest in international development, including companies and civil society as a whole as well as governments. Increasingly, companies are recognizing that they have a wider responsibility to the communities within which they operate – Corporate Social Responsibility (CSR). Whether the impacts of globalization are positive or negative will depend in part on the way in which companies respond to this challenge. This paper discusses current developments in this area and considers where they are taking us. It draws on discussion at the RIIA conference on 'Corporate Social Responsibility - From Words to Action' held at Chatham House in October 2001. BRIEFING PAPER 2 Towards Global Corporate Social Responsibility
this is often completely distinct from the company's main business Corporate Social Responsibility: activities. concepts, development and issues Much more difficult is what might be called 'filling the Corporate Social Responsibility is not a new concept. middle ground' – activities such as translating the high- Some companies have always acknowledged a wider level principles into regulations and standards, responsibility towards the community. However, broadly management systems and incentives, or monitoring and speaking, such activities have tended in the past to reporting arrangements within the business. Yet it is come under two general headings: only if this middle ground can be filled effectively that CSR will become a genuine part of corporate culture l Paternalism: companies have often felt a responsibility to and influence its day-to-day decision-making. take care of their employees, or perhaps it would be more accurate to say that company owners have often felt such a responsibility. There can be a variety of motives for engaging with Sometimes the impulse has been essentially feudal – that of the the CSR agenda and uncertainty about what it means. lord for his peasants – and sometimes religious and moral, but still The starting point is the core concept of shareholder with results which would now be considered patronizing and value, to which CSR can contribute in a variety of ways: hierarchical. l Public and consumer relations: a responsible image can be l Philanthropy: while paternalism was normally a function of helpful (and profitable) to a company. Other things being equal, employer/employee relationships, philanthropy (again often customers will prefer to take their business to a company with driven by moral or religious convictions) extended to the wider whose activities they feel comfortable. In many sectors, it is now community and led to the founding by successful business people this initial decision (whether or not to deal with a particular of schools, hospitals and other services. It tended to stem from an company) which is seen as key. For instance, consumers tend not individual's wish to return something to the community which had to shop for individual bargains at a range of different made him (or, less commonly, her) wealthy, rather than from any supermarkets, but to choose a particular store and do the bulk of wish to conduct business in a fundamentally different way. Many their shopping there. Any additional incentive to tempt them in of the greatest philanthropists in 18th-century Europe were slave has real value to a company – as does avoiding any scandal which traders. might keep consumers away.
CSR is now seen as something more far-reaching l Reputation and brand management: at a more general level, than paternalism or philanthropy. It engages at a much many companies increasingly see their reputation as one of their wider level with business's operations and relations with key assets. Reputation can be damaged overnight by charges of communities. It embraces the 'triple bottom line', malpractice or irresponsible behaviour – for example, of sweatshop practices in the supply chain or environmentally damaging requiring attention to be paid not just to economic activities. Companies need systems which can monitor their performance, but also to environmental and social activities so that they are confident they can defend their impacts. It is essentially about business's contribution to operations if challenged. sustainable development and how best to maximize that contribution. l Staff recruitment and motivation: generally, employees too However, 'sustainable development' is itself a like to work with a company with whose activities they feel notoriously vague and slippery term. Simply to set it as comfortable. Anything which discourages highly qualified staff in a goal does not take a business very far. Putting CSR particular (who are likely to be well-informed and articulate in into operation, bringing it to the heart of corporate their views) can be damaging. It has been commonly reported, for culture without losing sight of core business objectives, instance, that Shell detected an unwillingness among graduates to while also avoiding the traps of paternalism and work for the company in the wake of the Brent Spar incident and philanthropy, is a complex task, requiring clear-sighted the problems encountered in Ogoni land in Nigeria, and that this motivated a significant effort by Shell to understand and respond analysis and detailed implementation. to public concerns on these issues. Many companies are not very far down this road; their commitment to CSR operates at two extremes: l Risk management: in the 1990s, many companies found themselves saddled with environmental liabilities arising from past l High-level principle: it is relatively easy for companies to make activities