The Corporate Social Responsibility (CSR) industry and proposals for corporate legal accountability are expressions of corporate ideology created in response to the backlash against the legitimacy of the corporate form and profit-making activities.
Corporate Social Responsibility – and its younger sibling, ‘Corporate Citizenship’ (CC) – have in recent years lost much of their ideological purchase, however, and are frequently exposed as whitewashing or greenwashing efforts. While there may be concrete local benefits from schools and clinics built by corporates in remote areas (and there are real reasons for non-governmental organisations (NGOs) or indeed Market-NGOs (MaNGOs)4 to support such programmes), activists and corporate strategists alike largely recognise that CSR and CC are regimes of corporate ideology designed to make (mainly Western) consumers (and, to a lesser extent, institutional investors) feel better about buying their products or services.
While the adoption of non-binding CSR ‘commitments’ may have marginally improved corporate behaviour, it is also clear that CSR does not fundamentally change the parameters within which companies operate. For instance, BP’s massive ‘green’ makeover did not bring an end to environmental controversy or change its economic model built on destroying the Earth’s climate. This is because CSR does not fundamentally alter the fact that corporate directors are bound (by law in most countries) to serve the financial interests of shareholders over all others. Corporations can only ‘do good’ if this translates into shareholder returns.
One of the main problems that progressive business and human rights activists therefore see with CSR and regimes such as the United Nations Guiding Principles (UNGPs), developed by Professor John Ruggie, is that they are not enforceable; they have no ‘teeth’. It is too easy for corporations to pledge allegiance to them in principle and then ‘forget’ all about them in practice.
Moreover, if companies do ‘forget’, there is no appropriate forum (other than the media) to hold them to account for failing to live up to their promises. This – and charges of ‘corporate impunity’ following several corporate scandals in recent years – has given rise to a move to ‘legalise CSR’, and to create binding legal rules and enforcement mechanisms and instruments. Frustrated with what they perceive as CSR’s ‘lack of teeth’, activists have moved in two main directions.
One direction being taken by progressive NGOs, social movements and human rights lawyers is the push to ‘legalise CSR’ by encouraging states and the international community to adopt binding instruments setting out corporate obligations with regard to human rights and the environment. One such movement is the push for legislation on the transparency of supply chains, such as France and the US state of California have recently enacted, or for binding human rights ‘due diligence’ requirements. At the international level, the main efforts to legalise CSR globally are led by a movement that is currently working with the United Nations Human Rights Council on a binding ‘Business and Human Rights Treaty’.
The other main direction has been led by business and human rights (BHR) lawyers, who have engaged in increasingly creative litigation in order to seek the enforcement of human rights and environmental principles via the courts. These include examples such as the Urgenda case, in which a Dutch court condemned the Dutch government for its failure to protect public health by failing to curb climate change. They also include other civil and criminal claims and complaints filed with various regulatory and judicial bodies.
Best known of these are the compensation suits brought against corporations (usually as legal persons, sometimes in conjunction with key corporate officers) under the Alien Tort Statute (ATS) and other provisions of US law, which have been numerous and highly publicised. The latest form of ‘weaponised CSR’ involves filing complaints at the International Criminal Court (ICC) against corporate actors. There are also many local and national campaigns to sue and prosecute corporate actors that have not been so highly publicised.
The dark side of (legal) corporate accountability struggles
The efforts to achieve corporate accountability discussed above – voluntary CSR, legalised CSR and BHR litigation – have had many positive effects, not least the vastly greater public awareness of corporate activities worldwide. Litigation often involves courts forcing companies to disclose details of their operations that were not previously in the public domain. This (negative) publicity may result in corporations losing potential contracts or customers and thus generate a financial incentive to change their operations.
Corporate accountability campaigns stimulate public debates and discussions that were not taking place before, and educate the general public as well as policy-makers. Moreover, the collaboration between communities and progressive lawyers during the time it may take to prepare a case or a campaign can be empowering in itself. The movement for a binding Business and Human Rights Treaty, for example, has brought together social movements from various parts of the world, and generated knowledge-sharing and empowerment on other issues well beyond the main campaign.
