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    Blowfield Murray 2008 Taxonomia

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    Carlos Tavares

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    ‘The trae people here share similar deological perspectives, but have not aiays ‘he seme conclusions about corporate responsibility How convincing is Mackey's argument that profits arenot the purpose, but meens tealing social an ervircamertal ends? «te Smith ght o say hat comporate responsibly advocotes ere opposed to oconomic and techiaogial progress? le Fiedman agresig with corporate responsiblity advocates in saying tat theres @ ral for many phitncheopic cts? business Ataxonomy of business responsibilities ‘Values or buslness-society perspectives of corporate responsibility essentially ask Wy should company be responsible?” more direct approach is to ask what ts that compan- les are being held responsible for. Although the answer Is a broad and seemingly dis- jointed array of issues, this type of taxonomy appeals to many practitioners who are ‘concerned less with underlying rationales and more wit technical problem solving There are various ways of categorizing the main Issues that fall under the corporate responsibility heading today and, inthe following pages, we provide an overview ofthe ‘ost prominent ofthese (see Box 1.3), Whether ths taxonomy is comprehensive enough to ineluce all of the Issues for whch business might be held responsible i «topic for debate to which we return in later chapters. Nonetheless, the list ast stands, isa challeng ing one and relates to many aspects of business that compantes might have been reluctant to consider inthe past. We have already provided a bref overview of ‘Business ethic’ (see p18), so we wil turn now to legal compliance, {ox 1.9 Prominent areas of corporate responsibilty activity today Business ence Lege! compance Phigntrooyanacormunity investment Envrcamental marogerent Sustinabilty Animal nts Human hs Werke ight and waltore Mecket rations ‘Conuston Corpor governance 4) Legal compliance eshaps the most fundamental responsibilty that a company has towatds society it hey the lav. No matter ow innovative or exciting corporate responsibly may some times appar the fact emains tat, in mot ofthe world, the baste expectation Is hat companies make a profit and sly with hela. But not all companies ae law-abiding, fost as ey are nt alway prosabe; any deinion of responsi tat ignores ga Compliance nerenty faved Loca nations and nteratonal asso the es ty which oeorations play and, overtime, as pres what compan can and can ero wit wears oaea su x eploytet, envcontental protection, cpio, human its, and produc safety. One only needs o thnk of pornography arms sles, and arcotes to realize now thea defines whats egtiate busines cy one weed nly conde corporate law to appreciate boi spels out he purpose of the company. Ther ae, ower strong reson for saying tat corpo eaponsblltyisrere tan egal compliance, Corporate pilnthropy fc te mos pa, dsceionay, bat may ‘companies fe complet give ack to soit inthis way (ee below). Ever since the ince century, ome companies have sought odo oe than mee tattory og Sous sometimes fo preeopt tough legion and sometines because Is com a5 soc, Sine the 198, tere has ao been renewed awareness De conn, legal institutions rote in the nation state are inadequate to regia ult tational companies. Moreover, tere are many instances in which goverment have roased week regulatory environment (nore oatact Inver vestcent,levng empanies pen to charges of exploing worker coumunitis and the envrocent “The degree to which voluntary iniativesandsl-segultion can adress sich ues is cenial to many contemporary debces about corporate resp. Bat, even Is tre tat government find t ander to regulate busines than inept ssa to gnore the very red power hat gsltion has, The Allen Torts Cats Act 1789, for cxample, dept bring a US lw, has een used to make companies leglly accountableor thal behaviour overseas and ls modelled onthe US Foreign Coup Practices Act 1977 ate satng to nd tis way ono sate books in other counties, Tete is as cone ex body of international a ois sucha lou rights slavery, economic lg, 2nd the envconment, which, despite beng incomplete, unity, and pool enforced, onetless offers the bas fr regulitng Busnes nthe coming yeas Philanthropy and comunity invest ‘As noted, for some, cozporate esponsibility Is what lies beyond the law and an important area of lscretionary responsibility as been the Idea of ‘giving back’ to soclety through philanthropic donations. Business leaders such as Carnegie, Rowntree, and Ford gave back large amounts of their individual wealth to establish foundations or to invest in favoured projects. Companies such as Hitachi, ExxonMobil, and Tata often encouraged by tax regimes, gave as much as 5 per cent of ther pre-tax income tothe arts, community evelopment, education, and other valued causes. Even though it no longer defines corporate responsiblity, philanthropy remains important, as the multi-billion-ollar endowments by Bill Gates and Warren Buffet show. [nthe USA, whete 2,600 companies have charitable foundations, coxporate giving rose 14 pe cent in 2005 to $8.4bn, equival- ent 10 $685 per employee." That same year, the UK's $00 largest business donors con- ‘rfbuted £1.07n in cash and kind, arse of 1S percent. In the 1990s, companies increasingly began to take a more strategie view of phillan- thropy, seeking out causes that were aligned with their business goals. For example, ATECT's foundation used its funding of edacation procs to win the eat of government policy advisers and this gave it an inside track in subsequent policy making about the Information superhighvray.