To What Extent Does The Neoliberal Consensus In Western Society Undermine The Corporate Social Responsibility Of The 2011 Human Rights Framework?
A dissertation submitted to The University of Manchester School of Social Science for the degree of a Masters of Arts in Politics, in the Faculty of Humanities – December 2018
Chapter 1: Conceptual Definition of Neoliberalism and Corporate Social Responsibility Guiding Principles
Chapter 2: Implementation of Corporate Social Responsibility Guiding Principles
Chapter 3: Achieving a uniform Corporate Social Responsibility human rights policy within an economically globalised and a legally culturally nuanced world
Chapter 4: Perception, Reputational damage and the effects that reported poor treatment of agents in the lower echelons of the supply chain has on corporations
Chapter 5: Future of Corporate Social Responsibility, is there any way it can work?
Word count – 14,105
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Corporate Social Responsibility (CSR) is a topic that is regularly discussed within the geopolitical sphere and it is a concept that is frequently debated within both the broadcast and print media across the developed world. Using historical examples and contemporarily relevant case studies, this dissertation discusses the significant obstacles that the intended practice of CSR faces in the present global economic climate.
The primary focus of the dissertation is the dichotomy between the CSR Guiding Principles, as devised by John Ruggie, for the United Nations in 2011 and Neoliberalism, with particular emphasis on the philosophies of Mliton Friedman (1951, 1962, 1970 & 1993). The thesis argues that due to the dominance of the Neoliberal economic model which dominates the developed world, CSR cannot work in tandem with Neoliberalism without effective regulation and sanction for non-observers of CSR Guiding Principles.
At present, compliance with CSR Guiding Principles is voluntary. The strongest sanction available to affect corporations for non-observation is the concern of a tainted reputation. This dissertation argues that a good reputation is desirable for a corporation to operate successfully, but is not essential. Without a meaningful legislation governing corporate observance of the CSR Guiding Principles, this paper argues that Ruggie’s 2011 document is little more than a wish list.
The Guiding Principles on Business and Human Rights (2011) by John Ruggie, was commissioned by the United Nations (UN) and was intended to set up an ethical framework for corporations to abide by. This dissertation argues that the Neoliberal economic consensus, as prescribed by Milton Friedman (1951, 1962, 1970 & 1993) and the influence that its contemporary practitioners enjoy, have made a successful application of Corporate Social Responsibility (CSR) impossible. The focus of this paper will be specifically on the second chapter of Ruggie’s 2011 report, The Corporate Responsibility to Respect Human Rights, which, primarily concentrates on how corporations should maintain the minimum standards for agents working within their supply chain.
The structural lines of Neoliberalism and CSR will be discussed in chapter two. Arguments presented by Catherine Rottenburg (2018), Matthew Eagleton-Pierce (2016), Tim Worstall (2015) Johanna Bockman (2011) and Friedman (1951, 1962 & 1970) will discuss the parameters of Neoliberalism and how it applies to both the world we live in and the economic policy of what is colloquially known as the free world. As an economic concept, Neoliberalism runs parallel to the ideology of what is popularly known as Keynesianism, as devised by John Maynard Keynes (1936). There will be a brief contextual description as to what Keynesian economics are and how important and influential they were to post-war economic policy. The economic policies introduced by Margaret Thatcher in the United Kingdom (UK) (1979-1990) and Ronald Reagan in the United States of America (USA) (1981-1989) will provide empirical evidence of Neoliberalism at work. Ruggie (2011), James Arnt Aune (2007), Maria Gjølberg (2009) and Elisabet Garriga & Domènec Melé (2004) will fuel the descriptive basis of the CSR Guiding Principles and explain how they are supposed to work in the contemporary economic climate.
Using arguments presented by Friedman (1970), Ruggie (2011, 2017) Garriga & Melé (2004) and Susan Ariel Aaronson & Ian Higham (2013), the third chapter debates and questions how an effective implementation of CSR could occur within the present legislative climate. While ‘organisations such as the Competitive Enterprise Institute and the Free Enterprise Action Fund argue against CSR, claiming that it is a smokescreen for leftist assaults on capitalism’ (Aune, 2007: 208), others, such as Ronen Shamir argue that CSR ‘fits within the Neoliberal principal of private enterprise and successfully grounds the very notion of moral duty within the rationality of the market. Doing good is good for business’ (Shamir, 2008). This displays the disparity of interpretation of how CSR is perceived and how it can be implemented and shows how Neoliberalism can be subject to the whims of post-structuralism. While Shamir may argue that CSR is framed to conform to Neoliberalism, Friedman’s Neoliberal philosophy, which influences the economic policy in Western society, encourages laissez-faire. This is a more discretionary system of economic management, far removed from any kind of regulation or directives like CSR, which, is completely parallel to Friedman’s view of how economics function. ‘Friedman’s position has become even more influential after the decline of social democracy and Keynesian consensus among Western industrial nations since 1975’ (Aune, 2007: 207). Friedman’s influence on global economic policy is in sharp contrast to the wishes expressed in Ruggie’s CSR document, even if Ruggie had composed his report with the idea of making it compatible with Neoliberalism (Shamir 2008). Andrew Smith and Alice Lepeuple (2018: 2nd paragraph) say that CSR Guiding Principles are already privatised, because of the influence and leverage that corporations have over state actors with economies not as large as those they possess. An argument is presented where it is claimed that Friedman was in favour of a form of privatised implementation of CSR (Chryssides & Kaler, 1993: 253), that Smith & Lepeuple allude to, a concept that would never be advocated by Ruggie (Ruggie & Connor, 2011: 5th paragraph). This is further evidence of Friedman’s post structural idea of regulation. However, in reality, it is difficult to see how any regulation can be effective if there is no structural consensus to its employment.
Using Duncan Green’s (2016: 6th paragraph) graphs and observation’s, chapter three also examines the economic power that the largest corporations have over their hosting state actors. An argument is presented, that should state actors assert the CSR Guiding Principles, a significant amount of investment in the state actor’s respective economies would disappear due to the corporate actor’s using their agency to threaten a move of their businesses to another state actor, more amenable to their working methods and conditions.
Chapter three further argues that while Friedman’s arguments can be paradoxical, Ruggie also has contradictions to address, most importantly, the admission to Michael Connor (2011: 27th Paragraph) that there are too many actors within the supply chains to ever have a consistent and successful implementation of CSR Guiding Principles. This, alongside the prevailing Neoliberal economic consensus is the main reason why this chapter argues that despite Garriga & Melé’ (2004: 65) and Shamir’s (2008) assertions of the intended compatibility of Neoliberalism and CSR Guiding Principles, the two concepts cannot work harmoniously.
Focussing on the theories of Melé (2008), Keith Davis (1967), Dow Votaw (1972) and Richard Fenning (2011), chapter four will discuss the obstacles of achieving a uniform CSR human rights policy within a culturally nuanced world. As well as cultural differences and local conventions posing barriers to a uniform CSR policy, Garriga & Melé (2004: 60) point out that, such are the potential differences in interpretation, scholars cannot agree as to what a uniform policy of CSR is or should be. With empirical examples provided of corporations transferring labour from the UK to India due to profit optimisation and differences in legislation between the two state actors, this chapter observes that the “race to the bottom” mind-set of some large corporations make a culturally nuanced legal world in trading a significant obstruction to successful implementation of CSR Guiding Principles. This chapter argues that Ruggie’s 2011 paper does not make any distinctions clearer. There will be a discussion about how effective CSR can be in the protection of agents involved in the supply chain, which, benefits corporations, but who nevertheless do not work directly for the corporation or indeed, crucially, in the same legal jurisdiction.
Analysing arguments presented by Aune (2007), Ruggie (2011), Connor (2001), Davis (1967) and Simon Zadek (2004), chapter five examines the reputational damage that CSR malpractice can have on corporations, should they fail to observe good practice of CSR Guiding Principles. Davis (1967) says that corporations need to be seen to be behaving responsibly towards agents within their supply chain, but the chapter argues that while a good reputation for good practice is obviously desirable for a corporation, it is not essential for it to function successfully.
An empirical example through the lens of rational choice will be presented, highlighting the corporate behaviour of Nike since it first experienced significant adverse publicity in 1998. Despite this, statistical evidence (Nike, 1999: 1st paragraph) (BBC, 2001: 3rd paragraph) (CNN, 2002: 3rd paragraph), will be provided which, shows that Nike’s profits were consistently healthy, both throughout the first wave of adverse publicity and again in 2001, when the promises made by Nike CEO, Phil Knight (Cushman jr, 1998: 1st paragraph) were found not to have been honoured (Connor, 2001: 1/2). The chapter disputes Davis’ (1967: 49) statement that the corporation has to act responsibly to maintain its power. While ethically, Davis may have a point that a corporation should act responsibly with power, the findings, both of Nike’s annual fiscal reports during periods of adverse publicity and the fact that it remains an admired corporation (CNN 2014) (Fortune, 2018), means that it has little incentive to alter their working practices.