when awareness of environmental issues was much a high-level commitment to principles of sustainability and lower. There is at least a possibility of such liabilities arising in responsibility. Even where this commitment is genuine, however, future in the social sphere (see, for instance, the discussion below there is often a big gap between making the commitment and of transnational litigation). A prudent company will ensure that it implementing it in practice. has a sufficiently clear understanding of its operations to know how to avoid or manage such risks. l Ground-level projects: it is also relatively easy for companies to sponsor particular projects, often with outside organizations, These, and related, motivations for promoting CSR which will bring local benefits to the community and the can be fitted without difficulty into an approach based company's reputation. But, like the philanthropy discussed above, Towards Global Corporate Social Responsibility 3
on shareholder value. Greater controversy arises when it This is, or should be, a concern for companies, at is a question of moving on from there to responsibility least those which wish to be sustainable companies, as for sustainable development in general. Do businesses much as for the host countries. They too have an have wider responsibilities towards stakeholders and interest in operating in environments where local communities? populations are not ravaged by civil war or AIDS, where There are counter-arguments of both principle and an educated and healthy workforce is available, where practice. investments are not threatened by unstable institutions and corrupt regimes. Sustainable companies are l In principle a business's sole or primary responsibility (the legal ultimately reliant on the sustainable development of position varies between countries) is towards its owners, the their hosts. While it is not the companies' sole or shareholders, perhaps also with certain responsibilities towards primary responsibility to achieve this, it is important that employees. Activities undertaken for the benefit of other parties, they understand how their activities contribute to such as local communities, are according to this view a diversion sustainable development and that they can act on that from the core role, undermining the business's key function. understanding. Filling 'the middle ground' of CSR should help provide that understanding and l In practice, businesses are not set up to provide social and other services and are not qualified to do so. The task should be left to mechanisms for implementing it. governments. For businesses to try to supplant governments' role is inefficient and (with multinational companies in developing Current developments at countries) neo-colonialist. international level
What has been called above 'filling the middle A huge range of initiatives is currently under way aimed ground' helps respond to both these arguments by at filling this 'middle ground'. Often, a sharp distinction clarifying responsibilities and roles. The middle ground is drawn between voluntary and regulatory routes, but consists of formal rules and regulations, as well as a the distinction is somewhat misleading – given the huge range of voluntary codes and principles of various relatively undeveloped state of international law as sorts, discussed below, developed by a process of compared with national legal systems, formal partnership and debate between businesses, NGOs, regulation is not the mainstay of international CSR. governments and other interlocutors. The process helps International law is also very different from national law establish boundaries between the roles of different as regards compliance and enforcement arrangements. organizations and develop a consensus about their In practice, international regulation, where not backed proper functions. It also helps engage parties and up by formal policing structures, may be different more partners who may be better equipped than the in degree than in kind from less formal 'voluntary' businesses themselves to deliver the results required. arrangements, many of which do have inbuilt The process is particularly important at an monitoring and enforcement structures. international level. The regulation of investment within The discussion below looks at a range of current industrialized countries has evolved over time and with measures, broadly speaking on a spectrum of increasing experience; it has been designed to fit national legal effect. Such is the range of activity that the listing circumstances and institutions. Foreign direct cannot aspire to be comprehensive or detailed, but gives investment brings companies into new societies and only an overview. structures, often with very different expectations. Standards for health, safety, labour practices and Private international relations environmental protection can vary significantly Quite apart from any formal institutional development, between countries. There can be an imbalance between there is a growing public questioning of the the investing company and the host country, if not of acceptability of corporate activities and, along with it, formal power, at least of resources and knowledge. For the need for companies to respond. The trend has been instance, a country with newly discovered oil resources described as one towards a world of 'private may not have the technical expertise to assess these international relations'.1 It is fuelled by the explosion of resources and gauge how to develop them most communicating power via the