* Companies such as Taiwan’ King Car Food, and Japan's Sony and Toyot, have shovtn this to be a worldwide trend” and the US Conference Board (2006) reckons nearly half of compan align thelr community investment programmes ‘with business objectives, Moreover, some even claim that philanthropists may potentially contibute more to eliminating world poverty than do the leading industrial nations." “This has led some companies to adopt cause-elated or affinity marketing, under which companies invest in social causes that complement thelr brands.” But companies are ‘wary of criticism thet anything they do to give back is perceived as a public relations ‘exercise and ave sought to emphasize the win-win nature of investing in communities, ‘while alo taking a more critical view ofstaff volunteering and product gifting. Company- ‘backed initiatives, suchas the Fartnership for Quality Medical Product Donation and the [London Benchmarking Group, have helped focus attention on what constitutes good practice andthe impact that philanthropy can have, er ‘The environmental dimension to business is nothing new: industries such as ageculture hhave always recognized the importance of managing natu to achieve commercial ends. Ploneers of environmental thinking such as Stelne, Morris, and Huxley recognized the impact of business on the need for environmental management, Nonetheless, the ‘environment—by which we mean the natural conditions under which any entity lives ot ‘develops—as often been treated as something to be exploited by business, with pollu- ton, contamination, and resource depletion regarded as the necessary price of economic Prosperity. Since the 1960s, however—especially, but not exclusively, in advanced industrial ‘conomies—socety has increasingly questioned the cost of growth to the enviconment. Exposes such a5 Carson's silent Spring (1962), & study of the environmental impact of chemical pesticides, and the emergence of a new kind of citizen activism around envi ‘onmental issues led to tough legislation and the creation of special government agencies. ‘Throughout the 1970s, Wester governments produced an enormous body of command- and-contiol regulation to limit the eavironmental impact of business. For companies, however there always seemed to be a trade-off between environmental and financial pe formance, and, for most it was a distraction from, rather than a component of, good ‘management, Environmental issues such a8 pollutants, emissions, and waste were typically dealt with as ‘end of the pipe’ problems (Le. involving costly remediation or litigation), rather than as something that might be tackled wpstiam, as part of core stratery In the 1980s, the effectiveness of command-and-control regulatory solutions started to be questioned, and bot companies and regulators began to accept that preventing pollution could bea more effective way forward than simply punishing it. Environmental issues found theit way into marketing strategies and industries focused on environmental technologies and services emerged. In the 1990s, envizonmental management standards such as BS 7750, the EU Beo-Management and Audit System (EMAS), and the ISO 14000 series provided new ways for companies to understand and manage thei environmental Impacts. Companies began to realize that, in certain situations, improve environmental performance could have a postive impact on the financial bottom line. Ia wat came to be called the ‘greening revolution’, the business-environment relationship became, for some companies, less costly problem than a strategic opportunity." ‘The greening revolution was accompanied by a shift In goverment attitude, notably {in Europe, where the legal responsibility of producer fr their products began to cover ‘more ofthe product ie cycle, so that factors such as disposal and recycling had tobe con- sideted in product design, manufacturing, and marketing. ‘Cradle to grave thinking has become part of designer philosophy in industries ranging from electrical goods, 9 footwear, to automotives. Major chemical companies have invested tieavily in develop- ng more environmentally beneficial subsites for harmul materials. At the same time, new industries, sch as biotechnology, have presented new environmental challenges (eg. the perceived environmental consequences of genetically modified organisms) and ‘established industries, such as energy, have generated new debates by investing in renewable energy at the same time as they remain dependent on environmentally