With empirical examples featuring Coca Cola, Adidas and Hugo Boss, chapter six discusses the future of CSR Guiding Principles and examines the possibility of the philosophy having a significant influence on global corporate policy. Richard Karmel (2017: 11th paragraph) presents some hope for better observation of the CSR Guiding Principles, due to the French and German governments compelling some of their larger corporations to present an audit of how they are dealing with human rights concerns. Curtis Verschoor (1998) and Sarah Cook (2008) also discuss the future of CSR and how it could possibly work. They claim that voluntary ethical practice (Cook, 2008: 88) and mainstream practice (Verschoor, 1998: 1515) could be an influence on how CSR is observed in the future. David M Kotz (1998: 10) discusses the economic crash in Russia in 1998, which, he predicted would end the fledgling Neoliberal experiment in the country. The worldwide economic crash of 2008 saw a nationalisation policy introduced in the banking sector of the UK, which could have severely changed the government ideology on Neoliberalism, particularly as Friedman (1951: 90) was so virulently against nationalisation. However, despite the state intervening to prevent an economic crash, the philosophy of Neoliberalism is as influential in geopolitical economics as it has been since it became mainstream in the mid nineteen seventies. Thus, the chapter argues that contrary to Shamir’s (2008) and Garriga & Melé’s (2004: 65) statements that CSR is intended to work with Neoliberalism, the reality is that they are not compatible philosophies.
Chapter 1: Conceptual Definition of Neoliberalism and Corporate Social Responsibility Guiding Principles
This chapter will discuss the concepts of Neoliberalism and Corporate Social Responsibility Guiding Principles. A brief historical analysis of both concepts will be provided to give context. This will be followed by an analysis of Friedman’s (1951, 1962 & 1970) interpretation of Neoliberalism and Ruggie’s CSR Guiding Principles (2011), as these concepts provide the philosophical spine for the composition of this dissertation.
As a concept, Neoliberalism is the predominant economic philosophy of what can loosely be described as the developed world or western capitalism. The focus will be mostly on the third phase of what Daniel Stedman Jones (2012: 6) calls the three phases of Neoliberalism, which, ‘broke out of the predominantly North Atlantic and Western European confines of elite academia and domestic national politics and spread into many global institutions, especially in the former communist countries and developing world’ (Stedman Jones, 2012: 8). The root idea of modern Neoliberalism is that a fair and meritocratic ending will always be achieved by market value; hence, the best agent for a task will receive the highest reward for their work as due to popular demand, they will be able to choose where to sell their trade and labour to the highest bidder. This can apply to personal professional ventures and tradable goods/commodities. Theoretically, this would mean that the poorest performers would lose the trade and the best practitioners would thrive in their endeavours. Rottenburg (2018) however, is sceptical of this notion. Rottenburg (2018: 998) says ‘meritocracy not only functions as an ideological myth that promises mobility while obscuring and extending economic and social inequalities, but it also reinforces the idea that those who have succeeded in the Neoliberal rat race are thoroughly deserving of their wealth and power’.
The modern concept of CSR started in 1953, with Howard R Bowen’s book, Social Responsibilities of the Businessman (Segerlund, 2010: 40). Friedman had no enthusiasm for CSR, saying that ‘social responsibility is a fundamentally subversive doctrine in a free society. In such a society, there is only one social responsibility of business: to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game’ (Beal, 2014: 39). When Friedman dismissed the concept of CSR, his disdain for the notion was based on Bowen’s theory. Allowing for Friedman’s antipathy to the idea of CSR, this dissertation will use Ruggie’s 2011 paper, Guiding Principles on Business and Human Rights, as the philosophical debate to Friedman’s theory.
Both Eagleton-Pierce (2016) and Worstall (2015) argue that there is a post-structural emphasis to Neoliberalism. Eagleton-Pierce (2016: 13) states that there is no way of neatly encapsulating what Neoliberalism is, while Worstall (2015) says that interpretation of a Neoliberal depends which side of the Atlantic you are on. To elaborate the UK, a Neoliberal is a classic liberal: the sort of person who thinks that reality is somewhere along the Friedman/Hayek axis, while in the USA, it is someone looking toward traditionally leftist goals. This could mean making the poor richer as an example, but tending to prefer the methods of markets (Worstall, 2015: 2nd and 3rd paragraphs). For the basis of this dissertation, the Neoliberalism as described in the title will be the economic philosophy as prescribed by Friedman (1951, 1962 & 1970). There will be a particular emphasis on Friedman’s book, Capitalism & Freedom (1962) and Social Responsibility of Business is to Increase its Profits (1970), an essay he provided for the New York Times Magazine in September 1970. Friedman was a passionate advocate for free trade and the minimum of regulation of trade to the point where the optimisation of profit would yield the best results for society.
In contemporary terms, Friedman’s philosophy has been heavily endorsed by ideologues on the right of the political spectrum. Friedman was a significant influence on Reagan and his economic policy while he was president of the USA (Anderson, 1990: 172) and Thatcher’s economic policy in the UK. Thatcher said that ‘Friedman revived the economics of liberty when it had been all but forgotten. He was an intellectual freedom fighter’ (Jones, 2006: 3rd Paragraph). However, for all the admiration that Friedman and his philosophy drew from the right leaning side of the political paradigm, it would be too simplistic to say that his ideas were right wing, or only adopted by right influenced policymakers. Bockman (2011: 7/8) said that ‘the pure competitive market and centrally planned Neoliberalism sit together at the centre of neoclassical economics, no matter the politics of an economist. The methodological centrality of socialism to neoclassical economics informs Neoliberalism’. This would suggest that while Friedman could never be commonly described as a socialist, socialism did provide a theoretical framework for his philosophy. In 1951, Friedman also bemoaned the protectionist policies of the traditionally right wing Republican Party in the USA. Friedman said, ‘the Republicans profess to be in favour of free enterprise and strongly opposed to a drift toward socialism. Yet their published programme favours protective tariffs, agricultural subsidies and support of the prices of agricultural products as well as a number of other measures that can fairly be termed collectivist in their implications’ (Friedman, 1951: 89). Nearly seventy years later and with an incumbent President who is strongly identified with right wing ideology, the USA has placed ‘steep tariffs on billions of dollars of goods from the EU, Canada, Mexico and China’ (BBC, 2018: 1st paragraph), the very thing Friedman decried in 1951. This contradicts one of the key facets of Neoliberalism’s trading philosophy, yet despite these tariffs, the economic model of the USA is still strongly influenced by Friedman’s doctrines, particularly regarding state intervention (Friedman, 1951: 90).
In May 1979, the Conservative Party, led by Thatcher, won the UK General Election, which saw them succeed the Labour party, led by James Callaghan. This was a more significant win for the Conservatives than previous post-war successions of a Labour government by Winston Churchill in 1950 and Edward Heath in 1970. Both Churchill and Heath had upheld the economic model of the UK, as devised by Keynes (1936) while in office. Keynes, who opposed laissez faire economics and was a strong advocate of state intervention (Murad, 1964: 18) had the antithetical economic philosophy to Friedman (Froyen, 2002: 225). Thatcher and her cohort of ministers, particularly Sir Keith Joseph, were enthusiastic disciples of Friedman’s Neoliberal economic philosophy and during Thatcher’s incumbency, the predominant economic philosophy of the UK changed from the Keynesian model of the post-war consensus to Neoliberalism. Along with Reagan and Thatcher’s conviction in the Neoliberal philosophy, the free trade ethos of the EEC/EU also spread the Neoliberal consensus throughout Western Europe, particularly the free trading arrangements which eradicated previous barriers and tariffs between European state actors.
Aune (2007: 214) says that the concept of CSR ‘dates back over one hundred years, when, late nineteenth century drug companies created codes of conduct… however, in 1977, Reverend Leon Sullivan proposed a human rights code for companies doing business in South Africa’ and this is the root of contemporary CSR action by the UN. Ruggie said that ‘as recently as the late nineteen nineties there was no recognition that companies had human rights responsibilities’ (Ruggie, 2017: 3) (Ganesan, 2015) and thus, the Guiding Principles on Business and Human Rights (2011) was commissioned by the UN and composed by Ruggie. The intention of the CSR Guiding Principles was to give clear instructions on the minimum standards of behaviour that large corporations should demand of agents within their supply chain, for the wellbeing of people working within it. Gjølberg said that ‘the emergence of CSR is closely coupled with the process of economic globalisation, and the governance gap resulting hence. A central question in international economic politics, is where to strike the balance between the benefits of open markets, versus the social costs associated with that openness’ (Gjølberg, 2009: 4). This concurs with Shamir’s (2008) and Garriga and Melé’s (2004: 65) assertion of CSR being devised to be compatible with the Neoliberal economic model, despite Friedman’s (1970: 6) unequivocal opposition to the concept.
Even allowing for Shamir’s (2008) and Garriga & Melé’s (2004: 65) belief of CSR’s composition and its intended compatibility with Neoliberalism, the idea of a state actor or an international organisation, such as the UN, imposing rules or guidelines on corporations for the welfare of agents, is anathema to the devotees of Neoliberalism and its laissez faire philosophy. Aune (2007: 208) says that libertarian organisations, such as the Competitive Enterprise Group and the Free Enterprise Action Fund, argue that CSR is a ‘smokescreen for leftist assaults on capitalism’. For all perceived differences and Friedman’s loathing of regulation in business practice, Friedman and Ruggie would appear to agree on one thing. Friedman (1951: 93) said ‘Our humanitarian sentiments demand that some provision should be made for those who draw blanks in the lottery of life. There is justification in trying to achieve a minimum income for all’ and Ruggie said ‘let’s take suppliers of goods and services. You would write into their contracts that they have to comply with certain workers’ rights to make sure workers get paid, to make sure that the legal minimum wage is applied’ (Forrest, 2016: 19th paragraph). Allowing for that rare moment of harmony between Ruggie and Friedman and Garriga and Melé’s (2004: 65) assertions, in practice, their respective philosophies of CSR and Neoliberalism appear as compatible as oil and water.
