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<DIV><FONT face=Tahoma><SPAN class=412063213-08042006></SPAN><FONT size=2>P<FONT
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<DIV class=OutlookMessageHeader dir=ltr align=left><FONT face=Tahoma
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<H1>Ending the CSR Debate</H1><!--BODY COPY--><B>By Bart
Mongoven</B><BR><BR>The debate over the moral responsibilities of corporations
to society has taken on a more solid form with the release of the first draft
of the standard known as ISO-26000. When finished, the standard -- drafted by
the International Organization for Standardization (ISO) -- can be used by
corporations to determine (and prove) that they are acting in a socially
responsible manner. The standard will not be published until 2008, and the
current draft reportedly is in a highly unfinished form, with many significant
questions still to be answered. Nonetheless, the release of the draft marks a
turning point in the long-running debate. <BR><BR>The need for a standard on
<A
href="http://www.stratfor.com/products/premium/read_article.php?id=260444">corporate
social responsibility</A> (CSR) is clear. Nongovernmental organizations, labor
unions and international organizations like the United Nations not only are
calling for multinational corporations based in the West to bring their global
operations into line with the norms of advanced Western countries, but --
going a step further -- are coming to view these companies as instruments of
cultural change. They see corporations as mechanisms through which to advance
certain values in countries lacking the West's approach to civil rights and
liberties. <BR><BR>With the completion even of this early ISO draft, the field
of debate begins to change. Growing criticisms and the potential for
litigation about corporate complicity in <A
href="http://www.stratfor.com/products/premium/read_article.php?id=258335">human
rights abuses</A> -- as well as ongoing debates over where corporations'
responsibilities begin and end -- likely will cause corporations to flock to
ISO-26000. After years of trying to find ways to show the public that they
understand the concept of social responsibility -- but lacking both a guide
and a way to measure progress -- multinationals will be able to use the
standard as a set of ground rules to follow, and the public will have a
benchmark against which to measure the companies' performance.<BR><BR>Over
time, once the standard comes into effect, the debate over corporate social
responsibility can be expected to grow more moderate; with a guiding standard
in place, there will be far less drama in the debates, and activists who use
questions about CSR as a strategy to effect social change will have an uphill
struggle. Instead, corporations will face a new set of issues, relating to the
root of their rights in society, that will usher in a more thoroughgoing
debate about the power of corporations and how they are viewed by the
public.<BR><BR><B>Explaining the Standard</B><BR><BR>ISO-26000 is designed as
a guide to help businesses understand where their responsibilities to various
stakeholders begin and end. The standard, long in demand by Western
businesses, will provide a company with a system to ensure it is properly
monitoring its social responsibility performance and that it has in place the
relevant mechanisms to achieve its goals in this realm. Following the standard
will not necessarily mean that a company is acting in a socially responsible
manner, but it will make it easier to achieve these goals and for management
and observers to know if the company is, or is not, meeting its social
responsibility objectives. <BR><BR>Like the larger CSR debate to which it is a
response, ISO-26000 will focus primarily on corporate operations. It will
address the human rights, labor, environmental and community relations-related
effects of corporate operations. It also will examine methods of ensuring
social-responsibility goals associated with products, which is a relatively
newer and less-established field of study (and one where significant work will
have to be done in the next two years). The standards ISO-26000 will introduce
will help to clarify lines of responsibility on all of these topics.
<BR><BR>Few corporations would deny that they have a responsibility to live up
to higher standards than those of certain countries in which they do business.
Every multinational oil major, for example, maintains strong prohibitions
against bribery; large manufacturers refuse to use child labor or to do
business with suppliers that do. <BR><BR>At the same time, even those
companies recognized as the most socially responsible chafe at an open-ended
approach that places the burden on companies to change the culture where they
operate. Google, which is dedicated to the motto "Don't Be Evil," nonetheless
finds it sometimes cannot avoid being placed, for instance, between human
rights campaigners and the Chinese government. Advocates of an international
standard hope such a measure will present corporations with a globally
accepted and recognized alpha and omega for corporate social
responsibility.<BR><BR>Beyond these outcomes, corporations expect the push for
standards to yield even more concrete benefits. Those supporting the ISO
process perceive the standards as providing companies with the basis of a
legal defense in the face of litigious critics. To cite perhaps the most
obvious example, the growing use of the Alien Tort Claims Act (ATCA) in the
United States -- which allows foreign nationals to sue corporations in U.S.
