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THE International Journal of Corporate Social Responsibility, Sustainability, Leadership and Ethics

 

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Debating Points

Has a Collective Insanity Overtaken the World?
Some 50 years ago if you had seriously proposed any of the ideas and policies in today’s neo-liberal toolkit, you would have been laughed off the stage or sent off to an insane asylum. At least in the Western countries at that time, everyone was Keynesian, a social democrat or a social-Christian democrat, or some shade of Marxist. The idea that the market should be allowed to make major social and political decisions; the idea that the state should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given less, rather than more, social protection - such ideas were utterly foreign to the spirit of the time.
However incredibly it may sound today, the IMF and the World Bank were seen as progressive institutions. When they were created at Bretton Woods in 1944, their mandate was to help prevent future conflicts by lending for reconstruction and development and by smoothing out temporary balance of payment problems. They had no control over individual government’s economic decisions nor did their mandate include a license to intervene in national policy,
In the Western nations, the Welfare State and the New Deal had got under way in the 1930s but their spread had been interrupted by the World War II. The first order of business in the post-war world was to put them back in place. The other major item on the agenda was to get world trade moving – and this was accomplished through the Marshall Plan, which established Europe once again as the major trading partner for the USA.
On the whole, the world had signed on for an extremely progressive agenda. The great scholar Karl Polanyi published his masterwork, The Great Transformation in 1944, a fierce critique of 19th century industrial, market-based society. Over 50 years ago, Polanyi made this amazing prophetic and modern statement:
To allow the market mechanism to be sole director of the fate of human beings and their natural environment….would result in the demolition of society.
But Polanyi was convinced that such a demolition could no longer happen in the post-war world. Alas, his optimism was misplaced: the whole point of neo-liberalism is that the market mechanism should be allowed to direct the fate of human beings. The economy should dictate its rules to society, not the other way around.
So what happened?

o         How did neo-liberalism ever emerge from its ghetto to become the dominant doctrine in the world today?

o         Why can the IMF and the World Bank intervene at will and force countries to participate in the world economy on unfavourable terms?

o         Why is the Welfare State under threat in all the countries where it was established?

o         Why is the environment on the edge of collapse?

Why are there so many poor people in both the rich and the poor countries at a time when there has never existed such great wealth?
Susan George
Associate Director, Transnational Institute. Amsterdam
President, Observatoire de la Mondialisation (Globalisation Observatory), Paris


 

Ideopolis International

 

New Academy Review: Volume 2 Number 3
Autumn 2003

Professor Tom Cannon; Managing Editor
The death of Sergio Vieira de Mello, the United Nations High Commissioner for Human Rights, has deeply affected all of us involved in the Review. The loss of a person who could combine an awareness of the challenges and opportunities across the human rights agenda with the belief that positive change was possible is a loss for everyone. That he was killed with colleagues from across world who had come together to help the people of Iraq is doubly tragic.
Their loss is a challenge to all of those sharing his belief that good corporate citizenship “is not, and must not be, a mere public relations exercise … it is a platform for showing how markets can be made to serve the needs of society as a whole (and in doing so) reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of future generations.”
Delivering this is a challenge to the corporate community to achieve and disseminate best practice. The academic community has a responsibility to review, scrutinise and apply the best research tools to shape, determine and communicate these standards. Public and voluntary sectors can and should create frameworks, policies and where necessary regulate to embed these practices while intermediary and advocacy bodies need to represent diverse interests and ensure sound distribution. Across all these communities and processes particular challenges exist to ensure that the standards of responsible action expected of others elsewhere are seen across the corporate social, ethical and sustainability agenda
.

Leaders are few and followers many for a reason.
Anita Roddick
SMEs must develop greater knowledge of the different ways of creating positive relations with their stakeholders, as well as the positive effect that investment in CSR can have on company performance.
Mario Molteni
Migration has become a hot-button issue…
John Morrison
Seventy percent of the studies reviewed showed a positive and statistically significant relationship between CSR and financial performance.
Marina Martin Curran
As corporations buy the crop with the prevailing low world price, coffee farmers have begun to shift to other crops and some have chosen to sell off their lands.
Chairmaine Nuguid-Anden
For the neo-liberal, the market is so wise and so good that like God, the Invisible Hand can bring good out of apparent evil.
Susan George.

Contents
A View from the Chair  by  Anita Roddick 
Notes from the Edge       by Tom Cannon
Human Rights
Human Rights and Business: an update by John Morrison
Leader to Leader  
Re Sergio de Mello by Lord John Browne
Debating points
How a collective Insanity has taken grip of the World by Susan George   
Refereed Papers
Investigating the link between corporate social responsibility and financial performance by MM Curran
Corporate Social Responsibility in Small/ Medium Enterprises by Mario Molteni
Recognizing Saintly Business  by Robert Sexty
Managing Codes by Tom Cannon
Case Studies
Saving the Barako Bean: The Figaro Coffee Company’s Approach to Fair Trade      by Charmaine Nuguid-Anden
Research Notes

The Ethical Ratings Phenomenon by Christopher J. Cowton, and Christopher J. Low
Web News
Parting Shots by David Grayson

Guarding against ‘complicity’ in human rights abuses
 
In theory, there are several possible layers of corporate complicity in human rights abuses, which might be characterised as ‘direct’, ‘indirect’ or ‘silent’.[i]  Companies feel that it is not clear what might be regarded as complicity and what might not. A company’s presence in any country where the government is unwilling or unable to uphold universal human rights standards must raise questions about possible indirect complicity. Yet only rarely is it  the appropriate solution for a business to withdraw from a country completely. In fact it can be argued that, accept for one or two cases, any business is likely to exert more influence by remaining in the country. The challenge for any initiative focused on business and human rights is to develop criteria and tools that can be applied effectively within the local and national operations of a company to guard against any possible complicity.[ii]
 An example of this is the recent interest in the nature of Host Government Agreements (HGAs) between international companies, in particular the extractive sector, and specific governments in areas of operations. The consortium of companies, led by British Petroleum, developing the Baku-Tbilisi-Ceylan pipeline have recently adapted their HGA in light of human rights concerns.[iii] The implication is that good corporate governance requires a respect for international human rights, protecting the interests of a range of societal actors, and these cannot be exempted through bilateral arrangements with national governments.


