Corporate Social Responsibility Ethics Aalto University May 2019
Corporate Social Responsibility & Ethics Aalto University May 2019 Prof. Carole Parkes
For Wednesday n Complete and submit individual work n Read “Clothing Manager’s” case
Group Assignment Background Strategy Framework Stakeholders Reporting
Stages n Evolution of CSR (Mirvis & Googins) © Sheila Killian
Wednesday n n n Human Rights Labour Standards Clothing case
Starter exercise – complete and keep for end of class The ten most trusted people outside family
Human Rights & Business - 5 Key Questions 1. What are human rights? 2. How are human rights relevant for business? 3. What are business responsibilities? 4. What is due diligence in relation to human rights and business?
CHOXXO CASE n What are the issues here? n What should you do?
International Ethical Standards n n There are intra and inter-country differences in ethical standards Caused by issues such as: n Different histories n Religions n Cultural values (e. g. Hofstede’s work)
Question n n Should we accept these differences? Or attempt to impose one single standard ethical framework on international business?
Ethical Variances n n Ethical Relativism n What is right is whatever a society defines as right n No absolute right or wrong as long as behaviour is within the society’s laws n Local values and culture dominate (imposing home country values is ethical imperialism) Ethical Universalism (Absolutism) n There is a single set of universal ethical principles applying to all at all times everywhere n Global code of ethics
Ethical Relativism n n n We should respect other cultures’ values Who are we to impose our view on everybody? But: n How do we judge what is right and wrong? n Don’t we just have to accept anything now? n It’s just arbitrary – ‘anything goes’!
Approach n n n The idea of standards at least is universal The contingency approach n The ends are consistent n But the means contingent on situation n Not ‘best’ but also not ‘bad’ Stakeholder approach n Who benefits and who suffers? n But what is benefit and how do we weigh different stakeholders against each other
Globalisation n International business brings these issues into sharp focus How do we deal with ethical differences in our global operations? And what are the implications of global operations?
Ethical Universalism (Absolutism) n n n International standards are necessary to ensure fair and equitable trading Western business perceived as successful n So are these the standards of ethics? n How does recent economic ‘meltdown’ affect this view? Who should be responsible for defining ‘what’ is a universal standard? n UN, WTO, NGOs? ?
United Nations Declaration of Human Rights UNDHR (1948) http: //www. un. org/en/documents/udhr/ https: //www. theguardian. com/books/gallery/2008/oct/17/amnestydeclaration-human-rights-children
- International Labour Organisation promoting decent work for all The International Labour Organization (ILO) is the tripartite UN agency that brings together governments, employers and workers of its member states in common action to promote decent work throughout the world
The UN Global Compact n Initiated by Koffi Annan UN Secretary General World Economic Forum, Davos, January 1999 Challenged world business leaders - to ‘embrace and enact’ in both - individual corporate practices and - supporting appropriate public policies n www. unglobalcompact. org
Ten universally agreed values & principles in the areas of; Human Rights Labour Standards Environment Anti Corruption www. unglobalcompact. org
Human Rights 1. 2. Businesses support & respect protection of internationally proclaimed human rights within sphere of influence; and Make sure that they are not complicit in human rights abuses John Ruggie UN Special Advisor Business & Human Rights
Labour Standards 3. 4. 5. 6. Businesses uphold freedom of association & effective recognition of right to collective bargaining; The elimination of all forms of forced & compulsory labour Effective abolition of child labour Eliminate discrimination in respect of employment and occupation
The “International Bill of Human Rights” n n n The Universal Declaration of Human Rights The International Covenant on Civil and Political Rights The International Covenant on Economic, Social and Cultural Rights
Business & Human Rights Background n n Traditionally human rights centered on nation states (& core responsibility to protect and promote human rights). Global economy and the blurring of boundaries (for effective protection and remedy) suggests more powerful actors that influence the effectiveness (or otherwise) of enforcement including large organisations & multinational corporations (MNCs.