amag- sng eabon-based fuels Sustainability With its emphasis on financial and environmental benefits, the greening revolution ‘marked a significant step forward in corporate responsibility and one that most corporate responsibility theorists falled to predict. The tem ‘eco-efficiency’ has become widely ‘sed, highlighting that there ned not be a tradeoff between business and enviconmen- tal performance. As McDonough and Braungart (2002) point out, however, there is a significant difference between being eco-fficient and being eco-ttective: iis the di- tinction between being less bad and consctously striving to do more good. Ifthe greening revolution helped companies to think about making thelr products Iss hac, eco- ‘tlctiveness (what bas been called “beyond greening’) requires companies to rethink {heir technologies, their products, and thei whole vision of the contsibution that busi- ness makes to society ‘The importance of beyond greening has grown as sustainability has become a major public concern Sustainability—the ability to sustain a high quality of ie for current and future generations—requires companies to rethink what they produce and how they do so, It aso involves society rethinking what It wants from commercial enterprise 2 question that is captuting widespread attention, asthe potentially catastrophic conse. «quences of global climate change become more widely believed. Although ‘sustainability’ sstill used in some corporate responsibilty literature to refer toa much narrower eco-ffciency agenda, in it fullest sense, it efers to something that ‘cannot be captured only by reference to an environmental or a business rationale. The ‘miple bottom line was developed to address this by encouraging companies to think in tezms of adding economic, social, and environmental value.» This provides the frame= ‘work for some companies’ sustainability reports, bt merging these three dimensions of value in a way that shows the company’s relationship to sustainable development has proved difficult and there isa marked tendency to teat each topic in isolation, ‘There ate other ways of conceptualizing sustainability. For example, Hewken et al, (1999) have adapted the Natural Step—a framework for understanding sustainable eco- logical systems—to the business context. Hart (2008) argues that there are three inter- ‘dependent economles—the money economy of the Industrialized word, the traditional economy of poorer counties, and nature's economy the natural systems and resources ‘that support the other economies}—of which business needs to be aware, but each of ‘which has tobe approached through different strategies. Such frameworksare themselves ‘response to questions about whether capitalism is tslf sustainable, and we delve deeper Jno sustainability and its business casein Chapters § andl 9. Groen ia yronn—a business eae fort People somatimes say hat corporate responsibilty means bong response with othr peo- ‘les money: using company’s assets io solve probes thai business shoud nothave to solve: ‘detecting menagement fim creating shareholder wealth. Bux business loaders are becoming ‘more cutspoken, arguing that the most pressing problems facing society nous business involvo- ‘ment, and that, what's more, there may be money to be made in realizing this fact Take, for example, Diawk Dizmond Mines inc in Canada, which used to haul equipment and _supols forts mines onan ice highway thal svadsed vos, kes, ndtunda. Now, owing octen- tte change, the ice never ges thick enough to support tucks an the compen has to pay it eons of exis dors to ais matrials. n Mal, sing temperatures anda shorter ary season havo prompted researchers to find altemative to staple foods, and, until they come up with an answer, Ue county's economy isin jeopardy. Industries fom ol and gs, to cruise lines and power sup, are wresting withthe consequences ofa warming earth, ining ways to adopt to it and of reducing te effects. ‘Some compari, sotably in the USA, have notoously been linked to public rlatons and polticalcempaigns that seem to deny that global warming exists, Te Competitive Enterose Institue, for example, ses thatitrecewves funding rom ExxonMebil and the American Petoleum Inevtut to advocate against the oles o and coal in mate change, Yet here seems increas: ingly less syroathy fr deniers ad growing suppert for nding solitons. Reinouance compar: as ware among the fist wan businesses tht they needed to have global warming poles in place or face boing considexed too high an insurance risk Investors are increasingly awa of the copertunites that orzen investment represents and ron its ft only about whare no to put your money leg avoiding investing in envronmentaly L tech olgias and in major envioreentl change) Tha fact that carbon-based ues ae inked both {oclmate change end a dependence on unstable poical regimes hss proved a double spur to investrontn renewable oneray, trom sla panels and ethanol, to hydrogen and nuclear pow. ‘x te company lve, Nike and WalMart aim that ganic cotton fs no roe cost than its ‘orventionalaltemaive and are armen the many businesses that have found cast