Corporate Citizenship: The Journal of

the journal of
Corporate Citizenship
Issue 9
Spring 2003
ISSN 1470-5001
the journal of
Issue 9
Spring 2003
Editorial From the Center for Corporate Citizenship World Review Turning Point Are Business Schools Silent Partners in Corporate Crime? Diane L. Swanson, Kansas State University, USA William C. Frederick, University of Pittsburgh, USA Turning Point The Ecology of Corporate Citizenship: Raising a Ladder to the Moon? Malcolm McIntosh, University of Bath, UK Turning Point Responsibility versus Accountability? Interpreting the World Summit on Sustainable Development for a Synthesis Model of Corporate Citizenship Ralph Hamann and Nicola Acutt, University of East Anglia, UK Paul Kapelus, African Institute of Corporate Citizenship, South Africa Corporate Citizenship: The Role of Commercial Organisations in an Islamic Society Malcolm H. Cone, University of Otago, New Zealand Managerial Interpretations of Stakeholder Influence: A Study of Pollution Control in Russian Manufacturing Enterprises Jo Crotty, University of Liverpool, UK Making the Business Case for Sustainability: Linking Social and Environmental Actions to Financial Performance Marc J. Epstein, Rice University, USA Marie-Jose Roy, University Laval, Canada Resisting Corporate Citizenship: BusinessNGO Relations in Multi-stakeholder Environmental Partnerships Eric C. Poncelet, CONCUR, Inc., USA Towards a Process View of the Business Case for Sustainable Development: Lessons from the Experience at BP and Shell Christopher Perceval, Said Business School, Oxford, UK Managing Corporate Stakeholders: Subjecting Miless 1987 Data-Collection Framework to Tests of Validation James Weber, Duquesne University, USA David M. Wasieleski, University of Pittsburgh, USA Diary of Events About the Journal of Corporate Citizenship Notes for Contributors
2003 Greenleaf Publishing Limited. All written material, unless otherwise stated, is the copyright of Greenleaf Publishing Limited. Views expressed in articles and letters are those of the contributors, and not necessarily those of the publisher.
3 8 11 24-27
28-31
32-48
49-66
67-78
79-96
97-115
117-132
133-153
154 155 156
ISSN 1470-5001
The Journal of Corporate Citizenship

General Editor Professor Sandra Waddock,
Boston College, Carroll School of Management, USA
Regional Editors Europe/Africa: Professor Malcolm McIntosh, University of Bath, UK; Australia/Asia: Professor David Birch, Corporate Citizenship Research Unit, Deakin University, Australia Publisher Production Editor Book Review Editor John Stuart, Greenleaf Publishing, UK Dean Bargh, Greenleaf Publishing, UK Jerry Calton, University of Hawaii, USA
Editorial board
Carol Adams Jrg Andriof Gill Coleman Andr Habisch Bryan Husted Jan Jonker Juan Miguel Luz Judi Marshall Jeremy Moon Marcelo Paladino James Post Peter Reason Sybille Sachs Ann Svendsen Simon Zadek Monash University, Australia Visiting Fellow, Warwick Business School, UK New Academy of Business, UK Katholische Universitt Eichsttt, Germany Instituto Tecnolgico y de Estudios Superiores de Monterrey, Mexico Nijmegen University, Netherlands Asian Institute of Management, Philippines University of Bath, UK Nottingham University Business School, UK IAE, Argentina Boston University, USA University of Bath, UK University of Zurich, Switzerland Simon Fraser University, Canada AccountAbility, UK
Review board
Ian Barney Jem Bendell Simon Collinson Mark Glazebrook Brad Googins Adrian Henriques Rob Lake Rolf Lunheim Magnus Macfarlane Craig Mackenzie Christopher Marsden, OBE Anupama Mohan Eamonn Molloy David Murphy Jane Nelson Jacob Park Jan Aart Scholte Swansea University, UK Founder, Lifeworth.com, UK Warwick Business School, UK Deakin University, Australia Boston College, USA independent consultant, UK Henderson Global Investors, UK Norsk Hydro ASA, Norway Warwick Business School, UK Clerical Medical Investment Management, UK Amnesty International Business Section, UK Warwick Business School, UK Warwick Business School, UK New Academy of Business, UK Prince of Wales Business Leaders Forum, UK Green Mountain College, USA Centre for Regionalisation and Globalisation, University of Warwick, UK
Correspondence
The Journal of Corporate Citizenship encourages response from its readers to any of the issues raised in the journal. All correspondence is welcomed and should be sent to the General Editor at Boston College, Carroll School of Management, Chestnut Hill, MA 02467, USA; edjcc@bc.edu. Entries for the Diary of Events should be marked JCC Diary and sent to journals@greenleafpublishing.com. Books to be considered for review should be marked for the attention of the Book Review Editor and sent to Jerry Calton, School of Business and Economics, University of HawaiiHilo, 200 W. Kawili Street, Hilo, HI 96720, USA; calton@hawaii.edu; notification should be also sent to editor.jcc@bc.edu. All articles published in The Journal of Corporate Citizenship are assessed by an external panel of business professionals, consultants and academics. The Journal of Corporate Citizenship is monitored by Political Science and Government Abstracts and Sociological Abstracts.
Subscription rates
The Journal of Corporate Citizenship is a quarterly journal, appearing in Spring, Summer, Autumn and Winter of each year. Subscription rates for organisations are 150.00 sterling/US$250.00 for one year (four issues) and for individuals 75.00 sterling/US$125.00. Cheques should be made payable to Greenleaf Publishing and sent to: The Journal of Corporate Citizenship Greenleaf Publishing Ltd, Aizlewood Business Centre, Aizlewoods Mill, Nursery Street, Sheffield S3 8GG, UK Tel: +44 (0)114 282 3475 Fax: +44 (0)114 282 3476 E-mail: journals@greenleaf-publishing.com. Or order from our website: www.greenleaf-publishing.com.
Advertising
The Journal of Corporate Citizenship will accept a strictly limited amount of display advertising in future issues. It will also be possible to book inserts. Suitable material for promotion includes publications, conferences and consulting services. For details on rates and availability, please e-mail journals@greenleaf-publishing.com. Printed on acid-free paper from managed forests by The Cromwell Press, Trowbridge, Wiltshire, UK.
Editorial
Issue 9
Spring 2003
Sandra Waddock, General Editor

Professor of Management, Boston College Carroll School of Management, USA Senior Research Fellow, Center for Corporate Citizenship, Boston College, USA
Making corporate citizenship real

making corporate citizenship real that is the long-term task of The Journal of Corporate Citizenship. From this issue forward, it is intended that JCC will focus explicitly on bridging the gap between the concept of corporate citizenship and its practice in todays complex and challenging organisations (see page 155). True corporate citizenship involves far more that what has traditionally been called corporate social responsibility.
Getting the definitions straight

Corporate citizenship really means developing mutually beneficial, interactive and trusting relationships between the company and its many stakeholdersemployees, customers, communities, suppliers, governments, investors and even nongovernmental organisations (NGOs) and activists through the implementation of the companys strategies and operating practices. In this sense, being a good corporate citizen means treating all of a com-
panys stakeholders (and the natural environment) with dignity and respect, being aware of the companys impacts on stakeholders and working collaboratively with them when appropriate to achieve mutually desired results. Assessment of corporate citizenship is based on the perceived level of corporate responsibility a company exhibits, which inherently involves accountability to relevant stakeholders for ones actions, which stakeholders see in a companys actions, impacts and practices. With increasing calls for transparency about responsibility for corporate impacts resulting from the global communication capabilities of the Internet and the recent wave of corporate scandals comes a new recognition: some level of responsibility, good or bad, is implicit in every company action. Just as the quality movement showed us that some degree of quality is integral to every product or service, so the stakeholder orientation of corporate citizenship allows us to see that some level of responsibility is integrally connected to every action that affects a stakeholderor the natural environment. There is no escape. Companies will be judged for their corporate citizenship, largely by external stakeholders but
JCC 9 Spring 2003
2003 Greenleaf Publishing
editorial
also by internal stakeholders such as employees, investors and suppliers, whether they do it well or not. Scholars and managers alike often speak of corporate social responsibility. Yet in practice corporate social responsibility can be (and is usually considered to be) more discretionary such as involving the charitable or voluntary actions of the company or the direct involvement in achieving social cohesion or building a better society. In contrast to the definition of corporate citizenship offered above, where responsibility is not discretionary and cannot thus be avoided by the nature of the major impacts that companies always have on stakeholders, companies can and sometimes do choose to avoid engaging in meeting societal or local community needs. They may avoid such social engagement at their peril, however, since most companies are still locally tied in some way. The health of communities and engagement with the governments where companies operate do matter to corporate success. By these definitions, corporate responsibility is not just social, it is integral to practice and strategies; it is unavoidable and is the building block on which the companys reputation for citizenship is built. Realised corporate citizenship is more important than ever in an era in which new cases of institutional failure, abuses of power, accounting frauds, labour and human rights violations, environmental degradation and scandals come to light daily. Not since the worldwide depression of the 1920s have the internal practices and external relationships of companies come under such public scrutiny or has distrust been so common. Indeed, large institutions in general are affected by the lack of trust in their integrity; witness the scandal in the USA and elsewhere surrounding abuses in the Catholic Church. Perhaps the only way to rebuild trust in corporations, whether they are global firms with long supply chains or small to medium-sized enterprises struggling to survive, is to recognise that corporate citizenship is integral and that responsibility,
accountability and transparency are part of the manifestation of corporate citizenship. Corporate citizenship, I believe, is at the core of companies reputations and the ways in which stakeholders are served, including shareholders, but it goes well beyond these things. The relationships that a company has with its many stakeholders are tied to that firms very success. In a world where managers face incredibly intense pressure regarding financial performance, it is altogether too easy to lose sight of the broader corporate citizenship agenda which places businesses firmly within the context of the societies in which they operate. Determined to meet the numbers, many executives today seem to overlook the potential of corporate citizenship to enhance corporate reputation and long-term effectiveness, or they believe that corporate citizenship is merely the do-good stuff of philanthropy and social action rather than an integral part of developing productive and constructive ongoing relationships with key stakeholders. Understanding what is happening in companies today with respect to their corporate citizenship is vitally important. Although research on corporate social responsibility has been under way for more than 30 years, the emerging understanding of the integral nature of corporate citizenshipthe reality that corporate citizenship cannot be divorced from practiceis relatively new. Only through the best scholarship, creative thinking, new ideas and new insights about the potential and problems of corporate citizenship as practised in the real world can we even begin to build the necessary bridges. Only when new, theoretically, empirically and practically based constructive and critical ideas are translated into practical advice and these practices are shared and disseminated can corporate citizenship actually be made real. It is in the encouragement and sharing of such ideas that The Journal of Corporate Citizenship hopes to accomplish its task.
JCC 9 Spring 2003
editorial
Developments in The Journal of Corporate Citizenship

JCC can, I believe, play an important role
in creating new understanding of the links between the theory and practice of corporate citizenship by providing a forum where those who study corporate citizenship in its many manifestations and those who practise it can come together in common understanding. Thus, the goal of JCC is to publish the best ideas integrating the theory and practice of corporate citizenship in a format that is readable, accessible, engaging, interesting and useful for readers in business, consulting, government, NGOs and academia. The topics that can be included under this logic in the journal vary widely, but we hope they will carry a common thread: that of bridging the gap that now exists between the best thinking about corporate citizenship and the best practice of it in the vaunted real world. To enhance this journals capacity to build bridges between theory and practice in the global context in which many companies play today, we have created a new editorial structure for the journal. For the next two years, I will serve as General Editor and Editor for the Americas. In addition, Malcolm McIntosh, University of Bath and Founding Editor, will serve as Regional Editor for Europe and Africa; David Birch, Deakin University, Australia, who will become General Editor in 2005, will be Regional Editor for Asia and Australia. We hope that by spreading editorial responsibility globally in this way we will have a significantly enhanced global coverage. To further the globalisation of JCC we have begun the process of globalising the Editorial Board of the journal, inviting new members who can bring perspectives from around the world to the journal (see page 2). This process of expanding the scope of the Editorial Board (and the Review Board) is still under way, with invitations out to several other individuals, who will provide even more in-depth access to global perspectives on corporate citizenship.
Thanks to the good efforts of Malcolm McIntosh, Founding Editor, and the good graces of publisher John Stuart at Greenleaf Publishing, the journal is well launched. With the new connection to the Center for Corporate Citizenship at Boston College, where JCC is now administratively housed, there is an opportunity to make a direct connection between academics and the global business community. The new editorial policy of JCC focuses explicitly on translating solid academic or practically based ideas and research into practice. We hope that the articles published in JCC will be accessible, interesting, engaging, critical and even . . . controversial. To spark some controversy, be provocative and provide a forum for emerging ideas and perspectives, we have added a new feature called Turning Points. Turning Points are commentaries, controversies, new ideas, essays and insights that we hope will be provocative and engaging, raise the important issues of the day and provide observations on what is too new yet to be the subject of empirical and theoretical studies.
About this issue

This issue of JCC clearly illustrates both the controversial and global nature of the dilemmas of corporate citizenship as it is currently practised (or not practised). I am pleased to bring you an exciting array of peer-reviewed papers as well as three exciting commentaries in our new Turning Points feature, and welcoming remarks from Brad Googins, Executive Director of the journals new administrative home, the Center for Corporate Citizenship at Boston College. In his remarks welcoming JCC to Boston Colleges Center for Corporate Citizenship, executive director Brad Googins raises a challenge for all of us: how can we, scholars and managers alike, create a global learning community on this topic of corporate citizenship? To create this learning community we need to reach across the
JCC 9 Spring 2003
editorial
divide between theory and practice, scholar and manager, and create a forum where good ideas can be exchanged.
Turning Points
Following Jem Bendells regular column, World Review, we introduce this new section of the journal, which provides a rich opportunity for well-thought-out opinions, new ideas, creative scholarly or practicebased insights and practical observations. This issues Turning Points selections are no strangers to controversy, providing, as they do, provocative perspectives on emerging issues. In the vein of raising important but too often unspoken questions, Diane L. Swanson, Kansas State University, and William C. Frederick, University of Pittsburgh, raise an issue that ought to be at the heart of new thinking about the future of management and of management education. What is the responsibility of management educatorsbusiness and management schoolsin fostering a narrow perspective on corporate citizenship and business ethics, and is the education that management students receive in most management education programmes part of the problem underlying the tremendous wave of corporate scandals that has rocked the USA since the collapse of Enron Corporation and accounting firm Arthur Anderson in autumn 2001? Also not one to avoid controversy in his commentary arguing for an ecology of corporate citizenship, Malcolm McIntosh raises several fundamental issues related to achieving a complete understanding of corporate citizenship and how such citizenship is to be fully achieved. Despite the failure of so many corporations to behave responsibly, there are companies making serious efforts to make their corporate citizenship real. Companies alone are not responsible for the worlds problems. Other institutions must share the blame. Corporate and other institutional accountability, as well as a better understanding of core purposes of different institutions, is needed.
Just what did the Johannesburg World Summit on Sustainable Development accomplish in terms of corporate responsibility and corporate citizenship? As the Turning Point commentary from Ralph Hamann and Nicola Acutt of the University of East Anglia and Paul Kapelus, of the African Institute of Corporate Citizenship, suggests, much effort was spent in trying to come to a common understanding of definitions. Coming to terms with differences in the meaning of responsibility and accountability created interesting tensions at the summit. To be useful in the long run, as these authors emphasise, the meanings need synthesis and support from other elements in society than simply business: it is needed also from governments and NGOs.
Papers
The papers in this issue focus on three key issues: different models of sustainability as they are being played out in corporate practice, the ways in which corporate citizenship manifests itself (or does not) in different systems around the world and managing stakeholder relationships.
Global corporate citizenship

First are two papers dealing with issues of corporate citizenship and corporate responsibility in contexts where they have, to date, been little studied. In a much-needed assessment of the contributions of one of the worlds major religions to understanding the role of the company in society, Malcolm H. Cone, University of Otago, provides an introduction to the ways in which an Islamic society (Indonesia) thinks about matters of corporate responsibility. Using an in-depth study of a banks approach to issues of responsibility, Cone guides the reader through terms such as riba (prohibition of exploitative economic relationships), zakat (a voluntary social security tax) and mudarabah (risk sharing in commercial ventures). In an era in which lack of understanding of the true nature of Islam can create significant problems,
JCC 9 Spring 2003
editorial
Cones paper provides a welcome perspective on the positive contributions that Islam makes to society. In an empirical study, Jo Crotty, University of Liverpool, sheds interesting new light on the ways Russian managers view their environmental stakeholders. Indeed, much of the contribution of Crottys paper is to inform us about how far there is to go to build in concepts of corporate responsibility, sustainability and stakeholder relationships to the thinking of managers in nations such as Russia, where markets are still developing. The paper serves as a reminder that much of the thinking about corporate citizenship on which we rely may be limited to industrialised and Western nations.
Sustainability and stakeholders

The rest of the papers in this issue deal with issues of sustainability and stakeholders. In Making the Business Case for Sustainability: Linking Social and Environmental Actions to Financial Performance, Marc Epstein, Rice University, and MarieJose Roy, University Laval, provide a window into what companies are actually doing to measure, monitor and report their environmental management and sustainability initiatives. Using a framework through which they can assess the depth of integration and reporting, Epstein and Roy provide both theoretical and practical guidance for reporting on sustainability initiatives but suggest that, in the end, businesses still have a distance to go before they are fully making the business case. In Resisting Corporate Citizenship: BusinessNGO Relations in Multi-stakeholder Environmental Partnerships, Eric C. Poncelet, CONCUR Inc., provides new insights into why collaborations fail. In particular, he points out that stakeholders in different sectors have different perspectives on themselves and each other, not to mention on their respective environmental responsibilities and the ways they view their collaboration. These differences, according to Poncelets findings, serve to reinforce existing intersectoral mistrust and power imbalances.
Using two in-depth cases, Shell and BP, Chris Perceval, University of Oxford, illustrates how these two global firms are attempting to implement sustainability into their corporate strategies, in Towards a Process View of the Business Case for Sustainable Development: Lessons from the Experience at BP and Shell. Although broad-based empirical work on stakeholders, of the sort we find in the final paper in this issue by James Weber, Duquesne University, and David M. Wasieleski, University of Pittsburgh, entitled Managing Stakeholders: Subjecting Miless 1987 Data-Collection Framework to Tests of Validation, is important, Percevals paper reminds us of the equal importance of qualitative studies to provide insight into managerial practice. The Weber and Wasieleski paper provides, for the first time, important validation of the links between top-management philosophy, corporate strategies, and companies exposure to their social environments. Sandra Waddock December 2002
q
Sandra Waddock is Professor of Management at Boston Colleges Carroll School of Management, USA, and Senior Research Fellow at Boston Colleges Center for Corporate Citizenship. She received her MBA (1979) and DBA from Boston University (1985) and has published extensively on corporate responsibility, corporate citizenship and inter-sector collaboration in journals such as The Academy of Management Journal, Strategic Management Journal, The Journal of Corporate Citizenship, Human Relations and Business and Society, among many others. Her book, Not by Schools Alone, was published by Praeger in 1995. Her 1997 paper with Sam Graves, entitled Quality of Management and Quality of Stakeholder Relations: Are They Synonymous?, in Business and Society, won the 1997 Moskowitz Prize. Her latest book is Leading Corporate Citizens: Vision, Values, Value Added (McGrawHill, 2002). She was Senior Fellow at the Ethics Resource Center in Washington, DC, from 20002002 and a founding faculty member of the Leadership for Change Program at Boston College.
u ! <
Boston College, Carroll School of Management, Chestnut Hill, MA 02467, USA edjcc@bc.edu www.bc.edu/corporatecitizenship
JCC 9 Spring 2003
From the Center for Corporate Citizenship

Practising Corporate Citizenship: Welcome JCC
Bradley K. Googins
Boston College Center for Corporate Citizenship, USA
on behalf of the center for

Corporate Citizenship and the Carroll School of Management at Boston College I want to issue a very warm welcome to the readers of The Journal of Corporate Citizenship (JCC). We are very proud to serve as the new home of the journal and look forward to continuing the high quality of discourse that has characterised the first two years of its existence under the superb wisdom and guidance of Malcolm McIntosh. I can think of no one more suited to assume the editorship than our colleague Sandra Waddock, who, as one of the true pioneers of the corporate citizenship field, has been at the forefront of thought leadership. Sandra and the Center are committed to establishing JCC as a leading voice in corporate citizenship across the globe, bringing new knowledge to light, linking practitioners with academics, creating dialogue across the sectors, and stimulating innovative thinking and practice of corporate citizenship in our workplaces and communities. We believe the Center constitutes a stable and nourishing home for the journal. For nearly 20 years the Center has distinguished itself in the field by focusing on education and research. Actively supported by over 300 leading companies, we have set an ambitious agenda as both capacity builder and thought leader for corpo-
rations who are seeking excellence in corporate citizenship. We are enthusiastic about the prospect of linking the journals content to the extensive training and education courses we offer worldwide, and to communicating its research and new thinking to the wide network of business practitioners who serve on the front lines of corporate citizenship. The current state of corporate citizenship is one of rapidly shifting expectations and norms around corporate values and behaviour in an environment that is straining to create links between citizenship and business success. We are witnessing, across the globe, heightened expectations for greater corporate integrity and increasing demand for corporate involvement in a broad array of social issues. As these issues, demands and expectations confront corporations and societies, JCC becomes an important vehicle for creating dialogue, building knowledge and stimulating innovation. The journal at its best will place itself squarely in the midst of the super-heated vortex of competing concepts of citizenship, rapidly developing issues such as reporting and measurement, and multiple conflicts that arise across the sectors in defining roles, rights and responsibilities of citizenship. What more could a journal ask for? We are living in anything but boring and irrelevant times.
JCC 9 Spring 2003
practising corporate citizenship
I would suggest that, in the midst of these rapidly changing dynamics, the journal, like the field of corporate citizenship, faces a number of critical issues around which it has great potential to contribute significantly.
Global corporate citizenship

The term global corporate citizenship is bandied about as if it were a clear and widely understood concept. In truth, our understanding of global corporate citizenship has shifted according to the forces of globalisation, rapid advances in technology, the retreating role of government and a rise in the number and prominence of activist groups. Further complicating our knowledge of global citizenship is that it is rooted primarily in the context of state or region. In the USA, for example, global corporate citizenship has barely surfaced, even though US companies are among the leading players in the global economy. This is manifest in the efforts of large multinationals to globalise corporate philanthropy rather than adopt a comprehensive global citizenship strategy. This contrasts markedly with a country such as Brazil, where non-governmental organisations (NGOs) and government officials are more apt to be interacting with the private sector on basic issues of economic development and sustainability. Global corporate citizenship is still at an early developmental stage, where global economic and political forces are shaping country behaviour, but corporate citizenship remains disjointed from any overriding concept of global citizenship or ties with a global network. Here, JCC has a unique opportunity. The journal plays a very important role in linking corporate citizenship within a global community of researchers and practitioners, both public and private. From the outset, JCC was designed to be global in scope, stimulating new thinking by bringing in perspectives from around the world. A rotating series of editors will span the globe. The JCC advisory and editorial boards will con-
tinue to reflect a rich global diversity. Its contributors will be encouraged to bring a global outlook and the dialogue will open up new avenues across countries and regions. It might legitimately be said that in the 21st century there is no such thing as corporate citizenship, only global corporate citizenship. JCC will seek to become a major voice and vehicle for linking the disparate communities across the globe who are engaged in building corporate citizenship at home and abroad.
Corporate citizenship practice

From a developmental perspective, we are still at the very early stages of corporate citizenship. There remains little conceptual clarity. Models of citizenship only now have begun to take shape, and signs of a profession have just started to emerge. Over the past two decades, a relatively active academic community has begun to form, which is focused on a wide array of corporate citizenship issues such as ethics, business and society, stakeholder theory, and sustainable development. On the ground level of corporate citizenship, business has had few structures, guidelines or even well-developed practices, never mind clear visions of what a corporate citizenship company looks like. However, new corporate leaders are beginning to develop new ways of linking citizenship efforts across the company. Establishing the business case for citizenship has become a highly valued undertaking. JCC can and should play a crucial role in developing and advancing corporate citizenship practice. Where too many academics and academic journals live in the world of TBU (true but useless), this journal aspires to bring the best of academic research together with the daily challenges of corporate citizenship within the firm and the community. Knowledge and conceptual clarity must be brought into the field of corporate citizenship in a manner that is easily understood and useful to those who are in the firms, practising corporate
JCC 9 Spring 2003
bradley k. googins
citizenship. Innovation and new knowledge is not the domain of the academic. It is often shaped in the crucible of practice. JCC strives to link the worlds of practice and academia so a learning community emerges, excited about opening up new avenues and pushing the boundaries of global corporate citizenship.
Business schools
This journal should play a critical role in influencing both the thinking and the curriculum in business schools. Issues around corporate citizenship, ethics and corporate responsibility have been pushed aside in the rush among business schools to embrace the prevailing paradigm of shareholder value. But the recent corporate scandals and misdeeds have challenged business schools to integrate ethics and social responsibility into their teachings. Many schools, and the US the Academy of Management itself, are being called on to re-examine their mission and curriculum as well as some of the core issues that lie within the corporate citizenship domain. The journal is located within a business school. It can and should contribute to this dialogue. It has an opportunity to push the boundaries for thinking, suggest new approaches and models and serve as a catalyst for shaping tomorrows business school curriculum.
However, the journal should also be judged on its contribution to creativity, innovation and integration of theory and practice. The corporate citizenship community is growing. Some of us reside inside academia; many of us reside in firms and companies around the world. A hallmark of the journals success will be to link these two groups into a virtual learning community. This will happen if JCC meets the basic criteria of ensuring a high calibre of research while simultaneously drawing in those who are building and practising citizenship on the ground. Although academics are instinctively drawn to a journal as part of their culture, it is our hope that JCC will inform the work of those outside academia and reflect their contributions to the growing body of knowledge of corporate citizenship. This, of course, is a tall order and will challenge the editors and the editorial board. But its promise is why the Center for Corporate Citizenship at Boston College is so pleased to be the journals new home. The vision of a global community learning from one other and contributing to an active dialogue through the pages of the journal can only result in a much-needed voice for this emerging field of global corporate citizenship. We at the Center look forward to working with all of you in this very exciting endeavour.
q
Bradley Googins is the Executive Director of the Center for Corporate Citizenship at Boston College, USA, and an Associate Professor in the Department of Organizational Studies at the Wallace E. Carroll School of Management. The Center is a leading voice in corporate citizenship through its research and executive education along with its active partnership with over 300 businesses who are members of the Center. Dr Googins is also the founder of the Center on Work and Family, a leading research institute also located at Boston College.
Final thoughts
As we move into our third year as a journal, let us define our measures of success. Clearly, we aim to attract and publish cutting-edge research and innovative practice that meets the highest standards of intellectual rigour and professional discipline.
u ! <
The Center for Corporate Citizenship at Boston College, 55 Lee Road, Chestnut Hill, MA 02467,
USA
googinsb@bc.edu www.bc.edu/corporatecitizenship
10
JCC 9 Spring 2003
World Review
OctoberDecember 2002 A synopsis of the key strategic developments in corporate responsibility around the globe over the last quarter
Jem Bendell *
Tim Concannon
Unsustainable world-views?
although most discussion of
socially responsible investment since the turn of the millennium has focused on the practices of the companies invested in, attention has increasingly turned on the responsibility of investors themselves. The role of the financial community in US corporate scandals post-Enron has played a part in this attention shift. By Christmas it became clear that a number of financial institutions, including Citigroup, J.P. Morgan Chase and Merrill Lynch, may be sued for their role in the creation of Enrons offthe-books partnerships that helped conceal that companys debts. A judge in Houston ruled that the defendants could be construed as having sufficient participation in the preparation of false statements about Enrons finances to merit the suit, and suggested that there was evidence to support the contention that they acted with an intent to deceive. This served notice that one of the primary lines of defencethat the financial institutions and legal firms were actually engaging in the normal practices of their business was not likely to succeed.
another reason for a focus on

investors was the continued growth in socalled ethical investment. For example, in Australia, this industry may be opened to greater scrutiny if a proposal by the corporate regulator, the Australian Securities and Investments Commission (ASIC), to issue guidelines on the disclosure of investment practices, comes to fruition. In December, ASIC asked for comments on a discussion paper that suggested it should provide guidelines for financial institutions on how to disclose information on the role of social and environmental issues in decision-making.1 Currently it is financial firms themselves that largely
* Jem Bendell is Founder of Lifeworth.com. Tim Concannon is a human and environmental rights campaigner based in Sussex, UK, working
with others to establish the Stakeholder Democracy Network (www.stakeholderdemocracy.org).

1 http://afr.com/australia/2002/12/20/FFXY3V0JV9D.html
JCC 9 Spring 2003
11
world review
define practice in this area. The process of assessing, rating and recommending companies on social and environmental performance may have to become more transparent and credible. The scope, methodology and inclusiveness of research, as well as the skills, qualifications and independence of analysts, need to be addressed. In time, questions such as whether information obtained by ethical investment analysts from particular companies is proprietary and should be in the public domain cannot be avoided. Indicating growing interest in the field, in November, the sustainable management magazine Green Futures focused on financial issues. A main feature considered the London Sustainability Principles, developed by Forum for the Future and the Corporation of London.2 These are seven principles, based on economic prosperity, environmental protection and social development. In Johannesburg these were recognised by the UNs Environment Programme to apply to all financial centres and markets, and the Corporation of London began introducing other financial centres to the principles, beginning in Geneva and then New York. Champions of the principles, such as Dame Judith Mayhew, referred to them as global principles. A closer look at the principles suggests there was much more work to be done for them to encompass all dimensions of sustainable development and become truly global. The principles on social development said nothing significant about human rights, unequal trading structures, corporate accountability, anti-competitive business practices, corruption or political lobbying. Reflecting the environmental bias of the process, the term social development was even mentioned in inverted commas, despite its much longer history than the term sustainable development.
dame judith mayhew: champion of the london sustainability principles
The methodology for developing the principles, using case studies of best practice and workshops of interested corporate responsibility professionals (mostly London-based), may explain why they do not deal with more systemic issues, nor views from different cultures.3
even
when
considering
environmental issues, some may question whether mere exhortation could help change the way financial markets work. Some blame the systemic restrictions on fund managers, and, in turn, the boards of companies they invest in. In the Green Futures issue, Nick Robins of Henderson Global Investors asserted that
todays financial markets are still institutionally programmed to deliver the short-term maximisation of financial returns alone. Not only does this mean that financial markets lag behind the steady integration of sustainability factors in the rest of economic life; it also means that the primary signals that companies receive are in tension with their longer-term purpose.4
2 Roger East, Faith in the City, Green Futures 37 (2002), www.greenfutures.org.uk/features/default.
asp?id=1260.
3 Financing the Future: The London Principles of Sustainable Finance, www.forumforthefuture.org.
uk/uploadstore/London%20_principles_full_report.pdf.
4 Nick Robins, Turning the Worm, Green Futures 37 (2002), www.greenfutures.org.uk/features/
default.asp?id=1262.
12
JCC 9 Spring 2003
octoberdecember 2002
Not only is short-term profit a potential problem but also the very nature of money in most capitalist economies. Since most of the money in circulation is created in the form of loans from banks, nearly all of it has to be paid back plus some more, thereby creating a growth imperative in the economy. This poses problems for a world of finite resources, and, if resourceneutral growth is possible, not only would it require major state intervention but would increasingly impel the commodification of free public goods to create new markets. This would compound the social concerns arising from the concentration of power in the hands of those that control access to financial capital. Such concerns have occupied both theologians and other followers of Judaism, Christianity and Islam. Centuries ago, the dominant view in Judaism and Christianity emerged that charging interest is permissible. However, today many Islamic institutions still adhere to the idea that usury, and thus interest, is wrong. This is because of a number of key principles in Shariah law. First, money should only be a medium of exchange, a way of defining the value of a thing; it has no value in itself, and therefore should not be allowed to give rise to more money. The human effort, initiative and risk involved in a productive venture are more important than the money used to finance it. Second, a lender must share the risk with the borrowerthe potential profits or losses that arise out of the enterprise for which the money was lent. Third, transactions should be entered into honestly with the minimum of uncertainty, risk and speculation. Fourth, investments should not support practices or products that are incompatible with the core beliefs of Islam. As a result, the charging of interest, trading in futures, speculation on currencies, and investment in products such as alcohol, are not permissible for many Islamic financial firms. The principle that
nbank1.html.
thereby emerges is that Islam encourages investments in order that the community may benefit.5 In practice Islamic banks usually work by taking an equity stake in the enterprises they help finance. In November, the 9th annual World Islamic Banking Conference took place in Bahrain. The Conference was be convened under the patronage of H.H. Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister of the Kingdom of Bahrain. That the conference attracted delegates from most of the major Islamic financial centres of the world, as well as international organisations such as the World Trade Organisation, indicates the growing importance of the sector. The Islamic banking sector is expanding at around 15% per year. There are now more than 200 Islamic financial institutions spread across the Middle East, with more in the Far East, controlling assets of around $200 billion. Major players, such as HSBC and Citibank, have opened Islamic operations. There is even a Dow Jones Islamic index. Environmental economist David Boyle suggested it was time to take a new interest in no interest:
It isnt clear yet whether charging interest is overwhelmingly bad in all circumstances. But the issue is surely due for much wider debateas environmentalists ask themselves if there isnt a basic flaw at the heart of the money system that powers unsustainability. Because if there is, something is going to have to be done about itand it may be that the Islamic scholars have at least part of an answer. 6
The Islamic financial community was also beginning to explore the connections between these practices and sustainable development, as indicated by the University of Bahrains plans to explore Sustainable Development and Islamic Finance in Muslim Countries at their 5th Inter-
5 Principles of Islamic Banking, Nidaul Islam magazine, www.usc.edu/dept/MSA/economics/ 6 David Boyle, Islam or Rust?, Green Futures 37 (2002), www.greenfutures.org.uk/features/default.
asp?id=1263
JCC 9 Spring 2003
13
world review
national Conference on Islamic Economics and Finance in April 2003.7 Given doubts about the coherence of the London Principles, and the important progress being made with Islamic finance, it seems premature to consider the principles as legitimate global standards, or even aspirations.
Rumbles from the jungle

in october, a united nations report
on mining in the Democratic Republic of Congo (DRC) packed a political punch, by accusing corporations of exploiting the African countrys mineral wealth in tandem with criminals.8 The report by a fivemember panel accuses 29 companies, the Rwandan government and army, the Ugandan army, Congolese and Zimbabwean government officials and other named individuals of continuing to exploit the DRCs resources in questionable ways. The Congo is rich in gold, diamonds, cobalt, copper and coltan, which is used in mobile phones. The report notes that trade in these resources has helped fuel the four-year civil war in which more than two million people have died. Significantly, the report called for the UN Security Council to introduce specific sanctions against named individuals and companies it claimed were involved, including travel bans, freezing personal assets and barring enterprises and individuals from receiving funding or establishing partnerships or other commercial relations with international financial institutions, or IFIs, such as the World Bank and International Monetary Fund. It
also listed 85 companies the panel considered to be in breach of the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, the voluntary code supported by many governments and business associations as the most appropriate way to police transnational business.9 The report called for a body to be established to monitor any further exploitation of the DRCs resources, which can report back to National Contact Pointsthe first port of call for any complaint through the OECD Guidelines procedurein the home countries of the companies on the list. The OECD code allows for both naming and shaming of companies in breach of the principles, and a theoretical monitoring by the host country of the businesses compliance with the code.10 Among the 85 companies listed in the report are Africas largest steel producer, Iscor Ltd, Germanys Bayer AG, four Belgian diamond firms and the Belgian Groupe George Forrest mining group, British-based De Beers, Anglo American and Barclays Bank, Chemie Pharmacie Holland and the Dutch-based ING Bank, Canadas First Quantum Minerals and the US mining firm Cabot. By the turn of the year, most of these companies were refuting the allegations. Barclaysone of the two largest banking groups in Sub-Saharan Africaresponded to the report with bemusement: We have not been given any details of why we are included and have asked the UN for an explanation, said a Barclays spokeswoman.11 The Belgian Groupe George Forrest mining group also responded with a statement: the experts have intentionally committed very serious negligences,
7 www.irti.org/conf002.htm 8 United Nations Security Council, Final Report of the Panel of Experts on the Illegal Exploitation of
Natural Resources and Other Forms of Wealth in the Democratic Republic of Congo, New York, 16th October 2002, http://193.194.138.190/Huridocda/Huridoca.nsf/e06a5300f90fa0238025668700518ca4/ 5e423385c10ae294c1256b1100505218/$FILE/N0132354.pdf. 9 OECD Guidelines for Multinational Enterprises, www.oecd.org/EN/document/0,,EN-document-933-no-6-18925-0,00.html. 10 See e.g. Stakeholder Democracy Network, Coded Words: A Critical Assessment of the Voluntary Approach to Achieving Corporate Accountability, Lewes, UK, October 2002, www. stakeholderdemocracy.org/pws/mod.php?mod=userpage&menu=1112&page_id=71. 11 Footsie firms caught up in Congo looting probe, The Independent on Sunday (UK), 27 October 2002.
14
JCC 9 Spring 2003
causing at an international level the devastation of the commercial reputation of the Forrest Group and endangering its economical survival.12 Nevertheless, the allegations were taken seriously by some, and in November investigators in Brussels searched the offices of the Belgian affiliate of Dutch bank ING, which the UN report accused of money laundering.13 As well as beginning criminal investigations, the Belgian government launched a parliamentary inquiry into the role of Belgian businesses in the DRC. If the Security Council adopts the recommendations of the report, it may establish a reporting regime under the authority of the UN, which would meet some of the demands from activists calling for binding rules to govern corporations, for example at the recent Earth Summit (see World Review, JCC 7). How the UN will relate to the OECD guidelines and associated complaints processes, through National Contact Points, will be carefully watched by those interested in the effectiveness of voluntary measures such as the OECD code, and the willingness of international bodies such as the UN to redress the costs of any corporate malpractice.
at a meeting in december of the

OECD Committee on International Investment and Multinational Enterprises (CIME)the body that oversees the Guidelinesmembers of the committee took the view that, unless complaints are formally filed with National Contact Points, they will not have any legitimate right to act in the matter. According to the UKbased group Rights and Accountability in Development (RAID)which attended some of the discussions informally CIME members took the line that the UN Panel had exceeded its power in reaching
the conclusion that the companies listed in the report had breached the Guidelines. Therefore, it is up to individual groups in each host country of companies named in the report to begin formal complaints (those countries include the UK, Belgium, Netherlands, Germany, Finland, Canada and the US). That international organisations cannot raise complaints directly to the OECD, at the international leveland that the OECD cannot mobilise itself when reports of breaches to its Guidelines arise from a body with the authority of the UNwill disappoint many who hope the Guidelines will be more than words. In order to make complaints through National Contact Points the groups will need to generate their own evidence. The UN report contains various omissions, going into considerable detail about the perceived wrongdoings of some companies (such as First Quantum) but offering very little by way of evidence about others (such as Anglo American). Nothing in this report was put in without being corroborated, being cross-examined, having documents, having testimonies to prove it, Mahmoud Kassem, Chairman of the Panel told journalists at a UN briefing. We are not asking for punishment, we are asking [corporations]questioning them to change their policy. When they have business in areas of conflict such as the Great Lakes region, and in particular the DRC, they have to act with full transparency and to stick to the guidelines of the OECD.14 Very few complaints have been raised in the three years since the reformed Guidelines have been in operation. According to RAID, the US National Contact Point has sat on all complaints while it assesses their admissibility. The UK Contact Point has allowed a well-documented complaint against a leading min-
12 www.forrestgroup.com 13 Belgium searches ING bank unit in Congo probe, Brussels: Reuters, 8 November 2002, www. reuters.com/news_article.jhtml?type=search&StoryID=1702752. 14 Mr Mahmoud Kassem, Chairman of the Panel of Experts on the Illegal Exploitation of Natural
Resources and Other Forms of Wealth of the Democratic Republic of the Congo, United Nations daily press briefing, 25 October 2002, New York. www.un.org/News/dh/pages/021025.ram [RealPlayer format].
JCC 9 Spring 2003
15
world review
ing company to gather dust for more than a year. In the view of RAID:
are left in the dark about what stage their complaint has reached. Inevitably the lack of feedback strengthens the impression that the procedures are there to protect the interests of companies rather than to promote the welfare and rights of the workforce or the communities in which the companies operate. It adds grist to the mill of those who believe that multinational corporations have greater influence over the [OECDs complaints] proceedings than NGOs or trade unions and undermines the core principle of equality of arms, which is the hallmark of a bona fide complaints mechanism.15
NGOs
t Diamonds are not tampered with
between their despatch from a producing country and their first arrival in a country where they will be cut, polished or traded
t Countries that cut, polish and trade in
rough diamonds have adequate controls and procedures to ensure that conflict diamonds cannot enter their trade Campaigners said that the process is just a code of conduct, and not enough to stop armed groups profiting from the trade. For example, research by ActionAid showed that many in the diamond trade are unaware of the agreement to self-regulate, and also of a European directive on conflict diamonds that enforces self-regulation. In November, Amboka Wameyo, ActionAids Africa Policy Officer, said:
The diamond industry is totally unprepared to implement [the code of conduct]. The World Diamond Council, the industrys trade body, has not made public, even to its own members, details of its self-regulation scheme. No attempts have been made to educate jewellers, yet they are the ones who have to prove to buyers that they are selling clean diamonds.
The OECD is believed to have referred the matter back to the UN Security Council by letter, offering help and clarification.
Blood diamonds
so-called blood diamonds, it has
been argued, have been used to finance civil wars in countries such as Angola, the Democratic Republic of the Congo and Sierra Leone. In November, 35 countries agreed new regulations to control the trade in diamonds from conflict zones. Signatories to the Kimberley Process agreed in the Swiss city of Interlaken will participate in a system that will aim to certify that:
t Conflict diamonds do not enter the
legal trading system between the point of mining and first export from a producing country
Campaigning organisations including ActionAid, Amnesty International, Global Witness and Oxfam issued a statement from the signing which said: NGOs are deeply concerned that there is still no system for regular, independent monitoring of all national diamond control systems. Without this, the overall process remains open to abuse.16
15 Patricia Feeney, Making Companies Accountable: An NGO Report on Implementation of the OECD
Guidelines for Multinational Enterprises by National Contact Points, Rights and Accountability in Development (RAID), Oxford, UK, November 2002, www.stakeholderdemocracy.org/pws/mod.php? mod=userpage&menu=9&page_id=84. 16 NGOs Cautiously Welcome the Launch of Kimberley Process, Interlaken: Global Witness, 5 November 2002, www.globalwitness.org/press_releases/display2.php?id=163; ActionAid, blood diamonds campaign, www.actionaid.org/policyandresearch/wic/diamond_conflict.shtml; Martin Plaut, Blood diamonds polished off, Interlaken: BBC News Online, 5 November 2002, http://news. bbc.co.uk/1/hi/world/africa/2406407.stm.
16
JCC 9 Spring 2003
UnWRAPping monitoring
criticism of western-based,
business-led initiatives on worker welfare issues in the global South grew toward the end of 2002, although the trade press on corporate responsibility was silent on the issue. For example, in November in front of representatives from many companies and multi-stakeholder initiatives on ethical trade, at a Renmin University conference in China, a variety of NGOs criticised the current practice of auditing. Delegates heard stories of workers being trained in how to answer inspectors questions and receiving bonuses if the factory performed well in a social audit. Marina Prieto, a Director of the Central American Womens Network (CAWN) and member of the Ethical Trading Initiative, made similar criticisms in her articles during this quarter. In one article she criticised the factory code and monitoring system developed by the Worldwide Responsible Apparel Production (WRAP). Originally the initiative of the American Apparel Manufacturers Association, WRAP has stated its dedication to the promotion and certification of lawful, humane and ethical manufacturing throughout the world.17 WRAP now covers over 700 companies responsible for 85% of clothing sales in the US. More than 615 factories from 56 countries have registered to earn the WRAP Good Factory Seal of Approval.18 Prieto wrote that many activists in Central America and elsewhere have pointed out serious flaws in the initiatives approach. She raised various points of concern, such as a lack of independence on its board, weak standards on some labour issues (especially those of specific concern to women workers), no public disclosure of monitors findings, and the use of pre-arranged audits, so that companies might clean up in advance.
17 www.wrapapparel.org 18 www.wrapapparel.org 19 www.gmies.org.sv
marina prieto: critical of auditing practices
CAWN published these concerns as WRAP became operative in El Salvador,
thereby directly competing with a local civil-society initiative headed by the nonprofit Salvadoran Independent Monitoring Group (GMIES), which was established in 1996.19 This was the first-ever civil-society programme to conduct external monitoring of labour conditions in the Maquilas and has since monitored factories supplying both Liz Claiborne and The Gap. Prieto argued that, in contrast to WRAP, this initiative: emphasises the importance of maintaining a regular presence at the factory, with regular visits and various channels for workers to contact the monitors; stresses the need for workers to get to know and trust the monitors, and to learn what their role is; and insists on the right to publish at least some of their monitoring reports. She concluded that:
The WRAP system should not be allowed to become the standard in El Salvador and across Central America because it would lead to major labour rights violations being completely ignored. Confidential reports by private-sector monitors often fail to convey an accurate picture of conditions in the Maquilas, meaning that consumers in the North would be unable to discriminate between companies
JCC 9 Spring 2003
17
world review
on ethical grounds. Workers and their organisations would lose the struggle to improve labour conditions. And, with factory owners even forced to pay for monitoring, US companies and consulting firms would be the only clear winners.
in december, a paper on a similar

topic was published by the New Academy of Business. Reporting on research conducted with womens groups and trade unions in Nicaragua, the authors criticised current approaches to codes of conduct and their monitoring, while presenting the ideas of women workers for how progress could be made. The papers title captured the key message from workers in the global South: If You Want to Help Us Then Start Listening to Us.20 Given this critique, the extent of accountability of corporate citizenship initiatives to their intended beneficiaries becomes important. Rather than being the exception, WRAP may find itself among other initiatives having its accountability challenged.
The director of GMIES, Carolina Quinteros, was therefore sceptical of the intent of WRAP and similar initiatives that are dominated by commercial interests in Northern countries:
Initiatives such as WRAP reflect the intention of the big corporations to appropriate a concept that was created from activist movements in favour of human and workers rights. The struggle for a code of conduct that reflects the responsibility of companies towards their workers . . . and the demand for a monitoring process that contributes to improving workers conditions have been transformed into a business discourse. This discourse is closer to corporate public relations than to real undertakings towards workers and consumers.
Locating justice
one of the nicaraguan women
involved in the New Academy of Business research project, Claudia Blanco, was mentioned in the JCC 6 World Review. A mother of eight, she was sacked after decades of working on banana plantations, because of, she claimed, her trade union activities. In November she was diagnosed with cancer. Unfortunately, it seems she had become one of the (possibly tens of) thousands victims of a pesticide used on those plantations. In 1977, the Environmental Protection Agency of the United States prohibited the use of Nemagon (DBCP). Nevertheless, it continued being exported and used in the banana plantations of Central and South America, Africa and Asia for ten years. Besides being toxic to the environment, it has been claimed to cause hundreds of deaths and serious health problems including birth malformations, sterility, cancers, and sight problems.21 Victorino Espinales, a leader of the workers affected by the pesticide, said, the companies never told us that this product was highly poiso-
Criticisms coming from representatives in the global South are particularly important given that most often the intended beneficiaries of initiatives such as WRAP are workers and communities in such regions. By October 2002, of the 12 board members of WRAP, none was from the South (most appeared to be US citizens). Meanwhile, apart from one consultancy in El Salvador, Reduccin de Riesgos, by August 2002 all the auditors accredited to inspect and award factories this seal were US accounting firms. It appeared that the only way Southern stakeholders could participate in WRAP was by endorsing its principles, rather than having a say in its work. By August 2002, 13 trade associations from the global South had done so. The involvement of other, non-commercial stakeholders appeared to be non-existent.
20 www.new-academy.ac.uk/Research/Gender_Codes_Auditing/Report.pdf 21 Miriam Jacobs and Barbara Dinham (eds.), Silent Invaders: Pesticides, Livelihoods and Womens Health
(London: Zed Books, 2003).
18
JCC 9 Spring 2003
nous and dangerous, and now, thirty years later we are seeing the consequences. Following a new law passed by the Nicaraguan government to enable legal proceedings against multinationals that produced, distributed and used Nemagon/ DBCP (Law 384), hundreds of workers began suing seven US-based companies Dole, Shell, Castle & Cook, Chiquita Brands, Del Monte, Occidental Chemical Corporation, Dow Chemical Company and two Israeli companies: Dead Sea Bromine and Bromine Compound Ltd. Amid reports that the US government was pressuring Nicaragua to amend/suspend the new law, in October there was a 10,000-strong demonstration in Chinandega, in the banana-growing region. Then, in November, about 2,500 farm workers walked the 85 miles from that city to Managua to protest the lack of progress in their lawsuit. The marchers went first to the US Embassy, presenting officials with a letter about alleged attempts of former US Ambassador Oliver Garza to undermine Law 384. Embassy official Michael Stevens said that the only interest of the US government was to establish an equal playing field between those who are suing and those being sued. Then the protesters went to the house of deputies to encourage them not to overturn the law. In response, Roberto Gonzalez, chair of the Labour Committee, said, none of the 92 deputies have the remotest idea of changing even one comma of this law, and said that the affected banana workers are giving us a lesson of bravery and dignity. The government also announced the formation of a high-level commission to support the workers demands. A couple of weeks later, on 11 December, 580 workers affected by Nemagon/ DBCP won a court verdict in Managua, with Dow Agro Sciences, Shell and Standard Fruit (Dole) ordered to pay $490 million in damages. There are more than 4,000 further plaintiffs who are pursuing
similar action. The problem for them is that the companies involved do not have significant assets, if any, in Nicaragua. The newspapers in Nicaragua are therefore reporting that the battle will have to move to the US.22 The experience with such cases is mixed. One, started in 1991 by Honduran workers against Dole, eventually stalled, but the company then offered an out-of-court settlement.23 Given the amount of time these processes take, and the real human costs of waiting around, various NGOs were increasing their support for victims and also ratcheting up their campaigning for companies to respond positively and swiftly. For example, the Associacion Italia Nicaragua has launched a Campaign called No More Chemicals.24 That substantive justice may only be located in the countries where sued corporations have assets, makes the Alien Tort Claims Act (ATCA) in the United States particularly important. Dating from 1789, this federal law promotes respect for basic human rights by holding government officials and corporations liable for wrongs committed against non-US citizens. The first ATCA human rights claims were brought against foreign government officials, although, more recently, victims have filed suit against corporations alleged to be complicit in abuses. One example is Doe v. Unocal, where Burmese villagers sued the Californiabased energy giant for complicity in abuses committed by the Burmese military. In September of 2002, a federal appeals court held that the plaintiffs had presented evidence that Unocal knowingly provided substantial assistance to the military in its commission of forced labour, murder and rape, while the military secured the project and built project infrastructure. In a similar case, Nigerian plaintiffs sued ChevronTexaco for complicity in the Nigerian militarys human rights abuses associated with oil produc-
22 www-ni.laprensa.com.ni/archivo/2002/diciembre/15/nacionales/nacionales-20021215-10.html 23 www.bananalink.org.uk/impact/human_impact.htm 24 www.itanica.org; see also www.cawn.org
JCC 9 Spring 2003
19
world review
tion in the Niger Delta. This case, ongoing at the time of writing, is based on two incidents: the shooting of protestors at ChevronTexacos Parabe offshore platform by soldiers allegedly flown in by ChevronTexaco, and the destruction of two villages by soldiers allegedly in ChevronTexaco helicopters and boats. Just as the potential of ATCA as a tool of corporate accountability is being realised, Earth Rights reported that anti-ATCA lobbying has begun. The National Foreign Trade Council (NFTC), a trade group of some of the largest multinational companies, is being supported by the International Chamber of Commerce (ICC), to lobby Congress to amend the law. USAEngage, the lobby arm of NFTC, has established a working group to provide support for companies that have been sued [under ATCA] and to explore remedies to the abuse of the law. Earth Rights stated: it is no coincidence that the NFTC includes many of the corporations who are being sued. The NFTCs effort to curb abuses of the law is in fact an attempt by its members to avoid civil liability for wrongdoing.25
whether this suit would have an adverse effect on US foreign policy. The State Department argued that the Indonesian government would view the case as a referendum on the human rights record of the Indonesian armed forces, which would dissuade it from co-operating with the United States in counter-terrorism. According to Human Rights Watch and other groups, this raises questions about the Bush administrations commitment to corporate responsibility.26 Meanwhile, new reports of human rights abuses in Indonesia, with possible corporate involvement, arose towards the end of 2002.27
as the nicaragua case illustrated,

the inability of courts in various countries of the global South to deliver substantive justice to victims of corporate malpractice makes ATCA and similar provisions for Foreign Direct Liability (FDL) in other Western countries of importance to the global application of international standards. The ExxonMobil case and the lobbying by NFTC and the ICC may add to the increasing criticism of corporate lobbying, and increased focus on the political responsibilities of companies aspiring to be corporate citizens.
the nftcs new campaign follows

previous corporate lobbying against the ATCA. A suit filed by the International Labor Rights Fund (ILRF) on behalf of 11 anonymous plaintiffs against ExxonMobil in a US Federal Court was questioned by the US State Department, after possible lobbying by the company. The suit held that the company was liable for the alleged abuses in the Aceh region of Indonesia because it provided logistical and material support to the military. Presumably having prior knowledge of the US State Departments reaction, ExxonMobil petitioned the presiding judge to solicit an opinion from the government about
The political bottom line

a new book argued that, as a whole,
business is still the enemy of sustainable development, mainly due to the political lobbying done by, or at the behest of, corporations. Battling Big Business documents cases of where corporations attempt to control their enemiesand how groups and individuals can fight back.28 As 2002 drew to a close, more people questioned the value of some corporate lobbying. In
25 www.earthrights.org/news/atca.shtml 26 Human Rights Watch, US/Indonesia: Bush Backtracks on Corporate Responsibility, New York, 7
August 2002, www.hrw.org/press/2002/08/exxon080702.htm.

