Question:

Global business as an agent of world benefit in regards to development
New international business perspectives leading positive change
seeking global solutions for the common good: a new world order and corporate social responsibility
The rise of corporate social responsibility in global issue arenas
Closing global governance gaps through corporate social responsibility
Political dimension of multi national corporations in global governance
Business ethics responsibilities virtues of CSR
Globalization transnational corporations and the future of global governance
Corporate citizenship and the global civil society
The future of global corporate citizenship towards a new theory of the firm as a positive political actor of development, transparency integrity openness and accountability.

Answer:

Title: Global Governance and Corporate Social Responsibility

Abstract

This paper explores the issue of corporate social responsibility (CSR) in relation to global governance. The aim is to determine how CSR can be used to address the ‘corporate governance gap’ that is evident in today’s globalized world. The paper’s research methodology entails a descriptive analysis of three key global governance issues: human rights, environment, and labor, which were highlighted by the UN Global Impact. In this analysis, it is clear that the CSR movement is no longer driven by the coercive force of the global civil society; rather, it is driven by market-driven initiatives, which emphasize on consensus building and concensus building.

Contents

Abstract 2

Introduction. 4

Background to the study. 4

Research objectives. 9

Research questions. 10

Statement of the problem.. 10

Chapter 2: Literature review.. 12

Overview of CSR in the contemporary society. 12

Defining CSR. 16

Theoretical perspectives on CSR. 18

The rise of CSR as a way of addressing contemporary global governance problems. 20

Corporate citizenship and the global civil society. 23

Chapter 3: Methodology. 31

Chapter 4: Data analysis. 37

Environmental issues. 37

Human rights and labor exploitation issues. 41

Chapter 5: Conclusions. 47

References. 50

Introduction

Background to the study

In recent years, Corporate Social Responsibility (CSR) has become an interesting area of focus in efforts to address global governance problems[1]. CSR is a frequently used term today, particularly in the global political economy. In this context, there are persistent calls for Multinational Corporations (MNCs) to partake greater responsibility and accountability by, among other things, contributing to the existing governance structures as well as establishing new ones.

In today’s international business context, many problems exist, a bulk of which relates to the existing norms, rules, standards, and codes of conduct. Many people believe that problems of this nature can be solved through CSR[2]. However, these people express concerns that the solutions may not be sustainable if businesses do not become a part of the problem-solving process. CSR is seen as an excellent way through which these businesses can bring about long-term change in global governance.

Business leaders the world over are under constant pressure to integrate CSR components in their businesses. This explains the recent shift towards increased interest in CSR as one of the areas through which ideas on global governance are borrowed. This is a positive development, considering that the world of today faces numerous governance-related challenges, ranging from environment and energy insecurity to human rights violations.

In the context of these challenges, it is true to say that the world is in a development crisis. For this reason, the issue of embedding CSR into global governance is of great relevance. It is hoped that such embedding brings a wide range of solutions into sharp focus. It also puts into perspective various alternative forms of governance, particularly those that have proven to be quite successful in the corporate world. The perspectives in mind here include bargaining, collaboration among businesses, conflict resolution, public-private sector partnerships, and participation of the civil society.

Many scholars agree that CSR is a potential source of ideas on new global governance[3]. They argue that through CSR, many stakeholders can be brought to the negotiating table and make collective decisions aimed at solving a wide range of transnational problems. These undertakings are possible even without any government participation. This argument has been contributed to by various factors that have come into play on the international arena in recent decades.

A key development took place during the 1990s, when the world was encountering an increased level of power and influence from MNCs. During this time, MNC were becoming increasingly relevant participants in the development agenda of developing countries[4]. In these countries, the main areas of influence included environment, human rights, and employment. This influence continues to be felt even in the present time. This is particularly through labor policies, environmental impact, organizational culture, and regional economic integration efforts.

The internationalization of business has continued to gather pace in line with globalization trends. More than ever before, societies are converging into a global village, largely made possible in this information age where the internet is becoming increasingly become a necessity to many. International companies have found new opportunities in this integration process, and they are able to target customers in any part of the world. Similarly, whenever such companies embark on CSR efforts, its impact tends to have a huge potential to positive impact on the lives of millions of people around the world.

Participation in CSR is considered a way of giving back to the community by the corporate sector. The underlying assumption is that by giving back, companies can contribute to development in a big way. Development is associated with the ability to govern people more effectively. In light of this observation, the relationship between CSR and global governance may appear to be an indirect, but nonetheless a critical one.

The environment in which large transnational corporations operate is one in which there are huge gaps in development. Typically, these large corporations are based in developed countries but they thrive on cheap labor and raw materials from developing countries. With their core objective being profit-making, these companies appear to benefit at the expense of the development of these developing countries. This is because the circumstances of poverty are the ones that compel the people to sell their labor poorly. In order to deal with this bad image of an exploitation, colonialism, and imperialism, most of these transnational companies have embarked on

Moreover, the concept of ‘corporate citizenship’ has become a buzzword in the global governance debate. Corporate citizenship has a lot to do with the efforts of corporate players to contribute positively to the protection of civil and political rights. Large corporations are embarking on corporate citizenship efforts in an attempt to address the existing global governance problems[5]. In these roles, the corporate players are properly positioned because of their investment, innovation, and manufacturing expertise as well as their leadership position in matters of employment and lobbying.

Moreover, it would be difficult to imagine a world without corporate sector participants. In such a world, the society would lose the shape that has been attributed to entrepreneurship. It would also lose the benefits that come from astounding corporate influence in such diverse areas as media, entertainment, medical research, employment, and environment. For instance, pharmaceutical companies are the ones that determine who can access treatment for specific diseases and the prices of these treatments. Such a significant influence comes with the power to lobby and impact positively on global governance policies that will lead to development, peace, and democracy.

However, even with the corporate sector being virtually in control of the global economy, there is a clear ‘governance deficit’ in the international political environment. As various national economies move towards international integration, there is increased demand for properly coordinated responses to problems faced in the existing institutional capacity. Although the removal of trade barriers is good news to business, it creates new headaches for the people who manage the relevant institutions. Moreover, new conflicts arise as different states adopt varying responses to the new business environment. An excellent example is the GMO (genetically modified organisms) trade which has triggered for calls for the relevant international bodies to come up with protocols on bio-safety. In this regard, the issue of governance is resorted to in effort to bring about collective action to make resolutions that are of public good.

The global governance should also be viewed in the context of the new geopolitical realities. As the world becomes globalized, geopolitics continues to change as different states realign themselves in such a way as to derive the greatest benefits from different regional relationships. This geopolitical complexity brings about new challenges on global governance. The dynamics also make it difficult to find governance experts that will draft comprehensive policies with fairly accurate future political forecasts in mind.

Paradoxically, even as the need for increased global coordination becomes self-evident, many states are not willing to play ‘full-scale’ roles[6]. They tend to use their respective corporate participants as political proxies. This proxy wars have been characterized by massive privatization and deregulation. Rather than improve the global governance situation, this trend exacerbates it. In defense of their non-participation, the states argue that there is a need for ‘global competitiveness’, and this ideal can be constrained by state participation[7]. In the quest for this competitiveness, corporate participants have ended up constraining the existing resources and radically eroding the welfare state.

