Corporate Social Responsibility and Trade Unions

Perspectives across Europe

Lutz Preuss, Michael Gold, Chris Rees

• Publisher: Taylor & Francis
• Year: 2014
• eBook ISBN: 9781135077846
• Edition: 1
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

Growing interest in corporate social responsibility (CSR) has focused attention on the relationship between businesses and key stakeholders, such as NGOs and local communities. Curiously, however, commentators on CSR rarely discuss the role of trade unions, while commentators on employment relations seldom engage with CSR. This situation is all the more remarkable since unions are a critically important social actor and have traditionally played a prominent role in defending the interests of one key stakeholder in the company, the employee.

Written by dedicated experts in their field, this book addresses a key gap in the literature on both CSR and employment relations, namely trade union policies towards CSR, as well as union engagement with particular CSR initiatives and the challenges they face in doing so. The research covers eleven European countries which, when taken together, constitute a representative sample of industrial relations structures across the continent.

This book will be essential reading for scholars, students and practitioners of international business, employment relations, public policy and CSR. Its foreword is written by Philippe Pochet and Maria Jepsen, Directors of the European Trade Union Institute in Brussels.

1 The rise of corporate social responsibility as a challenge for trade unions

Lutz Preuss, Michael Gold and Chris Rees

Introduction

Corporate social responsibility (CSR) is a concept that has been adopted extensively by societal actors in business, public policy and non-governmental organizations (NGOs). CSR has diffused to all corners of the globe over the past decades, far beyond its origins in the United States (Visser and Tolhurst 2010). This trend is illustrated in part by the emergence of CSR-related institutions at the transnational level, such as the United Nations Global Compact, CSR guidance document ISO 26000 from the International Standards Organization and the sustainability reporting framework from the Global Reporting Initiative (GRI) (Leipziger 2010). Additionally, the global financial crisis has brought the issue of the legitimacy of corporate power into sharp relief (Werhane et al. 2011), making private corporate responsibility a core matter of public concern (Brammer et al. 2012).

In the wake of such developments, renewed attention has been devoted to the relationship between business and its key stakeholders, whether these are NGOs (Seitanidi and Crane 2009) or local communities (Bowen et al. 2010). Curiously, however, one societal actor is frequently absent in such discussions, namely trade unions. Such an omission is remarkable for two reasons. First, as the role of unions has traditionally been to defend the interests of the employee stakeholder, they should be part of the discussion of business–stakeholder relations. This is particularly important at a time when labour is affected by an increase in competition over international labour costs that in many industrialized nations has led to significant employment losses. Second, unlike trade unions, NGOs often do not have elected officials and do not necessarily consult their membership when they draw up their policies (Nye 2001). For this reason, many NGOs, although more often invited to participate in CSR discourse, appear to be less democratic than trade unions. The time is thus ripe to examine in greater detail what trade unions make of the rise of CSR.

We examine this question across 11 European countries, namely Belgium, Finland, France, Germany, Hungary, Lithuania, Poland, Slovenia, Spain, Sweden and the United Kingdom. Our approach draws loosely upon the ‘national business systems’ and ‘varieties of capitalism’ literatures, which highlight national variation in the way key institutions – such as the state, the legal system and the industrial relations system – combine to embed social and economic structures and norms within particular ‘national logics’ (Hollingsworth and Boyer 1997; Whitley 1999; Hanké et al. 2007). While not seeking to make an explicit theoretical contribution to this literature, our book aims to examine the nature of CSR, and trade union responses to it, through a broadly comparative institutionalist lens.

The rise of CSR

The rise of CSR is the result of several societal trends that have come together in the last few decades. With regard to changes in the political arena, many governments in industrialized nations have experienced a relative erosion of their powers, not least their ability to control multinational companies (MNCs) (Vogel 2010). This has been accompanied by important changes in civil society. There is a growing awareness in many countries of environmental problems and persisting social inequalities, coupled with new opportunities to address such concerns in ways that go beyond traditional party politics (Beck 2000). A crucial change in the economic sphere is the increasing mobility of corporations and the enhanced significance of financial markets for corporate success (Froud et al. 2006). Magnified by media scrutiny and advances in information technology, these pressures have led to an expectation that business should – in addition to benefiting from novel opportunities in the wake of globalization – assume a more beneficial social role.

CSR has been defined as ‘the responsibility of enterprises for their impacts on society’, which requires companies to ‘have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders’ (European Commission 2011: 6). In turn, a stakeholder in an organization is ‘any group or individual who can affect, or is affected by, the achievement of the organization’s objectives’ (Freeman 1984: 46). Less formulaic conceptualizations of CSR have been offered by authors like Carroll (1991), whose ‘pyramid of CSR’ starts with a company’s economic responsibilities, after which it should meet its legal responsibilities as well as ethical responsibilities, and finally engage in philanthropic activities. Business in the Community, a London-based CSR organization, suggests five material areas of CSR, namely: workforce, environment, marketplace, community and human rights (BITC 2000). While these conceptualizations of CSR give frequent attention to employees, trade unions are only occasionally explicitly recognized as stakeholders (e.g. Clarkson 1995; Basu and Palazzo 2008).