Internet and electronic effectively; it may have no safety and environmental media; the activism of non-governmental organizations standards in place; and it may be effectively reliant on (NGOs); and the growing sense of accountability of international oil companies for much of this expertise. private-sector managements to shareholders sensitive to More generally, in many non-OECD countries, ethical issues. In this new world, political objectives can government and governance structures are ill- 1 developed or inadequate. There may simply be no clear John Mitchell with Koji Morita, Norman Selley and Jonathan Stern, The New Economy of Oil: Impacts on Business, Geopolitics framework in which economic activity can take place in and Society (Royal Institute of International Affairs/Earthscan, a way which produces benefits to society in general. 2001). 4 Towards Global Corporate Social Responsibility
be achieved in other ways than through the traditional l Abolition of child labour; machinery of governments, treaties, regulation and l Elimination of discrimination; international institutions. Indeed, as was argued by l Precautionary approach to environmental challenges; Peter Hain MP in his study The End of Foreign Policy?,2 l Promotion of greater environmental responsibility; l governments themselves may increasingly operate as Development of environmentally friendly technologies. just another set of actors in this fluid new environment. These are clearly strategic goals rather than specific The manifestations of this trend are so many and so commitments but they are underpinned by examples of varied that is impossible to describe even a the sorts of activity which might be involved, and representative sample. But new developments in ethical companies are expected to share experience, via their investing are of particular interest, such as the websites and other routes, so that lessons learned in Responsible Engagement Overlay (REO)3 service implementing the principles can form part of a wider provided by a fund manager in the UK, Friends Ivory Sime international understanding. A number of multinational (FIS), under which it uses its influence as a significant enterprises, including leading companies from investor (it has £18bn under management using its REO developing countries, have signed up to the process and service). The aim is constructive engagement to bring various UN agencies are working with them to develop about change, rather than more passive approaches the concepts in more detail. (such as excluding 'unethical' companies from portfolios). Nonetheless, it is inevitable that as what is essentially Using this approach FIS met a number of British clothing a statement of principles, the Compact has disappointed companies to discuss what they were doing to tackle some. Monitoring arrangements are informal and it is child labour in their supply chains. It organized a seminar often open to debate what the principles mean in to underline the risks companies might encounter if they practice. To take one example, one NGO, CorpWatch, has failed to take action. Companies responded with such accused Norsk Hydro of violating the first two principles measures as establishing clear policies on the issue and of the Compact.5 The company is involved in plans to imposing codes of practice on their suppliers. mine bauxite in the Indian state of Orissa which have Such pressure can therefore be effective, but it is attracted strong opposition from tribal groups. A number clearly not comprehensive or systematic. The impact will of people have been injured or killed in clashes with the vary from company to company, country to country and police. The company says it is behaving responsibly. It has issue to issue. curtailed its project while tensions are high. Statements of principle Such conflicts are particularly difficult for companies to address; in many cases they feel the conflicts are High-level statements of principle invite cynicism; political matters, external to them and for others to nonetheless, they have a role in setting benchmarks for resolve. One way of providing greater clarity is to take corporate behaviour and embodying companies' the principles in the Compact to a level of further detail, commitment to these aims. A prominent recent initiative and there are many such examples, discussed below. in this area is the Global Compact,4 introduced in 1999 Within the UN, further elaboration of principles in by the Secretary-General of the United Nations, Kofi specific areas is also under way – for instance, Draft Annan. He did so deliberately against the background of Human Rights Principles for Business Enterprises6 are opposition to globalization, warning that imbalances currently under development. between rapidly expanding global markets and societal preferences must be reduced if a backlash was to be Partnerships averted. The Compact is designed as a process, not an The need for dialogue and partnership, to improve end result – an 'action and learning model'. It embodies understanding and implement more effective projects on nine broad principles which the Secretary-General asks the ground, is a constant theme in global CSR. Along world businesses to uphold in the areas of human rights, with the 'triple bottom line' comes the importance of labour and the environment. In summary, these are: 'tri-sector partnerships', involving governments, l Protection of human rights; communities and businesses. A prominent recent l Avoiding complicity in human rights abuses; example is the Business Partners for Development7 l Freedom of association; initiative which brings together the World Bank and over l Elimination of forced labour; 70 leading companies and NGOs to explore ways of working in partnership to maximize development 2 Peter Hain, The End of Foreign Policy? Britain's Interests, Global Linkages and Natural Limits (Fabian Society, Royal impacts from particular projects. Institute of International Affairs and Green Alliance, 2001). Other organizations such as the International Business 3 See, for instance, Ethical Performance Best Practice Summer 5 See www.corpwatch.org/un/updates/2001/norskhydro. 