savings in fethnking thai relaionship othe enwronmert. B&O, the DIY store, distinguished isetin@com- Dative marketplace by its exdymover suppor of sustainable forest management and oer fenvonmentaesues, Buta pasion fr he envcnmentis no guarantee of popula or business suceeas Ford mote company renovated te River Rouge plant ae 8 modo of green engineering. butlost ony markot advantage hesause the opening ef the plant coincided with te launch af one ‘ofthe most fustungry vehicles in the wid, And therein las the cnalong ofthe now green busness modet wether atoraive energy oss harmful practices, and new technology wit bo ‘encugh to offset tho glbal enviconmantalconsequonces of e illon-pus new consumers in ‘xunties such as Inda ond Chine al demancing more, while the old consumers of the West 20m uneling to sett fo less ‘Adapted from Acer, 2008; Corey, 2006; Vesteh, 2008: uostions “Thare has boon increasing coverge of compsniasidentiying business opportunites robtng to arvronmental challenges. + Does he fact hat a company s dives bya business ase ‘think green make ts aim tae a esponsiie corporation mare o lass cade? 2 Inekdion to energy, what te some ofthe ater ares in which green product might reap retumns for investors? 2 Which companies do you think ee leaders, and which ave loggers, terms of ‘addressing environmental chaenges? Animal cights ‘With the current focus on social and environmental concems, i tends to be forgotter that animal rghts was a stimulus of corporate esponsibility in the 1980s. Before that animal rights were dealt with in moze conventional ways. Inthe UK, Rath Haron’ 1964 book, Animal Machines, drew public attention to what she called "factory farming? and a world of industrial farm bulldings, dense stocking, and mechanized feeding arm ‘watering. Io 1965, the UK government, a5 a result, convened the Brambell Commniiex ‘whieh made what were to become influential recommendations on mandatory anime husbandry standards and statutory provisions, But Hastson’s book also catalysed publ ‘concern about the treatment of animals. Animal rights’ activists targeted factory farming ‘but also spread to include animal testing, hunting, and the very idea of using anim: products, notably fur. Typically, business has been on the receving end of these can ‘algns through boycotts, protests, shareholder activism, and attacks on company fac, ites. The highly publicized campaign against Huntingdon Life Sciences, where mo recent activistshave tried to“name and shame’ shareholders, s but one example of suc ‘campaigning. Some companies have, however, responded positively to animal rights concerns ‘Organic animal husbandry standards include stringent animal welfare requirements and form the backbone of new markets responding not only to public concern about live- ‘tock, but to recurring public health scares connected to aspects of intensive farming, Such as B.coll and BSE ('mad cow disease), People forthe Ethical Treatment of Animals (PETA) runs a number of highly visble campalgns targeting particular companies and, fimong other things, has succeeded in getting fast-food chains such as McDonald's 10 scrablish animal welfare committees involving outside experts. Perhaps most famous of iris The Body shop, which, asa global chain of beauty stores, prohibited the use of anl- ‘nal testing in its own products and used its postion to redefine what were acceptable practices fr the cosmetic industry as. whole, Human rights since 1945, inthe aftermath of the atrocities inflicted during World War Il, the notion of a universal set of human rights shared by all people has gatned strength, These are typ- ically portrayed as fundamental principles allowing individuals the freedom to lead @ tignised life, fee from fear or want, an ree to express independent beliefs" The 1948 Universal Declaration of Human Rights is the most widely used codification of human rights and includes the rights tif, recognition before the law, freedom of thought, con- Science and religion, and freedom from torture, slavery, and imprisonment for debt or through retroactively applied legislation. “The Universl Declaration puts the onus on individuals and organs of society to uphold these rights and, in recent yeas, business has been singled out as one ofthe Key social institutions that has responsibilities beyond its conventional fiduciary obligations. Thus, for example, rien workers at factories in Vietnam suffer beatings and sexual harassment, dr children in India are enslaved by debt bondage, or forced labour is used fr the benefit ‘f multinational rms in China and Burma, or companies fll speak out about oppress Ive government actions in Nigeria, ll ofthese well-documented acts are Interpreted as business falling to uphold human rights. The notion of companies as organs of society has been vague, but the idea oftheis bing explielt subjects of international human rights taw began to be tackled in the United Nations’ (UN) 2002 draft Norms on the Responsibilities of Transnational Companies and Other Business Enterprises with regard te Human Rights, Moreover, aspects ofthese rights have found their way into