In the present paper, a key objective is to explore how CSR can be used to improve global governance. With improved global governance, it would be possible to deal with a myriad of problems that humankind continues to endure in his daily living. In CSR, it is imperative to analyze how the global business can act as an agent of benefits the world over in terms of development. Other issues of relevance in the CSR debate include new international business perspectives that lead to positive change, the pursuit of global solutions for the common good in the new world order, and the need to close global governance through CSR.

In view of the participation of the state and international political actors, it is clear that the political dimension of multinational corporations in global governance is worth exploring. Moreover, the issue of business ethics is of great relevance in the context of the present paper, particularly if specific focus is put on the role of civil society and various political actors in ensuring that CSR activities lead to openness, integrity, transparency, and accountability.

Research objectives

The objectives of this dissertation include:

1. To explore the relationship between CSR and global governance
2. To investigate the ways in which CSR can be applied in addressing problems relating to global governance
3. To determine how global business can act as an agent of change in global governance.
4. To assess the relevance of new international business perspectives in bringing about positive change in global governance.
5. To critique conceptions on the new world order in relation to the contributions made through CSR with regard to various global governance issues.
6. To analyze the various ways through global governance problems can be solved through CSR.
7. To evaluate the political dimension of the involvement of MNCs in global governance.
8. To assess the future of CSR as a contributing factor for development, with focus being on a theoretical conception of contribution to global governance.
9. To explore similarities and differences between the principles of global governance, namely, transparency, integrity, openness, and accountability, with those of CSR.
10. To establish the relationship between corporate citizenship and CSR and the role that the global civil society plays in cementing this relationship.

Research questions

1. What is the relationship between CSR and global governance?
2. How can the relationship between CSR and global governance be used to address the world’s ‘global governance deficit’?
3. How can global business be used as an agent of progress in global governance?
4. What contribution can new international business perspectives make in improving the contemporary practice of global governance?
5. What is the relevance of the political dimension of global governance, particularly regarding the issue of MNCs as well as the need to bridge the gap between theory and practice?
6. Are there any similarities between the principles of CSR and those of global governance?
7. What role should corporate stakeholders play through CSR and corporate citizenship and what contribution should the civil society make in promoting this relationship?

Statement of the problem

The issue of global governance is one that touches on virtually all aspects of human life. In today’s highly commercialized global society, corporate entities are increasingly feeling compelled to contribute in the war against various social problems such as poverty, disease, energy insecurity, human rights abuses, and environmental degradation. Incidentally, most of these problems have been caused or propagated by the large global companies in their pursuit of profits[8].

The quest for CSR among these large companies appears to be a response to the criticism that has been directed at them from various quarters. In many ways, this criticism is justified. To realize this, one only needs to consider such basic issues as the exploitative labor practices of these multinational corporations. These corporations thrive on the availability of cheap labor and raw materials in poor countries. After benefiting from these two crucial factors of production, they again target these countries for ready market. These business strategies are normally orchestrated in a calculated move that draws heavily on the vulnerability of the citizens of poor countries. In most cases, these strategies greatly contribute to the existence of a vicious cycle of poverty in these countries. One of the most popular ways through which these companies respond to this criticism is through corporate social responsibility programs.

Unfortunately, poverty is just but a single dimension in the multifaceted issue of global governance. In the course of governing modern societies, there are many challenges to be encountered, most of which did not exist prior to the onset of the information age. The information age has heralded a new world order, one characterized by globalization. Almost all aspects of life have been internationalized. Problems that are experienced in one country end up having a ripple effect in far-off countries. Yet stakeholders in global governance are not always prepared to deal with problems of this nature.

Evidently, global governance has a lot to do with a shift from a national approach to a global approach in problem solving. In this global approach, businesses with global outreach are increasingly moving towards positions of advantage, power, and influence. The global governance stakeholders can ignore these corporate participants at their own peril. CSR is one of the approaches that these stakeholders use to bring large, transnational corporations on board in the global governance agenda. The present paper sets out to address the viability of the CSR approach in addressing the challenges of global governance in the 21^st century context.

 

Chapter 2: Literature review

Overview of CSR in the contemporary society

There is abundant literature on both CSR and global governance. Moreover, some scholars have dedicated their time on how CSR can be used to bring about improvements in global governance. In all these studies, the literature in question addresses the issue at hand in the context of globalization in relation to new patterns of governance. This is particularly the case regarding the most recent literature.

In a significantly high number of recent studies, the issue of CSR has been linked with various organizational platforms, for instance OECD (Organization for Economic Co-operation and Development) and ILO (International Labor Organization)[9]. All these are international organizations, and as such, the literature greatly contributes to the perception of the CSR issue in a global context. Moreover, this is an indication of the increased pace of internalization in various aspects of human life in recent years.

As the internalization process gathers pace, the role of the nation-state as an international actor continues to diminish. Nowadays, many international decisions are not made under the influence of independent nation-states. Instead, the greatest influence comes from non-state actors. In many cases, these non-state actors have to be motivated by commercial interests. In other words, most of them are private (and sometimes public) corporate entities. For them, the issue of CSR is of great relevance as a platform for showcasing their contributions to global governance.

The magnitude of today’s global problems is one that appears to exceed sovereignty concerns that many nation-states have held onto traditionally. Indeed, sovereignty concerns have historically been cited as a key factor in determining trends in global governance[10]. Whenever states are engaging in negotiations at an international level, they have tended to put into considerations the implications that arise in terms of sovereignty. It is on this basis that a wide range of international regimes, institutions, and orders have been established today. These entities have designed in such a way that nation-states retain their capacities to address various transnational issues such as political and economic integration.

It is actually the issue of integration that has triggered world leaders into perceiving pertinent global governance gaps. These governance gaps are seen to exist largely because in most cases, economic integration has tended to precede political integration. At the political level, states appear unwilling to enter into multilateral solutions. However, at an economic level, this level of coordination is normally readily agreed to. This agreement arises mainly because of economic benefits to be derived from comparative advantage.

However, it is difficult for these benefits to be derived in a sustainable manner if the right global governance structures are not in place. A case in point is the scenario where there are many international rules for economic cooperation while a corresponding regulatory framework is lacking at the political front. An excellent example is the existence of elaborate rules, laws, and policies on intellectual property rights whereas similar policies have not been established in order to protect the people’s human rights as well as their environment. When such governance gaps exist, states progress economically but continue to lag behind on key governance issues. The benefits tend to go to corporations at the expense of citizens of various countries.

In recent times, new governance structures have been emergence in response to the transnational problems being encountered globally. In the analysis of these structures, scholars have concerned themselves with the analysis of the main public and private actors involved in governance[11]. They have also concerned themselves with manner in which the changes are orchestrated. In terms of execution, the actors have tended to use both hierarchical and non-hierarchical methods. The hierarchical method is associated with nation-state actors. On the other hand, non-hierarchical methods are mostly associated with non-state actors, for instance corporations.

