Business as a political actor in an era of emergent social transformation

1. Business as a political actor in an era of emergent social transformation Peter Edward, Newcastle University Business School DSA conference, November 2012

2. Outline • Changing economy of poverty • From international to domestic politics • The problem of re-politicization • ‘Political CSR’ and its limits • The political as formation of hegemony • New questions, new directions

3. Poverty forecasts

4. Changing economy of poverty

5. Poverty in the future – a problem of national distribution

6. Comprehensive/ holistic Concepts of development Interdependent / integral Instrumental Business engagement with development Reductionist/ particularistic (Edward & Tallontire, 2009)

7. Comprehensive/ holistic Setting standards Fairtrade Labelling Organisations International (FLO) Alternative Trade Organisations Concepts of development B: Institutionalising Mainstreaming D: Politicising Business engagement with development ?? C: Pragmatic A: Managerialist Reductionist/ particularistic

8. Comprehensive/ holistic Setting standards MACS (co-operatives) Standard Assessment procedures Women’s self-help groups and micro-savings Concepts of development B: Institutionalising Opening to commercial finance D: Politicising Business engagement with development Bailiffs as ‘Stakeholder Engagement’ Entry of private banks as lenders Farmer suicides C: Pragmatic A: Managerialist Reductionist/ particularistic

9. Comprehensive/ holistic How do we get back to here in a world where business is increasingly the dominant institution? Concepts of development Interdependent / integral Instrumental Business engagement with development Reductionist/ particularistic (Edward & Tallontire, 2009)

10. Political CSR – rethinking business and the political Palazzo, G., & Scherer, A. G. 2006. Corporate Legitimacy as Deliberation: a communicative framework. Journal of Business Ethics, 66: 71-88. Scherer, A. G., Palazzo, G., & Baumann, D. 2006. Global rules and private actors: toward a new role of the transnational corporation in global governance. Business Ethics Quarterly, 16(4): 505-532. Scherer, A. G., & Palazzo, G. 2007. Towards a Political Conception of Corporate Responsibility – Business and Society seen from a Habermasian Perspective. Academy of Management Review, 32(4): 1096-1120. Palazzo, G., & Scherer, A. G. 2008. Corporate Social Responsibility, Democracy, and the Politicization of the Corporation. Academy of Management Review, 33(3): 773-775. Scherer, A. G., Palazzo, G., & Matten, D. 2009. The Business Firm as a Political Actor: A New Theory of the Firm for a Globalized World. Business & Society, 48(4): 577-580. Scherer, A. G., & Palazzo, G. 2011. The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy. Journal of Management Studies, 48(4): 899-931.

11. From ‘Instrumental’ to ‘Political’ CSR • Changing nature of business interaction with society • Emerging institutional context • From national governance to post-national governance • (decline of role of state) • Role of law • From hard law to soft law and self-regulation • Scope of CSR • From corporate liability to social connectedness • Legitimacy • From cognitive/pragmatic legitimacy to moral legitimacy • Proposed model of democracy/politics • liberal democracydeliberative democracy • (Habermas) (Scherer & Palazzo, 2011)

12. Deliberative democracy and its limits • Deliberative Democracy • Presumed shared will to consensus • Construction of political processes that support consensus formation • Limits of Deliberative Democracy • Beyond process • politics occurs in largely unregulated processes in the public sphere • …where dissent and disagreement can be constructive • ‘Disembodied consensus’ Honneth (3rd generation Critical Theory) • Problem: ‘Will to Consensus’ unfolds ‘behind the backs’ of participants • What is the role of emotion and ‘belonging’ in the formation of interests • Limits and the impossibility of consensus (Rescher, 1993) • How can we ever really distinguish between consensus, acquiescence and coercion? • Idealization “involves the projection of a hypothesis that removes some limit or limitation of the real” (p 196) • “in matters of practical philosophy idealization can do actual harm. No doubt, ideals can be a useful motive in the direction of positive action. • Limitations shared with • ‘stakeholder engagement’ and ‘participatory development’

13. Post-foundational ‘political CSR’? • The post-foundational perspective (Norval, 2004) • social interaction creates & transforms interests & identities • rather than merely revealing and contesting pre-given interests & identities • construction of hegemony (naturalized system of meaning/understanding)through articulation in both discourse and practice • articulation invites identification with specific perspectives (and rejection or overlooking of others) • identification as a process of emotional investment in the sense we make of our world • consensus and legitimacy are therefore a political (contingent, hegemonic) accomplishment • rather than outcomes of rational processes and instrumental procedures that expose and balance pre-given interests

14. Three faces of Hegemony • Construction of Hegemony • articulation as structuring process “that can win over subjects to a particular project or coalition” • creation of logics of equivalencethat invite inclusion and identification (e.g. through use of metaphor and metonym to occlude difference) • Management of dissent • impeding the formation of competing positions so that they “do not disturb or modify a dominant practice or regime in a fundamental way.” • involves “the disarticulation of equivalential chains of demands and identities via practices of challenge, institutionalization, deflection, or negation.” - logics of difference • strategies : differential incorporation, partial co-optation, pluralisation • Fantasy • “providing a fantasmatic narrative that promises a fullness-to-come once a named or implied obstacle is overcome, and which foretells of disaster if the obstacle proves insurmountable.” • explains how logics or articulations ‘grip’ individuals through an emotional investment that sustains our subjective desires and identifications • Poststructuralism and After (Howarth, forthcoming)

