CSR Growing Up?

For the business-NGO relationship to gel, its CSR offspring may have to grow up fast and reflect the changes within the business and NGO sectors over the past decade. If we consider development NGOs, the last ten years have seen an increased focus on both rights-based understandings of development, and the systemic causes of maldevelopment. One example of this level of analysis is the new Real World Economic Outlook, which was published by the New Economics Foundation at the end of last year.11 The argument is that economic globalisation has created a situation of debt and deflation. This is because globalisation's great achievement - falling prices for labour, goods and services - will make it more difficult for individuals, households, governments and corporations to repay the debts acquired through financial liberalisation. The Outlook argues that ordinary people have been lured into a quagmire of debt and deflation. Worse, a finance-centred economy has led to a dramatic increase in inequality, both within and between countries. Putting finance at the centre of our society "has proved disastrous for the environment and for billions of people in poor countries. It now poses a threat to people and households in the west, as well as to corporations and governments," says Ann Pettifor, who edited the report.

One key aspect to this problem is currency volatility, where over a trillion dollars worth of different monies are traded on electronic exchanges each day. The ease of making short term speculative transactions has been held partly responsible for creating currency crises which have increased poverty in various regions, an example being Indonesia where poverty doubled as a result of the East Asian currency crisis.12 Moreover, the currency markets exert a undemocratic pressures at all times, as any negative perspectives from finance companies on the politics of a sitting or prospective government can lead to a devaluation of its currency. Thus there was a run on the Real as Inacio Lula Da Silva moved toward the Presidency of Brazil.13 In February the Swiss NGO Bread for All published a study on the negative effects of currency volatility.14 What was unusual was that it set out key reasons why there is a business case for companies in various parts of the world, and various economic sectors, to see a reduction in currency volatility. Speaking at the preparatory meeting for the 11th ministerial conference of the UN Conference on Trade and Development (UNCTAD), co-author of the report Francois Mercier called on progressives within the private sector to engage with civil society in a global dialogue on how to calm currency markets and promote more developmental financial flows to the global South. "Cooperation, dialogue and partnership between business and civil society has to become more strategic and more systemic if we are to address the root causes of poverty," he said. Given that only the top 20 international banks account for about 80% of global currency transactions, the vast majority of financial services companies, and other businesses, could constructively engage in an initiative on calming financial volatility.

Two other events in Geneva in the first quarter of 2004 suggested this type of 'new generation partnership' between business and civil society might be possible in the near future. First, the report of the World Commission on the Social Dimension of Globalization, was published by the UN's International Labour Organisation (ILO) in February. Discussing the governance of globalisation the report highlighted the growing problem of currency volatility, arguing that "serious defects need to be corrected if we are to attain a fairer and more inclusive pattern of globalization." However, the report noted that "progress has been slow and limited" (p.39). Although it did not elaborate, the reasons are quite clear, as the International Monetary Fund (IMF) has been responsible for driving currency market liberalisation in past decades: the IMF is controlled by the richest nations on Earth, where the banks that benefit from currency speculation are based. Multilateral action would be required to address currency volatility for development objectives, and thus UNCTAD should have a role, yet the secretariat of the UN body were reportedly cautious about acting on this agenda, given the concerns of key donor governments from the West.

Another initiative launched in Geneva in January suggested that there might be some governmental leadership in this area. Progress towards the UN's Millennium Development Goals (MDGs), which include a target to halve the number of malnourished people by 2015, has stalled, with a fall in bilateral development aid from Northern governments not helping the prospects of success. "The implementation of those goals must be revitalized," said President Lula Da Silva, at the launch of a new fund to combat hunger and poverty. The fund was launched with French President Jacques Chirac, who said government development aid alone could not provide the estimated 50 billion more dollars a year needed to fight poverty. In a joint declaration in January the two Presidents relaunched the idea of international taxes on arms sales and financial transactions to generate funds to achieve the MDGs.15 A global partnership is envisaged that will engage governments, the UN system and financial institutions. And the tough issues might not be avoided, as Chirac told journalists after the launch that "we cannot avoid setting up a system of international taxation."

Given that the currency markets are often likened to a global casino, bank executives might take inspiration from the recent moves of the American Gaming Association. Just before Christmas this industry association for US casinos launched a code of conduct for its members to target problems with compulsive gambling. The code includes mandatory training in responsible gambling for new employees, information for gamblers on the probabilities of winning or losing at specific games, and exclusion programmes for known problem gamblers.16 The world's problem gamblers are the top 20 banks. Whether they can be weened off their addiction to gambling with currencies, and the lives of billions of people, is another matter.

12. Weller , C. and Hersh, A. (2002) The Long and Short of it Global Liberalisation, Poverty and the Inequality, Technical Papers 40, EPI.

13. Beck, L. (2002) Election Dysfunction , Brazzil, August 2002, Accessed at: www.brazzil.com/p20aug02.htm

14. The Business Case for Financial Stability: A Global Dialogue with Business, by Francois Mercier and Jem Bendell, Bread For All, February 2004. Available from: mercier@bfa-ppp.ch

15. France, Brazil relaunch "Lula fund" to tax arms sales and fight poverty, Channel News Asia, 31 January 2004, Accessed at: www.channelnewsasia.com/stories/afp_world/view/68822/1/.html

16. Business Respect - CSR Dispatches No#68 - 21 Dec 2003

 

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