Corporate Social Responsibility and Democracy VillePekka Sorsa Hanken

Corporate Social Responsibility and Democracy Ville-Pekka Sorsa Hanken 19. 5. 2015

Purpose of the presentation • ”Political Philosophy 101 for doctoral students interested in CSR” • Making sense of ’political CSR’ debates • What does it mean to take a ’political’ approach to CSR? What are ’political’ approaches good for? • Moving from general political CSR debate to more specific type of political – democratic CSR • What kind of CSR and what role for it in democratic societies, does CSR promote democratization, is democraticness good for business etc. • Background: forthcoming research project Is Corporate Social Responsibility Good for Democracy?

Making sense of Political CSR

What ‘political’ CSR? (1) • Normative and positive contestation of the instrumental conception of CSR based on ideas of economic liberalism (classical or neo-liberal) and/or modern systems theory – …i. e. , on business as calculative decision-making based on voluntary membership and justified with (market-based) efficiency • The (ostensible) rise of multinational corporations as background, e. g. Whelan (2012): – “As -- MNCs -- have become more numerous, more powerful, and more variously engaged --, and as their global operating context has changed --, so too have the normative demands commonly made of them. Within the business ethics and business and society literatures for example, the belief that ‘globalization’ has increased the power of MNCs, and concomitantly decreased the power of states, has informed a body of work that normatively prescribes, and positively describes and explains, the political duties and activities of MNCs. This specific literature -- is here referred -- as the ‘political’ perspective of corporate social responsibility (CSR), or ‘Political’ CSR for short. ”

What ‘political’ CSR? (2) • Examples of approaches identified as ‘political’ CSR: – New role of firms in global political economy / corporations as governments (Palazzo, Scherer, Crane, et al. ) – Extended corporate citizenship (Matten, Moon, Crane et al. ) and other civil society approaches to business (Den Hond, De Bakker et al. ) – Analysis on political foundations of different conceptions of CSR (Whelan, Mäkinen, Kourula, Fougére) – Seeing business as polis / political theory of the firm (Néron) – Critiques of CSR as regulatory captures, CSR discourse as greenwashing etc. (Banerjee, Barley et al. ) • These studies seem to represent quite different meanings of both ‘political’ and CSR – how to make sense of it all?

Useful analytical distinctions • How do understand different ’political’ approaches to CSR? – ’The political’ vs. politics – Political interpretations of CSR vs. actual politics of CSR • How to understand different conceptions of CSR? – Explicit vs. implicit CSR – Corporate policies and practices using CSR discourse vs. general social norms, expectations and demands over business

What makes an approach ‘political’? • • Often based on loose definitions or dualisms • Political vs. violent solutions, ‘economic’ calculation vs. ‘political’ deliberation • Analogies and metaphors (‘firms as governments’) More series conceptualizations (required in research): – Conceptual frameworks based on political philosophy • e. g. normative analysis (critiques, justifications etc. ) rooted in political philosophy (Jukka’s presentation earlier today? ) • Political CSR debates have especially drawn on Habermasian and Rawlsian philosophy – Research based on political theory and focused on politics • In CSR debates, businesses have been seen to engage in politics as distributive agents, communities of decisionmaking and participants in public policy processes (Néron)

’The political’ and politics (1) • ’The political’ is an ontological, ’politics’ an ontic level concept – Politics are things (policies, modes of governance, relations between citizens, conflicts of interests, legitimate exercises of the threat of violence, guarantees of rights etc. ) in the world that can have descriptive characteristics or plain facts stated about their existence – ‘The political’ refers to questions regarding what defines the nature and meaningful structure of existence of such things • ”In contrast to mere political concepts, such as legitimacy, rights, or sovereignty, the concept of the political is a radical one, one that goes to the root, addressing as it were the substance of politics, and not merely its attributes and predicates” (Andrew Norris)

’The political’ and politics (2) • Different conceptions of ‘the political’ make us see different types and forms of politics (foundationalism) – Recall Whelan’s definition: ‘political duties and activities’ of firms – what makes some duties and activities ‘political’? – E. g. Carl Schmitt’s essentialism (‘the political’ as friend vs. enemy & essence of state sovereignty), liberal aggregation of interests, Parsons’s structural functionalism • However, ‘the political’ should be seen as a field of debate and enquiry by its own right (post-foundationalism) – Issues like real-life relevance, normative commitments and social ontology should influence all definitions – N. B. ‘The political’ cannot be defined scientifically or without engaging in politics!

