1. Session 13 Civil society and business ethics
Sungkyunkwan University (SKKU) International Summer Semester (ISS) 2017
“Global Synergy: Innovating through Collaboration”
Business Ethics
Session 13
Civil society and business ethics
Prof. J. G. Frynas
13 July 2017

2. Civil society as ‘third sector’
State sector
Government
Market sector
Business
Civil society sector
Including NGOs, pressure groups, charities, unions, etc

3. Civil society organizations (CSOs)
Civil society organizations include a whole plethora of pressure groups, non-governmental organizations, charities, religious groups, and other actors that are neither business nor government organizations, but which are involved in the promotion of certain interests, causes, and/or goals

4. Diversity in CSO characteristics
Scope
Individual
Grass-roots
Local
Regional
National
Transnational
Global
Type
Community group
Campaign group
Research organization
Business association
Religious group
Trade union
Technical body
CSOs
Structure
Informal
Formal
Co-operative
Professional
Entrepreneurial
Network
Activities
Academic research
Market research
Policy research
Information provision
Campaigning
Protests & demos
Boycott co-ordination
Focus
Natural environment
Social issues
Development
Poverty alleviation
Human rights
Animal welfare
Source: adapted from McIntosh and Thomas (2002: 31)

5. Civil society organizations as stakeholders

6. Civil society organizations as stakeholders
The ‘growth in the number, power and influence of CSOs represents one of the most important societal developments in the past twenty years, in terms of how the dynamics of public debates and government policies concerning corporate behaviour are changing’ (Yaziji and Doh, 2009: 16)
The stake held by CSOs is largely one of:
Representing the interests of individual stakeholders
Representing the interests of non-human stakeholders

7. Different types of CSOs
Sectional groups
Promotional groups
Membership
Closed
Open
Represent
Specific section of society
Issues or causes
Aims
Self-interest
Social goals
Traditional status
Insider
Outsider
Main approach
Consultation
Argument
Pressure exerted through
Threat of withdrawal
Mass media publicity

8. Ethical issues and CSOs

9. Recognizing CSO stakes
Many CSO groups tend to ‘self-declare’ themselves as stakeholders in a particular issue (Wheeler et al. 2002)
Issuing statements
Launching campaigns
Initiating some kind of action towards the corporation
Self-declaring does not necessarily lead to recognition (legitimacy)
But ignoring CSOs may have negative long-term consequences

10. CSO tactics Indirect action Violent direct action
Sometimes criticised for providing misleading information
Violent direct action
Often illegal
Tends to generate the most publicity
Is this action ‘civil’ at all?
Non-violent direct action
Demonstrations and marches
Protests
Boycotts
Occupations
Non-violent sabotage and disruption
Stunts
Picketing

11. Example of CSO tactics: Boycotts
A boycott is an attempt by one or more parties to achieve certain objectives by urging individual consumers to refrain from making selected purchases in the marketplace
Four different purposes for boycotts:
Instrumental boycotts
Catalytic boycotts
Expressive boycotts
Punitive boycotts

12. Some well-known boycotts
Target company
CSO Organizer
Dates
Main issues
Outcomes
ExxonMobil (Esso)
Greenpeace, Friends of the Earth, People and Planet
2001-4
Anti climate change position, including active lobbying against Kyoto global warming treaty; lack of investment in renewable energy
Raised awareness and brought (unsuccessful) shareholder resolutions to the AGM. ExxonMobil has since shifted to a more accommodating climate change position
Triumph International
Burma Campaign
2001-2
Manufacturing operations in Burma
Announced withdrawal from the country in 2002
KFC
People for the Ethical Treatment of Animals (PETA)
2003-
Cruelty towards chickens in the KFC supply chain
Some improvements in practices. Campaign called off in Canada due to new animal welfare plan but continues in US, UK, and several other countries.
PG Tips Tea
Captive Animals' Protection Society (CAPS)
2004
Use of performing chimpanzees in advertisements - claimed to reduce animals to ridicule, and to involve taking young chimps from their mothers, and potential physical punishment
Removed advertisements featuring the chimpanzees in 2004, having used the image for 45 years. Now uses animated animals.
Body Shop
Naturewatch
2006-
Sale of Body Shop to L’Oreal, which is part owned by Nestlé. Main issues involved L’Oreal’s use of animal testing
A Naturewatch press release claimed that the Body Shop had lost millions in revenue in just one year due to the campaign. No change in policy at L’Oreal.
Guess
The Coalition to Abolish the Fur Trade (CAFT)
2007-8
The international clothes retailer Guess sells products made with real fur.
Following an international campaign, Guess announced that it would not buy fur after September 2007, and would stop selling fur in their 800 shops worldwide by April 2008.
Heinz
Stonewall
2008
Company accused of discrimination against homosexuals after it dropped a UK advert featuring two men kissing following the receipt of more than 200 customer complaints
Ad is investigated by Advertising Standards Authority. Heinz sticks to decision not reinstate ad despite a motion being filed in Parliament condemning decision.
Sources:

13. CSO accountability CSO stakeholders might be said to include:
Beneficiaries
Donors
Members
Employees
Governmental organizations
Other CSOs
General public (especially those who support their ideals)
Recently, growing number of organizations similar to CSOs being initiated within business
Accountability of CSOs to supposed beneficiaries tends to raise most debate
Force agendas on beneficiaries without understanding needs
Limited involvement of beneficiaries in decision making
CSO donor interests receive higher priority
Lack of effective mechanisms for beneficiaries to feedback on CSO performance

