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environment for CSR, yet these conditions are absent in the majority
of the world™ (Newell and Frynas 2007). A crucial challenge for the
CSR agenda is to explore the potential and limitations of CSR in
contexts which lack certain conditions of success. A related challenge
is either to compensate for the lack of conditions for success in some
countries (for instance, using alternative channels of communications
in countries without free media or a civil society) or to help improve
those conditions by contributing to better societal governance.
Conclusions and recommendations 169
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Finally, and perhaps most importantly, the needs and expectations
of stakeholders vary between different places. As we pointed out
earlier, South Africans expect companies to tackle black empower-
ment and HIV/Aids (Hamann et al. 2005), Argentinians expect
companies to tackle the social needs created by the 2001 economic
crisis (Newell and Muro 2006), while Nigerians expect oil companies
to provide basic infrastructure (Frynas 2001). The universal CSR
standards may do little to help companies ˜to do the right thing™ in
those specific contexts.


Importance of government

This book has repeatedly shown that a country™s government is not
merely an important element of the national context, within which
companies operate. The actions or inaction of the government largely
define the rights and responsibilities of companies. Indeed, the dis-
tinction between ˜regulatory compliance™ (companies complying
with the law) and ˜voluntary action beyond compliance™ (CSR)
depends crucially on the government.
The need for CSR is greatest in societies where the government has
not been successful in providing public goods and effective regula-
tion. At least in the short term, stakeholders may expect companies to
fill in for government shortcomings, and voluntary action by compa-
nies may provide one of the few available channels for environmental
remedy, better working conditions or health provision. However,
effective CSR in these societies can be constrained by the lack of
government support, corruption or lack of a civil society.
In societies where the government has been relatively successful in
providing public goods and effective regulation, the expectations
placed on companies are considerably lower but government action
is still crucial. Chapter 4 shows that government action is still very
important in situations when there is great potential for CSR to
create ˜win-win™ outcomes, namely environmental protection. Even
170 Beyond Corporate Social Responsibility
*




CSR leaders require government pressure to motivate them to inno-
vate, as the example of BP™s carbon trading scheme demonstrated.
Government pressure is even more important for companies that are
slow in improving their environmental performance, which is to say
the majority of companies. The reality is that some companies are
much more active in environmental improvements than others
because companies react differently to the economic opportunities
for voluntary action. Companies have considerable technical and
managerial expertise, and they have considerable potential for crea-
tivity, but they may be slow in recognising the economic opportuni-
ties from CSR, they may be risk-averse, they may find it difficult to
re-engineer their internal management systems or they may sacrifice
future economic opportunities for the sake of short-term considera-
tions. Government pressure can help to reduce uncertainties about
the future, improve the economic incentives for companies to act
responsibly and ensure a level playing field for everyone.
There will be further pressures on governments and inter-
governmental organisations to go beyond ˜voluntary CSR™ towards a
formal legal framework for holding companies accountable for their
actions. For instance, since the appointment of Professor John Ruggie
as a special representative to the secretary-general of the United
Nations in 2005, Ruggie™s yearly reports to the UN have promoted a
universal international legal framework for the liability of companies
for human rights infringements. Ruggie™s 2007 report to the UN
Human Rights Council was unequivocal in advocating a significant
role for formal regulation: ˜History demonstrates that without
adequate institutional underpinnings markets will fail to deliver
their full benefits and may even become socially unsustainable™
(Ruggie 2007, 3).
However, it is obvious that government regulation is not a pan-
acea. Indeed, appeals by non-governmental organisations for more
international regulation seem to ignore the many historical failures of
formal regulatory approaches to social and environmental issues,
Conclusions and recommendations 171
*




especially in developing countries. At the same time, the world™s
social and environmental challenges cannot be successfully tackled
without government. It follows that we need to learn more about the
optimal balance of voluntary and mandatory, national and interna-
tional, prescriptive and enabling regulation. Debates on CSR must
move beyond unproductive calls for or against regulation towards
studying new forms of ˜shared™ governance.


Recommendations for the business community

The limitations of CSR do not imply that private enterprises should
do nothing about societal issues. Firms are pressured to engage with
the social and environmental aspects of their operations, and they
may benefit from the business opportunities that CSR offers.
Given the importance of the industry context, industry associa-
tions have an important role to play in spreading social and environ-
mental practices. Companies would benefit from having a strong
CSR champion at the industry level. Industry associations can
claim to represent the collective interests of their members, they
often have greater power than individual members and they have
the resources to undertake strategic sector-wide initiatives. They can
provide training and information on the benefits of CSR to their
members, they can formalise the exchange of best practices, they can
introduce common industry standards for social reporting or environ-
mental practices, they can devise sector-wide guidelines on human
rights, they can launch initiatives on governance and so on. The
International Council on Mining and Metals (ICMM) could serve as
a possible role model (see Box 7.1). Most industries, including the oil
and gas sector, do not have a comparable organisation to represent
them.
Individual companies can still do a lot to improve their relation-
ship with wider society, and some of the key advice seems to be so
simple that it almost does not warrant a repetition here. One of the
172 Beyond Corporate Social Responsibility
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Box 7.1: International Council on Mining and Metals (ICMM)
The International Council on Mining and Metals (ICMM) was founded
in 2001 with the vision of a ˜viable mining, minerals and metals industry
that is widely recognized as essential for modern living and a key con-
tributor to sustainable development™. Its members include three of the
world™s biggest mining companies: BHP Billiton (Australia), Rio Tinto
(UK) and Anglo American (UK). As of April 2008, ICMM consisted of
sixteen companies and twenty-eight national mining and global com-
modities associations.
All member companies are required to implement the ICMM
Sustainable Development Framework, which includes ten general prin-
ciples, reporting guidelines (including sector-specific indicators devel-
oped in collaboration with the Global Reporting Initiative) and an
independent assurance procedure (to evaluate the companies™ compli-
ance with the ten principles and reporting guidelines).
ICMM is also a formal supporter of the EITI on behalf of its
member companies, in contrast to the oil and gas sector, where oil
companies such as BP and Petrobras have individually supported
the EITI.
Source: ICMM website at www.icmm.com (accessed 21 April 2008).



