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Objectives of Corporate Social Responsibility Orgs Undermined by Lack of Binding Rules, Power Imbalances

By:
Chris Gaetano
Published Date:
Aug 4, 2020
A recent report has concluded, after numerous case studies, that multi-stakeholder initiatives (MSI) that seek to promote corporate social responsibility (CSR), have failed to make any appreciable change in the world, as their voluntary nature and the power imbalances among participants undermine the larger humanitarian goals on which they are premised.

The report was authored by the group MSI Integrity, a group that has spent 10 years investigating whether, when and how MSIs protect and promote human rights. The final document represents the culmination of this research.

MSIs are a broad category of programs that seek to bring the business community together with other stakeholders in addressing environmental issues, human rights abuses and other issues, usually through some form of standard-setting. These CSR organizations include the Rainforest Alliance, which provides certifications on sustainable forestry; the Fair Labor Association, which promotes adherence to worker's rights; and the Global Reporting Initiative, which provides a framework for sustainability reporting.

A big part of the problem with MSIs, said the report, is their generally voluntary nature. At best, these organizations might censure a company that is not in compliance with its standards, but generally they have little other power. They can be only as rigorous as the member company will allow them to be. The report noted, for example, that despite numerous voluntary standards set by the cocoa industry, child labor remains a major force within the supply chain, which has prompted supporters to begin questioning the effectiveness of the entire project. Further, if a member firm no longer likes an MSI's standards, it can always leave the alliance and just make standards of its own, which have even less accountability and oversight. The report noted that grocery chain Sainsbury's did that very thing in 2017.

Another major issue is power imbalances in these initiatives. These projects exist ostensibly to bring corporations together with civil society organizations and other non-business stakeholders to work on mutually beneficial solutions, but the report said that the massive resources the corporate players can bring to bear means that they almost inevitably wind up dominating the agenda. While other organizations might be a part of these initiatives, the report said they have far less influence than those from the business sector.

"MSIs are highly technocratic, and effective participation in their governance requires significant financial and technical resources, as well as investments of time," said the report. " Yet CSOs [civil society organizations]—particularly those from the Global South—are often poorly resourced compared to their corporate or government constituents. MSIs thus risk reproducing pre-existing Global North/South and corporate/community power imbalances."

This has had the effect of sapping the legitimacy of these initiatives, as civil society partners, frustrated with the lack of progress, increasingly disassociate from them. For instance, the NYU Stern Center for Business and Human Rights left the Global Network Initiative (an MSI devoted to promoting electronic privacy rights and opposing censorship) over what it said was a lack of shared vision and a lack of compliance monitoring. The Maquila Solidarity Network, similarly, left the Fair Labor Association in the 2013, saying it felt like a voice crying out in the wilderness.

Further, because of this influence, the report said many MSIs issue overly-narrow standards that ignore the core causes of human rights abuses. So, even if a company or government complies with all of an MSI’s standards, critical human rights abuses may continue. For example, an analysis of eight prominent supply chain MSIs found that while more than half encourage paying workers fair wages, only one actually requires that they be paid a living wage within a fixed time frame. It also noted that, in examining seven MSIs regarding sustainable agricultural products, the focus is almost exclusively on monitoring conditions at the initial point of production, ignoring the entire rest of the supply chain.

Sometimes this is due to these initiatives' fears of of losing influence. The report pointed to the Marine Stewardship Council, which certifies sustainable seafood, as one example. When news of forced labor and child labor in the fishing industry broke around 2014, the council expanded its standards to include these issues, but the effort amounted to just imposing prohibitions on fishing operators that had been convicted of forced or child labor in the last two years, or that do not disclose their internal policies relating to child and forced labor. Further, it did not address at all other labor issues such as wage theft, excessive hours, or obstructing people's ability to change employers. The council responded that it feared businesses leaving its initiative if its standards became too stringent. The report also faulted MSIs for having generally inadequate monitoring mechanisms to detect when standards are not being followed, and generally inadequate enforcement measures to provide incentive for following them. Many also lack grievance mechanisms and processes for which injured parties can find remedy.

"MSIs are not effective tools for holding corporations accountable for abuses, protecting rights holders against human rights violations, or providing survivors and victims with access to remedy,' said the executive summary. "While MSIs can be important and necessary venues for learning, dialogue, and trust-building between corporations and other stakeholders—which can sometimes lead to positive rights outcomes—they should not be relied upon for the protection of human rights. They are simply not fit for this purpose."

The report said that, in light of all these findings, worker-driven social responsibility (WSR) initiatives present a better model for positive social change. One of the biggest differences between WSRs and MSIs is that WSRs present legally binding obligations to their participants that carry mandatory economic consequences for those who fail to comply.The report pointed to the Fair Food Program as one example. Participants must pledge more than just to think about or discuss the rights of agricultural workers: They must specifically agree to pay 1 to 4 cents more per pound of tomatoes, while the growers must pay farm workers at least the local minimum wage. Unlike in an MSI, there are legally binding consequences for failing to do this.

The report said that this WSR model will, over time, replace the MSI model as the "gold standard" for addressing human rights abuses.