27 International Labor Rights Fund, Show Solidarity with Acehnese Detainees, Washington, DC, 22
November 2002, www.laborrights.org/urgent/aceh1122.htm.

28 Eveline Lubbers (ed.), Battling Big Business: Countering Greenwash, Front Groups and Other Forms of
Corporate Deception (2002, www.evel.nl/pandora/bbb.htm).
20
JCC 9 Spring 2003
the UK in November, Friends of the Earth complained about lobbying by the Confederation of British Industry (CBI):
whilst accepting the need to tackle climate change, [it] has actively opposed attempts to use economic instruments to alter the price of carbon to reflect its environmental damage primarily the climate change levy [CCL], and the fuel duty escalator. The CBI have been accused of only representing the interests of its heavy industry members in such lobbying and criticised for not balloting its members on opposition to the CCL.29
Then in December concerns were raised when the International Chamber of Commerce (ICC) began lobbying governments against the implementation of the precautionary approach to environmental issues. In evaluating the potential environmental or health effects of new products, governments should guard against an excessively precautionary approach that may stifle trade, economic development and technological progress, said the ICC.30 The statement was issued against the background of growing business concern at moves such as the European Unions restrictions on hormone-treated beef and the campaign against genetically modified food that has kept food aid out of famine-stricken regions of Africa. The ICC statement on Precaution, Science, Risk and Trade said: The responsibility remains with governments to ensure that precautionary risk-management measures they take in circumstances of uncertainty involve scientifically substantiated threats to health or the environment.31 Further questions were raised about corporate influence over US government policy when in December The Guardian reported that Vice President Dick Cheney
personally intervened to block a global deal to provide cheap drugs to financially poor countries.32 Faced with opposition from all the other 140 members of the World Trade Organisation (WTO), the US refused to relax global patent laws that presently place the price of drugs beyond reach of most developing countries. While trade envoys said that the negotiations were likely to resume in 2003, failure to reach an agreement on cheap drugs could collapse the entire WTO Doha agreement, which covers everything from cutting farm subsidies to introducing more competition in service industries. The paper noted that Americas drug industry lobbied the White House to impose the narrowest possible interpretation of the Doha declaration, thus restricting any deal only to drugs to treat HIV/AIDS, malaria, TB and a shortlist of other diseases unique to Africa
that some corporations lobbying

activities run counter to the spirit and letter of their espousals on social and environmental responsibility was an issue raised in 1999 by the JANUS project. This developed a toolkit to help companies and/or trade associations analyse the misalignment between their corporate citizenship and lobbying positions, look for risks and opportunities within this and thus realign. At the time there was limited interest from companies.33 However, one person involved in that work, Jules Peck, told JCC that during 2002 leading companies were showing signs of discontent with trade associations that do not adequately represent their interests. For many pioneering companies, environmental regulation or economic instruments would reinforce their competitive position by pushing other companies to internalise
29 Friends of the Earth, CBI Told to Stop Lobbying against Planet, press release, 24 November 2002,
www.foe.co.uk/pubsinfo/infoteam/pressrel/2002/20021124223216.html.
30 www.uscib.org/index.asp?documentID=2387 31 www.iccwbo.org/home/statements_rules/statements/2002/precaution_science_risk_trade.asp 32 Larry Elliott and Charlotte Denny, US Wrecks Cheap Drugs Deal: Cheneys Intervention Blocks Pact
to Help Poor Countries after Pharmaceutical Firms Lobby White House, London: The Guardian, 21 December 2002, www.guardian.co.uk/international/story/0,3604,864071,00.html. 33 www.sustainability.com/programs/janus/default.asp
JCC 9 Spring 2003
21
world review
bp ceo john browne: we need the help of governments shell uk chairman, clive mather: short-termism hinders corporate citizenship
more of their environmental costs. Now at the World Wide Fund for Nature UK, Peck indicated that many NGOs will be engaging each other and the private sector on the question of responsible corporate lobbying.
Neo-regulation?
one of those companies that was
breaking ranks with the party line of many trade associations on government intervention for sustainable development was BP. Their CEO John Browne said we need the help of governments to establish the appropriate framework of incentives to move toward climate stabilisation.34 Earlier in the year, its rival Shell said the UK government had not helped in making more renewables possible, by providing the necessary incentives and disincentives to shift consumption and production.35 The Chairman of Shell UK, Clive Mather, stated in December at a meeting of the Institute for Public Policy Research (IPPR) that his biggest worry with corporate citizenship was that much was not possible due to the short-termism of financial analysts.
ella joseph of the ippr argued,

we cant just leave it to business to be good.36 Other NGOs heavily engaged in corporate citizenship issues in the UK also called for more imagination about government intervention. In a Forum for the Future report published in November,
ella joseph of the ippr: we cant just leave it to business to be good
34 www.nytimes.com/2002/12/08/magazine/08BP.html?tntemail0 35 www.independent.co.uk/story.jsp?story=331352 36 www.ippr.org.uk/research/index.php?current=28&project=129
22
JCC 9 Spring 2003
jonathan porritt: leading corporate citizens need to enter the debate
four key rolesmandating, facilitating, partnering and endorsing. However, the report noted that developing-country governments are often constrained in their ability to respond to increasing pressures for corporate citizenship-related legislation and enforcement. Weak institutions, lack of knowledge and understanding, lack of financial and human resources, and lack of capacity to maintain standards are some of the main impediments to stronger encouragement of corporate citizenship by the public sector in the global South.
that a new suite of government

authors Jonathan Porritt and Roger Cowe concluded by suggesting that leading corporate citizens need to enter the debate on the role of government intervention for sustainable development.37 measures to support corporate citizenship and sustainable development may be required makes a report for the World Tourism Organisation on the implications of multilateral trade agreements particularly pertinent.38 This suggested that governments could be negotiating away their future capacity to intervene in the market for sustainable development through the current round on the General Agreement on Trade in Services (GATS). The authors suggested that a variety of government measures aimed at promoting corporate citizenship could, in future, be challenged by some interpretations of the GATS. That the new round of trade liberalisation talks under GATS has been driven by corporate lobbying brings us back, once again, to questions about the congruence of corporate citizenship and corporate lobbying. The political bottom line of business is a complex one, but one thing is certainit will have to be addressed by practitioners and researchers in this field.
the way government could create

a framework for corporate citizenship was the subject of a study by the International Institute for Environment and Development (IIED) for the World Bank. Published in November, it underscored the fact that actions taken by the public sector could positively support businesses overall contributions to sustainable development. The study demonstrated a need to go beyond problematic voluntaryregulatory distinctions when considering corporate citizenship, and explore the dynamic relationship between voluntary approaches and regulation. The study suggested that the public sector currently encourages responsible business practices through one or more of
q
t You can view or make comments on this review at www.jembendell.com
37 www.forumforthefuture.org.uk/uploadstore/governments_business.pdf 38 Xavier Font and Jem Bendell, Standards for Sustainable Tourism for the Purpose of Multilateral Trade
Negotiations (World Tourism Organisation, 2002, www.rainforest-alliance.org/programs/sv/stscgats-standards.pdf).
JCC 9 Spring 2003
23
Turning Point Are Business Schools Silent Partners in Corporate Crime?

Diane L. Swanson
Kansas State University, USA
William C. Frederick
University of Pittsburgh, USA
during the past year the us public

has witnessed unprecedented corporate misconduct and crime, with each new scandal pointing to new levels of selfishness, greed and dishonesty in business. The ink was barely dry on the story of Enrons bogus financial accounting when the announcement of WorldComs misrepresentation of US$3.8 billion in expenses hit the media. As if that disclosure were not mind-boggling enough, the public subsequently learned that the miscalculation was more to the tune of US$7.6 billion. Then Enron was back in the news again after Arthur Andersen, an accounting firm that long trumpeted a reputation for high ethical standards, was accused of cooking the books for Enron. Adding insult to injured investors, Martha Stewart, Americas darling of homespun mass consumerism, faced allegations of insider trading (McHutchinson 2002; Solomon and Sandberg 2002). None of this was lost on the stock market, already battered by 9/11, President Bushs bellicosity toward Iraq and a shaky economy. The signal to investors was loud
and clear: they could neither trust the validity of financial information nor the stock market itself as a level playing field. The value of pension funds plummeted and thousands of employees of scandalridden firms lost their jobs. Faith in financial capitalism lost ground as well. Bush hurriedly reacted with comments meant to soothe rattled investors, implying that the scandals were the result of a few bad apples and that most business in the USA was still in good hands. But the stock market plummeted anyway. Wall Street foundations were shaking as the shockwaves of corruption and fraud registered loudly in the American psyche. An unexplored question is the link between corporate misdeeds and the nations business schools. Although policy-makers in Washington have now changed the rules for stock options and 401K plans, they have not yet investigated business schools as possibly unwitting accomplices to corporate crimes. This oversight seems odd, since the executive managers of the scandal-ridden firms and their partners in crime, some holding MBA degrees, may
24
JCC 9 Spring 2003
are business schools silent partners in corporate crime?
reflect an approach to business education that elevates narrow self-interest above broader values of community and corporate citizenship. This ideology was never very far from the minds of the executive carpetbaggers who stole from their own companies, wiped out employee pensions and made distrust of business a national byword. In the aftermath of this wholesale robbery, members of the Association for the Advancement of Collegiate Schools of Business (AACSB) in the USA have maintained an inexplicable silence. Behind their wall of quietude, these deans of colleges of business who set the standards for business school curricula worldwide are proposing wobbly new accreditation guidelines that will do little to head off a new generation of MBAs who are at risk of Enron-like behaviour. Knowing that the fellowship of deans will vote on the proposed standards in April, we contacted AACSB and were told that the member deans have acknowledged the crisis in business by putting ethics first among equals in the proposed standards for degree programmes. Big deal. The rub is that the delivery of that ethics content is to be left to each individual business school. The damage that can result from this doctrine of flexibility goes way beyond ethics. Topics such as corporate citizenship, public policy and corporate governance can also be flexified at a schools whim. As news of the proposed standards swept through academic circles in the autumn of 2002, the AACSB office has been inundated with messages of protest from a crosssection of professors in the USA and abroad. Even though these professors teach a variety of management subjects and hold divergent viewpoints, they have spoken with one voice to tell AACSB that its standards for ethics education are patently inadequate. This unanimous demand is truly an extraordinary development, since professors from different backgrounds rarely agree publicly on anything. The cat is out of the bag. The professors who voted their dissatisfaction so openly
did so because of their experience to date with the failed doctrine of flexibility. A relatively recent innovation, the gospel of flexibility effectively absolves schools from requiring any courses in ethics. Deans can claim that ethics is incorporated into curriculum overall, meaning that professors from disciplines such as marketing, finance, operations management, accounting and strategic management can claim to teach a smattering of ethics topics in their courses. In reality, however, these professors find it burdensome to try to integrate well-developed variants of ethics across the curriculum, particularly given their understandable desire to teach their own areas of expertise first and foremost. Additionally, members of the AACSB teams who visit schools to judge accreditation status find it difficult if not impossible to assess the quality of ethics coverage in such a system. We know of a case where an accrediting team spent an entire day poring over a schools course offerings, looking as if through a magnifying glass for just enough ethics content to pass the school. The listing of ethics on various syllabi does not qualify as satisfying any particular standard. At best, such ad hoc coverage is superficial and uninformed. At worst, it is inaccurate and woefully inadequate. There is simply no substitute for ethics delivered as a dedicated course by a knowledgeable faculty. To compound issues of accountability and transparency in curricular standards, members of AACSB accrediting teams sometimes have long-standing professional relationships or personal friendships with the deans of the schools they visit, calling into question the arms-length relationship expected of accreditation judgements. One might as well ask Arthur Andersen to audit Enron, where cronyism reigned. An AACSB official points out that seeking accreditation is voluntary, and that no one forces schools to accept AACSB standards.1 But this response begs the question for schools bearing AACSBs seal of approval. An association that accredits
1 Personal communication with an AACSB accreditation official, 16 October 2002
JCC 9 Spring 2003
25
diane l. swanson and william c. frederick
professional degree programmes should take the high road on ethics standards, especially in the aftermath of what are arguably the worst corporate scandals in the history of financial capitalism. Moreover, it is disheartening to hear the rhetoric of free to choose from AACSB, given that this same refrain has been a long-standing chorus of free-market pundits who argue vociferously that corporate managers should not consciously try to fulfil moral obligations to society. Such invocation of freedom is misguided when it functions as a cover for the right to act selfishly and irresponsibly in business or for an educational approach that denigrates a broad sense of ethical and moral responsibility to society. We urge AACSB officials not to quest for institutional autonomy at the expense of more laudable citizenship goals. We are reminded that the executive managers of Enron, WorldCom, Global Crossing and others have literally cashed in by autonomously setting their own standards of gross misconduct. In drawing this parallel, we do not question the sincerity of deans or the AACSB. Nor do we cast aspersions on most practising managers. To do so would be to sidestep the real issue, which is that large-scale organisations are chain-of-command structures that encourage policies and behaviour that narrowly serve the status quo. This state of affairs puts dissenting managers and other employees in harms way, especially if they dare to blow the whistle on superiors who exhibit dubious behaviour. In the absence of countervailing forces, whole organisations and perhaps even industrial sectors easily become self-serving, inert and out of step with environmental imperatives. Ironically, AACSB deans have more than a passing acquaintance with these wellknown and critical insights from contemporary management theory. The crux of the matter is that the proposed AACSB standards do not speak to the experience of practising managers, leading us to believe that AACSB needs to solicit more input from its corporate constituents.
Perhaps the most distressing aspect of this whole situation is that it represents ground covered before (Frederick 1977). This is yet another characteristic of the status quoits agents do not necessarily learn from history, especially when accreditation is reinforced by a schools internal politics. AACSBs doctrine of flexibility can contribute directly to reducing or eliminating the number of professors teaching ethics in business schools. Here is the way it works. In spite of a stacked political deck, some schools have developed excellent programmes in ethics, corporate social responsibility and, more recently, corporate citizenship. Yet, as Professor Duane Windsor (2002) attested in an open letter to AACSB, these gains are easily wiped out by faculty attrition, especially when key senior professors retire and are not replaced. This happened at the University of Pittsburgh, according to Professor Donna Woods recent correspondence with AACSB (Wood 2002). As a result, Pitts Katz School has quickly earned a dubious reputation for dismantling a longstanding and distinguished programme in ethics and corporate social responsibility. Amazingly, the axe fell on this programme in August 2002, even as sensational news of the corporate scandals was still unfolding. Such folly is permitted or even encouraged by flexible ethics guidelines, loosely enforced. Not that flexibility should be ruled out completely. A certain amount is called for, given the plurality of AACSB constituents. The issue is one of scope. As proposed in 1977, the existence of one required threshold course in ethics and corporate social responsibility need not dampen other curricular initiatives. Nor does it dictate the design or placement of individual courses in a curriculum (Frederick 1977: 2). Moreover, the requirement for one threshold course does not preclude professors from addressing ethical and environmental issues across the curriculum. Potentially everyone gains by keeping the material on ethics and social responsibility intact as a required threshold course. By design, this
26
JCC 9 Spring 2003
are business schools silent partners in corporate crime?
approach encourages cross-fertilisation of ideas within other business courses. It is an eminently flexible base for any and all schools to infuse greater ethical awareness in their students. Is this too much to ask and expect of business schools and their accrediting agency, given the dark cloud of disrepute and failed trust that now shrouds the management profession and, by association, management education? Peter Drucker (1969: 210) summed up the legitimacy of institutional aims long ago when he stated:
To satisfy their members is not and can never be the first task or the test of the pluralist organisations of our society. They must satisfy people outside, must serve a purpose outside, must achieve results outside.
Windsor, D. (2002) An Open Letter on Business School Responsibility, addressed to the Association for the Advancement of Collegiate Schools of Business (AACSB) Blue Ribbon Committee on Accreditation Quality, 9 October 2002. Wood, D. (2002) Personal Endorsement of Windsors Open Letter to the Association for the Advancement of Collegiate Schools of Business (AACSB) Blue Ribbon Committee on Accreditation Quality, 14 October 2002.
q
Diane L. Swanson is an the von Waaden Professor of Business Administration and Faculty Fellow in the College of Business Administration at Kansas State University, USA, where she teaches undergraduate and graduate courses in business, government and society, and legal and social issues in business. Her research on corporate social performance, government regulation, organisational dynamics and ethics of leadership has been published in several outlets, including Academy of Management Review, Behavioral Science, Human Relations, The Journal of Business Ethics, Companion to Business Ethics, Business and Society and Systems Research and Behavioral Science. Dr Swanson has served as Book Review Editor for The International Journal of Organizational Analysis since 1993. She received her PhD in strategy, environments and organisation from the University of Pittsburgh in Pennsylvania in 1996.
The AACSBs ethics standard and accreditation guidelines do not meet Druckers test of serving outside purposes. Even worse, they signal that business schools and their leaders will not be summoned to work conscientiously and collectively to prevent the next assault of corporate criminality on society.
u References
Drucker, P.F. (1969) The Age of Discontinuity (New York: Harper & Row). Frederick, W.C. (1977) Business and Society Curriculum: Suggested Guidelines for Accreditation, AACSB Bulletin 13.3. McHutchinson, J. (2002) Corporate Scandals, CBC News Online, 26 June 2002: 1-4. Solomon, D., and J. Sandberg (2002) WorldComs False Profits Climb, Wall Street Journal, 6 November 2002: A3.
College of Business Administration, Kansas State University, Calvin Hall 101, Manhattan, KS 66506-0507, USA swanson@ksu.edu
William C. Frederick is Professor Emeritus, Katz Graduate School of Business, University of Pittsburgh, USA. His scholarly publications include business and society relations, managers values, social auditing, empirical studies of business ethics, and the evolution of corporate social responsibility. His most recent book is Values, Nature, and Culture in the American Corporation (Oxford University Press, 1995), which uses natural science to analyse business motives and corporate organisation. He is past president of the Society for Business Ethics and the Society for the Advancement of Socio-Economics, and past chair, Social Issues in Management division of the Academy of Management. His PhD in economics and anthropology is from the University of Texas.
u !
1246 Murray Hill Avenue, Pittsburgh, PA 15217, USA billfred@katz.pitt.edu
JCC 9 Spring 2003
27
Turning Point The Ecology of Corporate Citizenship

Raising a Ladder to the Moon?* Malcolm McIntosh
University of Bath, UK
there are perhaps two normative

answers to the question, What is corporate citizenship?
t Organisations should understand their
social and environmental impact as well as their financial performance.

t Organisations should understand their
role, scope and purpose and be able to articulate that. There is also one overriding statement regarding the reorientation of the debate over corporate social responsibility. Whether they like it or not, corporations are public culturethey are of us (politically, socially and economically; see Birch 2001). This is not a debate over private property rights but a concern with how we manage the planet. Many of our largest institutions are market-driven organisations.
The debate
Companies, consultants and others in the corporate citizenship movement devote a great deal of energy to understanding and
establishing criteria for measuring the social and environmental impact of organisations. These can be seen as attempts to rationalise the world and provide managerial instrumentalism and thereby reassure themselves and stakeholders. A similar amount of energy is devoted to establishing and attempting to articulate the vision and values of organisations. There is much mileage to be gained in working on these parallel tracks, and a healthy profession is developing. However, much of the well-meaning work in these areas fails in two respects. First, there are many in the business community who are not convinced that this conversation is anything more than hot aira waste of time, detracting from the core business of business, to make money and reward the nominal owners: the shareholders. Second, much of the debate takes place in a contextual void with little or no reference to the rest of society. The debate about the role, scope and purpose of business, sometimes called corporate social responsibility and at other times called corporate citizenship, often starts in the wrong places. There is a popular perception that, if there are villains, it is companies that are the villains of the
* This paper is taken from Malcolm McIntoshs forthcoming book, Raising A Ladder to the Moon, to
be published in June 2003 by Palgrave Macmillan. Copies are available at 25 (www.palgrave.com).
28
JCC 9 Spring 2003
the ecology of corporate citizenship: raising a ladder to the moon?
piece. Then there is a perception that if only were we to make companies accountable then control would be gained over their nefarious activities. This may be true, but we may need to look elsewhere for the answers. Much of the writing on corporate citizenship focuses on recognisable corporate behaviour, which is easily observable, whereas a great deal of what is actually happening is either in the realm of the processes of the market or in the realm of illegitimate, informal or illegal activity in other words, it is unincorporated market behaviour. We live in a society of organisations and networks, and this poses enormous ethical questions about whose values are they anywayours or theirs or nobodys? Also, our lives are shaped by a faster and faster-moving continuum of superficial contact. Ephemera and instant celebrity rules! It is difficult to pin down what isas the authors of Funky Business expressed so well: Crash! Boom! Bang! Welcome to the age of accidents. Welcome to the age of constant alarm bells where surprise is all and no one can predict what will happen tomorrow (Ridderstale and Nordstrom 2000: 10). It is also important to look at corporations and brands. In other words, we may need to look downstream and think about brand citizenship as well as corporate citizenship. Corporate citizenship is fraught with dangers and ambiguities. For example, one of the largest companies selling almost everything to everyone around the world is Virgin. It sells banking, airline tickets, music and drinks. It is possible, although perhaps boring, to live a Virgin life. Perhaps my tribe is Virgin? Do our brands and our corporations represent our yearnings to find identity? Should we start with the corporation or with citizenship, given that it is not even a common expression? After all, most people do not think of their local supermarket or their bank as a citizen. There is much written about the social and environmental impact of large business organisations, and this is not new. What is new is that we cannot decide
whether they are a good or bad thing; we cannot decide if they are in control of our lives or not; whether they are honest or not; whether our politicians have control of corporations. There is no doubt that the world has been restructured since 1945 and more so since 1989 around markets and marketbased organisations and institutions. Some of these, such as the United Nations (UN) and its family of agencies, despite being the only global political bodies that we have, are due for radical change. It is a truism that we share one world, and we can, if we wish, manage decisions collectively, shape it in the future for the benefit of all humankind. How this century develops will depend on our ability to recognise shared values, on developing common strategic principles and our ability to accept, but not necessarily celebrate, divergent civilisations. Three overlapping and symbiotic institutional processes now dominate the world: private corporations, the state and civil society. The first and the last are sometimes now virtual networks, supra-territorial in nature, and it is often the case that there is a clash between all three. If the dilemma is about values, responsibility and purpose, then Benjamin Barber (2001: 269) is right when he says that the focus in this debate should be on active collaboration: Civic responsibility is a partnership between government, civil society and the market. It necessarily depends on the active collaboration of political leaders, citizens and business people.
The ecology of corporate citizenship

It is always a surprise when teaching business and management students on international MBAs and other business programmes around the world to be faced with multiple understandings of the role of business in society, such that much of the first session is preoccupied with give me a clue as to what this corporate citi-
JCC 9 Spring 2003
29
malcolm mcintosh
zenship thing is. Asking what is the purpose of business or what is the corporation for? comes as a profound shock to many students. We do not have a tendency to ask fundamental questions about our societyparticularly where business and management are concerned. But our future may depend on us asking what are our corporations for and are they the best way of delivering what we want? The feeling that we do not ask the questions that matter most is echoed by Stephen Covey, who says: Ask people what the purpose of the company is and youll get ten different answers. Theyre not on the same page. They dont know the purpose of the company. The discussion of corporate citizenship is traditionally set within the boundaries of management theory, international policy, organisational behaviour and ethics. Its ecology is therefore bounded by discussions that sometimes contradict its integrated or holistic approach to market-driven private organisational behaviour. As Paul Hawken (1993: 3) wrote in The Ecology of Commerce, the title of his book reads as an oxymoron because of the gap between how the earth lives and how we now conduct our commercial lives. The title of this piece, The Ecology of Corporate Citizenship, has the same problem. The way our international corporations have developed may not augur well for our ability to tackle the conflict that now arises from the global wealth disparity and problems over environmental resources. The end of one century and the beginning of another produces many summations of the development of the human race, if you accept the millennial dating system. There is also endism afoot that postulates at every turn that it is the end of history, the end of nature or the end of modernityand, of course, the end of the millennium! However, one theme is common to, and seemingly shared by, most commentators at this time. It is perceived that there is a global disconnect between finance, trade, business organisations and social and environmental conditions. One of the things that the corporate citizenship
agenda avowedly seeks to do is marry these issues, in particular by using the organisational power that lies in corporate hands to effect the management of global capitalism alongside global social development. For George Soros, a significant beneficiary of open global markets, open society is endangered by the crisis of global capitalism. His prescription is that market discipline needs to be supplemented by another discipline: maintaining stability in financial markets ought to be the objective of public policy (Soros 1998: xvi). For the corporate citizenship movement it is the maintenance of stability in the social market as well as in financial markets that is of paramount importance. Richard J. Barnet and John Cavanagh (1994: 21) have an agenda not dissimilar to Soross, arguing that bringing global economic institutions under the authority of political institutions is essential to protect the environment, human rights and job possibilities around the world. This is echoed by the UN Secretary Generals call for business to help give a human face to the global market (www.unglobalcompact.org). There has been a spate of books attacking the economic monoliths of modern life: private corporations. They, apparently, are the principle architects (or the result) of the dissonant relationship between economics, society and the environment. Some of the titles tell all. Noreena Hertzs The Silent Takeover (2001) is subtitled Global Capitalism and the Death of Democracy; Richard Welford has written Hijacking Environmentalism: Corporate Responses to Sustainable Development (1997); Naomi Kleins No Logo (2001) is subtitled No Space, No Choice, No Jobs, No Logo: Taking Aim at the Brand Bullies; and David Kortens books include When Corporations Rule the World (1995). This attack is representative of the growing frustration when faced with the anonymity of corporate power, but it fails to address four important issues. First, some corporations advance global social development. Second, the oppression and the lack of social and environmental jus-
30
JCC 9 Spring 2003
the ecology of corporate citizenship: raising a ladder to the moon?
tice suffered by many people is because of institutional actors other than business; it is a mixture of governments and UN agencies, military associations and other multilateral systems. Third, the growth of global private corporations has been because of the vacuum in global social governance. In other words we have the corporations we deserve because, like technology, they have developed at a pace greater than our ability to hold them accountable. Fourth, critics on the left and the right agree that business has failed, in the main, to articulate its role, scope and purpose. Such criticism has been made by David Henderson, at the market-loving Institute for Economic Affairs, as well as those who have written about new initiatives such as the UN Global Compact (McIntosh et al. 2002). That different commentators should be in agreement on this issue indicates a serious market failure!
Klein, N. (2001) No Logo. No Space, No Choice, No Jobs, No Logo: Taking Aim at the Brand Bullies (London: Flamingo). Korten, D. (1995) When Corporations Rule the World (San Francisco: Berrett-Koehler). McIntosh, M. (2003) A Ladder to the Moon (London: Palgrave). McIntosh, M., D. Leipziger, R. Thomas and G. Coleman (2002) Living Corporate Citizenship: Strategic Routes to Socially Responsible Business (London: FT Prentice Hall). Ridderstale, J., and K. Nordstrom (2000) Funky Business: Talent Makes Capital Dance (London: ft.com). Soros, G. (1998) The Crisis in Global Capitalism (London: Little, Brown). Welford, R. (1997) Hijacking Environmentalism: Corporate Responses to Sustainable Development (London: Earthscan Publications).
References
Barber, B. (2001) How to Make Society Civil and Democracy Strong, in A. Giddens (ed.), The Global Third Way Debate (Cambridge, UK: Polity Press). Barnet, R.J., and J. Cavanagh (1994) Global Dreams (London: Simon & Schuster). Birch, D. (2001) Corporate Citizenship: Rethinking Business beyond Corporate Social Responsibility, in J. Andriof and M. McIntosh (eds.), Perspectives on Corporate Citizenship (Sheffield, UK: Greenleaf Publishing): 53-65. Hawken, P. (1993) The Ecology of Commerce: A Declaration of Sustainability (New York: HarperBusiness). Hertz, N. (2001) The Silent Takeover: Global Capitalism and the Death of Democracy (London: Random House).
Professor Malcolm McIntosh is an independent writer, broadcaster and teacher on corporate citizenship, sustainability and accountability. He is a Visiting Professor at the Universities of Bath, UK, and Stellenbosch, South Africa. Malcolm has had working experience in business, government and civil society and has established successful companies, NGOs and teaching programmes in many parts of the world. In the last few years he has worked closely with a divergent group of organisations including Royal Dutch/Shell, BP, ABB, Norsk Hydro, Johnson & Johnson, BT and the UN Secretary Generals Office, the ILO, UNEP, OHCHR, and the British and Norwegian governments. He is also Editor of the annual Visions of Ethical Business and a Member of the Governing Council of the Institute of Social and Ethical AccountAbility. Malcolm is a former Director of the Corporate Citizenship Unit at Warwick Business School, UK, and European Director of the New York-based Council on Economic Priorities. His most recent publications include: Living Corporate Citizenship: Strategic Routes to Socially Responsible Business (Financial Times/Pearson, 2002); Raising a Ladder to the Moon: Corporate Citizenship in the 21st Century (Palgrave, 2003); Perspectives on Corporate Citizenship (Greenleaf Publishing, 2001); Corporate Citizenship and Evolving Relations with NGOs (BritishNorth America Research Committee, 2002); and Global Companies in the 20th Century: Selected Archival Histories (Routledge, 2001).
! <
malcolm.mcintosh@btinternet.com www.malcolmmcintosh.org
JCC 9 Spring 2003
31
Turning Point Responsibility versus Accountability?

Interpreting the World Summit on Sustainable Development for a Synthesis Model of Corporate Citizenship*
Ralph Hamann and Nicola Acutt
University of East Anglia, UK
Paul Kapelus
African Institute of Corporate Citizenship, South Africa
this article interprets the

World Summit on Sustainable Development (WSSD), held in Johannesburg from 26 August4 September 2002, in terms of the evolving definition of corporate citizenship. As a point of departure, the Plan of Implementation (the negotiated text agreed to by governments and a key outcome of the Summit) contains a number of references to corporate responsibility or accountability. One of these is paragraph 45(m), which went through a series of changes, as illustrated by the following draft, alternative and final versions (emphasis added):
45(m) Promote corporate responsibility and accountability and the exchange of best practices, including through public/private partnerships and voluntary initiatives (draft text, 12 June 2002; United Nations 2002a).
45(m) Develop by 2005 a framework to secure corporate accountability (including liability) in the context of sustainable development, incorporating relevant international agreements such as those on human rights and the environment and fully implement Principles 13, 16 and 17 of the Rio Declaration (alternative paragraph, proposed by Friends of the Earth International, 23 August 2002; FoEI 2002b). 491 Actively promote corporate responsibility and accountability, based on the Rio Principles, including through the full development and effective implementation of intergovernmental agreements and measures, international initiatives and publicprivate partnerships, and appropriate national regulations, and support continuous improvement in corporate practices in all countries (final text, 4
* We are grateful to Tim ORiordan for many fruitful discussions on this topic and to Richard Hill,
Peter Utting and Jem Bendell for insightful comments on an earlier draft. Ralph Hamanns research is made possible by the Ernest Oppenheimer Memorial Trust and the Harry Crossley Foundation; Nicola Acutts research is funded by the Association of Commonwealth Universities and the University of East Anglia. 1 The paragraph numbering was changed in the final version of the document (see United Nations 2002b, available via www.johannesburgsummit.org).
32
JCC 9 Spring 2003
responsibility versus accountability? interpreting the world summit on sustainable development
September 2002; United Nations 2002b).
outcome of the Summit may be interpreted.
Considering the breadth of issues discussed during the Summit, the commotion that surrounded different versions of the above, innocuous-sounding, section is perhaps a little surprising. This paragraph, however, came to represent one of the key points of contention during the Summit: the role of business in sustainable development and the widely disparate perceptions of it.2 Simply speaking, there were two camps: corporate responsibility was claimed by the sizeable business lobby at the Summit as being the main pathway by which business would voluntarily, and by means of partnerships, contribute to implementing sustainable development. 3 This approach is exemplified in the text of paragraph 45(m) as it stood prior to Johannesburg (see the first, 12 June, version displayed on page 32). Corporate accountability, in contrast, was the rallying cry of most nongovernmental organisations (NGOs) and community groups assembled in Johannesburg, who saw (big) business as the main constraint to sustainable development and who demanded strict regulation of corporate behaviour by national governments as well as an international corporate accountability convention (see the alternative paragraph from Friends of the Earth International displayed on page 32).4 In what follows, we describe the ways in which these perspectives manifested themselves during the Summit and propose a synthesis that avoids the weaknesses and builds on the strengths of both, whichto some extentis how the final
Responsibility
In his opening speech, United Nations (UN) Secretary General Kofi Annan raised the idea of responsibility to a guiding principle of the Summit: If there is one . . . concept that embodies everything that we hope to achieve here in Johannesburg, it is responsibility! (Annan 2002). Business representatives, organised under the auspices of the World Business Council for Sustainable Development (WBCSD), were proactive in their response, arguingas they did in Rio ten years ago that business had a key role to play.5 The argument for why business would play this role, the business case, is well known, of course, to readers of this journal. Another widely cited reason was the need for business to fill the gap left by governments: If you are looking for leadership, look to the private sector (Jeffrey McNeely, IUCN/World Conservation Union, quoted in Short 2002). Business representatives also sought to demonstrate that many companies were devising innovative and effective ways of implementing sustainable development, ostensibly exemplified by 67 case studies described in Walking the Talk (Holliday et al. 2002), the WBCSDs flagship publication launched at the summit. Partnership was another buzzword at the Summit, promoted by business and governments as the key implementation mechanism for sustainable development:
2 There are, of course, various other sections in the outcome document (see United Nations 2002b)
that are relevant to corporate citizenship, most notably paragraph 18, which calls on governments to enhance corporate environmental and social responsibility and accountability, with reference to voluntary initiatives (such as the Global Reporting Initiative [GRI; see www.globalreporting.org]), stakeholder dialogue and the role of the financial sector. 3 Reportedly over 700 businesses and over 50 chief executives attended the Summit (Short 2002), though estimates vary. 4 A similar characterisation of these two perspectives is given by Bruno and Karliner (2002: 19, 6364). 5 The WBCSD partnered with the International Chamber of Commerce (ICC) to form Business Action for Sustainable Development (BASD) to provide a collective voice for business at the Summit (see www.basd-action.net).
JCC 9 Spring 2003
33
ralph hamann, nicola acutt and paul kapelus
Not only do such partnerships [between business, civil society and government] combine skills and provide access to constituencies that one partner may not have, but also they enhance the credibility of the results (Holliday et al. 2002: 150). Indeed, partnerships between companies, government or multilateral institutions, and civil-society groups were elevated to one of three main outcomes of the Summit itself: so-called type 2 outcomes, of which over 200 were made public in Johannesburg6 (the other two outcomes were the Plan of Implementation and the Johannesburg Declaration; see United Nations 2002b). Businesses enthusiasm for partnerships, however, was not shared by most of the NGOs present in Johannesburg (as explained below), and some governments remained circumspect.7 Faced with calls for greater monitoring and accountability of partnerships, WBCSD president, Bjrn Stigson (Source 10), exclaimed: Partnerships are voluntary, we go into partnerships because we want to achieve certain objectiveswe dont need bureaucratic burdens or monitoring, by the UN or otherwise. The keystone business event was the Business Day Lekgotla (the Basotho word for council) on 2 September 2002, attended by numerous dignitaries and chief executive officers (CEOs). Significantly, even some business representatives complained afterwards that this event had been mainly about self-congratulation and mutual backslapping. Although there was a general sense that an increasing number of companies are committing themselves to corporate responsibility, and that there are examples of significant progress, there was little emphasis on pushing the boundaries of corporate responsibility or dealing
proactively with worst practice. Two main concerns were discernible even within the business community: case studies of best practice are presented without a sense of perspective of how much more needs to be done, and the impression is given perhaps inadvertentlythat business as a whole is moving in the right direction. (Though WBCSD president Stigson admits in his foreword to Walking the Talk: We do not want to claim that our more than 160 member companies are already doing precisely what many of their mission statements say they are trying to do [Holliday et al. 2002: 8].) Another concern that was commonly heard during business-sponsored events was that company management might be willing to integrate corporate responsibility into core strategy, but that it was fundamentally constrained by financial markets, whose emphasis was still primarily on maximum returns. The market does not support a paradigm change, complained Michael Spicer (Source 9), executive vice president of corporate affairs at mining company Anglo American. Some efforts during the Summit therefore focused explicitly on the financial sector, such as the Finance Initiative of the United Nations Environment Programme (UNEP; see www.unepfi.net). The Johannesburg Securities Exchange (JSE) took this opportunity to introduce an initiative to create a South African sustainability index, in conjunction with the FTSE and along the lines of the FTSE4Good (see http://ftse.jse.co. za). Nicky Newton-Smith (Source 8), CEO of the JSE, emphasised, however, that such an index needed to respond to the complex nature of corporate responsibility in the African context. Sean de Cleene (Source 3), member of the UNEP Financing Initia-
6 Illustrative examples include the Global Gas Flaring Reduction Partnership (led by the World
Bank), Niger Delta Fund Initiative (to allow oil revenues to benefit local communities, led by the NGO Earth Rights International), and the Global Mining Initiative (an industry-led initiative to improve social and environmental performance in mining). A full list of type 2 agreements is accessible via www.johannesburgsummit.org. 7 For instance, Norwegian Minister of International Development, Hilde Johnson, complained already during the pre-WSSD meeting in Bali: Why are we here if the only tangible results from the Johannesburg process will be type 2 partnership initiatives . . . putting green paint on old projects, or launching new ones primarily directed towards show-offs (Johnson 2002).
34
JCC 9 Spring 2003
tives African Task Force, argued that, although Africas severe challenges, such as HIV (human immunodeficiency virus) and AIDS (acquired immuno-deficiency syndrome), needed to inform the corporate responsibility agenda, the continent also provided many investment opportunities, to which the financial sector was inadequately responding.
Accountability
Long before the actual Summit, many NGOs complained that the preparatory process, and indeed the UN system itself, was being hijacked by corporate interests:
A major weakness of UNCED [United Nations Conference on Environment and Developmentthe Rio Earth Summit] was the dismantling of the notion of regulating the private business and financial sector, especially TNCs [transnational corporations]. In its place was the notion of business as a partner in sustainable development, on par with all other stakeholders. Today, in a world that is more unequal, with a small number of TNCs dominating each sector and exerting tremendous influence on governments, this concept of partnership and stakeholders perpetuates the myth that there is a collective endeavour, and that all players are equal and conflicts of interest can be resolved by roundtables seeking consensus (extract from TWN/ELCI/D92G 2002, quoted in Hamann et al. 2002: 16).
This critical view of (big) business corporate accountabilityfeatured prominently in numerous Summit side-events and demonstrations hosted by NGOs and community groups. During Corporate Accountability Week, for instance, held just prior to the Summit, numerous NGO and community representatives shared experiences and devised strategies for opposing corporate-led globalisation. Part of this event was the Greenwash Awards ceremony, where awards were given to
those companies that are purportedly acting green, but not behaving green: It is often the worlds most polluting corporations that have developed the most sophisticated techniques to communicate their message of corporate environmentalism (FoEI et al. 2002). Oil companies were prominent winners. BP received the Best Greenwash award: While we change the climate day by day, changing the climate of public opinion is harder still! (slogan coined for BP by the award-givers). Shell got the award for Lifetime Achievement: When it comes to greenwash, we have been there from the beginning! (slogan coined for Shell by the award-givers). Outstanding performance in bluewash was commemorated by the prize for Best Supporting UN Agency, which went to the UN Office of the Global Compact (see Fig. 1; see also www.earthsummit.biz). Bluewash was widely seen to be at work during the WSSD itself, with Naomi Klein (2002) wondering, whether the Summit can even save itself (see Fig. 2). Craig Bennett (Source 1), of Friends of the Earth International (FoEI), explained one of the NGOs main concerns: For every company that sincerely implements its CSR [corporate social responsibility] policies, there are hundreds who greenwash, and for each of these there are hundreds more who dont even bother with that. In order to thwart greenwash and, more importantly, raise the social and environmental performance of recalcitrant companies, NGOs demanded more effective and targeted government intervention, including the guarantee of human rights, rights to a clean and healthy environment, access to justice, access to information, and public disclosure of pertinent information. At an international level, they called for an International Convention on Corporate Accountability:
This binding agreement would need to incorporate legal rights for citizens and communities affected by corporate activities incorporating the direct liability of foreign multinationals; duties on corporations with respect to social and environmental matters;
JCC 9 Spring 2003
35
From left to right: mock representatives from BP (Best Greenwash, holding the Green Oscar), the UN Office of the Global Compact (Best Supporting UN Agency, holding the Blue Oscar), Arthur Andersen (Best Documentary Destruction), the USA (Best Supporting Government) and one of the awards presenters, Mr Oscar Green (who flanked Monsieur Vol N. Terry)
Figure 1 winners of the greenwash academy awards