main limitations of CSR is that micro-level projects often do not
amount to a greater whole. Without co-ordination with other com-
panies and stakeholders, the impact of a CSR initiative may be
limited, a project may not be located where it is most needed or
efforts may be duplicated. Partnerships with governments, interna-
tional organisations, non-governmental organisations and other
companies can greatly help towards maximising the potential of
CSR. The involvement of industry and other business associations
may further maximise this potential. If CSR is really going to fulfil its
societal promise, the business community needs to make a shift from
micro-level projects to macro-level solutions.
Chapter 5 suggested that many voluntary initiatives fail to gen-
erate societal benefits because companies do not listen to their
Conclusions and recommendations 173
*




stakeholders properly. Stakeholder engagement is often superficial
and brief, companies may listen to those stakeholders with the
biggest bargaining power rather than to those whose interests are
most affected or managers may simply make decisions based on the
company™s priorities without due regard for the interests of stake-
holders. As we identified in Chapter 5, a crucial problem is that
decisions on social and environmental initiatives are usually made in
order to pursue corporate rather than stakeholder priorities, which in
turn may limit the ability of CSR to bring significant benefits to
stakeholders. It follows that companies sometimes need to step outside
the ˜business case™ and think like stakeholders, so that the priorities of
stakeholders do not become subordinate to corporate priorities. One
author has argued that managers should accept that respect for social
issues ˜will sometimes require companies to make less than the max-
imum possible profits™ (Parkinson 1999, 62). Somewhat paradoxically,
in order to have greater corporate benefits from CSR and stakeholder
engagement in the long-term, corporate leaders may have to convert
to the view that stakeholder concerns are sometimes more important
than profits.


Beyond Corporate Social Responsibility

Several possible scenarios for the future of CSR beyond the year 2015
have been predicted (Ward and Smith 2006; White 2005). At one
extreme, CSR may decline as a result of a severe long lasting global
recession or another serious adverse event. At the other extreme,
CSR may help towards systematically changing many business prac-
tices. The reality will probably lie somewhere between these two
extremes. From a long-term perspective, however, the CSR concept
may yet turn out to be short-lived and it may be replaced by ˜corporate
citizenship™, ˜accountability™ or something entirely new. Indeed, we
need to go beyond the CSR concept in order to maximise the positive
contributions that business can make to society.
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Experience to date suggests that CSR tools usually fail to transform
the day-to-day running of the whole organisation. Even among the
most socially responsible companies investigated in this book, CSR
initiatives are often conducted in parallel to ˜business-as-usual™ activ-
ities, which may destroy many of the positive gains of these initia-
tives. The payment of taxes to unaccountable governments, private
investment in countries with bad human rights records, relocation of
jobs from one country to another, corporate lobbying of governments
or tax avoidance may have negative consequences for society. Many
taken-for-granted business practices are simply at odds with good
corporate citizenship. Even if no harm is done, companies themselves
realise that their main contribution to society is through paying taxes
to governments, providing jobs and investment or “ in the case of the
energy sector “ supplying energy. The key issues in the business“
society relationship are economic and political, yet these issues tend
to be ignored in CSR debates, and they tend to be excluded from the
contents of CSR standards.
This book implies that the current focus of the CSR agenda on
strictly ˜social™ and ˜environmental™ issues is problematic. With refer-
ence to the oil and gas sector, Chapter 6 suggested that the economic
impact of private investment can be much more damaging than the
˜social™ or ˜environmental™ impact. Indeed, senior company execu-
tives understand the importance of addressing economic and political
issues. A 2007 survey by the consultancy firm McKinsey among 2,687
senior executives from around the world asked the question ˜Which
three issues are likely to have the most impact, positive or negative,
on shareholder value for companies in your industry over the next
five years?™ The response that recurred most often was environmental
issues (48 per cent of executives), which is largely due to the recent
concern with climate change. The other responses included: ˜polit-
ical influence and political involvement of companies™ (25 per cent
of executives), ˜health care benefits and other employee benefits™
(24 per cent), ˜job losses and offshoring™ (24 per cent), ˜privacy, data
Conclusions and recommendations 175
*




security™ (22 per cent), ˜pension, retirement benefits™ (22 per cent)
(McKinsey & Company 2007). A number of these issues “ including
the political involvement of firms and job losses “ are not even
mentioned in current CSR discussions. Indeed, it is doubtful that
voluntary CSR approaches are capable of tackling these issues.
While I do not propose a radical new approach to business“society
relations, it may be useful to finish this book by briefly exploring ideas
for alternative approaches to addressing the societal impact of
business.
Given the importance of economics in shaping business practices,
one needs to look much more closely at the rules governing the
market, including terms of international trade, market structure and
rules for foreign investment. Instead of relying on voluntary corporate
initiatives, the responsibilities of business could conceivably be incor-
porated into the rules governing the market, such as, for instance,
those governing regional economic trade agreements, international

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