Business Responsibility for Sustainable Development: II. Meaningful Change?

II. Meaningful Change?

What does all this activity mean for the promotion of sustainable development in the South? Are the numerous initiatives being taken by business enough to “overcome the inertia of the present destructive course, and to create a new momentum towards sustainable development” (Schmidheiny, 1992)? Opinions on this question are often highly polarized.

While recognizing that the pace and location of change is still uneven, the WBCSD suggests (Schmidheiny et al., 1997) that various changes in corporate policy and practice point to a “paradigm shift” from:

• seeing only costs and difficulties in the concept of sustainable development to seeing savings and opportunities;

• end-of-pipe approaches to pollution to the use of cleaner, more efficient technology throughout entire production systems and, further, to seeing sustainable development as integral to business development;

• linear, “through-put” thinking and approaches to systems and recycling approaches;

• seeing environment and social issues as responsibilities only for technical departments or experts to seeing these issues as company-wide responsibilities;

• a starting premise of confidentiality to one of openness and transparency;

• narrow lobbying to more open discussion with stakeholders.

According to this perspective, sometimes referred to as “ecological modernization” (Dryzek, 1998; Hajer, 1995), an increasing number of companies are not only adopting innovations associated with corporate environmental and social responsibility, but also shifting from a narrow, piecemeal and technical approach to one that is holistic, systemic and more responsive to multiple stakeholders.

Box 3: Best or Bad Practice?

Asea Brown Boveri (ABB), the Swedish/Swiss engineering corporation, is a sponsor of the Global Sustainable Development Facility (GSDF) and an active member of the WBCSD. It is “a world leader in developing eco-efficient technologies in a wide range of industry areas from electricity transmission to transportation, and is building a global network of joint ventures and strategic alliances to install these technologies in many developing and transition economies” (Nelson, 1996:163). ABB has also “faced sustained campaigns by environmentalists and human rights advocates against its involvement in various hydro projects, including the Three Gorges Project in China and the now indefinitely postponed Bakun Dam in Malaysia” (TRAC, 1999:1).

Aracruz Celulose, the world’s largest exporter of bleached eucalyptus pulp, is often cited for its efforts to promote sustainable development through its tree planting, harvesting and pulp production processes in Brazil (Sargent and Bass, 1992). “Since its establishment, the company has earned a positive reputation both nationally and internationally for its efforts to incorporate social and environmental factors into its corporate vision” (Nelson, 1996:202). Certain investigations, however, have revealed a very different picture: “... its eucalyptus trees have dried streams, destroyed the local fauna, impoverished the soil, impeded the regrowth of native plant species, and drastically reduced the area available for cultivating basic foodstuffs... This is not to mention land concentration and the expulsion of the rural population...” (Goncalves et al., 1994, quoted in Carrere, 1999).

Dow Chemical is a US corporation which was selected to participate in the GSDF for, inter alia, “abid[ing] by the highest standards of human rights, environmental and labor standards and norms, as defined by UN agencies” (UNDP, 1999a). According to the Transnational Resource and Action Center (TRAC) “... Dow Chemical is probably the world’s largest root source of dioxin - a chlorine by-product closely associated with reproductive disorders, birth defects, increased rates of cancer, and endocrine disruption.... Dow has regularly exported pesticides unregistered in the U.S. for use in developing countries” (TRAC, 1999).

General Motors (GM), the world’s largest automobile manufacturer, is involved in various environmental protection initiatives and partnerships. It is a Charter Partner to the Climate Wise Program, promoted by the US government to encourage energy efficiency (WBCSD, 1999:13), and in 1998 entered into a partnership with the World Resources Institute to “define a long-term vision for protecting the earth’s climate and the technologies and policies for getting there” (WRI, 1998). Simultaneously, however, GM has “maintained its membership in the hardline [Global Climate Coalition]... [which] continued to be a bastion of reaction and misinformation..., and the Business Roundtable, which opposes the Kyoto Protocol...” (Frankel, 1999:11).