14. Globalization and civil society organizations: Charity, collaboration, or regulation?

15. Globalization and civil society organizations
Globalization reshaping relations between corporations and CSOs:
Engagement with overseas CSOs
Potentially new set of unfamiliar groups
Many developing and transitional economies lack strong and institutionalized civil society (e.g. China)
Global issues and causes
Problems that transcend national boundaries (e.g. climate change, water conservation, human rights)
Critique of globalization
Globalization of CSOs
‘the resistance will be as transnational as capital’
Global civil society

16. CSO relationships with business: Conflict
When CSOs are very opposed to a firm, they may employ:
Indirect action: often focussing on research and social media
Direct action: sometimes illegal but generates high publicity
Boycotts
Protests
Occupations and picketing

17. CSO relationships with business: Charity and Giving
When CSOs receiving funding from firms:
One way support
Strategic philanthropy / cause-related marketing
Building staff commitment to the company
Putting something back or stealing from the shareholders?

18. Charity and community involvement
Starting point for consideration of business involvement in civil society
One-way support – benefits communities and civil action but does not usually allow them much voice in shaping corporate action.
Types of involvement:
Corporate foundations to channel philanthropy
Employee volunteering. This allows achievement of the following aims (Muthuri, Matten, and Moon 2009):
Making a meaningful social contribution
Contributing to the development of their human resources
Enhancing the firm’s reputation
Increasing employee morale
Building ‘social capital’ within the community

19. Classroom Task: Greenpeace’s greenfreeze campaign
Please read the Ethics in Practice case:
From conflict to collaboration: Greenpeace’s greenfreeze campaign
Answer these questions:
Who are Greenpeace’s stakeholders in this case?
What are the advantages and disadvantages of Greenpeace pursuing the greenfreeze campaign compared to a company that is attempting to diffuse an innovation?

20. Business-CSO collaboration
Closer and more interactive relations between civil society and corporations
Sometimes called social partnerships
Limitations of business-CSO collaboration
Difficulties managing relations between such culturally diverse organisations
Difficulties ensuring consistency and commitment
Partnership appear to mask continuing hostility and/or power imbalances between the ‘partners’
The question of power imbalance
The distribution of the benefits of partnerships
CSO independence

21. Some examples of business-CSO collaborations
Name of
initiative
Country
Main CSO(s) involved
Main corporation(s) involved
Launch
Aims and objectives
Change for Good
International
UNICEF
Major airline carriers incl. Alitalia, British Airways, Cathay Pacific, JAL, Quantas
1987
To collect unused currency from passengers and convert it into life-saving materials and services for needy children
Marine Stewardship Council (MSC)
Originally developed by WWF-UK, now MSC is an independent CSO in itself
Unilever (at outset), now thousands of retailers, suppliers and restaurants globally
1997
Establishment of standards and independent certification for sustainable fishing
Ethical Trading Initiative
UK/
15 NGOs & 3 trade unions incl. International Confederation of Free Trade Unions, Anti-Slavery International & Christian Aid
50+ companies, incl. Gap, Jaeger, Monsoon, Tesco, Body Shop
1998
To define best practice in ethical trade and enable firms to implement labour standards in international supply chains
Juice UK
Greenpeace
Npower
2001
Development of a ‘clean’ electricity product which is based on renewable energy sources.
Sustainable Coffee
US/
The Rainforest Alliance
Kraft Foods
2003
To bring coffee beans certified for social and environmental sustainability into Kraft’s mainstream brands, including Kenco Yuban, and Carte Noir.
International Business and Poverty Reduction
Indonesia
Oxfam
Unilever
2004-5
Development of a research programme to explore the nature of Unilever’s Indonesia business and its impacts on people living in poverty.
HSBC Climate Partnership
The Climate Group, Earthwatch Institute, Smithsonian Tropical Research Institute, WWF
HSBC
2007
To combat climate change by ‘inspiring action by individuals, businesses and governments worldwide’, including programmes in education, research, conservation, and engagement with business, government and communities.
Green Works US
Sierra Club
Clorox
2008
Endorsement of ‘green’ line of cleaning products

22. Drivers towards business-CSO collaboration
Drivers for business engagement with CSOs
Drivers for CSO engagement with business
Consumer expectations
Growing interest in markets
NGO credibility with public
Disenchantment with government as provider of solutions
Need for an external challenge
Need for more resources
Cross-fertilisation of thinking
Credibility of business with government
Greater efficiency in resource allocation
Desire to head off negative public confrontation and protect image
Access to supply chains
Desire to engage stakeholders
Greater leverage

23. Who are CSOs accountable to?
Donors
Members
Employees
Government organisations
Other CSOs
No one

24. Limitations of CSOs
Many CSOs provide useful societal contributions, but most CSOs…
lack accountability compared with government or elected unions,
are prone to information misrepresentation,
lack grassroots support,
are often ineffective at providing public goods.

25. Classroom Task: Role-play in crisis management
Please read the scenario: Crisis management at Kapala Mine
Please form two teams:
Kapala Mine crisis management team
Managers of the parent company Gold Star Mining
Please follow instructions for the exercise