Examples What is ’political’? Explanation of key ideas What is politics? Location of politics Rawls Legitimate use of coercive (state) power based on reasonable pluralism, rights and liberties Legitimacy is set by principles of a freestanding conception of justice based on freedom, equality and fairness that citizens affirm Public use of reason over the nature of societal basic structure Reasoning in the public sphere Habermas Legitimate use of coercive power based on deliberation (as symbolic medium of self -representation of a society) Legitimacy is dependent on consensus based on civil society discourse and public opinion Struggle for power based on argumentation between equal citizens Deliberation in the public sphere Gramsci Hegemony over societal, intellectual and moral leadership Hegemony = ideas, institutions, material settings etc. through which governing power wins consent to its rule from those it subjugates (e. g. modern states and firms!) Hegemonic struggles Wherever legitimacy or leadership is formed or contested Laclau “Moments of antagonism where the undecidable nature of the alternatives and their resolution through power relations becomes fully visible” Moments of antagonism = violent decisions in which (socially contradictory) alternatives are eliminated on the basis of no objective fact or telos that could compel general acceptance Identity formation: plays of equivalence/simplification and difference/complication (always based on excluding something and establishing a violent hierarchy between the two resultant poles) Conflicts in which one confronts a threatening world that needs to be repulsed or subdued

Implicit vs. explict CSR • By ’CSR’, one can refer to two quite different kinds of things / research objects (Matten & Moon) • Explicit CSR refers to (voluntary) corporate programmes and policies explicitly articulating some responsibility over social, environmental etc. matters – N. B. Doesn’t necessarily have anything to do with responsibility in a strict sense • Implicit CSR refers to the responsibilites firms have in the broader society (whether CSR discourse is used or not) – Social expectations businesses face and channles through which they are held responsible – Theoretical approaches needed to address the nature and significance of responsibilities (e. g. new institutional theory) • These aren’t mutually exclusive, e. g. explicit CSR as corporate definitions of their own responsibilities

Example research agendas Rawls Explicit CSR Implicit CSR Civil society integration/mobilization on basis of CSR discourse Normative critique: businesses should respect societal basic structure (and not to engage in politics of it) Public reasoning over moral division of labour in the basic structure of different societies (if businesses are justified in the first place) Habermas Civil society integration/mobilization on basis of CSR discourse Normative critique: firms and markets should be kept out of politics (Scherer & Palazzo : if firms become like states, they need deliberative legitimacy) Gramsci Recognition of CSR as an idea potentially producing and maintaining leadership and/or legitimacy (e. g. CSR & neoliberalism) Corporate self-regulation (stakeholder-oriented or otherwise) as a hegemonic mode of global governance Laclau CSR as empty signifier and related identity plays (us/them, this/that responsibility, we are/aren’t responsible) Political mobilization on basis of corporate irresponsibility How do changing responsibilities shape antagonisms between capital and labour?

Another example • My research (in JSFI) on multi-level politics of socially responsible investment in Finnish pension insurance companies • SR as empty signifier + new institutional theory interpretation of explicit SR (legitimation of actual practices) • Main antagonisms: numeric vs. other evaluations, profitability vs. other concerns, insider vs. outsider control • Findings: SR discourse has much political significance – in symbolically reinforcing legal and practical (MPT) status quo, not going ’beyond’ them Institutional frames for SR Definition and differentiation of responsibilities Mobilization in investment practice National political economy Parliamentary committee calls for SR as investment targets, employers interpret as ’anchor ownership’ Legitimation of constant overweight of domestic assets in equity portfolio Industry SR standards (TELA) Legal responsibilities, compliance with law and international standards (human rights, PRI & GC) Legitimation of active corporate engagement and (box-ticking style) analysis of investee firms Organizational SR principles Pension sustainability, satisfaction of own employees, ethical commitments Legitimation of screening tobacco firms and cost containment

CSR and Democracy

Why democracy? ”Democracy has been defended on the grounds that it comes closest among the alternatives to achieving one or more of the following fundamental values or goods: rightful authority, political equality, liberty, moral self-development, the common interest, a fair moral compromise, binding decisions that take everyone’s interest into account, social utility, the satisfaction of wants, efficient decisions. Within the history of the clash of positions lies the struggle to determine whether democracy will mean some kind of popular power -- or an aid to decision-making--. ” David Held (2006)

What democracy? • Literally ”rule by the people” – Self-government and self-regulation – Theories of democracy differ in how they see ’people’ (demos), ruling (and participation in it), obedience etc. • Key modern principle of political legitimacy and justification – ”The consent of the people” (Held) – Varying roles in normative political philosophy: in some strands it is a precondition for all politics, in others one form of politics • Different ways to approach ideal types: – Forms of decision-making (models of democracy) – Principles of decision-making – Democracy as democratization