Chapter 2: Implementation of CSR
With Ruggie’s CSR Guiding Principles (2011) being a voluntary concept (Aaronson & Higham, 2013: 337), this chapter discusses how and if the concept can work and attain influence within the state and corporate sector. There is no legal obligation to abide by CSR and while Shamir (2008) and Garriga and Melé (2004: 65) argue that CSR has been composed to perform within a Neoliberal economic framework, the hostility towards regulatory CSR that Friedman (1970: 6) had and the strong influence his philosophy has on worldwide economic policy, would suggest that CSR has significant obstacles to overcome before it becomes custom and practice within the capitalist world. Green (2016: 6th paragraph) shows that one of the biggest hurdles CSR has within the worldwide economic landscape is that major corporations dominate the world’s top one hundred economies and while major corporations do not control state legislation, their powers of persuasion, as explained by Gay W Seidman (2009: 15) are significant in implementation of CSR.
Ruggie (2011: 3) fervently believes in state actors implementing the CSR Guiding Principles and this chapter discusses the profound difficulties confronting Ruggie’s desire for this practice, while corporate power has such a grip on the global economy. This obstacle is discussed within this chapter along with the effective privatisation (Smith & Lepeuple, 2018: 2nd paragraph) (Aaronson & Higham, 2013: 344), of the CSR Guiding Principles as advocated by Friedman, which, agency given to corporations within the prevalent economic consensus presently allows. This chapter argues that a successful implementation of the CSR Guiding Principles requires regulation and effective penalties for non-conformation. The discretionary and fragmented CSR policy that presently exists is not conducive to any successful implementation of the Guiding Principles.
The implementation of CSR, as written by Ruggie (2011), is mired in legal and practical difficulty within the Neoliberal economic framework, as decreed by Friedman (1970), of most of the state actors at which it is aimed. Any kind of corporate regulation is a bane to Friedman, as to his observations, it interferes with the optimum profitability of a corporation and takes away their agency to implement the social responsibility as they see fit. Garriga and Melé (2004: 65) refer to four main aspects of CSR, which, are:
- meeting objectives that produce long-term profits;
- using business power in a responsible way;
- integrating social demands;
- contributing to a good society by doing what is ethically correct.
This would imply that CSR is composed with the idea of being compatible with Neoliberalism. However, the optimisation of profit over everything else, which, is the spine of Neoliberal philosophy and CSR’s potential obstruction to that accumulation is where the conflict occurs. The fact that Ruggie has a preference for stating that CSR is a responsibility rather than a duty, gives credence to the flexibility of interpretation as stated by Garriga and Melé (2004: 65). In an interview with Business Ethics in October 2011, Ruggie said ‘the second pillar is what I call the corporate responsibility to respect rights. I chose the word responsibility, rather than duty, because for the most part, international law doesn’t apply directly to companies’ (Connor & Ruggie, 2011: 6th paragraph). Allowing for Ruggie’s carefully chosen words, this is an expression of desire for practice rather than a policy by which, participating, superficially democratic, nations are legally obliged to abide.
Friedman’s view of CSR was in direct contrast to that proffered by Ruggie. In 1970, Friedman said ‘the only one responsibility of business towards society is the maximization of profits to the shareholders within the legal framework and the ethical custom of the country’ (Melé, 2008: 55). The crucial clause in Friedman’s comment was “the ethical custom of the country”. However, Seidman (2009: 15) said this is ‘an era when most national governments seem weaker than footloose multinational corporations’. Combined with this, ‘corporations are not subject to international law and there is currently no general legal requirement for corporate actors to observe human rights under international human rights law’ (Muchlinski, 2012: 147). With Friedman (Melé, 2008: 55), Seidman (2009) and Muchlinski’s (2012) observations considered, this effectively leaves social responsibility to the discretion and interpretation of local corporate agents and their traditional means of ethical behaviour. This would obviously make any implementation of CSR highly subjective and interpretation would vary wildly throughout the world as to how this is practiced.
Friedman’s idea of a healthy society was of a heavily deregulated laissez-faire economic system and the thriving private concerns in that system, would naturally operate in a satisfactory ethical manner. Combined with this, Aune (2007: 209) goes a step further, claiming that Friedman is like ‘a fundamentalist Christian, who views any none literal interpretation of the bible as destroying faith. The smallest effort to consider the social impact of corporate actions is already a surrender to the enemy’, in this case, a practicing socialist ideology. This fanaticism and the influence that Friedman and his disciples have on modern economics affect the workings of CSR. Aune (2007: 212) also claims that ‘Friedman’s argument lacks rigour. The boundaries between moral and social responsibility are never made clear’, which, creates an ambiguity around implementation of both his economic philosophy and that of CSR. Friedman believed that corporations would, through the medium of benevolence at their discretion, ensure the best way of observing social responsibility.
Friedman said ‘It will be in the long-run interest of a corporation that is a major employer in a small community, to devote resources to providing amenities to that community or to improving its government. That makes it easier to attract desirable employees’ (Chryssides & Kaler, 1993: 253). With this statement, it is clear that Friedman believed that social responsibility would come naturally to the corporations operating and trading. However, this is a paradoxical statement from Friedman; if the corporations were to have taken Friedman’s advice to devote resources to invest in their locality, they could compromise the profit optimisation that he held such a strong conviction in (Melé, 2008: 55). From this comment, it would also appear that Friedman was advocating a form of deregulatory social responsibility, a movement from government imposition of ethical conditions on the workings of a corporation, to something akin to a privatisation of ethical policy. This is an idea that Ruggie is firmly against. Ruggie said that ‘States have certain legal obligations under customary international law. The bedrock of the Guiding Principles is that they do not attempt to privatise human rights protection’ (Ruggie & Connor, 2011: 5th paragraph). For any kind of social responsibility to be a success, there has to be a structural consensus on what behaviours are required and what is unacceptable. Friedman’s effective idea of privatising CSR and leaving it to corporate discretion, means that they would be diversified depending on which corporate actor decided what was ethical for their own employees or agents within their supply chain. Leaving CSR to the mercy of individual corporate actors clearly deregulates the proposals to the point of impotency.
Friedman said that ‘businessmen believe that they are defending free enterprise when they declaim that business is not concerned ‘merely’ with profit, but also with promoting desirable “social” ends; that business has a “social conscience”. In fact they are preaching pure and unadulterated socialism’ (Friedman, 2007: 173). However, this collides with his statement that ‘It will be in the long run interest of a corporation that is a major employer in a small community to devote to providing amenities to that community’ (Chryssides & Kaler, 1993: 253) but does tally with his discretionary view of how social responsibility should be implemented.
Aune (2007: 212) claims that ‘Friedman has admitted that the corporation has a moral responsibility: to increase the wealth of shareholders; yet shareholders are interested in making profits and fulfilling social responsibilities; from the minimum requirement of a safe workplace to refusal to do business with racist or terrorist states. Friedman thus, in a curiously paternalistic way, insists that his definition of corporate values must trump any social values held by shareholders’.
This is a succinct explanation of Friedman’s philosophy going around in circles. The one observation that is abundantly clear from Friedman’s comments is that whichever way he leans on CSR, state or any other kind of governmental regulatory intervention in corporate strategy is destructive and his desire for passing social responsibility of this to companies would make Ruggie’s proposals obsolete. This would appear to dispel any faint belief that a corporation should have any legal or moral responsibility for the wellbeing of the locality and the agents that the locality is home to. It would also show that philosophically, Friedman could be inconsistent with his argument as to what social responsibility actually was. The one consistency he did have in his view of social responsibility was that it was to be done without any governmental intervention, be that local or state government or international bodies like United Nations or the EEC/EU (Friedman, 1993: 5).
Allowing for the cloudy rhetoric of Friedman as to his thought processes on CSR, there is no doubt that at heart and in principle, he was against the idea of CSR. Aaronson & Higham (2013: 361) say that implementing the Guiding Principles will be expensive and time consuming. Many executives are not yet convinced that they need to do more than the little they are already doing. This position is consistent with the Neoliberal position as to why corporations will be reluctant to implement the CSR Guiding Principles. While Friedman slips into ambiguity, Ruggie can be equally vague when expressing his theory of how CSR Guiding Principles should work. Ruggie says;
‘The State duty to protect is a standard of conduct. Therefore, States are not per se responsible for human rights abuse by private actors. However, States may breach their international human rights law obligations where such abuse can be attributed to them, or where they fail to take appropriate steps to prevent, investigate, punish and redress private actors’ abuse’ (Ruggie 2011: 3).
This clause simultaneously absolves states from any responsibility of implementing the human rights directives, while placing an onus on state actors to take appropriate steps which, they were ‘not per se responsible for’ (Ruggie, 2011: 3). This idea collides with Aaronson & Higham’s observation. They say;
‘Although the Universal Declaration of Human Rights (UDHR) calls upon all organs of society to protect and promote human rights, whether civic groups, corporations, or governments, it does not distinguish specific responsibilities for business’ (Aaronson & Higham, 2013: 339)
This obviously creates confusion as to what the responsibilities are of corporations to ensure human rights are respected, both within their own structure and that of their supply chain. However, Ruggie points out that ‘if you have 100,000 suppliers, as Wal-Mart have now, you obviously cannot monitor the day-to-day activities of each and every one of your suppliers’ (Ruggie & Connor, 2011: 27th paragraph). This adds a strain to implementation due to the near impossibility of maintaining accountability for 100,000 actors of varying degrees of size within the supply chain of just one corporation.