2001, pp. 12–13; Dunstan's Publishing in association with the 6 See www1.umn.edu/humanrts/links/principles11-18-2001.htm. Institute of Business Ethics. 7 Information available on World Bank website – 4 See www.unglobalcompact.org. www.worldbank.org. Towards Global Corporate Social Responsibility 5
Leaders' Forum,8 which seeks to promote socially Certification schemes responsible business practices, also lay great stress on There are many examples of certification schemes partnership approaches to the development of policies worldwide. One prominent case is that of the Forest and projects. Stewardship Council.11 Again, there are a number of driving factors: consumer concern at tropical Codes of Practice/Codes of Conduct deforestation; forest industry concern for sustainable development (or fear of consumer boycotts and logging The above examples are open to the challenge posed bans); NGO dissatisfaction with government inaction, earlier in the paper of focusing either on high-level etc. The initiative aims to overcome these problems with principle or on ground-level projects, and missing the a certification scheme to provide independent middle ground. A number of initiatives have sought to verification of the quality of forest management. The fill this gap, often based around Codes of Practice or Council itself is a global body, with representatives from Conduct. They are particularly common in areas such as both North and South. Underpinning the certification the environment or labour practices, where there are scheme is an agreement by the Northern buyers varying international standards or ill-developed involved to sell only certified products. national regulatory arrangements. There are a number There are extra costs but also marketing advantages; of examples in the garment sector. In 1996, for instance, the hope is that there will be a consumer premium for President Clinton set up an Apparel Industry Task Force, sustainably produced timber, which would cover the responding to concerns about sweatshop practices extra costs. Certification has indeed increased rapidly; among manufacturers in the supply chain of US nonetheless, it still accounts for only a minority of companies. The Task Force issued a Workplace Code of timber sales, concentrated particularly in niche markets Conduct, which, among other things, prohibits the use such as do-it-yourself (DIY). As this implies, such of child and forced labour and sets out monitoring schemes have impact mainly in markets which are both principles.9 A related example is the 1995 memorandum discretionary and publicly visible – construction timber, of understanding between the Bangladesh Garment for instance, tends to be ignored. Other problems Manufacturers and Exporters Association, the United include the fact that smaller forestry enterprises may Nations Children's Education Fund (UNICEF) and the find it difficult to absorb the costs of certification and International Labour Organization (ILO) on the child the proliferation of different certification schemes. labour issue, which includes provision for ILO spot checks at garment factories. Reporting arrangements Codes of Practice can also be internal to a company Many of the schemes listed above have associated or a sector. At the sectoral level, for instance, the monitoring and reporting arrangements. Yet, given chemicals industry aims to improve health, safety and their specific focus, these may well not capture a environmental performance via an initiative called company's full social and environmental impacts. A 'Responsible Care' which embraces a set of principles, much wider initiative in this area is the Global Reporting underpinned by specific codes of management Initiative.12 This seeks to elevate corporate sustainability practice.10 reporting to the same level as financial reporting and to What these examples have in common is the wish to design improved reporting guidelines to reflect the translate broad principles into tangible and monitorable three dimensions of sustainability – financial, social and terms which can underpin company activities at a day- environmental. It has a number of working groups to-day level. More cynically, it could be said that such looking at specific measurement issues in particular measures tend to be defensive – the companies areas and at ways of linking them into more integrated concerned have often faced threats of consumer measures. The guidelines are regularly updated; boycott or government regulation, and have used the industry supplements for particular sectors are being development of codes, at least in part, as an argument developed. Over time it is hoped to develop a full set of for the freedom of self-regulation. Generally Accepted Sustainability Reporting Principles, on the analogy of Statements of Accepted Accounting Practice for financial accounts, which would enable companies to develop and communicate a better understanding of the wider impacts of their activities.