Source: authors photograph
Thanks to Jonathan Shapiro for permission to use his cartoon.
Figure 2 the trojan horse of corporate responsibility: a popular cartoon during the summit
Source: Shapiro 2002: 147
36
JCC 9 Spring 2003
and rules to ensure improved practices wherever corporations operate (FoEI 2002a: 1; emphasis in original).
Yet members of the accountability camp were made aware from within their own ranks that such a convention would be a complex undertaking for the long haul. Richard Meeran (Source 7), legal representative of asbestosis sufferers and (ostensibly successful) litigants against Cape plc,8 spoke of the legal complexities that would be required to pierce the corporate veil of limited liability and multiple levels of company ownership. It was frequently argued that an important prerequisite to any legal system being effective was that local people develop the capacity to make use of such systems. Marcelo Furtado (Source 4), of Greenpeace, thus stated: There are 14 conventions on international liabilities, but theyre not being or cannot be usedpeople must use the law, otherwise its useless! There was a common call among advocates of corporate accountability for local communities engaged in struggles against multinational corporations (MNCs) to create alliances with other social or political groups, including international NGOs. Indeed, it has been often said that the saving grace of the Summit was that the world got to network (Time 2002: 3). So, while business representatives held meetings in Sandton, close to the official conference venue, countless groups representing peasants, indigenous people, activists and workers, who broadly aligned themselves with anti-corporate and anti-privatisation sentiments, were convening at dedicated venues that were auspiciously distant from Sandton. Whenever they did try to approach the official conference venue, they were effectively contained by a rigorous security apparatus, which was seen by protestors as a further indication of the Summits elitist and pro-corporate orientation. Even though the Johannesburg
Summit did not see the large-scale, violent protests seen in, for example, Seattle and Genoa, these meetings in Johannesburg did reinforce emerging characteristics and developments in the new social movements. First, the issue of corporate accountability and a common resentment against MNCs and the privatisation of natural goods and services presented themselves as a unifying theme, which bound together a very diverse and broad-ranging set of groups and interests: If there is one force we can thank for bringing this front into being, it is the multinational corporations (Klein 2001: 84; see also IFG 2002). Second, the Summit suggested the continuing evolution of more targeted and strategic anti-corporate action, weaving together:
t Strategically planned direct action at
the local level (such as the increasingly popular bucket brigades; see www.gcmonitor.org)
t Proactive approaches to mobilising
consumers or citizens (such as the Los Angeles Bus Riders Union; see www.busridersunion.org)
t More sophisticated shareholder activ-
ism and targeting of corporate brand reputation, in conjunction with the development of international monitoring and lobbying networks (via organisations such as CorpWatch or Earth Rights International; see www. corpwatch.org, www.earthrights.org) During the Summit, these anti-corporate and anti-privatisation sentiments showed themselves as part of a broader political front emerging in South Africa. The Summit thus presented an opportunity for a coalition of landless people, informal township residents and unemployed to voice strong criticism of the ANC (African National Congress) government. A march, attended by about 20,000 people, was the first time that the ANC gov-
8 This case, heard in the United Kingdom, is a vital precedent for corporations being held liable in
their home country for offences conducted in another country (see e.g. Ward 2002). However, there is still some uncertainty as to whether the company will actually adhere to the out-of-court settlement, and, interestingly, the banks have an important role to play in this (Morris 2002).
JCC 9 Spring 2003
37
ernment had been subject to such vocal public criticism by groups that used to be among the ruling partys most important supporters, suggesting a new war for the allegiance of the urban poor, rural landless and others who have not benefited from the governments transformation agenda (Brummer 2002). At the same time, it marked the first ever major anti-globalisation protest against the UN itself (Bruno 2002) and the allegedly corporate-friendly agenda of the Summit (Brummer 2002). The corporate citizenship debate will be increasingly shaped by these anti-corporate social movements and their growing political significance in countries such as South Africa, but how this will manifest itself globally remains to be seen.
Totem poles
From the above description, it is apparent that these opposing approaches to the role of business hold widely disparate perceptions. The Summit ought to have been an opportunity for the proponents of these perspectives to communicate with each other. To some extent it did allow for at least an increased awareness of other standpoints; however, most of the speeches, debates and functions at the Summit were a case of preaching to the converted. The two approaches became totem poles around which Summit delegatesopinion formers and peddlers, leaders and followers, high priests and their flockdanced to the tune of their respective mantras. Hence underlying assumptions, common arguments and ever-present soundbites circulated between adherents of a specific faith, thereby reinforcing and perpetuating themselves. Significant challenges or even dissent within these faiths was hardly
experienced, nor was there meaningful discussion between opposing camps.9 Table 1 illustrates some of the arguments and soundbites posed by the two approaches. These include arguments for and against a corporate accountability convention and, perhaps more importantly, diverging perceptions of fundamental issues related to sustainable development. Many observers pointed out that a key challenge in the corporate citizenship debate is to find a common language to facilitate dialogue between the different sectors. Table 1 shows that this is indeed a significant challenge. Not only did the different approaches make use of different keywords, the same words were often used in different ways: for the business lobby, accountability was interpreted as an obligation voluntarily demonstrated primarily through reporting,10 whereas for critical NGOs accountability required duties on human rights and labour standards, liability and regulation. Of course, Table 1 should not give the impression that either perspective is held by a monolithic block of people or groups. Nor should the perspectives be directly correlated to business, on the one hand, and civil society on the other. Such an oversimplification would ignore the fact that there is a spectrum of positions apparent in both approaches and also that there are organisations that see themselves as vital links between these polarised positions. NGOs such as the International Union for the Conservation of Nature (IUCN) or the World Wide Fund for Nature (WWF) might be characterised as such, considering their common interaction and willingness to partner with big business, and even the WBCSD itself may be considered as an intermediary between those critical of business and the more conservative business position. Further-
9 This impression is shared, for instance, by Short (2002): It seemed that the various interest groups
at the summit were better at engaging with themselves than with each other. There was a sense that the confident can-do stance of business skimmed too easily over the real challenges posed by the gap between the developing and developed world. 10 The Global Reporting Initiative was a particularly prominent point of reference at many business side-events.
38
JCC 9 Spring 2003
Responsibility On sustainable development and the role of business Sustainable development is mainly about economic development and job creation: Johannesburg, built on the gold industry, is a shining example of sustainable development (Tony Trahar, Anglo American, 31 August 2002: Source 11). Business and increased liberalisation are key driving forces for sustainable development: Globalisation of the marketplace [is] the best path toward sustainable human progress (Bjrn Stigson, WBCSD, quoted in Holliday et al. 2002: 8). Globalisation is not a race to the bottom MNCs are responsible for the spread of best practice and technology transfer: MNCs spread the highest common denominator (Claude Fussler, WBCSD, 2002: Source 5).
Accountability
Sustainable development is mainly about local livelihoods and social wellbeing: Johannesburg is perhaps the worlds most unsustainable city (Patrick Bond, quoted in Hamann et al. 2002: 20). Big business and increased liberalisation are primary causes of environmental and social damage: Global corporations are at the very heart of the unsustainable practices that shape our economies (Bruno and Karliner 2002: 6).
MNCs drive the race to the bottom by
demanding cheap labour and lax environmental and social standards; small and medium-sized enterprises are often more socially responsible because they are closer to the people (Marcelo Furtado, Greenpeace, 20 August 2002: Source 4). Business is supporting incremental, small changes in order to prevent the more fundamental changes required in this state of crisis: CSR has failed since Rio, and we dont have another 10 years to wait for real change (Kenny Bruno, CorpWatch, 20 August 2002; Bruno 2002a: Source 2).
Development as a process of incremental steps: NGOs and government want perfect solutions, whereas we see the value of incremental improvements (Bjrn Stigson, WBCSD, 31 August 2002: Source 10).
On the role of government or NGOs The principal cause of poverty, environmental damage, human rights abuse and social exclusion is not big business, but bad government (Hilton 2002a). Funny they [corporations] should mention governance at a time when corporate governance is in such tatters. Even more to the point: Those same corporations are responsible in significant measure for governmental weakness (Bruno 2002).
NGOs represent citizens and the environment in their battle against corporate oppression: We cant win the war through argument capitalism has the reason of a drug addict but only through mass struggle and direct action (Naomi Klein, 24 August 2002: Source 6).
NGOs are potential partners in some cases; but many make exaggerated claims or demands: NGO critique of business is at the level of caricature . . . Exaggerated claims by campaigners are irresponsible (Michael Spicer, Anglo American, 2 September 2002: Source 9).
CSR = corporate social responsibility; MNC = multinational corporation; NGO = non-governmental organisation; WBCSD = World Business Council for Sustainable Development
Table 1 examples of arguments and perceptions underlying the different approaches at the world summit on sustainable development (continued over)
JCC 9 Spring 2003
39
Responsibility On a binding corporate accountability convention Voluntary approaches are more effective and efficient than is regulation: You cant regulate virtue (Michael Spicer, Anglo American, 2 September 2002: Source 9).
Accountability
Corporations will take what they can: when there is a conflict between profitability and the environment or human rights, the profits come first. Voluntary agreements . . . simply do not work (Monbiot 2002). A convention would not specify detailed standards or implementation procedures these would be left to companies to design but rather universally applicable rights, duties and liabilities: We want duties, not details! (Craig Bennett, FoEI, 2 September 2002: Source 1).
A one-size-fits-all approach will not take into consideration the many complexities and local contexts of business, thereby constraining innovation and investment: We cant have a template approach (Claude Fussler, WBCSD, 29 August 2002: Source 5).
FoEI = Friends of the Earth International; WBCSD = World Business Council for Sustainable Development
Table 1 (continued)
more, the various type 2 initiatives aired at the Summit suggest that there is indeed an increasing acceptance of Kofi Annans approach, in which confrontation has been replaced by co-operation (quoted in Bruno and Karliner 2002: 18). However, as described above, the accountability camp is fiercely critical of this enthusiasm for partnerships, arguing that it perpetuates the myth that there is a collective endeavour (see the displayed quote on page 35, from the dialogue paper of TWN/ ELCI/D92G). It is also critical of the WBCSD, which is seen as a key culprit of greenwash and bluewash, as well as of NGOs such as the WWF, which stand accused of selling out to corporate interests. Hence, there is an explicit insistence on opposition. One implication of this polarisation is that, during the Summit, both sides found it difficult to acknowledge potentially valid arguments of the other camp. Neither was there the possibility of a reappraisal of common assumptions or arguments. Such opportunities, however, are vital if a common language or some middle ground is to be found. Such middle ground may be charted on the premise that both
approaches have strengths and weaknesses, as suggested, from our perspective, in Table 2.
A synthesis
To counteract the polarisation between responsibility and accountability, we suggest it may be helpful to develop a synthesis model as a step towards finding a common language between the different stakeholder groups. This is based on the assumption that key features of both approaches are not exclusive of each other and that strengths of both can be combined in such a synthesis. Figure 3 illustrates schematically the development of such a model, based on a revised set of roles and responsibilities for the different sectors. This synthesis model of corporate citizenship, variants or predecessors of which can be found in Bendell 2000 and Zadek 2001, has the following characteristics:
t The model provides a more differen-
tiated assessment of the current role
40
JCC 9 Spring 2003
Strengths Responsibility Identifies the potentially important role of private-sector investment and innovation in sustainable development Seeks to harness market forces and competitive impulses to improve sustainability performance Identifies the obstruction to sustainable development caused by corrupt or inefficient governments
Weaknesses
Pays insufficient attention to the social and environmental impacts of business, especially by irresponsible or free-riding companies, as well as cumulative impacts Pays insufficient attention to the role of greed and corporate structures that constrain personal values in the name of profit Pays insufficient attention to the development of effective governance and the role of business in perpetuating corruption, social injustice and conflict
Accountability Identifies the important role of local livelihoods, the right to prior informed consent to developments, access to information and access to justice Identifies insensitive economic development, especially where associated with short-term profit incentives as a serious cause of human rights abuses and environmental destruction Identifies limitations of a purely voluntary approach to corporate responsibility in that it is constrained by the profit motive, and advocates complementary measures, including national regulation Oversimplifies categories such as local or community, thereby paying insufficient attention to challenges related to developing local community capacity for fair decisionmaking Frequently pays insufficient attention to local and national needs for economic development (including the human right to development and employment) Pays insufficient attention to the benefits of using market forces to promote innovation and investment, as well as constraints and problems related to international legal frameworks (such as lack of political support and potential barriers to trade)
Table 2 strengths and weaknesses (in the authors view) of the different approaches to corporate citizenship
JCC 9 Spring 2003
41
Responsibility
t
Accountability
t
Business is seen as a voluntary, active agent for sustainable development. Governmentat a national levelis seen as provider of a limited regulatory framework (and potential partner in delivery).
NGOs and civil-society groups are seen as potential partners, but others are seen as irresponsible and unaccountable meddlers.
Big business is seen as a key cause of environmental and social deterioration and should be subject to strict government control. Government should act, at national and international level, as an active enforcer of strict rules and standards, taking business to account.
NGOs and civil-society groups are seen as active
watchdogs of both business and government.
Synthesis model of corporate citizenship

t
Business is seen as both a voluntary, active agent for sustainable development and a source of social and environmental problems, hence the need for improved measures, including government regulation, for accountability, transparency and liability. Strengthened efforts are made by government to implement existing agreements such as the OECD Guidelines on Multinationals (adopted in 1976 and revised in 2000; see www.oecd.org) and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (adopted in 1977; see www.ilo.org); increased commitment to the establishment of UN standards for human rights responsibilities for transnational corporations (see text); active government support for home-country liability for activities conducted overseas; and increased international commitment to governance capacity-building, especially in developing countries.
NGOs and civil-society groups are seen as active watchdogs of both
business and government, with the ability to engage in critical collaboration but with an increasing requirement to demonstrate accountability to stakeholder constituencies.
t
Greater emphasis is placed on tri-sector negotiation and implementation structuresat an international, national and local levelwith in-built power-sharing and stakeholder accountability mechanisms (e.g. consensus decisions, demonstrated stakeholder feedback).
ILO = International Labour Organisation; NGO = non-governmental organisation; OECD = Organisation for Economic Co-operation and Development; UN = United Nations
Figure 3 characterising different approaches to corporate citizenship and a possible synthesis approach
42
JCC 9 Spring 2003
of business in sustainable development: business is both a contributor and a detractor from sustainable pathways. This includes an awareness of the tensions between Northern models of corporate citizenship and developing countries priorities and interests.11
t Government must play a more active
role in supporting voluntary initiatives by business, as well as implementing regulation that protects workers and communities rights to, inter alia, a clean and healthy environment, also in foreign countries where national companies are active. It should also create a more conducive enabling framework by, for instance, establishing a more appropriate tax regime and by reversing perverse subsidies. The aim of these measures would be to raise the social and environmental performance of laggard companies, in particular, and more generally to address the tensions between shareholder profits and social performance, which are explicitly acknowledged by business leaders. Hence, well-targeted regulations should not only satisfy some of the concerns of the corporate accountability lobby but alsoperhaps more importantlyprovide a more structured and universal approach to corporate responsibility (Hilton 2002b). Quoting Simon Zadek, Jem Bendell (2002a: 10) argues that, unless government provides such a regulatory framework, corporate responsibility will remain distrusted and inadequate.
t There is a need for multilateral gov-
corporate accountability. The OECD Guidelines on Multinational Enterprises, adopted in 1976 and revised in 2000, are a step in the right direction, but they need to be implemented with greater commitment.12 An important initiative that deserves attention is the development of a draft report entitled Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights by the UN Commission on Human Rights, published May 2002. This report also includes provisions for implementation, including independent monitoring of corporate activity and remediation measures for those adversely affected, adjudicated by national courts.13 Again, there is a strong business case for such international frameworks, which would raise the common standard of practice and ensure greater benefit for all (Bendell 2000: 251).
t The role of NGOs is increasingly vital;
ernment co-ordination in ensuring
however, they need to improve their efforts at practising what they preach in terms of accountability, stakeholder dialogue and legitimacy. They should also develop a more differentiated view of business that goes beyond black-and-white caricatures. This includes a renewed emphasis on raising the public profile of laggard companies (including national and parastatal companies, which frequently fail to report at all), while providing support to genuine reporting initiatives in line with the GRI. Finally, NGOs need to actively engage in the process of developing, assessing and implementing cross-sector partnerships, based on the principle of criti-
11 Personal e-mail communication with Peter Utting, 5 October 2002. 12 NGOs complain about the non-binding status of the OECD Guidelines (see e.g. www.earthsummit.
biz), but the Guidelines are not a purely voluntary standard: They are the only multilaterally endorsed and comprehensive rules that governments have negotiated, in which they commit themselves to help solve problems arising in corporations (TUAC-OECD 2002: 2; see also www.oecd.org). Their success depends primarily on governments commitment to their implementation. 13 See www.unhchr.ch and documents listed under the Fifty-fourth Session of the UN Sub-commission on the Promotion and Protection of Human Rights; alternatively, follow links under www. businesshumanrights.org; see also Graymore and Bunn 2002; Bruno and Karliner 2002: 70; Bendell 2002b.
JCC 9 Spring 2003
43
cal collaboration: that is, identifying opportunities for achieving common interests while maintaining a critical stance (see Covey and Brown 2001; Hamann and Acutt 2003). The concept of critical collaboration is particularly apposite because, while the emphasis in this article is on the need for improved dialogue between different perspectives, this should not detract from the importance of hardball advocacy, naming and shaming, protest, and political bargaining14 for bringing about change. This also includes strategic alliance building among civil-society groups, with an emphasis on NorthSouth linkages (Bendell 2000: 252) for the purpose of establishing improved negotiating positions.
t Business also needs to embrace the
and business associations. Not only will this allow for better co-ordination, greater economies of scale and the development of more social and intellectual capital, but in many instances it is a prerequisite for significant improvements in social and environmental performance, because it limits free-riding and the costs borne by responsible first-mover companies.
t The new corporate citizenship requires
critical collaboration approach; by going into partnership with government or civil-society groups business does not make itself immune to criticism. Business needs to learn to face challenges and criticism in an open and courageous manner and must also be able to accept that it has made mistakes, and should demonstrate that it is willing to learn from them. As an example, consider Shells experiences in Nigeria. Recalling that Shells Board Chair Philip Watts was quite proud of Shells overall behaviour in Nigeria, Bruno (2002) quotes Nigerian Isaac Osuoka as asking: How can we begin to trust business leaders that cannot even recognise the most blatant case of corporate crime? Obviously, this refers back to the issue of disparate perceptions (in this case of what constitutes corporate crimes), but it also suggests that business has, in some instances, been slow or reluctant to deal with dilemmas, mistakes or opposing stakeholders perceptions.
t Greater collaboration and peer pres-
a renewed emphasis on collaborative rule-making and joint implementation by means of tri-sector partnerships, but within the framework outlined above. The presence of all three sectors in an ongoing process of identifying priorities for action and establishing implementation and monitoring mechanisms has been shown to markedly improve levels of trust and communication between the sectors, particularly at the local level (e.g. Hamann 2002) and there is much scope in linking tri-sector forums at different levels of decision-making. However, much work needs to be done to make partnerships accountable (see Zadek 2002)they should be more than just a neat arrangement of stakeholders and they require the continued evolution of new forms of governance based on shared power (e.g. with an emphasis on consensus decision-making), trust and transparency.
Summit post-mortem
The Summit has shown that some elements of such a hybrid model of corporate citizenship are emerging. Notwithstanding the pessimism that has been in vogue since the end of the SummitSustainable Development is Dead! (Bruno 2002)the Plan of Implementation (United
sure is required among companies
14 Personal e-mail communication with Peter Utting, 5 October 2002.
44
JCC 9 Spring 2003
Nations 2002b) does provide some pointers in the right direction (as does the political declaration). It is now up to all three sectors to identify these opportunities, maintain the momentum generated by the Summit, and establish at international, national and local scales mechanisms that harness the ability of governments and international organisations to set standards, the social legitimacy and knowledge of NGOs and community groups, and the entrepreneurship and resources of business. These mechanisms should be based on a frank assessment of both converging and diverging interests, and participatory processes for rule-making, implementation and monitoring. This article does not take a strong stand on the desirability or feasibility of an international convention on corporate accountability, mainly because there already exist initiatives, the development and implementation of which should be a priority, such as the above-mentioned effort by the UNHCR. Ideally, however, there ought to have been a decisive reference to this initiative in the WSSD text. However, lobbying for an accountability convention may have created the awareness and the political space (Peter Utting: Source 12) for a greater commitment and sense of urgency in strengthening multilateral frameworks for corporate accountability. Significantly, Section 49 of the Plan of Implementation provides for the full development and effective implementation of intergovernmental agreements for the promotion of corporate responsibility and accountability (see the quote in the opening text, page 32) and this potentially provides an important incentive for new agreements, in defiance of late efforts by some governments, to limit this reference to existing intergovernmental agreements, and in contrast to some business interpretations (Bendell 2002b; TWN 2002; for the business perspective, see BASD 2002). In addition, the Plan of Implementation, in paragraph 122(f), requires the UN Commission for Sustainable Development (CSD) to convene a multi-stakeholder dialogue for furthering corporate responsi-
bility and accountability. Business needs to transcend its disenchantment with this institution (according, for instance, to comments made by WBCSD president Bjrn Stigson: Source 10), contribute to it becoming more than an annual talkshop, and participate in a sincere manner that gives NGOs a significant voice if it wants to counter increasing criticism. Importantly, the UNCSD has also been tasked, in paragraph 130(b), to serve as a focal point for the discussion of partnerships that promote sustainable development. The establishment of monitoring and accountability criteria for these partnerships ought to be high on the UNCSD agenda, as should be a closer engagement with the UNHCR. Business, in particular, has a crucial role to play post-Summit: the WBCSD presidents remarks (Source 10; quoted on page 34), which characterise partnerships as voluntary efforts that do not require monitoring, miss the point that partnerships are increasingly seen as a new, collaborative form of governance, in which power is shared and where the development of trust between the sectors is of the essence. Such trust can be developed only if all pertinent stakeholders are involved from the outset, if rules of engagement are defined jointly and if joint implementation and monitoring arrangements are instituted. Business could go some way to build trust by supporting targeted efforts at ensuring that wayward corporate activity is adequately punished. Some business representatives did approach such middle ground at the Summit: in a powerful analogy, Claude Fussler (Source 5) from the WBCSD argued that there may be a need for the equivalent of a sweeper car that sweeps up the laggard cyclists in the Tour de France when they fall too far behind the pack! In conclusion, this article has interpreted the World Summit as a vital event in the evolving definition of corporate citizenship, putting corporate accountability (in its various guises) firmly on the agenda. Although the Summit outcomes do not go as far as desired by many (particularly in
JCC 9 Spring 2003
45
terms of establishing multilateral arrangements for monitoring corporate behaviour and partnerships), they do provide important incentives and opportunities for finding common ground between opposing perspectives of the role of business in sustainable development.
References
Annan, K. (2002) Secretary Generals opening address to the World Summit on Sustainable Development, www.johannesburgsummit.org, accessed 29 August 2002. BASD (Business Action for Sustainable Development) (2002) Key Business Messages, www. basd-action.net/docs/releases/20020904_ keybus.shtml, accessed 30 September 2002. Bendell, J. (2000) Civil Regulation: A New Form of Democratic Governance for the Global Economy?, in J. Bendell (ed.), Terms for Endearment: Business, NGOs and Sustainable Development (Sheffield, UK: Greenleaf Publishing): 239-55. (2002a) World Review, Journal of Corporate Citizenship 5 (Spring 2002): 6-15 (2002b) World Review, Journal of Corporate Citizenship 8 (Winter 2002): 4-15. Brummer, S. (2002) A New War for the Allegiance of the Poor, Mail and Guardian, 6 September 2002. Bruno, K. (2002) Sustainable Development: RIP. The Earth Summits Deathblow to Sustainable Development, 4 September 2002, www. corpwatch.org/campaigns/PCD.jsp?articleid =3831, accessed 18 September 2002. Bruno, K., and J. Karliner (2002) earthsummit.biz: The Corporate Takeover of Sustainable Development (Oakland, CA: Food First Books). Covey, J., and L.D. Brown (2001) Critical Cooperation: An Alternative Form of Civil SocietyBusiness Engagement (report 17[1]; Boston, MA: Institute for Development Research). FoEI (Friends of the Earth International) (2002a) Towards Binding Corporate Accountability (position paper for the WSSD; London: FoEI, January 2002). (2002b) Alternative paragraph 45(m) (onepage flyer distributed at the Corporate Accountability Week, Johannesburg, 23 August 2002; London: FoEI). FoEI (Friends of the Earth International), groundWork and CorpWatch (2002) Greenwash Awards (brochure; Pietermaritzburg, South Africa: groundWork, August 2002). Graymore, D., and I.D. Bunn (2002) A World Summit for Business Development?, Christian Aid, www.christian-aid.org.uk/indepth/ 0208wssd/report.htm, accessed 19 September 2002.
Hamann, R. (2002) Tri-sector Partnerships for Managing Social Issues in Extractive Industries. Kelian Equatorial Mining, Indonesia: A Partnership Approach to Mine Closure. A Case Study, September 2002 (London: Business Partners for Development, Natural Resources Cluster, www.bpd-naturalresources.org/html/focus_ kelian.html). Hamann, R., and N. Acutt (2003) How Should Civil Society (and Government) Respond to Corporate Social Responsibility? A Critique of Business Motivations and the Potential for Partnerships, Development Southern Africa 20. Hamann, R., Z. Patel and M. Pressend (2002) Competing Visions and Conflicting Strategies: A Southern African Perspective on the World Summit, Environment 44.6: 8-21. Hilton, S. (2002a) How Green is my Business?, The Guardian (www.guardian.co.uk/comment/ story/0,3604,781682,00.html, accessed 2 September 2002). (2002b) Comment: A Tale of Two Launches, Ethical Corporation, www.ethicalcorp.com/ NewsTemplate.asp?IDNum=294, accessed 20 October 2002. Holliday, C.O., Jr, S. Schmidheiny and P. Watts (2002) Walking the Talk: The Business Case for Sustainable Development (Sheffield, UK: Greenleaf Publishing). IFG (International Forum on Globalisation) (2002) Report Summary: A Better World is Possible! Alternatives to Economic Globalisation, www. ifg.org/alt_eng.pdf, accessed 16 September 2002. Johnson, H. (2002) Speech at the Fourth Preparatory Committee Meeting, Denpasar, Indonesia, 6 June 2002, www.92grp.dk/speech_by %20Hilde%20Johnson.htm, accessed 16 September 2002. Klein, N. (2001) Reclaiming the Commons, New Left Review 9: 81-89. (2002) Summit Keeps the Voiceless Gagged, Sunday Times, 1 September 2002. Monbiot, G. (2002) Beyond Petroleum or Principle?, Mail & Guardian, 6 September 2002. Morris, R. (2002) Cape plcs 5.6m goes to banks, not victims, Business Report, 11 September 2002. Shapiro, J. (2002) Zapiro: Bushwhacked (Cape Town, South Africa: Double Storey Books in association with ZAProck Productions). Short, A. (2002) October 2002 Focus: Business in Johannesburg, Ethical Corporation, www. ethicalcorp.com/printtemplate.asp?idnum= 400, accessed 20 October 2002. Time (2002) Caption in Table of Contents, Time magazine, 16 September 2002: 3. TUAC-OECD (Trade Union Advisory Committee to the Organisation for Economic Co-operation and Development) (2002) The OECD Guidelines on Multinationals: A Users Guide (Paris: TUAC-OECD).
46
JCC 9 Spring 2003

TWN (Third World Network) (2002) Implemen-
tation Plan Passed, Drama on Corporate Accountability, www.twnside.org.sg/title/ 5186a.htm, accessed 30 September 2002. TWN/ELCI/D92G (Third World Network/Environmental Liaison Centre International/Danish 92 Group) (2002) Dialogue Paper by Nongovernmental Organisations (submitted to the Second Session of the Preparatory Committee [PrepCom2]; accessed via www.johannesburgsummit.org on 3 April 2002). United Nations (2002a) Draft Plan of Implementation (A/CONF.199/PC/L.5/Rev.1; New York: United Nations, June 2002). (2002b) Report on the World Summit on Sustainable Development, Johannesburg, South Africa, 26 August4 September 2002 (A/CONF. 199/20*; New York: United Nations; www. johannesburgsummit.org/html/documents/ summit_docs/131302_wssd_report_reissued. pdf, accessed 26 December 2002). Ward, H. (2002) Corporate Accountability in Search of a Treaty? Some Insights from Foreign Direct Liability (Briefing Paper 4, London: The Royal Institute of International Affairs, Sustainable Development Programme). Zadek, S. (2001) The Civil Corporation: The New Economy of Corporate Citizenship (London: Earthscan Publications in association with the New Economics Foundation). (2002) Comment: Looking Back on Johannesburg, Ethical Corporation, www.ethicalcorp. com/printtemplate.asp?idnum=366, accessed 19 September 2002.
Sources
Source 1 Craig Bennett, Friends of the Earth International, presentation to Corporate Accountability Week, Johannesburg, 20 August 2002. Source 2 Kenny Bruno, CorpWatch, presentation to Corporate Accountability Week, Johannesburg, 20 August 2002. Source 3 Sean de Cleene, co-director of the African Institute of Corporate Citizenship and member of the United Nations Environment Programme (UNEP) Financing Initiatives African Task Force, presentation to a side-event on sustainability in the finance sector, hosted by UNEP Finance Initiatives and the African Task Force, Johannesburg, 29 August 2002.
Source 4 Marcelo Furtado, Greenpeace, presentation to Corporate Accountability Week, Johannesburg, 20 August 2002. Source 5 Claude Fussler, World Business Council for Sustainable Development (WBCSD), comment made during a side-event sponsored by the Trade Union Advisory Committee to the Organisation for Economic Cooperation and Development (TUAC-OECD), Johannesburg, 29 August 2002. Source 6 Naomi Klein, author (of, inter alia, No Logo), presentation to an event held by the International Forum on Globalisation (IFG), Johannesburg, 24 August 2002. Source 7 Richard Meeran, legal representative of, inter alia, South African claimants against Cape plc, presentation to Corporate Accountability Week, Johannesburg, 20 August 2002. Source 8 Nicky Newton-Smith, deputy chief executive officer of the Johannesburg Securities Exchange (JSE), presentation to a workshop on sustainability indices, Johannesburg, 26 August 2002, hosted by the Gordon Institute of Business Science and the African Institute of Corporate Citizenship. Source 9 Michael Spicer, executive vice president of corporate affairs at Anglo American, remarks at the workshop organised by Deloitte Touche Tohmatsu, Novo Nordisk, and the University of Cambridge Programme for Industry, Johannesburg, 2 September 2002. Source 10 Bjrn Stigson, president of the World Business Council for Sustainable Development (WBCSD), remark at the Global Public Policy Institute/IUCN (World Conservation Union) event on partnerships, Johannesburg, 31 August 2002. Source 11 Tony Trahar, chief executive officer, Anglo American, presentation during the launch of Walking the Talk, Johannesburg, 31 August 2002. Source 12 Peter Utting, United Nations Research Institute for Social Development (UNRISD), presentation to a seminar organised by UNRISD and the University of the Witwatersrand, Johannesburg, 30 August 2002.
JCC 9 Spring 2003
47

Ralph Hamann is currently conducting PhD research on corporate social responsibility (CSR) in mining in South Africa. He also contributes to international comparative research projects on CSR and consults on related issues.
u !
20 Clarence Street, Troyeville 2094, South Africa hamann@iafrica.com
Nicola Acutt is a Commonwealth scholar and PhD student investigating corporate responsibility in the South African petrochemical industry, focusing on negotiated agreements and voluntary initiatives.
u !
School of Environmental Sciences, University of East Anglia, Norwich NR4 7TJ, UK N.Acutt@uea.ac.uk
Paul Kapelus is a founding director of the African Institute of Corporate Citizenship. He has been working on corporate citizenship in southern Africa for the past ten years.
u ! <
African Institute of Corporate Citizenship, PO Box 37357, Birnam Park 2015, South Africa paul@aiccafrica.com www.corporatecitizenship-africa.com
48
JCC 9 Spring 2003
The Role of Commercial Organisations in an Islamic Society
Malcolm H. Cone
University of Otago, New Zealand
The study uses Rawlss theory of distributive justice to frame an account of corporate citizenship in an Islamic society. The paper is divided into two sections. The first section offers a normative account of Islam as it is taught in Islamic universities in Indonesia. The second section is an ethnographic study of Bank Muamalat, an Islamic Bank in Indonesia. The findings indicate that there is a close correspondence between the normative account found in mainstream neo-modern teaching in Indonesia and the practice as it is found in the case study. This suggests an elective affinity between neo-modern Islam found in Indonesia and ethical guidelines and practice in Islamic banking in Indonesia.
Social responsibility Rationality Distributive justice Riba zakat mudarabah
Malcolm Cone teaches international and comparative management. His research interests are in South-East Asia, East Asia and South America. He has published papers on Islam and business and Islam and civil society in South-East Asia and on comparative studies of competitive advantage in Chinese and South American business cultures.
u !
School of Business, University of Otago, Dunedin, New Zealand mcone@business.otago.ac.nz
JCC 9 Spring 2003
49
malcolm h. cone
s the pace of globalisation accelerates, we must come to understand
_the cultural differences that are increasingly evident in the international arena. In __the new millennium, corporate citizens steeped in other cultural traditions are ___poised to exert a more obvious influence on world affairs. What does corporate citizenship mean to these people? It is not easy for Western scholars or practitioners to grasp Islamic notions of corporate citizenship. For many in the non-Islamic world, terrorists, chadors, jihads and, if we watch old films, harems, dominate images of Islam. Our only images of the Islamic businessperson are often of the excesses of gun dealers, Saudi princes in robes or stallholders in some Middle Eastern bazaar, all stereotypes owing more to Western media than to any reality. Islam, needless to say, is infinitely more than this; much of the above is the result of media hype, prejudice and straight-out ignorance, fuelled, as Said (1978) argued, by a systematic misrepresentation of Islam that has its roots in the combined histories of Islam and Christianity and Western imperialism. In this paper, I present an introduction to the Islamic understanding of corporate citizenship in the context of Indonesian Islam. The first section is based on research conducted in the Islamic University libraries and conversations with Islamic scholars; the second section is an ethnographic study of Indonesian Islamic corporate citizenship in action. The Muslim scholars who contributed to the first section were either teaching in the Islamic University in Jakarta, which shares its teaching curriculum with ten other Islamic universities scattered throughout the Indonesian archipelago, or were members of an Islamic tertiary teaching institute called Paramidina, which is actively supported by prominent Muslim business interests in Indonesia. Muslim South-East Asia, Indonesia, Malaysia and Brunei comprise more than 220 million Muslim citizens. Brunei, the smallest Islamic country in South-East Asia, has a population of 330,000, of which 65% are Muslim. In 2000 it had an estimated gross domestic product (GDP) of US$9,500 (World Bank estimates 2000), in adjusted terms. Malaysia, middle-sized in relation to the other Muslim countries in South-East Asia, has a population of 19 million, of whom 55% are Muslim. In 1992 it had a GDP, in adjusted terms, of US$7,400, and 45% of its people live in urban centres. Indonesia, by contrast, is a giant, having a population of 220 million, of whom 85% are Muslim. In 1992 it had a GDP, in adjusted terms, of US$2,730, and 32% of its people live in urban centres (Robison and Goodman 1996). To give an understanding Islamic corporate citizenship, I adopt three objectives. First, I aim to relate the Islamic conception of corporate citizenship to the wider discussion of citizenship and civil society that has preoccupied scholars around the world for the past decade (Fukuyama 2000; Landes 2000; Putman 1993; Nakamura 2001). Second, I aim to develop a conceptual account of Islamic ethics rooted in Indonesian Islamic understanding of the relationship between the individual and society in Muslim societies. Last, I undertake empirical research to see what these Islamic notions look like in the contemporary business world. It is important, I believe, to avoid Western conceptions as a frame for this empirical work. Therefore, an ethnographic approach has been adopted for the empirical research reported here.
The corporate citizenship debate

The debate is always the same: it focuses around the question of the autonomy of the firm. Is it a voluntary organisation of private persons or is it, in an important sense, an entity that owes its existence (by way of directly and indirectly derived benefits) from the activities of the state? The dilemma posed by this question is founded on two
50
JCC 9 Spring 2003
corporate citizenship: the role of commercial organisations in an islamic society
contradictory principles: (1) inherence: the idea that corporations are voluntary associations formed by their stockholders and therefore possessing the same rights and privileges as natural persons; and (2) concession: the idea that incorporation is a privilege granted by the state, with limited purposes and prerogatives. This has been the subject of debate for centuries, from well before Mandevilles freemarket treatise The Fable of the Bees (1705) and Adam Smiths Wealth of Nations (1776) up to the 20th centurys various ideologies, from communism, to fascism, to the market. Within what could be called mainstream economics, two significant schools of thought are represented by Keynes (1926) and Friedman (1970); the current literature includes work by Vinten and Henderson (Henderson 2001; Vinten 1994). The current views continue to represent the range of opinion that has shaped the debate throughout history; from Friedmans (1970) contention that firms have a duty only to maximise profits and comply with minimum legal restrictions, to socialist perspectives that resist the idea of any privatised business activity (Halal 1990). Standing between these extremes is Frederick (1986), who lists some normative expectations that can be placed on a commercial activity in whatever social contextthose of corporate responsibility, responsiveness to social expectations and fiscal rectitudethese providing a matrix of the expectations that can be plausibly seen to bear on a firms relationship with its social context. Ignored in this literature is the Muslim response to these issues, a response that is based on a specifically Islamic understanding of khalifah (delegated responsibility), which encompasses the twin requirements for Muslims of social responsibility and stewardship. In identifying Islams account of social responsibility and stewardship it is interesting to review a proposal put forward by Preston and Windsor (1990) to consider the above questions from a Rawlsian standpoint: that of distributive justice. The issue, to follow Preston and Windsor (1990), is: whether commercial organisations should have moral and social responsibilities beyond profit maximisation and the legal obligations common to natural persons. The difficulty is that stakeholders disagree, and they do so not only on the grounds of economic self-interest (losses and gains) but also on public interest (morality and social welfare). The views that Islamic jurisprudence in Shariah law and the Rawlsian perspective share is that of a set of fair procedures for making what are essentially social decisionsspecifically, decisions that involve the distribution of benefits and costs among participating parties. To quote Preston and Windsor (1990: 84), this constitutes a regime of mutually acceptable procedural rules relevant to the distribution of benefits and costs among collaborating parties, whether individuals, corporations or nation states. In this study, it is argued that the Islamic understanding of corporate responsibility shares some fundamental similarities with the Rawlsian concept of social justice as mutual agreement among equals (motivated by self-interest). All parties must be fully aware of the risks attendant on a particular course of action and be accepting of equal liability for the outcomes, good or bad. Although there seems to be this convergence between the ideals of distributive justice in the Rawlsian account and that of Islam, it is the singularity of the Islamic world-view that this study seeks to investigate, for the social responsibility debate must always be founded on a particular account of what it is to be humanchange that account and the social responsibility debate changes as well. It is from this perspective that I wish to situate the study of Islamic understandings and practice of corporate social responsibilityfrom the viewpoint that, within Islam as it is practised in Indonesia, the relationship between commercial activity and civil society is taken as natural and the rules of practice are embedded in the teachings of Islam.
JCC 9 Spring 2003
51
malcolm h. cone
Foundations for a theory of Islamic corporate citizenship

In seeking the outline of what it is to act as a good corporate citizen in Muslim culture it is useful to introduce some of the fundamental assumptions that shape the Muslim world-view, assumptions about human nature, in reference to ideas about purpose and social responsibility. In this section I set out to identify the particular character of what is called neo-modern Islam, found in Indonesia. The account depends on significant Islamic scholars in the Indonesian tradition of neo-modern Islam, including H. Nasution (1984, 1989, 1995: Source 1), N. Madjid (1994, 2001), D. Effendi (1984), G. Barton (1995) and M. Nakamura (1984, 2001). The description depends not only on sources from within Islam in Indonesia but also on the scholarship of Western commentators on Islam, including A.H. Johns (1987), E. Gellner (1992), I.R. Lapidus (1984, 1988), L. Goodman (1992), F. Rahman (1979), L. Binder (1988), M. Foucault (1982), P. Brown (1984) and G. Makdisi (1990). Publications by all these Western sources were available in the libraries of the Islamic University in Jakarta and came with the recommendation of the teachers in this institution. Informants within the University regarded these authors as scholars who have sought to account for Islam on its own terms rather than as the negative pole of Western typologies of cultures or civilisations.
A model of Islamic corporate citizenship

Muslims see Islam as the religion of trade and business, making no distinction between men and women and seeing no contradiction between profit and moral acts. Evidence for this can be found in the fact that only a small portion of the Quran is devoted to matters of theology. The bulk of the Holy Book is to do with rules of conduct, social and economic. All actions are judged according to their congruence with the guide to living found in the Quran. The Quran contains numerous references to economic practice, including the right to private property as one of the principles on which the Islamic economic system is built. This right is protected as long as the means of acquisition is lawful. There are references to unlawful means of acquiring wealth, including usury (Quran 2: 278-79), cheating (9: 3), gambling and chance (5: 91-92) and theft (5: 38). However, the right of possession, given its lawful nature, is not absolute, since Allah is seen as the ultimate owner of all wealth (6: 165; 57: 7). Given these antecedents it is no surprise that Ernest Gellner, a long-time researcher and scholar of Islam, suggests that Islam is the ideal social model for commercial activity. He writes (1992: 14):
Weberian sociology leads us to expect a certain congruence between a modern economy and its associated beliefs and culture. The modern mode of production is claimed above all to be rational. It is orderly, sensitive to cost effectiveness, thrifty rather than addicted to display, much given to a division of labour and the use of the free market. It requires those who operate it to be sensitive to the notion of obligation and contract, to be work oriented, disciplined and not addicted to economically irrelevant political and religious patronage networks. If this is indeed what a modern economy demands and above all if it is required by the construction of a modern economy, then modern Islam would seem to be custom made.
A prominent neo-modernist thinker in Indonesia, Nurcholish Madjid, argues that to be a Muslim means thinking and working in accordance with the true and inherent laws of nature. In extending this line of reasoning, Madjid accepts that the Quran is natural law, uncreated in its essence so that when verse X: 101 says:
52
JCC 9 Spring 2003
Man is commanded by Allah to study and investigate the laws that operate in nature (Quran, II: 70)
this is understood as an explicit command that humans use their minds fully, that Allah dislikes anything that impedes the development of thought, particularly in the form of sterile conservatism (Madjid 1994). This view is widely accepted among Muslims in Indonesia; they see there is no contradiction between Islam and modern business practices; one can be seen as confirming the other. In fact, in a recent contribution to the literature in Islam and civil society, Siddique (2001) notes the vital contribution made to life in Singapore by the Association of Muslim Professionals (AMP), providing educational and family-centred support to all Singaporean citizens, quite independent of any state assistance. In addition to this view of the laws of the Quran being natural and therefore unremarkable, Islam in Indonesia has been influenced by the Sufi scholastic traditions that seek personal contextual meaning in any text and that see the social utility of any prescription for living lies in its ability to realise the social objectives implicit in it. In this social milieu the emphasis is on acting as a citizen who is aware of social obligation and who identifies the role of the individual citizen as seeking self-realisation in the practice of these roles of citizenship, although there will, of course, be variations in the level of individual commitment to the values embedded in these social roles. The connection of these values to individual identity and hence self-esteem suggests a powerful combination of forces that will profoundly influence a sense of corporate responsibility. For example, the commitment to provide comprehensive medical and educational opportunities to the families of staff in companies surveyed in Malaysia and Indonesia over the period 199496 demonstrates that sense of corporate citizenship (Cone 1999).
Epistemological and ethical foundations

All Islam shares a clear understanding of the division between the sacred and the profane, or, in a related sense, between value and fact. Although there is a chain of being in creation, it is one with a profound discontinuity. The discontinuity is between Allah (value) and His creation (fact). Humankind provides the link between Allah and His creationall being, all creation is linked, but the world is devoid of spirit, except for humankind, which possesses the divine spark of consciousnessreason and language capability (Madjid 1994). The scientific interest of Islam is in a kind of metaphysics of existence, not in an analytic understanding of nature as in chemistry or physics. The Islamic philosophical problem is ethics, in contrast to the Western philosophical problem of knowledge. In its predispositions and interests it is focused on an intuitive understanding of the role of the divine in human existence (Goodman 1992). This special status of humans is considered to be so self-evident that in conversation with numerous Muslim scholars and teachers in Indonesia it was suggested to me that there is no need for a person to convert to Islam in order to experience the benefits that flow from being a member of the tradition. In their view, the practice of a follower of Islam is one whose benefits are self-evident and available to all people of reason; in other words, he or she is one who sees humankinds unique position as the link between fact and value. (It must be said, however, that the same openness is less evident in Malaysia, where distinctions are made, in some quarters, between Dar al-Islam [the abode of peace], where the Muslim way is followed, and Dar al-Harb [the abode of war], where it is not followed. In the former, the ethical guidelines of the Quran and Sunna apply; in the latter they do not.)
JCC 9 Spring 2003
53
malcolm h. cone
History
There is a tradition of adab (humanist) thought that extends through Islamic history (Makdisi 1990), linking it to the traditions and practices of the Roman world of late antiquity, from which, some argue, Islam received a significant part of its political and cultural practices (Brown 1984). A similar view is expressed by I. Lapidus (1984, 2002), a noted scholar in Islam, who suggests that Islamic humanisms (adab) significance is not its religious content but its application as a set of personal standards of behaviour for humans in the world (Lapidus 1984). Both Brown and Lapidus suggest a convergence with the Stoic tradition of late antiquity that promoted a universal ethic based on the recognition and acceptance that the best of human life is the fact that humans are rational beings (see the discussion of consciousness in the next section). In the Stoic tradition, as in Islam, there is a stress placed on the primacy of the individual as an independent moral actor who conducts himself or herself in a way that stresses free will, self-responsibility and balance. In Islam, this is coupled to an acceptance of the Unity of Allah, and the unity of all believers, the ummah (the community and, by extension, the nation of Islam). The personal standards expected are the same, regardless of social context:
correct knowledge and behaviour in the total process by which a person is educated, guided and formed into a good Muslimadab as the foundation of the soul or personality of the human being as a whole (Lapidus 1984: 37).
Human reason
The unique status of humans discussed in the previous two sub-sections is that of reason or, to put it another way, intellectual awareness. This faculty was acquired in the story of the Garden of Eden in the book of Genesis through the consumption of an apple. This action is seen in the eyes of Muslims to be bringing into being an Allah-given attribute that enables them to apprehend Allah; in contrast, the same act seen through Christian eyes is the Original Sin, the act of disobedience that severed human links with the divine. For Muslims, there was no severance of contact between humans and Allah, but rather a conscious connection. From this view, there is no need to claim that Allah must intervene in the world to save humankind; humankind has not fallen (Nasution 1989). For Muslims, the intention of the Genesis story is to illustrate reflexivity, the ability to reflect on ones thoughts and actions, to be aware of ones nakedness (both literally and metaphorically). This forms the basis for a set of ethical principles that are, according to my informants in the Paramidina and the Islamic University in Jakarta, designed to support daily life in Muslim communities throughout Indonesia. Supporting this perspective, Lapidus (1984: 39) offers the following summary of the social objectives of Islamic Humanism:
The ideal is adab, a cultivated way of living in the world, without being absorbed by the world or fleeing from it. It is a life journey towards self-realisation and religious salvation that can be only achieved by cultivating clear vision, ethical responsibility and honourable relations with ones fellow humans, and sincere worship. The true telos of a Muslim, then, is the integration of all levels of experience, knowledge, character, feeling and action into a harmonious life that leads to wellbeing in this world in patient preparation for the world to come.
Nurcholish Madjid makes similar references to the specific nature of Islamic humanism and its connection to the humanist traditions in other faiths in his discussion of the oration of Pico della Marindola in Seville in 1486 (Madjid 2001).
54
JCC 9 Spring 2003
The ideals of Islamic social practice: four principles

S.H.N. Naqvi (1981), in his influential investigation of the basic principles of Islamic economic and social life, identified four elements that are considered by many Muslims to be key pointers to the unique perspective of Islam in matters of human life. These four principles are unity, responsibility, equilibrium and free will.
Unity
Unity has two related meanings: the world is a connected whole, with Allah as a unifying principle standing outside creation. The individual finds his or her proper place in society via an acceptance of the Quranic prescriptions that serve as uncreated laws standing in reference to human behaviour, as do the laws of physics to that of natural phenomena. In Islam, just as words have their meaning by reference to what they represent, so human practice is similarly judged; a persons life is a sign also of the mark of Allah, and it is for this reason that actions rather than intentions are the focus of interest (Nasution 1989).
Responsibility
Responsibility stems from the recognition that accompanies self-consciousness. Humans are responsible, as khalifah, for the care of the Earth as vice-regents of Allah. One could say that knowledge is the fundamental Muslim metaphor, the template or pattern by which a Muslim life is constructed. This knowledge (as noted earlier) is to be distinguished from the Western scientific emphasis on knowledge of facts. Islamic knowledge emphasises knowledge for living, an emphasis that does not preclude knowledge of facts but places such knowledge in the service of social ethics. The stress on personal responsibility is seen to be realised in the function of intellect or, to put it another way, in the power of akal (reasoning). Being rational, one must act rationally; ones telos is to act in accordance with what one knows to be the case, the ideal of universal reason, an ideal that has a close congruence with the Stoic thought of late antiquity (Foucault 1982: 260). In all circumstances, there is a pressure on Muslims to act in accordance with their understanding (itjihad):
Truth is to be found in growing into an understanding of the teachings and practice of Islam, and the power of al Aql (the intellect) via the application of reason is the path prescribed for that growth. The rational, knowing part of the soul links man to Allah; the truth of this link is what forms the being of humans (Nasution 1995: Source 1).
Equilibrium
Social existence requires the maintenance of a balance between the needs and desires of the individual and those of the community. Religious knowledge and virtue can be achieved only by engaging in practical worldly affairs; but worldly activity has no ultimate value unless it is infused by religious purposes. The Sunni-Sufi tradition, especially as it is found in Indonesia, rejects worldly values pursued for their own sake; the enjoyment of family, economic wellbeing and power are of secondary importance. It rejects also the monastic ideal of religious discipline; the romantic ideal of the unfolding of individual potentials through free and creative thought and action, the scientific ideal of the pursuit of knowledge for its own sake and passive mysticism are all rejected as incomplete. For Muslims in Indonesia the objective seems to be that in the midst of life the individual guided by right thought and right action will achieve what Foucault in his later work called positive freedom (Foucault 1982).
Free will
The Islamic understanding of free will concerns the power to act (Nasution 1989). Such a conception of free will is conditioned by recognition that each person has a limit, so
JCC 9 Spring 2003
55
malcolm h. cone
a persons power to act is limited by that persons capacity. The personal limitations of each person is that persons manifest destiny. The individual human task is to seek to achieve that limit. The doctrine of human responsibility is formulated in terms of power, not of freedom; it is of capability to do, not freedom to choose; it is of capacity to do what is required, not the freedom to decide for oneself what is desirable or proper. For those who have knowledge, what is desirable or proper is already known in the Quran; for those of lesser erudition, it is given in conventional understandings of Shariah law and Hadith. There is only one path fixed from eternity. This means that individual responsibility is located not at the junctions of action or in its possibilities, because there is none; instead, it is determined according to how far one can move along a predestined path.
Conclusions
To summarise this section, it can be suggested that:
t Unity is expressed in the natural law view that society is part of the natural world
and therefore is governed by natural laws.

t Free will is the power to act in accordance with the natural laws of social intercourse
found in the Quran.

t Responsibility is a natural outcome of the acceptance of the self-evidence of the
concepts of unity and free will.

t Equilibrium is expressed in balancing the demands of being in society and at the
same time acting in reference to what is regarded as universal natural laws. It is not too much to suggest that Islam in Indonesia represents a liberal humancentred account of social life that appeals to the best sentiments of humankind. A.H. Johns (1987: 276) writes:
There are many Islamic modernist intellectuals who see Islam not as a system of Law but as a revelation of spiritual and human values; it is impressive to see the appearance of such a modern educated Islamic elite in Indonesia.
However, it may seem both optimistic and somewhat nave to assume that these ideals will guide the actions of all Muslims, for it is inevitable that there will be some slippage between that which is desirable and that which is desired, and differences and conflicts between what is said and what is done will emerge. Nevertheless, it is in reference to these ideals that the Muslims who were the subject of this study conduct their daily lives, so we can say that these understandings and values represent the normative context in which the followers of Islam in Indonesia conduct themselves, however unrealised their desire to emulate the ideals.
Case study: Bank Muamalat

This section provides a case study of an Islamic bank in Indonesia. If there is an alignment between espoused theory as it has been discussed above, in the first section of this paper, and theory in practice, as discussed below, then we can expect to find it in reference to attitudes to economic relationships that encapsulate the values of responsibility, balance and personal effort. I will argue that these values can be seen in the emphasis on non-exploitative relationships in commercial activity, a determination to retain a link
56
JCC 9 Spring 2003
between ownership and risk, the extension of financial aid to the least well off in society and the active support for the hadj pilgrimage to Mecca. If we find that these ideas are the basis for corporate decision-making in Bank Muamalat, then we can suggest that they are in practice as well as in theory the foundation of what we can call an Indonesian Muslim account of corporate citizenship.
Introduction to the case study