In recent times, there is a trend towards relying more on non-state actors to deal with governance problems.  Similarly, there is a tendency to rely on new methods of regulation that borrow heavily on non-hierarchical steering, for instance positive and negative persuasion. In the context of positive and negative incentives for improved global governance, many scholars emphasize on the crucial role that these new patterns can play in taking the place of the role played nation-states, which is now increasingly diminishing.

CSR is cited as a great example of the recent changes in governance patterns. In CSR, both state and non-state actors come into cooperation to addressing a wide range of policy problems. Indeed, from an international perspective, CSR is variously regarded as a new form of global governance. However, the concept of CSR is not new. In Britain, for example, it was being referred to as early as the 19^th century. In the US, it was not until the 1960s that increased attention was directed at the principles of CSR[12]. In the US, this trend emerged because the government increasingly relied on private corporations to offer social services such as medical care and pensions. In other countries, these services were still being provided by government agencies.

The rise of CSR in the US came at a time when trade was being increasingly liberalized, both locally and internationally. Many Western countries were privatizing their key public agencies. With time, this trend triggered a spread of CSR values to other Western countries. As liberalization continues to take toll on the economies of many countries, it becomes difficult for governments to maintain control of all policies, laws, and regulations. After all, liberalization and internationalization of businesses is characterized growth in flexibility. In the contemporary globalized business environment, corporate players expect business hurdles to become fewer by the day.

Nevertheless, corporations have not been acting alone in embracing CSR. In many cases, they have simply been bowing to pressure heaped on them by non-governmental organizations (NGOs). Many NGOs have taken it upon themselves to monitor the behavior of corporations. It is on the basis of the outcomes of this monitoring process that they have been pressuring corporations to behave in a more responsible manner and to show concern for the welfare of society. In some instances, they have been organizing extensive demonstrations to draw attention to the misbehavior and misconduct of various major transnational companies.

In many cases, the response of many multinational corporations has entailed setting up of internal management systems for developing, implementing, and monitoring CSR strategies[13]. Sometimes the strategies have been designed for defensive purposes while in other cases, they have been designed in a strategic manner. Some corporations use CSR as a defense mechanism against attacks directed at them by NGOs and other critics. Strategically, CSR is being used by corporations to position themselves in such a way that they can penetrate new markets, particularly to consumers and investors who are inclined to make ethical considerations before making purchase and investment decisions.

All in all, CSR remains a crucial response strategy that corporate entities use when attempting to address the regulatory gaps that exist as the process of globalization progresses. Indeed, at the international level, CSR activities appear to take over from where inter-state cooperation ends. At this juncture, opportunities arise for cooperation between non-state and state actors. It appears that this cooperation can work best if companies with a true commitment on integrating CSR into their daily operations come together with civil society and state actors to reward compliance as well as punish non-compliance.

Defining CSR

In efforts to reap the greatest benefits from CSR, it is imperative that the definition of this term is clearly understood. Most studies take CSR to be a concept in which companies undertake to integrate environmental and social concerns into their daily business operations as well as in their interactions with all stakeholders voluntarily[14]. This definition is also the one that was adopted by the European Commission in 2002.

This definition does not mention anything about CSR being philanthropic in nature, as some people take it to be. Instead, it is viewed as an approach to daily business undertakings. From a different perspective, CSR has nothing to do with what a corporate body chooses to do with its profits, but rather how it undertakes to make this profit. Yet many companies have taken to undertaking one-time social projects and terming them CSR projects.

It is also clear that this definition puts emphasis on the key role that stakeholders should play in the coming up with a CSR strategy. It is important to put the interests of stakeholders into consideration if a CSR strategy is to succeed. Still, the voluntary nature of corporate social responsibility means that it is not subject to compliance with any legal requirements. Instead, focus is on what companies can do to improve the social and environments within which they operate, beyond the existing legal requirements.

The socio-environmental context of CSR entails the workplace, community, the marketplace, and the environment[15]. In the workplace, CSR addresses the manner in which employees are treated by their employers. In the marketplace, it is about responsible marketing from the perspective of customers, suppliers, as well as competitors. Regarding the environment, CSR should ideally address measures that a company can undertake in efforts to reduce the negative impact that its operations bring to the environment. For the community, the strategy should be all about the company interacts with the community in such a manner that the community’s welfare is safeguarded.

In all these aspects, CSR is portrayed, and rightly so, as both an approach to management and as a political concept. This is because on the one hand it touches to the objectives of the business enterprise while on the other it touches on policy goals. From the perspective of business objectives, many corporations engage in CSR to improve customer relations, to enhance the reputation of their brands, to increase employee motivation, and as a way of avoiding criticism from non-governmental organizations[16]. Most importantly, though, the close link between management principles and policy goals make CSR a crucial strategy for consideration in the global political economy as far as the issue of global governance is concerned.

Theoretical perspectives on CSR

In today’s globalized world it is imperative that the issue of CSR is addressed from multiple perspectives. Other than in practice, it is also imperative that the issue is addressed from a theoretical perspective.  There are many theories that seek to elaborate on the foundations of CSR. In terms of classification, four main categories are discernible: instrumental theories, political theories, integrative theories, and ethical theories[17].

In instrumental theories, the corporation is viewed as an instrumental element in the creation of wealth, such that all social activities engaged in are aimed at maximizing economic outcomes. Political theories, on the other hand, put emphasis on the power of corporations in social contexts, such that CSR becomes a crucial strategy for ensuring that this power is used in a responsible manner. In contrast, integrative theories focus on the view of the corporation’s CSR activities as a means through which social demand are met. As for ethical theories, the basis of all arguments is the ethical responsibilities that corporations have to the societies within which they operate. In short, CSR theories may be classified according to economic motivations, political performance, demands of the society, or ethical responsibilities[18].

The journey that led to the creation of these theories may be traced back to the mid-20^th century[19]. Since then, many theories have been developed, and perspectives on CSR have kept changing, both in terms of terminologies used and in theory. In recent times, however, renewed interest in CSR has emerged as alternative concepts in efforts to understand the existing global problems in a better manner. Particularly, the themes of corporate sustainability and corporate citizenship have taken dominated CSR literature.

Interestingly, in some CSR theories, the same terminologies are being used but with different meanings. To some extent, this problem exists even in the case of the term ‘CSR. Whereas some people understand it to mean liability or a legal responsibility, others conceptualize the ethical perspective, whereby companies are expected to act in a socially responsible manner[20]. Yet for others, it simply means a ‘charitable contribution’ by a company. Other variants of these conceptions include social consciousness, social legitimacy, and fiduciary duty[21]. This is a clear indication that CSR is a field with loosely defined boundaries, diversity of perspectives, and literature from a wide range of scholarly sources. For this reason, CSR is best examined from a multidisciplinary dimension. This explains why the research trend for this field is a rather poor one. Nevertheless, many researchers have embarked on efforts to address this problem[22].

