Corporate Social Responsibility and Globalization

1
Corporate Social Responsibility and Globalization

• Prof. Lok Sang Ho
• Centre for Public Policy Studies Lingnan
  University
• Peoples Council for Sustainable Development

2
Why CSR?

• Multinational Companies today have become
  extremely powerful, and are not like any of the
  private enterprises that existed, say, two
  decades ago
• To put it mildly, the future of humanity is very
  much at their mercy.

3
CSR and Free Market Economics

• Milton Friedman has argued that the social
  responsibility of business is simply to maximize
  the rate of return to the general shareholders,
  consistent with the law.
• This Legal Approach implies Regulation.
• If Regulation were effective and appropriate,
  Friedmans approach is fine.

4
Limitations to the Regulatory Approach

• Transnational Regulations are notoriously
  ineffective because there is no one to enforce
  them
• National Regulations are often not enforced
  because of widespread corruption in many
  developing nations
• Globally needed regulations are often not even in
  place because of short-term behavior of people in
  power or because of poverty.

5
Examples of Regulatory Failures

• Bhopal disaster and Union Carbidecompensations
  by Indian standards may be affordable and within
  the law, but are we content with having had the
  disaster?
• Human cost of coal mine accidents in China
• Politicians and their constituents may not be
  sensitive to pollution that drifts across
  national borders and causes only small short term
  problems at home

6
Advantages of the CSR Approach

• Often more effective than the regulatory
  approach
• CSR implies a constant dialogue between the
  corporation and the community, and allows
  considerable leeway for implementation that may
  reflect the changes of the times
• The CSR approach allows struggling small and
  medium enterprises greater room for survival

7
How much is Perfectly Legal worth?

• David Cay Johnston, a Pulitzer Prize-winning
  reporter for the New York Times, reveals how the
  government provides the "super rich"--from
  private individuals to profitable
  corporations-to hide their wealth, to defer or
  evade tax payments, and to pass the bill to
  law-abiding middle-class Americans.

8
CSR and the Bottom Line

• If corporations operate within the law and
  maximize profit by disregarding industrial
  safety, because industrial safety is more costly
  than paying compensations when accidents do
  occur, is this acceptable?
• If corporations cause serious environmental
  damages but the law allows that, is this
  acceptable?

9
Supply and Demand

• When numerous suppliers vie for the business Big
  Corporations can keep costs very low and profits
  very high
• When hundreds of thousands of workers vie for the
  scarce jobs Big Corporations can pay very low
  wages and raise their profits
• The low costs and wages may have nothing to do
  with low productivity, and are often the result
  of the working of supply and demand.

10
Human Costs

• When profits are the result of huge human costs,
  they are unhonorable and the world should be made
  aware of it
• Productive and hardworking but poor should be
  history
• Avoidable industrial disasters should be history

11
Sustainable CSR Corporations generate sufficient
profit to sustain their operations over the long
term while

• paying their workers and providing a clean
  working and safe working environment
• paying their suppliers reasonable prices
• paying due respect to the environment

12
A Better World

• With a living wage, hundreds of thousands of
  manufacturing and service workers will be able to
  unleash their newly found spending power on goods
  and services, and this will cause a BOOM in
  investment and a new prosperity
• More inequality and less waste
• A sustainable, happier and more peaceful world.