The study provides a context for the outline of Islamic social responsibility and the model of Islamic corporate citizenship given above, in the first part of this paper. The research was carried out in an Islamic bank owned by Indonesian Muslims operating in a competitive international banking environment in Jakarta, the capital of Indonesia, in West Java. The material presented in this study was collected over a three-month period in 1996 when an Indonesian research assistant and I worked in the bank, interviewing staff and attending staff meetings. The study includes structured interviews, informal conversations with 30 Bank Muamalat staff and a quantitative survey that sought information on the values, aspirations and educational backgrounds of 100 bank staff. The discussion will cover three topics of great importance to the Bank: the hadj (the pilgrimage to Mecca), zakat (a voluntary social security tax) and Riba (the prohibition of exploitative economic relationships). Each topic will be related, when possible, to the four principles already discussed, in the first section. Not only will the perspective taken on these principles in the previous section be employed but also we will look at the understanding of these principles by the head of the Shariah department, who has responsibility for ensuring that all activity in the bank is conducted in accordance with the rules governing commercial activity in Islamic society. The rules of what is acceptable are found in the Shariah, the corpus of law that derives its authority from the Quran and the Hadith (the acts and statements of the Prophet). The Shariah head saw himself in the tradition of generations of Islamic experts on fiqh (Islamic jurisprudence) whose task it is to debate the application of this law. He believed that at no time has it been modified in its first intention which is, in his view, to secure the practice of commercial activity with as little disturbance to the practical realities of the market, provided the principles and understandings of ownership, exploitation and fair risk are observed.
A brief history of Bank Muamalat

Bank Muamalat Indonesia (BMI) was opened on 1 November 1991, inspired in Indonesia by the success of Islamic banking in Malaysia and the Middle East. The name Muamalat was chosen because it refers in Shariah law to the realm of interhuman relations. The formation of the bank has a history going back to the 1960s, but it was only recently that the Indonesian government and Islamic leaders in Indonesia began to take up its establishment in a concerted manner. Earliest support came from the two main Muslim organisations: Muhammadiyah, a reformist social movement with 12 million members in 1995, active since the early 1900s in education and small business development; and Nahdlatul Ulama, the largest Muslim organisation in Indonesia, with 35 million members in 1995, a social movement involved since the early 19th century in Islamic madrasa schools, the Islamic equivalent of a private church school in the West. These organisations were concerned to have a means of making investment capital available to small Indonesian businesses. The bank was officially established and fully sponsored by Majelis Ulama Indonesia (MUI; The Organisation of Muslim Teaching Scholars in Indonesia), with an authorised capital of 500 billion rupiahs (US$250 million), sub-
JCC 9 Spring 2003
57
malcolm h. cone
scribed by 145 shareholders. The Minister of Religious Affairs, H.M. Sjadzali, on the opening of a training course for executives at the new bank, said (1991: Source 2):
it would be expected to stimulate investment activities between Indonesian Muslims and would, in addition to this, be expected to lend to those who lacked the necessary securities needed to obtain loans from normal banks.
A primary concern was to find the most equitable way of disbursing zakat to worthy recipients and to provide savings accounts for Muslims in Indonesia who were saving each year for the pilgrimage to Mecca. (In 1994, the official number of hadj pilgrims was 130,000.) From the very outset of the banks operations it was made clear that the bank would not offer interest to its shareholders and depositors but would follow the intentions of Muhammad that all investors had to share the risks of any commercial operation by participating as partners in profit and loss sharing (mudarabah). As a full commercial bank, Muamalat would provide all the usual banking services, such as demand and time deposits, savings, credits, corporate and consumer financing, and currency exchange. The specific charter for Bank Muamalat was to work towards the achievement of an equitable banking service based on: the belief that Islam represents the natural order of things; unity (tauhid) in terms of a unity of ideals and practice, with an emphasis on Allahs ultimate ownership of all wealth; and on khalifah, the responsibility to follow the natural law of the Quran in matters of economic practice.
The hadj, zakat and Riba

The following sub-section frames the primary function of the bank, as described by the bank president (an ex-senior manager in Citibank in New York) and his staff. In an effort to make this sub-section as clear as possible it is divided into several further sub-sections, dealing first with hadj, then zakat and riba; in each case, Naqvis four principles outlined earlier are used to illustrate the connection in the minds of my informants between these principles and the practices that they underpinned.
The hadj pilgrimage

Records indicate that for at least the past 100 years Indonesia has had the largest number of pilgrims travelling to Mecca of any Islamic country.1 Bank Muamalat places a high priority on linking its commercial activity to the wider community; in this, the bank was aligned with the majority of large Islamic commercial organisations that were part of an earlier study (Cone 1999). As with most other Muslim companies visited in Indonesia, bank staff were sponsored to participate in the hadj (pilgrimage). The bank president indicated that it was one of the banks primary functions to administer saving schemes to assist its Muslim customers planning their own journeys to Mecca. This it did by providing free bonus earning savings accounts for individuals and groups planning their usually once-in-a-lifetime pilgrimage to Mecca.
Zakat: the charity tax

The payment of zakat (the social tax mandated in Islamic law) is one of what is called the five pillars of Islam. Each adult person is expected to contribute a percentage of his or her income to the community. Muamalat staff saw the primary intention of zakat as to achieve a redistribution of wealth from the well off to the less well off, thereby reducing the inevitable friction and resentment that arises if the gap between rich and poor is too wide and if the rich are seen not to care for those less financially successful. Traditionally,
1 IAIN (Institut Agama Islam Negeri [State Institutes for Islamic Studies), Indonesia, Newsletter, June
1994.
58
JCC 9 Spring 2003
this had been given to the local mosque for distribution through its social support network to those in its community who are struggling to survive. Since Indonesia gained its independence in 1947, large state-owned enterprises such as airlines and oil companies and the large state bureaucracy have adopted a policy of automatic deduction of 2% of salary payments to Muslim for zakat. This has generated a vast fund to use for education and welfare; as noted earlier, it was the best utilisation of this resource that was one of the reasons for the establishment of an Islamic bank in Indonesia. To this end, the bank has a close relationship with the government-sponsored body the Association of Indonesian Co-operatives, which looks after the interests of the thousands of co-operatives that provide marketing support for the small agricultural producers throughout the archipelago. The chairperson of this association is a member of the Bank Muamalat board of directors, appointed to ensure that a percentage of the millions of rupiah of zakat are used to provide equity funding for product development and marketing for the small and medium-sized co-operatives all over Indonesia.
Riba: exploitative economic relationships and Bank Muamalat

Staff referred to the writings of the Islamic economist Naqvi (1981), who argues (see the sub-section on The ideals of Islamic social practice: four principles, page 55) that the Islamic prohibition of interest (riba) is a special case of a general rule that prohibits all financial transactions that produce social inequities. It was in reference to the above understandings of unity and responsibility that staff explained their understanding of riba. In discussing these, staff stressed that the prohibition on interest on loans stems not from a derivation of the problems of mediaeval Christianity (the attempt to reduce the dependence of feudal princes on moneylenders) but from a belief that the charging of interest was exploitative. Borrowing for consumption was not encouraged; it violates the basic Islamic notion of how wealth ought to be distributed. Surplus wealth, if not immediately invested for productive purposes, should be lent at no interest. During the time I spent in the bank, discussion with the staff would often centre on the difficulties of applying the concept of riba to lending. One member of staff in the lending section of the bank explained the various methods of lendingfrom taking shares, to buying and leasing back. If a loan is for productive purposes then a guaranteed return on capital is unjust in view of the uncertainty surrounding the outcomes of any business investment. A member of staff in the lending section explained the following methods for lending for productive purposes (Source 3):
t Mudarabah is a partnership agreement without a specific limit on its duration, made
between the supplier of capital and the entrepreneur. Under this arrangement, lenders supply capital to borrowers as their agents for trading purposes; the borrowers contribute labour and experience. Profits are divided between the parties in a ratio specified in the original agreement. Losses are borne by the lenders to the limit of capital originally introduced, and the borrowers receive no reward for their efforts.
t Musharaka is a partnership of limited duration formed to carry out a specific project:
for example, a joint venture or consortium agreement. Both parties agree to contribute fixed and working capital and technical and managerial expertise in agreed proportions. There is agreement in advance on the division of any profits. Losses are shared in proportion to the capital contributions.
t Ijara is for customers who do not want to borrow money over a long period. Ijara
is effectively a hire-purchase agreement. It involves the bank buying the asset and the customer agreeing to pay agreed instalments into an investment account held at the bank. These funds are invested until accumulated funds equal the asset price.
JCC 9 Spring 2003
59
malcolm h. cone t Quard hassan is a benevolent loan that does not involve any interest or charges. This
is provided for customers who are facing difficulties or unexpected expenditure and is usually a case for the use of zakat. The most common lending activity to small operators was the leasing of equipment, buildings and vehicles. This provided the bank with some security for its investment and gave it some hold over its business partners, many of whom, it was said by bank staff, saw the bank as a charity bank because it was the repository for pension funds and zakat. The charity bank description was problematic because it tended to encourage a belief that a loan was in fact a gift and as such did not necessarily need to be invested in what was originally proposed as the intended objective, or, if it was, did not have to be paid back. The lending departments main concern was the lack of teeth in the rules concerning what to do if someone did not keep up the payments. The manager said that, at present, rather than applying penalty compound interest, which can double a debt in no time, the bank simply stood by and waited for the borrower to meet his or her obligations, asking perhaps for more collateral but not for more return from its investment. A senior accounts manager said that this was patently different from the non-Islamic banks. However, the bottom line had to be that it had an obligation to the lenders as well as to the borrowers to protect their assets, so, in the last instance, unless the loan given could be classified as a case of the application of zakat to a worthy recipient, draconian measures had to be applied. If it comes to this the bank usually takes over the assets of the defaulter, leaving the bank with the difficult task of administering these defaulted accounts. The problem of accurately accounting for the actual profit and loss of borrowers with whom the bank had a mudarabah arrangement was causing real concern. It was acknowledged that if such policies of being the silent partner in business were to be successful in the long term then a very large audit department would need to be established to keep an accurate check on the books of companies in which the bank is a stakeholder.
The Head of the Shariah (jurisprudence) department

As already noted, the approach adopted by the bank seems to owe much of its inspiration to the work of Naqvi (1981) and Siddiqui (1981), Muslim scholars from South Asia who have been frequent visitors to Indonesia in the past. The following account of the values discussed earlier of unity, equilibrium, responsibility and free will were provided by the head of the Shariah department at Bank Muamalat in Jakarta Indonesia (Source 4); his version is more concrete than the discussion in the previous sub-section, as one would expect from a person who has to provide an ethical context for myriad transactions undertaken by the bank on a daily basis.
The application of the four principles in Bank Muamalat

The Shariah manager identifies two kinds of unity (tauhid), one in the vertical dimension and one the horizontal. With regard to the vertical dimension, he states:
Allah is the only one who gives living and everything to His ummah. Everything on the Earth or beyond the Earth belongs to Him (Source 4).
On the horizontal dimension, he states:

In the world of commerce, businessmen must realise that all the assets he has belong to Allah and he is only a trustee (Source 4).
The concept of unity extends to include all the worlds material properties, humanmade or natural; no part can be seen as being independently constituted and, as a result,
60
JCC 9 Spring 2003
is inalienable. The consequence of the social responsibility principle is an obligation to use the asset according to what is decreed by the owner: Allah. It is, after all, a given that the profits on the sale and manufacture of goods as well as the goods themselves are seen as ultimately held in stewardship by the persons and companies in the present. Present owners are acting as agents of the natural laws governing economic activity as revealed in the Quran. In an economic sense, it can be recognised that Allah is equivalent to and stands for the community in the present and the communities of future generations of Muslims, providing an external referent for standards of accountability in business activity (Source 4). The second principle of responsibility (khalifah) means, in the Shariah managers understanding, accountability (he supplied two sura from the Quran to emphasis the importance of this concept: Surah Al Baraqah 30 and Surah Al Anam 165). According to the Shariah manager, one of the main reasons that inhibits conventional accountancy from playing a role in society is the fact that many people think that accountancy is a technical skill that can be understood by professional accountants only. According to his understanding in Islamic practice, every Muslim must be able to practise accountancy in every form of daily activity. He suggests that the events of the last day, when each will be accountable for all his or her actions, must be a constant point of reference for the Muslims actions in the present. This stipulation gives added weight to the incentive to, when one is able, contribute zakat to those in need The third principle of equilibrium the Shariah manager described as being connected to almost all aspects of social life, including economics and politics:
Ibnu Qayyin said The basis of Shariah law is wisdom and welfare in this world and for the next life. Welfare is perfect justice, love and wisdom (Source 4).
It was a surprise to hear his reasoning when he went on to add that

if these sentiments are expressed outside the Islamic discourse they are considered to be meaningless, so justice becomes injustice, love is hatred, and wisdom is stupidity (Source 4).
This profoundly exclusive rendering of Islamic law could, in his view, be applied to justify unfair practice, such as creating a monopoly and cheating in prices (e.g. buying goods from villagers at a lower price or establishing monopolies in the market). It must be assumed that the exclusion works in several ways: to deny moral value to the activities of non-Muslims, to release non-Muslims from the need to comply with these specific moral requirements and to release practising Muslims from the requirement to act morally when dealing with non-Muslims. This division into separate spheres of social and/or corporate responsibility can be explained by reference to the distinctions made between Dar al-Islam (the abode of peace) where the Muslim way is followed and Dar al-Harb (the abode of war) where it is not. In the former, the ethical guidelines of the Quran and Sunna apply; in the latter they do not. Other managers at the bank did not support this view in their capacity as bank officers, all insisting that non-Muslims were treated equally as Muslims in their dealings with the bank. However, the Shariah managers position in the bank indicated that his perspective would carry considerable weight in any deliberations about bank policy. The Shariah manager saw free will, the fourth principle, relating to practice in the horizontal dimension, in economic and social life only, not in the vertical dimension between the individual and Allah; in that dimension there was no free will. He reasoned that the impetus for all action is Allah:
the creature that acquires the action is khalifah (responsible) for the action on Earth, given that the creature has the faculty of reason, a faculty granted only to humans (Source 4).
JCC 9 Spring 2003
61
malcolm h. cone
Humans are free to exercise with responsibility the innovation in thinking and action that are seen to be the responsible use of ones faculty of reason. Referring to the many new initiatives promoted by the bank, in introducing the latest computer technology and a new insurance scheme, he argued that Islam motivates Muslims to be innovative by using the latest technology and being entrepreneurial in their product diversification. He quoted the prophet as saying approvingly:
Blessed whoever does an innovation and also blessed others who take advantages from it (from the Hadith of the Prophet; quoted by the Shariah manager).
Conclusions
This case study has been an attempt to give an account of an alternative ethical view to that familiar in the West, of the connections between businesses and the society in which they operate In this account it is clear that Muslims see business activity as being embedded in the social world and, as a result, have expectations that business activities will reflect the value orientations of the surrounding social environment. For example, one can see the social significance of the banks role as a supporter of the hadj pilgrimage. By acting as a low-cost depository for personal savings for the pilgrimage, the bank is a guarantor and facilitator of cultural continuity in Muslim life in Indonesian society, by reinforcing as it does a common aim, that of pilgrimage. In doing so it supports the hadj pilgrimage which for 1,500 years has been a unifying experience for pilgrims; also, by extension, for the communities in which the pilgrims live, this experience has buttressed the sometimes tenuous feeling of solidarity throughout the Islamic world. In the same way, the payment of zakat can be seen to be designed to maintain an equilibrium between the demands of self and of the communityin a social sense, to recognise the unity of the ummah, the family of Islam that exists in every country of the world and as an exercise of will to show restraint in ones personal life. The intention is to ensure a continuous awareness of the fortunate conditions made possible by the benevolence of Allah for the individual to have a surplus of wealth. The social consequence of this behaviour is to ensure the protection of those in need in the Islamic community, such as widows, orphans and those who are temporarily down on their luck. As noted earlier, riba, the prohibition on the paying of interest on loans, is not a prescriptive restriction to limit the development of commercial activity but the very opposite; it is an example of a more general principle to reduce as much as is possible exploitation of the weak by the powerful in economic relationships. This is a general principle that is founded solidly on the existential account of Islamic ethics and epistemology provided in the first section of this paper, an account that places humankind in the midst of the world, alone among the worlds creatures with the capacity to be reflexive and hence responsible for actions. Humans are not only potentially responsible but are endowed with the power of reason and hence are able to see and understand the consequences of their actions. They are not only rational but, having been granted the blueprint in the Quran for the right way to act in the social world, are made accountable to the demands laid down in the Quran and its historical interpretations in Shariah law. The ideals found in this account require of the manager who is a follower of Islam to conduct himself or herself in the corporate world in a way that is a guarantee not only of commercial success but also of corporate responsibility, not only within the organisation but also in reference to the social system within which the organisation is embedded. A close reading, as has been given in the first section of this paper, would suggest that, if followed, the precepts of Islam are formulated in such a way as to make this at least a realisable objective.
62
JCC 9 Spring 2003
This study provides not only a unique view of human nature and of the development of a moralethical perspective but also provides a distinctive view of the relationship between autonomy, rationality and natural law. As noted in the discussion earlier, there is an interesting symmetry between Islamic understandings of corporate social responsibility and the ideas of John Rawls (1971) on distributive justice. In addition to the obvious similarity to Rawlss ideas of distributive justice there is more than a passing resemblance to McIntyres discussion of goods being internal to a practice (McIntyre 1988: 273). The bank staff seemed to accept as a matter of fact that in order to find themselves they must subject themselves to the disciplines of the guidelines of the Shariah and the Quran. In such a formulation, the possible tension between the goals and objectives of the individual and that of the organisation are seen as unproblematic. The role of the organisation, and particularly of management staff as carriers of practice that contained such goods, was a central tenet of management thinking. Because of the emphasis on acting as much as possible in reference to Islamic values, staff felt the bank provided a place in which the goals of the followers of Islam were being achieved by working in the organisation. Serving the bank as a member of staff, particularly at the management level, was seen as serving Islam as well. Managers regularly spoke of the satisfaction they felt in being able to make a difference, working in a commercial bank and simultaneously satisfying their desire to spread the benefits of Islam to as many of their fellow citizens as possible. These views seemed to confirm the account in the first section of this paper: that religious knowledge and virtue can be achieved only by engaging in practical worldly affairs, with a caveat that worldly activity has no ultimate value unless it is infused with religious purposes. There is sufficient evidence to suggest that Bank Muamalat is representative of the corporate values of Islamic organisations in Indonesia, not only because of the banks role as the nations banker of preference for the two largest Muslim organisations in IndonesiaMuhammadiyah, with 12 million members, and the largest voluntary Muslim organisation in the world; and Nahdlatul Ulama, with in excess of 30 million membersbut also because the values described here were present in a significant number of the Muslim-owned and Muslim-operated commercial organisations in South-East Asia (Cone 1999). In many instances, the level of awareness of the need to follow the rules of business according to Shariah law were not as high as they were at Muamalat, but there was in each an attitude of working together to achieve a goal, where all the staff were seen as stakeholders in the organisation. This was apparent both inside the organisations and in the relationship of the organisations to the communities in which they were placed. Within the organisations it is seen in the medical insurance made available to staff and their families, the generous superannuation schemes for staff, support for staff to attend the hadj pilgrimage and the support for local mosques and, in Indonesia, orphanages for homeless children. Between organisations, it is seen in a surprising willingness to co-operate to cope with the supply of raw materials for manufacture and to pool resources for large orders and in the sharing of marketing costs even among companies that are competing in the same markets. It therefore seems plausible to suggest from this that the banks practices reflect the values of a majority of the managers in Muslim-owned and Muslim-operated commercial organisations in Indonesia. As noted in the earlier discussion, the concept of mutuality of shared riska shared understanding of the role of commercial activity in human lifeprovides the basis for a notion of fairness that is naturally just. The close examination of the Islamic tradition, as has been undertaken in this paper, indicates that there is an interesting convergence between Islamic and Rawlsian notions of equity. If one accepts the account of economic practice offered here, Islam provides a reasonable model of corporate social responsibility that makes Islam well suited as a model for the development of alternative ways
JCC 9 Spring 2003
63
malcolm h. cone
of conceptualising the role of commercial organisations in society. In the case study, there is an emphasis on the greater good: that is, the social development of the individual and the role of the Bank as a carrier of Islamic values; both were acknowledged as being objectives that were greater goods than individual private interest, for either the borrower or the lender. It must be more than a tentative conclusion that Islam, as it is described here, provides the means of achieving a subtle and persuasive symmetry between self-interest and the interests of society.
Glossary
Dar al-Harb Dar al-Islam Fiqh Hadith Hadj Ijara Khalifah Madrasa Muamalat Mudarabah Musharaka Quard hassan Quran Riba Shariah the abode of war, where Islam is not followed the abode of peace, where Islam is followed Islamic jurisprudence the sayings of the Prophet the pilgrimage to Mecca, taking place each year a lending and buy-back agreement (e.g. hire purchase) the notion of delegated responsibility from Allah, the source of all value, to humankind as Allahs agents on Earth Islamic schools the realm of interhuman relations the act of sharing the risk of an investment between borrower and lender a limited partnership in business risk and benefits proportional to investment a benevolent loan to someone in need the guidelines for life in the Islamic community as originally revealed to Muhammad the prohibition of the charging of interest on loans; a particular case of a general rule prohibiting all forms of exploitation the body of legal opinion recorded by Muslim lawyers relating to all facets of social life in an Islamic community, established since the founding of Islam in the 7th century the body of writings in the Islamic canon, including the Hadith and Shariah on the vertical dimension it is the unity between humankind and Allah in kalifah; on the horizontal dimension it is the unity of believers, all being equal teachers in Islam the principle that the Muslim community extends to all followers of Islam a voluntary tax paid by Muslims to support social services in their communities
Sunna Tauhid Ulama Ummah Zakat
References
Barton, G. (1995) The Emergence of Neo-modernism: A Progressive, Liberal Movement of Islamic Thought in Indonesia (Clayton, Victoria, Australia: Monash University Press). Binder, L. (1988) Islamic Liberalism (Chicago: Chicago University Press). Brown, P. (1984) Classical Adab: Late Antiquity and Islam, in B. Metcalf (ed.), Moral Conduct and Authority: The Place of Adab in South Asian Society (Berkeley, CA/London: University of California Press): 23-31. Brummer, J.J. (1991) Corporate Responsibility and Legitimacy: An Interdisciplinary Analysis (New York: Greenwood Press). Cone, M.H. (1999) Neo-modern Islam in Indonesia: A Study of the Practice of Islam in Commercial Organisations in West Java (unpublished PhD thesis; Otago, New Zealand: University of Otago). Effendi D. (1984) Islam and Social Responsibility, Mizan 1: 87-95.
64
JCC 9 Spring 2003
corporate citizenship: the role of commercial organisations in an islamic society Foucault, M. (1982) Beyond Structuralism and Hermeneutics (ed. D.L.Dreyfuss and P. Rabinow; Chicago: University of Chicago Press). Frederick, W. (1986) Corporate Citizenship: Some Typologies (Bloomington, IN: Indiana University Press). Friedman, M. (1970) The Social Responsibility of Business is to Increase its Profits, New York Times Magazine, 13 September 1970: 122-26. Fukuyama, F. (2000) Social Capital, in L. Harrison and S. Huntingdon (eds.), Culture Matters (New York: Basic Books): 98-111. Gellner, E. (1992) Postmodernism, Reason and Religion (New York: Routledge). Goodman, L. (1992) Avicenna (New York: Routledge & Kegan Paul). Halal, W.E. (1990) Political Economy in an Information Age: The Convergence of a New Capitalism and a New Socialism , in L. Preston (ed.), International and Comparative Corporation and Society Research (Greenwich, CT/London: JAI Press): 1-27. Henderson, D. (2001) Misguided Virtue: False Notions of Corporate Social Responsibility (Wellington, New Zealand: New Zealand Business Roundtable). INIS (IndonesianNetherlands Cooperation in Islamic Studies) (1993) Journal of the Indonesian Netherlands Cooperation in Islamic Studies, Jakarta 10: 65-66. Johns, A.H. (1987) An Islamic System of Islamic Values, in W. Roff (ed.), Islam and the Political Economy of Meaning: Comparative Studies of Muslim Discourse (London/Sydney: Croom Helm): 279-90. Keynes, J.M. (1926) The End of Laissez- faire (London: Hogarth Press). Landes, D. (2000) Culture Makes all the Difference, in L. Harrison and S. Huntingdon (eds.), Culture Matters (New York: Basic Books): 2-13. Lapidus, I. (1984) Knowledge, Virtue and Action: The Classical Muslim Conception of Adab and the Nature of Religious Fulfilment in Islam, in B. Metcalf (ed.), Moral Conduct and Authority: The Place of Adab in South Asian Islam (Berkeley, CA/London: University of California Press): 32-43. (2002) A History of Islamic Societies (New York: Cambridge University Press [1988]). McIntyre, A. (1988) Whose Justice? Which Rationality? (London: Duckworth). Madjid, N. (1994) Neo-modern Islam in Indonesia, Studia Islamica 1 (AprilJune 1994): 23-42. (2001) Potential Islamic Doctrinal Resources for the Establishment and Appreciation of the Modern Concept of Civil Society, in M. Nakamura (ed.), Islam and Civil Society in South-East Asia (Pasir Panjang, Singapore: Institute of South-East Asian Studies): 67-88. Makdisi, G. (1990) The Rise of Humanism in Classical Islam and the Christian West (Edinburgh: Edinburgh University Press). Mandeville, B. (1905) The Fable of the Bees: or, Private Vices, Publick Benefits (New York. Capricorn Books, 1962). Nakamura, M. (2001) Islam and Civil Society in South-East Asia (Pasir Panjang, Singapore: Institute of South East Asian Studies). Naqvi, S.N.H. (1981) Ethics and Economics: An Islamic Synthesis (Manchester, UK: Islamic Foundation). Nasution, H. (1984) An Islamic Theology, Mizan 1: 20-45. (1989) Refleksi Pembarun Pemikiran Islam 70 Tahun (Jakarta: Lembaga Studi Agama dan Filsafat). Preston, L., and D. Windsor (1990) Corporate Governance, Social Policy and Social Performance, in L. Preston (ed.), International and Comparative Corporation and Society Research (Greenwich, CT: JAI Press): 79-92. Putman, R. (1993) Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press). Rahman, F. (1979) Islam Challenges and Opportunities, in A.T. Welch and P. Cachia (eds.), Islam: Past Influence and Present Challenge (Edinburgh: Edinburgh University Press). Rawls, J. (1971) A Theory of Justice (Cambridge, MA: Harvard University Press). Redding, S.G. (1990) The Spirit of Chinese Capitalism (New York: Walter de Gruyter). Robison, R., and D. Goodman (eds.) (1996) The New Rich in Asia (London/New York: Routledge). Said, E. (1978) Orientalism (London: Routledge & Kegan Paul). Schwartz, P. (1999) When Good Companies Do Bad Things: Responsibility and Risk in an Age of Globalisation (New York: John Wiley). Siddique, S. (2001) Islam and Civil Society: A Case Study of Singapore, in M. Nakamura (ed.), Islam and Civil Society in South-East Asia (Pasir Panjang, Singapore: Institute of South-East Asian Studies): 89-105. Siddiqui, M.N. (1981) Muslim Economic Thinking (Leicester, UK: King Abdul Aziz University). Smith, A. (1776) The Wealth of Nations (London: David Campbell, 1909). Tibi, B. (1981) The Crisis of Modern Islam: A Pre-industrial Culture in the ScientificTechnological Age (trans. J. Sivers; Salt Lake City, UT: University of Utah Press). Vantow, D. (1965) Modern Corporations (Englewood Cliffs, NJ: Prentice Hall). Vinten, G. (ed.) (1994) Whistleblowing: Subversion or Corporate Citizenship? (New York: St Martins Press). Vredenbregt, J. (1962) The Haddj (book 1, 118, no. 1; Jakarta).
JCC 9 Spring 2003
65
malcolm h. cone
Sources
Source 1 H. Nasution, taped conversations at Ciputat Islamic University, Jakarta, 1995. Source 2 H.M. Sjadzali, Minister of Religious Affairs, Indonesia, on the opening of a training course for executives at the new bank, 1991. Source 3 Staff member, lending section, Bank Muamalat, 1997. Source 4 Head of the Shariah department, Bank Muamalat, 1997.
66
JCC 9 Spring 2003
Managerial Interpretations of Stakeholder Influence

A Study of Pollution Control in Russian Manufacturing Enterprises *
Jo Crotty
University of Liverpool, UK
To date, a number of authors have sought to determine the influence of different stakeholder groups on greening within Western firms. These researchers have indicated that two stakeholder clustersregulators and pressure groupsare accorded salience by management. The aim of this paper is to explore the influence of different stakeholder clusters on Russian managers in the area of pollution control. The impact of two groupsregulators and foreign investorsis examined in some depth, highlighting the role of resources in determining stakeholder power. The relative weakness of other stakeholder groups, such as pressure groups, customers and local communities, in influencing managerial behaviour are also detailed. Implications of this research for stakeholder theory and Russian environmental protection per se are also demonstrated.
Pollution control Stakeholders Resource dependence Russia Transition economies Power Salience
Jo Crotty is a lecturer at the University of Liverpool Management School. She has worked for the past six years on projects in the former Soviet Union and Russian Federation, focusing on the responses of key actors to systemic change. Current interests include social capital development and the use of networks within Russian privatised and non-state organisations.
u !
University of Liverpool Management School, Chatham Street, Liverpool L69 7ZA, UK jcrotty@liv.ac.uk
* A PhD studentship from the Economic and Social Research Council funded this research. I would like to thank Dr K. Bangassa, Lecturer at the Management School of the University of Liverpool, Mr C. Moore, Business Unit Manager at Autoliv UK and two anonymous referees for their comments and proof-reading of this and earlier drafts of this paper.
JCC 9 Spring 2003
67
jo crotty
uring the past decade the russian economy has undergone huge
systemic change (Malleret et al. 1999; Schroeder 1998; Tabata 2000). State firms have been privatised (Boycko et al. 1995), markets opened up and the rouble allowed to float freely (albeit with some interventions) on world currency markets. This systemic change has also created many unforeseen, dysfunctional, characteristics, including the lack of effective governance within privatised firms (Filatotchev et al. 2000). This led to widespread labour hoarding, the use of barter to effect intercompany transactions (Aukutsionek 1998) and asset stripping by management for self-enrichment (Hanson 1997; Linz and Krueger 1996). In this paper I examine the attitudes of those who manage these privatised firms towards the issue of pollution control and environmental management. This is facilitated by the stakeholder concept, a concept that itself has been a focus of fierce debate within the literature during the past ten years (see Agle et al. 1999; Donaldson and Preston 1995; Friedman and Miles 2002; Frooman 1999; Hill and Jones 1992; Jones 1995; Mitchell et al. 1997; Stoney and Winstanley 2001). It is hoped that this paper can contribute to that debate while simultaneously extending what is known about the environmental impact of economic transition within the Russian Federation (Crotty 2002; Shaw and Oldfield 1998). Utilising Hill and Joness (1992) treatise on stakeholderagency theory, and Mitchell et al.s (1997) paper on stakeholder salience, the impact of different stakeholder clusters on pollution control behaviour within these privatised firms is examined. Semistructured interviews were conducted with directors at 11 privatised firms about their perceptions of stakeholder influence in this area, with some interesting results. This interview dialogue and its resultant impact on the development of stakeholder theory is examined below. Prior to this, however, the Russian economy in transition and the motivation of adopting the stakeholder concept to study this phenomenon is reviewed
The stakeholder concept and the Russian economy in transition

The stakeholder concept has been used in a number of studies that assess stakeholder influence on pollution control behaviour within Western firms (Belz and Stannegard 1998; Fineman and Clarke 1996; Henrique and Sadorsky 1999). Within the stakeholder concept, this failure focuses on short-term market imperfections that can generate asymmetric relationships between the management of an organisation and those who have a stake in it. Hill and Jones (1992: 135) state:
If the markets that surround the firm are inefficient, as occurs when alternative contracting opportunities are limited (between principle and agent), then the existence of power differentials between principles and agents must be admitted.
Hill and Jones (1992), in their treatise on stakeholderagency theory, review key sources of market failure that generate informational asymmetries between management and other stakeholder clusters. Each has strong resonance with the incomplete nature of the Russian economy, as indicated below (Gaddy and Ickes 1998; Sapir 1999; Schroeder 1998).
t Barriers to entry and exit. Hill and Jones (1992) first indicate that barriers to entry
and exit facilitate the existence of power differentials between management and other stakeholder groups in the short run. In Russia, an opaque economy (Crotty 2001) has developed. This economy has been dominated at various stages by a lack of money-based transactions (Treisman 2000) and ill-enforced property rights (Hedlund 2001), allowing enterprises to continue to operate irrespective of demand
68
JCC 9 Spring 2003
managerial interpretations of stakeholder influence
for their product or current liquidity. In addition, instability and currency shocks have dissuaded many overseas investors from entering the Russian economy. The Russian economy therefore became a no exit economy (Gaddy and Ickes 1999), with unofficial barriers, or at least disincentives, to entry (Halligan and Teplukin 1996).
t Organisational inertia. There is significant evidence to suggest that some form of
organisational inertia is endemic throughout privatised Russian manufacturing enterprises (Moers 2000; Perevalov et al. 2000; Polonsky and Aivazian 2000). The privatisation process that allowed incumbent managers to buy 51% of their organisation at a nominal value (Boycko et al. 1995) led to many managers preserving existing Soviet-style working practices, at least in the early stages. In an environment of hyperinflation and a rudimentary stock exchange (Buck et al. 1994) managers also consolidated their position by purchasing the shares of employees bought initially through vouchers. Incumbents became both owner and manager, with little outside pressure to restructure (Linz and Krueger 1996).
t Open systems theory. Open systems theory suggests that if management perceive
a certain state of affairs to be skewed to its advantage then it has a vested interest in attempting to maintain it. As stated above, and, in particular, by Hanson (1997), Linz and Krueger (1996) and others, many managers appear to have made significant personal gains as a result of privatisation and transition. In the institutional vacuum (Peng and Heath 1996) that immediately followed ownership transfer, many were able to strip assets from the organisation and manipulate employee shareholders to consolidate their own personal wealth and position within the enterprise. With the persistence of these asymmetries, Russian managers maintain an exceptionally strong position within privatised enterprises. Consequently, it is their attitude towards pollution control and their perception of those attempting to change or shape those attitudes and behaviour that are of particular interest. This study therefore sets out to answer the following questions with respect to pollution control within privatised firms: Which stakeholders, if any, do management feel change or impact on pollution control policy and practice? What factors or characteristics do influential stakeholder groups possess? To what extent does the presence of an incomplete market have on stakeholder recognition? These questions can be reformulated to resonate with those asked by Mitchell et al. (1997) in their paper on stakeholder salience. Mitchell et al. explored several pertinent questions: To whom do managers pay attention and why?, and To whom do managers accord salience? Mitchell et al. formulated salience as being a function of urgency, power (more specifically, resource power) and legitimacy.
Stakeholder salience
Mitchell et al. (1997) posit that a stakeholder claim will be ignored if it is not perceived by management to be legitimate. Similarly, if the claim is not perceived as urgent, management is more likely to defer action. Power differentials are created where a stakeholder controls a resource or where the firm and the stakeholder have mutual dependence on a particular resource. The extent to which these factorsurgency, legitimacy and resource powerimpact the Russian managers perception and degree of salience accorded to environmental stakeholders is examined below. This discussion demonstrates the degree of salience accorded a range of stakeholder groups, non-
JCC 9 Spring 2003
69
jo crotty
governmental organisations (NGOs), local communities, employees and trade unions, shareholders, customers, regulators, and foreign investors. Throughout the interviews, factors of urgency, legitimacy and resource control are indicated as determining salience. Of these, stakeholder clusters, regulators and foreign investors are accorded the greatest salience. The remainder are accorded little or no salience at all. Before these outcomes are examined in detail, it is necessary to give a brief overview of the research methodology employed to collect this data.
The research study

Given the emerging nature of the Russian economy and the lack of extant literature regarding both environmental management and risk theory in Russia, an inductive research design was undertaken in order to build theory from case-study research (Eisenhardt 1989). Eisenhardts approach provides a method for conducting case-study research that explores relative strengths and weaknesses of theory and seeks to incrementally build on it through iterative steps of data collection, analysis and theorising. In this instance, fieldwork was undertaken in two contrasting oblasts in the Russian Federation. Within each of these oblasts, nested case studies (Yin 1989) were conducted at 11 privatised manufacturing enterprises; 5 in Chelyabinsk Oblast and 6 in Nizhny Novgorod Oblast, involving personal interviews with managers, local residents, regulators and NGOs. This was supplemented with analysis of data generated within these oblasts relating to production and pollution for the purpose of developing further insight and triangulating with qualitative data. The firms selected were not chosen because they had a particular environmental profile but because they could be seen as representative of different types of privatised Russian enterprise during the transition period. Within the enterprises, semi-structured interviews were conducted with senior management. Sets of base questions were asked at every enterprise, with individual supplementary questions used where further abstraction was required. Questions regarding the current state of pollution control within the enterprise, attitudes towards pollution control and perceived influences on it were directed at all the managers in the study. Interviews were transcribed in the field and, where relevant, translation was checked by a Russian national fluent in English. In the United Kingdom, transcripts were reviewed and scrutinised for statements indicating stakeholder influence and perceptions thereof. The identities of the respondents and the firms they represent have been concealed to protect their identity.
The sample
Each of the enterprises fall into one of the following categories: monolithic enterprises (MEs), old-style large enterprises (OSLEs) without foreign investment (FI), OSLEs with FI, and smaller, newer, firms (SNFs). All of these firms, except the SNFs, were established prior to 1960. All were involved in heavy industries such as metal or electrodes or in the manufacture of lighter goods such as paper or automobile ancillary parts. Of the SNFs, SNF 1 was established during the 1980s with the help of an Italian company. The other (SNF 2) was established during privatisation when a larger company was broken into smaller parts. Like many firms in the Russian Federation (Hendley 1998), SNF 2 is still a dedicated supplier to two large factories in the immediate oblast. The sample is summarised in Table 1.
70
JCC 9 Spring 2003
Type
No. in study
Size*
Transition characteristics Yes
Foreign partners (no.) 1(ME 2)
Monolithic enterprises (MEs) Old-style large enterprises (OSLEs): without foreign investment (FI) with foreign investment (FI) Smaller, newer firms (SNFs)
> 15,000
4 2 2
< 10,000 < 10,000 c. 500
Yes Limited Limited
None 2 2
* Number of employees (Soviet employment levels) Use of transition characteristics such as barter, non-payment of wages, part-time working practices and/or lay-offs
Table 1 summary of the case-study enterprises
Findings
Discourse with enterprise managers at all the enterprises in this study indicated that the regulator was perceived as having a strong influence on pollution control behaviour. At the OSLEs with FI, foreign investors were also accorded significant salience. In probing these perceptions, it became obvious that the withdrawal or injection of resources into or out of the organisation during a time of extreme financial difficulty and economic turmoil was the strongest determinant of stakeholder recognition. In this context, other stakeholders, such as pressure groups and customers, were accorded little recognition by managers. Any limited influence they did have was formulated via perceptions of legitimacy or urgency, or a lack of either.
Regulators
Russian environmental regulation works through a system of taxes. In the first instance, the regional ecological committee (REC) for each oblast establishes a maximum permissible level (MPL) of pollution for each enterprise. This is formalised by a contract between the firm and the REC. On inspection, if the enterprise is found to have exceeded its MPL then it will be charged up to 25 times a nominated standard charge. This will then equate to the enterprises annual ecological tax burden for any particular year. Since 1994, Russian environmental law has allowed the RECs to effect exemptions from part or all of the charge. If an enterprise can be seen to have invested in end-of-pipe technology during the year in question, then it will be let off some or all its obligation. More recently, charges have increasingly been paid in goods rather than cash, and exemptions have been used extensively by the RECs to allow polluting, bankrupt, enterprises to circumvent charges they cannot afford (for a more in-depth prcis of the Russian system of pollution charges and its manipulation during the transition period, see Kjeldsen 2000). At the enterprises in this study, this system of levying ecological taxes and strategies to engineer exemptions from them dominated discussion in this area:
Now our financial position is rather difficult, but we know we should make improvements to our environmental systems, as the ecological taxes are high. We are ordered to pay a significant charge for our pollution. We prefer to try to make some improvements rather than have this money taken away in taxes. If we make some improvements it is
JCC 9 Spring 2003
71
jo crotty
likely that part of all of the charges will be waived (director of ME 2, Chelyabinsk Oblast: Source 1).
Kjeldsens (2000) findings regarding the use of trade-offs in reducing ecological taxes were apparent in ME 2 and in all the enterprises in this study. All the directors interviewed wanted to reduce their outgoings via this ecological tax in some way. Consequently, they were motivated to make improvements or, at least, to formulate some plans. The regulator has power to extract resources from cash-starved organisations via an ecological tax. Company directors wish to reduce this, and so they indicate that they are willing to improve, but their motivation is not one of concern for the environment. Neither the company director nor the regulator is perceived or portrayed as an environmental champion. At ME 2, and all the enterprises in this study, the power of the regulator to extract these funds was acknowledged. The urgency with which plans for improvement needed to be implementedgiven that firms are assessed for these taxes on an annual basiswas also acknowledged. However, when it came to the legitimacy of the environmental regulator in its role as a tax collector, opinion was divided between those directors who had FI partners and those who did not. A director at the first OSLE with FI (OSLE + FI 1) explains:
Yes, we do pay taxes. We are the only enterprise in our region that produces paper; we are also one of the few that makes a profit. These taxes, they are a reason to take money from the enterprise, because at this plant our norms for sewage are quite reasonable, and we are within all statutory limits. But our administration would like to receive money from the enterprise, and so for any case, any reason, they take money from us. It is any excuse to take money. In the region of Balakhna [a town in the Nizhny Novgorod region] we are the only enterprise that can pay. If every enterprise could pay this money then there would be enough money to do something, to improve our local ecology (Source 2).
Directors at other enterprises perceived to be more buoyant expressed similar sentiments. They felt that the REC pursued them more rigorously because they were more likely to be able to pay and not because they were generating a greater proportion of emissions relative to others in the surrounding oblast. Understandably, these directors questioned the legitimacy of the regulator in this context. They perceived that the levying of ecological taxes had become a revenue-raising exercise and had ceased to be about environmental regulation and protection. In the case of the regulator, Mitchell et al.s (1997) predictions regarding urgency and resource control are key determinants in establishing stakeholder salience. As each enterprises ecological tax burden is assessed on an annual basis, there was a degree of urgency to their claim. Resource control is also a factor. Given the prevailing economic climate, managers want to reduce leakages from the organisation. As the system for ecological taxation allowed for charges to be reduced or minimised if improvements were made to current systems, managers could reduce their burden by attending to environmental issues within their particular firm. The regulator therefore exacts some control via the withdrawal from, rather the injection of funds into, the organisation. Urgency and resource control, therefore, are both factorsdespite some directors viewing this regulatory function as illegitimatecontributing to the degree of salience accorded the regulator by all the directors in this study.
Foreign investors
Foreign investment partners were cited as having a direct influence on pollution control practice. This was particularly evident within the SNFs. Even where their influence was classed as incidental, the legitimacy of this influence was not questioned. The following comments are indicative.
We have some foreign investors, a Swiss firm. They have invested money in technology and plant. In as much as this new technology improves the environmental standards of
72
JCC 9 Spring 2003
the plant, this money goes towards environmental improvements. These investments were made, however, to improve the quality of the plant, improvement in environmental standards was not the main motivation . . . However, they [Swiss company], have also invested in some new pollution filters (Source 1).
Despite some reluctance, the director at ME 2 indicates that foreign involvement had had a positive impact. Attitudes elsewhere indicated similar improvement and also a greater deal of ownership by management of a more Western approach to environmental management and pollution control. For OSLE + FI 2 in Chelyabinsk Oblast, its foreign investment partner built an entirely new factory containing modern equipment. In acknowledging the improvements this would make, the director also displayed some relief that the firm could conclusively address an environmental issue that had plagued them throughout the companys 60-year history:
During Soviet times everyone was pushing us to make improvements, because you know, SO2, it is difficult to hide, particularly when you are situated this close to the city. With the new plant we finally have a chance to address this issue (director of OSLE + FI 2, Chelyabinsk Oblast: Source 3).
The influence of the foreign investor at other firms was less drastic, but the directors appeared to exhibit a greater level of ownership with the changes made. In particular, at the second SNF (SNF 2), in Nizhny Novgorod, the director spoke at some length about the specific changes made to the plant and about what this would mean for the company in the future:
As a result of our involvement with our German partner company, the environmental situation at the company is definitely better. We have new equipment, ventilation, and extraction of impurities is better. The raw materials we are receiving from Germany are of a better quality, so we have practically no rejects . . . As a result of this investment we have been able to make changes in this company to bring us in line with European environmental norms and standards. With this updated equipment, updated technologies, etc., we are able observe these standards very closely, as anywhere in the world (director of SNF 2, Nizhny Novgorod Oblast: Source 4).
Later, he said:
Our German investment partner has also been assisting us in obtaining money from the European Bank . . . EBRD [European Bank for Reconstruction and Development]. This money will be used to make further improvements and modernise our equipment. We shall install new equipment for the production of foam-based parts. As a result we shall be able to exclude this ozone from our production. We shall also use part of the money to make further improvements to our filtration system (Source 4).
At SNF 2 the management clearly recognise that compliance with environmental standards is inevitable if the company is going to survive in the long term. Recognition of these marketable benefits of adopting a greener manufacturing process were also expressed at OSLE + FI 1, also in Nizhny Novgorod:
Our investment partners also brought in new, up-to-date paper manufacturing plant and machinery. Everything from the old plant is gone. We also have begun to import foreign chemicals that are better for the environment. We can now produce paper to sell to European countries, as we understand that we need to comply with certain standards in order to trade in Europe and elsewhere. This is important to us and we hope will help us survive the current economic situation that persists now in this country (Source 2).
At OSLE + FI 1 the director had clearly made the link between the plants long-term survival and FI, environmental standards and export business. Embracing the investment partners environmental processes and procedures was perceived as legitimate because it was framed from the perspective of economic rationalism and corporate needs (Banerjee 2001). In incorporating these standards and practices within the firm
JCC 9 Spring 2003
73
jo crotty
it assisted, in the case of OSLE + FI 1, in generating export trade. In the case of SNF 2 it had facilitated access to EBRD funds. OSLE without FI 1 (OSLE FI 1) had also made this link and was attempting to obtain EBRD funds by making environmental improvements and subjecting itself to an EBRD environmental audit in order to raise its standards to facilitate overseas trade (Source 5). Foreign investors, where they exist, can be seen therefore to have a strong influence on the pollution control activity of a firm. This influence is seen as legitimate, timely and of benefit to the recipient. Company managers perceive this influence as reasonable, albeit instrumental (Jones 1995), framed within a general working relationship that is likely to guarantee longevity and survival. Meeting European and international environmental standards is more likely to result in export trade. Consequently, the foreign investor is accorded significant degrees of salience (Mitchell et al. 1997). This is in sharp contrast to managerial perceptions of the regulator. Foreign investors attempt to influence behaviour by making injections of much-needed funds into the organisation. Regulators are attempting to do this by taking them away. In extremely harsh economic conditions, it is not surprising that, although both appear to dominate the visual field (Agle et al. 1999), foreign investors are accorded greater legitimacy.
Other stakeholder groups

Western scholars such as Starik (1993) and Fineman and Clarke (1996) posit that other stakeholder groups such as customers, suppliers and employees will be interested in the pollution control activity the firm. When questioned about the influence of these groups, managers demonstrated that they perceived these groups interests as lying elsewhere. In the majority of cases, managers indicated that their customers were satisfied if the goods were accompanied with an appropriate certificate assuring some kind of quality standard at the time of purchase. Individually, employees and trade unions were also accorded little power, that ecology was of little interest to them. Employees were cited as having other priorities, associated with jobs and wages. This group of actors employees and trade unionswere, however, viewed differently when seen as part of the local community. The dual roles (Johnson and Scholes 1999) played by these actors, given the nature and legacy of the Soviet Union, is an important factor that must be acknowledged when analysing managerial response and perceptions of the role of local communities and their influence on pollution abatement within enterprises. In many instances, those managers interviewed, particularly those situated in small towns (e.g. Balakhna and Kstovo in Nizhny Novgorod Oblast, and within the metallurgical district in Chelyabinsk City), demonstrated a perceived duty toward those living within the region or district of the enterprise vis--vis the enterprises environmental performance:
We ourselves are interested in this environmental situation because we live near this factory. We ourselves understand why we should do this because we live there, and we understand this (Source 3).
Despite this, instances where this duty had translated into action were not discernible (Crotty and Crane 2002). It is probable in this case that managers felt that any claims by the local community were either unlikely to be pressed or that the community would not respond if they were ignored. Consequently, the directors felt little urgency to address or act on the duty they expressed. With regard to the influence of financial organisations, at no point was the concept of environmental liability arising from non-compliance mentioned by the managers. When asked if shareholders or financial institutions were interested or had ever tried to influence their environmental performance, their response indicated that such a con-
74
JCC 9 Spring 2003
cept was alien to them. Comments by the director at SNF 1, Chelyabinsk Oblast, demonstrate this most succinctly:
There are ten shareholders that control over 80% of the shares but, because not all of them are working in our plant, for them there is no difference. Is it a good ecological situation or not? All they want is profit, no more (Source 6).
The link between reducing pollution charges, good environmental practice and profits appeared to be missing. The director does not acknowledge any sense of environmental liability or of this type of performance having a bearing on the companys longterm survival. This is a clear indicator to suggest that the Russian economy is still incomplete. In summary, customers appear disengaged with the issue of environmental quality or pollution control. They therefore do not possess any of Mitchell et al.s (1997) determinants of salience, urgency, resource control or legitimacy. Employees and trade unions are perceived as potential actors but have no urgency to their claim and therefore are dismissed. The community is viewed as having a legitimate claim on the environmental behaviour of the enterprise, but, as the community itself has no urgency in acting on this perceived legitimacy, action based on this sense of duty expressed by managers towards it is lacking. In all these cases, the stakeholder cluster is perceived either as having other interests or as being at such a distance from the organisation so as not to really care about its environmental performance. Similar sentiments were expressed about environmental NGOs.
Non-governmental organisations
Recognition of pressure groups appeared to be dictated by the region in which the enterprise was situated. In Chelyabinsk Oblast, where restructuring has been slower and less deep than it has been in Nizhny Novgorod (Crotty 2001), none of the managers interviewed claimed to have heard of any environmental groups operating in the city. Furthermore, the concept of such a group communicating directly with them with a view to changing their environmental behaviour and/or strategy appeared alien. When asked how they would react in this instance, such replies were typical:
Difficult question; I have never considered it (Source 1).
In Nizhny Novgorod Oblast, a so-called laboratory of reform (Brown 1993), managers appeared more open to the possibility of such a group approaching their enterprise. The managers are certainly aware of the existence of such groups, but only one firm indicated that it had had any dealing directly with these groups:
There is such a group in Nizhny Novgorod and in Kstovo. I know of these people, they are very active; they pay us a lot of attention. They know a lot about us, our products, activities and so on. As a matter of fact, I can give you an example. They drew to our attention that in spring, when the snow melts from around our facility, the water runs into the local water supply. This water contains oil from the plant while the snow is melting; these melting waters are flowing down from the factory and have an impact on the environment. Due to their remarks, we introduced some additional filters and other systems (Source 5).
Despite this case, NGOs appear to have very little influence across this group of managers. Many of the directors appeared never to have considered the possibility of such a group attempting to communicate with them directly or influencing their policy on pollution control. It was beyond the realm of their experience, and so the claims of these NGOs went unheard. Moreover, if the environmental movement is not communicating claims effectively, then it cannot be heard. This finding indicates that factors beyond urgency, power and legitimacy can contribute toward stakeholder salience. Access to effective communication channels (Fill 1998) may also have a part to play.
JCC 9 Spring 2003
75
jo crotty
Moreover, these reactions and attitudes towards NGOs indicate that the Russian Federation lacks a functioning civil society (Rose 2000), a factor necessary for any functioning democracy and free market.
Conclusions and implications