For some scholars, the answer lies in a theoretical classification that is based on a transition from ethical consideration to theoretical conceptions. For others, the solution lies in managerial orientation, whereby emphasis is put on responsiveness to social expectations. Alternatively, a normative approach has also been suggested, whereby emphasis is on values and ethics. The fourth suggestion directs attention to the role of science and religion in the management of social issues. Quite evidently, these suggestions are a reflection of the variations in the way people understand the term ‘CSR’.

The rise of CSR as a way of addressing contemporary global governance problems

In recent decades, CSR has continued to be of increased relevance in the global political economy. CSR has become a buzzword for those who call for MNCs to exhibit a greater sense of responsibility, accountability and transparency. These calls have led to the introduction of new structures of governance, mainly through new norms, rules, and regulations, all aimed at restricting the behavior of MNCs within certain ethical bounds. Sometimes, the multinationals themselves are getting involved in the establishment of these new rules, largely as a strategy of minimizing the risk of criticism and backlash from NGOs and the global civil society[23].

In this context, the link between CSR and global governance becomes evident. CSR emerges as a strategy through which new forms of governance are introduced. The underlying aim is normally to bring about collaboration among diverse global actors, including business, government agencies, civil society, and international organizations[24]. Indeed, to this extent, it is true to say that CSR is a new platform where global governance issues are being tackled from a new perspective. A key characteristic of this engagement is the non-participation of the governments and the transnational nature of the problems being addressed.

The way the global business establishment has started engaging in social responsibility issues may be viewed to be motivated by both political-institutional and financial goals. Not only do firms ideally consider the interests of all stakeholders in their CSR strategies, they also look at their best interests in the long run. On the aspect of environment, CSR efforts tend to be geared towards those activities that will bring about substantial economic rewards in the process. The firm managers do this by looking at the demand side. This leads to the adoption of ‘green technology’ that will facilitate the manufacture premium products. On the side of production, some of the most sought-after opportunities take the form of cost-saving on such things as raw materials, energy, and waste management.

From a broader perspective, CSR strategies are being modeled in such a way that they will lead to reduction of liability, increase in employee morale, reduction in the cost of compliance, among other things[25]. From a global perspective, governance specialists are keen to see how these activities can lead to growth in developing countries. The same is expected regarding the standardization of financial reporting standards across all countries.

When attention shifts from CSR to that of its contribution to global governance, one easily notes that few empirical studies have been carried out. This means that many questions remain unanswered as far as the task of evaluating the success of CSR activities is concerned. For instance, it is difficult to determine the relationship between CSR activities and a firm’s financial performance. It is widely known, though, that the level of market demand for CSR remains limited, such that it becomes difficult for firms to identify niche segments and make maximal economic benefits from them. Moreover, since CSR efforts are also targeted at stakeholders in addition to consumers, it remains difficult to capitalize on monetary value per se.

In other words, a contentious issue today is that all along CSR has continued to appear weak when analyzed using economic arguments. This is mainly because of its political character. The win-win situation upon which CSR is premised does not appear very compelling. Corporate behavior would not have changed if no pressure was put on corporations by NGOS, consumers, and civil society[26].

In many ways, CSR is a reflection of the changes that have occurred in the process of changing the existing balance of social forces. In an environment of persistent pressure, businesses have found change inevitable. The best that corporate players have endeavored to do is to ensure that this change takes place on terms that favor their businesses. This reflects the political component that characterized many CSR activities.

Indeed, the need for political sustainability is one of the things that are being addressed through CSR activities, particularly those relating to environmental management[27]. In this undertaking, governance issues have to be addressed at stages of implementation. In these undertakings, business players learn how to accommodate and respond to pressure. They also know all about positioning their corporations as moral agents, reduction of regulation-related threats, and marginalization of radical activists. All these activities are more inclined towards politics as opposed to politics.

Moreover, participation in global governance by multinational corporations has helped shape the meaning of corporate social responsibility[28]. They have done so by promoting voluntarism as opposed to public accountability or legal obligation.  This has happened as the business establishment struggle to sustain its legitimacy on the global issue arena. Yet radical activists have always found reason to complain about irresponsible business practices that negatively affect consumers, stakeholders, and the global society as a whole.

One of the most outstanding criticisms directed to transnational companies has to do with their engagement with developing countries. These companies have been accused of exhibiting colonial tendencies while seeking to propagate the existing global inequalities. Many national governments have been encouraging the activists to raise these concerns. These complaints have made large MNCs from industrialized countries, for example Wal-Mart and Nike, to be associated with environmental and socio-economic concerns on a global scale.

Corporate citizenship and the global civil society

The debate on CSR goes on hand in hand with that of corporate citizenship. Businesspeople tend to talk as much about CSR as they do about the need to become good corporate citizens[29]. For business leaders, being a good corporate citizen entails engagement with all shareholders, the communities within which their corporations undertake their activities, and everyone else who is affected by their business activities.

Global corporate citizenship is a new business imperative that is worth exploring in greater detail[30]. This imperative is based on the conviction that companies must go beyond engagement with stakeholders, by themselves operating as stakeholders in coordination with the civil society and governments. In this context, international business leaders are expected to show full commitment to sustainable development, largely by addressing key global challenges such as climate change, energy conservation, public healthcare, and resource management. After all, these global issues tend to have a far-reaching impact on them. Failure to address them would definitely impact negatively on the businesses’ bottom line.

Global corporate citizenship, no doubt, serves the enlightened self-interest of a corporation, and is therefore sustainable[31]. When global issues are addressed, both the society and corporation benefit. This is important at a time when the influence of the state is diminishing and that of the corporation increasing. Indeed, the diminishing role of the state is cited as one of the reasons why the corporation is engaging with society more closely than ever before. The situation today is similar to that of early modern Europe, when the rise of the sovereign state led to the diminishing and eventual loss of the power of the church.

In the contemporary world, no national government has the capacity to provide leadership on the aforementioned global issues. In all parts of the world, many government departments thrive on coordination and assistance from the private sector[32]. The main factor that has led to the weakening of the nation-state is globalization. Technological advancements have heralded a new world order characterized by fast transport networks and ‘split-second’ flow of information across the world. These two factors have rendered geographical borders, upon which the nation-state is founded, irrelevant.

In this new world order, most problems, such as poverty, disease, climate change, and human rights abuses, are best addressed from a global perspective. To a lesser degree, bilateral and regional solutions are also being sought. This is a clear indication of a diminished role of the nation-state as the main actor in international relations. Although the corporation is taking over as the main actor in international relations, there is a glaring global leadership gap. One of the reasons for this gap is that the existing institutions of global governance continued to be hampered in their daily operations by outdated procedures and conventions that were put in place after the World War II.

In the post-World War II global governance arrangement, sovereign power is still vested in national governments[33]. This arrangement makes it impossible for an authentic global leadership to emerge. This lack of elected leaders at the global level has led to the weakening of public governance at global, regional, and local levels. Although many leaders have been willing to lead the way at the global level, they have found this a difficult undertaking because the failed global governance system always renders them inefficient.