numerous Voluntary codes of conduct, such asthe Global Sullivan Principles that were inital ts- feted at busineses operating in apartheid South Africa the MacBride Principles that were med at ending workplace discrimination in Northern Ireland, and the OFGD Guidelines for Multinational Enterprise. They are also explicitly mentioned in standards of labour practice that multinational companies employ in thee supply cans, such as SABOOO and the ETI Base Code. “The scope of universal human rights agreements has expanded since the Universal Declaration. The UN's Intemational Covenant on Economic, Social and Cultural Rights focused on fai wages, the rights to work and education, to freedom of association and collective bargaining, and to workplace hesth and safety, is international Covenant on Ci and Potical Rights emphasized te nights to ile to peaceful assembly, freedom from torture and crue! or degrading treatment, freedom from arbitrary atest and deten- tion, and ethnic and minoety eight. As corporate responsiblity fs evolved, some nies uhasapael detonate fc ooo and cultural rights, while others, such as mining, oil and natural gas, and logging, have found themes more involved in uso clan pola ihtsThus, orem seine nest etn compen ha Tes ap no ee cara tention to far wages, working conditions, and ther worker rights and wel fareisues, whereas those such BP, 8&Q, and Rlo Tinto have ad toads issues such a the behaviour of security forces, indigenous people’ right sect {genous people's rights, and the management of ‘Workers’ rights anc! weliere been, Indi cons, wor lt poetons wae ae) on aed Dent independent sation pay rove og unten te consaton. wa ao es, nthe Cold Ware polis, meer nt et sen «Sve oct we conomican ctr ight reson Wan Ro pro, Whe srk hts never aie ety ee oth cote rene of og Sons ue te lta Labour Oration (0) dt nem ade cnton movement tna only with hei wo ses of wok eplotation in sew ella the ly 190 tats ne nrc of once Sere ce The ono in Indonsian ao cen Sa came nt mm. ti ep. nes al ot ee eprom at hs ae ior eto nme aid at epson ws the pce pd or cos poe et testa ey of ngpte ans dss ss and ow wags res teed ue pts a compas cui et gh, oi the man eo sine mrs, coneqey, opal ich Le St began oo i pls advo conus ht conan alos apc twee and le Ne government organizations and trade unions cajoled. 8 ld orp ing coarse lates to ence higher standads and ol egrzatonah =s Coe a hata and be BRING Foundtn formed y the domes toy nd Bae treo mprve aay mong Wiehe ren om cde coe yh rt opted ody wes toy al cones die Leon on anal Pncps ns We at ed -dealt with more rigorously than freedom of association and working hours. ‘ SRT ln 1991, Indonesia was» booming location for producing garments ane spots shoes for msor ‘Wester brends such 2s Nie, Cen Klin, and Puma. But the largely femal workorce was poaty sid, with over 72 percent reeniving lass than the alroady etry lag! minimum wage. ‘Although it was bribes to local fils that were as high as 30 per cent of production costs), tathor than wsgoe ealeated ate litle ss 2 por cant of production costs that aia into corporate profs, local menagers seid they were powerless to teat workers batter Compulsory overtime, leading to Athour shits, was 3 regular Feauze of worker’ Ives, yet som women were happy fo the extra hours in oder to survive. Workers Geserbed how they could not atfrd to got hospital after workplace acidents, and @ survey of fectves producing shoes for Nice revesie thatthe base wage fren experianced employes ws less than hal the Indonesian government's estimate of what i cost 10 meet a person's basic physical needs. On ‘topo tis, ret miltary personnal were aresda sight arcing he lector, while workplacw accidants were so common that @ nurse said he had lost count of how many fingers hed been amputated Representatives of Western brands denied tht they had ny sayin how the factros ware ‘maneged, although joumslits winessed at firsthand production supervisor tom companies ‘such a Nik turing up at he factories ona daily basis and giving order lool management. Claims tat twas untenable to aise wages rang hollow as medi and academic reports argued thatthe cost of paying ling wage anc curing back werting hours would add a mare 13 conts to theretal price of a $100 pai of trainers. Increasingly, companies found themselves challenged bythe Western metiatoustlyieiractions as, grdusly, werkarights found thei way onto co- potete ae political agendas. (0NG},18812,5; Batinger, 1992) Uwostions (One ofthe most sinfcant changes in cosporat eeponsiiyinecent years has bean the acceptance by mejor companies of thor reszonelbiy for working conto int supoters factories. Why do you think these companies denied this kindof responsi n the early 19806? 