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Social Responsibility: Whose Business is it?


Kailash Satyarthi, Chairperson South Asian Coalition on Child Servitude (SACCS) and Global March Against Child Labour


The post cold war world has witnessed the emergence of three important trends. First is the overwhelming power and influence of the market economy, which is determining the rule of law in the governance of many countries. Second is the accumulation of State power with a fewer countries, losing the balance in bargaining and national diplomacy, which seems to have crystallised even more after September 11. Third, seen as a silver lining, is the emergence of civil society power and the growing social, ecological and human rights concern among the consumers, NGOs, teachers union, labour union, youth groups and the media.


Rugmark has over the years resulted in an unprecedented image building, good will, trade promotion and a sense of accomplishment among the manufacturers. Over 2.5 million carpets carrying the label has so far been exported from India alone in less than 5 years, all owing to increasing demand and conscious buying. "

In this emerging scenario, the almighty market cannot remain unaffected. The growth in consciousness is bringing rapid change in corporate behaviour. In addition to this threat of consumer boycott, pressure to respect human rights in production and marketing and fear of negative media publicity in the situation of tough business competition, all have raised a significant debate over the past two decades. The concrete outcomes of this is seen in agreements on ethics in trade, internal and external codes of conduct, social monitoring and labelling, bilateral and multilateral trade protocols and other similar measures as part of corporate social responsibility.


The basic idea behind the Corporate Social Responsibility (CSR) is that business and society are interwoven rather than distinct entities. So the fundamental principles of CSR will lie in the respect for people and nature. This means protection and promotion of Universal Human Rights and use of natural resources based on parameters of sustainable development.


I would like to begin by sharing with you a concrete example from my country, India, which in a week's time from now will be celebrating its most luminous festivals - Diwali. On this day the whole country comes alive with lighting of lamps and colourful pyrotechnics. However, many of us are oblivious of the fact that that these firecrackers are being produced by small children, often at the risks of their lives. Accidents in the production units are common and hundreds of children are known to have lost their lives. Appalled by their plight my organisation, the South Asian Coalition on Child Servitude (SACCS), almost a decade back initiated a "Boycott Firecrackers" campaign aimed at sensitising hundreds of thousands of school-going children about the hazards of child labour and asking them to shun the use of firecrackers. The campaign spread like wild fire and soon several environmental groups also joined us in our initiative. It gives me pleasure to share the success of the campaign with all of you present here. The consumer pressure built over the period forced the firecracker manufacturers to take some remedial measures including removal of child labourers to a large extent, adoption of codes of conduct and a significant change in their trade behaviour.


In the present times, corporate social responsibility is largely driven by four powers namely volunteerism, statutory obligation, consumer concern and trade barriers including import ban.


A clear manifestation of volunteerism among the businesses is philanthropy. It has been an age-old tradition of the businesses based on the principle of "good doing and good looking". I wish to stress here that Corporate Social Responsibility is more than philanthropy, although donating to local community groups or charities may form part of a CSR initiative. The message here is crystal clear. Social expectations about what corporations are and how they should behave have moved well beyond the traditional realm of philanthropy or business ethics. The name of the game today is to align the corporation behind broader social and environmental goals, or at least to make sure that actions by firms do not undermine them.


The good news is that we see this change, though limited to few big companies alone. On a positive side, such companies have or are in the process of evolving their internal codes of conduct guided by the concern for human rights and ecology. The philanthropy is also seen changing its character from small charity actions to rights based projects of wider social and ecological interest.


There is however a dark side to it. For many companies it is a mere window dressing as they lack any kind of transparent and independent monitoring system to oversee the implementation of these codes. These then become a means for trade promotion rather than an adoption of a genuine ethical practice.


Some companies are also managing social projects but they seldom become anything more than a PR exercise aimed at their image building and sales promotion.


Another power that drives the corporations to assume social responsibility is their statutory and legal obligations. These include both, the labour standards set by the law of the land as well as that by the International Labour Organisation (ILO). The ILO's Core Labour Standard's include provisions against the use of child labour, forced labour, gender discrimination at work place and freedom of association.


The companies may implement the legal provision as the result of pressures from the organised labour, the State labour inspectorate or organisations for ensuring responsible behaviour.


Poor enforcement of laws has been seen as a major problem over the years especially in the unorganised sector, contractual labour practices and sub-contract production units. It has been observed that the multinational companies and the corporates, which subcontract their production to small manufacturing units, often shirk their responsibility of enforcement of labour laws. The absence and weakening of trade unions in these areas too contribute to this situation and the businesses go scot-free.


To make things worse is the inadequate, untrained, inefficient and corrupt labour inspectorate system, which fails to ensure compliance by the businesses. As a result one finds the rampant use of exploitative child labour despite international provisions against its use.


The carpet weaving units, sporting goods industry, toys manufacturing units, apparel goods industry are some of the visible examples of such an exploitation world over. Just recently, the news about the rampant use of child slaves in cocoa production in Ivory Coast shook the world. There are also reports on how American Oil Companies are making big bucks by using forced labour for laying its pipelines in Myanmar. These are just a couple of examples.


I personally believe in the power of the consumers and would place it over and above all other powers that are responsible for driving the corporations to behave responsibly. The present times has seen an enormous growth in the socially conscientious consumers. With this is growing the demand for the socially responsible products - the products that are eco-friendly, child friendly, animal friendly etc.