As the state continues to lose influence, the corporation has moved in to fill the void[34]. This explains why it is common to find many companies taking it upon themselves to handle the health, education and pension plans of their workers as well as dependants. Indeed corporations are at the heart of crucial operations that are a matter of life and death for citizens. In this regard, the survival of national governments increasingly depends on their activities and goodwill.

As companies assert their influence, they are increasingly being compelled to take a global approach in their operations. This is the case in the fast-growing, medium-sized corporations from developing countries. This radical shift in power means that instead of citizens looking to national governments for leadership, they are now looking to corporations. Instead of criticizing national governments, they criticize corporations for irresponsible practices. Today, the citizens willing to embark on new social initiatives are more likely to request for sponsorship from corporations than from their respective national governments.

This is how the corporation has found itself with a rather challenging of performing the role of a global corporate citizen. The civil society has played a key role in this turn of events. This is particularly the case regarding engagements with the international media and the creation of NGOs, many of which have a global scope of operations[35]. Most of these NGOs have been targeting corporations. At the beginning, the civil society was using NGOs as a launching pad for their criticisms on corporations, which of which entailed confrontations. However, with time, many in civil society have come to appreciate the numerous ways in which a large number of business leaders across the world are engaging with society. This realization has made many civil society associations to abandon their confrontational approach to global governance. Instead, they are looking for ways in which they can work with business to address various global problems.

One of the platforms in which the civil society is working with business is the World Economic Forum. In this forum, civil society organizations participate in efforts to look for ways through which business leaders can be helped in global governance activities. On its part, the World Economic Forum has for decades been devising ways through which companies can engage with society. The first suggestion, in the early 1970s, was the ‘stakeholder concept’. This concept stated that the company had a responsibility not only to its stakeholders but also to the community. It is on the basis of this concept that the fundamental principles of the social responsibility of the corporation were derived. This formed the foundation of the forum’s active participation in the promotion of corporate engagement ideals.

Indeed, the notion of global corporate citizenship can be understood from the perspective of corporate engagement. However, this engagement is not possible unless the general public clearly understands the complex challenges that these corporations face on a day-to-day basis. Yet in a way, global corporate citizenship may also be viewed as just one among many corporate engagement activities, which indeed it is. From this perspective, the other forms of corporate engagement would include CSR, global governance, corporate social entrepreneurship, and corporate philanthropy.

For purposes of the present study, the most important thing is determining how global corporate citizenship can bring about global impact as far as global governance is concerned. For companies to make this impact, they first and foremost to adhere to the laid-down rules of corporate governance[36]. Corporate governance is not just about the daily operations of a company. It is also about a corporation’s compliance with domestic and international laws. It is also about adherence to all accountability, transparency, and ethical requirements. It also entails environmental awareness and consideration of all social norms in all the company’s areas of operation.

It is evident that if these ideals are replicated in global governance practices they can lead to success in this front. This is because the threshold of quality of governance would have been met. A corporation that complies with all domestic and international laws undoubtedly sets a good example in the area of global governance. Moreover, such a corporation can be considered a good global corporate citizen.

Today, the notion of corporate citizenship appears more compelling than that of CSR. Many scholars share this view, with others even alluding to the apparent demise of CSR and the eventual replacement of this notion with that of corporate citizenship[37]. This change has been triggered by the failure by many CSR initiatives to compel companies to behave not only in a socially responsible manner, but also in a manner that contribution to problem-solving on matters of global governance. This change is also premised on the need to regulate the social power wielded by corporations and bring it in line with global governance goals.

Evidently, compared to CSR, global corporate citizenship appears to embrace consensus to a greater extent. Emphasis is on the need for companies to become good corporate citizens and a confrontational approach is rarely used. However, in the corporate context, the issue of being good global citizens is best understood in combination with the notion of CSR. Despite the setbacks faced in CSR, the notion still remains a buzzword in corporate circles, and can be used to explain what good global corporate citizenship really entails.

In the global corporate citizenship regime, emphasis is normally on consensus as opposed to actions that are motivated by coercion. The element of consensus is indeed the one that appears to be the most fundamental distinguishing factor between CSR and corporate citizenship. Therefore, whenever consensus is being used to bring success to CSR efforts, this is a case of corporate citizenship working in a complementary relationship with CSR.

A more straightforward view of global corporate citizenship is that of corporations as citizens[38].  The argument of corporations as citizens in the ordinary sense of the term ‘citizenship’ has not captured the attention of many experts. This is evident in the way the notion of corporations as citizens has gone unquestioned. The lack of critique is evident in the de-contextualization of the concept from the mainstream corporate discourse.

Rather than focus on the direct interpretation of corporate citizenship, some scholars use a metaphoric understanding of corporate citizenship. This view is mainly derived from a political understanding of citizenship. From this perspective, democratic citizenship is explained in terms of its application to business. A liberal understanding is normally used to explain some of the factors that motivate business leaders to undertake certain CSR activities.

It is also uncommon for analysts to elaborate on corporate citizenship from legal and administrative perspectives. Instead, they determine the suitability of corporations to be considered citizens only on the basis of their participation in global governance processes. In this way, the analysis appears to be more inclined towards practice and not theory. Yet it is also possible to use a theoretical perspective to investigate whether or not corporations have the qualities of global citizens.

It is interesting to analyze the responses that come from the civil society and governments. From a theoretical perspective, cooperation between the government, private companies, and the civil society is considered beneficial because chances of them acting as development agents tend to be high. For development to take place, governments must understand the factors that motivate private businesses to engage in CSR activities. The motivation may have something to do with cosmetic changes to the existing business practice. It may also be part of a larger ploy to legitimize business activities.

For civil society groups, corporate citizenship is an excellent undertaking because it creates the impression that their power to safeguard human rights is being demonstrated[39]. In the context of corporate citizenship, civil society groups also tend to be in better negotiating positions. However, for these negotiating positions to be acquired, it is imperative that NGOs and other like-minded advocates participate actively in the work of shaping up debates on CSR and global corporate citizenship.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chapter 3: Methodology

There are numerous issues that researchers have been focusing on with regard to CSR methodology. These issues range from indicators of CSR participation and performance to matters on reporting and contexts in which CSR reporting is undertaken[40]. In all these activities, an overarching goal entails the achievement of a balance between sensitivity to specific contexts and the benefits to be derived from indicators that can be applied to a wide range of CSR contexts.

In this methodological undertaking, there is need for specific guidelines. First of all there is need for a definition of a complete spectrum of sustainability with regard to all the issues raised by different stakeholders. When addressing these issues, it is imperative that the contexts of the problems to be solved are put into consideration. Secondly, it is necessary that a database is maintained for purposes of preparing a reference point for all indicators of CSR activities. The third requirement is proper selection of the indicators to be referred to during the CSR reporting process. It should be borne in mind that during this process, all stakeholders should participate fully. Fourthly, the indicators should be positioned in such a way that there is diversity in terms of empirical context.

