Business as a political actor in an era of emergent social transformation

Peter Edward, Newcastle University Business School DSA conference, November 2012

Outline Changing economy of poverty From international to domestic politics The problem of re-politicization Political CSR and its limits The political as formation of hegemony New questions, new directions

Poverty forecasts
Global poverty headcounts (millions)
7000

6000

5000 $10 a day 4000 $2 a day $1.25 a day 3000 Pessimistic Moderate Optimistic 2000

1000

0 1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

Changing economy of poverty

LIC poverty as % of global totals
100.0 90.0 80.0 70.0 60.0 $10 a day $2 a day

50.0
40.0 30.0 20.0 10.0 0.0 1990

$1.25 a day Pessimistic Moderate Optimistic

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

Poverty in the future a problem of national distribution

HIC and UMIC poverty as % of global totals
70.0

60.0

50.0 $10 a day 40.0 $2 a day $1.25 a day

30.0

Pessimistic Moderate Optimistic

20.0

10.0

0.0 1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

Comprehensive/ holistic

Concepts of development

Interdependent / integral

Instrumental

Business engagement

with development

Reductionist/ particularistic (Edward & Tallontire, 2009)

Comprehensive/ holistic Fairtrade Labelling Organisations International (FLO)

B: Institutionalising Mainstreaming

Setting standards

Alternative Trade Organisations

Business engagement

Concepts of development

D: Politicising

with development

??

A: Managerialist

C: Pragmatic

Reductionist/ particularistic

Comprehensive/ holistic MACS (co-operatives) Standard Assessment procedures

B: Institutionalising Opening to commercial finance

Setting standards

Womens selfhelp groups and micro-savings

Business engagement

Concepts of development

D: Politicising

with development

Entry of private banks as lenders A: Managerialist

Bailiffs as Farmer suicides Stakeholder Engagement C: Pragmatic

Reductionist/ particularistic

Comprehensive/ holistic

Concepts of development

Interdependent / integral

Instrumental

Business engagement

with development

Reductionist/ particularistic (Edward & Tallontire, 2009)

Political CSR rethinking business and the political

Palazzo, G., & Scherer, A. G. 2006. Corporate Legitimacy as Deliberation: a communicative framework. Journal of Business Ethics, 66: 71-88. Scherer, A. G., Palazzo, G., & Baumann, D. 2006. Global rules and private actors: toward a new role of the transnational corporation in global governance. Business Ethics Quarterly, 16(4): 505-532. Scherer, A. G., & Palazzo, G. 2007. Towards a Political Conception of Corporate Responsibility Business and Society seen from a Habermasian Perspective. Academy of Management Review, 32(4): 1096-1120. Palazzo, G., & Scherer, A. G. 2008. Corporate Social Responsibility, Democracy, and the Politicization of the Corporation. Academy of Management Review, 33(3): 773-775. Scherer, A. G., Palazzo, G., & Matten, D. 2009. The Business Firm as a Political Actor: A New Theory of the Firm for a Globalized World. Business & Society, 48(4): 577-580. Scherer, A. G., & Palazzo, G. 2011. The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy. Journal of Management Studies, 48(4): 899-931.

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From Instrumental to Political CSR

Changing nature of business interaction with society

Emerging institutional context From national governance

Role of law From hard law Scope of CSR From corporate liability Legitimacy From cognitive/pragmatic legitimacy Proposed model of democracy/politics liberal democracy
(Scherer & Palazzo, 2011)
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to post-national governance (decline of role of state) to soft law and self-regulation

to social connectedness

to moral legitimacy

deliberative democracy (Habermas)

Deliberative democracy and its limits

Deliberative Democracy
Presumed shared will to consensus Construction of political processes that support consensus formation

Limits of Deliberative Democracy

Beyond process politics occurs in largely unregulated processes in the public sphere where dissent and disagreement can be constructive

Disembodied consensus Honneth (3rd generation Critical Theory) Problem: Will to Consensus unfolds behind the backs of participants What is the role of emotion and belonging in the formation of interests
Limits and the impossibility of consensus (Rescher, 1993) How can we ever really distinguish between consensus, acquiescence and coercion? Idealization involves the projection of a hypothesis that removes some limit or limitation of the real (p 196) in matters of practical philosophy idealization can do actual harm. No doubt, ideals can be a useful motive in the direction of positive action. Limitations shared with stakeholder engagement and participatory development
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Post-foundational political CSR?

The post-foundational perspective (Norval, 2004)

social interaction creates & transforms interests & identities rather than merely revealing and contesting pre-given interests & identities construction of hegemony (naturalized system of meaning/understanding) through articulation in both discourse and practice articulation invites identification with specific perspectives (and rejection or overlooking of others) identification as a process of emotional investment in the sense we make of our world consensus and legitimacy are therefore a political (contingent, hegemonic) accomplishment rather than outcomes of rational processes and instrumental procedures that expose and balance pre-given interests

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Three faces of Hegemony

1. Construction of Hegemony articulation as structuring process that can win over subjects to a particular project or coalition creation of logics of equivalence that invite inclusion and identification (e.g. through use of metaphor and metonym to occlude difference) Management of dissent impeding the formation of competing positions so that they do not disturb or modify a dominant practice or regime in a fundamental way. involves the disarticulation of equivalential chains of demands and identities via practices of challenge, institutionalization, deflection, or negation. - logics of difference strategies : differential incorporation, partial co-optation, pluralisation Fantasy providing a fantasmatic narrative that promises a fullness-to-come once a named or implied obstacle is overcome, and which foretells of disaster if the obstacle proves insurmountable. explains how logics or articulations grip individuals through an emotional investment that sustains our subjective desires and identifications Poststructuralism and After (Howarth, forthcoming)
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2.