Dimensions of democratization • A litmus test of democracy: can everyone potentially affected by a decision participate in making it as equals • Dryzek (1996): the ’democraticness’ of any such political setting (deliberative, representative etc. ) can be assessed through 3 dimensions: 1. Franchise – how many people participate in decisionmaking 2. Scope – how many domains of life are under democratic control 3. Authenticity – the degree to which democratic control is substantive, informed and competency engaged • In order to qualify as democratic, no trade-offs between the dimensions or abandonment of democratic principles are allowed

Note: democracy vs. radical democracy From Laclau and Mouffe’s radical democratic perspective, neither liberal democracy nor even deliberative democracy can ever amount to a truly political approach because their normative foci, on aggregation of interests and the construction of consensus respectively, decentre or sidestep the problems of difference, undecidability, negativity and antagonism. Rather than seeing consensus or the aggregation of interests as the measure of success for politicisation, radical democracy implies that we should look to the ways that a political process not only helps to expose difference and dissent but also, in doing so, leads us to confront, as problematic and in need of revision, our own self-identifications and understandings of the world. (Edward & Willmott 2011)

Towards ’democratic CSR’ • The challenge: businesses are not democracies – …and for many philosophies (e. g. liberal theory) they are not even political settings – All three dimensions of democraticness are very limited – For example joint-stock companies and cooperatives may differ in how democratically they can act ’internally’. Yet, in neither case are there guarantees for including stakeholders or that acting democratically will continue. • The most suitable option: democracy as democratic legitimacy – The challenge of the state: all businesses are nationally mandated entieies • Potential applications in CSR studies: – Democratic justification for & legitimacy of corporate responsibilities & explicit CSR programmes – Democratic decision-making over corporate responsibilities – The role of CSR discourse in democratic politics

Where can you find democratic politics of CSR? • Rawls: where free and equal citizens reason publicly over what the societal basic structure businesses have to respect should be like • Habermas: in the civil society (’life-world’) that seeks consensus over corporate responsibilities in ’ideal speech situations’ – However, the consensus must be binding for the economic system in order to be a matter of democratic deliberation • Gramsci: where popular legitimacy is sought for the ruling corporations – Note: democracy as a way to promote legitimacy of capitalist hegemony • Laclau & Mouffe (radical democracy): where difference, dissent and conflict is celebrated in addition to liberty and equality in corporate matters

Is CSR good for democracy? • Friedman (neoliberal): possibly, and that’s exactly why you shouldn’t do CSR • Rawls (liberal): possibly, as long as it is citizens, not firms, engage in politics of CSR • Habermas (critical theory): possibly, if it means genuine democratization of organizations (wither markets and firms) • Gramsci (post-Marxist): perhaps, if it makes corporations more legitimate – but then again, that’s just another way to strengthen hegemony • Laclau (post-foundationalist): yes, if it marks a shift to new forms of self-government, i. e. wither markets and firms – and that’s a big ’if’

CSR and hegemony Consider, for example, a central claim of mainstream `strategic CSR’: Porter and Kramer -commend the idea of `win-win’ in which securing corporate profitability is conceived as perfectly compatible with social development and the reduction of inequity. This grounding presumption of much `strategic CSR’ is clearly contestable. Yet, as almost anyone who has taught business ethics, whether to executives or business students, will confirm, it is very difficult to call this notion into question without encountering defensive vehemence and ridicule provoked by any challenge to this sacred cow. In liberal democracy, the idea that different interests can be aggregated is a fiction, and yet is so central to liberal democratic thinking that doubting this possibility elicits vigorous, and at times acerbic, defence --. An equivalent fiction, we submit, is present in deliberative democracy where a normative investment, or identification, with the idea of consensus enables the fictitious nature of the grounding of this discourse to be obscured through claims that deliberative democracy is a pragmatic turn to democracy over philosophy. [Social theory of hegemony] and radical democracy raise an alarm whenever a perspective is presented as commonsense, as `pragmatic’ or as “just being realistic‟. It warns us that we are approaching the locus of signification where difference and undecidability are hidden and the discourse is stabilised through hegemonic practices involving emotional investment. The point, we suggest, is well illustrated by Willke and Willke’s -- revealingly excessive and patronising commentary on Palazzo/Scherer’s refutation of the relevance of the liberal democratic model where they opine that “it seems unwise to call for a politicization of the corporation in view of what is happening in Russia, Venezuela or Bolivia. . . Have they considered the possible effects of `democratic accountability‟ when the `demos’ (are lead [sic] to) believe they should boycott Jewish shops? ” --. It is therefore unsurprising that challenges to commonsense encounter dismissiveness, defensiveness and even anger. (Edward and Willmott 2011)