While it is important for accountability in CSR implementation, Davis (1967) is wary of delegating legal responsibility to corporations. Davis (1967: 47) says ‘when freedom and initiative is lost to government, they are lost for the long run. If these are the facts, then the prudent course for business is to understand fully the limits of its power and to use the power responsibly, giving government no cause to intervene’. Wetzel (2015: 82) agrees with Davis, stating that corporations are abstract entities that are not fit to have human rights responsibilities or have any obligation to respect them. Wetzel (2015: 82) emphatically believes that human rights and CSR responsibilities are a state concern. However, allowing for Davis’ and Wetzel’s reluctance for corporate legal responsibility, their ideas are for corporate actors to respect CSR under their own volition, or risk government intervention. The important question here is, who decides what is satisfactory and what are the criteria? This could encourage a poststructuralist interpretation to CSR and its Guiding Principles, the very last thing it needs if it is to have a meaningful implementation.
Allowing for Ruggie’s reticence in his report in 2011, Davis does not provide an answer either, as he later says ‘Social responsibilities are difficult to determine and apply. Their relationships are complex’ (Davis, 1967: 49). Later in the same paragraph, Davis says ‘This is the iron law of responsibility. Those who do not take responsibility for their power, ultimately shall lose it’ (Davis, ibid). With Davis’ self-proclaimed difficulty in ascertaining what social responsibilities are, his idea for rule of responsibility bears more resemblance to zinc than iron.
Aaronson and Higham (2013: 359) say that under the Guiding Principles, corporations are supposed to monitor the performance of actors within their supply chain. However, a bigger problem for CSR is that ‘the Guiding Principles did not explain how firms should evaluate performance. Private businesses need to rely on metrics so they can monitor their performance over time. However, for metrics to be useful, they must be comparable across companies and accepted by stakeholders as trustworthy’ (Aaronson & Higham, ibid). This makes a farce of Ruggie’s proposals. By Aaronson and Higham’s observations, it is not Neoliberalism which is the main obstacle to a successful implementation of the CSR guidelines as the risibly slack measurement criteria for its implementation and success. Not only is the implementation of the Guiding Principles thwarted by the eternal quest for consensus, but with no numerical criteria to measure performance and provide a benchmark to conform to, it becomes impossible to say how CSR is being complied with.
Aaronson & Higham (2013: 361) say that ‘policymakers must educate their national firms regarding their human rights responsibilities. Policymakers should make it clear that firms are responsible for the behaviour of their suppliers’. However, implementing human rights guidelines on supply chain actors who are providing a service at optimum cost due to their lax attitude to CSR will be virtually impossible. They would have to go down a more certifiably ethical route to ensure rigorous accountability. However, with it already being ascertained that the ‘Guiding Principles did not explain how firms should evaluate their performance’ (Aaronson & Higham, 2013: 359), the question must be raised as to how they can do this, when the measuring system for CSR is not so much lax, as non-existent.
There is also a problem with state actors within the UN and how seriously they take their responsibilities. Aaronson & Higham (2013: 348) say that in response to a 2006 survey that Ruggie’s assistants sent out to the one hundred and ninety two state actors within the UN, only twenty nine responded. Ruggies ‘team found that most of the responding governments do very little to monitor the human rights practices of national or host firms or to educate national firms as to their human rights responsibilities’ (Aaronson & Higham, ibid). As poor and disappointing as the overall reply obviously is, the confusion over what exactly constitutes complicity could make a mitigating factor over the lack of response given.
Aaronson and Higham (ibid) say that thirty percent of the twenty nine respondents did allow the prosecution of corporations for human rights violations overseas. ‘For example, Australia, Belgium, Canada, France, the United States, and the United Kingdom allow individuals to sue companies for human rights violations’ (Aaronson & Higham, ibid). However, while the aforementioned countries theoretically allow individuals to sue human rights abusers, ‘compared to civil law, there are very few criminal law prosecutions for corporate human rights abuses. This could be explained by the many challenges in holding corporations criminally liable for when human rights abuses occur’ (Business and Human Rights Resource Centre, 2016: 3rd Paragraph). With there being so few prosecutions for human rights abuses by corporate actors, it could be claimed that there is virtually no problem and CSR is generally being faithfully observed. However, the financial power enjoyed by corporate actors (Seidman, 2009: 15) could easily dissuade the judicial process of state actors from taking legal action against them, especially as ‘a study by the anti-poverty charity, Global Justice Now, found that the number of businesses in the top one hundred economic entities jumped to sixty nine in 2015 from sixty three in the previous year’ (Inman, 2016: 3rd paragraph). Wal-Mart was tenth in the list of the strongest economies, bigger than politically significant state actors such as Saudi Arabia, Russia and Switzerland.
Source (Green, 2016: 6th paragraph)
For this reason and for this case, it could be argued that even if Ruggie wants states to be responsible for CSR and is firmly against the idea of privatising the implementation, with Wal-Mart’s economic power being greater than the vast majority of state economies in the world, the policy implementation has effectively already been privatised. Looking at the graph above, it would be difficult to see how even the largest state actors could assert CSR against corporations without losing the patronage and trade they bring to their respective economies. Smith and Lepeuple (2018: 2nd paragraph) say that ‘it no longer makes sense to argue that only states and not companies are capable of abusing human rights. The dominance of Neoliberalism means that multinational companies wield ever-increasing economic and political power’. In this instance, Smith and Lepeuple effectively argue that CSR implementation has already been privatised due to the financial dominance of corporations within the top one hundred world economies. With Ruggie viewing state implementation of CSR as a bedrock of the Guiding Principles (Ruggie & Connor, 2011: 5th paragraph) and the dominance of corporations over state actors within the economic power axis, there would have to be a serious revision of Ruggie’s Guiding Principles for CSR to have any hope of being effective.
Allowing for the serious compromise required, it is not an insurmountable conundrum for Ruggie’s Guiding Principles to overcome. Aaronson and Higham (2013: 344). say that ‘Ruggie noted that a firm’s due diligence process should apply to its business partners and suppliers. In doing so, he was arguing that firms would have to hold their affiliates responsible for human rights’. This idea gives credence to a privatised implementation of CSR, based on the principles of the senior agent within the business relationship as opposed to any governmental intervention and is also consistent with Garriga and Melé’s (2004: 65) assertion that CSR is framed to conform to neo liberal practice. At the very least, by its discretionary nature, Aaronson and Higham’s (2013) observation certainly keeps state actors away from implementation of CSR. This obviously contradicts Ruggie’s explicitly stated desire for no privatisation of CSR implementation, (Ruggie & Connor, 2011: 5th paragraph), yet his report inadvertently encourages the practice where he stresses ‘that in order to hold firms accountable for their behaviour, policymakers, consumers, and other corporate stakeholders should be able to monitor corporate performance’ (Aaronson & Higham, 2013: 344). Along with the previously alluded to discussion of Guiding Principles position on the state’s duty to protect (Ruggie, 2011: 3), this is another example of paradoxical rhetoric from Ruggie and how he thinks CSR should work in practice.
Any meaningful legislative implementation of CSR is significantly hampered not only by its voluntary status (Aaronson & Higham, 2013: 337) within the UN and state actors affiliated, but by a plethora of other factors too. Corporate financial power, as displayed in Green’s graph (2016) is an immense hindrance to the successful state implementation of CSR and it is difficult to see how that can change in the future. Allowing for the fact that Ruggie has composed the CSR Guiding Principles with the intention of working within the Neoliberal prism, the optimisation of profit, an idea sacred to Friedman (Melé, 2008: 55) and Neoliberal practice is viewed as being harmed by any state actor intervention (Friedman, 1993: 5) on the ethical behaviour of corporate actors. Another significant obstruction to any successful implementation of CSR Guiding Principles is the way it is composed by Ruggie. As highlighted within this chapter, there are paradoxical ideas presented by Ruggie, such as his insistence of no privatised implementation (Ruggie & Connor, 2011: 5th paragraph) and the effective privatisation of implementation (Smith & Lepeuple, 2018: 2nd paragraph) (Aaronson & Higham, 2013: 344), which, can easily create confusion for the sincere and a golden opportunity to the disingenuous. However, the biggest challenge facing any contemporary implementation is that there is no measuring mechanism or figure to prove or disprove compliance, as discussed by Aaronson and Higham (2013: 359). There is no hope of successful mass complicity with the Guiding Principles until all relevant actors know what is expected of them in a numerical sense to ensure consensus.
Chapter 3: Achieving a uniform CSR human rights policy within an economically globalised and a legally culturally nuanced world
‘The concept of CSR is far from being unanimous’ (Melé, 2008: 47).
For CSR to have any hope of becoming a policy which is implemented within the global trading sphere, it needs to have a unanimous or near unanimous consensus and substantial economic sanctions applied to either state or corporate actors as an appropriate deterrent for those who do not comply. For states, this could be in financial penalties applied or a pariah status akin to the one experienced by South Africa, particularly in the decade preceding the ending of their Apartheid policy and structure in 1994. For corporations, due to the economic power of the largest actors surpassing most state actors, a change in legislative responsibility would need to happen as ‘for the most part, international law does not apply directly to companies. It applies to states, and through what states do domestically, it applies to companies’ (Ruggie & Connor, 2011: 7th paragraph). While the previous chapter discussed the difficulties in implementation of CSR, particularly the lack of numerical criteria to measure complicity and the inadvertent privatisation of CSR, this chapter works on the hypothesis that those hurdles have been overcome. The chapter discusses if the CSR Guiding Principles could work in a globalised economy which functions within a Neoliberal structure and using an empirical example involving the transfer of labour by a corporate actor from the UK to India, explains the obstacles that a legally diverse and culturally nuanced world presents to CSR Guiding Principles.
