How American companies shape the corporate responsibility agenda (Part II)

LC: Continuing our discussion on the corporate responsibility challenges facing multinational companies, what about the relationship between business and human rights?

Adam Greene: Business and human rights is another big issue right now. Some groups blame companies for complicity in violating human rights by supporting oppressive governments in countries like Congo, Myanmar and Zimbabwe. Paying legal taxes in these countries is considered providing support to these governments. How can a company both be compliant and refrain from paying taxes? Who will decide where it’s OK to pay taxes and where it’s not? It’s very difficult to say when governments violate human rights. Many groups have claimed that the US government has violated human rights. So, does it mean companies should stop paying taxes in the US as well?

While it is easy for governments, particularly oppressive ones, to ignore criticism, brand name companies find it very hard to ignore any criticism; therefore they are willing to engage into discussion and try to find a solution. However, in spite of a company’s willingness to help, it can’t change all things in a country. What a company can do is to make sure it does not contribute to any problems and maybe help where possible. But dumping responsibility for issues generated by government failures onto companies is not wise and even somewhat dangerous. Companies cannot and should not replace governments. A company should not act as a judge or police. It would be undemocratic.

LC: If having companies ensure compliance in their supply chain is a short-term solution, what would be an effective long-term solution?

AG: The long-term solution is to improve the capacity of national governments to implement and enforce their laws. The ILO works with its member governments to learn from what companies are doing with their suppliers and apply that in relation to the rest of the factories. Through ILO’s Better Work Program, multinational companies partner with suppliers and national governments to improve labor standards while raising local competitiveness. This type of corporate responsibility initiative aims to improve overall legal compliance and enforcement in a country.

LC: What is your opinion about the campaign against Nestlé’s infant formula?

AG: Although the problem has come up because of Nestlé’s product, the real issue is related to lack of access to clean water. The campaigners are against this product because it relys on access to clean water, which can be difficult to find in many areas. However, many people drink contaminated water every day. So the real question is: shouldn’t every country strive to provide its citizens with clean water regardless of infant formula? So, the problem is not Nestle or its product. The problem is lack of investment in local infrastructure. Even if Nestle stops manufacturing this product locally, access to clean water remains a pressing problem, as does adequate nutrition for infants.

LC: What do you think of Denmark's recent passing of a law that makes CSR reporting mandatory?

AG: I think that’s a bad idea. Reporting is a form of communication to the key audiences. The first problem with a single CSR report is that there is no single audience for CSR information. In the US, the audience for CSR reports is the company’s employees. Most shareholders generally don’t read these reports. The general public certainly doesn’t read them. Mainstrean investors don’t read them. Suppliers usually don’t read them unless it relates to their operations. And most government agencies don’t read them. Companies provide each of these groups with different kinds of information, written in the most relevant way for that group.

Yet, a CSR report is good for pulling information together, recognizing that it does not have a wide readership. So, given that, CSR reports are only useful to the extent the information they provide is being managed within the company. If it's collected only for the sake of reporting, that's no good. And mandating CSR reporting might have this effect, thus failing to be adequately used internally and effectively reach a target audience. Therefore, this would be the wrong way to promote corporate responsibility. CSR beyond compliance is voluntary and should remain so, because good behavior simply cannot be mandated.

LC: Thank you very much for your contribution!