Several conclusions can be drawn in light of this paper with respect to both the impact of Russian economic transition on environmental provision within privatised enterprises, and with regard to the stakeholder concept and its continuing development. First, the lack of recognition indicated by Russian managers for any group that does not impact its level of economic resources in this context is astounding. Economic survival appears to dominate the directors field of vision to the exclusion of anything else. This finding in and of itself is not new (Hendley 1998) but the fact that it pervades attitudes towards environmental provision is significant. Stakeholders such as customers, communities and, in particular, NGOsall stakeholders shown by Western studies to have significant influence on managerial thinking and behaviour in the West (Belz and Stannegard 1998; Fineman and Clarke 1996; Henrique and Sadorsky 1999) do not feature here. In addition, the regulator is not seen as a key stakeholder because it is the source of environmental liability. It is perceived as a dominant stakeholder because it creates financial liability. Non-compliance results in increased taxes, but no link to reputation, fines or other implications for the company were mentioned. The role of the foreign investor was somewhat different. Although any environmental aspects were probably a condition of investment, the company directors did not dismiss these aspects or claim not to be interested in them. In all but one case, managers appeared to embrace the environmental improvements brought about by these ventures, exhibiting considerable ownership of pertinent issues. Again, however, this is not because the managers interviewed were particularly interested in environmental protection per se but because they acknowledged other potential export benefits that this type of investment could bring. These observations lead to the conclusion that there are still some gaps in Russias economy. Greater institutional development would allow a sense of environmental liability to develop. A more transparent economy would allow managers to hear complaints or demands from wider quarters. Currently, managers are in a position to dismiss stakeholder groups as having other priorities. They can also decide not to act where they feel a sense of duty. In terms of the stakeholder concept, this research, conducted in a venue of extreme economic difficulty, highlights how significant resource control can be in determining stakeholder salience. In this case, however, directors focused on direct resource control; regulators can extract money, foreign investors can inject it. The directors did not make links that were more instrumental, such as an improved environmental profile delivering softer, less tangible benefits. In some cases, particularly in the case of NGOs, the factors indicated by Mitchell et al. (1997) did not appear to be relevant. Managers did not respond to NGO claims because they either did not perceive them to exist or, if they did acknowledge them, did not perceive them to be relevant. In this case, access to effective communication channels may have been more of a determinant of salience than urgency, legitimacy or power. Overall, this paper does support Mitchell et al.s (1997) claim that power, urgency and legitimacy do determine stakeholder salience but that not all need to be present, or present in the same degree, for a stakeholders claim to be acted on. In a final assessment, the future for environmental protection and pollution control within Russian firms looks bleak. Those with foreign partners are likely to make
76
JCC 9 Spring 2003
improvements and embrace international standards. Those without will attempt to reduce or get out of their ecological tax liability any way they can. Neither course of action is likely to result in widespread, universal good environmental practice across the Russian Federation.
References
Agle, B.R., R.K. Mitchell and J.A. Sonnenfeld (1999) Who Matters to CEOs? An Investigation of Stakeholder Attributes and Salience, Corporate Performance and CEO Values, Academy of Management Review 24.5: 507-25. Aukutsionek, S. (1998) Industrial Barter in Russia, Communist Economies and Economic Transformation 10.2: 179-88. Banerjee, B.B. (2001) Managerial Perceptions of Corporate Environmentalism: Interpretations from Industry and Strategic Implications for Organisations, Journal of Management Studies 38.4: 489-513. Belz, F., and L. Stannegard (1998) International Business Environment Barometer (Oslo: Cappelen Akademisk Forlag). Boycko, M., A. Schleifer and R. Vishny (1995) Privatising Russia (Cambridge, MA: The MIT Press). Brown, K. (1993) Nizhny Novgorod: A Regional Solution to National Problems?, RFE/RL Research Report 2.5: 17-23. Buck, T., I. Filatotchev and M. Wright (1994) Employee Buy-outs and the Transformation of Industry, Comparative Economic Studies 36.2: 1-15. Crotty, J. (2001) The Impact of Economic Transition on Pollution Control in Russian Manufacturing Enterprises: An Exploratory Study (unpublished PhD thesis; Nottingham, UK: University of Nottingham). (2002) Economic Transition and Pollution Control in the Russian Federation: Beyond Pollution Intensification?, EuropeAsia Studies 54.2: 299-316. Crotty, J., and A. Crane (2002) Transitions in Environmental Risk in a Transitional Economy: Management Capability and Stakeholder Trust in Russia, Journal of Risk Research forthcoming. Donaldson, T., and L.E. Preston (1995) The Stakeholder Theory of the Corporation: Concepts, Evidence and Implications, Academy of Management Review 20.1: 65-91. Eisenhardt, K. (1989) Building Theories from Case Study Research, Academy of Management Review 14.4: 532-50. Filatotchev, I., T. Buck and V. Zhukov (2000) Downsizing in Privatised Firms in Russia, Ukraine and Belarus, Academy of Management Journal 43.3: 286-304. Fill, C. (1998) Marketing Communications: Frameworks, Theories and Applications (Hemel Hempstead, UK: Prentice Hall Europe). Fineman, S., and K. Clarke (1996) Green Stakeholders: Industry Interpretation and Response, Journal of Management Studies 36.6: 715-30. Friedman, A.L., and S. Miles (2002) Developing Stakeholder Theory, Journal of Management Studies 39.1: 1-21. Frooman, J. (1999) Stakeholder Influencing Strategies, Academy of Management Review 42.2: 191-205. Gaddy, G.C., and B.W. Ickes (1999) An Accounting Model of the Virtual Economy in Russia, Post Soviet Geography and Economics 40.2: 79-97. Halligan, L., and P. Teplukin (1996) Investment Disincentives in Russia, Communist Economies and Economic Transformation 3.1: 29-51. Hanson, P. (1997) What Sort of Capitalism is Developing in Russia?, Communist Economies and Economic Transformation 9.1: 27-42. Hedlund, S. (2001) Property Without Rights: Dimensions of Russian Privatisation, EuropeAsia Studies 53.2: 231-37. Hendley, K. (1998) Struggling to Survive: A Case Study of Adjustment at a Russian Enterprise, EuropeAsia Studies 50.1: 91-119. Henrique, L., and P. Sadorsky (1999) The Relationship between Environmental Commitment and Managerial Perceptions of Stakeholder Importance, Academy of Management Review 24.1: 87-99. Hill, C., and T. Jones (1992) Stakeholder Agency Theory, Journal of Management Studies 9.2: 131-54. Johnson, G., and K. Scholes (1999) Exploring Corporate Strategy (Hemel Hempstead, UK: Prentice Hall, 5th edn). Jones, T. (1995) Instrumental Stakeholder Theory: A Synthesis of Ethics and Economies, Academy of Management Review 20.2: 404-37. Linz, S.J., and G. Krueger (1996) Russias Managers in Transition: Pilferers or Paladins?, Post Soviet Geography and Economics 37.7: 397-425.
JCC 9 Spring 2003
77
jo crotty Kjeldsen, S. (2000) Financing of Environmental Protection in Russia: The Role of Charges, Post Soviet Geography and Economics 41.1: 48-62. Malleret, T., N. Odova and V. Romanov (1999) What Loaded and Triggered the Russian Crisis?, PostSoviet Affairs 15.2: 107-29. Mitchell, R.K., B.R. Agle and D.J. Wood (1997) Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts, Academy of Management Review 22.4: 853-86. Moers, L. (2000) Determinants of Enterprise Restructuring in Transition: Descriptions of a Survey in Russian Industry, Post-Communist Economies 12.3: 307-35. Peng, M.W., and P.S. Heath (1996) The Growth of the Firm in Planned Economies in Transition: Institutions, Organisation and Strategic Choice, Academy of Management Review 21.2: 492-528. Perevalov, Y., I. Gimadii and V. Dobrodei (2000) Does Privatisation Improve Performance of Industrial Enterprises? Empirical Evidence from Russia, Post-Communist Economies 12.3: 337-63. Polonsky, G., and Z. Aivazian (2000) Restructuring Russian Industry: Can it Really Be Done?, PostCommunist Economies 12.2: 229-40. Rose, R. (2000) Uses of Social Capital in Russia: Modern, Pre-Modern and Anti-Modern, Post-Soviet Affairs 16.1: 33-57. Sapir, J. (1999) Russias Crash of August 1998: Diagnosis and Prescription, Post-Soviet Affairs 15: 1-36. Schroeder, G. (1998) Dimensions of Russias Industrial Transformation 1992 to 1998: An Overview, Post-Soviet Geography and Economics 39.5: 243-70. Shaw, D., and J. Oldfield (1998) The Natural Environment of the CIS in the Transition from Communism, Post-Soviet Geography and Economics 39.3: 164-77. Starik, M. (1993) The Natural Environment as Stakeholders: Issues and Challenges, in A.B. Carroll (ed.), Business and Society: Ethics and Stakeholder Management (Cincinnati, OH: South Western Publications, 2nd edn). Stoney, C., and D. Winstanley (2001) Stakeholder: Confusion or Utopia? Mapping the Conceptual Terrain, Journal of Management Studies 38.5: 603-29. Tabata, S. (2000) The Great Russian Depression of the 1990s: Observations on Causes and Implications, Post-Soviet Geography and Economics 41.6: 389-98. Treisman, D. (2000) Inter-enterprise Arrears and Barter in the Russian Economy, Post-Soviet Affairs 16.3: 2,225-56. Wright, M., I. Filatotchev and T. Buck (1993) The Role of Buy-outs in Restructuring Central and Eastern Europe: Theory and Practice, International Business Review 2.3: 239-52. Yin, R.K. (1989) Case Study Research: Design and Methods (London: Sage).
Sources
Source 1 Director of monolithic enterprise 2 (ME 2), Chelyabinsk Oblast, March 1998. Source 2 Director of the old-style large enterprise with foreign investment 1 (OSLE + FI 1), Nizhny Novgorod Oblast), November 1998. Source 3 Director of the old-style large enterprise with foreign investment 2 (OSLE + FI 2), Chelyabinsk Oblast), March 1998. Source 4 Director of smaller, newer, firm 2 (SNF 2), Nizhny Novgorod Oblast, November 1998. Source 5 Director of the old-style large enterprise without foreign investment 1 (OSLE FI 1), Nizhny Novgorod Oblast), November 1998. Source 6 Director of smaller, newer, firm 1 (SNF 1), Chelyabinsk Oblast, March 1998.
78
JCC 9 Spring 2003
Making the Business Case for Sustainability

Linking Social and Environmental Actions to Financial Performance
Marc J. Epstein
Rice University, USA
Marie-Jose Roy
University Laval, Canada
With growing sensitivity toward social issues, companies are increasingly expected to take greater responsibility for making sustainable development a reality. However, defining this new role is a major challenge for companies as they search for ways to balance economic, environmental and social performance. To integrate sustainability principles into their business strategies and to aid resource allocation decisions, managers must quantify the link between social and environmental actions and financial performance. The authors have proposed a framework that will assist managers in making the business case for sustainability initiatives. Within the context of that framework, a sample of corporate sustainability reports are examined to (1) determine whether companies have been measuring the financial impact of social and environmental initiatives, (2) identify specific areas of concern and obstacles to the integration of sustainability into corporate performance and (3) provide specific guidance as to how companies can move toward a better integration of social and environmental initiatives in their decision-making processes and operations. Results suggest that companies are increasingly attempting to link environmental initiatives to financial performance. However, companies are not typically making a clear business case for broader issues of sustainability.
Sustainable development Corporate sustainability performance Implementing sustainability initiatives Performance drivers Social performance Environmental performance
Marc J. Epstein is Distinguished Research Professor at the Jones Graduate School of Management at Rice University in Houston, TX. Formerly a professor at both Harvard and Stanford Business Schools, Dr Epstein is the author of numerous books including Counting What Counts: Turning Corporate Accountability into Competitive Advantage (Perseus Books, 1999) and Measuring Corporate Environmental Performance: Best Practices for Costing and Managing an Effective Environmental Strategy (Irwin Professional, 1995). He has also authored numerous other publications on sustainability, corporate environmental management, corporate governance and accountability. Marie-Jose Roy is Assistant Professor of Strategic Management at the Faculty of Administrative Sciences at University Laval in Qubec, Canada. Her research focuses on the implementation aspects of corporate social responsibility and corporate governance. Dr Roy has recently published articles in European Management Journal, Business Strategy and the Environment and Long Range Planning.
u !
Jones Graduate School of Management, Rice University, Houston, TX 77005-1892, USA epstein@rice.edu
u !
Faculty of Administrative Sciences, University Laval, Ste-Foy, Qubec G1K 7P4, Canada Marie-Josee.Roy@mng.ulaval.ca
JCC 9 Spring 2003
79
marc j. epstein and marie-jose roy
ncreasingly, companies are expected to take greater responsibility for
making sustainable development a reality. Sustainable development (or sustainability) has been defined as economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs (WCED 1987). In an attempt to provide more guidance to managers, some indices, such as the Dow Jones Sustainability Index, have operationalised this concept as a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. The focus on how social and environmental investments impact financial performance has also been examined in the academic literature (Dowell et al. 2000; Griffin and Mahon 1997; Roman et al. 1999; Rowley and Berman 2000; Waddock and Graves 1997). Although the results of this research on that relationship is not completely consistent, leading companies have recognised that sustainability principles are important for long-term corporate profitability and are focusing increased attention on these issues. However, understanding the contribution of various investments in sustainability initiatives to improved shareholder value and identifying which projects provide the greatest net benefits to both the company and society is certainly a major challenge for managers formulating a sustainability strategy (Hillman and Keim 2001; King and Lenox 2002; Martin 2002; McWilliams and Siegel 2001). In order to properly evaluate the impact of investments in sustainability, companies must implement the proper systems to evaluate the impacts of sustainability initiatives on financial performance and the trade-offs that ultimately must be made when there are many competing organisational constraints and numerous barriers to implementation. These systems assist corporate executives as they develop a sustainability strategy and make overall corporate resource allocations to support that strategy. The systems also assist sustainability and environmental managers as they evaluate the trade-offs and decide which sustainability projects provide the largest net benefit to both sustainability and financial performance. Hence, to implement their sustainability strategy, companies are faced with an enormous challenge: that of quantifying the link between corporate actions and environmental, social and financial performance. Indeed, only by making the business case for social and environmental performance can managers truly integrate social and environmental aspects into their business strategies; yet many companies have not focused on making the business case for social and environmental performance. Instead, they have acted in socially responsible ways because they believe it is the right thing to do. However, programmes put in place solely for this reason are vulnerable because they are subject to the whim of swaying public priorities, changes in senior management and financial cycles. Further, the lack of a detailed business case creates additional barriers for sustainability managers and environmental managers trying to get support for social and environmental projects. In fact, in its 2002 Sustainability Survey Report, PricewaterhouseCoopers reports that the main reason respondents provide for not adopting sustainable business practices is the inability to present a clear business case for such practices. To present a clear business case, managers need to identify the drivers of social performance and how that performance impacts overall long-term corporate profitability. This increased attention to a thorough identification and measurement of the drivers of performance is echoed in popular management frameworks such as the balanced scorecard and value-based management. Frameworks such as these focus on a better understanding of the causal relationships and linkages within organisations and the actions managers can implement to improve both customer and corporate profitability (Epstein and Westbrook 2001; Kaplan and Norton 2000). However, further assistance is required to establish relationships that relate to social and environmental strategies.
80
JCC 9 Spring 2003
making the business case for sustainability
Undeniably, the identification and measurement of social and environmental strategies is particularly difficult as they are usually linked to long time-horizons, a high level of uncertainty and impacts that are often difficult to quantify (Berman et al. 1999; Dowell et al. 2000). In a recent paper (Epstein and Roy 2001), we proposed an integrative framework that offers guidance to managers trying to make the business case for sustainability initiatives. The framework describes the drivers of corporate sustainability performance, the actions that managers can take to affect that performance and the consequences of those actions on corporate sustainability and financial performance. The framework relies on a thorough identification of performance metrics characterising each component of the framework. In this paper, we examine corporate social, environmental and sustainability reports to determine whether companies are able to properly measure the value resulting from the integration of social and environmental initiatives, as illustrated in our framework (Epstein and Roy 2001). More specifically, we examine whether companies have the type of information that permits them to make a compelling business case for sustainability initiatives. To that end, we first briefly present the main elements of the framework to better understand and identify the drivers of sustainability and financial performance and the type of information that is needed to integrate environmental and social initiatives into business strategies. Based on the type of information companies communicate in their reports, we then offer a typology that classifies companies according to the level of integration of their social and environmental initiatives. Finally, in light of the examples presented in corporate reports, we identify potential barriers and gaps and provide specific guidance as to how companies can move toward a better integration of social and environmental initiatives within their decision-making processes and operations.
Making the business case: presenting the framework

In our framework we organise the drivers of corporate sustainability and financial performance into five major components (Epstein and Roy 2001; see also Fig. 1):
t Corporate and business unit strategy t Sustainability actions t Sustainability performance t Stakeholder reactions t Corporate financial performance
The framework begins with corporate and business unit strategy and moves from there to the second component: the sustainability actions that will be used to implement strategy. Companies can then analyse and establish the drivers of and causal relationships with the actions to sustainability performance, stakeholder reactions and longterm corporate financial performance. The corporate financial performance component of the framework then feeds back into the corporate strategy to improve and challenge strategies and assumptions and, ultimately, to improve social and financial performance. The framework requires that corporations implement appropriate systems, structures and performance measures to improve corporate financial and sustainability performance. These systems, structures and measures provide a better understanding
JCC 9 Spring 2003
81
Sustainability actions (strategy, plans and programmes, structure and systems)

1 2
Sustainability performance
t
Stakeholders reactions Employees Community t Customer t Government t Investors t Financial analysts

t t
Corporate and business unit strategy
Workforce diversity Environmental impacts t Job creation t Community involvement t Ethical sourcing t Human rights t Product safety t Product usefulness
t
Long-term corporate financial performance
Corporate costbenefit of actions
Feedback
The arrow indicates the direction of influence (e.g. stakeholder reactions drive financial performance, which in turn drives strategy). Continuous lines illustrate causal relationships; broken lines illustrate informational feedback.
Figure 1 drivers of sustainability and financial performance

Source: Epstein and Roy 2001
of the drivers of social performance and the impacts of that performance on the various corporate stakeholders. Hence, this framework helps managers to better integrate sustainability principles into their business strategies by setting relevant priorities and by screening business options. An important characteristic of the framework is the distinction between intermediate results and financial outcomes. Indeed, intermediate results, such as improved sustainability performance (e.g. product safety) and positive stakeholder reaction (e.g. customer satisfaction), must be monitored to evaluate the profit consequences of sustainability actions. As shown in Figure 1, the framework includes actions that aim at improving environmental and social performance and those that aim at promoting a positive stakeholder reaction. An essential component of the framework is stakeholders reactions. As illustrated in Figure 1, sustainability performance and actions are drivers of stakeholder reactions. It is through stakeholder reactions that managers can accurately translate actions and performance into the resultant costs and benefits. Furthermore, stakeholder reactions provide feedback to revise corporate strategy (arrow 3). In order to link sustainability performance elements, such as a companys environmental record, to financial performance, managers need to assess how it affects various stakeholders. Indeed, a companys poor environmental record can translate into fines from regulators, whereas an excellent one could ease the permitting process. Likewise, customers may react to poor sustainability performance through boycotts or they may demonstrate brand loyalty following good sustainability performance. Other stakeholders, such as employees and
82
JCC 9 Spring 2003
investors are also likely to react to this performance, and their reactions must also be monitored. However, impacts of sustainability performance elements on stakeholders are often ignored, as they are harder to measure and evaluate. Indeed, companies often quantify the most obvious and easy-to-measure costs. This problem is compounded by the fact that many companies still do not believe that there are significant potential benefits to social investment and do not have the proper systems to evaluate these costs and benefits. Finally, the feedback process is a fundamental aspect of the framework. This process will in all probability challenge and change strategies and assumptions about linkages. As shown in Figure 1, the feedback process does not rely exclusively on data relating to financial performance. Indeed, appropriate management control systems should feed back information on potential environmental and social impacts, sustainability actions, sustainability performance, stakeholder reactions and corporate financial performance. An appropriate set of measures should be developed to support the framework, because managers must quantify how one variable drives another until the link to ultimate corporate financial performance is clear. They need concrete metrics to evaluate and monitor performance on the intermediate and final goals of improving corporate social, environmental and economic performance. For example, in the case of diversity issues, managers should be able to establish a connection between an increase in the percentage of minority groups in the workforce and stakeholder reactions, such as employee productivity (revenue per employee) or customer satisfaction (increased sales). The breadth of this information provides substantial additional input to the managerial decision-making process and should lead to decisions and performance that are more sustainable. The framework relies on making the business case for sustainability. Though social and environmental performance are important by themselves, the business case argues that the corporate externalities do ultimately get internalised and thus have a substantial impact on corporate financial performance.
Linking sustainability actions to financial performance: examples from corporate external reporting
The framework describes the drivers and linkages of sustainability and financial performance and stresses the importance of appropriate measures to support it. How extensively have companies implemented the systems and measures to evaluate the impacts of sustainability initiatives and the associated trade-offs? In order to gain greater insight into whether companies have been making a clear business case for sustainability initiatives, we examined 20 external corporate reports dealing with sustainability issues.1 As we reviewed each company report, sustainability issues were first organised according to two possible dimensions: environment, health and safety (EH&S) elements, and social elements. We grouped the various elements in the following manner:
t EH&S elements relate to employee health and safety issues and to the companys
impacts on the environment.
1 These reports are often entitled corporate citizenship reports, sustainability reports or triplebottom-line reports. However, some environment, health and safety (EH&S) reports dealing with
sustainability issues were also examined, as numerous companies have incorporated social and economic issues in their EH&S reports.
JCC 9 Spring 2003
83
marc j. epstein and marie-jose roy t Social elements relate to employment characteristics (e.g. diversity of people em-
ployed, labour rights, training) and community relations (e.g. philanthropy, community involvement, job creation). Further, for each of the two categories (EH&S and social) we examined the reports to assess whether sustainability actions were integrated into business strategies through a clear connection to financial performance as proposed in the framework outlined in the previous section. Hence, we examined the type of information used to characterise each component of the framework. We classified the companies according to four possible levels of integration:
t Level 1: descriptive information not linked to financial performance t Level 2: quantified information not linked to financial performance t Level 3: monetised information on expenditure, partially linked to financial perfor-
mance
t Level 4: monetised information on the benefits of expenditure (i.e. measures of
benefits in addition to measures of costs), fully linked to financial performance Level 1 integration of social and environmental elements consists only of a description of the companys activities related to sustainability actions, sustainability performance or stakeholder reactions (see Table 1). Level 1 companies have not included quantified or monetised metrics for any of those elements in their reports. In contrast, level 2 companies have provided specific quantitative metrics to describe their sustainability actions. For example, a discussion about the implementation of an environmental management system (EMS) and how it can improve a companys environmental performance would be considered a level 1 report, whereas the provision of quantified evidence, such as emission reduction metrics, would be classified as a level 2 report. However, neither level provides a demonstrated link to financial performance as neither costs nor benefits are presented as evidence of such a connection. Level 3 integration is partially linked to financial performance as it offers some monetary information (i.e. expenditure) whereas level 4 companies have evaluated the effectiveness of social and environmental expenditures and have accounted both for costs and for benefits associated with sustainability actions. For example, information disclosed regarding expenditure aimed at reducing environmental impacts is considered to be level 3 reporting, whereas reports disclosing costs and associated benefits are classified as level 4 reports, as they show more complete integration into corporate financial performance, as proposed in our framework. As we examined corporate reports, we found that for the health and safety dimension and for the social dimension most companies have not attained level 4 integration where proper linkages between sustainability performance and financial performance are made explicit (see Table 2). However, there are many examples of some level 4 integration in the case of environmental issues. These results are not surprising, as for many years companies throughout the world have experienced pressure from regulators, communities and non-governmental organisations (NGOs) for increased environmental performance and reporting, but, even here, more needs to be done. The level 4 integration that does exist is typically limited to the direct benefits of expenditure on the company in terms of cost reduction rather than in terms of a broader (and admittedly more difficult) evaluation of indirect benefits to stakeholders (such as customers and society)benefits that ultimately do impact corporate profitability. Thus, sustainability actions often impact customers perceptions of corporate products and do impact purchase decisions and corporate revenues and profits. These impacts should also be included in level 4 integration.
84
JCC 9 Spring 2003
Level 1
Level 2
Level 3
Level 4
eh&s elements
Environment Description of an EMS Emissions (tonnes) Description of a waste-management programme Health and safety Description of a safety Number of lost days training programme due to injuries Description of a medical surveillance programme Number of EH&S professionals on staff Cost of safety programmes Cost of health programmes Cost savings of reduced number of lost days Compensation-cost savings (owing to reduced injuries) Regulatory violations (number) Cost of ISO 14001 certification Cost of recycling technology Compliance-cost avoidance Income from recycling
social elements
Community Description of a supplier diversity programme Description of a public consultation programme Community opinion survey Philanthropic contributions (monetary value) Goods and services purchased locally (monetary value) Increased revenues
Public incidents involving company (number)
Cost savings as a result of the shorter negotiating time with community (owing to positive community relations)
Employees Description of a diversity programme Description of an employee assistance programme Employee satisfaction survey Employee turnover (percentage) Cost of diversity programme Cost of employee assistance programme Increased employee productivity Increased revenues (through access to multicultural markets)
EMS = environmental management system ISO = International Organisation for Standardisation
Table 1 level of integration of environment, health and safety (eh&s) and social elements, by level of integration (type of information)
JCC 9 Spring 2003
85
Company report
ABB 2001
Sector Manufacturing Healthcare Energy
EH&S elements
environment health & safety
Social elements
community employees
Level 3 Level 4 Level 2 Level 2 Level 4 Level 4 Level 4 Level 4 Level 3
Baxter 2001
BC Hydro 2000
British Airways Airline 2001 Bristol-Myers Squibb 2001 Conoco 2001 Co-operative Bank 2001 Dow Chemical 2000 Ford Motor Company 2000 Fortum 2000
IBM 2001
Pharmaceutical Energy Banking Chemicals Automotive
Energy Computer Telecommunications Metal and mining Pharmaceutical Consumer products Mining Energy Energy Utilities
Level 3 Level 4 Level 3 Level 4 Level 4 Level 4 Level 3 Level 4 Level 4 Level 3 Level 4
Motorola 2001 Noranda 2001 Novo Nordisk 2001

P&G 2001
Placer Dome 2000 Shell 2000 Suncor Energy 2001 TransAlta 2001
United Utilities Utilities 2000
Table 2 sustainability elements and level of integration (see table 1 for a description of each level; see the appendix for details of the source reports)
86
JCC 9 Spring 2003
An example of level 4 integration is provided by IBM, which, in its Environment and Wellbeing Progress Report (2001 [Source 11; see the appendix]), gives estimates for environmental expenses and savings such as those associated with compliance cost avoidance, insurance savings, Superfund cost avoidance and site remediation efficiencies.2 For example, compliance cost avoidance includes consideration of the avoidance of penalties, legal fees and business interruption. The penalties and legal fees were estimated from reports of average penalties assessed by the US Environmental Protection Agency and the estimate for business interruption was based on the potential impact of a plant shutdown. Spill remediation cost avoidance is estimated from IBMs actual experience with remediation costs (IBM 2001 [Source 11]). Furthermore, in its Sustainability Report (2001 [Source 2]), Baxter International provides even more detailed information on its environmental costs and savings as it offers a three-year comparative environmental financial state-ment. Suncor Energy, a Canadian-based integrated energy company, has adopted life-cycle value assessment (LCVA) to enhance its ability to anticipate and respond to change, thus helping its decision-making and business planning (Suncor Energy 2001 [Source 18]: 53). LCVA provides the company and its employees with a systematic method of evaluating the economic, environmental and social impacts of a product or service through its entire life-cycle, from raw materials to final disposal in an integrated manner. LCVA was used to assess options for a heavy oil developmenta direct route for a pipeline over undisturbed terrain or a longer route along an existing right-of-way. After consideration of the long-term effects of using the longer pipeline route, the analysis indicated that the shorter route was preferable environmentally and economically. Encouraged by early experiences, Suncor has adopted a policy that mandates the use of LCVA and plans to expand the use of this method to all significant business decisions. A company-wide initiative is under way to train employees and to incorporate LCVA into the evaluation of development projects, the implementation of green purchasing policies and other business activities. We found fewer examples of level 4 integration in the case of health and safety performance. Evaluation of P&Gs Construction Safety Network programme is a good example of level 4 integration. Its programme includes professional safety managers from construction contractors on P&G sites. The network establishes and documents best work practices, delivers construction safety management training, provides a construction safety audit team, analyses incident information and monitors system results. P&G was able to make the business case for this programme: excellent results in the reduction of lost time from injury has saved US$26 million over comparable commercial insurance rates since inception of the programme in 1993 (P&G 2001 [Source 15]: 40). Conoco is another illustration of how a company can make a connection between safety performance, stakeholder reaction and the bottom line. In its report, Conoco (2001 [Source 6]) recognised that its reputation for safe operations was an important factor in the Czech governments decision to invite the company to participate in a joint venture with Agip and Shell that resulted in Conoco acquiring a 49% interest in the Czech Refining Company (Conoco 2001 [Source 6]: 42). In the reports we reviewed, we did not find any evidence of level 4 integration related to community relations or employee management. However, there is substantial evidence of level 3 integration as the amount of grants and donations given to charitable organisations comprises readily available information on companies, but the company and societal benefits of corporate philanthropy are not typically measured. We observed a growing trend to use opinion surveys as a means to quantify stakeholder reactions. For example, Dow Chemicals community relations surveys cover the
2 Information about Superfund is available at www.epa.gov/superfund/about.htm.
JCC 9 Spring 2003
87
spectrum of triple-bottom-line topicsranging from community economic impact, to public health and safety, to contributions spending and hiring practices: Our objective is nothing less than this: In each location where Dow has a significant presence, we want at least 80 percent of residents and leaders to agree that Dow is a good neighbour and a valuable member of the community (Dow Chemical 2000 [Source 8]: 8). The surveys are measurement instruments and effective stimulants for improvement. Each location is responsible for developing and implementing effective action plans based on the survey results. However, in the reports, impacts of these results are not explicitly linked to financial performance. We also observed that most companies are addressing diversity issues in their external reports. For example, Shell has formed a global diversity team to provide guidance and strategic direction for its business units. Shell provides self-assessment guides to help measure advances in three primary areas: cultural change, changes to management systems and shifts in the composition of the workforce (Shell 2000 [Source 17]). We did find many companies that disclose gender diversity data such as the percentage of women in senior executive positions. However, we have not found evidence of level 4 integration regarding diversity issues. Although in their respective reports companies have all acknowledged that diversity brings a richness of skills, ideas and talents and although several companies have programmes in place that promote diversity within their environment, none of them has explicitly linked diversity performance to financial performance by measuring how that performance has affected employee productivity or customer satisfaction. Nonetheless, some companies, such as BC Hydro (2000 [Source 3]), are taking a step in that direction and are beginning to explore linkages between different aspects of their human resources management plan (see Fig. 2), as described in our framework. Elements such as attract and retain talented people and investment in the growth and the development of people have been identified by BC Hydro as drivers of a highperformance work environment: Given the opportunities to attract new people to BC Hydro, we are working to diversify our workforce to reflect customers and communities we serve and to position ourselves as an employer of choice for visible minorities, Aboriginal peoples, women and persons with disabilities (BC Hydro 2000 [Source 3]: 7). By further analysing the linkages in the model, BC Hydro could eventually quantify the impact of attracting and retaining talented people on its work environment and ultimately link it to profitability. While examining the reports, we found that few companies have been making explicit connections between sustainability performance and financial performance. Obviously, there are limitations to using corporate reports as a source of information as they are often used as public relations tools. There is, indeed, doubt about whether these disclosures truly reflect the level of integration of sustainability issues into business processes or whether they overstate it. Extensive fieldwork has been undertaken to examine how environmental matters are integrated into company operations (Epstein 1996), and it has been found that much corporate disclosure is made with intentions to proceed in this public relations area rather than to achieve actual integration of these principles into company operations and day-to-day operational and capital decisions. Thus, if there is any bias, it is likely that the results presented here include both actual sustainability integration and company intentions to integrate sustainability into their operations. Though not without limitations, the details that companies disclose do provide information about the type of data that is available to managers as they set and implement their social and environmental objectives.
88
JCC 9 Spring 2003
Strong and capable leadership
Rigorous communication and engagement of people
Recognition and celebration of accomplishments
Clear business direction and values Strategic workforce planning
Investment in the growth and development of people
Highperformance work environment
Attract and retain talented people
Figure 2 bc hydros corporate human resources management plan

Source: BC Hydro 2000 (Source 3): 7
Moving toward a more advanced level of integration

As we reviewed the reports we found that some companies have been making explicit connections between their sustainability strategy and financial performance. However, this is the case mostly for environmental expenditure. Indeed, most companies have not made the business case for investments relating to health and safety and social performance. Managers can use the framework outlined in this paper to guide their efforts as they try to improve the decision-making process that relates to these other types of investment. The implementation of the framework involves four steps:
t Step 1: identify stakeholders t Step 2: map the corporate performance model t Step 3: develop the plan, systems and structure t Step 4: develop metrics and gather data
Identifying the stakeholders

As we proposed, in order to move toward a more advanced stage of sustainability integration and improve the decision-making process, the impacts of social and environmental actions must be monetised. However, as advocated in the framework, in order to monetise information, managers must first broadly identify their stakeholders, as the likely reactions of various stakeholders to company activities must be considered. Obviously, companies must customise their approach to address the most relevant company relationships. However, the identification should be broad, as this will allow
JCC 9 Spring 2003
89
a more complete measurement of costs and benefits. Indeed, in our survey, we found that level 4 companies all share in a broad identification of stakeholders where many stakeholders are integrated into the decision-making process.
Mapping the corporate performance model

Companies must map carefully and explicitly the corporate model and underlying assumptions motivating sustainability performance improvements. By assigning a strategic value to sustainability performance, managers are placing a bet that improved sustainability will lead to increased profits. For example, senior managers might believe that a given set of explicit management actions can lead to improved social and environmental performance, which will enhance the companys reputation and encourage customers to increase their purchases. This increased market share should then lead to increased long-term profitability. Alternatively, the desire for improved social and environmental performance may be driven by cost or liability reduction goals, long-term responsiveness to market trends or a variety of assumptions relating improved environmental and social performance to improved business performance. In its report, Shell (2000 [Source 17]) has mapped its corporate model (see Fig. 3). Shells profit-and-principles business model is designed to help the company achieve
Profits
Creates wealth
Shareholder value Wealth for society
benets
Attracts resources
Capital
Talent
Maximises value of business levers
Organisation of first choice for: Shareholders Employees Customers Society Those with whom we do business Reduce costs Create options Gain customers
Reduce risk
Is embedded in decision-making
actions
Sustainable development management framework
Builds on sustainable development principles
Develop natural capital
Promote economic prosperity
Develop social capital
Have core values

Figure 3 shells business case for sustainable development
Source: Shell 2000 (Source 17): 6
90
JCC 9 Spring 2003
the necessary integration and create the conditions for building long-term value and a strong brand in line with its business principles and societys expectations. As illustrated in this model, Shell believes that sustainability development principles may lead to cost reduction, help build customer loyalty, reduce risks and create options for the company. In turn, these elements should improve its relations with its various stakeholders, provide better access to capital and attract talent. Ultimately, these elements translate into increased shareholder value and wealth for society. The Shell model is a good example of how a model of sustainability can be customised to reflect a companys specific business context and goals. However, the model alone does not provide the specific guidance necessary for managers to make the necessary trade-offs and to take action. Indeed, the implementation of the model requires far more specificity of the causal relationships throughout the organisation. It also requires detailed plans, systems, structure and performance indicators to drive sustainability actions and to improve both sustainability and financial performance.
Developing plans, systems and structure

As evident in company reports, there are many types of plan that companies may devise to improve sustainability performance. However, it is a substantial challenge to translate sustainability strategy into action and drive it through complex organisations. Without appropriate organisational structures and management systems, corporations may not reap all the benefits associated with sustainability performance (Christman 2000; James 2000). The alignment of strategy, structure and management systems is essential for companies to co-ordinate activities and motivate employees toward implementing a sustainability strategy. Companies must make numerous choices when designing an organisational structure to support sustainability. These include choosing the appropriate flow of tasks, technology, information and human resources and often entail organising many activities and resources in various locations. Corporations must consider whether key resources and activities should be centralised or decentralised and decide on the balance between central control and business unit autonomy. Companies must implement appropriate management systems to identify and measure the drivers and causal relationships of sustainability. Management systems, such as product costing, capital budgeting, information and performance evaluation, must be designed and aligned to support the sustainability strategy. The sustainability performance of corporations, business units, facilities, teams, managers and all other employees should be measured and be a part of the way these actors are evaluated. Corporate initiatives are usually linked more powerfully to performance through the development of performance measures that are linked both to strategy and to rewards. Undoubtedly, if sustainability performance really is important, management must send a clear message to this effect, and incentives should be established to encourage fitting behaviour and initiatives. Many companies have developed performance evaluation systems to help measure the sustainability performance of business units and company facilities. In its effort to better manage its corporate activities on the economic, environmental and social dimension, Dow Chemical has introduced a sustainability index (Dow Chemical 2000 [Source 8]). The index comprises a global set of 21 measurements to evaluate business performance and monitor the progress of each global business against economic, environmental and social goals. Current metrics include economic profit, use of natural resources, emissions and waste, employee satisfaction and community perception data. The Sustainability Index is a tool that not only allows evaluation of the performance of
JCC 9 Spring 2003
91
businesses but also promotes accountability and creates awareness about sustainability issues. Finally, companies must develop mechanisms to access and share good practice and initiatives across the organisation. Feedback mechanisms and continuous learning are important parts of any learning organisation and in the implementation of systems to improve corporate sustainability. Managers must constantly use feedback to challenge their assumptions as to the viability of various decisions and to the long-term implications of these decisions for both the company and society. Thus, systems must be in place to support the feedback process.
Developing appropriate metrics, and data-gathering

An appropriate set of measures should be developed to test the basis of the corporate model. Thus, every component of the framework should be associated with specific performance indicators. As managers implement new programmes or invest in new technologies to improve their sustainability performance they must clearly define goals and targets and compare these with actual performance. In an attempt to measure stakeholder reactions, the UK-based Co-operative Bank has identified seven groups that can affect or are affected by corporate actions: shareholders, customers, staff and their families, suppliers, local communities, national and international society, and past and future generations of co-operators (Co-operative Bank 2001 [Source 7]). The Co-operative Bank has chosen specific indicators to assess whether it is improving its relations with each of these stakeholders. For example, to evaluate its performance with customers, The Co-operative Bank, through survey research, measures its customer satisfaction on quality and convenience of service. Table 3 proposes examples of performance metrics for the components of our framework. Different types of tools and techniques are available to measure the different aspects of the framework. For example, life-cycle assessments (LCAs) and social audits are powerful tools to help companies better understand the environmental and social characteristics of their business activities, thus providing valuable information regarding opportunities to improve social and environmental performance. As we mentioned, community panels and surveys are increasingly being used to measure and monitor stakeholder reactions and provide valuable feedback. For example, every year, British Airways asks its members of staff, worldwide, how they feel about working for the company. To ensure anonymity, the Employee Opinion Survey is designed and implemented by an independent, external, consultant. Results are provided at both the corporate level and the department level. Following the results, managers throughout the company set action plans and targets for the issues specific to their area (British Airways 2001 [Source 4]). Once metrics have been developed, data on these indicators must be collected and statistical analysis, such as multiple regression, should be performed to analyse and test the validity of the customised model as hypothesised. As companies evaluate the initial models performance, they will inevitably add links and drop others because there is not enough evidence of a strong relationship. This phase is important because it is here that a final model emerges, and the focus then shifts to applying the model to support decision-making.
Summary
These four steps will provide guidance to managers trying to make an empirical connection between sustainability actions, sustainability performance and financial perfor-
92
JCC 9 Spring 2003
Metric description Sustainability actions Investment in cleaner technologies Safety training programmes
ISO certification
Unit
$ hours percentage of facilities
Sustainability performance Emissions Women Hourly wages Stakeholder reaction Employee satisfaction (determined by survey) Grievances among unionised workforce Community opinion (determined by survey) Credit rating Financial performance Economic value added Return on investment Return on capital employed $ % %
Table 3 performance metrics
tonnes percentage in a senior position $
satisfaction score number survey score rating score
mance. However, companies can benefit from the framework without the use of rigorous statistical analysis. Indeed, companies can benefit from the framework as it guides their thinking about the links between their own metrics, even if they do not gather data to test the model fully. In addition to the improvement in analysis and output provided by use of the framework there are substantial process benefits to companies. The framework encourages managers to link their actions to overall corporate profitability, not simply to specific functional priorities. This provides a new level of awareness of the social and environmental impacts and a broader vision of the changing demands of customers, employees and other stakeholders. By raising awareness of these impacts throughout the organisation this process alone often provides substantial benefits to companies and to society (Epstein 1996).
Conclusions
Increasingly, companies are trying to better manage their responsibilities to a broader range of stakeholders for long-term value creation and are moving toward more internalisation and institutionalisation of social and environmental concerns around the concept of sustainable development. However, companies implementing sustainability initiatives face an important challenge as several aspects of the implementation process are key to its success.
JCC 9 Spring 2003
93
As we have suggested, managers need to better understand the implications of their decisions and the specific actions they can take to improve both sustainability and longterm financial performance. Some companies have already recognised the significant value that can be added by including the identification and measurement of social and environmental impacts into business decisions, particularly regarding environmental expenditure. Though improvements in sustainability are admittedly often driven by regulatory requirements, an increasing number of companies are noticing that decreased operating costs and increased revenues are frequently the result of such initiatives. However, most companies have not implemented the proper systems to evaluate the impacts of sustainable development initiatives on financial performance and the tradeoffs that ultimately must be made. To move toward a more advanced stage of sustainability integration and to improve the decision-making process, managers must carefully measure the drivers of performance and the linkages between them. They must develop a clear understanding of the broad set of impacts that are caused by corporate activities and understand these impacts on a broad set of stakeholders. Further, translating strategy into action requires appropriate systems, structures and measures that provide managers with information relating to their current and past performance as well as with an insight into their ability to improve their competitive position in the future. Only with such systems and measures can managers make dayto-day and long-term decisions while being aware of all risks and opportunities. This will also help them to define strategy, communicate a clear agenda in terms of expected social performance, accelerate feedback and learning and inspire loyalty among stakeholders. Indeed, it will provide managers with relevant information to quantify their efforts and evaluate their impacts on stakeholders and ultimate financial performance.
References
Berman, S.L., A.C. Wicks, S. Kotha and T.M. Jones (1999) Does Stakeholder Orientation Matter? The Relationship between Stakeholder Management Models and Firm Financial Performance, Academy of Management Journal 42.5: 488-506. Christman, P. (2000) Effects of Best Practices of Environmental Management on Cost Advantage: The Role of Complementary Assets, Academy of Management Journal 43.4: 663-80. Dowell, G., S. Hart and B. Yeung (2000) Do Corporate Global Environmental Standards Create or Destroy Value?, Management Science 46.8: 1,059-74. Epstein, M.J. (1996) Measuring Corporate Environmental Performance: Best Practices for Costing and Managing an Effective Environmental Strategy (Chicago: Irwin, in association with the Institute of Management Accountants). Epstein, M.J., and M.-J. Roy (2001) Sustainability in Action: Identifying and Measuring the Key Performance Drivers, Long Range Planning 34: 585-604. Epstein, M.J., and R.A. Westbrook (2001) Linking Actions to Profits in Strategic Decision Making, MIT Sloan Management Review, Spring 2001: 39-49. Griffin, J.J., and J.F. Mahon (1997) The Corporate Social Performance and Corporate Financial Performance Debate: Twenty-five Years of Incomparable Research, Business and Society 36.1 (March 1997): 5-31. Hillman, A.J., and G.D. Keim (2001) Shareholder Value, Stakeholder Management and Social Issues: Whats the Bottom Line?, Strategic Management Journal 22: 125-39. James Jr, H.S. (2000) Reinforcing Ethical Decision Making through Organisational Structure, Journal of Business Ethics 28: 43-58. Kaplan, R.S., and D.P. Norton (2000) The Strategy-Focused Organisation: How Balanced Scorecard Companies Thrive in the New Business Environment (Cambridge, MA: Harvard Business School Press). King, A., and M. Lenox (2002) Exploring the Locus of Profitable Pollution Reduction, Management Science 48.2: 289-99. McWilliams, A., and D. Siegel (2001) Corporate Social Responsibility: A Theory of the Firm, Academy of Management Review 26.1: 117-27.
94
JCC 9 Spring 2003
making the business case for sustainability Martin, R.L. (2002) The Virtue Matrix: Calculating the Return on Corporate Responsibility, Harvard Business Review, March 2002: 68-75. PricewaterhouseCoopers (2002) 2002 Sustainability Survey Report (www.pwcglobal.com/fas/pdfs/ sustainability%20survey%20report.pdf, August 2002). Roman, R.M., S. Hayibor and B.R. Agle (1999) The Relationship between Social and Financial Performance: Repainting a Portrait, Business and Society 38.1 (March 1999): 109-25. Rowley, T., and S. Berman (2000) A Brand New Brand of Corporate Social Performance, Business and Society 39.4 (December 2000): 397-418. Waddock, S.A., and S.B. Graves (1997) The Corporate Social PerformanceFinancial Performance Link, Strategic Management Journal 18.4: 303-19. WCED (World Commission on Environment and Development) (1987) Our Common Future (Oxford, UK: Oxford University Press).
Appendix: sources
No.
1
Company
ABB Group
Year
Report title
Electronic address
www.abb.com/global/abbzh/ abbzh251.nsf!OpenDatabase&db =/GLOBAL/ABBZH/abbzh258. nsf&v=4C0E&e=us&c=94B74478700 40FD9C1256BC7003DD28D www.baxter.com/sustainability/ index.html www.bchydro.com/rx_files/info/ info3297.pdf www.britishairways.com/ responsibility/docs/performing/ report_2001.pdf www.bms.com/sustainability/report/ data/sust01.pdf
2001 Sustainability Report 2000
Baxter International 2001 Sustainability Report 2000 BC Hydro British Airways 2000 Triple Bottom Line 2000 2001 Social and Environmental Report 2001: From the Ground Up 2001 Sustainability Progress Report 2001
Bristol-Myers Squibb Conoco
2001 Conoco Sustainable Growth www.sustainablegrowth.conoco. Report 2001: Look at our com/2001/Sustainable_Growth01. Progress pdf 2001 The Partnership Report 2000: Making our Mark 2000 Public Report 1999 www.co-operativebank.co.uk/ ethics/partnership2000/downloads/ partnership2000.pdf www.dow.com/webapps/lit/ litorder.asp?filepath=environment/ pdfs/noreg/233-00068.pdf&pdf=true www.ford.com/en/ourCompany/ corporateCitizenship/ buildingRelationships/ printable2000Report.htm www.fortum.com/binary.asp?page= 7110&file=attachments%5C2001% 5C5%5C46142750244868%5C18710 +Fortum+ymp%5FENG%2EPDF
The Co-operative Bank Dow Chemical
Ford Motor
2000 2000 Corporate Citizenship Report
10
Fortum
2000 Fortum in Society 2000
11
IBM
2001 Environment and Wellwww.ibm.com/ibm/environment/ being: Progress Report 2001 annual2001/ibmbroch.pdf
JCC 9 Spring 2003
95
No.
12
Company
Motorola
Year
Report title
Electronic address
www.motorola.com/EHS/ environment/reports/ 2000report.pdf www.noranda.com
2001 2000 Global Corporate Citizenship Report: Its about People and the Planet 2001 Sustainable Development Report 2000: Fulfilling our Commitments 2001 Environmental and Social Report 2000: Values in a Global Context 2001 P&G 2001 Sustainability Report
13
Noranda
14
Novo Nordisk
www.novonordisk.com/ sustainability/reports/ order_form.asp www.novonordisk.com/ sustainability/reports/ order_form.asp www.placerdome.com/ sustainability/downloads/reports/ 2000/dome.pdf www2.shell.com/home/media-en/ downloads/shell_report_2000.pdf
15
Procter & Gamble (P&G)
16
Placer Dome
2000 2000 Sustainability Report
17
Shell
2000 How do we Stand? People, Planet and Profits: The Shell Report 2000 2001 2001 Report on Sustainability: Our Journey toward Sustainable Development 2001 SD 2000 Sustainable Development Annual Report 2000 Social and Environmental Impact Report 2000
18
Suncor Energy
www.suncor.com/SiteAdmin/data/1/ rec_docs/126_2001report.pdf www.transalta.com/website2001/ tasdwebsite.nsf/AllDoc/A41BEC8A64 C6EA2F87256A1100763A5C! OpenDocument www.unitedutilities.com
19
TransAlta
20
United Utilities
96
JCC 9 Spring 2003
Resisting Corporate Citizenship