From a different perspective, many suggestions for CSR research have been made in the context of small businesses[41]. In today’s globalized societies, some of these small businesses end up becoming large corporations with a far-reaching international influence. Therefore, it is important to put these studies into consideration as well. Over the last few decades, a lot of research has been directed into the quest for methodological applications of CSR studies in the context of start-ups. In these studies, researchers and managers alike have come to appreciate the pros and cons of business involvement in problem solving through CSR activities. The main problem is that whereas some CSR activities are legally- or market-driven, other go far beyond legal requirements. This has been a key factor in coming up with a theory of CSR.

Nonetheless, a visible gap remains between the theory of CSR and international management practice. This problem is normally exacerbated when CSR theory has to be assessed from the perspective of small businesses. Most of the existing literature focuses on international companies, and small- and medium-sized businesses have largely been neglected[42]. This problem is closely related to that of evaluating the level of influence that different types of business have on CSR, global corporate citizenship, and all the attendant social problems.

It is particularly evident that there is a tendency for researchers to address CSR from a large-scale perspective. This tendency ignores the fact that most of the employed people in contemporary societies are employed by companies with a workforce of less than 100 individuals.

In management literature, the state of CSR research has been an issue of quite some interest. In this interest, the main issues under assessment include research trends, focus of this research, its salience, and various sources of methodological influence. In this assessment, empirical studies are normally resorted, with their core basis being an in-depth analysis of publications and citations available within different timeframes.

In recent years, an overwhelmingly large body of literature on CSR has emphasized on quantitative methods. In these studies, the most popular theme is environment, followed by ethics[43]. In most cases, these research studies have been based on non-normative conceptions. Most of the agendas addressed have been those that impact on business environment and existing scientific management principles. The most crucial source of reference sources has been the management literature itself[44].

A case in point of reliance on management literature is that of Vaaland, who uses marketing journals published between 1995 and 2005 in his analysis of the present state of CSR theory, particularly when it is applied in the contemporary marketing context. According to Vaaland, there is a need for perspectives on empirical research to be broadened so that the CSR concept is addressed in its entirety. Similarly, such an undertaking would entail a widened scope, such that focus is not singly on customers. This would entail a renewed emphasis on empirical studies that embrace exploratory and inductive principles. In essence, this argument is based on the underlying need to understand today’s global customer from a multidimensional perspective.

            Other than the analysis of relevant journals and other materials as well as the use of quantitative methods, the stakeholder approach is also commonly used in CSR studies. It is also common in studies relating to business, management, accounting, and economics[45]. It has also gained currency in literature that focuses on society. This is largely because of its practicality from the viewpoint of both scholars and managers. In other words, it is appropriate in both theory and practice.

In one of these studies, focus was on an overview of the way CSR has traditionally been conceptualized.  In this study, the taxonomic CSR definitions provided appeared largely static. Nevertheless, the article successfully employed the stakeholder approach to explain the importance of CSR in the contemporary society. In some cases, this approach is used together with the so-called Ethical Performance Scorecard. This scorecard is crucial because it facilitates the integration of case study elements in the study. The data obtained from these CSR case studies can be used to draw implications on the methodological usefulness of the stakeholder approach.

In some cases, the case study approach is considered the ideal methodology in addressing various issues relating to CSR, global governance, and corporate citizenship. In some case studies, researchers choose countries and carry out their analysis strictly from this point of view[46]. Other perspectives include developed/developing country settings, individual companies, and various multinational corporations. The case study method is advantageous because a researcher is able to derive as many lessons as possible from the perspective of one country or corporate entity. These lessons, if properly derived, can be applied across the entire industry within which the company operates or the region in which a country is located.

One of the country perspectives covered in research addresses the CSR practices is Lebanon. In Lebanon, the studies’ conclusion was that CSR is still being viewed from the viewpoint of philanthropic action[47]. These findings were arrived at after an in-depth analysis of the CSR approach employed in 8 companies operating in Lebanon.

An alternative to the country approach is cross-national perspective.  In this methodology, researchers explore the way various multinational corporations behave in different national contexts[48]. Unfortunately, not many studies have been carried out using this methodology. This scantiness of literature is the main factor behind the proposition of the so-called ‘transnational’ model of CSR. In this model, universal domains are identified, yet at the same time, enough room is created for the flexibility that is required in international research. This model contains three dimensions, namely a typology of strategies, conceptual domains of corporate social responsibility, and different CSR perspectives. The main components of the typology include ‘global’, ‘multinational’, and ‘transnational’ elements. On the other hand, the key conceptual domains as proposed under the auspices of the UN Global Impact include labor, human rights, and environment[49]. Finally, in the transnational model, the CSR themes covered are societal, ideological, and operational as far as perspectives are concerned.

Elsewhere, event studies are also not being used often in management research[50]. This is particularly the case on issues of theoretical framework and research design. This problem easily leads to false inferences on the significance of various events as well as the validity of the various theories being put to test. This is a deeply rooted problem, one that has been reiterated in many studies in recent years.

For purposes of the present study, there is a conspicuous absence of literature on methodologies for use in determining how CSR can be used to derive global governance benefits. The notions addressed are not directly related to global governance. A case in point is reference to the notion of ‘social performance’ in a bibliometric analysis of research studies done within a period of 30 years[51].

In a situation of such obscurity in literature, the best approach would be one involving description and empirical analysis of the existing literature on the role of CSR in global governance. In this analysis, it would be imperative for evidence to be sought on the various global governance solutions that have been found as a result of CSR activities. The main conceptual domains of analysis in this case would be environment, human rights, and labor, as proposed by the UN Global Impact. For this reason, this dissertation will embark on a descriptive analysis of CSR’s role in global governance. The three areas of analysis selected will include environment, human rights, and labor. In each of these areas, empirical analysis of secondary data will be used to derive findings on how CSR-related responses have contributed to solutions. The underlying assumption here is that these solutions would undoubtedly have a positive impact on global governance.

 

 

 

Chapter 4: Data analysis

Environmental issues

Today’s globalized world is experiencing far-reaching environmental problems. These problems were created mainly by industrialized countries in their imperialist rush for mega profits. Unfortunately, most of the effects of environment degradation are being experienced by developing countries, which did not play any key role in creating the problem[52]. Worse still, the problem of environmental management is rooted in issues of products, corporate activities, and production systems. These issues are yet to be fully addressed in current industrial practices.

Various reasons have been suggested as the main causes of the prevailing environmental problems. Some scholars argue that this is because CSR continues being viewed as a philanthropic undertaking[53]. As a solution, these scholars propose a CSR model that is anchored on crisis prevention, eco-centric management, and sustainable management. Such a model would have a far-reaching, positive effect on global governance. An example of this model at work is the way Union Carbide responded to the Bhopal crisis. Based on the way this company handled this crisis, many lessons on non-consideration of global governance impact through broad social responsibilities became clear.