Background continued “Governance gaps provide the permissive environment for wrongful acts by companies of all kinds without adequate sanctioning or reparation” John Ruggie (2008) There is also evidence that through CSR strategies, MNCs have potential to be effective supporters of human rights An organisation’s legal obligations are those required in the main by domestic law but it is states and not MNC that are subject to international law.
n n n Many argue that MNC’s should carry out human rights obligations and even become ‘human rights duty bearers’. The UDHR refers to businesses by stating that “every individual and every organ of society” shall strive to promote respect for human rights (Nolan & Taylor, 2009). They are involved indirectly because states are responsible to respect, fulfill and protect human rights - which includes organisations and other private actors from violating such rights (Dine, 2005).
UN Special Representative John Ruggie n n His role is to ‘operationalise’ human rights and business in the three areas of; protect, respect and access to remedies. The responsibilities of companies “cannot and should not simply mirror the duties of states“ but that they do have “distinctive responsibilities” and should respect human rights, do no harm, act with “due diligence” within their “sphere of influence” (Ruggie 2008: 17).
John Ruggie’s Mandate 1 n n To identify and clarify standards of corporate responsibility and accountability for transnational corporations and other business enterprises with regard to human rights; To elaborate on the role of States in effectively regulating and adjudicating the role of transnational corporations and other business enterprises with regard to human rights, including through international cooperation;
John Ruggie’s Mandate 2 n n n To research and clarify the implications for transnational corporations and other business enterprises of concepts such as “complicity” and “sphere of influence”; To develop materials and methodologies for undertaking human rights impact assessments of the activities of transnational corporations and other business enterprises; To compile a compendium of best practices of States and transnational corporations and other business enterprises;
John Ruggie on why it matters to companies n UN Guiding Principles
International Labour Organisation n n UN organisation, based in Turin Set international labour standards Ratified by governments Agreed by industry groups and unions
Basic question: n What are the responsibilities of employers?
South African mining n n n n Problems and solutions ? What issues should companies address? Why? What happens if they don’t? How should they tackle this?
Sweatshops n n Walmart’s decorations Defending sweatshops n What do you think? Will growth solve everything?
Apple and Foxconn n Classic supply chain issue Do Apple have influence? For good or not?
ILO Standards n n n Freedom of association Collective bargaining Forced labour (video) Child labour Equality of opportunity and treatment Tripartite consultation Labour administration Labour inspection Employment policy Employment promotion Vocational guidance and training Employment security n n n Wages Working time Occupational safety and health Social security Maternity protection Social policy Migrant workers HIV/AIDS (video) Seafarers Fishers Dock workers Indigenous and tribal people
ILO case n n n Children in gold mines Can other companies replicate this? Think of companies that use metals …. .
Carrot and Stick
Four Core Elements of Human Rights Due Diligence 1. Human Rights Policy – ‘Setting the tone’ 1. Assessing Impacts – ‘From Reactive to Proactive’ 2. Integration – ‘Walking the Talk’ 3. Tracking Performance – ‘Knowing and Showing’ Grievance mechanism – ‘Early Warning System’
Complicity n n Complicity is both an ethical and legal concept. Corporate complicity in human rights violations refers to indirect involvement by a company in abuses carried out by a government or other actors. Charges of complicity can be raised when a company knew, or should have known, of its contribution to the abuse of a wide range of human rights, including; Civil and political rights, economic, social and cultural rights.
Sphere of Influence 1 Society Community Contractors Company
Sphere of influence 2
Organisational Implementation Due Diligence Human Rights Policy Tracking Performance Assessing Impact Integration Grievance Mechanism
Clothing case n n n Work in groups Come up with as detailed as solution as you can Report using flip chart pages
How was the process? n Did you find competing needs difficult? n What helped you to decide? n How different are boardroom decisions?
American Apparel n Made designs more complex Slowed production n Made wages smaller n Helped company move to retail Moved some sewers to year-round products Four-day week for everyone else Gave them a week off ($150) n n n More trust with older employees ”The bar has been raised for us”
American Apparel n n n Crisis continued, had to cut working hours CEO met all groups 2 nd week off, 300 interest-free loan Made it through with no layoffs Does this make them a responsible company? Sexual harrassment, Woody Allen, etc
Useful Websites n n http: //www. businesshumanrights. org/Home http: //www. ihrb. org
For Thursday n n n Work on group project Today – let me know how work is balanced out Sulitest
Thursday n Supply chain n Reporting n Recap on key issues
- Slides: 49