2 For what ypes of workers sights should they take responsibity? ‘ny were these compsries made responsiie, rather than local governments 2 Internationa agorcies such asthe LO? arc relations In tive 1950s and 1960s, falth-based and other organizations responded to their members! concerns about unequal distribution ofthe wealth created by trade by establishing alten- stive trade organizations. Oxfam Trading, Traidcraft, and others invested in building {he capacity of producers in poor counties, and sold thelr handicrafts and other products In Western markets. Later, beginning in the Netherlands, fartrade labelling organiza- tons were formed, guaranteeing tothe consumer that certified producers and trader, in commodities such as coffee, tea, and cocoa, met specified fairtrade standards that incade ox 14 Comparing the res of ethic! sourcing end fairtrade Ethical sourcing Fame Primer fess is conditions of rod Pinay feu ero tadng Wists witnessing radng uns Ole natematovadrg chon epmcay poder xgeiationeoparewen worker freon on é Brae, andere buyngaenshog Caretstninds ost sesicable ast tastadatemal praca ough ‘to commercial producers (slthou tage commode ae ae ‘i eet Suites rsp ain "dno oe Se oe rc dec suppor son or Asay om hans eazcy ura and promotes cho ery ng Demertin between oaicussrcooys Santos vag vane fo wate: Exepton ptr, oes oon worl! wae Dror gumanie pices opodicers — Guetoos amnmum emgus pce cat Guaatons gat pon eam ont Gries corsiour ssid Asus natamumado ues ta sso capes ry ou od terre co ot aye ton coe bar Stands Doesnot require producers toadopt Pro r ceases ease ovis og tc dao byes imum eo Bowen ets then of odo ad payment asec Famade soften confused with inativs to protct workers right uch as ethical sourcing (Sc Hox 1, Ceiinly, as fata has expanded beyond sal producer Ince plantations the movement has become more explic about orien” signs ‘What ditingisesfaerade, however, that is markt focused, englnecting dng tltonso that he weakest ckemensof the wag chain, suchas anal rome pospen 'vacinowiedges the need for prottaiity, but is aso founded onthe asumprion eg urkts do not stb bens fal and have negative soll consequences The same pein of hamesing the power ofthe inakets forthe beni of he pes ‘ound in intiatves populares under the headings ‘bottom ofthe pyramid and terpoc ste scl opportunity’ A wellknown example ofthis i the mlcohnance made oe nally developed in Bangladesh, but now fund throughout the wot, Nicetoanes ores poor people wth nana capital without the ned fr colt, blpng tree toavotd astronomically high usury charges and providing them with a safe place to keep ‘tei money, Initially it was promoted by non-government and aid organizations, but more recently, major banks such as Citigroup and Deutsche Bank have started to offer ‘microfinance services. A variety of models have evolved, such as the pioneering Grameen Bank, BRI in Indonesia with 30 million savers, and ProCredit with banks throughout Eastern Europe, ‘Outside finance, companies such as Unilever and Procter & Gamble target basle soap, micronutrients, and other product a low-ncome consumers. Companies have found that by investing in poor communities, they can increase thelr sles, improve thelr work: force, develop new products, and increase the range of services for otherwise underserved markets As we will see in later chapters, there are questions as to whetber the thetorle ‘matches the reality when it comes to this type of market engineering, but the market relations aspect of corporate responsibility sone that is attracting increasing atention, not east because it more red allows debates about corporate responsibilty tobe framed in ‘terms of opportunities rather than problems. The language of corporat responsibility also evident, for example, in the debate about obesity, asa result of which food and bev. erage firms such as Cadbury Schweppes and PepsiCo are starting fo review thelr product, hines and marketing strategies, or in the debate about the impact of major retail chains on local businesses Corruption Business has long been criticized from diferent parts of the ideological spectrum for using Diibety and corruption to influence policy, win contracts, and otherwise distort both the functioning of free markets and the political process. Transparency International, an International non-government organization that lobbies against corrupt practices, defines corruption as the abuse of entrusted power for private gan, Although often portrayed as 4 victmless crime, corruption has been associated with low wages, unsafe counterfelt products, and hazardous living and working conditions. Its also blamed for undermin. Ing democracy and sound governance, stiling private sector growth, and encouraging Inchicient business management (because winning contracts comes dovn to influence sather than competency). Industries such as mining, construction, and defence have been especially citcizd for ‘paying commissions to win business, not last in countries with limited transparency and. accountability. This s only partially accurate, because the influence of business on. gov- ‘emment remains # hot topic in many advanced democracies and industis from bank ‘ng, to pharmaceuticals, to football, have all been implicated in comuption scandals, "Nonetheless, the traditional taigets have been atthe fretiont of corporate responsibility Initiatives in this area including the Extractive Industries Transparency Initiative, which ‘compares company payments with government revenues from ol, gas, and