15. Example 1: FLA • Fair Labor Association (FLA) • “the gold standard among voluntary [multi-stakeholder] initiatives”, John Ruggie, former UN Special Representative on business and human rights • No longer just apparel: Nestle joins Nov 2011, Apple joins Jan 2012: ‘FLA is the credible partner with capacity’ • Tripartite governance: business, consumers, NGO’s • BUT • Business funds FLA • Consumers = university representatives • NGO’s are (western) human rights, not labour organisations • US tradeunion UNITE withdrew early on • Marx (Axel, 2008) – active unions in a corporation reduce the likelihood of joining FLA • Dissent confined mainly to university campuses - United Students Against Sweatshops (USAS)

16. FLA – Stabilising Equivalence • Fair Labor Association (FLA) • How did FLA manage to establish itself as hegemonic ‘gold standard’ • How was rhetoric of deliberation and inclusion sustained as legitimate/credible even when (or maybe because) FLA is so unrepresentative? • Why did FLA become ‘credible partner’ but others (eg. ILO?) did not?

17. Example 2: FSC • Forest Stewardship Council (FSC) • Similar governance to FLA but chambers (economic, social, environmental) have equal voting power • High profile NGOs are members and endorse: e.g. WWF, Greenpeace • S&P propose it as one of best examples of deliberative model today • BUT • Rainforest Foundation (2002) report: • Key stakeholders excluded • Non-functioning complaints procedures biased in favour of commercial interests • Lack of transparency or ‘democracy of knowledge’ • Joint assessment by Greenpeace et al. 2008: “problems with FSC are so severe that supporting FSC threatens their own organisations’ credibility” • June 2011, FERN (Dutch not for profit) resigns • But Greenpeace stays in and maintains high-profile support • FSC logo is ‘Greenpeace approved’ • Jan 2012: ‘Vote NO’ letter added to Greenpeace FSC webpage

18. FSC – Dissent and Difference • Forest Stewardship Council (FSC) • How should we make sense of different actions (discourses and practices) of FERN and Greenpeace (since they probably have very similar aims)? • Deliberative approach might judge Greenpeace’s action as ‘more legitimate’ (engagement, transparency into FSC). • Post-foundational approach would consider influence (articulatory effect) of these different behaviours (and their interaction) on discourses and practices at FSC and beyond.

19. Example 3: Shell in Nigeria • 2011 study by Hennchen and Lozano (not yet published), explicitly uses the political CSR model • Local criticisms of Shell: pollution (leaks and gas flaring), human rights abuses (e.g. Ken Saro Wiwa), links to security forces, own armed police. • Response to growing local criticism is to partner more with government agencies and NGOs • Withdrawing of external audit of sustainability reporting in Nigeria “signals the maturing of Shell’s reporting” • Sunmonu, Shell Nigeria chairman, 2010: militant violence and lack of government funding is the main problem • “We don’t have the skills to be a government ... We are a bloody technical company” • Beyond lobbying: former employees become Minister of Petroleum, bribery and expenses paid trips for officials, secondments of experts to ministries • Surveillance contracts: controlling security through local power-brokers and strongmen (fuels inter- and intra-community violence), contracts are ‘excluded’ from Shell’s global principles of responsibility

20. Shell - Creating fantasy • Shell • H&L conclude that we need a less dichotomous view of ‘political CSR’ – i.e. we need a hybrid between liberal and deliberative models • e.g. Extractive Industries Transparency Initiative (EITI) is hard law • But “the alternation between two opposing solutions [liberal and deliberative] is an inherently unstable solution” • Reassess Shell’s discourses and practices as an attempt to articulate a hegemonic position • Surveillance failures support a security/policing discourse (fantasy) • Displacement (depoliticization or sedimentation) onto government is aided by Shell’s working deep inside the political system • Inter- and intra-community violence promotes security discourse and impedes radical alternatives of ‘tolerance’, ‘sensitivity’ and ‘moral discourse’ • Can ‘post-foundational political CSR’ avoid ‘inherently unstable alternation’?

21. References Edward, P. and Tallontire, A. (2009). 'Business and Development – towards re-politicisation'. Journal of International Development, 21, 819-833 Hennchen, E. and Lozano, J. M. (2011). 'Corporate political responsibility in a globalized world: The case of Royal Dutch Shell in Nigeria' Howarth, D. (forthcoming). Poststructuralism and After: Structure, Subjectivity and Power. Palgrave Macmillan: London Marx, A. (2008). 'Limits to non-state market regulation: A qualitative comparative analysis of the international sport footwear industry and the Fair Labor Association'. Regulation & Governance, 2, 253-273 Norval, A. J. (2004). 'Democratic Identification: A Wittgenstinian Approach'. Political Theory, 34, 229-255 Rainforest Foundation. (2002). 'Trading in credibility: the myth and reality of the Forest Stewardship Council': Available from: http://www.rainforestfoundationuk.org/files/Trading%20in%20Credibility%20full%20report.pdf, Rescher, N. (1993). Pluralism: against the demand for consensus. Oxford University Press: Oxford Scherer, A. G. and Palazzo, G. (2011). 'The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy'. Journal of Management Studies, 48(4), 899-931