On a positive note, some companies have realized that environmental performance is a core component of their overall growth[54]. In the pursuit of this improved environment performance, the companies also hope to improve their corporate reputation. This realization became a widespread phenomenon particularly during the 1990s. However, some unscrupulous corporate leaders only ride on the environment bandwagon without bring actual change in their companies and in their societies. They take advantage of the complex interplay that exists between environmental performance, corporate reputation, and financial performance. It is in this context that the notion of environment marketing has emerged.

In the context of global environmental governance, the traditional focus was on global environmental institutions, environmental law, and the way these could be managed to bring about global good. Today, things have changed in that environmental governance is increasingly become a multi-level issue. In such a case, a diverse number of participants are coming on board, for example regional bodies and cities, to try and make an impact where the corporate world has failed.

Whereas this multi-level approach marks a positive development in global governance, it also poses the problem of coordination. This is because vertical policy structures are being erected along geographical borders, making it difficult for coherent management activities to be undertaken at each policy level. This challenge may be traced back to the weakening role of the state. The actors that participate in global environmental governance are radically different. State interactions no longer form the core of these interactions. Their influence is virtually being replaced by that of the civil society and the private sector.

This challenge started unfolding after the Conference on Environment and Development in 1992. It played out again a decade later during the 2002 Johannesburg Earth Summit. Some 9 years later, this same scenario played out again during the Durban Climate Change Conference of 2011. All along, greater emphasis has been on the market mechanisms aimed at solving problems relating to the environment. This process is commonly known as marketized global governance. In marketized governance, there is little room for top-down regulations. Instead, various market mechanisms are used to provide incentives for activities that lead to reduced carbon emissions. These incentives may be in the form of taxation, permits, and property rights.

The concept of ‘carbon trading’ was derived from this new approach to global environmental management. Carbon trading is a process through which pollution is controlled by providing economic incentives that help in the reduction of the rate of emission of pollutants. In the context of the increasingly globalized world, global environmental governance, and economic integration, emphasis is increasingly being put on a cost-benefit analysis of economic growth. In this analysis, focus is not just on liberalization; it is also on environmental justice, utilization of natural resources, and environmental rent.

In many regions, particularly in developing countries, a great environmental challenge is that of finding balance between sustainability of growth rates and environmental preservation. This challenge has been evident in the ongoing efforts to make major amendments to the Kyoto protocol. During this process, various stakeholders have acknowledged that the problem at hand is one that requires collective action. In the current scenario, it is clear that rich nations bear the greatest responsibility for the reduction of carbon emissions. As for developing countries, accountability is mainly on future flows of carbon emissions.

Fortunately, there are signs that consensus will be reached on how to go about the social responsibility and global governance issues relating to environmental conservation. This consensus is typical of the marketized government mentioned earlier. In this consensus, stakeholders have chosen to veer away from the subject of Kyoto Protocol. In the area of forest preservation, for example, there is consensus on the need to compensate for all the rent that would have accrued during the pursuit of alternative business activities. In this regard, the greatest responsibility for technology transfer lies with the developed countries. The various aspects of this transfer include infrastructure, energy, and transport. Negotiations on this issue are ongoing, and it will be interesting to observe the sort of global leadership provided by various social actors, including large corporations.

In the context of such a trend, one should expect corporations to continue engaging in environmental marketing[55]. Through environmental marketing, these companies hope to achieve corporate reputation. Clearly, without an environmental component as in integral part of the overall corporate, it is impossible for a large corporation to excel. This has been the case since the mid-1990s when environmental conservation because a major global issue.

To further emphasize the need to incorporate an environmental component, the notion of environmental accounting has been introduced[56]. The level of interest in this issue has indeed been immense. The euphoria surrounding environment accounting has even made some scholars to express concerns that in the end, it may end up being injurious to global environment management efforts. In environmental accounting a ‘managerialist’ approach is normally used, whereby there is continued reference to the conventional business agenda[57]. It is also based on the assumption that there is a conflict between the conventional business agenda and the pursuit of sustainability through efforts to protect the environment.

The main source of motivation for marketized global governance approach is the concerns over the negative spillovers that are likely to occur as a result of globalization. Being the main participants, MNCs tend to be pushed towards compliance to certain international codes of responsibility with regard to environmental justice. The task of overseeing this adoption has been a challenging one for governments. This is why they have left it to non-state actors such as NGOs.

The level of pressure heaped on MNCs tends to vary depending on the industry. In the mining industry, for instance, companies face more pressure to justify the sustainability of their activities[58]. The CSR agenda tends to be at the center of efforts to ensure that companies operate in an environmentally friendly manner. Such companies are expected to disclose all relevant information that is likely to have environmental implications. Today, the main headache is on how the criteria for environment disclosure ought to be determined. The process of coming up with criteria is very sophisticated. Moreover, even where the standards have been set, many companies, especially very large ones, fail to comply.

Human rights and labor exploitation issues

Just like in the case of environment, there are calls for CSR to employ market-based remedies when addressing violations of international human rights[59]. In this approach, just like in the case of environment, the mechanisms entail self-governance, and the requirements are non-binding. This approach works best where global governance leaders are keen on prevention of international human rights abuses. In some cases, non-binding governance is considered more effective than the traditional CSR movement.

Many international companies have been linked with human rights violations, especially in the third world. In these areas, it is normally easy for MNCs to derive huge profits from their investments, yet in the end do nothing about the conflicts that are caused or exacerbated by their commercial activities. Most of these conflicts take the form of labor exploitation. Labor exploitation is a form of human rights violation. This happens in many industries across the third world countries, such as Ecuador, Indonesia, Nigeria, Papua New Guinea, among others[60]. In these countries, blame goes to MNCs with their origins in developed countries.

The nature of labor exploitation ranges from typical violations to child and slave labor. In simple terms, consumers insist on cheap products. Since the third-world labor is cheap, large companies rush for it in order to be able to manufacture products that can be sold cheaply but at a reasonable profit. In other words, exploitation of cheap turns out to be a profitable venture. With such a simple explanation, it is easy to understand why a market-based approach is an excellent solution to the problem of human rights abuses and labor exploitation.

It is in the enlightened interest of large corporations to engage in market-based approaches to global governance as far as human rights violations are concerned. This is because the questionable position in which they find themselves when operating in poor countries is injurious to their reputation. This is particularly the case in situations where the governments of these poor countries are weak and unstable. In such countries, only non-binding regulation can yield fruits if the problem of human rights violations is to be solved.

In non-binding regulations, companies are required to develop internal mechanisms of dealing with the ethical issue of human rights violations through labor exploitation. Otherwise, the best thing that a government can do is to put in place a law that limits the nature and magnitude of transactions. Even in such a case, it becomes extremely difficult to follow up on what happens in every factor and every production line to determine where there are any sweatshop labor practices.

In non-binding regulation, it is upon the company itself to determine which codes of business and regulations are to be established. Alternatively, they may be established on the basis of operating conditions put in place by the industry, civil society groups, or by the relevant international organizations. Examples of such international organizations include the Organization for Economic Cooperation and Development (OECD) and International Labor Organization (ILO)[61]. The participation of these organizations indicates a point of intersection between the CSR activities of global business and the contemporary global governance regime[62].