Nevertheless, counter-intuitively and despite activists’ best efforts, these strategies suffer the same defects as other legal strategies, in that they fail to challenge the corporate structure of irresponsibility in and of itself, as well as the broader system of corporate capitalism. In addition, these strategies play into the inherent dynamics of capitalism that unequally distribute violence along gendered, racialised and class lines at the global level.
These are not just the ‘side effects’ of legal corporate accountability methods, but reveal them as part of the problem. They show that even when one makes a pragmatic choice to engage in reformist work, capital will manage to co-opt or sabotage any progressive intentions to its own ends. Ultimately, rather than tipping the balance in favour of gradual improvement, such legal methods will be follow the capitalist logic and create a ‘market for responsibility’ – whereby responsibility is commodified, and harm is paid off. Human rights work, therefore, becomes part of the problem.5
Compliance and Class
When legal systems focus on corporations, they overwhelmingly seek to achieve compliance rather than to prioritise enforcement and punishment. Compliance focuses on incentivising actors to comply with particular rules rather than on sanctioning transgressions. This differential treatment – if you compare business with ordinary individuals accused of a crime – is the result of the economic power of business and the common class interest of business and the legal and political elites.
When activists express concern that CSR rules have no teeth, it is worth noting that the difference between existing voluntary and any new legally binding norms in a compliance-focused approach is likely to be semantic. Legally binding rules in a compliance model do have teeth, but they aren’t used. The Organisation for Economic Co-operation and Development (OECD) Guidelines illustrate a compliance model.
So, when the international NGO Global Witness lodged an official complaint under OECD Guidelines against mining company, Afrimex’s trade in minerals that had contributed directly to the brutal conflict and large-scale human rights abuses in the Democratic Republic of the Congo (DRC), the company, by promising to adopt a CSR policy document, avoided being sanctioned after a finding of violation of the Guidelines.6 Like voluntary guidelines, compliance-based approaches seek to achieve adherence to rules through persuasion and incentives rather than by the threat of enforcement. At the same time, the mere existence of binding CSR rules, in combination with a ‘compliance culture’, has the power to deflate the charge of ‘corporate impunity’. ‘Something is being done’, after all.
Given that the UNGPs follow a compliance model, it is likely that domestic-level ‘legalised CSR’ laws implementing them would do likewise. The UN Special Rapporteur on Business and Human Rights has defined the ‘responsibility to respect’ human rights as ‘in essence mean[ing] to act with due diligence to avoid infringing on the rights of others’.7 ‘Due diligence’ here means to show efforts towards achieving compliance. There are currently high hopes that several countries, and possibly the European Union (EU), will adopt mandatory Human Rights Due Diligence laws.8
The trouble is that building and invoking a compliance culture in which all employees exercise due diligence has two main effects that undermine its potential for achieving justice.
The first is that a corporation can shield itself from liability by adopting programmes that provide compliance in technical terms while not actually reducing the incidence of ‘violation’. If a company is charged with failure to exercise due diligence, a so-called ‘due diligence defence’ can then be invoked, which allows the company to argue that managers had followed protocol.
The second is that it has a class-based effect as it can shift blame from directors and managers to the workers. This is because due diligence in a corporate compliance programme works through the senior manager’s delegation of responsibility, in which all employees have a specific task list, receive training on compliance, and have to sign off on the accomplishment of their tasks. Essentially, aberrant outcomes are considered to be the result of workers’ deviation from the norms.
This means that, even in countries that have enacted a corporate criminal law, the most likely target of enforcement action (if any) is a low-ranking individual employee. As such, ‘legal’ corporate responsibility immunises the corporation itself.