BusinessNGO Relations in Multi-stakeholder Environmental Partnerships
Eric C. Poncelet
CONCUR, Inc., USA
This paper addresses corporate citizenship as expressed by business participation in multi-stakeholder environmental partnerships. Based on ethnographic research performed in a European Union (EU) partnership in the mid-1990s, its goal is to explore why some environmental groups are resisting such voluntarist efforts. The paper describes several specific practices of resistance and then draws on an analysis of some of the sociohistorical differences characterising representatives from the business and environmental non-governmental organisation (NGO) sectors to explain them. The focus is on differences in the participants relative understandings of themselves, each other, environmental responsibility and multi-stakeholder proceedings. The findings suggest that these differences serve to reinforce intersectoral mistrust and power imbalances. The paper concludes that these partnerships are in the contradictory position of both inciting this resistance and presenting a means for overcoming it. The paper suggests ways by which corporations may approach multistakeholder partnerships to help diminish NGO reluctance but cautions that these changes may take time and that certain barriers to corporate citizenship efforts via partnerships will in all probability remain.
Corporate citizenship Environmental partnerships Stakeholder processes Collaboration Public participation Ethnography European Union
Eric Poncelet received his doctorate in anthropology (1998) from the University of North Carolina, where his research focused on the practice and products of multi-stakeholder environmental partnerships in the European Union and the USA. He now works as a mediator for CONCUR, Inc. His responsibilities include convening and facilitating multi-stakeholder environmental planning, management and dispute resolution processes involving the business community, governmental agencies and environmental groups.
u ! <
6021 Rockwell Street, Oakland, CA 94618, USA poncelet@earthlink.net www.concurinc.com
JCC 9 Spring 2003
97
eric c. poncelet
Introduction
The evolving environmental arena, corporate citizenship and non-governmental organisation resistance in todays environmental arena, growing threats of natural resource
and biodiversity depletion, air, soil and water pollution and human-induced global climate change are causing actors from all sectors of society to rethink their traditional approaches to the environment. Nowhere have these changes been greater than in the business sector. Here, companies are increasingly pursuing a slew of new strategies. They are promoting pollution prevention and clean manufacturing practices, materials reduction, recycling and re-use and resource conservation (Rondinelli and Berry 2000). They are integrating environmental concerns into broader business objectives and treating environmental issues as opportunities for competitive advantage (Hart 1997). Finally, they are sharing information with and opening up decision-making processes to environmentally concerned stakeholders from government and civil society (Lynn et al. 2000; Milliman and Feyerherm 1999). This turn toward improved stakeholder relations is not restricted to the environmental arena. Rather, it is part of a broader trend toward corporate citizenship that has gained momentum over the past decade. Corporate citizenship goes beyond the traditional corporate social responsibility goals of ensuring profitability and observing the law to include the additional objective of enhanc[ing] the quality of community life through active, participative, organised involvement (Tichy et al. 1997: 3; see also McIntosh et al. 1998; Rondinelli and Berry 2000). A corporate citizenship approach recognises that a liberal capitalist system brings with it certain social and environmental costs that place a burden on the health and wellbeing of communities. This approach also acknowledges that, unless something is done to rectify or mitigate this damage, this burden may eventually threaten long-term corporate performance. Two broad factors lie behind the recent interest in corporate citizenship. The first has to do with the marked rise in stature and power of corporations in society. With the end of the Cold War, the international power structure has shifted from its political and defence base toward one of market economies and business, the very domain of corporations (Baron 2000; Kulik 1999). During this period, the power of the welfare state has also steadily declined. Corresponding shifts toward liberalisation, privatisation and globalisation mean that corporations are increasingly assuming some of the social responsibilities formerly held by government while at the same time being held less and less accountable to nation-states (Tichy et al. 1997). The second factor concerns rising public expectations for corporations to play a greater role in ensuring societal wellbeing. Empowered by increasing access to information, citizens are demanding greater levels of inclusiveness, transparency and accountability from corporations (McIntosh et al. 1998; Rondinelli and Berry 2000). In the face of increasing numbers of stakeholders now capable of directly affecting business performance, businesses are paying more and more attention to matters of assuring stakeholder trust and maintaining a strong corporate image (Garone 1999; Kulik 1999; McIntosh et al. 1998). In the past, corporate citizenship actions were largely dominated by philanthropy (Garone 1999; Post et al. 1999). Today, corporate citizenship efforts are much more strategically oriented. For example, they are increasingly being managed to produce an economic return on investment (Baron 2000; McIntosh et al. 1998). They are also less concerned with the amount of money being contributed than with the end effects that their corporate citizenship actions are having on societal wellbeing (Kulik 1999). Finally, corporate citizenship efforts are increasingly being designed to affect stakeholders
98
JCC 9 Spring 2003
resisting corporate citizenship: businessngo relations in multi-stakeholder environmental partnerships
beyond the traditionally esteemed shareholder, employee and customer (Post et al. 1999; Wheeler and Sillanp 1997). One set of stakeholders that has grown in influence over the past few decades and that is increasingly drawing the attention of corporations is the environmental interest groups who lobby, educate, protest and otherwise act on behalf of a broad range of environmental concerns (Dalton 1994; Libby 1998). Corporations have attempted to reach out to environmental non-governmental organisations (NGOs) by making more information on corporate environmental performance available to them, by better involving them in the design of proposed development projects and by forming bilateraltype strategic alliances with them (Lynn et al. 2000; Milliman and Feyerherm 2000; Stafford and Hartman 1996). Despite these opportunities for improved contact and communication with the business sector, some environmental NGOs continue to resist such voluntarist efforts. The goal of this paper is to improve current understandings for why this is so. In particular, the paper explores this resistance by examining some of the differences characterising corporations and environmental NGOs with regard to their understandings of themselves, each other, social responsibility and processes of stakeholder collaboration.
Corporate citizenship and multi-stakeholder environmental partnerships

To address this goal, this paper examines corporate citizenship as expressed by business promotion of and participation in multi-stakeholder environmental partnerships. Broadly speaking, multi-stakeholder environmental partnerships are voluntary, jointlydefined activities and decision making processes among corporate, non-profit and agency organisations that aim to improve environmental quality or natural resource utilisation (Long and Arnold 1995: 6). Their participants are individuals or organisations that either have a role in producing or are in some way adversely affected by particular environmental issues of concern. Multi-stakeholder partnerships are one of several types of environmental collaboration increasingly being found in the environmental arena. Other forms include environmental mediation and dispute resolution processes (Weidner 1995), regulatory negotiations (Weber 1998), citizen advisory committees (Lynn and Busenberg 1995) and voluntary environmental agreements (Glasbergen 1998). Multi-stakeholder environmental partnerships are organised around problems of common concern and are used to produce and/or implement environmental management decisions. They can be initiated by any sector and are typically proactive in orientation. They involve face-to-face interaction, consensus-building and a joint investment of time, knowledge and reputation. Authority, responsibility and management functions are shared, as are liability, risk-taking, accountability and rewards (Hartman et al. 1999; Poncelet forthcoming; Sagawa and Segal 2000; Winer and Ray 1997). Multi-stakeholder environmental partnerships represent valuable opportunities for companies to both implement and manage corporate citizenship actions. Given the complex, multi-sectorial nature of todays pressing social and environmental problems, these partnerships offer businesses a way of pooling their resources, experience and expertise with those of environmental groups and public authorities to accomplish more than they could alone (Tschirhart 1997). At the same time, by placing corporations in closer touch with the concerns of these key stakeholders, these partnerships afford corporations a means of influencing and controlling these relations so as to reduce the potential for future uncertainties or conflict (Cardskadden and Lober 1998).
JCC 9 Spring 2003
99
eric c. poncelet
Research design
This paper draws on ethnographic research performed over a one-year period in 1994 95 with a case-study multi-stakeholder environmental partnership in the European Union (EU). This case derives from a larger collective case-study (Stake 1994: 237) research project aimed at improving current understandings of the practices and products of these types of partnership.1 The paper utilises this case study in a heuristic (George 1979: 51) fashion for the purpose of stimulating new thinking on similar forms of multi-stakeholder collaboration.
Case-study partnership
The case study in focus consisted of an EU-based partnership directed broadly toward fostering sustainable development in Europe. Entitled the European Union Partnership for Environmental Co-operation (EUPEC),2 this project was initiated on the heels of the 1992 United Nations Conference on Environment and Development (UNCED) by two individualsleaders from the European business and environmental communities, respectivelyas an attempt to give actors from corporations, NGOs and government a place to meet, talk and collaborate with regard to pressing environmental issues. Its official mission was (1) to stimulate dialogue and co-operation between all sectors involved in or affected by the implementation of the EUs Fifth Environmental Action Programme and (2) to serve as a model for future partnership initiatives at the national, regional and local levels. Its intention was to utilise multi-stakeholder collaboration for the purpose of producing policy recommendations with regard to issues of sustainable development. To date, EUPEC has addressed environmental concerns in such pertinent areas as transport, tourism, agriculture and environmental management. During the research period, the partnership comprised over 50 members representing multinational corporations, national-level and European-level environmental NGOs, subnational-level public authorities, trade unions, consulting firms and think-tanks. Structurally, the partnership consisted of a general assembly made up of all the partnerships members and an executive committee composed of equal numbers of participants from the NGO, business and governmental sectors. The general assembly met annually to decide on programme and budgetary issues and to elect the executive committee. The executive committee convened quarterly and was charged with co-ordinating the partnership. It was responsible, for instance, for organising informational seminars and partnership workshops and for setting up expert groups to address key issues of common concern. These expert groups were composed of interested EUPEC members as well as technical specialists brought in from the outside. Membership dues were the primary source of financial support for EUPEC, although funding from the European Commission was also significant. Participation was open to any organisation, but official membership required approval by the general assembly.
1 Three other case studies were included as part of the overall research project conducted between
1994 and 1999. These included a provincial-level partnership directed toward improving the water quality within a river basin in Belgium, a local-level partnership concentrated on preserving the biodiversity within a Belgian commune and a national-level partnership aimed at improving natural resource management practices in the USA (for a more complete analysis of all four case studies, see Poncelet forthcoming). 2 This is a pseudonym. As is typical of anthropological research, pseudonyms are used for the partnerships, organisations and individuals discussed in this paper. This is done to protect the identities of the participants and their organisations and to encourage their participation in the research.
100
JCC 9 Spring 2003
Theoretical orientation
To date, most studies of environmental collaboration have focused predominantly on the political and/or economic interests at stake in these processes. Many have also had the tendency to reduce behaviour in these settings to the rational pursuit of these interests (Healy 1997; Schwarz and Thompson 1990; Woodhill and Rling 1998). Stemming from a cultural anthropological orientation, this paper focuses instead on the role of meaning and, in particular, on the plethora of assumptions, values, perspectives and experiences that also influence and guide human behaviour (Geertz 1973; Peacock 1986; see also Crumley 2001; Milton 1993). Its goal is to highlight the different habitual ways of thinking about, talking about and acting with regard to environment issues that individual participants bring with them to collaborative processes. These culturally, socially and historically based influencesor sociohistorical differences, as they are referred to belowunderlie some of the interests being pursued. To the extent that they can affect peoples capacities to comprehend and identify with one another, sociohistorical differences also influence stakeholder communication and interaction in more direct ways (Hall 1995; Schwarz and Thompson 1990; Sagawa and Segal 2000; Zabusky 1995). In multi-stakeholder environmental partnerships, sociohistorical differences are apparent in the varying understandings of environmental problems brought by the diverse stakeholders, the divergent ways by which actors attach significance to these problems and the differing types of action they commonly pursue to resolve them. These conventional understandings, discourses and practices are historically derived, having been developed in past personal experience and institutional activity with regard to environmental issues and struggles. This institutional activity includes formal education, professional training and organisational background in the business, NGO or governmental sectors. The term sociohistorical is used here in lieu of other related analytical constructs based on the word culturesuch as political culture (Almond and Verba 1963) or psychocultural (Ross 1993)in an effort to avoid another pitfall associated with past studies on this topic. This is the tendency for things cultural to be treated in a decontextualised, ahistorical manner. With reference to Bourdieu (1977, 1990), this study attempts instead to ground its analysis of sociohistorical differences in the context of actual partnership practicesthat is, in the context of what participants actually say and do in these collaborative settings. The focus is on the influence that sociohistorical factors have on particular types of participant behaviour.
Methods
In the tradition of much work in cultural anthropology, my method for studying EUPEC was ethnographica method that emphasises the systematic description of social and cultural processes based on first-hand observation and participation.3 Data on the case study was collected via participant-observation of all partnership meetings held during the research period, the assemblage of textual materials produced by the partnership and its participant organisations and semi-structured interviews with a broad sample of
3 Ethnography is a qualitative research strategy that is characterised by the following features: a strong
emphasis on exploring the nature of particular social phenomena, rather than setting out to test hypotheses about them; a tendency to work primarily with unstructured data, that is, data that have not been coded at the point of data collection in terms of a closed set of analytic categories; investigation of a small number of cases, perhaps just one case, in detail; [and] analysis of data that involves explicit interpretations of the meanings and functions of human actions, the product of which mainly takes the form of verbal descriptions and explanations, with quantification and statistical analysis playing a subordinate role at most (Atkinson and Hammersley 1994: 248).
JCC 9 Spring 2003
101
eric c. poncelet
partners. The interviewees were strategically selected so as to adequately represent the business, environmental NGO and governmental sectors, the variation in size of the participating organisations and the range of level of participation in the partnership. The interviews were open-ended and designed to elicit naturally occurring speech on a range of topics including personal and organisational background, stakeholder collaboration in general and EUPEC specifically. Key meaning systems expressed by the partnership participants serve as the basis for this analysis. These meaning systems were inferred via the discourseanalytic technique of focusing on important metaphors, terms, repetitions, generalisations and evaluative statements (Price 1987; Quinn and Holland 1987). The basic analytical strategy was that typically used with ethnographic materials: analytic induction (Denzin 1989; Glaser and Strauss 1967). A total of 29 interviews lasting approximately 90 minutes each were conducted for the EUPEC case study. This analysis draws from 18 of these that were performed with members of the business and environmental NGO communities (see Table 1 for a general description of these business and NGO participant organisations). Three of the NGO interviews were with organisations that elected not to formally join the partnership.
Practices of resistance
In the EUPEC case study, environmental NGOs responded to corporate overtures in a variety of manners. Some groups were impressed by this new access to the business sector and quickly accepted the invitation to improve communications and relations. Others, however, resisted these corporate citizenship efforts and did so in three main ways. One practice was simply to refuse to participate in the partnership process at all. Although EUPEC was initiated by representatives from the business and the environmental NGO sectors, the initiative was more heavily weighted toward corporations during its first two years of operation. This was due in part to the refusal of several prominent environmental groups to join the partnership. When asked why they had chosen to forego participating, representatives from these organisations expressed either a lack of trust regarding the hidden agendas of the corporate participants or a commitment on their part to reject any form of collaboration with the business sector. A second strategy of NGO resistance involved the practice of foot dragging once in the partnership setting. In the EUPEC case study, several of the environmental groups who elected to join the partnership did so only reluctantly out of respect for the environmentalist co-founder. Once in, however, these actors generally pursued a waitand-see strategy of participation, revealing, again, their lack of confidence in the intentions of the other stakeholders. These groups seldom volunteered to participate in working groups, rarely introduced new ideas or initiated new projects and typically responded to business-led proposals with tepidity. The result was a slowdown in the pace of progress. A final strategy of environmental NGO resistance concerned the practice of engaging in conflict with other partners in the collaborative setting. Although this was not a frequent occurrence in EUPEC, participants from the NGO and business sectors would periodically line up on opposite sides of an issue. Conflict occurred, for instance, around organisational issues, such as over who would hold what offices on the executive committee. It also took place over certain topical issues. Perhaps the most common of these was the recurring debate over regulatory reform, where corporate representatives were generally in favour of relaxing existing EU and national regulatory standards, whereas environmental NGOs largely opposed such roll-backs.
102
JCC 9 Spring 2003
Focus Business sector* Consumer products Agriculture, oil and gas, light metals, petrochemicals Federation of European-based industrial corporations Petroleum, petrochemicals Cleaning products Chemicals, plastics, hydrocarbons, energy, consumer specialities Chemicals, agrochemicals Medical products, industrial enzymes NGO sector
Scope/office location
US-based company, European office
Europe-based company Europe-based organisation Europe-based company Europe-based company

US-based, company, European office
US-based, company, European office
Europe-based company
Federation of European environmental groups European-level organisation Nature conservation Federation of environmental groups Federation of environmental groups concerning land-use planning Research on global environmental issues Nature conservation Association of national-level environmental groups, with a focus on economic and international development, community health Directed campaigns on global environmental issues Sustainable society International organisation, European office National-level organisation in Europe National-level organisation in Europe
International organisation, European office National-level organisation in Europe International organisation, European office
International organisation, European office
European-level organisation
* All of the companies represented were large in size, ranging from 10,000100,000 employees. The NGOs represented ranged in size from small organisations with limited staff and no membership to large organisations with dozens of member groups, thousands of members and millions of contributors.
Table 1 organisations from the business and non-governmental organisation (ngo) sectors represented in the european union partnership for environmental co-operation (eupec; see footnote 2 in text) interviews
JCC 9 Spring 2003
103
eric c. poncelet
The role of sociohistorical differences

To help explain why environmental groups pursued these practices of resistance, let us now explore four general sociohistorical differences distinguishing some of the EUPEC NGO representatives from their business counterparts. These include differences in their self-conceptualisations, perceptions of each other, views on environmental responsibility and approaches to multi-stakeholder collaborative processes.
Notions of self
The first area of difference involves disparities between environmental NGO and business participants self-representations. In general, representatives from both sectors described themselves along two key lines: as leaders in the environmental domain and as contributors to the public good. Where they differed was with regard to how they defined these specific positions (see Table 2).
Representatives from corporations see themselves as:
t t
Representatives from environmental NGOs see themselves as:

t t t
Leaders in the environmental domain Voluntarily committed to good environmental practice Willing to co-operate with other stakeholders Contributors to the public good Promoting an improved quality of life (economic, social and environmental) Serving customer needs Obeying laws Minimising environmental degradation Good citizens
Leaders in the environmental domain Catalysts for environmental action Watchdogs preventing environmental degradation by business or government Representatives of environmental interests Contributing to the public good Promoting a healthy environment Promoting a well-managed economy
t t t t
t t
t t t t
Table 2 representatives from the european union partnership for environmental co-operation (eupec; see footnote 2 in text) from business and environmental non-governmental organisations (ngos): sociohistorical differences involving self-conceptualisation
Sources: interviews
In the interviews, environmentalists commonly referred to themselves as key catalysts for environmental action or watchdogs preventing business or governmental destruction of the environment. They portrayed their organisations as the principal venues from which citizens have been able to oppose environmental exploitation in the past and as the only true representatives of the natural environments own interests. To this leadership role, these NGO representatives also attached a primary concern for public, rather than private, welfare. They described their driving motivation as the quest not for material self-interest but for a healthier environment benefiting everyone. They did not, however, see themselves as anti-business. On the contrary, these participants generally depicted themselves as champions of a well-managed economy. As summed up by one environmental NGO participant:
104
JCC 9 Spring 2003
The environmental movement is not talking against technology but for better technology. Were not talking against the market but for a functioning marketno monopolies [and] a high level of competition. Were not [asking] for a state-controlled system but for a state framework which sets the proper incentives for environmental development (Source 1).
Although the corporate representatives taking part in EUPEC did acknowledge that industry continues to have both good guys and bad guys in the environmental domain, these participants nonetheless typically portrayed themselves as trend-setters in the struggle for better environmental quality. They attributed their own leadership role to such factors as their voluntary commitment to good environmental management practices and their increased willingness to co-operate with other important stakeholders in the environmental arena. Like their environmentalist counterparts, these corporate representatives also ascribed this leadership position to their role as key contributors to the public good and, in particular, as providers of an improved quality of life. In their case, however, the contributions were to economic and social as well as environmental wellbeing. Citing their service to customer needs, their obedience before the law, their proactive attempts to minimise environmental degradation and their increasing openness and honesty vis-vis the public, several of these participants described themselves as good citizens in society.
Perceptions of each other

In their descriptions of each other, EUPEC environmental group and business participants revealed greater contrasts (for a summary, see Table 3). Although some NGO representatives lauded recent improvements within certain sectors of industry, others continued to portray most corporations as isolated in their thinking, reluctant to alter their ways of doing things, insolent in their approach to the natural environment and arrogant in the lack of attention that they traditionally have paid toward the general public. Most of these environmentalists viewed corporations as still dominated by an overriding sense of economic self-interest.
Corporations view environmental NGOs as:
t
Environmental NGOs view corporations as:

t t t
Uninformed regarding how many corporations currently approach environmental issues Driven by emotions and idealism rather than science Often extreme and narrow-minded in their views
Isolated in their thinking Reluctant to change their behaviour Disrespectful in their approach to the environment Arrogant with regard to the opinions of the general public Driven primarily by economic self-interest
Table 3 representatives from the european union partnership for environmental co-operation (eupec; see footnote 2 in text) from business and environmental nongovernmental organisations (ngos): sociohistorical differences involving perceptions of one another
Sources: interviews
JCC 9 Spring 2003
105
eric c. poncelet
Business participants, in contrast, commonly described environmentalists as well intentioned but nevertheless relatively ignorant with regard to how many businesses are now approaching environmental issues. As expressed by one business participant:
Actually, most NGOs dont really understand anymore what is going on in companies, where the debate is now in terms of the details of how to manage the environment in the companythe management systems, life-cycle assessment, product and process improvement. With rare exceptions, most NGOs have no technical competence in these issues (Source 2).
These corporate representatives criticised environmental groups for other reasons as well, such as for their proclivity to organise environmental campaigns based on emotion and idealism rather than good science, for their propensity to take extremist positions and for often failing to adequately contextualise their environmental campaigns. In their comments, these business participants often took a rather paternalistic position toward environmentalists, describing them as in need of education, guidance and even a dose of professionalism from the business sector.
Views on environmental responsibility

The third broad sociohistorical difference concerns a disparity in the two sectors general views of who bears what responsibility for todays environmental problems. When addressing this issue, representatives from corporations and environmental NGOs generally called for greater amounts of shared responsibility. Where they differed was with regard to how they defined this catchphrase and, in particular, which of the two words in the phrase they chose to emphasise (see Table 4).
Corporations call for shared responsibility*: Corporations believe:
t
Environmental NGOs call for shared responsibility*: Environmental NGOs believe:

t
The onus of responsibility should be shared by all of societys stakeholders (especially the consuming public). The business community has made great steps in pollution reduction.
Environmental responsibility should not be shared equally. The onus of responsibility should fall primarily on those who benefit the most from polluting (i.e. business). Consumers are less responsible than are producers.
t t
* Note the difference in emphasis in the same phrase from one group to the other.
Table 4 representatives from the european union partnership for environmental co-operation (eupec; see footnote 2 in text) from business and environmental non-governmental organisations (ngos): sociohistorical differences involving perceptions of environmental responsibility
Sources: interviews
For many of the business representatives participating in EUPEC, resolving current environmental problems required a better sharing of responsibility among all of societys stakeholders. In particular, these participants called for a relative shift in the onus of responsibility away from business and toward the consuming public. This view was grounded in a general perception expressed by certain of the EUPEC corporate participants that industry has already made great accomplishments in reducing many forms
106
JCC 9 Spring 2003
of pollution. One business representative made this point by distinguishing between the responsibility that car-makers and car drivers have in improving fuel efficiency:
Industry cant solve everything. Each individual should do his [or her] part in the game. [Industry] can make cars which consume maybe 5 litres or 3 litres per 100 kilometres. But if you see how some people drive their cars, at a certain moment when they stop their car, they are using 3035 litres . . . If a guy is driving 180 kilometres per hour, . . . he is consuming much moreten times, one hundred times more. So, that is the big issue. It is the individual. We can work, and we have done work; industry has done an enormous effort. We have solved 8090% of pollution, the companies who have been taking care (Source 3).
These business representatives believed that it is now time for individual consumers to own up to their role as precipitators of environmental degradation. Although many of the NGO representatives participating in EUPEC also called for a greater commitment toward shared responsibility, their emphasis was not on how this responsibility must be shared but on the necessity for social actors to take responsibility for their environmental actions in the first place. For these environmentalists, shared responsibility did not mean equal responsibility. Some actors were seen to be more responsible than others for todays environmental dilemmas, and these NGO participants generally held industry to be the most responsible of all. As stated by one environmentalist:
The most important players . . . for implementing sustainability are the companies, . . . because they are the biggest offenders against sustainability. They are the most important players because they have to change (Source 4).
Although these NGO participants admitted the environmental responsibilities of consumers, they rejected the idea that this in any way absolved corporations of their own rightful obligations. This was apparent in the comments of another environmental NGO representative, who claimed that the business version of shared responsibility:
Plays a wrong music to me. It means, for instance, that the consumer carries the same responsibility as the producer, which means that the consumer must inform himself [or herself ], that he [or she] must learn about the items which are good for the environment, and that he [or she] must pay as much as anybody wants him [or her] to pay for it. That is not shared responsibility (Source 5).
The environmental NGO argument was that those societal actors who have benefited the most from past exploitative environmental practices should bare the brunt of paying for the rectification of harm done.
Approaches to multi-stakeholder environmental partnerships

The final sociohistorical difference explored here concerns the diverging manners by which representatives from the business and environmental NGO sectors approached multi-stakeholder environmental partnerships. This difference manifested itself in two main ways: with regard to how participants perceived the relationship between multistakeholder collaboration and environmental regulations, and with regard to how participants defined the primary utility of such partnerships (see Table 5). In their discussions on the topic of collaborative processes, EUPEC representatives from corporations and environmental groups commonly described multi-stakeholder partnerships as voluntary-based approaches to environmental problem-solving. Where the two sectors diverged was with regard to their perspectives on how these partnerships relate to existing regulatory regimes. Members from the business sector, for instance, tended to view stakeholder processes as potential replacements for environmental regulations. These participants described prescriptive regulations as highly inefficient and
JCC 9 Spring 2003
107
eric c. poncelet
Corporations
Environmental NGOs
Relationship between multi-stakeholder partnerships and environmental regulations

t t
Regulations are inefficient. Partnerships are potential replacements for prescriptive regulations.
Regulations are valuable, effective and necessary. t Partnerships are supplements to regulations. t Self-regulation is not enough.
t
Benefits of participating in multi-stakeholder environmental partnerships They serve as a management tool: For managing relations with the environmental community t For launching green products and avoiding costly boycotts t For educating environmental policy actors
t
They are an opportunity to influence business practices. t They are an opportunity for NGOs to participate in environmental decisionmaking. t They contribute to more participatory, transparent and democratic processes of governance.
t
Drawbacks of participating in multi-stakeholder environmental partnerships

t
There is a risk of divulging sensitive information.
They are potential tools of co-optation. They restrict the capacity of NGOs to act autonomously and radically outside of the partnership setting. t They place participating NGOs at risk of losing legitimacy in the environmental community and among the financially contributing public.
t t
Table 5 representatives from the european union partnership for environmental co-operation (eupec; see footnote 2 in text) from business and environmental non-governmental organisations (ngos): sociohistorical differences involving perspectives on multi-stakeholder environmental partnerships
Sources: interviews
therefore unduly burdensome to corporations trying to compete in the global marketplace. They argued that, if partnerships are capable of producing multi-sectoral agreements that result in overall environmental improvements, this obviates the need for any corresponding regulatory rules or controls. The EUPEC environmental NGO representatives, in contrast, tended to view multistakeholder partnerships more as supplements to rather than replacements of a valuable and, indeed, necessary regulatory system. They saw environmental regulations as the most effective way of ensuring environment protection, and most considered the promotion of effective environmental legislation to be among their principal organisational goals. These NGO participants were not at all convinced by industrys arguments of the superiority of self-regulation, especially when this was predicated on the good will of corporations with less than stellar environmental histories. The second manner by which this final sociohistorical difference was manifested concerned the relative benefits and detriments that the two sectors commonly attributed
108
JCC 9 Spring 2003
to multi-stakeholder environmental partnerships. Some environmental NGO representatives, for instance, regarded these partnerships as opportunities to directly influence actors from business and government. Even more saw the primary benefit to be that of securing NGO participation in environmental decision-making processes. These participants spoke of inclusive, collaborative partnerships as contributing to more participatory, transparent and democratic processes of governance in the EU. With regard to the detriments, most NGO representatives perceived the major drawback of multi-stakeholder partnerships as stemming from their potential as a tool for business or governmental co-optation of environmental groups. Several participants expressed particular concern that participating in multi-stakeholder partnerships might compromise their capacity to act autonomously and radically outside of the partnership setting. Moreover, having their names appear alongside those of corporations, some of which might not have the best environmental reputations, might cause these participating NGOs to lose status within the environmental NGO community and, even more importantly, in the eyes of the financially contributing public. The corporate representatives in EUPEC, in contrast, generally found the major benefit of partnerships to stem from the utility that collaborative processes present as management tools. In particular, these participants saw partnerships as a way of keeping their fingers on the collective pulse of the environmental community. They described partnerships such as the EUPEC initiative as early warning signals or as a means of pre-emptive damage control helpful in avoiding costly boycotts. They also portrayed partnerships as a way of using the prestige and knowledge of environmental groups to foster their green images and to promote and launch their products. Finally, they depicted partnerships as a means for educating environmental NGOs and other policy actors so as to ensure the production of better environmental policies in the future. As to the possible detriments of participating in multi-stakeholder environmental partnerships, EUPEC business representatives appeared less concerned than their environmentalist counterparts. Some pointed toward the risk of divulging sensitive industry information and having this used against them, but most found the process to be a sound, if not imperative, business investment.
Discussion: enduring mistrust and imbalances of power

These sociohistorical differences suggest that two major factors underlie NGO resistance to corporate voluntarist efforts in multi-stakeholder environmental partnerships. The first concerns a pervasive mistrust that representatives of the NGO and business sectors have for each other. Many environmentalists continue to view corporations as arrogant, narrowly focused and materially self-interested organisations that remain insensitive to the will of the general public. Many corporations, likewise, still see environmental groups as under-informed, single-issue pressure groups unwilling to see beyond their own environmental special interests. These views are historically deep-rooted, having been reinforced by decades of poor communication and antagonistic relations between the two sectors. They also differ markedly from the two sectors common self-representations as environmental leaders working for the public good. The consequence of these discrepancies is that, when environmentalists and businesspeople harbouring these preconceptions find themselves with the opportunity to work with one another, they will be predisposed to misconstrue each others messages, however well intentioned. The problem is that these misunderstandings may then lead these actors to act toward each other in contrary ways, further reinforcing the negative
JCC 9 Spring 2003
109
eric c. poncelet
images that they have of each other and exacerbating what can quickly become a positive feedback loop of mistrust and ill will. The second factor underlying this NGO resistance pertains to the enduring power differentials characterising the relations between the two sectors. These power asymmetries derive from a variety of sources. They stem, for instance, from the sizeable advantages that firms have in terms of economic capital (i.e. access to material resources). Beyond the economic realm, participation in multi-stakeholder partnerships also enables corporations to make gains in the area of cultural or symbolic capital as well (Bourdieu 1990). This cultural or symbolic capital is evident in the authority and prestige that corporations achieve by increasing their knowledge or expertise with regard to particular environmental issues; it is also evident in the public credibility that comes from participating in voluntary, proactive environmental problem-solving processes.4 The sociohistorical differences described above point toward three additional dynamics that may also be seen as exacerbating these power differentials. The first of these relates to the common desires of both corporations and environmental groups to be valued for their roles in addressing and resolving contemporary environmental problems. This competition for societal leadership, however, plays out differently in the economic and environmental domains. In the economic sphere, corporations have long been the dominant actors. Some environmental groups are now increasingly attempting to incorporate economic factors into their policy recommendations (Hajer 1995), but this has done little to diminish the status of corporations as the key economic players in society. In the environmental arena, however, things are not so simple. The advantages that environmental groups have traditionally held here, due in large part to their success in mobilising public opinion, are no longer as clear (Butt Philip and Porter 1997; Dalton 1994; Hagland 1991). Business strategies involving increased participation in multi-stakeholder environmental partnerships, not to mention the adoption of prevention-based environmental management practices, has led to an increase in the status of corporations in the environmental policy domain (Coen 1997; McCormick 1997; Switzer 1994). The problem for environmental groups is that the gains in environmental standing that corporations are achieving via these partnerships are being made possible in part by the legitimacy that environmental NGOs bring to such collaborative endeavours. NGO resistance to participating in these partnerships thus serves as an effort by environmental groups to maintain their influence on environmental policy affairs. The second dynamic affecting power differentials between the two sectors concerns the issue of environmental responsibility. Environmental groups have long benefited from the moral authority brought by depicting industrial corporations as the primary culprits of contemporary environmental problems (Dalton 1994). Co-operating with these corporations in environmental partnerships, however, undermines this position. By partnering with business in this way, environmental groups, by definition, assume some of the responsibility for adequately resolving the specific environmental problems being addressed. This sharing of obligations fits nicely with the business conceptualisation of environmental responsibility, but it departs from the NGO view that business should be held more responsible than should civil society. In resisting these partnerships, NGOs are protesting the fact that, although they are being asked to share in the
4 This notion of power draws from Bourdieus notion of field (Bourdieu 1983, 1985; see also Bourdieu
and Wacquant 1992). This analytical perspective views actors as operating within an environmental field defined by the relationships that exist among them and that are structured according to the distribution of capital, both economic and symbolic, maintained by them. Individuals are seen as continually, though not necessarily consciously, acting in consideration of preserving the value of their capital in this field. As such, they may also be seen as producing and reproducing both the field and its structure.
110
JCC 9 Spring 2003
responsibility for remedying past environmental damage done, they are not being asked to share in the power of corporate decision-making that they believe leads to these problems in the first place. The third way by which power asymmetries between corporations and environmental groups are being aggravated is tied to the two sectors respective interpretations of and approaches to multi-stakeholder partnerships. To the extent that environmental NGOs view these partnerships as deregulatory, they see them as threats to the very regulatory structures that they deem necessary to ensure a healthy environment within a market capitalist system and that have been their primary means of environmental influence in the past. Moreover, in evaluating the benefits and drawbacks of multi-stakeholder partnerships, environmental NGOs recognise that the problems that these partnerships pose for the environmental NGO community are exactly the advantages being gained by business. Multi-stakeholder partnerships, among their many other qualities, are tools of control, and that is exactly how many management-driven corporations strategically attempt to utilise them (Amy 1987; OLeary 1995). NGOs understand that by participating in these collaborative initiatives they are subjecting themselves to the control and domination of more powerful actors that would much prefer to learn from and deal with environmentalists in a co-operative setting than suffer their attacks in the media or their protests in the streets (Nader 1995). For many environmental NGOs, this forfeiture of their capacity to act radically and mobilise public opinion is far too heavy a price to pay.
Conclusions: the implications for corporate citizenship

Although environmental groups are by no means the only stakeholders reluctant to participate in multi-stakeholder environmental partnerships, given the preceding analysis it is likely that NGO resistance to corporate voluntarist efforts along these lines will continue in the future. Two main reasons support this prediction. The first concerns the fact that cultural change is often a slow process. It may take quite a while for some of the sociohistorically based (mis)conceptualisations underlying the mistrust between environmental NGOs and corporations to evolve and permit greater confidence between the two sectors. The second reason stems from the fact that the structural imbalances underlying this resistance remain firmly in place. Multi-stakeholder partnerships pose little threat to the privileged position of corporations in modern society. Nor do these partnerships appear likely to undermine the prevailing system of market capitalism on which these power asymmetries are in part based (Blowers 1998; Poncelet 2001). Whatever the underlying cause, this resistance remains problematic for businesses pursuing corporate citizenship strategies because it undermines or at least limits their claims of being socially responsible actors. Overcoming this resistance, however, is no simple matter. One potential avenue for altering this dynamic, interestingly enough, involves the use of multi-stakeholder environmental partnerships themselves. The irony is that, although these partnerships serve to produce and reinforce this resistance, they may also represent one of the best means for overcoming it. This is because these partnerships provide one of the few occasions that diverse stakeholders have for meeting and interacting in a non-adversarial setting. They constitute opportunities for social learning that may result in personal transformations in terms of how these actors think about themselves, each other, environmental problems and the modes of environmental action that they have pursued to date (Daniels and Walker 2001; Forester 1996; Maarleveld and Dangbgnon 1999). These transformations, then, open the door for the recreation of more trusting relations.
JCC 9 Spring 2003
111
eric c. poncelet
For environmental partnerships to play this positive role of helping to reconcile differences between the business and environmental NGO sectors, environmental groups will have to perceive them as doing more than just reproducing the status quo. There are actions that corporations can take to encourage this shift. For one, corporations must value these processes as more than mere management tools. Partnerships are greater than simple opportunities for corporate social responsiveness; they are also a means by which firms can show their commitments toward corporate social responsibility. Corporations can also promote the increased use of partnerships, or collaborative processes more generally, to make policy decisions both within their organisations and within society in general. Such collaborative processes would have to be organised, however, so as to permit greater actual power sharing among business, civil society and government. They would also have to satisfy the requirements of being inclusive, transparent and egalitarian in their treatment of civil society. If conditions such as these can effectively be met, it is likely that environmental groups would be more willing to participate. Any corporate efforts in this direction, nevertheless, will face certain challenges. Primary among these is the economic ethic that still predominates in business (Buchholz 1998). Corporate desires to do the right thing are often sacrificed when they come up against long-term economic interests, and, to date, moral arguments alone have not been enough to dramatically shift corporate social behaviour (Danley 1994; Fombrun 1997). Moreover, it is far from certain that the period of enlightened capitalism (Tichy et al. 1997: 2) or caring capitalism (Fombrun 1997: 40) that some analysts are predicting will ever actually become systematic, given capitalisms ethic of self-interested accumulation (OConnor 1994). Economic and environmental interests are not always at odds, however, and it is precisely in this zone of potential economicecological winwins that multi-stakeholder environmental partnerships are currently making their greatest contributions (Blowers 1998; Hajer 1995; Poncelet 2002). Corporate claims to good citizenship in this arena will depend on how well such winwin actions actually protect the social and environmental foundations on which contemporary society depends, and the environmental community will no doubt be watching.
References
Almond, G., and S. Verba (1963) The Civic Culture (Princeton, NJ: Princeton University Press). Amy, D.J. (1987) The Politics of Environmental Mediation (New York: Columbia University Press). Atkinson, P., and M. Hammersley (1994) Ethnography and Participant Observation, in N. Denzin and Y. Lincoln (eds.), Handbook of Qualitative Research (Thousand Oaks, CA: Sage): 248-61. Baron, D.P. (2000) Business and its Environment (Upper Saddle River, NJ: Prentice Hall, 3rd edn). Blowers, A. (1998) Power, Participation and Partnership: The Limits of Co-operative Environmental Management, in P. Glasbergen (ed.), Co-operative Environmental Governance: PublicPrivate Agreements as a Policy Strategy (Dordrecht, Netherlands: Kluwer Academic): 229-50. Bourdieu, P. (1977) Outline of a Theory of Practice (Cambridge, UK: Cambridge University Press). (1983) The Field of Cultural Production, or: The Economic World Reversed, Poetics 12: 311-56. (1985) The Genesis of the Concepts of Habitus and Field , Sociocriticism 2.2: 11-24. (1990) The Logic of Practice (Palo Alto, CA: Stanford University Press). Bourdieu, P., and L.J.D. Wacquant (1992) An Invitation to Reflexive Sociology (Cambridge, UK: Polity Press). Buchholz, R.A. (1998) Principles of Environmental Management: The Greening of Business (Upper Saddle River, NJ: Prentice Hall, 2nd edn). Butt Philip, A., and M. Porter (1997) Business Alliance, Network Construction and Agenda Definition: Recent Development in Lobbying Activities in Brussels and Strasbourg, paper presented at the Fifth Biennial International Conference of the European Community Studies Association, Seattle, WA, 29 May1 June 1997.
112
JCC 9 Spring 2003
resisting corporate citizenship: businessngo relations in multi-stakeholder environmental partnerships Cardskadden, H., and D.J. Lober (1998) Environmental Stakeholder Management as Business Strategy: The Case of the Corporate Wildlife Habitat Enhancement Programme, Journal of Environmental Management 52: 183-202. Coen, D. (1997) The Evolution of the Large Firm as a Political Actor in the European Union, Journal of European Public Policy 4.1: 91-108. Crumley, C.L. (ed.) (2001) New Directions in Anthropology and Environment: Intersections (Walnut Creek, CA: AltaMira Press). Dalton, R.J. (1994) The Green Rainbow: Environmental Groups in Western Europe (New Haven, CT: Yale University Press). Daniels, S.E., and G.B. Walker (2001) Working through Environmental Conflict: The Collaborative Learning Approach (Westport, CT: Praeger). Danley, J.R. (1994) The Role of the Modern Corporation in a Free Society (Notre Dame, IN: University of Notre Dame Press). Denzin, N.K. (1989) The Research Act: A Theoretical Introduction to Sociological Methods (Englewood Cliffs, NJ: Prentice Hall). Fombrun, C.J. (1997) Three Pillars of Corporate Citizenship: Ethics, Social Benefit, Profitability, in N. Tichy, A.R. McGill and L. St Clair (eds.), Corporate Global Citizenship: Doing Business in the Public Eye (San Francisco: New Lexington Press): 27-42. Forester, J. (1996) Beyond Dialogue to Transformative Learning: How Deliberative Rituals Encourage Political Judgement in Community Planning Processes, Poznan Studies in the Philosophy of the Sciences and the Humanities 46: 295-333. Garone, S.J. (1999) The Link between Corporate Citizenship and Financial Performance (New York: The Conference Board). Geertz, C. (1973) The Interpretation of Culture (New York: Basic Books). George, A.L. (1979) Case Studies and Theory Development: The Method of Structured, Focused Comparison, in P.G. Lauren (ed.), Diplomacy: New Approaches to History, Theory and Policy (New York: The Free Press): 43-68. Glasbergen, P. (ed.) (1998) Co-operative Environmental Governance: PublicPrivate Agreements as a Policy Strategy (Dordrecht, Netherlands: Kluwer Academic). Glaser, B.G., and A.L. Strauss (1967) The Discovery of Grounded Theory (Chicago: Aldine). Hagland, P. (1991) Environmental Policy, in L. Hurwitz and C. Lequesne (eds.), The State of the European Community: Policies, Institutions and Debates in the Transition Years (Boulder, CO: Lynne Rienner): 259-72. Hajer, M. (1995) The Politics of Environmental Discourse: Ecological Modernisation and the Policy Process (Oxford, UK: Clarendon Press). Hall, W. (1995) Managing Cultures: Making Strategic Relationships Work (Chichester, UK: John Wiley). Hart, S.L. (1997) Beyond Greening: Strategies for a Sustainable World, Harvard Business Review 75.1: 66-76. Hartman, C., P.S. Hoffman and E. Stafford (1999) Partnerships: A Path to Sustainability, Business Strategy and the Environment 8: 255-66. Healey, P. (1997) Collaborative Planning: Shaping Places in Fragmented Societies (Vancouver: University of British Columbia Press). Kulik, T. (1999) The Expanding Parameters of Global Corporate Citizenship (New York: The Conference Board). Libby, R.T. (1998) Eco-wars: Political Campaigns and Social Movements (New York: Columbia University Press). Long, F.J., and M.B. Arnold (1995) The Power of Environmental Partnerships (Fort Worth, TX: Harcourt Brace). Lynn, F.M., and G.J. Busenberg (1995) Citizen Advisory Committees and Environmental Policy: What We Know, Whats Left to Discover, Risk Analysis 15.2: 147-62. Lynn, F.M., N. Cohen and C. Chess (2000) The Chemical Industrys Community Advisory Panels: Whats Been Their Impact?, Environmental Science and Technology 34.10: 1881-86. Maarleveld, M., and C. Dangbgnon (1999) Managing Natural Resources: A Social Learning Perspective, Agriculture and Human Values 16: 267-80. McCormick, J. (1997) Imbalanced Interests: The Role of Interest Groups in the Making of European Union Environmental Policy, paper presented at the Fifth Biennial European Community Studies Association Conference, Seattle, WA, 29 May1 June 1997. McIntosh, M., D. Leipziger, K. Jones and G. Coleman (1998) Corporate Citizenship: Successful Strategies for Responsible Companies (London: Financial Times Professional). Milliman, J., and A. Feyerherm (1999) Responding to Community Expectations on Corporate Environmental Performance: How to Develop Effective Citizen Advisory Panels, Corporate Environmental Strategy 6.2: 164-74.
JCC 9 Spring 2003
113
eric c. poncelet Milton, K. (ed.) (1993) Environmentalism: The View from Anthropology (London: Routledge). Nader, L. (1995) Civilisation and its Negotiations, in P. Caplan (ed.), Understanding Disputes: The Politics of Argument (Oxford, UK: Berg): 39-64. OConnor, M. (1994) Liberate, Accumulateand Bust?, in M. OConnor (ed.), Is Capitalism Sustainable? Political Economy and the Politics of Ecology (New York: Guilford Press): 1-21. OLeary, R. (1995) Environmental Mediation: What do we know and how do we know it?, in J.W. Blackburn and W.M. Bruce (eds.), Mediating Environmental Conflicts: Theory and Practice (Westport, CT: Quorum Books): 17-35. Peacock, J.L. (1986) The Anthropological Lens: Harsh Light, Soft Focus (Cambridge, UK: Cambridge University Press). Poncelet, E.C. (2001) A Kiss Here and a Kiss There: Conflict and Collaboration in Environmental Partnerships, Environmental Management 27.1: 13-25. (2002) In Search of the WinWin: Possibilities and Limitations of Multistakeholder Environmental Partnerships, in T. de Bruijn and A. Tukker (eds.), Partnership and Leadership: Building Alliances for a Sustainable Future (Dordrecht, Netherlands: Kluwer Academic). (forthcoming) Partnering for the Environment: Multistakeholder Collaboration in a Changing World (Lanham, MD: Rowman & Littlefield). Post, J.E., A.T. Lawrence and J. Weber (1999) Business and Society: Corporate Strategy, Public Policy, Ethics (Boston, MA: McGrawHill, 9th edn). Price, L. (1987) Ecuadorian Illness Stories: Cultural Knowledge in Natural Discourse, in D. Holland and N. Quinn (eds.), Cultural Models in Language and Thought (Cambridge, UK: Cambridge University Press): 313-42. Quinn, N., and D. Holland (1987) Culture and Cognition, in D. Holland and N. Quinn (eds.), Cultural Models in Language and Thought (Cambridge, UK: Cambridge University Press): 3-40. Rondinelli, D.A., and M.A. Berry (2000) Environmental Citizenship in Multinational Corporations: Social Responsibility and Sustainable Development, European Management Journal 18.1: 70-84. Ross, M.H. (1993) The Culture of Conflict: Interpretations and Interests in Comparative Perspective (New Haven, CT: Yale University Press). Sagawa, S., and E. Segal (2000) Common Interest, Common Good: Creating Value through Business and Social Sector Partnerships (Boston, MA: Harvard Business School Press). Schwarz, M., and M. Thompson (1990) Divided We Stand: Redefining Politics, Technology and Social Choice (Philadelphia, PA: University of Pennsylvania Press). Stafford, E.R., and C.L. Hartman (1996) Green Alliances: Strategic Relations between Businesses and Environmental Groups, Business Horizons 39 (March/April 1996): 50-59. Stake, R.E. (1994) Case Studies, in N. Denzin and Y. Lincoln (eds.), Handbook of Qualitative Research (Thousand Oaks, CA: Sage): 236-47. Switzer, J.V. (1994) Environmental Politics: Domestic and Global Dimensions (New York: St Martins Press). Tichy, N.M., A.R. McGill and L. St Clair (1997) Introduction: Corporate Global CitizenshipWhy Now?, in N. Tichy, A.R. McGill and L. St Clair (eds.), Corporate Global Citizenship: Doing Business in the Public Eye (San Francisco: New Lexington Press): 1-22. Tschirhart, M. (1997) A Three Sector Model of Community Service: The Alliance of Business, Government and Non-profit Organisations, in N. Tichy, A.R. McGill and L. St Clair (eds.), Corporate Global Citizenship: Doing Business in the Public Eye (San Francisco: New Lexington Press): 62-74. Weber, E.P. (1998) Successful Collaboration: Negotiating Effective Regulations, Environment 40.9: 1015, 32-37. Weidner, H. (1995) Mediation as Policy Instrument for Resolving Environmental Disputes, in B. Dente (ed.), Environmental Policy in Search of New Instruments (Dordrecht, Netherlands: Kluwer Academic): 159-95. Wheeler, D., and M. Sillanp (1997) The Stakeholder Corporation: The Body Shop Blueprint for Maximising Stakeholder Value (London: Pitman). Winer, M., and K. Ray (1997) Collaboration Handbook: Creating, Sustaining and Enjoying the Journey (St Paul, MN: Amherst H. Wilder Foundation). Woodhill, J., and N.G. Rling (1998) The Second Wing of the Eagle: The Human Dimension in Learning our Way to More Sustainable Futures, in N. Rling and M. Wagemakers (eds.), Facilitating Sustainable Agriculture: Participatory Learning and Adaptive Management in Times of Environmental Uncertainty (Cambridge, UK: Cambridge University Press): 46-72. Zabusky, S.E. (1995) Launching Europe: An Ethnography of European Co-operation in Space Science (Princeton, NJ: Princeton University Press).
114
JCC 9 Spring 2003
Sources
Source 1 Interview with a representative from the European Union Partnership for Environmental Co-operation (EUPEC; see footnote 2 in text), from a large international-level environmental organisation focused on issues of economic and international development and community health, 3 October 1995. Source 2 Interview with a representative from the European Union Partnership for Environmental Co-operation (EUPEC; see footnote 2 in text), from a large US-based consumer products company, 3 August 1995. Source 3 Interview with a representative from the European Union Partnership for Environmental Co-operation (EUPEC; see footnote 2 in text), from a large European-based company focused on agriculture, oil and gas, light metals, and petrochemicals, 23 August 1995. Source 4 Interview with a representative from the European Union Partnership for Environmental Co-operation (EUPEC; see footnote 2 in text), from a small European-based environmental organisation focused on sustainability issues, 3 August 1995. Source 5 Interview with a representative from the European Union Partnership for Environmental Co-operation (EUPEC; see footnote 2 in text), from a European-based federation of environmental organisations, 24 August 1995.
JCC 9 Spring 2003
115
Towards a Process View of the Business Case for Sustainable Development