mining, and the Business and Corruption project on the role that business can play. Combating cor ‘ruption has also been added to the principles of the United Nations’ Global Compact, but, despite these developments, some still downplay its importance, either because it {is held to be culturally acceptable in some parts ofthe world, or because of feats that, by geting too seit with certain governments, companies wil lose busines to less srupul- us competitors Corporate govuinine CCortuption and malfeasance within companies Is one reason why some see corporate {governance—the way in which rights and responsibilities aze shared between different ‘corporate actors—as an essential part of corporate responsibilty. The fat that Enron had ‘been praise for its leadership in corporate responsibility just before it collapsed because of falled governance made it very clear that ignoring the latter can sedously undermine {he credibility ofthe former. At the same time, governance—and, in particular, ow it prescribes the fiduciary duties of corporate officers—is recognized as posing particular ‘challenges or corporate responsibility, not leas ow companies can mest obligations to shareholders while flillin the expectations of other stakeholders. Both Harvard University’s Kennedy School and the environmental non-governmental ‘organization (NGO), CERES, for example, have, in different ways, put governance tothe {ote oftheir work on corporate responsibility. Many companies ae, however, reluctant {to tackle some of the inconsistencies that have been highlighted. For example, political lobbying remains an important activity for many companies, even though it can leave ‘them open to accusations that they are working against the pubic good while simaltan- ously claiming to promote it. The disparity between executive remuneration packages and those of the vast majority of employees regularly attracts media and academic Scrutiny, reflecting wider concerns about the ich-poordivkle around the wot, Yet gov- femmance reform has made litle impact tn this age. This snot to say that there has been no progress with governance in aeas of interest to corporate responsibility. There is more racial and gender diversity on the boards and ‘amongst senior management teams of leading multinational companies than in the past, thanks, in panto investor concerns, tougher equal opportunites legislation and govern ‘ment enquires suct as the Higgs Report in the UK. Although there is nothing like equa: lity, the reasons for disparity are much less likely to be connected with overt prejudice than they were in the past and are more likely tobe to do with education, wealth, and ‘other systemic factors, Corporate responsibility has also found sts way, although vith mixed results, onto governance reform initiatives such asthe UK Company Law Review, ‘and the Australian government's Corporations and Markets Advisory Committee enquiry into directors duties, corporate responsiblity, and reporting. Cental to such initiatives 4s. a debate about directors’ duties to those other than shareholders and the idea of ‘enlightened shareholder value. ‘More generally, companies such as Walt Disney, IBM, and intel include corporate gov- ‘ermance as part of ther corporate responsiblity reports, while pressure groups such as the Interfaith Center on Corporate Responsibility see aspects of governance, such as exee- ‘live compensation, the independence and inclusivity of boards of directors, and trans _parency and accountability to shareholders and other stakeholders, as important parts of the corporate responsibility agenda, Transparency and disclosure are recutting themes in debates about good governance and coxporate responsibility more broadly. But while some argue that good corporate governance isan indicator of eficiency, ultimately, the degre of transparency depends on legal and stock market requirements. As the number ‘of privately held companies, oF the numberof multinationals from emerging economics, grows it will be interesting to ce how the relationship between corporate governance and corporate responsibility develops. summary Corporate rspensibity isthe newest ‘ot thing in business managornent. What wo mean by ‘corporate responsibilty’ is constantly changing #s society itself evlves, effecting our expacta- tions of businass and the way in which it relationship with society is handled. Tha cecussion spout weat corporate responsibity regan cn be entered into trom sevaral gateways. We can think the company a8 an eaty ih ts own values, or at esate 9 vessel that has to Secor ‘modate te competing values anc mor! pnciples of diferent peopl. Wie can also tink of 2s ‘member of society tet has o upheld ceten cues and obligations n order tobe. good ctizen, ‘Alenacively, we can weat it as something thats cormpelid o react toa wide ange of disparate issues rtecting the concoms ofthe contemporary work ach gatomey has is advantages ard csedvantags fom an analical standpoint, but itwauld bo mietake to conoude tha corporate resporsibit is diminished because tere i no univers

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