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FPP-04-1

The Corporate Social Responsibility System inLatin America and the Caribbean

Paul Alexander Haslam

Executive Summary

This paper advances our understanding of the existing system of corporate social responsibility (CSR) promotionand advocacy in Latin America and the Caribbean.Itbegins by contextualizing the relative importance of,andcommitmentto,corporate social responsibility in the Americas through a cross-national comparison of levels of CSR activity.The paper then elaborates a model,“The CSR System”which theorizes the key relationships and influ-ences on the developmentof the CSR culture in the region.Itdefines the major actors working to promote CSR inthe hemisphere as multilateral organizations,governments,private firms,private foreign foundations,education-al institutions and civil society organizations.The CSR System model shows thatconsiderable impetus behind thepromotion of CSR in the region comes from outside Latin America.By understanding how the system of CSR pro-motion and advocacy works,itis possible to identify the pressure points where the CSR agenda can be bestmovedforward.The paper advocates strengthening the watchdog capacity of independentnon-governmental organiza-tions (NGOs),in order to work towards a CSR system thatnotonly promotes corporate social responsibility,butalso engenders business compliance with its CSR obligations.

Résumé

Le présenttravail expose nos idées sur la promotion du conceptde la responsabilité sociale des entreprises (RSE)qui existe actuellementen Amérique latine etdans les Caraïbes.D’entrée de jeu,ce documentétablitl’importancerelative du contexte de,etde l’engagementpour,la responsabilité sociale des entreprises dans les Amériques parune comparaison transnationale des niveaux d’activités de la RSE.Ensuite,il élabore un modèle,le «Système deRSE»,qui théorise les principaux rapports etinfluences sur le développementd’une culture de RSE dans la région.Il établitles principaux acteurs travaillantà favoriser l’essor de la RSE dans l’hémisphère,à savoir:les organisationsmultilatérales,les gouvernements,le secteur privé,les fondations étrangères privées,les établissements d’éduca-tion etles organismes appartenantà la société civile.Le modèle du système de RSE démontre que l’impulsion con-sidérable derrière sa promotion trouve principalementson origine à l’extérieure de la région de l’Amérique latine.En comprenantcommentce système fonctionne,il devientalors possible d’identifier les points de pression sus-ceptibles de faire avancer davantage l’agenda politique de la RSE.Ce documentpréconise un renforcementde lacapacité de «chien de garde» des organisations non gouvernementales etindépendantes (ONG) afin de travaillerà l’établissementd’un système de RSE qui favorise non seulementla responsabilité,mais engendre égalementlaconformité du monde des affaires avec ses obligations liées à la RSE.

POLICY PAPERDOCUMENT DE POLITIQUEDOCUMENTO DE POLÍTICA

INTRODUCTION

Much of the corporate social responsibility (CSR)debate focuses on individual firm case studies,bestpractices,and philosophical and moral argumentsintended to encourage the adoption of CSR codes bycompanies.This debate originates in the rich coun-tries of the world,buthas increasingly found advo-cates and resonance in the developing world.The normative and case-study driven nature of thisdebate has tended to overwhelm empirical andaggregated research into the effects of CSR,andobscure questions aboutthe appropriateness of encouraging companies to adoptCSR codes in devel-oping countries,or using scarce foreign aid funds forCSR promotion.This paper advances our understanding of the exist-ing system of CSR promotion and advocacy in LatinAmerica and the Caribbean.Itbegins by contextual-izing the relative importance of,and commitmentto,corporate social responsibility in the Americasthrough a cross-national comparison of levels of CSRactivity.The paper then elaborates a model,“The CSRSystem”which theorizes the key relationships andinfluences on the developmentof the CSR culture inthe region.Itdefines the major actors working topromote CSR in the hemisphere as multilateralorganizations,governments,private firms,privateforeign foundations,educational institutions,andcivil society organizations.By understanding howthe system of CSR promotion and advocacy works,itis possible to identify the pressure points where theCSR agenda can be bestmoved forward.

HOW IMPORTANT IS CSR IN THE AMERICAS?

One question thatis rarely asked,and even less fre-quently answered is,“how importantare CSR princi-ples in the Americas?”In order to try and answer it,this paper extends a 2002 study by Susan Aaransonand James Reeves,published by the National PolicyAssociation (2002),to Latin America.Aaronson andReeves assessed the “levels of activity”of CSR inNorth America and selected European countriesaccording to three axes:the private sector;involve-mentof government;and public awareness.In a variation on this approach,selected countries of the Americas were compared along the same cate-gories (using the Canadian ranking from Aaronsonand Reeves as the baseline).This comparison wasbased on “levels of activity”apparentthroughInternetsearches and therefore suffers from theusual methodological limitations of web-basedresearch.Nonetheless,since mostmultinationalenterprises (MNEs),civil society and non-govern-mental organizations (CSO & NGOs),and govern-ments have a web presence in Latin America,and thestudy used the same search terms across differentcountries,some general conclusions can be drawn.A number of indicators of CSR activity in each cate-gory were used to geta “picture”of the state of theart.Using these indicators,in the “baseline”case of Canada a very significantdegree of CSR activity wasrevealed.An Internetsearch for “CSR and Canada” yielded 917 “hits.”An analysis of the first50 hitsrevealed significantCSR activity in mostcategories.In the private sector there were firms with CSR codes,