3.

Example 1: FLA
Fair Labor Association (FLA) the gold standard among voluntary *multi-stakeholder+ initiatives, John Ruggie, former UN Special Representative on business and human rights No longer just apparel: Nestle joins Nov 2011, Apple joins Jan 2012: FLA is the credible partner with capacity Tripartite governance: business, consumers, NGOs BUT Business funds FLA Consumers = university representatives NGOs are (western) human rights, not labour organisations US tradeunion UNITE withdrew early on Marx (Axel, 2008) active unions in a corporation reduce the likelihood of joining FLA Dissent confined mainly to university campuses - United Students Against Sweatshops (USAS)
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FLA Stabilising Equivalence

Fair Labor Association (FLA) How did FLA manage to establish itself as hegemonic gold standard How was rhetoric of deliberation and inclusion sustained as legitimate/credible even when (or maybe because) FLA is so unrepresentative? Why did FLA become credible partner but others (eg. ILO?) did not?

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Example 2: FSC
Forest Stewardship Council (FSC) Similar governance to FLA but chambers (economic, social, environmental) have equal voting power High profile NGOs are members and endorse: e.g. WWF, Greenpeace S&P propose it as one of best examples of deliberative model today BUT Rainforest Foundation (2002) report: Key stakeholders excluded Non-functioning complaints procedures biased in favour of commercial interests Lack of transparency or democracy of knowledge Joint assessment by Greenpeace et al. 2008: problems with FSC are so severe that supporting FSC threatens their own organisations credibility June 2011, FERN (Dutch not for profit) resigns But Greenpeace stays in and maintains high-profile support FSC logo is Greenpeace approved Jan 2012: Vote NO letter added to Greenpeace FSC webpage
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FSC Dissent and Difference

Forest Stewardship Council (FSC) How should we make sense of different actions (discourses and practices) of FERN and Greenpeace (since they probably have very similar aims)? Deliberative approach might judge Greenpeaces action as more legitimate (engagement, transparency into FSC). Post-foundational approach would consider influence (articulatory effect) of these different behaviours (and their interaction) on discourses and practices at FSC and beyond.

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Example 3: Shell in Nigeria

2011 study by Hennchen and Lozano (not yet published), explicitly uses the political CSR model Local criticisms of Shell: pollution (leaks and gas flaring), human rights abuses (e.g. Ken Saro Wiwa), links to security forces, own armed police. Response to growing local criticism is to partner more with government agencies and NGOs Withdrawing of external audit of sustainability reporting in Nigeria signals the maturing of Shells reporting Sunmonu, Shell Nigeria chairman, 2010: militant violence and lack of government funding is the main problem We dont have the skills to be a government ... We are a bloody technical company Beyond lobbying: former employees become Minister of Petroleum, bribery and expenses paid trips for officials, secondments of experts to ministries Surveillance contracts: controlling security through local power-brokers and strongmen (fuels inter- and intra-community violence), contracts are excluded from Shells global principles of responsibility
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Shell - Creating fantasy

Shell H&L conclude that we need a less dichotomous view of political CSR i.e. we need a hybrid between liberal and deliberative models e.g. Extractive Industries Transparency Initiative (EITI) is hard law But the alternation between two opposing solutions *liberal and deliberative+ is an inherently unstable solution Reassess Shells discourses and practices as an attempt to articulate a hegemonic position Surveillance failures support a security/policing discourse (fantasy) Displacement (depoliticization or sedimentation) onto government is aided by Shells working deep inside the political system Inter- and intra-community violence promotes security discourse and impedes radical alternatives of tolerance, sensitivity and moral discourse Can post-foundational political CSR avoid inherently unstable alternation?
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References
Edward, P. and Tallontire, A. (2009). 'Business and Development towards re-politicisation'. Journal of International Development, 21, 819-833

Hennchen, E. and Lozano, J. M. (2011). 'Corporate political responsibility in a globalized world: The case of Royal Dutch Shell in Nigeria'
Howarth, D. (forthcoming). Poststructuralism and After: Structure, Subjectivity and Power. Palgrave Macmillan: London Marx, A. (2008). 'Limits to non-state market regulation: A qualitative comparative analysis of the international sport footwear industry and the Fair Labor Association'. Regulation & Governance, 2, 253273 Norval, A. J. (2004). 'Democratic Identification: A Wittgenstinian Approach'. Political Theory, 34, 229-255 Rainforest Foundation. (2002). 'Trading in credibility: the myth and reality of the Forest Stewardship Council': Available from: http://www.rainforestfoundationuk.org/files/Trading%20in%20Credibility%20full%20report.pdf, Rescher, N. (1993). Pluralism: against the demand for consensus. Oxford University Press: Oxford Scherer, A. G. and Palazzo, G. (2011). 'The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy'. Journal of Management Studies, 48(4), 899-931
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