8 See www.iblf.org. Sectoral initiatives 9 For a discussion of codes see www.igc.org/trac/feature/ A number of initiatives originate at sectoral level, where sweatshops/codes. 10 For an analysis of various sector guidelines, see 'Self-Regulation an industry sector is concerned to understand and of Environmental Management', UNCTAD, Environment Series No. 11 See, for example, www.fscus.org and related sites. 5, 1996. 12 See www.globalreporting.org. 6 Towards Global Corporate Social Responsibility
improve its performance. For instance, the Mining, Official guidelines Minerals and Sustainable Development project13 set up Prominent among these are the 'OECD Guidelines for by the Global Mining Initiative aims to 'maximize the Multinational Enterprises',15 which have been expanded contribution of the mining and minerals sector to and developed considerably since they were first adopted sustainable development, at the global, national and in 1976. They cover such areas as the environment, bribery local levels'. The project recognizes that it is necessary to and corruption, employee relations etc. Their significance respond to the pressures of 'private international lies perhaps not so much in what they say as in what they relations' and give interested parties a way of are – in the words of the Chairman of the OECD distinguishing good and bad performance. The final Ministerial of June 2000, 'the only multilaterally endorsed report from the project, to be issued in April 2002, is and comprehensive code that governments are likely to call for the development of such a certification committed to promoting'. They are intended to provide a scheme. government-backed standard of good corporate conduct and help create a level playing field between competitors Issue-based initiatives in the international market-place. They include In some cases, the need for action stems from particular procedures for implementation and monitoring via issues rather than sectors as such, as with the Voluntary national contact points. A number of non-OECD countries, Principles on Security and Human Rights,14 announced mainly from South America, have declared their in late 2000. This is a set of principles negotiated adherence to the Guidelines. between two governments (UK and US), seven Nonetheless, and notwithstanding the government companies (in the oil and mining sectors) and nine NGOs backing, the Guidelines remain voluntary – they are concerned with human rights and corporate merely 'recommendations' and rather general in their responsibility. In the background is the recognition that content. Despite their formal status, they are not very resource extraction activities often take place in different from the general statements of principle situations of conflict and violence. The clash between referred to earlier. Also under discussion as a voluntary set companies' need to protect their personnel and of principles is the EU Green Paper Promoting a European installations on the one hand and the human rights of Framework for Corporate Social Responsibility.16 local peoples on the other has often been acute. Many companies have been accused of complicity in human rights abuses committed by governments and their International conventions security forces in the host countries. Formal legally binding instruments are relatively rare in the area of corporate social responsibility. An important The Principles address three areas: exception is the OECD Convention on Combating Bribery of Foreign Public Officials in International Business l Risk assessment; Transactions,17 dating from December 1997. This is legally l Relationship with state security forces; binding and has to be implemented in appropriate l Relationship with company security forces. national legislation. It is regarded as an important step forward in helping create a level playing field between Although described as Principles, the document companies. Previously, some countries such as the US, with contains a number of quite detailed prescriptions, e.g. its Foreign Corrupt Practices Act, had imposed more rigorous requirements than others. The Convention Companies should record and report any credible allegations of should make a real difference in the treatment of such human rights abuses by public security in their areas of operation offences by making nationality-based extra-territorial to appropriate host government authorities. Where appropriate, jurisdiction the norm. A UN Convention is also now under Companies should urge investigation and that action be take to prevent any recurrence. discussion. It is early days yet in the implementation of the This example gives a flavour of the strengths and Convention and its impact in practice is unclear. To date weaknesses of the approach. On the one hand, the there have been no prosecutions under the anti-bribery prescription is fairly specific and in theory monitorable. laws enacted pursuant to the Convention. Countries only On the other, the Principles are (as the name makes very rarely bring court cases against their nationals for clear) voluntary and are subject to a large number of overseas corruption, partly because of the difficulty of qualifications, as the words 'where appropriate' in the gaining clear evidence, partly because there are usually no above quotation indicate. It is too early to judge their 15 Available via www.oecd.org. (Click on 'corporate governance', impact. then 'Guidelines for Multinational Enterprises'.) 16 COM (2001) 366 Final. 13 See www.iied.org/mmsd. 17 On www.oecd.org, click 'corruption' for information about 14 Available, inter alia, at www.state.gov/www/global/human_rights. implementation of the Convention. Towards Global Corporate Social Responsibility 7