Communication developments, particularly the advent of the common use of the internet which, occurred in the mid nineteen nineties has figuratively decreased the size of the world significantly and given far greater fluidity to global trade. Davis (1967: 47) said that ‘a century ago the acts of a business man in India were of little significance to the United States. However, today, with the world tied together in technology, communication and politics, and with U.S. firms operating in India, business developments in that country are significant to a U.S. firm’. While these developments could have caused a more uniform global trading structure, the reality is that through the Neoliberal economic model, it has created a significantly more competitive market place, where costs are cut and beneficial conditions adversely affect the agents at the lower echelons of the hierarchical structure. Ruggie’s proposals are not the first attempt at preventing this from happening. Early in the twentieth century, ‘many national governments tried to prevent global forces from eroding local labour conditions. Fledgling efforts at international governance responded to concerns that countries with superior labour conditions would be at a competitive labour disadvantage in international markets. Concerns about a worldwide race to the bottom led to the development in 1919 of the International Labour Organsation (ILO)’ (Flanagan, 2006: 3/4). The ILO may have successfully restrained the race to the bottom in certain ways for a period of time, indeed it won the Nobel Peace Prize in 1969 for its endeavours, but with developing countries keen to entice corporations to invest in their sovereign land and ‘third world governments tending to set the minimum wage below the subsistence level in an attempt to attract overseas investors’ (Wang, 2013: 3), its relevance has eroded dramatically in the Neoliberal era. This is in part due to the ILO becoming complicit with what John Williamson called the Washington Consensus in 1989. The Washington Consensus originally encouraged ‘policies such as the promotion of open trade, deregulation, privatisation and liberal financial markets that supposedly hasten economic growth’ (Aziz & Westcott, 1997: 4). Due to this occurrence, the ILO were placed ‘very much on the defensive and left many experienced observers wondering whether the ILO had meaningful role’ (Cogan, Hurd & Johnstone, 2016: 479), certainly in comparison to the role that it once fulfilled.
Where we have state actors with many different structures of regulation and nuances within those regulations that can be exploited by corporations, what is needed is clear guidance as to how CSR proposals can be both interpreted and implemented. With a Neoliberal consensus that is generally hostile to the idea and practice of a regulated CSR as well as the cultural nuances of the state agents it needs to be implemented in, the ideas expressed in Ruggie’s report need to be clear in its objectives. However, Richard Fenning, CEO of Control Risks, has reservations and concerns about the clarity of the Guiding Principles. In a letter to Ruggie on 31st January 2011, Fenning said that;
‘In the final stages of the drafting process, we would encourage you to elaborate on the ways in which, states can integrate these due diligence principles into existing or new structures. Without clearer guidelines for States, we fear that these principles may remain aspirational when they deserve to be operational’ (Fenning, 2011: 5th Paragraph)
This is an explicit expression of concern about the clarity of CSR Guiding Principles from the head of an independent global specialist risk consultancy that is generally sympathetic to the raison d’etre of CSR. While Fenning expresses concern about how state actors can integrate the principles into structures, there is a certain irony that he did not elaborate on what these structures could be in his letter. With the economic strength of corporate actors being as starkly obvious as it is from Green’s (2016) chart, which is displayed in the previous chapter, does Fenning mean the corporate sector and their legal responsibility to respect human rights? Even allowing for Fenning’s lack of clarity in lamenting Ruggie’s lack of clarity, there is no doubt that in principle, he is correct in highlighting Ruggie’s blurred rhetoric. This is particularly pertinent when considering there were significant regional differences with the human rights policies and compliance of corporations which, Aaronson and Higham (2013: 356) discussed. By nature of the laissez faire method of Neoliberalism, ‘firms have different cultures toward human rights’ (Aaronson & Higham, 2013: 339). The UDHR needs to recognise that with the effective privatisation of CSR (Smith & Lepeuple, 2018: 2nd paragraph) (Aaronson & Higham, 2013: 344), it is at least as incumbent on corporations to abide by the Guiding Principles and be held to account.
Davis (1967: 50) believes that history has proved that properly implemented Guiding Principles would lead to corporations taking the initiative to maintain the standards. In regards to safe working conditions, Davis (ibid) says: ‘Under the protection of common law, employers during the nineteenth century gave minor attention to worker safety. Early in the twentieth century, in the face of pressure from safety and workmen’s compensation laws, employers changed their attitudes to accept responsibility for job safety. Since then, very few restrictions have been imposed on business power in this area because business in general has been acting responsibly’
The most pertinent thing about what Davis said is that the claim was made while the western world operated under the Keynesian economic model, before the paradigm change to Neoliberalism in the mid nineteen seventiess. This is an example of ethical policy breeding a behaviour where CSR would be widely complied with as a matter of nature, as opposed to the reluctant lip service that it at best it contemporarily receives. In the current climate of state actors competing for the privilege of hosting corporations, businesses have moved their operations to state actors who have less regulation. Hence, cheaper employer liability and less corporate social responsibility, which is consistent with Friedman’s philosophy of profit optimisation (Melé, 2008: 55). However, while Friedman might have thought that his profit optimisation would have led to a better society (Friedman, 2007: 173) (Chryssides & Kaler, 1993: 253), all it has really done is accelerate a race to the bottom in CSR by globalisation.
In 2013, UK Trade and Investment, a UK Government QUANGO claimed that ‘the UK is renowned for providing international investors with the best combination of labour market attributes in Europe. This includes having one of Europe’s largest workforces and flexible labour regulations’ (UK Trade & Investment, 2013: 8). The crucial line in this paragraph is the boast of having “flexible labour regulations”, which, would countenance any possible uniformity that CSR Guiding Principles would have. Furthermore, UK Trade and Investment said ‘The legal system supports and protects business interests, and cuts to bureaucracy are reducing burdens on business’ (UK Trade & Investment, 2013: 2). The flexibility and cuts to bureaucracy cited by UK Trade and Investment are a euphemism for weak protection rights for employees in comparison to their partners within the European Union. Indeed, in 2007, it was claimed by the House of Lords; European Union Committee that: ‘It is easier to hire and fire UK workers than in almost any other Western European country. Amongst the Organisation for Economic Co-operation and Development nations, the World Bank places the UK as the fourth easiest place to business and the sixth easiest to hire and fire workers’ (House of Lords, 2007: 109).
With the sixth largest economy in the world (Green, 2016: 6th paragraph) promoting itself as an agent where there is a reduction on what they call bureaucracy, in reality, regulation in favour of protecting employees, and boasting of the ease to hire and fire workers, this should be of concern to any hope of the CSR Guiding Principles being universally adopted when such a significant economy is promoting this practice. A 2003 report in the London Evening Standard claimed that research by the Communication Workers Union had revealed that twenty eight firms have outsourced more than fifty thousand jobs serving UK customers to India over the previous two years. (London Evening Standard, 2003: 1st and 9th paragraph). This practice persists contemporarily, with the Royal Bank of Scotland announcing the outsourcing of over four hundred UK based jobs to India in June 2017, ‘as part of an ongoing cost-cutting drive’ (BBC, 2017: 2nd paragraph). Singh & Zammit (2004: 1) said that the subject of establishing minimum labour standards is deeply divisive as it pits workers of the rich countries in the Northern hemisphere against those in the poorer countries of the Southern hemisphere.
In this instance, Singh & Zammit (2004), the London Evening Standard (2003) and the BBC (2017) highlight how the nuanced global regulations can mean the workforce at the lower echelons of a state actor with 28% of its citizens living in poverty (Times of India, 2018: 2nd paragraph) can be exploited by corporate actors with employees in other territories with superior working conditions. That the people who were displaced from their jobs were from a state actor which, was promoting itself as market place where agents were easy to dispose of is a classic display of the race to the bottom reaching a natural conclusion and also displays a fatal flaw in the hopes of CSR Guiding Principles ever working properly. While this transfer of labour from one state actor to another is not in isolation an abuse of CSR Guiding Principles, it does show that corporations in a Neoliberal economic climate will by nature do as Friedman decrees (Melé, 2008: 55) and optimise profit over every other consideration. For this reason and even allowing for Garriga and Melé’s (2004: 65) claim that CSR is composed with the intention of working alongside Neoliberalism, it is impossible to see the prevalence of CSR Guiding Principles occurring within a global Neoliberal sphere.
Interpretation and subjectivity as well as cultural nuances and practices are a major hurdle to the success of CSR Guiding Principles. Votaw (1972: 25) said ‘Corporate social responsibility means something, but not always the same thing to everybody. To some it conveys the idea of legal responsibility; to others, it means socially responsible behaviour in the ethical sense’. Alongside this ambiguity is Ruggie’s lack of clarity in his 2011 document, which, does not make a universal interpretation any easier to decipher. The fact that Germany and France both have larger economies than the UK (Green, 2016: 6th paragraph) and far stronger employee protections than both the UK and India have (UK Trade & Investment, 2013: 2 and House of Lords, 2007: 109) and are likely to have for the foreseeable future means that the race to the bottom does not necessarily mean a healthier state economy. However, this empirical example does show that major corporations will move their operations to a state actor that has a more favourable climate for profit optimisation when opportune. It is for this reason that ‘it is untenable to expect companies to enforce their codes voluntarily. Governments and international bodies should ultimately control the workers’ rights by regulating companies through both national and international legislation’. (Monshipouri, Welch & Kennedy, 2016: 979). The only way this can happen is for a uniformly agreed CSR Guiding Principles within world trade, a concept which, is nigh on impossible within a contemporary Neoliberal structure which, exploits an economically globalised and a legally culturally nuanced world.