In the CSR movement, focus is on both direct and indirect influence on corporate behavior. This is done through internal self-regulation as well as marketplace and shareholder activism[63]. From this perspective, market-based approaches are a component of CSR. The main difference is that market forces are allowed to provide incentives for proper corporate behavior. Conversely, the disincentives that arise from various market forces discourage corporate leaders from pursuing profit-making strategies that lead to human rights violations.  The benefits that accrue from this approach translate to marketization of global governance. In this regard, indirect benefits of self-regulation end up being experienced by both the global business and the global society.

Human rights abuses at the corporate are an indication of the so-called ‘global governance gap’. In terms of international legal personality, there are many limits on non-state actors, yet these actors are the ones with an increasingly strong influence on the behavior of large corporations. These non-state actors are also the ones with the greatest influence on the issue of global corporate citizenship.

As non-state actors, corporations continue to enjoy immense de facto influence on the direction of international relations yet they lack the power to form international law. However, this significant non-state actor still reserves some power of influence with regard to the establishment of customary international law. Failure to take advantage of this power is conventionally considered an error of omission, and an extension, a move towards propagating human rights abuses in employment relations.

With regard to exploitation through labor practices, the main global governance issue is whether there is a way market-forces can be used to encourage corporate to promote better labor standards in developing countries. The answer here is no doubt a ‘yes’. Although market forces per se may not as effective as most global governance leaders would want it to be. The solution here lies to linking market forces to the existing legal regimes.

A great example of a law that has been put in place with the need for self-regulation in mind is the Alien Tort Claims Act[64]. This Act is a suitable reference point for human rights activists who advocate for self-regulation but who also feel the need for the existing legal regimes to be utilized in addressing the global problem of human rights violations in the labor market. It should be borne in mind that the international relations environment is a crowded one, with numerous stakeholders with conflicting interests. No wonder international relations scholars define this environment as anarchical. In such a context, it would be naïve and impractical to expect that corporations will act in free will to cater for human rights protections, yet their primary goal is maximization of profits.

However, there is hope that through proper governance, corporate citizenship, appropriate self-regulation safeguards, and continued reliance on the relevant legal regimes, all corporate leaders can be made to understand that in the new world order, business is not just about profits. They can be made to understand that global business is also about being mindful of all sustainability concerns raised. Obviously, in an environment of human rights abuses at the workplace, one cannot talk about sustainability.

However, other than human rights concerns, labor also poses many other problems all, of which fall within the realm of the global governance gap. There are no proper labor standards that can be applied across countries. This creates a major problem for MNCs, most of which are forced to applied their home-country rules in foreign contexts. In many cases, this move causes friction and conflicts between the host country and the MNC. Today, these problems have taken on a global perspective, thereby necessitating global solutions.

It is against this backdrop that a global labor governance regime is emerging[65]. A key characteristic of this regime is a gradual change in the approach used by governments and businesses in addressing labor and social issues from a global perspective. This transformation has evident in the way new international actors have been brought on board. In one way or the other, these actors have been contributing to the debate on labor regulation. Moreover, their contributions have ended up constituting different forms of governance.

Even in the context of this evolution of the international labor regime, it is difficult to fail to mention the issue of labor laws vis-à-vis self-regulatory standards in the ongoing debate. Even where the appropriate laws exist, enforceability is a major handicap. In fact, it seems that this was the main reason why CSR experts came up with the notion of self-regulation. Self-regulation, both at the local and international levels leads to higher expectations on the behavior of firms that operate in a transnational environment[66]. The same case is true about norm-setting, and the establishment of international codes of conduct in various industries. Other than raising expectations, these notions, when put into practice, create a pattern of regulation, albeit indirectly.

In the context of the evolution of a global labor governance regime, it is interesting to note the voluntarist initiatives that have been successfully carried out through such international platforms as the ILO, and the UN Global Impact. The activities of labor regime stakeholders through these platforms tend to create a shared understanding of the existing as well as forecasted labor standards. It is widely hoped that this understanding will contribute to the transformation of institutions that dwell on global labor governance.

 

 

 

 

Chapter 5: Conclusions

This dissertation has generated significant findings regarding the use of CSR in global governance. First, at the outset the study identified the existence of a global governance gap. This gap exists because the contemporary super-fast pace of globalization has surpassed the existing capacity in terms of global governance. At the same time, the data analyzed indicates a gradual shift from CSR to global corporate citizenship. In corporate citizenship, emphasis is on consensus building in solving global problems. However, this shift is far from clear, as evident in the fact that for some analysts, the CSR activities continue to take place alongside those of global corporate citizenship.

Secondly, the relationship between CSR and global governance is a very close one. When used properly, it can help in bridging the existing global governance deficit gap. Currently, stakeholders in global governance have resorted to a marketized approach to global governance. This approach suits global business in the new world order, unlike past coercive CSR activities that only helped reinforce the existing conflicts between global corporate players on the one hand and the civil society on the other.

This study has explored data on the marketization approach with regard to issues of labor, environment, and human rights. In each of these issues, it is clear that MNCs stand accused of seeking profits at the expense of environmental sustainability, labor ethics, and human rights. A workable solution to these problems is using self-regulation and non-binding governance to address them. Although the effects of this approach are experienced in an indirect way, they can be highly effective because the incentives and disincentives for various courses of actions are provided in the market.

In both theory and practice, it is clear that international organizations, though outdated, provide a platform for engagement between corporations and global societies in matters of corporate citizenship. An excellent example is the contribution of the ILO and OECD in global labor issues. It is therefore imperative that self-regulation is reinforced with the use of the existing legal regimes.

Regardless of the approach used to address global governance problems through CSR and corporate citizenship, the civil society plays a crucial advocacy and oversight role. This role is a crucial one, considering that globalization continues to weaken the position of the nation-state as the primary actor in international relations. Since its place is being taken by international businesses, it is important that the civil society occupies a position of leadership. Traditionally, the civil society was using a confrontational approach; nowadays, owing to the changing demands of self-regulation, a consensus-building approach is being used.

The changing role of the nation-state brings into perspective the political dimension of global governance. This dimension is appropriate in the understanding why approaches to CSR keep changing. The interplay of relationships between politics, CSR, and global governance is also worth emphasizing, and it is evident in both theory and practice. In this regard, the main similarity between ideals of CSR and those of global governance is that the underlying objective is to ensure that all stakeholders come together to address and seek lasting solutions to the main global problems of the contemporary society.

In conclusion, this dissertation has led to a positive proof of the research hypothesis: namely: that CSR can be a potential of global governance ideals that can be used to solve the crises being experienced in the world today. In showing this ability, the study focused on three key issues as highlighted in the UN Global Impact: environment, labor, and human rights. As CSR moves towards self-regulation and market-based approaches, there is hope that the solutions derived can embedded into global governance to bring about positive change in the contemporary society.

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