Governments, not the International Standards Organisation, should be regulating the social responsibility of corporations at the national level, while the WTO should be adopting measures to ensure that corporate social irresponsibility is not routinely used to secure unlawful competitive advantage in global markets, a Swedish Government-sponsored dialogue on responsible business practice in Hong Kong was told this week.
Speaking at the meeting Neil Kearney, General Secretary of the Brussels-based International Textile, Garment and Leather Workers' Federation said that voluntary commitments to observe labour and environmental legislation were no substitute for government action in enacting and effectively enforcing good laws.
He said if governments did their jobs properly there would be no need for the current strain of Corporate Social Responsibility and businesses would be able to concentrate on raising the bar and concentrating on being good corporate citizens providing innovative solutions to broader problems.
Hitting out at the failures of national governments and international agencies such as the WTO to set clear guidelines for company behaviour, Kearney said it was such inaction that had created corporate irresponsibility in the first place. Kearney was dismissive of the current glorification of unacceptable corporate behavior.
"When did you last hear of a teenager being taken aside and lauded for tossing his empty coke can in a dustbin rather than in the street or a neighbours' garden?", he asked. "Or a factory worker praised publicly when leaving the factory without having stolen company property? However, this is happening every day to corporations – congratulated for obeying environmental legislation, commended for paying the legal minimum wage, given awards for not illegally endangering the lives of its workforce".
"What is known as corporate social responsibility today should be the norm for every business, big and small. Those who can only survive and prosper by law breaking should not be in business. Not only do they endanger and damage their own workforce but they drag down their competitors, locally, nationally and globally.
Pointing to China, Kearney said legislation was pretty good but rarely enforced. "In textiles and clothing twelve to fourteen hour workdays are the norm but are illegal", he said. "Wage payments below the legal minimum are common with wage arrears now estimated at US$43 billion. Often every health and safety law in the book is broken and with immunity. Not much corporate social responsibility here!"
"Fortunately", said Kearney, "media exposure of such exploitation has touched the public conscience. Following the collapse of the Spectrum factory in Bangladesh which killed more than sixty workers, one European retailer sourcing there received more than one million e-mails of protest. Eight months on the e-mails are still coming.
"It is responses like this which have spurred CSR action and produced more than 10,000 individual codes of conduct. Many are useless – no more than public relations exercises – but still corporations want to be patted on the back. The improvements in factories have been limited but many corporations are now embarked on efforts to further lower the bar. These include the leading European retailers belonging to the Business Social Compliance Initiative who have now produced a light version of the standard code of conduct and which weakens provisions on freedom of association, working hours and wage payments and threatens to create 'a race to the shadows' among European buyers.
"China itself is getting in on the CSR act with the creation of its ultra-light code – CSC9000T. This is a sham code which could gravely harm the whole concept of CSR. Fortunately, it will never be credible!
"Companies shouldn't need to be convinced of the benefits of CSR nor should they have to be dragged kicking and screaming to compliance. It is absurd to suggest that a business case is needed to before the law can be respected."
Giving some examples of the benefits of a strong CSR approach, Kearney said that at one factory in Vietnam which had improved working conditions, productivity, quality and profitability had all shot up. In another factory in Sri Lanka eight months of acceptable working conditions had seen productivity increase by 35.5% and waste in production fall from 7 to 1 per cent. Meanwhile, factories in China's textile and clothing sector are experiencing labour turnover at the rate of 200 per cent a year.
"Cambodia has few comparative advantages in the production of textiles and clothing, but, it has maintained an impressive customer list. And two key brands, the Gap and Levi Strauss have joined with others to help stabilize and grow these industries. In addition, the Gap and Nike have both stated that the current approach to Codes of Conduct with its emphasis on social auditing is no longer sustainable in the longer term and needs to be replaced with a mature system of industrial relations where managers and representatives of workers do a constant review of working practices at the factory."