The reasons commonly advanced as to why companies should engage in CSR fall into three broad categories. Prominent among these is the ‘business case for CSR’, according to which investment in social and environmental initiatives leads to financial benefits for the firm in terms of stronger consumer loyalty, higher employee satisfaction, enhanced brand reputation, preferential access to input markets or a better standing with regulators (Carroll and Shabana 2010; Porter and Kramer 2006). However, empirical studies into the link between corporate social and financial performance have so far proved inconclusive (Orlitzky et al. 2003; Peloza 2009). Another category of arguments is more normative. With a starting position in moral philosophy, these argue that businesses should take account of CSR as it is ‘the right thing to do’ (Hartman et al. 2007: 374). Yet this perspective has been less able to offer concrete advice on how companies should manage these responsibilities. Finally, there are sociological accounts which centre around the notion of a ‘licence to operate’, the idea that business needs tacit or even explicit permission from society to operate, and that this licence can be revoked if a firm were found wanting in terms of its social or environmental performance (van Marrewijk 2003; Lynch-Wood and Williamson 2007).

As a form of private regulation, CSR has led to the evolution of a wide range of instruments (Leipziger 2010). At the voluntary end of this range, many companies have adopted codes of conduct to manage employee behaviour or stakeholder engagement. As one of the most widespread CSR tools, codes of conduct have been adopted by 92 per cent of the largest 250 companies worldwide (KPMG 2008). Beyond the level of the individual company, codes are also promoted by a number of business interest groups, such as the Caux Principles adopted by the Caux Roundtable, a group of senior business leaders from North American, European and Japanese companies (Barkemeyer et al. 2014). CSR has also led to the emergence of a sizeable support industry. Key players here are the International Standards Organization (ISO), which has produced tools like the environmental management standard ISO 14001 and the CSR guidance document ISO 26000, and the Global Reporting Initiative (GRI), which developed guidelines for social and environmental reporting to make CSR performance comparable between firms and over time (Leipziger 2010). Corporate take-up of these tools is again voluntary, although adherence to them can be certified by external parties. Meanwhile, the United Nations adopted the UN Global Compact, consisting of 10 principles of responsible business practice. Other UN initiatives with a focus on business are the Guiding Principles on Business and Human Rights and the Principles for Responsible Investment.

At the more mandatory end of the range of CSR initiatives, a number of national governments have engaged in measures to shape the emerging CSR debate. Governments can play various roles in CSR, from requiring minimum standards for business performance, through facilitating collaboration between the public sector, the private sector and civil society, to endorsing best practice examples (Fox et al. 2002). For example, dialogue between the governments of the US and the UK, companies in the extractive and energy sectors as well as NGOs led to the Voluntary Principles on Security and Human Rights. Such efforts are complemented at the supranational level. Here, the European Commission has published a range of official documents on CSR, starting with the green paper Promoting a European Framework for Corporate Social Responsibility (Commission of the European Communities 2001). In later documents, such as the Communication Implementing the Partnership for Growth and Jobs: Making Europe a Pole of Excellence on Corporate Social Responsibility (Commission of the European Communities 2006) and A Renewed EU Strategy 2011–14 for Corporate Social Responsibility (European Commission 2011), the Commission has sought to present CSR as part of a set of initiatives to stimulate growth and employment within the EU. The Organization for Economic Co-operation and Development (OECD) has produced Guidelines for Multinational Enterprises, which cover a range of CSR issues, such as human rights, employment conditions, environmental protection, consumer interests and taxation. The International Labour Organization (ILO) has adopted several hundred conventions and recommendations covering a broad spectrum of labour-related subjects in addition to its Tripartite Declaration of Principles on Multinational Enterprises and Social Policy. Being supra-national organizations, the European Commission, the OECD and the ILO first and foremost address the national governments of their member countries, which are expected to translate the various initiatives into national law. Beyond this, however, their stipulations are increasingly being taken up by companies, not least in their codes of conduct (Preuss 2010).

Situated between voluntary and mandatory initiatives, CSR also entails a wide range of more or less binding commitments. Of particular interest here are International Framework Agreements (IFAs), also called Global Framework Agreements (GFAs), between companies and trade unions, usually between multinational corporations and international union federations. Early examples of such agreements were concluded between French food manufacturer Danone and the International Union of Food Workers (IUF ) in the early 1990s. Such agreements are voluntary for companies to enter but, once concluded, contain binding clauses regarding corporate adherence to international labour standards across all the company’s sites (ETUC 2013; Hammer 2005). IFAs thus address some of the shortcomings of purely voluntary CSR tools, such as codes of conduct, in terms of enabling monitoring and providing accountability (Pearson and Seyfang 2001).

The trade union movement has not remained aloof from these developments. In 2002, Eurocadres, the Council of European Professional and Managerial Staff, initiated a project on ‘Responsible European Management’ to collect examples of best practice on CSR for use by its members and wider audiences. The project ‘systematically bridges the old social models and the new ones’ (Eurocadres 2006: 5). Somewhat less sanguinely, the European Trade Union Confederation (ETUC) published a report entitled European Trade Unions and Corporate Social Responsibility in 2004. It concluded that, while many unions admitted to a lack of knowledge of the concept, overall ‘European tr...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Notes on contributors
• Foreword by Philippe Pochet and Maria Jepsen
• Acknowledgements
• List of abbreviations
• 1 The rise of corporate social responsibility as a challenge for trade unions
• 2 Belgium: unions questioning the added value of CSR
• 3 Finland: positive union engagement with CSR
• 4 France: state influence over union strategies on CSR
• 5 Germany: binding agreements preferable to voluntary CSR
• 6 Hungary: CSR between socialism and export-oriented MNCs
• 7 Lithuania: CSR on a wish list
• 8 Poland: much risk, little benefit in CSR
• 9 Slovenia: CSR as a luxury in tough economic times
• 10 Spain: an opportunity to improve working conditions through CSR
• 11 Sweden: CSR as a non-union arena for union issues
• 12 United Kingdom: scepticism and engagement in union positions on CSR
• 13 European trade unions and CSR: common dilemmas, different responses
• Index