Promoting Corporate Social Responsibility Abroad: The Human Rights and Democracy PerspectiveLorne W. Craner, Assistant Secretary of State for Democracy, Human Rights and Labor
Remarks at the 2002 Surrey Memorial Lecture, National Policy Association
June 18, 2002
It is an honor to be here today to address such a distinguished group of business and labor leaders, academics, and NGOs. The National Policy Association’s (NPA) work promoting informed dialogue and research on public policy issues of global significance is an invaluable resource for policy makers.
The politically and economically interrelated world that we live in today has made the tired adage that goes, "When Wall Street sneezes, Tokyo catches a cold," more relevant now than it has ever been. The links between nations, facilitated by the rapid advances in information technology, generally results in the policy and economic decisions of one country reverberating around the world within hours.
Globalization is not simply economics, of course. The cultural, social, and political components of the equation must also be considered. Corporate social responsibility touches on each of these facets of civil society.
Gone are the days when multinationals could source products overseas without concerning themselves with factory conditions and worker rights. The negative consequences of conducting business as usual in countries with pronounced problems makes it incumbent on corporations to observe standards that they adhere to at home.
Human Rights and Democracy Post-9/11
The past year has brought dramatic change to the United States and the free world as a whole. Despite this, the U.S. Government remains focused on its foreign policy goals in human rights and promoting democracy. We believe more than ever that free and transparent democratic political processes and institutions benefit all nations and their people. We believe that respect for human rights is part and parcel of a society based on fundamental freedoms.
The last half of the last century made abundantly clear that our foreign policy has been on track. The growing number of democratic nations unambiguously indicates that the people of the world eagerly choose freedom when given the choice. While we can take pride in the Western Hemisphere as a poster child for the movement toward democracy among nations, we have also seen advances in several of the countries of the former Eastern Bloc, indeed Russia itself, as well as Asia and Africa.
A recent survey of 12 African nations that have introduced democratic and market reforms over the last decade revealed that support for democracy is widespread. Even as a significant proportion cited their dissatisfaction with their country’s economy, the bottom line was that the respondents expected democracy to improve their socioeconomic well-being. Plainly, the people of these nations believe as we do that political and economic reforms are two sides of the same coin.
The significant steps forward made in the last decade, however, have not made us complacent about our responsibilities in advancing human rights and democracy worldwide. In fact, the advances made have only deepened our commitment. While 121 of the world’s 192 sovereign governments are electoral democracies, much remains to be done. In some of these democracies, democratic institutions are still fragile and incomplete. Gains must be consolidated.
Effective democracy requires continuous nurturing and the vigilance of an educated citizenry in partnership with a responsive government. Elections alone are not sufficient to build a strong, real democracy. Therefore, in my Bureau, our programming is being directed at developing educated electorates and guiding the newly elected officials in governance all over the world. We are focusing our programs on new areas like the Middle East.
Our aim is also to encourage the growth of vibrant, democratic societies in well-governed nations. These conditions will provide the economic stability necessary for any nation to become a full partner in the growing global marketplace.
As Secretary Powell noted recently, we are not selling America as a way of imposing ourselves on others, but as "a value system that believes in individual rights, democracy, [and] freedom as a way into [the] 21st century...[so] that everybody [can] benefit from being a part of a globalized world." It is in our national interest to promote global political and economic stability. A healthy respect for and adherence to democracy and human rights is the only means to achieve that end.
Corporate Responsibility -- Why we support it
To achieve this goal, we need partners. My experience as President of the International Republican Institute and my first year on the job at the State Department have demonstrated that we cannot carry out this task alone. Protecting and promoting democracy, human rights and labor rights is a tall order. To achieve sustainable results, we must work not only with our traditional partners -- governments and NGOs -- but also increasingly work with new partners -- corporations.
An increasing number of corporations share some of our interests in advancing human rights. They appreciate, as do we, that countries that respect human rights have more open and transparent laws and financial systems, less corruption, a better-educated workforce, more stability and more security. As the leading employers and revenue source in many developing countries that are transitioning to democracy, companies are uniquely placed to lead by example where they operate.