courts for human rights violations committed in other countries -- unnerves
corporate counsels, who cannot predict where ATCA will be used or how it will
be interpreted in the future. By following the systems laid out in ISO-26000,
a company will be better able to determine that it is not doing things that
put it at risk of ATCA litigation, and also gives it the ability to show in
court, if need be, the steps the company took to avoid committing human rights
violations.<BR><BR><B>After CSR</B><BR><BR>When ISO-26000 is completed in
2008, the business world likely will flock to it. The document will be
flexible. It will leave a place, for instance, for the emerging human rights
standards being developed by the International Finance Committee (IFC) and for
the conclusions that the U.N. special representative on business and human
rights, John Ruggie, draws in his assessment of the <A
href="http://www.stratfor.com/products/premium/read_article.php?id=263255">human
rights obligations</A> of businesses -- whether that means the U.N. Norms for
Business or (more likely) some new human rights code of conduct. ISO will give
companies a guide for monitoring their adherence to these codes of conduct and
other emerging codes and treaties. <BR><BR>Ultimately, the publication of the
draft standard tells the world that the day is coming when CSR will be well
understood and normalized. With that, the vagaries will be gone and the
debates over what can reasonably be expected of a company will fade. This is
not to say that the responsibilities of corporations to society no longer will
be subject to debate, but for the most part, the issue will be discussed
within the context of a series of established authorities -- ISO, the U.S.
Securities and Exchange Commission, and perhaps the United Nations.
<BR><BR>The publication of the ISO-26000 draft particularly tells the players
at the extreme edges of the debate -- the most strident NGOs and the most
recalcitrant corporations -- that, like it or not, CSR will be debated in a
fairly staid, narrow band with terms defined by ISO and arbitrated by lawyers
who are experts at splitting hairs.<BR><BR><B>Corporate Power and
Rights</B><BR><BR>The long-term goals of the activists who have been most
diligent in pushing corporations to act in a more socially responsibility
manner echo those of the anti-globalization movement. These goals can be
summarized as trying to reduce the effect of major corporations on the
societies in which they operate, and to carve out space for communities to
define themselves and their culture without the influence of financial
interests (or companies, primarily). <BR><BR>With the current CSR debate
drawing to a close, it is important to identify what is left: questions about
corporate power and the cultural impact of corporations on society. >From this,
it seems likely that the outstanding business not addressed by CSR campaigning
thus far concerns the social implications of corporations' products (and thus,
the corporations' responsibilities) and the legal structure that gives
corporations the power to change culture, domestically and globally.
<BR><BR>At the core of this new debate will be -- not the question of the role
or responsibilities of multinational corporations -- but rather a
re-examination of the limitations society places on large corporations.
<BR><BR>Central to this discussion will be the question of corporations'
influence on political systems. These questions have persisted to some degree
or another since the 1950s, but they have also been refined by changes in the
economy and culture. In the United States, the central questions today revolve
around the power of corporations to lobby government and to advertise.
<BR><BR>At a fundamental level, the American public tends to view the right to
speak and to lobby government as having been guaranteed to corporations by the
First Amendment, but activists increasingly are inverting the question and
asking whether the First Amendment -- or other parts of the Bill of Rights --
applies to corporations. The activists claim that only a series of Supreme
Court decisions during America's so-called Gilded Age extended constitutional
rights to corporations, and argue that the Bill of Rights applies only to
people, not organizations. Thus, it follows that free speech (advertising) or
addressing grievances with government (lobbying) are not inalienable rights
for corporations. Out of this line of discussion rises a clamor for a "true
democracy," "real democracy" or "participatory democracy" in which the public
clearly and intentionally defines what rights corporations have and do not
have. <BR><BR>Though the argument is based on tenuous historical reasoning --
and the mechanisms by which the public would define the rights of corporations
are almost impossible to imagine -- the question of whether corporations have
inalienable rights (or whether the people have the right to rescind or
otherwise limit those rights) will resound soon after ISO's standard comes
into effect in 2008. <BR><BR>The debate will take different forms in different
countries. At the core, however, will remain the question of what power
society gives to corporations, and what corporations owe to society in return.
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