The same process can of course be replicated internationally. Lead firms ‘delegate’ responsibility for certain issues to suppliers – an issue which campaigns and legislation on supply chain transparency and liability seek to counteract9 – but which the certification industry compounds.10 Compliance, especially when it is strengthened by an inspection and certification scheme, avoids top-level responsibility. For instance, it allows corporations to require low-level managers not to overwork their subordinates, while setting quotas that cannot be met without enforced overtime. An excruciating example of this was revealed in the ATS litigation against Firestone’s operating rubber plantations in Liberia. Their daily quotas for tappers were so high that to avoid being sacked, adult workers had no choice but to bring their children to work.11
At the same time, it is very hard for outsiders to investigate such claims because only someone who thoroughly understands a specific business could tell whether such quotas were unrealistic. Researchers from the Sheffield Political Economy Research Institute (SPERI) at the University of Sheffield in the UK have found that compliance audits – including those on supply chain transparency – reinforce the labour and environmental problems that NGOs are striving to improve. They conclude, ‘The audit regime, with the involvement and support of NGOs, is reducing the role of states in regulating corporate behaviour and re-orientating global corporate governance towards the interests of private business and away from social goods’.12
In the unlikely scenario that a court of law does manage to enforce a legalised CSR norm on a company (such as a new regulation on health and safety), a financial penalty or revocation of a licence to operate are not incurred by those most responsible at the top of the company. Rather, they are paid by increasing the cost to the consumer of purchasing its products or services; cutting the workforce or reducing their pay or conditions; or slashing expenditure in other areas, possibly including measures to reduce the corporation’s negative environmental impact. This means that punishment of the corporation is ‘socialised’ like any other risk, and can lead to the (collective) punishment of workers. Back in 1970, Ralph Nader famously described how corporations can, and often do, opt to pay a fine rather than adopt technology to conform to safety or environmental regulations if to do so is costlier.13
Rather than constraining corporate capitalism, then, measures such as compliance that aim to achieve corporate accountability, serve to maintain and reproduce – with renewed legitimacy – the profit-extracting rationale of the corporation and corporate capitalism, while the burden of compliance is disproportionately borne by workers and the environment.
Enforcement and imperialism
Most business and human rights (BHR) litigation takes place in Western jurisdictions – often in the corporates’ home country – but focuses on corporate violations in countries in the Global South. This is for two main reasons. First, the mostly low-level corporate violations in the home country remain invisible or appear normal; and second, that many ‘cause lawyers’ are often NGOs receiving development aid to assist countries in the Global South. The language used by many of these lawyers reveals the inherent imperialist nature of such activity.
Suing companies in countries in the Global North for their actions in the Global South is described by ‘experts’ as ‘necessary’ because low-income countries with ‘underdeveloped legal systems’ are simply not able to draft and enforce their own legislation to regulate corporate behaviour. In addition, in the Global North it is commonly held that such countries tend to have ‘oppressive leaders’, making it even more necessary for multinationals headquartered in the Global North (voluntarily) to set standards of good behaviour. We can easily recognise this as continuing a pattern of racist, neo-colonial thinking and behaviour.
It is well known that the shift of most manufacturing and extractive industries to the Global South suits business because they incur lower costs and can make ‘crimes’ less visible to their end consumers. With increased public scrutiny, however, there is a real risk of brand-name damage as a result of a ‘scandal’. Corporate ideology ensures that the blame for scandals is attributed to ‘badly chosen’ sub-contractors rather than a result of power relations down the supply chain and of price squeezing. Moreover, as we saw in the case of the Rana Plaza disaster in Bangladesh, lead companies can deny all knowledge of an ‘illegal sub-contract’ with a local firm.
Thus, BHR litigation can serve to create a distinction between ‘civilised’ multinational corporations (MNCs) based in the Global North on the one hand, and ‘cowboy’ companies in the host state on the other. Legalised CSR creates the possibility (or threat) of selective enforcement against ‘uncivilised’ corporations, to ‘level the playing field’,14 and to ensure their bad reputation does not affect all corporations.
An example of potentially ‘imperialist human rights litigation’ could be the recent case brought against tech giants including Apple, Google and Microsoft for the maiming and deaths of child labourers in cobalt mines in DRC. This class-action law suit concerns the (mainly) African context of conflict-related resources.15 This could become the paragon of the pro-business use of corporate accountability law, if it activates proposals aimed at regulating the market for natural resources in conflict-affected parts of the African continent in order to facilitate the prosecution of ‘rogue’ traders and ‘artisanal’ miners connected to armed groups – thus enabling international corporations to mine and trade without the risk of being stuck with the (costly) ‘conflict mineral’ or ‘child labour’ labels.16