And the good news here is that many companies are leading by example. Corporate responsibility has moved, in the past twenty years, from a theory to a more common practice. This can be attributed to two factors.
First, a growing awareness among businesses that corporate responsibility is good for business. Business leaders understand that "practicing" corporate responsibility affects their corporate reputation, brand image and bottom line. Socially responsible investors, like the Interfaith Center for Corporate Responsibility, and activist shareholders are paying attention to corporate practices.
Second, the growing influence of NGOs. Human rights and labor campaigns have turned the spotlight on corporate practices in recent years. Many companies have responded, in part, by developing successful corporate responsibility programs or participating in efforts to meet critical humanitarian needs. Encouraging examples have emerged. A number of footwear and apparel companies have established codes of conduct and monitoring programs. Pharmaceutical companies have reduced the price of HIV/AIDs medicine needed in developing countries.
Under Secretary for Global Affairs Paula Dobriansky and my colleagues in the Oceans, Environment and Science Bureau have met with a number of corporate representatives on developing a public-private partnership to address HIV/AIDs. The Department will be hosting an event next week to address partnerships to fight HIV/AIDs.
The President earlier this year set a benchmark for U.S. companies when he said:
The bottom line of the balance sheet defines a business’ goal, but not the sum of its responsibilities of its leaders. Management should respect workers. A firm should be loyal to the community, mindful of the environment.
At the State Department, we support corporate responsibility for several reasons.
First, to pursue our traditional function of promoting trade and business. By supporting economic growth, we are supporting democracy. The strongest foundations for the stability and predictability necessary for a sustainable business environment are democratic governments that protect human rights. Corporate responsibility can help safeguard those values.
Second, to promote strong corporate values. This means promoting legal and ethical behavior as well as respect for human rights and labor rights. U.S. corporations abroad are among our best ambassadors. They play an important role in changing global perceptions about the U.S. If people are to understand the generosity, strength and hearts of the American people, our corporations can help shape this image.
As Commerce Secretary Don Evans said during a visit to community projects sponsored by U.S. corporations in China, "trade can be a source for good, and a force for goodness."
Third, we have an important role in supporting and facilitating public-private partnerships. At about this time last year, Secretary of State Powell announced the establishment of the Global Development Alliance (GDA). The GDA, as Secretary Powell described it, is "a fundamental reorientation in how ... USAID relates to its traditional partners, and how it seeks out and develops alliances with new partners." The new partners were NGOs, foundations, and corporations.
Since its announcement, GDA has been working on the development of a number of important partnerships. ENTRA 21 is one recently completed alliance that prepared youth in Latin American and the Carribean for jobs in the technology sector. USAID worked closely with the International Youth Foundation, the Inter-American Development Bank, and a number of IT companies, including Cisco Systems, Lucent and Microsoft.
Fourth, governments should support existing international standards. For example, the U.S. supports the OECD Guidelines for Multinational Enterprises, a set of non-binding recommendations from governments to corporations. The objective is to help companies operate in harmony with government policies and communities. Governments have responsibilities as well.
The Guidelines provide voluntary principles and standards for responsible business conduct in a variety of areas including human rights, environment, employment and industrial relations, tax, and science and technology. Under Secretary Dobriansky recently highlighted, in setting out our vision for the World Summit on Sustainable Development, that good domestic governance is essential to attract foreign investment and to build public-private partnerships.
We believe that voluntary guidelines and public-private partnerships are the best ways to encourage corporate responsibility. There is no "one size fits all approach" to the issues corporations must address. Voluntary codes and partnerships provide the flexibility necessary to implement different approaches, involve relevant stakeholders, and achieve sustainable results.
And finally, as my colleague Under Secretary Alan Larson said to you at about this time last year, there are some circumstances in which a government’s policy is so odious or dangerous that governments should tell their companies not to invest. The U.S., for example, currently bans investment in countries such Cuba, Iran, Iraq, and Sudan. In some environments, we do not think there is any way for corporations to behave responsibly except by getting out.