Lessons from the Experience at BP and Shell
Christopher Perceval
Said Business School, Oxford, UK
This paper seeks to complement empirical studies that have been done in researching the business case for sustainable development. Drawing on the process approach within strategic management, the paper offers a way of viewing the role of sustainable development within corporate strategy that overcomes the shortcomings of the stakeholdershareholder dichotomy. A qualitative research approach discerns different management strategies taken towards integrating sustainable development objectives into the business model at two multinational companies, BP and Shell. Although both companies are recognised for what is traditionally viewed as a responsible attitude to society and the environment, Shell integrates sustainable development thinking more deeply into its structures, systems and processes. By taking a predominantly risk view of sustainable development, BP avoids potential damage that may result from emphasising sustainable development thinking at the expense of business value. The future experience of the two companies will be beneficial to others in the industry, who may learn the appropriate level of embeddedness to attribute to sustainable development thinking in adding value. A deeper analysis of processes that are currently in place at each company fits with Simon Zadeks call for further research to establish a greater understanding of what corporate social responsibility management really means in practice.
Business case Sustainable development Corporate strategy Corporate social responsibility BP Shell Stakeholder theory Social and environmental policies
Christopher Perceval (BSc Hons. Dunelm, MSc Hons Oxon) works in the Risk Management team at Agip (UK) Limited. He has worked for the United Nations Global Compact, as a consultant for Business in the Community and has specialist knowledge of multinational corporate impact in the leastdeveloped countries, especially in Mongolia and Madagascar, where he has conducted field research. As part of a MSc/DPhil programme at Oxford Universitys Said Business School, he conducted a study into the social and environmental policies of BP and Shell.
u !
Said Business School, University of Oxford, Park End Street, Oxford OX1 IHP, UK christopher.perceval@agipuk.agip.it
JCC 9 Spring 2003
117
christopher perceval
Developing sustainability
ethics, values and principles, corporate social responsibility (csr),
corporate citizenship and concepts of sustainability have been increasingly recognised by companies as important in making their business acceptable to society. In recent years a business case for sustainable development, the concept that adopting business policies that are aligned with the objectives of sustainable development can increase business value, has emerged. The business case is therefore something of a deviation from traditional thinking on how to increase business value. In offering a direction for refining the concept of the business case, this paper offers an insight into some of the, usually overlooked, diversity that is likely to lie behind different logics represented in the concept of the business case. The term sustainable development emerged out of the United Nations Conference on Environment and Development (UNCED) in 1987 and was quickly seized on for the various objectives of the growing number of non-governmental organisations (NGOs). By 2002, it was estimated that there were 30,000 NGOs working around the world for concerns directly or indirectly linked to issues of sustainable development (Shell International 2002). The work of these NGOs is often oriented towards rebalancing the predominantly neoliberal economic focus that international institutions such as the World Bank and the International Monetary Fund (IMF) are viewed to have taken (J. Williamson 1998). Although most companies are concerned with sustaining profitability over the long term and would be happy to allow NGOs to emerge from the impetus inherent within a free market (Friedman 1970), players in the energy industry have especially strong reason to develop strategies that consider the sustainability of their activities. The most fundamental reason is perhaps that, without principles to sustain a physical environment in which the company may operate, it becomes impossible to make a profit. Prahalad and Hart (2001) state that, using current technologies, it would take three planet Earths to sustain current levels of corporate impact if Western aspirations were attained by all nations. In avoiding the tragedy of the global commons, and as a way of improving their international scope for commercial growth, multinational corporations (MNCs) such as BP plc and Shell International recognise the strategic value in addressing contradictions inherent to international economic development. The sustainable business value matrix (Table 1), which has been developed by the consultancy company SustainAbility (2001), displays different ways in which sustainable development dimensions correspond to various business performance indicators. Undergirding the matrix format are a number of research exercises, which, although they have varying degrees of rigour and consistency, together offer a logical framework for understanding the business case behind sustainable development thinking in corporate strategising (SustainAbility 2001). Our research approach complements this empirical approach and progresses scientific understanding of the business case in a way that also highlights the intangible aspects of alternative CSR approaches. Identification of management practices and processes that distinguish strategic thinking at BP and Shell lay the foundations for a prescriptive CSR strategy and should be exemplary to other MNCs who may learn to adopt different approaches according to their specific culture, competences and requirements. The scientific value of research approaches such as this one inevitably offer a more watertight management tool to decision-makers than do the large number of how to guidelines that fail to place sufficient emphasis on learning processes occurring within specific industries.
118
JCC 9 Spring 2003
Governance process focus product focus development human rights workplace conditions business partners
General
Environmental
Socioeconomic
Engagement nonbusiness partners
ethics, values and principles
accounttripleability and bottom-line transparency commitment
JCC 9 Spring 2003

Moderate positive impact Moderate positive impact Moderate positive impact Weak positive impact Moderate positive impact Weak positive impact Weak positive impact Negative or no impact Negative or no impact Moderate positive impact Weak positive impact Strong positive impact Strong positive impact Weak positive impact Moderate positive impact Moderate positive impact Weak positive impact Weak positive impact Strong positive impact Strong positive impact Weak positive impact Strong positive impact Weak positive impact Moderate positive impact Negative or no impact Weak positive impact Weak positive impact Negative or no impact Weak positive impact Moderate positive impact Moderate positive impact Moderate positive impact Moderate positive impact Strong positive impact Moderate positive impact Strong positive impact Moderate positive impact Moderate positive impact Moderate positive impact Weak positive impact Moderate positive impact Strong positive impact Weak positive impact Weak positive impact Weak positive impact Strong positive impact Negative or no impact Moderate positive impact Negative or no impact Moderate positive impact Negative or no impact Weak positive impact Moderate positive impact Strong positive impact Strong positive impact Strong positive impact Strong positive impact Negative or no impact Weak positive impact Weak positive impact Strong positive impact Strong positive impact Negative or no impact Strong positive impact Negative or no impact Moderate positive impact Negative or no impact Moderate positive impact Weak positive impact Weak positive impact
Financial performance
Negative or no impact Moderate positive impact Negative or no impact Negative or no impact
shareholder value
Weak positive impact
revenue
Negative or no impact
operational efficiency
Moderate positive impact
access to capital
Financial drivers
Weak positive impact Strong positive impact Weak positive impact
customer attraction
brand value and reputation
Strong positive impact
human and intellectual capital
risk profile
Moderate positive impact Weak positive impact Strong positive impact
Note: bold typeface indicates strong evidence for the stated level of impact; a medium typeface indicates weak evidence for the stated level of impact.
innovation
Table 1 example of a sustainable business value matrix
Source: adapted from SustainAbility 2001
licence to operate
119
Corporate social responsibility and corporate strategy

MNCs tend to recognise a responsibility to operate within a framework of certain moral values, which are considered to exist at a universal level (e.g. Kant 1873). A popular version of what those should be, which is observed by many companies, is enshrined in the Global Sullivan Principles (emerging from a consequentialist view of business ethics)1 and forms a generic code of conduct similar to the UN Global Compact.2 In his famous article, The Social Responsibility of Business is to Increase its Profits, Friedman (1970) sets out the logic for interpreting the role of managers (agents hired by the ownersthat is, shareholdersof the company) as being to increase the performance of the company. According to this thesis, to manage the business for the sake of anyone else, such as stakeholder groups that Evan Freeman (1984) recognises, would be irresponsible, because it would be akin to the manager appropriating resources for illegitimate use. The difficulty with Friedmans suggestions is in distinguishing whether he would have managers working for the interests or desires of shareholders. Friedmans assumption that ethical practice is often at the expense of profits leads to the illogical assumption that the financial interests and non-financial desires of how the company should act are distinct and contradictory. Although it is true that they may diverge, this is not always the case. As the business value matrix illustrates, there may be good reason to believe that business performance is improved by considering measurements that are not purely financial. As such, stakeholder engagement could form part of the shareholder model if it were to translate directly into improved sales and profitability (Roman et al. 1999; Waddock and Graves 1997).3 The stakeholder theory also has problems. Elaine Sternberg says that, at a theoretical level, managers responsibility is removed by a vacuous notion of universal accountability: By substituting a vague notion of balancing interests for a measurable standard of financial performance, stakeholder theory frees business managers to pursue their own ends (2000: 52). The problem with linking either the shareholder view or a pragmatic stakeholder view (unlike Freemans) of the firm to business ethics is that they are so different that they are difficult to reconcile (Wicks 1998). However, the emergent discipline of strategic management makes two significant contributions to help overcome these philosophical difficulties. First, strategic management works towards developing a generally accepted view of the firm. This is a necessary prerequisite for any view of what a companys social and environmental responsibilities are, or should be. Currently, the most convincing model of the firm exists in Oliver Williamsons (1980) transaction cost economics, which views the boundaries of the firm as being defined by transactions between employers and employees and between buyers and suppliers. Rodin (2002) points out that, when abstracted from the interests of owners, managers, employees and customers, the corporation is left without interests, and, without interests, the concept of responsibility cannot be applied. In other words, the companys interests as a financial institution and responsibilities in the wider social arena must be balanced carefully by strategy-makers if the firm is to be acceptable to stakeholders and shareholders alike. This type of view is made possible through sociological perspectives of the firm, which have gained speed
1 www.globalsullivanprinciples.org 2 www.unglobalcompact.org 3 Rodin (2002) explains that a large company such as BP, which is held by large pension funds and is
therefore likely to be held by a significantly large section of society, is by definition answerable to society (who are shareholders).
120
JCC 9 Spring 2003
towards a process view of the business case for sustainable development
with the process view of strategy (Pettigrew 1992) and have built on foundational strategic management works by Barnard (1962) and Penrose (1959). Second, strategic management debate has refined two distinct academic orientations over what the place of activities allied to the objectives of sustainable development are within a companys broader business objectives. Broadly, a US perspective holds that ethics is useful as a modifying influence on the strategic management process (Gilbert 2002) and clearly distinguishes the responsibilities of a company from its activities that are associated with ethics.4 Within European strategic management literature the two concepts are considered to be intertwined, and it appears that business firms are broadening their list of salient decision criteria beyond the narrow considerations suggested by Friedman (Whetten et al. 2002: 403). Through the lens of strategic management thinking, both the US and the European perspectives provide insight to the processual significance that sustainable development thinking among policy-makers may bring. The processual element is seen no more clearly than in the link between the practices of policy-makers and policy implementation.
Methodology
Cook and Deakin (1999) review the methodology that may be used in linking CSR with corporate financial performance, saying that there is a problem with the halo effect in self-response-format CSR measures, whereby there is a tendency for CSR ratings to be overly correlated with prior financial performance. They explain the difficulties that arise in different measurements available for financial performance (e.g. they may be either investor-based or accounting-based) as well as the difficulties in defining corporate social responsibilities (because these change over time with the emergence of different issues). After reviewing 25 years of research and 50 published articles, Griffin and Mahon (1997) find that there still appears to be no consensus on whether there is, in fact, a relationship between the two constructs. In this paper, therefore, I aim to combine a positivist approach, which assumes that truth is measurable and scientifically testable, with a qualitative study of the strategy process. It fits with Elkingtons (2001) call for more research into extreme cases, and seeks to offer a contribution on how each of the two case-study companies fit the calls for social and environmental responsibility into their business framework. An iterative approach was taken in which managerial perspectives (from one-on-one interviews and public speeches made available on the main company websites) and company literature were analysed in coming to a view of what working models each of the two companies have. Wheeler et al. (2000) combined the classification of ten strategic management schools developed by Mintzberg et al. (1990) with the JohnsonScholes (1999) model and concluded that, whichever school (or combination) of strategic management approaches are considered, there are five fundamental manifestations of sustainable development strategies. In this study, the five factors that Wheeler et al. identified are considered as a baseline for comparing BP and Shell. Research of the two companies commenced in October 2001, and evolved over the course of the following nine months of study, taking account of new developments, in order to discern subtle differences in the companies social and environmental policies. BP and Shell were chosen as the two companies for study because they appear similar in so many ways. The companies headquarters are based in London and both enjoy similar cultural and institutional contexts. They were founded at the turn of the 19th
4 As such, it is allied to a shareholder view of the firm, but it also holds an important place for ethics.
JCC 9 Spring 2003
121
century, and corporate histories of both have been intertwined while competing in the exploration and production of fossil fuels over the years. Both companies employ over 100,000 people and have a presence in over 100 countries. Furthermore, in a bid for more sustainable approaches to business during recent years, both Shell and BP have defined themselves as energy companies instead of oil companies. It was anticipated that the strongest contrasts between the two companies non-financial policies would become clear through researching their core values and principles, the way in which those are embedded within the different corporate governance structures, their different attitudes to risk and opportunity and their different reporting procedures. A total of four one-hour interviews were conducted with individuals whose activities were considered to be influential in the policy formulation process. It was not possible to interview direct counterparts in each company because job titles are defined differently within the structure of each company. Nick Butler, Group Chief Policy Advisor at BP, and Ged Davis, Vice President of Shell International, were interviewed, and they recommended further interviews with David Rice, Policy Director of BP, and with Mark Wade, Manager of Sustainable Development, respectively (see Sources 14 at the end of this paper). All interviews were face-to-face and recorded to audiotape except for the one with Mark Wade, which was done over the telephone and recorded on an answering machine. Semi-structured interviews were conducted, and each individual was encouraged to express the issues that they thought were crucial in the policy process. They were asked to represent the company view on most matters, although it was recognised that their level of seniority often meant that their own views were fundamental to the company view. The sustainable business value matrix was used as a starting point in discussion with each interviewee, and certain key themes were discussed with all interviewees. These included:
t How are corporate social responsibility, sustainability and sustainable development
considered with regard to overall social and environmental policy?

t What are the formal and informal mechanisms by which policy is formulated? What
contribution do stakeholders make in this process?

t What sort of feedback is there from the field? t How does the implementation process follow from policy?
Interview content tended to differ quite markedly, mainly because the specific job description of counterparts in each company meant that they did not share exactly the same area of expertise. A future study would perhaps try to secure access to a wider sample of interviewees in order to discern the company view. However, access restrictions are likely to make a wider sample unfeasible, so perhaps a more structured interview approach would be an alternative. Using a more structured approach, policylevel differences could be made more explicit, but it would not capture the personal element involved in the translation of policy to its practical implementation. The interviews were audiotaped and then transcribed before the dialogue was coded to reflect common themes and marked differences in perspective (Glasser and Strauss 1967). The findings were triangulated (Jick 1979) with data found in company reports and literature available on the company websites and contributed to the assessment of policy implementation. Evidence of implemented policies was further triangulated using data from media, third parties and legal proceedings against each company to gauge the perceived and real validity of their claims. Website toolslinks, telephone numbers and feedback forumswere also tested to measure their efficacy (defined in terms of a quick response time and accuracy of information provided).
122
JCC 9 Spring 2003
Overall, by iterating between inductive methods (interviews and coding) and deductive methods (analysing published information by and about the companies), the approach fits with Weicks (1995) description of theorising and was a grounded approach (Glasser and Strauss 1967). It is unconstrained by wrongly assumed categories that might arise in empirical research but liberated only to the extent of referring induction back to visible aspects of strategy. It is therefore an appropriate methodology for a refined conceptualisation of how business value might be affected by sustainable development thinking.
Strategies: convergence on difference

The role of social and environmental policy process in sustainable development thinking
As a direct result of its market niche and history, each company recognises the strategic advantage in being distinct from the other. For both, the calls and demands of society have forced it to adapt its policies to account for social and environmental concerns. Both companies therefore aspire to meet international regulations and voluntary codes of conduct for social and environmental performance, but they also recognise that there is a strategic advantage in being seen to do the right thing beyond compliance. As a way of displaying this commitment, Shell launched its Tell Shell campaign, an international advertising campaign devoted to displaying its transparency and openness;5 BP shares the same objective, and as part of its recognition of its changed boundaries of responsibility has redefined itself as Beyond Petroleum (Nicholson 2002). Following Wheeler et al.s (2000) consideration of different theories of strategic management, the following five constructs were considered to be essential if they were to manifest sustainable development strategies:
Construct 1: policies must contain concepts of sustainability; for example, environmental quality and social justice feature alongside economic factors in a companys mission and values statement.
Environmental and social concerns are mentioned in the equivalent of mission and values statements by both BP and Shell.6 Both companies exemplify their commitment to thinking about sustainability at a global level with their focus on renewables and through their commitment to the UK Emissions Trading Scheme (DEFRA 2002). Shell uses the term sustainability to refer both to issues relating to sustainable development and to issues that relate to the companys long-term competitive advantage and claims that the two constructs are co-dependent (Source 3). However, they are not always viewed as mutually inclusive; the concept of sustainable competitive advantage is driven by the need to create value, whereas the concept of sustainable development is driven by the needs of future generations quite independent of value. By comparison, BP views sustainability in terms of the companys overriding objective, which is to make business acceptable to society and therefore feasible over the long term. Certain responsibilities are recognised as crucial if the company is to meet this aim, the most common construct of which is encoded in its policy statement as a commitment to being a force for good wherever it operates (BP 2002).
5 www.shell.com/tellshell 6 www.bp.com/company_overview/business_pol/index.asp; www.shell.com
JCC 9 Spring 2003
123
Construct 2: the company should have systems for linking its future competitive advantage and economic success with the environmental and social values of its customers and other stakeholders.
This construct is future-oriented. Although both companies have systems in place for anticipating how their strategy to sustainable development should be geared according to social and environmental expectations, those systems reveal fundamental differences in terms of underlying conceptual models. Shell uses global business scenarios to develop the capacity to think through the implications of unexpected changes and to foresee contingencies (Source 3). Thinking in terms of scenarios is practised in business units and geographical locations as well as at the headquarters and represents a core competency that pervades the group. BP, in contrast, appears to have a more opaque system in place to link future competitive advantage and economic success with environmental and social values of customers and other stakeholders. Scenario planning is not used, because to change the business strategy according to expectations of future outcomes is seen as being too risky (Source 2). However, no alternative way of integrating social and environmental concerns into planning for the future was suggested. The role of stakeholders in providing an indication of what expectations for the future might be was also a confused issue for BP. Stakeholder influence in policy formulation remains ambiguous, and, while the main role is expressed as being to bring to life BPs commitment to being a force for good when implementing policy, there was found to be little consistency between different locations.7
Construct 3: the company should have systems for detecting, assimilating and responding to economic, environmental and social pressures and other important cultural influences.
Both BP and Shell consider responsiveness to society to be of fundamental importance to their licence to operate (Sources 14). A wide array of systems are in place for both companies to detect, assimilate and respond to those influences. At Shell, stakeholder engagement and the possible role for non-business partners in verification represent a commitment to being highly responsive. When tested, the website tool for feedback in the Tell Shell campaign was effective and responsive.8 BPs official policy is dedicated to radical openness, and relationships form a core construct for the companys ability to be responsive. However, when tested, the true extent of transparency appeared doubtful; location reports were unobtainable because of wrong location contact details and feedback mechanisms were unresponsive.9 The strong emphasis by both companies on PR is not merely corporate greenwash. Rather, being seen to be doing the right thing and doing the right thing together form a mature and effective system via which to fully respond to social and environmental pressures. Shells Tell Shell campaign is exemplary in this respect.
Construct 4: the company should develop systems, structures and routines in business units and divisions that reflect the importance of environmental and social as well as economic criteria to the corporation.
Systems, structures and routines that reflect the importance of the triple bottom line are embedded within the corporate governance structures of both companies and extend
7 www.bp.com/location_rep 8 www.euapps.shell.com/TellShell Society and Multinationals What is the Appropriate Role of
Multinationals in the 21st Century?

9 Out of ten randomly picked locations, four of the contact details provided on the BP website were
wrong; two did not answer when phoned during the home-country office hours; and, out of the four that did work, only one provided location report information (www.bp.com In Your Area Locations AZ).
124
JCC 9 Spring 2003
to business units and divisions in both cases. Responsibility for social and environmental issues is delegated to units and businesses at both BP and Shell. Geographical location provides a useful organising principle for BP, but, although the systems used at each location were intended to be similar, internal reports revealed that they were subtly different. Location reports were an area to which BP was committed to improving during 2002 (Source 2), but did not meet its objective of making the majority of the reports publicly available. Shell places emphasis on both geographical location and business stream in a governance system that delegates responsibility for social and environmental policies more fully to the business unit. Sustainable development thinking is profoundly embedded within the culture and structure of the group of businesses. At BP, in contrast, social and environmental policies and the philosophy behind sustainable development remain in the most part a concern for headquarters. This was reaffirmed by a random selection of business unit sites. For example, a comparison of BPs Natural Gas Liquids website10 refers to www.bp.com/alive for a picture of the companys philosophy, whereas Shells Liquefied Petroleum Gas website11 offers examples of how sustainable development thinking has transformed and influenced its business units activities. David Rice mentioned in interview the benefits of natural gas for its low carbon content (Source 2), but the fact that such benefits are not mentioned on the business website suggests that changes in the natural gas portfolio is based on financial value assessment rather than on a triple-bottom-line assessment. Both BP and Shell have routines in place to encourage sustainable development thinking. Social and environmental awareness is a prerequisite for promotion at BP. Shells ability to embed sustainable development thinking more deeply into company routines means that it is more fully integrated. Timothy English (2001), Global Strategy Manager, described Shells working model for how to pursue the objectives of sustainable development in the particular case of Shell Chemicals (Fig. 1) to be of fundamental value and
Delivering bulk petrochemicals

Minimising our footprint
Creating our future
Providing the lowest total delivered cost
Building social capital
Sustaining value chains
To large industrial customers
Through simpler structures
Figure 1 operating model of sustainable development at shell chemicals: delivering bulk petrochemicals to large industrial customers through simpler structures providing the lowest total delivered cost
Source: English 2001
10 www.ngl.com 11 www.shellgaslpg.com
JCC 9 Spring 2003
125
believes that there is therefore an advantage in integrating sustainable development thinking at a business-stream level and into processes at the business-unit level. BPs policy-makers view the business case as emerging from the innovation, creativity and entrepreneurship that may emerge from sustainable development thinking. This is exemplified by the Helios Awards scheme, which was initiated in 2001 as a way to encourage entrepreneurial ideas from individuals within the group, for projects that are outstanding for their green, performance, progressive or innovative thinking and in order to publicly display BPs values (BP 2001b). One award was granted to an idea that uses a chemical (polybutene) to reduce the emission of smoke from motorbikes, an improvement that is now used daily around the world. By sharing the technology that can be used to improve the environment, BP places itself in a beneficial position for future business opportunities because it has a leading position in the manufacture of polybutene. Another award went to the biggest solar project in the world, in the Philippines, where solar panels are placed on the roofs of huts to provide energy to rural villagers (Source 2). Group-level processes are deeply affected by sustainable development priorities as well. At BP, an individual needs to display an awareness of social and environmental issues in order to receive a promotion, whereas at Shell an individual is graded on a scorecard in terms of their triple-bottom-line impact during the performance appraisal process.
Construct 5: the company develops measurement systems and management information (or communication systems) that reflect the importance of social and environmental as well as economic issues and other intangible assets (knowledge, loyalty and trust).
Management information and communication systems exist at both BP and Shell. BP uses e-mail chats to clarify issues to do with its social and environmental policies, over which uncertainties or dilemmas often emerge. Shell responds to uncertainties and dilemmas by providing business opportunities within the group and as a service to others through a business unit dedicated to global solutions.12 This part of the business integrates triple-bottom-line thinking into solutions that it offers and is seen as shifting the embeddedness of the companys sustainable development approach from being a licence to operate to a licence to grow. It clarifies the implementation logic of combining profits with principles (Shell 2001). Measurement systems differ between BP and Shell in terms of the reporting process, and this suggests something of the different responsibilities that the two companies view themselves to have. The measurements that the two companies choose to take are indicative of what drives each companys sustainable development policies. BP measures impacts as part of being accountable to society and as a procedure in risk management. Shell has a history for its accountability to society through external verification, but the company now claims that it wants to go beyond the bounds of conventional thinking in partnering non-governmental organisations (NGOs) to verify its social and environmental activities (Source 4). The role of NGOs as verifiers in social and environmental reporting is being pioneered by Shell. However, a number of questions over what the appropriate role for partnerships should be have arisen (Source 4). In the process of balancing responsibilities in a system where voter apathy is widespread, perhaps the best way of responding to the general demands of society is via the expectations of NGOs. But, then again, if the expectations of NGOs cripple the companys potential to increase its profits, proponents of the shareholder model of the corporation will again question to whom the company should really be accountable.
12 www.shellglobalsolutions.com
126
JCC 9 Spring 2003
Policy formulation: conceptual models of policy-makers at BP and Shell

In building conceptual models there is an inevitable trade-off between accuracy, simplicity and generalisability (Langley 2001). The graphs shown in Figures 2(a) and 2(b) display the different ways in which the potential for the triple bottom line, central to sustainable development, are conceptualised at BP and Shell, respectively. Their purpose is to offer a distinction of how each company views the objectives of sustainable development to fit within its objective of delivering business (and shareholder) value. In BPs conceptualisation of the place for social and environmental policies within the business plan, a risk view is taken. There is potential for business value to be increased by aligning business practice with certain of the sustainable development criteria. However, there is also a possibility that sustainable development thinking will reduce business value. Therefore, great care is taken over how the logic of the business case is integrated. The governance structure of the company, and headquarters risk view of sustainable development, means that autonomy is not extended to business streams and business units. The current policy focus of the company is on the illuminated part, to the front right-hand side of Figure 2(a). By formulating and implementing policies that are primarily focused on maintaining current approaches, some standards for improving sustainable development thinking are accommodated (which is why value curve C is partly illuminated). In terms of planning for the future, a risk approach is taken with a keen awareness to focus on avoiding value reduction that might arise from over-integration of SD thinking (curve D). From the companys current perspective, there is little focus on the potentially synergistic value creation of fully embedding sustainable development thinking within all group structures, systems and processes. In Shells conceptualisation of the place for social and environmental policies within the business plan, a growth view is taken. The potential of the business case to add value is taken seriously by policy-makers and fits appropriately with the culture and power structures within the group. New systems and processes are developed to fully embed the thinking within the group to allow both the group and individual companies to benefit from the resulting synergistic growth. The focus of current policies is to enhance a bright future but also to sustain current rates of growth if more valuable alternatives are not realised. The extent to which the business case has been integrated, however, means that there are certain risks that have been taken that are effectively irreversible. For example, if the effect of sustainable development thinking (e.g. the sustainable development dimensions mentioned in the business value matrix) is opposite to that intended, or there are other contingencies, there might be a significant reduction of business value, as seen in curve D of Figure 2(b). As displayed in Figure 2(b), current policy focus sheds no light on such a possibility. Both current and future conditions are instead viewed through the lens of scenario analysisa process that provides a basis for the three-dimensional and forward-leaning strategic approach represented in Figure 2(b), which gives greater attention to growth curves A, B and C.
Policy implementation: similarities and differences between BP and Shell

Table 2 offers a simplification of the policy distinctions and convergences observed at BP and Shell. One reason why BP appears to be one step behind Shell in its social and environmental policies is because it has not refined its thinking on the concept of sustainable development to quite the same extent as Shell. Sustainable development is the linchpin of thinking at Shell. At BP the highest priorities are to be profitable and to make a positive impact. Being positive, in this context, means caring for and responding to issues of responsibility and sustainable development. It stops short of fully integrating triple-bottom-line thinking into the full array of company activity. If BP wants
JCC 9 Spring 2003
127
(a)
NGOs grow Beyond in number compliance
External verification
Transparency and accountability
Over-integration of SD thinking considered to potentially threaten profit maximisation
A B
Business value
C D
1990
1993
1998
2002 Year
2006
2019
2040
(b)
NGOs grow in number
Brent Spar/ Codified Shell human rights Principles are Tell Shell campaign violations revised
Maximum possible growth path aspired to
A B
lue
C D
2040 2019 1998 1995 1990 Year 2002 2006
i Bus
Note: Curve A represents a future where sustainable development thinking is fully embedded into business processes and is competitively advantageous; curve B represents a future where corporate social responsibility is important and is a changing part of business process; curve C represents a conventional approach, where no changes are made to the current strategy for future business; curve D represents a future where sustainable development thinking is fully embedded into business processes and is competitively disadvantageous; the focus of light to the front right-hand side of the figure is the area where the company considers policy orientation to be best suited for maintaining business value.
Figure 2 alternative futures for (a) bps and (b) shells business value, according to the companys integration of sustainable development (sd) thinking
s va nes
128
JCC 9 Spring 2003
Similarities
Differences
bp
Sustainable development Brundtland Commission objectives (WBCSD 1987) are recognised as imposing a challenge to business practice. At BP, sustainable development is seen as being important in non-financial policy process.
shell
At Shell, sustainable development is seen as fundamental to overall business strategy. The concept of sustainable development has influenced Shells strategy since the 1980s (Source 3).
Sustainable development is An emissions trading system seen as inextricably linked to was developed at BP as a real the companies environmental engagement of the challenge. and societal impacts. Planning for the future Long-term business planning involves a concern for social and environmental change as part of risk management. Responsiveness to societal expectations is essential.
BP takes a predominantly financial view of planning for the future, seeing it as important to policy formulation.
Shell takes a predominantly scenario-based view, seeing planning for the future as a centrepiece in its strategymaking. Shell has a clear view of stakeholders.
At BP, the status of stakeholders in the process is inconsistent.
Stakeholders Stakeholders are seen as At BP, the status of stakeholders in the policy important. There is a responsibility for the company process is confused. to be transparent and open to stakeholders. Shareholders Shareholders form part of the triple bottom line. A companys primary responsibility is to its shareholders(Source 1). Shell sees commitment to social, environmental and economic bottom lines as inseparable (Source 4). Shell has a commitment to engage stakeholders in the policy process.
Corporate governance Both BP and Shell are companies within a wider group. Social and environmental policies are embedded within the governance structure and management mechanism.
BP defines the policies for others in the group.
Shell has a complex relationship with Royal Dutch.
At BP, group policies and values cover: ethical conduct; employees; relationships; communities; health, safety and the environment; control; finance.
Shell has nine central principles that act as a charter.
Table 2 policy implementation: similarities and differences of bp and shell (continued over)
Source: authors survey
JCC 9 Spring 2003
129
Similarities
Differences
bp
Transparency Importance is given to being open about all relationships and activities. Accountability External auditing and verification is seen as necessary. Environmental regulatory standard ISO 14001 is used.
BP gives a high priority to accountability and this is clearly displayed on its website. It uses traditional reporting procedures, complemented by location reports.
shell
BP posted misleading data on The Tell Shell campaign was its website. effective.
Shell was slow to adopt external verification, but it is progressive in moving to a new stakeholder engagement system; the status of accountability at Shell remains confused.
Table 2 (continued)
to remain exemplary in its social and environmental responsibility, it must take heed of the fact that there must be a true connectivity between policy formulation and policy implementation in forming a holistic view of the business case for sustainable development.
Implications for the future of the business case for sustainable development
Proponents of CSR and the business case for sustainable development often do not discern a substantial difference between BP and Shell. For example, in Business in the Environments index, BP was 7th and Shell 10th when ranked against participants from all sectors (Business in the Environment 2002). Likewise, both companies are recognised in Morleys matrix of socially responsible investment as being in the top quartile of companies worthy of investment for their management vision and practice.13 There are two main reasons why the true extent of difference in stance between the companies is not recognised. The main reasons why the difference in implementation between companies is rarely identified in company research stem from inadequacies in the methodology employed. Empirical methods, with their deductive criteria, are often preferred for their clarity, but they are badly suited to the challenge of entering the black box of the firm. A more sociological view is therefore more effective at refining the business case. The second, related, reason why differences are not always recognised is that companies and their activities are too often considered in comparison with companies from a wide variety of sectors and measured by generic frameworks. Subtle differences in approach, so important to the process of the business case, are much clearer when comparison is made between companies facing similar business contexts and sharing fairly similar social and environmental concerns. The fact that alternative forms of the business case exist, even when the large majority of possibly confounding factors are controlled for (as was the case in this study), suggests that the logic needs to be refined. A few things stand in the way of this refinement and
13 www.morleyfm.com/sri/matrix.pdf
130
JCC 9 Spring 2003
will need to be addressed if the business case concept is to gain speed. First, the concept of CSR must be thought of as an opportunity rather than as an obligation. The idea of responsibility, emerging from business ethics, should be made less ambiguous, or even replaced, but the appropriate approach should be sector-specific. In the energy industry, I believe that the appropriate way to view the social and environmental stewardship by companies is in terms of sustainable development, because certain objectives must be shared by proponents of sustainable development and proponents of a long-term strategy for the energy sector. Second, the potential for different ways of integrating the business case to add value must be gauged. This area provides a considerable opportunity for future research. There is inevitably a great benefit in comparing like companies with like, because the majority of possible sources of difference are controlled for; to reveal the nature of the logic one can then concentrate on the way policy frameworks are used rather than whether appropriate policy frameworks exist. By adopting a qualitative approach and a process view of corporate strategy the interconnectedness of policy formulation and implementation may be researched in coming to a deep understanding of the firms philosophy. As such, there is great opportunity for future research in this area to overcome the shortcomings of empirical studies that have been done in the past but have never confirmed a link between CSR and corporate performance by means of deductive categories. Companies such as ChevronTexaco, who are currently thinking about the possible benefits of the business case (Source 5), should not underestimate the potential in looking to exemplars from their own industry. Once the potential for the business case logic to work has been ascertained by considering, for example, the business value matrix, the most appropriate way of integrating the logic into business activities should be considered. The different possible ways of integrating routines and developing processes within structures and systems that would suit the companys niche focus, culture and idiosyncrasies are key areas for discussion among those who formulate policy.
References
Barnard, C. (1962) The Functions of the Executive (Cambridge, MA: Harvard University Press, 15th edn). BP (2001a) BP Social and Environmental Report (London: BP). (2001b) The Helios Awards (London: BP). (2002) What We Stand For (London: BP). Business in the Environment (2002) 6th BiE Index of Corporate Environmental Engagement (London: Business in the Environment). Cook, J., and S. Deakin (1999) Stakeholding and Corporate Governance: Theory and Evidence on Economic Performance, www.dti.gov.uk/cld/esrc1.pdf. DEFRA (Department for Environment and Rural Affairs) (2002) A Summary Guide to the UK Emissions Trading Scheme (London: DEFRA). Elkington, J. (2001) The Chrysalis Economy (Oxford, UK: Capstone Publishing). English, T. (2001) Sustainable Development in Phenol/Acetone Industry, paper presented at the Second ICIS-LOR World Phenol/Acetone Conference, Madrid, Spain, 2001. Freeman, R.E. (1984) Strategic Management: A Stakeholder Approach (Boston, MA: Pitman). Friedman, M. (1970) The Social Responsibility of Business is to Increase its Profits, New York Times Magazine, 13 September 1970: 122-26 Gilbert, D. (2002) Corporate Strategy and Ethics, as Corporate Strategy Comes of Age, in A. Pettigrew, H. Thomas and R. Whittington (eds.), Handbook of Strategy and Management (London: Sage). Glasser, B., and A. Strauss (1967) The Discovery of Grounded Theory (Chicago: Aldine). Griffin, J.J., and J.F. Mahon (1997) The Corporate Social Performance and Corporate Financial Performance Debate: Twenty Five Years of Incomparable Research, Business and Society 365.1: 5-31. Jick, T. (1979) Mixing Quantitative and Qualitative Methods: Triangulation in Action, Administrative Science Quarterly 24: 602-11.
JCC 9 Spring 2003
131
christopher perceval Kant, I. (1873) What is Enlightenment?, in Perpetual Peace and Other Essays (trans. Ted Humphrey, Indianapolis: Hackett Publishing Company, 1983). Langley, A. (2001) Strategies for Theorising from Process Data, Academy of Management Review 24.4: 691-710. Nicholson, C. (2002) The Boundaries of Corporate Social Responsibility, presentation by C. Nicholson, Group Senior Advisor, BP plc, for the CSR Europe General Assembly meeting, Limelette, Belgium, 10 December 2002. Penrose, E. (1959) The Theory of the Growth of the Firm (New York: John Wiley). Pettigrew, A.P. (1992) The Character and Significance of Strategy Process Research, Strategic Management Journal 13: 5-16. Prahalad, C.K., and S. Hart (2001) The Fortune at the Bottom of the Pyramid, Strategy and Business 26.2: 15-42. Rodin, D. (2002) Ethical Strategy: Framework for a New Approach to Business Ethics, lecture series on Business Ethics, Oxford University, Trinity, 2002. Roman, R.M., S. Hayibor and B.R. Agle (1999) The Relationship between Social and Financial Performance: Repainting a Portrait, Business and Society 38.1: 109-25. Shell (Shell International Ltd) (1997) Statement of General Business Principle (London: Shell, 2nd edn). (2001) People, Planet and Profits: The Shell Report (London: Shell). (2002) People and Connections: Global Scenarios to 2020. Global Business Environment (London: Shell). Sternberg, E. (2000) Just Business: Business Ethics in Action (Oxford, UK: Oxford University Press, 2nd edn). SustainAbility (2001) Buried Treasure: Uncovering the Business Case for Corporate Sustainability (London: SustainAbility). Waddock, S.A., and S.B. Graves (1997) The Corporate Social PerformanceFinancial Performance Link, Strategic Management Review 10: 758-69. Weick, K. (1995) What Theory Is Not, Theory Is, Administrative Sciences Quarterly 40: 385-90. Wheeler, D., B. Kelly and N. Sutherland (2000) Corporate Strategy and Sustainability in Business: A North American Review, in Proceedings ERP Environment Conference on Eco-Management and Auditing, Manchester, UK, June 2000. Whetten, D., G. Rands and P. Godfrey (2002) What are the Responsibilities of Business to Society?, in A. Pettigrew, H. Thomas and R. Whittington (eds.), Handbook of Strategy and Management (London: Sage). Wicks, A.C. (1998) How Kantian a Theory of Kantian Capitalism?, Business Ethics Quarterly (Special Issue) 1.4: 61-73. Williamson, J. (2000) What Should the World Bank Think about the Washington Consensus?, The World Bank Research Observer (Oxford, UK: Oxford University Press) 15.2: 251-64. Williamson, O.E. (1980) The Organisation of Work, Journal of Economic Behaviour and Organisation 1 (March 1980): 5-38. (1985) The Economic Institutions of Capitalism (New York: The Free Press).
Sources
Source 1 Source 2 Source 3 Source 4 Source 5 Nick Butler, Group Chief Policy Advisor at BP David Rice, Policy Director of BP Ged Davis, Vice President of Shell International Mark Wade, Manager of Sustainable Development at Shell International Chris Bannerman, General Manager of Strategy and Transformation at ChevronTexaco, personal communication, 29 May 2002.
132
JCC 9 Spring 2003
Managing Corporate Stakeholders

Subjecting Miless 1987 Data-Collection Framework to Tests of Validation*
James Weber
Duquesne University, USA
David M. Wasieleski
University of Pittsburgh, USA
Using a dataset of 391 field-based case studies, we test the viability of Miless (1987) data-collection framework for managing corporate stakeholders by assessing its internal validity (essentiality, comprehensiveness and strength of the interrelationships of the frameworks components) and external validity (generalisability across multiple industries). The results of our data analysis show that Miless framework is a valid and generalisable field-based measure for managing corporate stakeholders and auditing corporate citizenship. Two strong relational patterns were found that link the organisations business exposure to the social environment, top-management philosophy, external affairs strategy and internal organisational arrangements.
Stakeholder management Corporate citizenship Corporate social performance Social environment Cross-industry analysis Validity testing
James Weber is a Professor of Management and Director of the Beard Center for Leadership in Ethics, Duquesne University, USA. His research interests include the assessment of values, moral reasoning and ethical behaviour, corporate social performance and ethical issues in technology. He is the coauthor of the 10th edition of Business and Society (McGrawHill, 2002).
Professor of Management, Director, Beard Center for Leadership in Ethics, Duquesne University, Pittsburgh, PA 15282, USA weberj@duq.edu www.bus.duq.edu/Beard
! < u !
David Wasieleski completed his MBA with a focus on business ethics while working as an independent marketing representative for manufactured building products. Currently, he is completing doctoral work in business at the Katz Graduate School of Business, University of Pittsburgh, USA.
Katz Graduate School of Business, University of Pittsburgh, 329 Mervis Hall, Pittsburgh, PA 15260, USA Dmw723@aol.com
* An earlier version of this paper was presented at the national annual Academy of Management meet-
ing, August 2000 under a different title.
JCC 9 Spring 2003
133
james weber and david m. wasieleski
he challenge of managing corporate stakeholdersunderstood as
individuals or groups who are affected by or affect the organisation (Freeman 1984) has been a long and arduous task for business executives. Never was this challenge greater in the history of American business than in the 1960s and 1970s. During these decades social activists from nearly every venue challenged managers and business practices with regards to product safety, employment practices, environmental responsibility and other issues affecting the firms operations and profitability. Managers attempted to develop successful strategic responses to these challenges, often turning to academics or consultants for support. One promising development from this petition for help was the concept of corporate social performance (CSP) and its more recent incarnation, corporate citizenship. These notions have received much attention in the business and society literature (Altman and Vidaver-Cohen 2000; Wartick and Cochran 1985). Primarily, the CSP movement gained momentum as stakeholders, such as consumers and social activists, voiced their disapproval of businesss lack of responsiveness to societal issues and needs. Ironically, despite this attention, a comprehensive definition of CSP was lacking until the early 1990s (Wood 1991). Unfortunately, the maturation of the field was slow due to conflicting and independent research ideas developed through scattered research efforts (Wood 1991). Few attempts were made to harness the individual theories proposed to analyse facets of a companys responsiveness to its social environment. One of the most profound and comprehensive efforts was described in Robert Miless book, Managing the Corporate Social Environment (1987).1 Miless framework and resulting model were designed to aid executives in the diagnosis of their organisations performance and ultimately help them to intervene and improve their companys social performance and corporate citizenship. Although an important contribution to the fields of CSP and corporate citizenship, Miless framework was not without shortcomings. We found four weaknesses in his framework, which severely question the frameworks internal and external validity. First, Miles did not validate whether the multiple overall business exposure measures in his framework were essential for an understanding of managing corporate stakeholders. Second, Miles did not consider whether additional overall business exposure measures were necessary to guarantee the comprehensiveness of this dimension in his framework. Third, Miles did not subject the strength of the interrelationships between the key components of his framework to rigorous analysis. And, fourth, the external validity of Miless framework was suspect since Miles used only a limited number of firms from the insurance industry in his initial sample. Thus, it was unknown whether Miless framework was generalisable across multiple industries with potentially widely varying stakeholder relationships. The purpose of this research was to verify and expand on the framework that Miles used to construct his grounded theory of corporate stakeholder management. By subjecting the key components in Miless framework to path analysis regression and correlation analysis and by analysing a larger database of field-based corporate case studies, we were able to:
t Test the necessity of the multiple overall business exposure measures included in
Miless framework
1 We acknowledge that, in Miless book, the author presented both a framework for data collection (in
Chapter 1) and a grounded theory model based on his findings (in Chapter 13). Since we were seeking to replicate and validate the data-collection framework used by Miles, we used the same framework, with little modification, for our data collection and analysis to test the validity of Miless earlier findings.
134
JCC 9 Spring 2003
managing corporate stakeholders t Identify any new, critical components to be added to the overall business exposure
measures in Miless framework

t Measure the strength of the interrelationships between the key components in
Miless framework
t Generalise the applicability of Miless framework across multiple industries
Systems management and philosophy of science literatures provided the logic for focusing our efforts on these four tests of validation. Essentialist philosophers argue that the term cause should only be used to refer to variables that explain a phenomenon in the sense that these variables, when taken together, are both necessary and sufficient for the effect to occur (Cook and Campbell 1979: 14). These authors believed that it was important to completely understand all the determining factors causing an effect so as to be explicit about the factors that necessarily and inevitably produce the effect (Cook and Campbell 1979: 18). We sought to verify and be explicit about the determining variables in Miless original framework that affect a firms stakeholder management and corporate citizenship. C. West Churchman posited in his seminal work on systems and organisation (1971) that one of the main problems with designing a system was the determination of its basic components. The boundaries of the system became profoundly important. The designer of the system or framework must identify the whole relevant system and its components . . . and their interrelationships (Churchman 1971: 8). Thus, Churchman was speaking of the essentiality and comprehensibility of the components of a system and the interrelationships of these components. Moreover, Churchman claimed that one aim in designing a system for research was the goal of generality. Thus, when another designing mind faced with similar problems used the model, the design was generalisable to a broader class of problems (Churchman 1971: 6). We wanted to see if Miless original framework was applicable to other industries beyond insurance that may have differing stakeholder relationships. Generalisations from convenience samples in business ethics research are commonplace (Randall and Gibson 1990: 463). In their study on the methodology of business ethics literature, Randall and Gibson advocated the use of random samples rather than convenience samples in research. Since Miless original framework concentrated only on the insurance industry, a verification of his framework to other industries is warranted. Our study attempted to provide this verification of Miless original design. If significant research is interested in the desire for understanding and explanation (Daft 1984: 12), then it is completely valid to verify the usefulness of a frameworks dimensions and design. Prior to our study, Miless original framework explained only the management of corporate stakeholder relationships with regard to the insurance industry. We wanted to expand his study to test the frameworks validity, this being defined as the degree to which inferences from scores on tests or other assessments are supported or justified on the basis of actual evidence (Schoenfeldt 1984: 74). Thus, validity demonstrates the degree of relatedness between inferences and actual events (1984: 74). We wanted to discover how valid Miless original framework was in determining how managers assess their corporate stakeholder relationships and corporate citizenship.
JCC 9 Spring 2003
135
Literature background
Stakeholder theory
Scholars generally recognise R. Edward Freemans classic work, Strategic Management: A Stakeholder Approach (1984), as the formal, academic beginning of stakeholder theory. While choosing not to engage in the accuracy of this claim, we acknowledge that Freeman provides for scholars and managers a clear picture of a turbulent environment demanding a system or framework to managing the various relationships contained within this dynamic environment. According to Freeman, the demands from owners, customers, employees and suppliersthose stakeholders traditionally understood by management models or theories as seeking change from the organisationare accompanied by the demands from new, emerging stakeholders with powerful potential to influence the organisationgovernments, competitors, consumer advocates, environmentalists, special-interest groups and the media (see Part 1: The Stakeholder Approach, in Freeman 1984). Freeman criticises the traditional models that describe these organisational relationships, referred to as the managerial view of business, and warns, the Managerial View of the firm simply provides no cohesive way of understanding the changes that have and will occur (1984: 22). The stakeholder view of the firm, developed by Freeman and elaborated on by subsequent scholars, presents a more systematic and complete representation of the organisation and its stakeholders. In addition, the stakeholder view enables managers and others to evaluate each stakeholder relationship at any point in time in terms of its importance to the organisation, potential to benefit or harm the organisation, and its stability or instability as a change agent within the organisations environment. The richness of Freemans contribution may be in recognising what follows his classic book, in addition to what is contained in his work. Managers continued to struggle with managing the expanding list of organisational stakeholders. Scholars began to investigate more deeply the nature and impact of these stakeholders on organisations. Evolutionary reformulations of Freemans stakeholder view emerged as managers sought to strategically control their organisations stakeholder relations and as scholars attempted to model, dissect and predict organisations stakeholder relationships. The modern conception of stakeholder management can be seen in the notions of CSP and corporate citizenship.
Corporate social performance/corporate citizenship

The general understanding of business and society relationships has a nomadic history, evolving through many different names and emphases to its present-day understanding as corporate social performance (CSP) and corporate citizenship. Through its development, the field has modified what the business and society relationships are and has used various framework structures from which to evaluate a firms performance. The term corporate social responsibility was first introduced in the 1950s. Carroll examined the social responsibility of business by integrating economic, legal, ethical and discretionary expectations of society towards businesses (Carroll 1979). Corporate social responsibility has been defined as the firms consideration of, and response to, issues beyond narrow economic, technical, and legal requirements of the firm . . . [to] accomplish social benefits along with the traditional economic gains which the firm seeks (Davis 1973: 312).
136
JCC 9 Spring 2003
managing corporate stakeholders
This term gradually gave way to corporate social responsiveness. Frederick (1994, originally 1978) coined the term CSR2, or corporate social responsiveness, as opposed to CSR1, where the R means responsibility. Corporate social responsiveness research influenced many business and society models. Freeman (1984) argued that stakeholder2 management gave rise to corporate social responsiveness, while Cochran and Wood (1984) credited issues management with affecting the social responsiveness of firms. Finally, Frederick illustrated that social responsiveness had several shortcomings, the most significant of which deals with the absence of value theory in the field. In retrospect, Wood (1991) characterised these developments into a broader category of CSP. Sethi (1979) relied on work by Ackerman and Bauer (1976) and Frederick (1994, originally 1978) to create categories for assessing CSP. Archie Carroll (1979) went a step further by formulating a three-dimensional model comprising mapping of various social issues, philosophies of social responsiveness, and social responsibility categories separated in terms of economic, legal, ethical and discretionary responsiveness (Carroll 1979). In 1985, Wartick and Cochran recognised the transformation of the term CSP and discussed the evolution of the CSP model. From their historical account, they devised their own CSP model that integrated the principles of social responsibility, social responsiveness and social issues. Their definition of CSP was born from this model and simply involved the interaction of the three factors. Next, by focusing on the dynamics of social responsiveness, Wood was able to build on Wartick and Cochrans model and composed a current and viable definition of CSP. Wood defined CSP as
A business organisations configuration of principles of social responsibility, processes of social responsiveness, and policies, programs and observable outcomes as they relate to the firms societal relationships (1991: 693).
According to Mitnick (1993: 15), Woods work represents a very significant advance in our understanding of corporate social behaviour. Mitnick went on to say that, since Woods landmark piece in 1991, hers is easily the most successful encompassing attempt to integrate earlier work (Mitnick 1993: 15). Swanson (1995) reoriented the CSP model devised by Wood by injecting a normative element. She sought to integrate the economic and duty-aligned perspectives that drive human behaviour. These two perspectives were linked across the principles of social responsibility, the processes of social responsiveness and the outcomes, or social impacts, of corporate behaviour (Swanson 1995: 43). Her work marked a critical moment in CSP development in that shortcomings were acknowledged in the existing framework and future research directions were outlined. The final progression of this notion into its current-day version emphasises the citizenry responsibilities of a business organisation to society. Corporate citizenship refers to businesses acting responsibly toward their stakeholders (Post et al. 2002: 81). This notion encompasses businesses proactively addressing business and society issues, building partnerships with stakeholders, seeking benefits through social strategic goals and integrating financial performance with social performance (Altman and VidaverCohen 2000). Additional conceptual and applied descriptions of corporate citizenship have been forthcoming in The Journal of Corporate Citizenship.
2 While many definitions of stakeholder can be found in the literature, we understand a stakeholder
to be any group or individual who can affect or is affected by the achievement of the organisations objectives (Freeman 1984: 46).
JCC 9 Spring 2003
137
Managing the corporate social environment

Embedded in business and society explorations and relevant to our research is Robert Miless 1987 study of the insurance industry in its effort to manage the corporate stakeholders within the firms social environment. Miles noted:
Executive leaders of Americas largest corporations have been confronted during the past two decades with an unprecedented increase in social issues impinging upon their business policies and practices (1987: 1).
These 1960s and 1970s social issues included the emergence of consumer advocates, spearheaded by Ralph Naders fight against the US automobile industry; environmentalists calling for businesses to be accountable for water and air quality; anti-Vietnam activists attacking the military industrial complexs manufacturing of conventional and chemical weapons; African-American groups organised under the civil rights movement and calling for an end to discriminatory employment practices; womens groups accusing businesses of gender bias and discrimination; labour unions demanding safer working conditions; and communities seeking an end to the use and transport of toxic materials needed by nuclear energy plants.3 Miles borrowed from strategic management and organisation theory to create a strategic approach for the management of corporate stakeholders. (His framework is described in the next section of this paper.) However, we challenged Miless work in terms of the essentiality, comprehensiveness and strength of the interrelationships of key components, as well as the frameworks generalisability across industries. Besides the potential weaknesses cited in this paper, Miless framework and model had other critics. Donna Wood (1991) mentioned that Miles concentrated too much on corporate responsiveness, since it was only one part of social performance (Wood 1991). Bhambri and Sonnenfeld (1988) called Miless procedure for assessing CSP simple, since it narrowly interfaced with the public in that it only examined the insurance industry. Their 1988 field study focused on two industriesinsurance and forest productsto analyse CSP and organisational structure. Steve Brenner (1988: 633) reviewed Miless 1987 book favourably overall, yet admitted that it was not clear how other scholars work influenced the research design or final conclusions. He also questioned the obtuse definitions of key factors used in the general framework. Specifically, he pointed out that no mechanisms were provided for firms to be categorised into high- or low-performance groups. Even more problematic may have been Miless assumption that high ratings on CSP functions were indicative of the contributions that a firm makes to society. This could be the result of using only insurance firms in his research. Despite their reservations, most scholars recognised the potential for Miless framework to become an important and useful contribution to the quest of measuring an organisations management of stakeholders and the pursuit of corporate citizenship. Therefore we propose the following research tests:
t Test 1: Essentiality. Is each of the multiple measures in Miless overall business
exposure component necessary?

t Test 2: Comprehensiveness. Are there measures missing from Miless framework
that would significantly contribute to explaining an organisations business exposure to the social environment?
t Test 3: Strength of the interrelationships. Are the relationships between the key
components in Miless framework significantly correlated?