Mitsubishi Group has been actively cultivating an image of environmental responsibility through advertising and specific environmental projects. At the same time, it is reputed to be “a leading destroyer of tropical (and non-tropical) forests” (Greer and Bruno, 1996:182). In spring 1998, Mitsubishi was a recipient of the Corporate Watch award for companies excelling in greenwash. In Mexico, the corporation has come under fire for its plans to vastly expand salt production in Baja California, which would have potentially serious implications for a local biosphere reserve, fishing communities and conflicts over land tenure and scarce natural resources such as water (Barkin, 1999).

Novartis, the Swiss life science corporation, is another participant in the GSDF and member of the WBCSD. It is often cited for its efforts in the fields of poverty alleviation and environmental protection. In 1992, for example, the company established a five-year programme to reduce the environmental and social impacts of pesticide use in the Dominican Republic (Watts and Holme, 1999:16), and the Novartis Foundation has been active in the field of corporate philanthropy (Novartis, 1998). Despite company claims to be committed to “sustainable development”, however, there are concerns that the fundamental Precautionary Principle, which business was asked to uphold at the Earth Summit in 1992, is being ignored by virtue of the company’s promotion of genetically modified crops.

Rio Tinto, the British mining company, is often cited for its standards of environmental reporting and for promoting “continued social development” and “sustainable livelihood” in areas such as East Kalimantan, where the company’s large mines approach closure (Watts and Holme, 1999:10). It has also entered into partnerships with UN agencies such as UNCTAD. Yet, according to TRAC, the corporation “has created so many environmental, human rights, and development problems that a global network of trade unions, indigenous peoples, church groups, and community activists has emerged to fight its … [alleged] complicity in, or direct violations... in Indonesia, Papua New Guinea, Philippines, Namibia, Madagascar, the United States and Australia...” (TRAC¹¹, 1999:1).

¹¹ The Transnational Resource and Action Center (TRAC), also cited elsewhere in this box, together with the Institute for Policy Studies and the Council on International and Public Affairs, prepared a report that questions the activities of various companies collaborating with UNDP in the Global Sustainable Development Facility (see TRAC, 1999).

This position is contradicted by those who accuse corporations of greenwash: inherently “socially and environmentally destructive corporations [are] attempting to preserve and expand their markets by posing as friends of the environment and leaders in the struggle to eradicate poverty” (Corporate Watch, 1996). Accordingly, many corporate policies and initiatives lack substance, are not implemented or amount to tinkering with a system that encourages “business-as-usual” (Welford, 1997).

In practice it is extremely difficult to assess the current state of play regarding corporate environmental and social responsibility. A notorious feature of much of the writing on this subject is that “the evidence” seems to derive from a handful of anecdotes and case studies and/or broad generalizations about how firms behave in the context of capitalism and globalization. Particularly confusing is the fact that many companies that are singled out for “best practice” are also those identified as bad practitioners (see Box 3 above). Surveys that attempt to quantify how many companies have improved their environmental and social performance are relatively few in number and generally measure changes in corporate policy and procedure rather than environmental and social impacts.

What most commentators can agree on is that corporate responsibility, as presently constituted, is a fairly fragmented and uneven affair. The number of companies that have taken a lead in this field is very small. Perhaps the most prominent business association in this field is the WBCSD, which has only 120 members. Even though these include some of the largest TNCs, it should be remembered that there are approximately 60,000 TNCs (UNCTAD, 1999). The illusion of more profound change stems partly from the fact that the TNCs and business or industry associations involved are big players on the international stage and are actively publicizing their new approach through the media, corporate advertising, publications, conferences and international institutions. It is also partly due to the vast body of literature that exists on “best practices” and the policies and practices of a relatively small group of companies that have taken a lead in the field of corporate responsibility. Such information is sometimes misleadingly construed as somehow representative of a larger universe of companies.¹²

¹² A recent survey of TNC affiliates in three Asian countries, which had a low response rate, warns against such misinterpretation (Hansen, 1999a).

The limited nature of change is described below, with attention focused mainly on developing countries. It can be summed up in terms of extremely piecemeal changes in corporate policy and procedures, a substantial gap between corporate rhetoric and practice, and the fact that the dominant model of economic growth continues to encourage business practices that degrade the environment and disregard the concerns of various stakeholders (Utting, forthcoming).