 

[i]   Clapham and Jerbi (2001) “Categories of Corporate Complicity in Human Rights Abuses”.

[ii] For example to the tools developed by the Danish Institute for Human Rights (www.humanrights.dk)

    [iii]  Amnesty International UK (2003) Human Rights on the Line: The Baku-Tbilisi-Ceyhan pipeline project, AIUK: London.

Dame Anita Roddick
Every real and good change of significance, every revolutionary idea, every heartfelt gesture that changes one life or a thousand, was once seen as eccentric. Leaders are few and followers many for a reason: Change requires bucking the status quo, and bucking the status quo requires a willingness to be perceived as crazy, dangerous, or ridiculous. Like entrepreneurs, revolutionaries, activists, and changemakers of every stripe lead because they cannot follow that with which they do not agree, or which limits their imaginations. They change the world because their passion and conviction will not allow them not to.

The Human Rights Debate Revised
Abstract

A final area of predicted growth is the relationship between business and the migration and diversity debates. This is an area of policy where it has been government that has failed to provide any real leadership and now migration has become a hot-button issue across Europe, Australia, parts of Asia, southern Africa and parts of the Americas. It is in Europe and Australia in particular that being ‘tough on migration’ has become an election winner for politicians: note for example the recent election results in Switzerland. The ‘business case for migration’ is a strong and compelling one and it emerges periodically through the pages of the Wall Street Journal, Financial Times and the Economist. It is perhaps only a matter of time before business leaders in Europe feel the need to take some direct responsibility, the way that Bill Gates and others did (successfully) in the face of the large cuts to US immigration proposed by Congress in 1995. In 2002, Kofi Annan called on the business sector to play a more direct role in the shaping of future international migration policies and there are now several initiatives in place through which they can. John Morrison

[ii] Kofi Annan welcoming ‘The Declaration of The Hague on the Future of Refugee and Migration Policy’ at the Peace Palace, The Hague in November 2002. Article 18 of this Declaration relates directly to business. (www.sidint.org).

[iii] For example through interaction with the ‘Club of the Hague’ or the planned United Nations Commission  on Migration.

 

Recognizing Saintly Business: Lessons from Saint Homobonus
Abstract

The history of saints and of one saint in particular, Homobonus, known as the patron of businesspersons, provides lessons regarding how contemporary business persons are recognized for socially responsible initiatives. The paper gives background on sainthood and Homobonus and identifies issues relating to the recognition of social responsibility in contemporary society. Robert W. Sexty Memorial University of Newfoundland


Developing Codes of Management Practice
Abstract

Despite Enron and MCI, hardly a week seems to pass anywhere in the business world where the ethics, values and behaviours of managers and business leaders are questioned. In the US, the Justice Department is questioning executives at struggling IT giant, Qwest Communications International Inc. while in Britain politicians complain against corporate greed as CEO’s walk away with massive bonuses while shareholder value and jobs are destroyed. In India, the Bofors scandal rumbles on, seemingly forever, but in Russia President Putin has moved to challenge the Bandit capitalists.As the criticisms have mounted, organisations have attempted to respond by introducing codes of practice for managers. The aim of this paper is to review the nature of these codes, explore the roles of different agents who play a part in advocating, introducing and embedding these codes. The paper reviews managers attitudes to codes by drawing on a major study of management codes undertaken under the auspices of Britain’s Management and Enterprise National Training Organisation. Professor Tom Cannon, Ideopolis International

Corporate Social Responsibility in Italian SMEs Abstract
This article presents the results of a study on the state of Corporate Social Responsibility (CSR) in Italian Small and Medium Enterprises (SMEs). It was carried out on a sample of 427 companies which employed from 20 to 250 workers and included seven technical areas: the relationship with personnel, corporate governance, the state of health, safety and respect for the environmental, relations with the community, the relationship with customers and suppliers, CSR instruments and CSR awareness. From many points of view the results were encouraging although there are some areas where SMEs have weak points. In particular there is strong concentration of decisional power in the hands of the company head, limited career possibilities for women, little interest in voluntary environmental projects, little knowledge about new forms of ‘partnership’ with the community and social marketing and little use of the typical instruments of CSR.
On the other hand, many areas show that social values are written into the DNA of Italian SMEs. This is shown above all by their personnel relationships, strong integration with the local community, and the importance given to the ethical control of the supply chain. In the final part of the article, we have made some suggestions of how to intensify the social responsibility of Italian SMEs, which are also relevant in a European context.
Mario Molteni Full Professor of Management at Università Cattolica del Sacro Cuore

The Ethical Ratings Phenomenon
- ABSTRACT
I
The rating of companies’ ethical, social and environmental performance is an increasingly common practice. This paper describes a research project designed to explore empirically this phenomenon of growing importance. It outlines a framework that positions rating agencies as information intermediaries and from this derives an initial list of research questions relating to the three major categories of players involved – companies, rating agencies and users of the ratings generated. Professor Christopher J. Cowton and Dr Christopher J. Low Centre for Enterprise, Ethics & the Environment Huddersfield University Business School