3 Adapted from Post et al. 2002: 81.
138
JCC 9 Spring 2003
managing corporate stakeholders t Test 4: Generalisability. Are the interrelated patterns of the key components in
Miless framework applicable to other industry groups?
Miless framework
In response to the new challenges placed on businesses to manage corporate stakeholders, Robert Miles devised a data-collection framework (see Fig. 1) to help executive leaders understand and manage the social turbulence. In the midst of this upheaval, it was assumed that managers recognised the importance of behaving as a good corporate citizen.
Business exposure
Top-management philosophy
External affairs strategy
Internal organisational arrangements
External affairs design
Linemanager involvement
Figure 1 miless data-collection framework for managing the corporate stakeholders
With CSP improvement as the goal, his framework was designed to facilitate organisational diagnosis and intervention of a firms stakeholder management. More specifically, his framework identified key factors that affected corporate citizenship and the stakeholder relationships that existed among those factors. A summary of the main components of the original framework is provided in Table 1. Each component lies on a continuum (see Tables 25). While firms may lie somewhere between the extremes, Miles believed that most companies could be characterised as one type or the other.
JCC 9 Spring 2003
139
Key factor
Measurement dimensions
Product mix
Tool characteristics
Availability, affordability, safety Industrial versus consumers Urban versus rural Concerned with consequences to industry Concerned with firm-centred consequences Strategies focus on societys needs Strategies focus on economic selfinterest of firm Breadth, depth and integration of employees devoted to external affairs activities Staff sophistication in organising external affairs activities
Postulated linkage
Overall business exposure
Customer mix Geographic mix Institution-oriented belief systems
no linkage
Enterprise-oriented belief systems Collaborative/ problem-solving Individualistic/ adversarial External affairs design
Line-manager involvement
External affairs strategies
Table 1 miless (1987) original framework summary chart
Measurement dimension Product mix Customer mix Geographic mix
High-exposure company Necessity goods; negative contingencies Public Urban
Low-exposure company Luxury goods; few contingencies Commercial/industrial Rural
Table 2 continuum of miless (1987) measure of overall business exposure
Characteristic value, intention or goal Integration with society Strategic outlook Strategic orientation
Institution-oriented company High Long-term Adapts
Enterprise-oriented company Low Short-term Preserves status quo
Table 3 continuum of miless (1987) measure of top-management philosophy
140
JCC 9 Spring 2003
Characteristic of company actions and programmes Interaction with stakeholders Interests Strategic implementation External affairs staff
Collaborative and problem-solving company Open Social and economic Long-term Sophisticated
Individualistic and adversarial company Minimal and legal Economic only Short-term None
Table 4 continuum of miless (1987) measure of external affairs strategies
Measurement dimension External affairs design Line-manager involvement
Sophisticated Extensive breadth, depth, integration of personnel High
No or little sophistication Few or no workers devoted to external affairs activities Low
Table 5 continuum of miless (1987) measure of internal organisational arrangements

Miles begins his four-tiered framework with overall business exposure. Business exposure simply shows to what extent the organisation is vulnerable to unwelcome influences from the social environment. Exposure is measured on a continuum from high to low, based on a firms product, customer and geographic mixes (see Tables 1 and 2 for additional description of these measures).
Next in Miless framework is top-management philosophy. Given the exposure to the social environment, it is necessary to determine how the corporation chooses to deal with society. This philosophy is deeply rooted in the executives underlying values and beliefs regarding their firms role in society: that is, its corporate citizenship. The philosophy also derives from the corporations character and political orientation of the managers. Part of the underlying reason for being concerned about this component in the framework is the fact that many of the top executives in the corporate world were born and educated in an era when societal pressures did not exist on a wide scale. Miles found it necessary to create a framework for these executives to understand the new context in which business operates in the modern era. He created a continuum for explaining managerial philosophies, with institution-oriented philosophy occupying one end and enterprise-oriented philosophy at the other extreme. High overall business exposure is linked to an institutional top-management philosophy, while low overall business exposure is linked to an enterprise type of top-management philosophy in his framework (see Tables 1 and 3).
JCC 9 Spring 2003
141

The third component in Miless framework, external affairs strategy, is significantly linked to top-management philosophy (see Table 1). Miles terms this relationship the philosophystrategy connection because he sees the relationship as extremely strong and pervasive. There are two external affairs strategies described in the Miles framework. Collaborative/problem-solving strategies are based on trust and open communications with a variety of external constituencies (Miles 1987: 8). This type of strategy is common with companies having an institution-oriented top-management philosophy (see Table 4). Short-term profit-making is often sacrificed for societal needs, demonstrating a key characteristic of corporate citizenship. At the other extreme are individualistic or adversarial strategies. These strategies are common with companies manifesting an enterprise-oriented top-management philosophy. Executives of these companies believe that their principal responsibility . . . is to protect the companys self interest and to defend or buffer its core business policies and practices against social threats (Miles 1987: 10). External affairs staff functions are often lacking in these types of company and, thus, they are unable to cope with their social exposure effectively.

The final component in Miless framework is the corporations internal organisational arrangements, which focus on how corporations organise their business activities to manage stakeholder relations within the corporate social environment. This can be broken into two parts: external affairs design and line-manager involvement (see Table 1). Miles defines the former term further in terms of an exposuredesign contingency. He posits that the sophistication of the corporate external affairs function must correspond to the degree of business exposure of the firm in order to achieve high levels of corporate social performance (Miles 1987: 11). Line-manager involvement is also included in the last major component of the framework. Miles stresses the importance of striving to get high levels of line-manager involvement and staff sophistication, which are related to executive philosophy and the sophistication of the core staff function. The continuum of the measure of internal organisational arrangements is summarised in Table 5.
Research methods
Sample
Graduate business students enrolled in two MBA programmes from 1988 to 1995 obtained the data from field research of organisational information. Each graduate researcher was trained in the concepts of stakeholder management and corporate citizenship, as well as the specifics of Miless framework. In addition, examples of prior research using Miless framework and research supervision by an experienced scholar were part of the training. The experienced scholar validated the researchers interpretation of information from executive interviews and secondary sources for consistency across the data-collection period. In total, there were 391 CSP case studies, significantly more observations than Miless original set of seven. These organisations were selected by the experienced scholar and graduate researcher based on the availability of data and diversity of the organisations
142
JCC 9 Spring 2003
demographics to the overall sample. Only 27 case studies were dropped from the dataset due to data-quality questions. The final sample represented a geographical cross-section of corporate America, evidenced by the regional distribution of organisations across the United States as shown in Table 6. In addition, the organisations sampled varied in size and industry membership. As shown in Table 7, of the companies analysed 58 were classified as small organisations based on number of employees (7500 employees), 160 were mid-sized organisations (5019,999 employees) and 173 were large organisations (10,000400,000 employees). Expanding on Miless original analysis of the insurance industry, our dataset, detailed in Table 8, comprised organisations from manufacturing (n = 102), financial services (n = 86), healthcare (n = 66), retail sales (n = 63), utilities (n = 39) and transportation (n = 35).
Region West and north-west Mid-west South and south-west North-east Number of firms 70 106 66 149 Percentage of sample 18 27 17 38
Table 6 distribution of corporate headquarters, by region

Source: authors survey
Organisation size* Small Mid-sized Large
Number of firms 58 160 173
Percentage of sample 15 41 44
* Small: 7500 employees; mid-sized = 5019,999 employees; large = 10,000 or more employees.
Table 7 distribution of organisations, by size
Sector Manufacturing Financial services Healthcare Retail sales Utilities Transportation
Number of firms 102 86 66 63 39 35
Percentage of sample 26 22 17 16 10 9
Table 8 distribution of organisations, by sector
Measures
In this section, we present the Corporate Social Performance Assessment Guide, which was based on components found in Miless framework. This guide was used to measure a companys position along continua focusing on product mix, customer mix, geographic mix, overall business exposure, top-management philosophy, external affairs
JCC 9 Spring 2003
143
strategy, external affairs design and line-manager involvement. Once these positions were found, then correlations among the components were assessed.

Overall business exposure was determined by examining a companys product mix, customer mix and geographic mix along a continuum from high to low. This research project measured two additional components: organisational size and industry membership. Products were classified as either necessities or luxury goods. Necessity items were products that the public purchased regularly for everyday use and continued to consume despite their modest price fluctuations, such as toiletries, energy providers, property or casualty insurance, or staple food products. Luxury products, on the other hand, were those goods that did not enter the public arena as often because their purchase was contingent on higher income levels and vast consumer research, such as a yacht, highfashion retailing or specialised financial consulting. Miles postulated that products with negative contingencies were more highly exposed to the public. In addition, of the products . . . [possessing] potential contingencies that might adversely affect the consuming public, the corporations business exposure will normally increase (1987: 3). For example, airline travel initially might be regarded as a luxury since it is a relatively expensive mode of transport. But the possibility of consumer harm due to a mishap dramatically increases an airline carriers overall business exposure. The second major component included in Miless overall business exposure dimension was customer mix. A customer, either a consumer or a commercial and industrial buyer, factored into a companys level of exposure to the social environment. According to Miles, consumer-products companies tend to be more exposed to the corporate social environment than are companies producing commercial or industrial products (1987: 3). In addition, commercial and industrial customers have more sophisticated purchasing functions and are staffed by professionals who are technically trained to make informed purchase decisions (1987: 4). Thus, customer products such as televisions tend to have high overall business exposure, whereas commercial/industrial products such as grinding wheels usually have low overall business exposure. The next component of overall business exposure, geographic mix, was concerned with where a business entered the market. Urban areas were more highly exposed to the public than were rural areas because of population density and effectiveness of regulatory agencies. Corporations marketing consumer products regarded as necessities in urban areas are far more exposed to the corporate social environment than are those that sell similar products in non-urban areas (Miles 1987: 4). Regulators in urban areas had far more resources and much more sophisticated regulatory agencies than their counterparts in non-urban states (1987: 4; see also Miles and Bhambri 1983).
Additional components
Although Miles did not discuss additional components within his framework, it is reasonable to assume that organisation size is a potential factor in determining the overall business exposure for companies. Larger organisations (categorised according to the number of employees4) are bigger targets for social groups than are small firms, thereby allowing greater opportunity for publicising social issues.
4 We attempted to solicit other measures of firm size, such as sales volume and annual income, but
found smaller firms reluctant to provide this competitive information. As privately held firms, this information was unavailable via secondary sources. Number of employees was the most readily available measure of firm size provided by our respondents.
144
JCC 9 Spring 2003
The final factor, industry membership, like organisation size, was not included in Miless original framework. We speculated, however, that different industries might have varying degrees of exposure to the social environment, naturally exposing some industries to more regulatory activity than others, such as extensive governmental scrutiny by regulatory watchdog agencies. For example, the computer industry was found to have significantly more environmental turbulence and discretion than the natural gas industry in one study (Haleblian and Finkelstein 1993: 853). Or, the healthcare industry experiences high levels of regulatory control; thus, this industry may be under a higher level of public scrutiny than other industries.
When looking at the first two major components of Miless framework, it is logical to deduce a correlation between overall business exposure and top-management philosophy. Miles explained my experience in highly exposed industries shows that member firms tend to move toward the extremes of [top-management philosophy types] (1987: 5-6). This study did not explicitly test this prediction, but it seemed more reasonable to us that high overall business exposure leads to institution-oriented philosophy and low overall business exposure leads to enterprise-oriented philosophy. The variations of companies top-management philosophy rested within a continuum according to Miles, with institution-oriented firms lying at one extreme and enterpriseoriented firms occupying the other end-point. We acknowledge that it is possible that these two orientations do not rest along the same continuum, but on separate and distinct continua. Despite the fact that other factors could contribute to a firms philosophy, this study simply tried to replicate Miless original framework using his same constructs. It was not our intention to revise his data-collection framework without testing it first. Corporate documents provided a window in to businesses to elicit top managements philosophical orientation. Specifically, these took the form of mission statements, corporate policies, letters from the CEO to stockholders or other constituencies, employee handbooks, etc. While it must noted that these documents may be prepared as publicity tools for the firms owners or other stakeholder groups, they do give researchers a glimpse into what is deemed important for top management. Despite their potential for social desirability bias, firms have been found to exhibit a wide range of top-management philosophy perspectives, as shown later in our results section. Content analysis of corporate documentation, using the criteria found in Miless framework, enabled researchers to classify a firms top-management philosophy.

External affairs strategy can be described along a continuum, with collaborative strategies and adversarial strategies as the extremes.5 It was believed that corporate strategies might vary according to a firms interactions with the external environment. Thompson (1967) said that firms use boundary-spanning units to reduce environmental uncertainty (quoted in Meznar and Nigh 1993: 32). Boundary-spanning units were seen to possess a bridging role in an organisation (Meznar and Nigh 1993: 33). Miles once again uses two extremes: at one extreme, a collaborative or problemsolving external affairs strategy focused on societys needs; at the other extreme, the adversarial or individualistic external affairs strategy, focused entirely on the economic self-interests of the firm. To discover a firms external affairs strategy, corporate documentation describing programmes or actions was assessed. For example, corporate
5 Miless EAS continuum may be contrasted with the typology of public affairs strategies developed by
Meznar and Nigh (1993).
JCC 9 Spring 2003
145
reports to stockholders, employee newsletters, press releases, policies and procedures, and employee handbooks were considered.

The last component that Miles considered was the internal organisational arrangements, ranging from a sophisticated arrangement to no arrangement at all. Within this component were two dimensions: (1) external affairs design, in which extensive arrangements led to sophisticated internal organisational arrangements and little or no arrangement led to a company with no internal organisational arrangements; and (2) line-manager involvement, in which several formal devices were used to measure line managers involvement in the corporate social environment. These included establishing top-management steering committees, designating specific roles that link external affairs units to line operations, and rotating line managers through temporary and fulltime job assignments in external affairs units. Greening and Johnson (1997) studied the characteristics of the top-management team related to the ability of the team to deal with environmental crises effectively. They claimed that the best teams in handling environmental crises were creative, flexible, and adaptable (Greening and Johnson 1997: 339). To deal with external crises effectively, they suggested that top-management teams must be heterogeneous: that is, they advocated diverse teams with a variety of functional backgrounds. Thus, the design of the external affairs team is quite important. Since the organisation of public affairs activities varies from highly centralised to comparatively decentralised (Post et al. 1983: 135), Miles believed that most firms could be classified as one extreme or the other.
Testing the validity of Miless framework

In order to test the validity of Miless data-collection framework, we measured overall business exposure (its five components independently), top-management philosophy, external affairs strategy and internal organisational arrangements (comprising external affairs design and line-manager involvement). Each of these components lies on a continuum as described earlier in this section. Taken together, relationships and correlations between the frameworks components became evident. A summary of the responses when applying Miless data-collection criteria is shown in Table 9.
Data analysis
Initially, regression analysis was used to determine the necessity of each of the components of overall business exposure. A t-statistic enabled us to determine the statistical contribution made by each variable within a group of variables. To perform the next analysis in this research, a path analysis using a regression statistic was implemented. Since the framework flows from an initial point to a final point with assumed relationships in between, a path analysis was the most relevant method for testing statistical significance. Path analysis enables researchers to examine the pattern of relationships between three or more variables. According to Bryman and Cramer (1999), the aim of path analysis is to provide quantitative estimates of the causal connections between sets of variables. Thus, by evaluating the strength of the connections proposed in Miless original data-collection framework, we were able to observe distinct paths of interconnected variables.
146
JCC 9 Spring 2003
Point on continuum* high Overall business exposure Product mix Customer mix Geographic mix Top-management philosophy External affairs strategy Internal organisational arrangements External affairs design Line-manager involvement 30 24 38 25 32 51 64 58 53 69 47 54 medium 9 12 10 11 19 11 low 27 30 37 20 34 35
* For overall business exposure, the continuum moves (from left to right in this table) from high to low; for topmanagement philosophy, it ranges from institution-oriented to enterprise-oriented; for external affairs strategy, it ranges from collaborative and problem-solving to individualistic and adversarial; for internal organisational arrangements, it ranges from sophisticated to none.
Table 9 responses when applying miless (1987) framework
Results
In our first test of validity, we explored whether each of the three measures of Miless overall business exposure component was essential to determine a firms exposure to the social environment. As shown in Table 10, when using our dataset, product mix and geographic mix were statistically significant influences of overall business exposure (t = 2.13, p = 0.036; t = 12.96, p = 0.001; respectively) but customer mix was not (t = 1.74, p = 0.176). Our second test of validity explored whether additional measures were needed for a more comprehensive account of Miless business exposure. Analysing our results shown in Table 10 we found that an additional business exposure measure, organisation size (as determined by number of employees), had a statistically significant influence in determining the firms business exposure (t = 7.53, p = 0.009). Industry membership was not found to exhibit a statistically significant influence on a firms business exposure in this dataset (t = 0.96, p = 0.537).
Variable Geographic mix Number of employees Product mix Customer mix Industry membership
* significant at 0.05 level
t-statistic 12.96 7.53 2.13 1.74 0.96
Significance 0.001 * 0.009 * 0.036 * 0.176 0.537
Table 10 the essentiality of business exposure variables as determined by path analysis regression
JCC 9 Spring 2003
147
Figure 2 shows the path direction and flow in order to test the strength of the interrelationships in Miless framework, our third test of validity. Each interrelationship in the framework, except the overall business exposuretop-management philosophy connection (r = 0.267), was found to be statistically correlated when using our dataset. All three measures of overall business exposure in Miless original framework were correlated with such exposure: product mix (r = 0.687), customer mix (r = 0.513) and geographic mix (r = 0.799). Top-management philosophy correlated with external affairs strategy (r = 0.893) and external affairs strategy correlated with both external affairs design (r = 0.471) and line-manager involvement (r = 0.500). All correlations, except that between overall business exposure and top-management philosophy (see Fig. 2), were significant at the p = 0.05 level, with all three measures of overall business exposure and the relationship between top-management philosophy and external affairs strategy significant at the p = 0.01 level. Thus, we were successful in replicating the relationships described in Miless original framework.
Product mix 0.687** Overall business exposure 0.267 Top-management philosophy 0.893** External affairs strategy Customer mix 0.513** 0.799** Geographic mix
0.471* External affairs design
0.500* Line-manager involvement
** = p < 0.01 * = p < 0.05
Figure 2 correlation analysis of miless original framework
In addition, these relationships could be separated into two distinct patterns of related variables. For example, as shown in Figure 3, a high product mix and a high geographic mix resulted in a high overall business exposure, which related to institutional-oriented top-management philosophy. Institutional-oriented top-management philosophy was correlated with collaborative external affairs strategy, which in turn was related to a sophisticated external affairs design. Conversely, in relationship pattern B, we found components at the other end of the continuum also interrelated. For example, low product mix and low geographic mix resulted in a low overall business exposure, which correlated with enterprise top-management philosophy. Miless framework was supported further in that enterpriseoriented top-management philosophy was related to an adversarial external affairs strategy, with no external affairs design or line-manager involvement.
148
JCC 9 Spring 2003
Pattern A High product mix High geographic mix
Pattern B Low product mix Low geographic mix
High OBE
Low OBE
Institutional TMP
Enterprise TMP
Collaborative EAS
Adversarial EAS
Sophisticated EAD
No EAD
No LMI
OBE = overall business exposure; TMP = top-management philosophy; EAS = external affairs strategy; EAD = external affairs design; LMI = line-manager involvement
Figure 3 relationship patterns found using entire (new) dataset
This led us to our fourth test of validity: generalisability across industries. Miles discovered a path direction and strength of interrelationships among framework components when analysing seven firms from the insurance industry. The fact that we found the same path direction and component interrelationships (shown in Fig. 2) when studying 391 firms from six different industries supports the validity test of generalisability. Additional within-industry analysis was explored and is shown in Figure 4. While some consistency was seen across industries, only limited relational patterns were discovered.6 For example, high overall business exposure was related to institutionaloriented top-management philosophy for firms in the financial, healthcare, retail and utilities industries, but not for firms in the manufacturing and transportation industries. The most developed patterns were found in the healthcare and utilities industries where high overall business exposure linked with institutional top-management philosophy which linked with collaborative external affairs strategy. In the healthcare industry collaborative external affairs strategy linked with high line-manager involvement, whereas in the utilities industry collaborative external affairs strategy linked with a sophisticated external affairs design. The other four industries failed to demonstrate any patterns of such magnitude; the transportation industry showed no interrelational patterns at all. The implications of these findings are discussed in the following section of this paper.
Conclusions and implications

The results of the regression and correlation analyses conducted in this study provide general confirmation regarding our efforts to validate Miless framework for managing corporate stakeholders and exhibiting characteristics of corporate citizenship. In addi6 By grouping firms into various industry groups, some statistical rigour was lost and this may partially
explain the lack of significant patterns in managing the corporate social environment.
JCC 9 Spring 2003
149
Pattern A High product mix High geographic mix
Pattern B Low product mix Low geographic mix
High OBE
Low OBE
Institutional TMP
Enterprise TMP
Collaborative EAS
Adversarial EAS
Sophisticated EAD
No EAD
No LMI
OBE = overall business exposure; TMP = top-management philosophy; EAS = external affairs strategy; EAD = external affairs design; LMI = line-manager involvement
Figure 4 relationship patterns found by industry type
tion, the broader dataset used in this research provided a critical, additional variable not included in Robert Miless original framework: organisation size. The major conclusions drawn from our analysis of 391 corporate social performance case studies offer a direction for future research. First, not all of the three original business exposure measures developed by Miles (product mix, customer mix and geographic mix) were critical influences in determining a companys overall business exposure. While product mix and geographic mix were found to be statistically significant in their influence on a firms overall business exposure when using this dataset, customer mix could be dropped from our analysis for determining the degree of overall business exposure without losing significant explanatory power. Therefore, scholars or executives concerned with determining critical corporate stakeholder relationships should focus on whether the public views the firms product as a necessity or a luxury and whether it has the potential to cause serious harm. However, we acknowledge that the generalisation in Miless original framework that necessities are necessarily viewed as having greater business exposure than luxuries may be suspect in some cases. For example, the fur industry markets a luxury item but it has high business exposure owing to public protests. In addition, if a firm distributes its product or service in an urban setting, the firm is more vulnerable to interventions from stakeholders found in the social environment. Yet the emergence of electronic business exchanges and the Internet may significantly reduce the importance placed on the firms geographic mix. In a high-tech, e-commerce world, geographic location is less critical. Our dataset was collected before the emergence of e-commerce and thus geographic mix was seen as an important element in determining a firms overall business exposure at that time. Second, the addition of organisation size to the list of measures influencing a companys business exposure is an important discovery in this study. Specifically, it was found that large and mid-sized firms tend to be more highly exposed than small organisations (with size determined by number of employees). Therefore, scholars should consider organisation size in their corporate stakeholder management investigations
150
JCC 9 Spring 2003
when considering corporate citizenship. In addition, executives employed by large or mid-sized organisations should be more wary of potential challenges from their social stakeholders than managers of small organisations. It appears that the organisations size, not its industry membership, is a critical factor in assessing threats from corporate stakeholders. Third, this research also explored the strength of the interrelationships among the variables found in Miless framework. Notably, every relationship that was posited in Miless original framework was significantly correlated using our expanded dataset, except one. Thus, the grounded theory approach taken by Mileswhere a framework is constructed from the data gleaned from field-based researchappears to be a robust technique, withstanding the test of replication using our new dataset. However, the one interrelationship not found to be statistically supported using our dataset is worthy of consideration. Why was overall business exposure not related to topmanagement philosophy? One explanation may lie in the discovery of a new overall business exposure measure: organisation size. When using our dataset, considering only the three overall business exposure measures identified by Miles was insufficient to statistically explain a firms business exposure. Scholars should be acutely aware of the need to include organisation size when exploring the overall business exposuretopmanagement philosophy relationship. We should note that, like Miles, our lack of support for an overall business exposure top-management philosophy linkage challenges the proposed relationships in Miless original framework found in Chapter 1 of his book. But this lack of a statistically significant relationship does lend support to Miless grounded model, presented later in his book in Chapter 13, where the influence of overall business exposure was depicted differently in his Figure 13-1 (Miles 1987: 274). Last, now that the essentiality and comprehensiveness of the overall business exposure component has been validated, scholars and executives can now turn to the issue of relational patterns to further their understanding of how firms might manage their corporate stakeholders. As found in Miless original work, the two patterns of variables found at the extremes of the corporate social performance measure continua were discovered when using our expanded dataset. Firms that were highly exposed to the social environment tended to have an institutional-oriented top-management philosophy, collaborative external affairs strategy and well-developed internal organisational arrangements. Conversely, firms with minimal social environment exposure exhibited enterprise-oriented top-management philosophy, adversarial external affairs strategy and little or no internal organisational arrangements. Both patterns appear reasonable when considering a firms strategic management of stakeholder relationships. Firms highly exposed to social stakeholders challenges are best served by a corporate philosophy that is highly integrated with society and long-term in its outlook, with an integration of the firms economic interests with its social goals: characteristic of strong corporate citizenship. Firms not experiencing this degree of vulnerability to social environment challenges can afford to exhibit a corporate philosophy that envisions little integration with society and takes a short-term outlook, leading to a preference for legal interaction with social stakeholders and the strategic pursuit of predominantly economic interests: a less aggressive attention to corporate citizenship. Thus, the framework provides both a descriptive view of how firms manage their corporate stakeholders and attend to corporate citizenship, and a prescriptive guide for executives seeking to understand how best to manage their corporate stakeholders and pursue corporate citizenship. Limitations of this research should be noted. First, research was conducted by hundreds of different evaluators in acquiring the corporate social performance assessment
JCC 9 Spring 2003
151
data for our firms. While inconsistencies could occur since more than one researcher was used to collect the data, each researcher received consistent training in how to conduct a corporate social performance assessment and used the same guidelines regarding data collection and measurement. In addition, a single experienced researcher supervised each new researcher collecting the data. For control purposes and to maintain data quality, if there was any question raised regarding the validity of the case study data, the experienced researcher removed the case study from the final dataset of 391 firms and did not include the observation in the data analysis. In total only 27 case studies were removed from the dataset before the analysis was conducted. Second, secondary corporate documentation was often used, along with corporate interviews, to determine a firms top-management philosophy, external affairs strategy and internal organisational arrangements. This documentation could be biased, projecting the firm in a more positive light than that which accurately reflects the operations of the firm. What really occurs at the firm may be different from what a firm states in its documentation. Nonetheless, we were pleased with the fairly random distribution of the classification of the firms across the criteria measure continua. If this was a serious bias in our dataset, more firms would have been classified in a more favourable light: that is, as having an institutional-oriented top-management philosophy, collaborative external affairs strategy, and extensive internal organisational arrangements. We did not find this to be the case with our dataset. Third, the external environment may dramatically change the type and degree of influences on the corporate stakeholder relationships and some factors were not considered in Miless or our data-collection phases. For example, exogenous factors, such as stock market fluctuations, recession or inflationary times, or publicly visible events, were not explicitly considered in the analysis. Miless framework and resulting model preceded the advent of wide public use of the Internet. Modern technological advances have complicated the operationalisation of the external affairs function. New issues regarding market size and business exposure have developed, as the world marketplace has become global. Future research may wish to examine the effects of the new economy and e-business environment. Finally, future research may also want to continue the efforts begun in this study and expand on the results discovered herein. While our expanded dataset found Miless framework to be a robust and generalisable framework for measuring corporate citizenship, more detailed industry data is needed to explore within-industry relationships. It may be desirable to integrate work done on top-management design and firm performance (Haleblian and Finkelstein 1993) and work done on the relationship between corporate social performance and corporate financial performance (Griffin and Mahon 1997). Since much work has been done on the effects of structure and design on firm profitability (Post et al. 1983; Meznar and Nigh 1993) and also on the effects of organisational structure on corporate social performance (Bhambri and Sonnenfeld 1988), a bridge between the two literatures may be a worthwhile task in gaining a better understanding of how managers assess their corporate stakeholder management and citizenship. In conclusion, we believe that Robert Miless framework for evaluating and managing the corporate stakeholders provides a systematic and valuable direction for scholars and executives interested in discovering how firms might best manage their corporate stakeholder relationships and pursue a strategy of corporate citizenship.
152
JCC 9 Spring 2003
References
Ackerman, R.W., and R.A. Bauer (1976) Corporate Social Responsibility (Reston, VA: Reston Publishing). Altman, B.W., and D. Vidaver-Cohen (2000) A Framework for Understanding Corporate Citizenship, Business and Society Review, Spring 2000: 1-7. Bhambri, A., and J. Sonnenfeld (1988) Organization Structure and Corporate Social Performance: A Field Study in Two Contrasting Industries, Academy of Management Journal 31.3: 642-62. Brenner, S.N. (1988) Book Review: Managing the Corporate Social Environment: A Grounded Theory, Administrative Sciences Quarterly 33.4: 632-34. Bryman, A., and D. Cramer (1999) Quantitative Data Analysis with SPSS Release 8 for Windows (London: Routledge). Carroll, A. (1979) A Three-dimensional Conceptual Model of Corporate Social Performance, Academy of Management Review 4: 497-505. Churchman, C.W. (1971) The Design of Inquiring Systems: Basic Concepts of Systems and Organization (New York: Basic Books). Cochran, P.L., and R.A. Wood (1984) Corporate Social Responsibility and Financial Performance, Academy of Management Journal 27: 42-56. Cook, T., and D. Campbell (1979) Quasi-Experimentation: Design and Analysis Issues for Field Settings (Boston, MA: Houghton-Mifflin). Daft, R. (1984) Antecedents of Significant and Not-so-significant Organizational Research, in T. Bateman and G. Ferris (eds.), Method and Analysis in Organizational Research (Reston, VA: Reston Publishing): 3-14. Davis, K. (1973) The Case for and against Business Assumption of Social Responsibilities, Academy of Management Journal 16: 312-22. Frederick, W.C. (1994) From CSR1 to CSR2: The Maturing of Business and Society Thought, Business and Society 33.2: 150-64. Freeman, R.E. (1984) Strategic Management: A Stakeholder Approach (Boston, MA: Pitman). Greening, D.W., and R.A. Johnson (1997) Managing Industrial and Environmental Crises: The Role of Heterogeneous Top Management Teams, Business and Society 36.4: 334-61. Griffin, J., and J. Mahon (1997) The Corporate Social Performance and Corporate Financial Performance Debate: Twenty-five Years of Incomparable Research, Business and Society 36.1: 5-31. Haleblian, J., and S. Finkelstein (1993) Top Management Team Size, CEO Dominance, and Firm Performance: The Moderating Roles of Environmental Turbulence and Discretion, Academy of Management Journal 36.4: 844-63. Meznar, M.B., and D. Nigh (1993) Managing Corporate Legitimacy: Public Affairs Activities, Strategies and Effectiveness, Business and Society 32.1: 30-43. Miles, R. (1987) Managing the Corporate Social Environment (Englewood Cliffs, NJ: Prentice Hall). Miles, R., and A. Bhambri (1983) The Regulatory Executives (Beverly Hills, CA: Sage). Mitnick, B.M. (1993) Organizing Research in Corporate Social Performance: The CSP System as Core Paradigm, Proceedings from International Association of Business and Society (IABS) Conference, 1993. Post, J.E., R.B. Dickie, E.A. Murray, Jr, and J.F. Mahon (1983) Managing Public Affairs: The Public Affairs Function, California Management Review 26.1: 135-53. Post, J.E., A.T. Lawrence and J. Weber (2002) Business and Society: Corporate Strategy, Public Policy, Ethics (New York: McGrawHill, 10th edn). Randall, D.M., and A.M. Gibson (1990) Methodology in Business Ethics Research: A Review and Critical Assessment, Journal of Business Ethics 9: 457-71. Schoenfeldt, L.F. (1984) Psychometric Properties of Organizational Research Instruments, in T. Bateman and G. Ferris (eds.), Method and Analysis in Organizational Research (Reston, VA: Reston Publishing): 68-80. Sethi, P. (1979) A Conceptual Framework for Environmental Analysis of Social Issues and Evaluation of Business Response Patterns, Academy of Management Review 4.1: 63-74. Swanson, D.L. (1995) Addressing a Theoretical Problem by Reorienting the Corporate Social Performance Model, Academy of Management Review 20.1: 43-64. Thompson, J.D. (1967) Organizations in Action (New York: McGrawHill). Wartick, S., and P. Cochran (1985) The Evolution of the Corporate Social Performance Model, Academy of Management Review 10.4: 758-69. Wood, D. (1991) Corporate Social Performance Revisited, Academy of Management Review 16.4: 691718.
q
JCC 9 Spring 2003 153
Diary of Events
MarchOctober 2003 A selective listing of key conferences, seminars and exhibitions in the field of corporate responsibility
l
<
1314 March 2003
Washington, DC, USA
WRIs 6th Annual Sustainable Enterprise Summit

www.wri.org
2627 March 2003
Kuala Lumpur, Malaysia
CSR in Asia Conference

, Ms Amy Justin
3 +60 3 2140 8171
+60 3 2145 7297
Amy.Justin@unim.nottingham.ac.uk
12 April 2003
New York, NY, USA
CERES Conference 2003: Advancing Sustainable Governance

, Lisa Jacobs
3 +1 617 247 0700 ext. 32
+1 617 267 5400
jacobs@ceres.org
1011 April 2003
London, UK
Ethical Corporation Europe Conference 2003

3 +44 (0)20 7375 7561 !
toby@ethicalcorp.com
<
www.ethicalcorporation.com
1012 June 2003
Washington, DC, USA
Ethical Corporation Asia 2003 Business Conference and Workshops

3 +44 (0)20 7375 7160 / 1 800 814 3459 !
peter.carkeek@ethicalcorp.com
l
<
1215 October 2003
San Francisco, CA, USA
Greening of Industry Network 11th International Conference: Innovating for Sustainability

www.greeningofindustry.org
q
154 JCC 9 Spring 2003
About the Journal of Corporate Citizenship

The Journal of Corporate Citizenship (JCC ) is a multidisciplinary peer-reviewed journal that focuses on integrating theory about corporate citizenship with management practice. It provides a forum in which the tensions and practical realities of making corporate citizenship real can be addressed in a reader-friendly, yet conceptually and empirically rigorous format.
JCC aims to publish the best ideas integrating the theory and practice of corporate citizenship in a format that is readable, accessible, engaging, interesting and useful for readers in its already wide audience in business, consultancy, government, NGOs and academia. It encourages practical, theoretically sound, and (when relevant) empirically rigorous manuscripts that address real-world implications of corporate citizenship in global and local contexts. Topics related to corporate citizenship can include (but are not limited to): corporate responsibility, stakeholder relationships, public policy, sustainability and environment, human and labour rights/ issues, governance, accountability and transparency, globalisation, small and medium-sized enterprises (SMEs) as well as multinational firms, ethics, measurement, and specific issues related to corporate citizenship, such as diversity, poverty, education, information, trust, supply chain management, and problematic or constructive corporate/human behaviours and practices.
In addition to articles linking the theory and practice of corporate citizenship, JCC also encourages innovative or creative submissions (for peer review). Innovative submissions can highlight issues of corporate citizenship from a critical perspective, enhance practical or conceptual understanding of corporate citizenship, or provide new insights or alternative perspectives on the realities of corporate citizenship in todays world. Innovative submissions might include: critical perspectives and controversies, photography, essays, poetry, drama, reflections, and other innovations that help bring corporate citizenship to life for management practitioners and academics alike.
JCC welcomes contributions from researchers and practitioners involved in any of the areas mentioned above. Manuscripts should be written so that they are comprehensible to an intelligent reader, avoiding jargon, formulas and extensive methodological treatises wherever possible. They should use examples and illustrations to highlight the ideas, concepts and practical implications of the ideas being presented. Theory is important and necessary; but theorywith the empirical research and conceptual work that supports theory needs to be balanced by integration into practices to stand the tests of time and usefulness. JCC aims to be the premier journal to publish articles on corporate citizenship that accomplish this integration of theory and practice. We want the journal to be read as much by executives leading corporate citizenship as it is by academics seeking sound research and scholarship. JCC appears quarterly and the contents of each issue include: editorials; peer-reviewed papers by leading writers; a global digest of key initiatives and developments from the previous quarter; reviews; case studies; think-pieces; and an agenda of conferences and meetings. A new feature is the Turning Points section. Turning Points are commentaries, controversies, new ideas, essays and insights that we hope will be provocative and engaging, raise the important issues of the day and provide observations on what is too new yet to be the subject of empirical and theoretical studies. JCC continues to produce occasional issues dedicated to a single theme. These have included Corporate Transparency, Accountability and Governance, Stakeholder Responsibility; forthcoming special issues will focus on The Global Compact and Corporate Social Responsibility in Asia.
Editor
Sandra Waddock, Professor of Management, Boston College, Carroll School of Management, Senior Research Fellow, Center for Corporate Citizenship, Chestnut Hill, MA 02467 USA; tel: +1 617 552 0477; fax: +1 617 552 0433; e-mail: edjcc@bc.edu. Regional Editors: Euro-Africa Editor: Malcolm McIntosh, Department of Economics and International Development, University of Bath, 242 Bloomfield Road, Bath BA2 2AX, UK; e-mail: malcolm.mcintosh@btinternet.com. Australo-Asian Editor: David Birch, Director, Corporate Citizenship Research Unit, Deakin University, 221 Burwood Highway, Melbourne, Victoria, Australia 3125; e-mail: birchd@deakin.edu.au.
Notes for Contributors

Submissions
Submissions via e-mail (edjcc@bc.edu) are preferred if saved as Microsoft Word or RTF documents. Alternatively, two copies of the paper and a PC-compatible disk should be sent to: Journal of Corporate Citizenship Editorial Office, Boston College Center for Corporate Citizenship, Carroll School of Management, Chestnut Hill, MA 02467, USA; tel: +1 617 552 0477; fax: +1 617 552 0433; E-mail: edjcc@bc.edu. Hard copies of all figures and tables will be required if the paper is accepted.
Presentation
Articles should be 4,0006,000 words long. Manuscripts should be arranged in the following order of presentation. Title, subtitle (if any), authors name, affiliation, full postal address and telephone, fax and e-mail. Respective affiliations, addresses and e-mails of co-authors should be clearly indicated. Please also include approximately 50 words of biographical information on all authors, and a good-quality photograph (print, not transparency; black and white preferred; digital files acceptable if at least 300 dpi 4 cm) of each. Second page: A self-contained abstract of up to 150 words summarising the paper and its conclusions; and between 7 and 10 keywords, which will reflect the core themes of the paper (anticipating possible search terms that might be used by a potential reader). Subsequent pages: Main body of text; footnotes/endnotes; list of references; appendices; tables; illustrations. Authors are urged to write as concisely as possible, but not at the expense of clarity. The main title of the article should be kept short, up to 40 characters including spaces, but may be accompanied by a subtitle if further clarification is desired. Descriptive or explanatory passages, intrinsically necessary but which tend to break the flow of the main text, should be expressed as footnotes or appendices. First page:
References
All bibliographic references must be complete, comprising: authors and initials, full title and subtitle, place of publication, publisher, date, and page references. References to journal articles must include the volume and number of the journal and page extent. The layout should adhere to the following convention: Clifton, R., and N. Buss (1992) Greener Communications, in M. Charter (ed.), Greener Marketing: A Responsible Approach to Business (Sheffield, UK: Greenleaf Publishing): 241-53. Porter, M.E., and C. van der Linde (1995) Green and Competitive: Ending the Stalemate, Harvard Business Review 73.5 (September/October 1995): 120-33.
WCED (World Commission on Environment and Development) (1987) Our Common Future (The Brundtland Report; Oxford, UK: Oxford University Press).
These should be listed, alphabetically by author surname, at the end of the article. When citing, please use the authordate method in parentheses, e.g. (Ditz et al. 1995: 107).
Endnotes/Footnotes
Endnotes/footnotes should be numbered consecutively in Arabic numerals and placed at the end of the manuscript before any figures. Automatic endnotes/footnotes are acceptable if using Microsoft Word.
Tables, graphs, etc.

All tables, graphs, diagrams and other drawings should be clearly referred to and numbered consecutively in Arabic numerals. Their position should be indicated in the text. All figures must have captions. In all figures taken or adapted from other sources, a brief note to that effect is obligatory, below the caption.
Photographs
Photographic material relevant to the article is encouraged and should be supplied as prints (black and white or colour; digital files acceptable if at least 300 dpi 7 cm).
Copyright
Before publication, authors are requested to assign copyright to Greenleaf Publishing. This allows Greenleaf Publishing to sanction reprints and photocopies and to authorise the reprint of complete issues or volumes according to demand. Authors traditional rights will not be jeopardised by assigning copyright in this manner, as they will retain the right to re-use.
Proofs
Authors are responsible for ensuring that all manuscripts (whether original or revised) are accurately typed before final submission. One set of proofs will be sent to authors before publication, which must be returned promptly.
t To discuss ideas for contributions, please contact the General Editor: Sandra Waddock, Professor of Management, Boston College, Carroll School of Management, Senior Research Fellow, Center for Corporate Citizenship, Chestnut Hill, MA 02467 USA;
tel: +1 617 552 0477; fax: +1 617 552 0433; e-mail: edjcc@bc.edu.

Corporate Citizenship: The Journal of

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Citizenship: The Journal of

Uploaded by

Copyright:

Available Formats

the journal of

154 155 156

The Journal of Corporate Citizenship

Sandra Waddock, General Editor

Making corporate citizenship real

Getting the definitions straight

JCC 9 Spring 2003

2003 Greenleaf Publishing

2003 Greenleaf Publishing

JCC 9 Spring 2003

Developments in The Journal of Corporate Citizenship

About this issue

JCC 9 Spring 2003

2003 Greenleaf Publishing

Global corporate citizenship

2003 Greenleaf Publishing

JCC 9 Spring 2003

Sustainability and stakeholders

JCC 9 Spring 2003

2003 Greenleaf Publishing

From the Center for Corporate Citizenship

on behalf of the center for

2003 Greenleaf Publishing

JCC 9 Spring 2003

practising corporate citizenship

Global corporate citizenship

Corporate citizenship practice

JCC 9 Spring 2003

2003 Greenleaf Publishing

2003 Greenleaf Publishing

JCC 9 Spring 2003

another reason for a focus on

with others to establish the Stakeholder Democracy Network (www.stakeholderdemocracy.org).

JCC 9 Spring 2003

2003 Greenleaf Publishing

dame judith mayhew: champion of the london sustainability principles

2 Roger East, Faith in the City, Green Futures 37 (2002), www.greenfutures.org.uk/features/default.

2003 Greenleaf Publishing

JCC 9 Spring 2003

JCC 9 Spring 2003

2003 Greenleaf Publishing

Rumbles from the jungle

2003 Greenleaf Publishing

JCC 9 Spring 2003

at a meeting in december of the

JCC 9 Spring 2003

2003 Greenleaf Publishing

t Diamonds are not tampered with

2003 Greenleaf Publishing

JCC 9 Spring 2003

marina prieto: critical of auditing practices

CAWN published these concerns as WRAP became operative in El Salvador,

JCC 9 Spring 2003

2003 Greenleaf Publishing

in december, a paper on a similar

(London: Zed Books, 2003).

2003 Greenleaf Publishing

JCC 9 Spring 2003

22 www-ni.laprensa.com.ni/archivo/2002/diciembre/15/nacionales/nacionales-20021215-10.html 23 www.bananalink.org.uk/impact/human_impact.htm 24 www.itanica.org; see also www.cawn.org

JCC 9 Spring 2003

2003 Greenleaf Publishing

as the nicaragua case illustrated,

the nftcs new campaign follows