victims within the home country itself. (Indeed in the past web – for instance, where there is no formal code of national governments have sometimes connived at or at practice in place, investor, consumer or NGO pressure can least turned a blind eye to corruption of overseas officials lead to the development of a new scheme. The different when it has appeared conducive to the national interest, strands can also be mutually supportive; general principles for instance in helping to gain major contracts.) It can also can be progressively underpinned by detailed codes and be difficult to distinguish between corruption, facilitation public certification and monitoring arrangements, all payments and other marginal cases. Even within the within a context of civil society scrutiny. Voluntary OECD, practices vary significantly, for instance on the schemes can provide officially based compliance receipt and declaration of electoral campaign mechanisms (such as with the Bangladesh garment contributions. The Convention makes some progress agreement involving spot checks by the ILO). Officially towards defining corruption, but huge grey areas remain. backed schemes, such as the OECD Guidelines, can operate on a voluntary basis and offer great flexibility in practice. Transnational litigation The system as a whole can be regarded as showing a In particular cases, companies may be liable under the law combination of flexibility and robustness, while being of their home country, e.g. for negative environmental or capable of further development and deepening. health and safety impacts, or complicity in human rights Nonetheless, it is also open to criticism. The complexity abuses, in developing countries where they operate; this is can be counter-productive, leading to confusing and known as foreign direct liability.18 Such cases are difficult competing demands on companies. Most of the system is to bring but there are now a growing number, mainly in essentially voluntary, allowing companies to avoid the 'Anglo-Saxon' world – the US, Canada, Australia and engagement. In practice, many of the initiatives have been the UK. The cases vary in their details but are usually based a response to particular pressures. By their nature such on one of two propositions: campaigns are easier to mount against high-profile companies in consumer goods industries. Other l That companies should adopt minimum international standards companies, and other issues, can be neglected simply throughout their operations. Examples include litigation against because they are less visible targets. So there is a significant Unocal in relation to alleged human rights abuses associated with element of randomness about the system; it is not its investment in Myanmar (Burma), and against Texaco over necessarily addressing the right problems in the right way. environmental impacts in Ecuador. Fundamentally, both strengths and weaknesses reflect l That companies within a corporate 'family' should exercise the the same underlying factor – the lack of a clear same standards of care in their overseas operations that would be international consensus which would make codification of expected at home. For instance, an action has been brought in the the requirements possible. While there are different UK against former asbestos mining company Cape in relation to its operations in South Africa. expectations, not just between companies and civil society, but within civil society and governments as well as To date, however, few of these cases have had conclusive companies, it is unrealistic to expect the same degree of results. Courts are reluctant to question another country's standardization as, for instance, in relation to companies' justice system when determining the proper jurisdiction financial accounts. In that area, indeed, even after for action; the chain of control between parent company centuries of development, huge differences of approach and subsidiary may not be clear; in many cases what is in remain between countries, and the system comprises a question is not the action of the company itself but the complex mix of legal, investor-driven and voluntary forms degree of 'complicity' with repressive state action. of reporting. As an example of the sort of dilemma involved, and the lack of international consensus, one can take the issue Discussion of 'constructive engagement'. In countries with weak or oppressive governments, is it better for companies to stay The examples above are by no means comprehensive. But out and avoid complicity with the actions of the regime, they should help to illustrate the complexity of the current or to invest in a responsible way and ensure that, at least position. There are a huge number of overlapping within their area of responsibility, acceptable standards of initiatives, with different starting points, different behaviour are maintained, and economic and social participants, different legal bases, and different development are promoted? There is no straightforward monitoring and compliance arrangements. answer and it is not clear that the situation can ever be In some ways this is a strength. The system as a whole codified effectively. A socially responsible company will creates a powerful yet flexible 'web'. Deficiencies in one have to make a judgment about whether on balance its area may be met by the strength of another strand in the activities within the country concerned have a positive 18 For a discussion of the issue, see Halina Ward, Governing impact or not, and there can be genuine disagreement Multinationals: The Role of Foreign Direct Liability, Royal Institute about whether this is the case. Even in countries which of International Affairs, Briefing Paper New Series No. 18, have attracted strong opposition for their human rights February 2001. 8 Towards Global Corporate Social Responsibility