Chapter 4: Perception, Reputational damage and the effects that reported poor treatment of agents in the lower echelons of the supply chain has on corporations
Having established that consistent with Friedman’s doctrine of profit optimisation (Melé, 2008: 55) a corporation’s prime concern is the health of the annual profit report, this chapter will assess how and if adverse coverage of a corporation’s behaviour in CSR can affect its performance in an economic and reputational sense. The potential for reputational damage and the effects it has on a corporation’s bottom line is a highly subjective one. Davis (1967: 47) said ‘the climate of public opinion increasingly insists that actions by all institutions and persons must be responsible. Responsible business becomes necessary in order to maintain a favourable public image’. This chapter will argue that a favourable public image is desirable for corporations, but not necessarily essential.
Analysing arguments presented by Ruggie (2011), Connor (2001), Zadek (2004) Aune (2007) and Davis (1967), this chapter will be split into two sections. The first section will focus on an empirical case study involving Nike and the adverse publicity the corporation received, particularly from 1998 to the present day. There will be a discussion about how the adverse publicity affected Nike’s conduct, specifically the use of child labour in the developing world, both on a superficial and deeper level and there will be a focus on statistical evidence to discuss the behaviour of Nike’s consumers once the adverse publicity became ubiquitous. The second part of the chapter will examine Nike’s actions looking through a lens of rational choice theory and the chapter will be linked throughout by an examination of consumer behaviour. The first part and the second part will use the rational choice theory lens to discuss the behaviour and how the adverse publicity has affected it in both senses.
Ruggie (2011, 7) said that corporations that do not adhere to the CSR Guiding Principles ‘put themselves at risk in reputational, financial, political and potentially legal terms for supporting any such harm and they may add to the human rights challenges faced by the recipient state’. While there is a demographic who shop scrupulously and are happy to pay a premium for goods and services which, are sourced ethically and while adverse publicity can certainly affect a corporation’s profit in the short term, for varying reasons, this chapter will argue that a significant number of agents are content to turn a blind eye to poor human rights practices if it is suitable for them to do so.
Nike have experienced significant negative publicity over the past two decades due to the working conditions imposed on agents within its supply chain. The corporation, acutely aware of the adverse publicity have publicly addressed the concerns expressed on several occasions. In May 1998, it was reported in the New York Times that;
‘Bowing to pressure from critics who have tried to turn its famous shoe brand into a synonym for exploitation, Nike Inc. promised to root out underage workers and require overseas manufacturers of its wares to meet strict United States health and safety standards’ (Cushman jr, 1998: 1st paragraph).
Nike cited operational costs as to why it would not bring production of its materials back to the state actor, the USA, where it is domiciled. In his 1998 speech, Nike CEO, Phil Knight said ‘A lot of people say, “Why don’t you bring shoemaking back to the United States?” Our studies show that using the same production techniques, the average cost at retail for a pair of Nike shoes if we did that would go up by $100” (Knight, 1998: 4). In practice, this means that ‘shoes that cost $16.75 to manufacture are sold for around $100 in the USA’ (Beder, 2002: 7th paragraph)
This operating method is consistent with Friedman’s core ideal of profit optimisation (Melé, 2008: 55) and it also displays a working of rational choice theory. In this instance, Knight was well aware of the adverse press that would occur from certain bodies, particularly protectionists, but he was content that it would not adversely affect Nike in an economic sense. In 1999, Nike’s fiscal report said ‘The U.S, which, represents our largest market segment, experienced the largest dollar reduction, decreasing $415.7 million, or 8%’ (Nike, 1999: 2nd paragraph), however, overall, Nike’s ‘net income increased 13%’ (Nike, 1999: 1st paragraph). Even allowing for the promises made by Knight (Cushman jr, 1998: 1st paragraph) for an improvement in conditions to agents within the lower echelons of Nike’s supply chain, in May 2001, Global Exchange found that ‘evidence continues to emerge of young persons under the age of 16 employed in Nike contract factories’ (Connor, 2001: 1). This was despite Knight promising that the minimum age of workers would be raised to 18 in his address three years prior (Connor, 2001: 2). The Global Exchange report subsequently became headline news around the developed world.
In Guiding Principles on Business and Human Rights (2011), Ruggie said;
‘Where agencies do not explicitly consider the actual and potential adverse impacts on human rights of beneficiary enterprises, they put themselves at risk – in reputational, financial, political and potentially legal terms – for supporting any such harm, and they may add to the human rights challenges faced by the recipient State’ (Ruggie, 2011, 7)
With Knight’s promises from 1998 not being observed and with Nike being subject to a huge amount of negative publicity due to the conditions revealed in the Global Exchange report of 2001, Nike still announced 2001 profits as being ‘up 29% at $163m’ (BBC, 2001: 3rd paragraph). This would suggest that the heavily negative scrutiny of Nike’s reputation during this era and the undoubted reputational damage that occurred did not affect the corporation’s financial health. On the contrary, the company’s fiscal report in June 2002 showed a 28% increase in profits (CNN, 2002: 3rd paragraph). These results were issued when the full implications of its adverse publicity from the Global Exchange report the previous year would have been fully realised.
In October 2001, Knight performed a mea culpa, saying ‘our age standards are the highest in the world: eighteen for footwear manufacturing, sixteen for apparel and equipment, or local standards whenever they are higher. But in some countries [Bangladesh and Pakistan, for example] those standards are next to impossible to verify, when records of birth do not exist or can be easily forged’ (Shankman & Kelly, 2013: 98). Knight did not elaborate on how Nike had found it impossible to verify the ages of underage agents within its supply chain in Pakistan and Bangladesh, something which, Global Exchange (Connor, 2001: 1) had managed to do, but his point was similar to the one made by Ruggie about Walmart’s supply chain accountability (Ruggie & Connor, 2011: 27th paragraph). Allowing for Knight’s problems of age verification within the supply chain and more pertinently, Global Exchange’s widely reported claims about supply chain malpractice, the economic performance of Nike was barely affected by the plethora of adverse publicity experienced during that phase.
Nike continue to perform well economically despite the sporadic adverse publicity regarding the treatment of agents within its supply chain. In January 2013, it was reported by ABC News in Australia that ‘workers at a Nike shoe factory in Indonesia say the factory paid military personnel to intimidate them into working for less than the minimum wage’ (Roberts, 2013: 1st paragraph). Despite another widely reported example of poor treatment of agents within the lower echelons of its supply chain, Nike continued to thrive in an economic and reputational sense. In 2014, Nike were the 13th most admired company in the Fortune list (CNN, 2014) and its revenues were up by 10% (Nike, 2014: 3rd paragraph). Contemporarily, a collaborative investigation between The Guardian and Danwatch, in June 2017 found that ‘Women working in Cambodian factories supplying some of the world’s best-known sportswear brands are suffering from repeated mass faintings linked to conditions… the most serious episode, recorded over three days in November (2016), saw 360 workers collapse’ (McVeigh, 2017: 1st & 2nd paragraph). Despite this latest adverse publicity, in May 2018, the corporation announced in its year end fiscal income statement that revenues ‘rose 6 percent to $36.4 billion, up 4 percent on a currency-neutral basis’ (Nike, 2018: 12th Paragraph) and it was ranked 16th in Fortune Magazine’s list of the most admired companies in the world. (Fortune, 2018)
These examples provided from the BBC (2001), CNN (2002 & 2014) Nike Corps (1999, 2014 & 2018) and Fortune Magazine (2018) show that Nike’s operational profits and overall reputation were barely affected by the significant adverse publicity it was receiving due to the conditions for agents within its supply chain. Ruggie’s claim that adverse impacts on human rights could affect the wellbeing of a corporation in regards of financial and reputational terms (Ruggie, 2011, 7) has been proved to be a fallacy, both by the financial and reputational success of Nike since it first acknowledged a problem with human rights within its supply chain in 1998 (Cushman jr, 1998: 1st paragraph).
Zadek (2004) and Aune (2007) disagree on both how Nike behaved in the aftermath of the initial adverse publicity and the effect it had on investors and consumers. Zadek (2004: 171). said ‘consider the global media coverage of the company’s alleged malpractices, yet institutional investors have shown a startling disinterest in Nike’s handling of its labour standards’. In a relative sense, this is also true of consumers, which would contradict Aune’s findings. Aune (2007: 212/213) referred to Nike’s enlightened practices ‘after the nineteen nineties activist assault on Nike for maintaining sweatshop conditions on its overseas suppliers. Friedman does not seem to imagine an audience of consumers who might desire to purchase commodities grown, manufactured, or distributed under ethical conditions’. This may have been true when Friedman was composing his philosophy, but a poll of more than 30,000 consumers in sixty countries by Nielsen in 2015 showed that ‘66% of global respondents are willing to pay more for products and services that come from companies that are committed to positive social and environmental impact, up from 55% in 2014’ (Nielsen, 2015: 8th paragraph).
