Analysis: The need of corporate social responsibility

The speed and extent of economic globalisation in recent decades has given enormous power to large multinational businesses. Capital, labour resources, technology and other resources are sent backwards and forwards at an ever-increasing tempo between the geographical points where gain is greatest.

This is also true of Norwegian companies, for example Cermaq, StatoilHydro and Telenor. These are among the largest businesses in their sectors, and the Norwegian government is heavily involved as both owner and negotiator when it comes to establishing new operations abroad. The Norwegian Pension Fund – Global (NPF-G) is one of the world’s biggest investment funds. It invests in more than 7000 companies and various government bonds. After a highly successful advocacy campaign by Norwegian organisations, the Fund’s administration was made accountable to a set of ethical guidelines.  These were revised after a broad round of hearings in 2008-2009.

Many developing countries lack the competence, will and ability to govern in such a way that foreign investment will create general development and strengthen the broader interests of society. The result has often been the opposite, an undermining of sustainable development and basic human rights. The UN’s special representative for business and human rights, John Ruggie, points out the absence of a framework to regulate  the challenges created by  globalisation. This absence has created what he calls a “Governance Gap”. He also indicates the particular responsibility for human rights that lies with nations that have large state interests in the ownership of multi-national companies. Norway is in such a situation, but has so far refrained from setting strict demands for transparency, reporting or accountability from its own companies.

The international finance crisis has resulted in greater acceptance within the sector that elected bodies should define some of the limits for finance and business practices. The economic bailout packages have weakened the ideological rejection of public regulation.

At the end of 2009, the director of the British FSA (Financial Supervisory Authority) recommended that a so-called Tobin tax be introduced to discourage economic gain through short-term speculation in foreign exchanges. He has received considerable political support for this view that was previously regarded as very radical, including by those in the Norwegian financial sector. This illustrates the need to exploit the current momentum, such that we can create new alliances and “sell” our recommendations.

The crisis even resulted in the 2009 World Economic Forum calling for stronger political control of the finance institutions to make people and property more secure. But when the finance world invests in poor countries and conflict areas, there is little sign of the same will to exercise control. To promote the best companies, assist those that wish to be better, and stop the worst, there is a need for both positive incitement and measures to prevent, stop and sanction harmful businesses. The ethical guidelines for the Norwegian Pension Fund – Global (NPF-G) are a beginning, and are followed closely by other investors worldwide and therefore can be said to have had a knock-on effect. Nevertheless, these guidelines are not necessarily either ethical or a means to promote global sustainable development, even if the fund has pulled out of the worst companies that refuse to change their behaviour. 

With this background, the Norwegian environment and development organisations have increasingly engaged themselves in issues concerning foreign investment and the activities of multinational companies. ForUM’s mandate in this respect is to illustrate that there is an increasing political responsibility to ensure minimum standards and  control mechanisms are in place for corporate social responsibility, wherever the business in question is being carried out.

Together with partner organisations and unions working at national and international levels, ForUM has presented these demands in relevant fora. Important Norwegian measures include binding Norwegian guidelines, further development of the ethical guidelines for the NPF-G and other public investment funds such as NorFund, as well as an ombudsman for finance and business ethics. Only then will we have our own house in order regarding the issues we wish to influence internationally. Domestic and global guidelines must be possible to implement and must lead to transparency at all stages – including investment, suppliers’ conduct, production and reporting. 

CSR

Thematic Advisor:
Gunhild Ørstavik
Cell 952 04 188

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We are a contact point for the coordination of policy initiatives and recommendations. Many of the following documents are in Norwegian adressed to the Norwegian government. But we also influence international processes so quite a few of them are in English.

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