records, such as Sudan and Myanmar, the impact of instruments has been brought to bear on this issue, but company involvement is not clear-cut. without providing clear answers. The controversy remains; In the case of Sudan, for instance, there has been strong the pressure to disengage continues; and Talisman has opposition to the activities of the Talisman oil company. declared itself open to offers for its stake in the project. Sudan has endured a civil war for more than three decades; human rights abuses have been committed on a wide Conclusions scale. The development of Sudan's oil resources has the potential to benefit the country, decrease its import bill What the Talisman episode illustrates is the fact that CSR is and free up funds for development – but in practice it may still a developing area. Even when an attempt is made, at simply fund a further stage of the civil war, with all the a considerable level of detail, and using many of the human misery that entails. At a more concrete level, oil- methods discussed above, to answer the question 'What is related activity may lead to displacement of populations responsible corporate behaviour in an inherently difficult and be associated with human rights violations by security situation?', the outcome has convinced few, leading some forces; but it also generates community development to wonder if the voluntary approach is worth pursuing. projects and infrastructure improvements. For others, the example is more positive: the controversy Against this background it is difficult to assess the could be considered an element in moving the debate impact of Talisman's involvement in Sudan. Then there is forward, towards developing greater consensus on the the question of what would happen if Talisman were to issue of constructive engagement. From this perspective, it leave; its partners in the project are state oil companies could be argued that if the flexible combination of from China, Malaysia and Sudan itself. As one NGO mechanisms involved has not delivered a clear answer, that representative put it, is in itself a strong argument against moving prematurely to the blunt instrument of legislation or sanctions. if you pressure Talisman to leave Sudan then will the The conclusion is not that the international community remaining actors take any action to address these critical should abandon the effort of seeking to define what issues? At least Talisman has taken notice and responded.19 corporate responsibility means in practice; rather that there is a need for realism. None of the measures listed Talisman has indeed followed through a number of the above will individually transform the situation. The system mechanisms described above. It has committed itself to a as a whole is likely to remain largely voluntary for some set of high-level principles (The International Code of time to come, and along with that it may have to be Ethics for Canadian Business); translated this into a more accepted that its effects will be patchy and partial. detailed operating framework (the Sudan Operating Standardization of the various elements and translation Principles); engaged in stakeholder dialogue; into legal requirements are likely to take some time. commissioned independent verification of its compliance But all this does not gainsay the fact that genuine with the Code and Principles, by PricewaterhouseCoopers; progress continues to be made, for instance on such issues and set out the results in its Corporate Social Responsibility as child labour. Individual initiatives like those listed above Report. Litigation is also involved. A class action lawsuit generally remain worthwhile in their own right, even if was filed on 8 November 2001 against Talisman they do not cure all the world's problems overnight. The Energy Inc. in New York under the Alien Tort Claims Act, on wider development of the mechanisms helps to make the behalf of Sudanese affected by military action. 'web' of different initiatives more resilient and flexible, In other words, almost the whole battery of CSR more capable of dealing with new challenges. Over time, these cumulative developments may lead to a change in the ways businesses interact with communities, to a new 19 Cited in Talisman's 'Corporate Social Report 2000'. See consensus on the meaning of corporate social www.talisman-energy.com. responsibility and to the codification of its requirements.
Malcolm Keay was Deputy Head of the Energy and Environment Programme until the end of 2001, working on energy and corporate responsibility issues.
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