While there may be a growing trend of agents who claim to be happy to pay extra for goods and materials made under ethical conditions, Knight’s (1998: 4) concerns of production costs and the domino effect that he claims it has on consumer prices means that the Neoliberal practice of source optimisation will prevail for the foreseeable future. With Nike’s profits being consistent over the two decades of sporadic adverse publicity, rational choice theory and practice mean that Nike have no incentive to change its supply chain methods. Knight’s claim (1998: 4) about production of its merchandise costing significantly more if it were made in its domiciled country barely affected its annual profit. With this, Nike have deduced that its present modus operandi to optimise profits, as consistent with Neoliberalism philosophy, will not change consumer behaviour to such an extent that it would significantly risk the corporation’s profits, assuming they are affected at all. Zadek said that “value customers focus on price and are generally less responsive to ethical proposition, particularly those involving faraway problems like worker conditions in Asia or Latin America” (Zadek, 2004: 28th par). In this context, this is a classic example of the attitude of corporate consumers in a sense that distance influences their spending. In a similar way that people who see the processing of animals in an abattoir would feel deeply uncomfortable consuming the produce that emerged from it, the same could be said for consumers of goods made in working conditions that would be illegal in the state actor they are domiciled in.
Nike argued ‘for regulated international labour standards, which, would offset any possible competitive disadvantage that Nike would incur if it had to go it alone’ (Zadek, 2004: 28th paragraph). With this argument, Nike simultaneously advocated a policy that would be anathema to a Friedmanite Neoliberal position and deflected any ethical responsibility that it as a corporation has. Nike said this, safe in the knowledge that a uniform CSR human rights policy within an economically nuanced world being almost impossible to implement. Nike initially brought its production to the state actors that permit these conditions to optimise profit, as admitted by Knight (1998: 4). With its present successful approach of conformation to the Neoliberal doctrine, it would be highly unlikely that Nike would keep its production within a state actor that imposed ethical conditions and thus, increased costs, on its production methods. Nike’s economic performance since the revelations of 1998 has continued to be robust and indeed, its rankings in the Fortune Magazine’s list of the most admired companies in the world (CNN 2014 & Fortune, 2018), show that any damage to its corporate reputation has been negligible. Aaronson & Higham (2013: 364) said ‘although the debate over the Guiding Principles was open to the public, the public was uninformed and uninvolved. Governments should begin by explaining to the public why these principles are necessary, useful and in the public interest’. With virtually no public engagement within the compositional process of CSR Guiding Principles and with only occasional mainstream media coverage of CSR malpractice, it is difficult to see how there can be any reputational damage for a corporation if they are breaking covenants that hardly anybody knows about.
In summary, it is obviously desirable for a corporation to have a good reputation for respecting conditions of agents working within them, but the evidence presented within this chapter would suggest that the emphasis of reputation to a major corporation is not as important as Davis thought. Davis (1967: 49) said ‘what are the consequences of responsibility avoidance? If responsibility arises from power, then the two conditions tend to stay in balance over the long run and the avoidance of social responsibility leads to a gradual erosion of social power’. The high profile nature of the working conditions experienced by agents within Nike’s supply chain would under Davis’ (1967) theory have caused significant damage to the wellbeing of the corporation. With Nielsen’s (2015: 8th paragraph) findings of an increasing demographic who are prepared to pay more for ethically produced merchandise, this may influence how Nike approach the conditions of agents within its supply chain. However, with its contemporary financial results being as healthy as they are, from a Neoliberal perspective of conducting trade, it has little incentive to do so.
5: Future of CSR, is there any way it can work?
This chapter will consider and debate the possibilities of CSR becoming an operating and widespread policy in the current global economy. CSR has often been described as a progressive movement that defines itself in stark opposition to market fundamentalism and the deregulatory urges of Neoliberalism (Valentin, 2012: 2). With this considered, there will be a discussion about how or if the respective philosophies of CSR and Neoliberalism can work in tandem to create a world order where laissez faire trade can work alongside fair trade. With empirical examples involving Coca Cola and Adidas, there will also be an analysis of how CSR can work when it has no legal standing in state or international governmental policy. An empirical example will also be presented involving the Hugo Boss Corporation, which, will display how corporations can not only outwardly abide by CSR Guiding Principles, indeed, draft their own equally impressive theoretical ethical policies, but through a breath-taking lack of diligence, have agents within their supply chain working in conditions akin to a Victorian workhouse.
Verschoor (1998: 1515) says ‘that a broad corporate concern for ethical conduct toward stakeholders is becoming a mainstream management issue in achieving higher profitability’. Gjølberg (2009: 5) concurs with Verschoor, saying that ‘in a globalised economy, a responsible profile is more than a nicety…today they need to go beyond legal requirements in order to be perceived as responsible and legitimate actors’. With this in mind and particularly after the adverse publicity Coca Cola received in the wake of the Bebidas court case in Colombia (Brodzinsky, 2003), for which, it as a corporation were eventually exonerated (Stephens, 2008: 322), Coca Cola has outwardly given great attention and respect to good practice of CSR. In 2003, Coca Cola started its social auditing programme (Coca Cola Company, 2017: 8) and in 2005, Coca Cola employed Ed Potter as a Director of Global Workplace Rights after he had been working for the ILO for twenty three years. During Potter’s decade in position at Coca Cola, the corporation had made significant improvements in its reputation for CSR Guiding Principles observation. Potter claimed that ‘we are now sought after as a company to learn from, based on our tools and framework for respecting human rights’ (Moye, 2014: 23rd paragraph). Brent Wilton succeeded Potter on his retirement in 2015. Wilton continued Potter’s (2014) rhetoric, saying ‘The Coca-Cola Company has publicly supported the United Nations Guiding Principles on Business and Human Rights since its inception in 2011. The UN Guiding Principles are the foundation of our policies and programs on human rights’ (Wilton, 2017: 5th paragraph). There is also practical evidence of Coca Cola adhering to good CSR in Africa. ‘Coca Cola has embraced CSR in Africa via its support of HIV/AIDS workplace policies. These include confidential screening for workers and their immediate families and Coca Cola puts in excess of 1% of its profits before tax into its CSR programmes’ (Cook, 2008: 88). That a global corporation with the size and profile of Coca Cola are endorsing good human rights practice with such enthusiasm should ostensibly bode well for the future of CSR Guiding Principles.
Adidas are another world famous corporation making vociferous efforts to conform to CSR Guiding Principles. Adidas claim that it is operating responsibly ‘by safeguarding the rights of those workers who manufacture our products through our workplace standards; and by applying our influence to affect change wherever human rights issues are linked to our business activities’ (Adidas, 2018: 1st paragraph). In 2014, Adidas lobbied Dongguan mayoral office on behalf on behalf of two trade union representatives who worked in its supply chain and had been incarcerated for their union activities (Borromeo, 2014: 9th, 11th & 14th paragraph). This intervention by Adidas is very unusual in a corporate atmosphere which, is normally hostile to the existence of trade unions and their representatives (Molyneux, 2001: 53).
This observance of CSR has had no adverse effect on its annual profits. In 2017, Adidas ‘achieved record sales of $21.2 billion, reflecting a currency neutral growth of 16%’ (Rorsted, 2018: 18) and Coca Cola announced a net profit of €426.5 million, an increase of €82.5 million on the previous year’s results (Coca Cola, 2018: 7). Both of the aforementioned are examples of how a conscientious CSR observation can still result in profits and growth.
The manifest adherence to CSR Guiding Principles practice as shown by Coca Cola and Adidas could by example, have created a positive human rights policy as custom and practice by global corporations. However, while there is undoubtedly good human rights ethical practice amongst some corporations, there is also an abundance of evidence that large corporations are abiding by Friedman’s original maxim of profit over all (Melé, 2008: 55) and at best, turning a blind eye to non-practice of CSR Guiding Principles, if not outright human rights abuses. This could be due to a reluctance for corporations to place themselves at a potential disadvantage by adopting more stringent policies for human rights within their supply chains. Aaronson & Higham (2013: 354) say that ‘unless the majority of firms take action, early adaptors could face an uneven playing field, where some firms establish due diligence mechanisms at considerable cost. But as of year-end 2012, few firms are doing anything to implement the GPs’.
In January 2018, a report in The Guardian (UK) claimed that an investigation into Best Corporation, the company used by Hugo Boss in its supply chain, found thousands of young migrant workers confined to factory premises in Tamil Nadu in India (Bengsten, 2018: 4th paragraph). This is contrary to Hugo Boss’s ethical code, which, says that ‘we respect human rights and are committed to ensuring that we comply with them. These rights include above all the protection of the personal dignity and privacy of each individual’ (Hugo Boss Corporation, 2018: 4). This is an example of enshrined CSR policy not being observed at a practical level in the supply chain. It could be argued in mitigation for Boss that even with the best intentions and practice, it is impossible to ensure that absolutely everybody’s personal dignity and privacy is respected. There will always be small cases of abuse and malpractice within even the most vigilant of CSR Guiding Principles practice. However when thousands of agents in the supply chain are confined to a working compound, effectively bonded labour, (Bengsten, 2018: 7th, 11th – 13th paragraphs), despite the claims of Boss corporation, it is a lamentable observation of its own stated policy and an indictment on its CSR auditing process.
Within the EU, there is some potential progress for a better observation of CSR Guiding Principles. Karmel (2017: 6th paragraph) says that certain companies in Europe are being compelled to report on potential human rights abuses and practices of slavery, both within their own organisations and their supply chains. Karmel (2017: 11th paragraph) specifies that the German and French Governments are mandating large corporations to publicly report on how they are dealing with human rights concerns. While this is an encouraging development for proponents of the CSR Guiding Principles, particularly from the respective third and fifth largest economies in the world (Green, 2016: 6th paragraph) and two state agents that operate on Neoliberal economics, there still needs to be a lot more done for CSR to become a de facto policy that is widespread amongst significant state actors.