Resumen

El presente trabajo expone nuestras ideas acerca de la promoción y fomento del sistema de responsabilidad socialempresarial (RSE) que existe actualmente en América Latina y el Caribe.Primeramente se ilustra la importanciarelativa y el compromiso que ha generado el tema en las Américas,mediante una comparación del quehacer sobreeste tema en diferentes países.Asimismo,se presenta un esquema denominado “

Sistema de RSE

”en el que setrazan las principales relaciones e influjos que se consideran parte del desarrollo de una cultura de responsabili-dad empresarial en la región.Además,se definen los protagonistas principales de la promoción de la RSE en todoel hemisferio;a saber,organizaciones multilaterales,gobiernos,firmas privadas,fundaciones extranjeras privadas,entidades educacionales,y organizaciones de la sociedad civil.Se observa igualmente que gran parte de los esfuer-zos a favor de la promoción de este Sistema de RSE en América Latina viene de afuera.Una vez que comprendamosmejor como funciona el sistema de promoción y apoyo a la RSE,podremos determinar donde mejor hacer presiónpara fomentar el interés en la RSE.Este trabajo aboga por el fortalecimiento de la capacidad fiscalizadora de lasorganizaciones no gubernamentales en aras de lograr un sistema que no solo promueva la responsabilidad socialempresarial sino que también propicie el acatamiento por parte de las empresas de sus responsabilidades.

independentorganizations funded by business pro-moting CSR as well as activities by industry associa-tions (due to the similar activities of these businessand industry NGOs they will be labelled in this paperas “B/INGOs”).The governmentcom-mitmentwas also deep,with 5 differentfederal departments cited in the first50 hits:the Canadian InternationalDevelopmentAgency,Departmentof Foreign Affairs,ExportDevelopmentCanada;Industry Canada;andAgriculture Canada.Public awarenesswas also significantwith media cita-tions,NGO activities,and educationalprogramming.So how does the restof the Americascompare?In general we can say thatthere is ahuge gap between the mostdeveloped countries of the Americas (Canada and the US) and the restof theregion.As deep as this gap is,a similar gap existsbetween the mostadvanced developing countries of the region and the rest.Overall,itis possible to saythatthere are four differentlevels of CSR activity inthe Americas,in declining order of activity:•Running (Canada and US);•Catching-up (mostdeveloped Latin Americancountries,such as Argentina,Chile and Mexico);•Walking (restof South America),and;•Stalled (Central America and the Caribbean).In the mostindustrialized of the Latin Americaneconomies,Argentina,Chile,Mexico,(Brazil andUruguay could probably be included in this list,butwere notexamined in the study) we see some impor-tantCSR activity.Itis worth emphasizing the hugedrop thatoccurs when this level is compared to thatof Canada.For example while Canada generated 917search “hits”,itwas 140 in Argentina,105 in Chile,and63 in Mexico.This constitutes a seven to fourteen-fold drop over the Canadian level.In these countries there is significantprivate sector CSR activity – includingby private companies,butof specialimportance are industry associationsand independentorganizations orclubs of business professionals(B/INGOs).We also see a relativelyvibrantpublic awareness – as reflectedby media citations (often in businessmagazines),NGO participation,anduniversity programming.There is oneimportantdistinction between Mexicoand the others – thatis the importanceof business school programmes in thepublic awareness category.Itmay be hypothesizedthatthis is due to Mexico’s deeper integration intoNorth American business practices and businesstraining norms as a resultof the North AmericanFree Trade Agreement(NAFTA).These countries alsohave National ContactPoints (NCPs) charged withpromoting the Organization for EconomicCooperation and Development’s (OECD)

Guidelines for Multinational Enterprises

,and in Mexico in partic-ular,there are a number of differentgovernmentbureaucracies and programmes promoting CSR(mostly within developmentand planning min-istries).When compared to the restof South America(Bolivia,Colombia,Paraguay,Peru,Venezuela),thereis another enormous drop in overall CSR activity.Search “hits”fell to the range of 7-21,with Colombiascoring the highestat21.In these countries we see

Method:An Internetsearch was conducted with the “Altavista”search engine using the terms “corporate social responsibili-ty”(or the Spanish equivalent) and the country,limited by the country domain.The firstfifty “hits”were categorized accord-ing to the indicators listed above.

Table 1:Indicators for CSR Study

Private SectorGovernmentPublic Awareness

IndependentOrganizationsGovernmentDepartmentsNewspaper CitationsIndustry Associations Publicly-Owned FirmsNational NGOs (non-business)Companies with CSR Codes Programmes with Foreign Governments Subsidiaries of Internationalor Multilaterals NGOsCSR ConsultantsUniversity/ College activities

There is a huge gapbetween CSR activity inCanada and the US and the restof the Americas…as deep as this gap is,asimilar gap exists betweenthe mostadvanced devel-oping countries of theregion and the rest.