These are just a few ways in which governments can support corporate responsibility. By praising and supporting corporate leadership in this area, governments can also learn from the private sector. Corporations, as I have said in the past, are laboratories of innovation and repositories of resources and talent.
How State Promotes Corporate Responsibility
Before I conclude, I also want to address the ways in which the State Department supports corporate responsibility. Our definition of corporate responsibility is a broad one. It entails supporting human rights, but it also includes fighting corruption, promoting the rule of law and good governance, and encouraging corporate philanthropy.
The Department employs a multi-faceted approach that provides funding for public-private partnerships, recognizes achievements by corporations, facilitates dialogue, and upholds international standards. This comprehensive approach allows us to work with governments, the private sector and civil society to strengthen human rights and promote corporate responsibility.
An important initiative funded by my Bureau is the Partnership to Eliminate Sweatshops. This four million dollar program is unique because it promotes alliances among corporations, non-governmental organizations, universities and organized labor to address unacceptable working conditions in overseas firms that produce for the U.S. market.
The objectives of the program are to protect worker rights and uphold international labor standards. We seek to accomplish these goals through the application of good business practices. The Partnership is a tangible example of our commitment to the crucial role the private sector plays in making workers’ rights a reality.
Through the leadership of the Under Secretary for Economic and Business Affairs, the State Department recognizes exemplary corporate leadership through the annual Award for Corporate Excellence. Corporations are recognized for outstanding corporate citizenship, innovation and exemplary business practices. Nominees’ accomplishments are viewed in light of their compliance with U.S., international and local laws as well as the positive contributions they make to local communities.
This year the awards were presented to Ford Motor Company, for an innovative HIV/AIDS program in Africa, and the Solar Electric Light Company, for its efforts to supply solar energy to rural villages in Vietnam. The 2002 awards will be presented in the Fall by Secretary Powell.
I am also especially proud of the beginnings of progress made with oil, gas, and mining companies on security and human rights. As most of you are aware, extractive companies work in difficult operating environments in strategically important countries. Some companies have faced allegations of human rights abuses in connection with their security practices.
This convergence of human rights and security provided the State Department and British Foreign Office with a unique opportunity to convene and facilitate a dialogue on security and human rights. The Voluntary Principles on Security and Human Rights represent the first set of guidelines jointly developed by governments, companies, NGOs, and a trade union to "recognize that security and respect for human rights can and should be consistent."
Two weeks ago, the British Foreign Office hosted meetings in London to continue this dialogue. Security managers, human rights and corporate responsibility groups, and governments met to discuss continued implementation efforts. We talked about broadening the current participants. We are pleased that the Dutch and Norwegian governments have joined our efforts as have Exxon Mobil and Occidental Petroleum.
Finally, we work to address corruption and promote transparency. As Secretary Powell has said "Corruption and unethical behavior are serious threats to the basic principles of democratic government, undermine public confidence in democracy, and threaten the rule of law."
Anti-corruption efforts at the State Department are addressed in several bureaus -- Economics and Business, International Narcotics and Law Enforcement Affairs, and my Bureau as well as our regional bureaus. The tie that binds our efforts is promoting the rule of law -- the cornerstone for supporting human rights and fighting corruption.
Since the enactment of the Foreign Corrupt Practices Act in 1977, the United States has provided leadership to combat bribery and corruption. We are a party to the OECD Convention on Combating Bribery that obligates parties to criminalize the bribery of foreign public officials by companies. We also support regional anti-corruption agreements. Finally, we are actively participating in the UN negotiations on a global anti-corruption convention.
Let me conclude by making an observation. While corporate responsibility has gained acceptance as both a principle and a practice, the true hurdle of implementation at the local and sub-contractor level -- beyond U.S. factories, communities and borders -- lies before us. The ability to achieve real results lies in our ability -- as governments, companies, and NGOs -- to work together.
Released on June 18, 2002