Aune (2007: 216) says that ‘it remains to be seen whether a kinder, gentler capitalism may emerge out of the CSR debate, but in the meantime, we need to insist that opponents of CSR argue from their assumptions as well as their conclusions’. The year following Aune’s comments, specifically September 2008, a financial crisis occurred which, caused ‘a near meltdown of the Global Finance system’ (Hieronymi, 2016: 7). In the banking sector, Lehman Brothers went out of business and in the UK, Bradford & Bingley, HBOS and the Royal Bank of Scotland had to be nationalised by the incumbent Labour government or they would have stopped trading. The ramifications of the respective banks ceasing to operate would have been catastrophic to the UK economy and the fact that they had to be nationalised meant that this displayed the most spectacular failure of Neoliberalism to date. Ten years prior, Russia, a relative newcomer to the Neoliberal economic philosophy had an economic crash which, Kotz (1998: 9) predicted would vanquish the practice of Neoliberalism in Russia. On both occasions and despite the nationalisations in the UK and Kotz’s (1998: 10) forewarning, the philosophy of Neoliberalism not only survived but thrived and continues to do so. Aune speculated (2007: 216) on the possibility of a gentler and kinder capitalism emerging. However, with CSR being widely ignored by both state and corporate actors (Aaronson & Higham, 2013: 348) and Votaw’s (1972: 25) observation of the subjectivity of interpretation of CSR not being clarified by Ruggie (2011) and the strength that Neoliberal economic model continues to enjoy, empirical examples of post-2008 corporate ethical practice would suggest that it is difficult to see a kinder capitalism emerging through corporate initiative.
Friedman (1951: 90) said “It has become abundantly clear that nationalisation solves no fundamental economic problems; that centralized economic planning is consistent with its own brand of chaos and disorganisation; and that centralised planning may raise far greater barriers to free international intercourse than unregulated capitalism ever did“. With the economic catastrophe only being avoided by state intervention in 2008 and the failure of Neoliberal economic practice being instrumental in that debacle, there is a certain irony that nationalisation, the very thing that Friedman disparaged, was used to save the economic system that he had such a profound global influence on implementing. Allowing for the irony and paradoxes of Friedman’s assertion and the near calamitous conclusion that Neoliberalism brought to the economic systems of the developed world, it remains as powerful a philosophy as it did prior to the crisis.
With state intervention coming to the aid of Neoliberalism, it also needs to have a heavy involvement in CSR legislation for the idea of Ruggie’s 2011 Guiding Principles to have any hope of having widespread and mainstream influence on global corporate behaviour. The voluntary nature of CSR (Aaronson & Higham, 2013: 337) means that the philosophy is implemented at the discretion of corporate agents. Monshipouri, Welch & Kennedy, 2016: 979) say that ‘it is untenable to expect companies to enforce their codes voluntarily. Governments and international bodies should ultimately control the workers’ rights by regulating companies through legislation’. Without any legislative framework to abide by and corporations allowed to deal with CSR on a discretionary basis, there can be no consistency applied to any CSR Guiding Principles in practice (Votaw, 1972: 25). Ruggie (2011, 11) stated that there should be adequate room within domestic government policy to respect human rights obligations and that ‘states should set out clearly the expectation that all business enterprises domiciled in their jurisdiction respect human rights throughout their operations’ (Ruggie, 2011: 3). However, Ruggie’s proposals are hampered by a lack of metric criteria (Aaronson & Higham, 2013: 359), which, makes it impossible to measure compliance. This would suggest that to ensure a working and consistent application of CSR Guiding Principles, there needs to be an agreed consensus of legislation, philosophy and metrics. Without those norms established, CSR Guiding Principles cannot function to a degree that corporations can respect and with the present system incumbent, a meaningful observance of CSR Guiding Principles around the globe will not work in the way they were intended to do by Ruggie (2011).
This dissertation has discussed the conflict between the U.N. mandated CSR Guiding Principles, as composed by Ruggie (2011) and Neoliberalism with a particular emphasis on the philosophies of Friedman (1951, 1962, 1970 & 1993), ‘who saw CSR as an undermining of both the free market and capitalism’ (Deva, 2012: 122). It is important to point out that Friedman was not against human rights per se, indeed, he was an advocate for a minimum income for everybody (Friedman, 1951: 93), but he was strongly against the imposition of human rights regulation on corporations (Melé, 2008: 55).
Allowing for Friedman’s antipathy to human rights regulation, the necessity for CSR Guiding Principles on human rights is obvious. The Guiding Principles should provide a structure with no ambiguity as to how corporations behave and a minimum standard for corporate behaviour in the wellbeing of the agents within their supply chain. This dissertation highlights three significant hurdles which are preventing Ruggie’s (2011) CSR Guiding Principles from having a significant effect on corporate behaviour.
The first hurdle is the lack of metric criteria for measurement of compliance with CSR Guiding Principles (Aaronson & Higham, 2013: 359). If there is no adequate method of metric criteria for compliance, then corporate observation of CSR veers into a post structural territory of subjectivity. With no consensus or guidance of metric criteria, it is impossible to measure corporate compliance of CSR with any accuracy. Conscientious corporate agents have no specific targets to abide by CSR without a metric criteria, they can only guess as to what complicity is and the lack of metric criteria gives the less scrupulous corporations sufficient excuse to ignore the Guiding Principles.
Secondly, with Votaw (1972: 25) explaining the subjectivity of CSR and Ruggie’s failure to make crucial caveats of the CSR Guiding Principles clear and unambiguous (Aaronson & Higham, 2013: 339), the UN mandated report that Ruggie composed is impossible to implement within a global trading structure where standards are sacrificed and ‘corners cut’ to optimise profit (Melé, 2008: 55) (Friedman, 2007: 173). As per the previously cited lack of metric criteria, the same applies to ambiguous language when attempting to define what the CSR Guiding Principles do, especially regarding state responsibility, as Ruggie (2011: 3) does in his report.
The third and arguably strongest obstacle to a successful observation of the CSR Guiding Principles is the profound influence Friedman’s concept of Neoliberalism has on geopolitical economic policy. With Garriga and Melé (2004: 65) claiming that CSR Guiding Principles were composed with the intention of working in tandem with Neoliberalism and the open hostility towards any kind of regulatory structure by Friedman (2007: 173), it could be argued that Ruggie’s proposals attempt to please everybody and ultimately end up pleasing nobody.
As the case study discussed in Chapter 5 involving Nike displayed and despite a plethora of sporadic adverse publicity over the past two decades for poor CSR compliance, they remained throughout and continue to be a financially robust corporation (CNN, 2002: 3rd paragraph) (Nike, 1999: 1st paragraph) and they also score highly in surveys regarding corporations that are admired (CNN 2014) (Fortune, 2018). The continued financial success of Nike contradicts the argument presented by Davis (1967: 49) which says that corporations need to be seen to be behaving responsibly towards agents within their supply chain. There is little doubt that a good reputation is desirable, but it is not essential to a corporation’s success.
Whilst there are high profile corporations who are setting an example as to how to conduct a healthy business with an ethical model throughout their supply chain, too few are following the example. Kim Ji Hye (2016: 31) says that ‘over 8,000 businesses in the world are now showing their engagement in CSR’. Bearing in mind that in the UK alone, ‘there were 5.7 million private sector businesses in the UK in 2017’ (Rhodes, 2018: 4), then the aforementioned approximate amount of 8,000 businesses, that are engaging with CSR is risibly low. Aaronson & Higham (2013: 362) say that Ruggie and his team effectively altered the debate over business and human rights. However, if only a few firms from some countries implement the Guiding Principles, then they will have minimal impact. As discussed in Chapter 4, for the Guiding Principles to have any significance, then based on the chain is only as strong as its weakest link axiom (Reid, 1822: 374), there has to be a uniform consensus of what principles to abide by and meaningful sanctions applied for any transgressions of the principles. At present, there is not and there is no sign of there being so in the future.
Working on the assumption that Neoliberalism, as defined by Friedman, is incompatible with CSR, the only real hope of the CSR Guiding Principles having any significant influence in global corporate policy would be a changing of global economic policy away from Neoliberalism. Aune (2007: 216) said that ‘it remains unclear whether American business is capable of continuing trends towards CSR, or if Marxists are correct that the entire system of global capitalism must collapse before human values take precedence over profits’. This particular scenario is discussed in Chapter 6, where in the UK and USA in 2008, the near collapse of the global Neoliberal economic system resulted in several banks being nationalised, a scenario that Friedman (1951: 90) would have been virulently against. Despite the state intervention which saved the institutions and thus, the simultaneous spectacular failing of the Neoliberal economic philosophy, the ideology and influence of the Neoliberal economic model is as strong today as it has ever been. The events of 2008 were the cataclysmic event that the Marxists said needed to happen to ensure a human values precedence (Aune, 2007: 216). The reality is that with Kim Ji Hye’s (2016: 31) findings, there has been virtually no change from in attitude towards CSR since 2006, when twenty nine state actors out of a possible 192 responded to a survey from Ruggie’s team, which asked about observations of CSR practice within their jurisdiction (Aaronson & Higham, 2013: 348). Of those that did respond, most admitted to doing “very little” to maintain the CSR was being observed from corporate actors based in their state (Aaronson & Higham, 2013: 348). With Ruggie’s (2011: 3) desire for states to have a significant role in implementing the Guiding Principles and with the voluntary nature of CSR (Aaronson & Higham, 2013: 337), the low engagement (Kim Ji Hye, 2016: 31) and the prevailing strength of the Neoliberal economic philosophy and its profit optimisation over everything else (Melé, 2008: 55), the Neoliberal consensus undermines the Corporate Social Responsibility Guiding Principles to the point of impotency.
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