My experience has shown that consumers do not only want good and safe products, but they also want to know if they are produced in a socially responsible manner. At times consumers are even willing to pay more for such products. The issues consumers care about the most are protecting the health and safety of workers and respecting human rights throughout company operations and the chain of suppliers for example not using child labour and safeguarding the environment in general.


This power has been tapped quite effectively through the various consumer campaigns spearheaded in the past. The anti-child labour Carpet Consumer Campaigns, Clean Clothes Campaign and Foul Ball Campaign are some of the successful consumers' initiatives that resulted in paramount changes in the corporate world.


I was fortunate to have been involved in many of these endeavours, especially the first voluntary "child labour free social labelling", popularly known as RUGMARK. In late 80s when my organisation, in collaboration with some European partners, launched the carpet consumers' campaign it was perceived negatively by the industry in South Asia that has a dubious distinction of using over a million children in slavery like condition for the production of carpets.


We did not call for a blind boycott of all the carpets because we believed in the industry's potential to get rid of child labour and engage adults under better working conditions. We only offered an alternative to the consumers in the form of child labour free carpets. To establish the credibility of the system among the consumers' it was imperative to have an independent and transparent monitoring, certification and labelling system. Also of prime concern was to offer the best alternative to the children engaged in the carpet industry. Therefore a full-fledged program for their rehabilitation and education was inbuilt in the whole program. Rugmark runs rehabilitation, vocational training and education centres for thousands of liberated and potential child labourers in India Nepal and Pakistan. To ensure that the system remains independent and self-sustainable, Rugmark introduced a small licensing fee to meet its expenses.


Rugmark has over the years resulted in an unprecedented image building, good will, trade promotion and a sense of accomplishment among the manufacturers. Over 2.5 million carpets carrying the label has so far been exported from India alone in less than 5 years, all owing to increasing demand and conscious buying. The success of Rugmark in promoting trade has resulted in its emergence as a global program. India, Nepal, and Pakistan are the three carpet-producing countries as well as Germany, USA, Canada, UK, The Netherlands are among major importing countries which are currently participating in the Rugmark program.


With the onset of globalisation and the greatly increased availability of detailed information, sophisticated and well-informed consumers are realising they really are king. The consumer has choice and the reputation of the brand is one key factor to the future prosperity of the business.


The power of the trade barriers reflects from the fact that its threat has led many sectors and industries to take action. One such example is the Sialkot program. When the issue of the use of child labour in production of sporting goods was highlighted in the media in the 90s, the Sialkot sporting goods industry, one of the largest exporters in the world, faced a major threat of import ban from the West. The industry was left with no option but to mend its ways. This took the shape of the Sialkot Agreement to eliminate child labour in the soccer ball industry in Pakistan.


In 1997, the Sialkot Chamber of Commerce and Industry (SCCI) entered into a partnership with the International Labour Organisation (ILO) and other organisations with the goal of eliminating child labour. The Agreement marks the first time multinational corporations and their local suppliers have teamed up with international organisations to eliminate child labour from this specific industrial sector. This Prevention and Monitoring program has two main components - identifying child labourers and ensuring that manufacturers in the program have 'child free' workplaces. The project has seen a marked shift in its target production capacity to child-labour-free stitching centres. ILO is responsible for the monitoring of the program. This has brought a remarkable success both in stopping recruitment of children in soccer ball manufacturing and rehabilitation and education of former child labourers. However, it has to be done in remote areas.


One very recent example that I now recall and wish to share with you is the introduction of corporate social responsibility in the chocolate industry. As I mentioned some time back, last year the world was hit by the news of thousands of slave labourers including children, brought from the poor neighbouring countries, working on cocoa fields in Ivory Coast, the largest producer of cocoa. The fact shook the trade and policy domains in the US and created uproar in the Senate.


Under the growing threat, the Chocolate Manufacturer's Association (CMA) which has all the major chocolate manufacturing companies as its members (including Nestle, Cadbury, M&M and Hershey's, who happens to be the biggest beneficiaries of this slave trade) signed a protocol last May committing itself to the prohibition and elimination of child labour from cocoa production. The signatories include the stalwarts from the chocolate industry, US Senators and Congressmen, ILO-IPEC and trade unions and NGOs. The efforts also resulted in the formation of an International Cocoa Foundation, consisting of all major chocolate companies, trade unions and NGO representatives, It has already started working on developing concrete programs for the elimination of child labour and finding alternatives for their rehabilitation and education.


I wish to also share with you an idea of a unified campaign of people's power for fair trade, being developed by my organisation, SACCS. This initiative, known as TRADEWATCH, aims to mobilise the power of consumers in India and abroad to demand an end to exploitation. It would be concerned with the production of goods for the domestic and international markets, as well as the import of goods from other countries. By using a variety of approaches, including grassroots campaigning, negotiations with businesses, independent monitoring, selective boycotts, and the promotion of ethical products, it will work towards the ultimate goal of social justice.


The main aspects of the program are:

Independent Monitoring of Companies and Industries - TRADEWATCH will develop a methodology for the independent monitoring of specific companies that may be using child labour or violating other labour standards. In a few cases (notably the carpet industry and soon the sporting goods industry), other specialised inspection and labelling systems have already been developed. When these initiatives are credible and reliable, TRADEWATCH will work in cooperation with them. It will not, however, be associated with any of the programs that are simply PR exercises with no impact on the underlying problem of exploitation. A number of codes of conduct have also been developed by various campaigns. Whenever possible, the work of TRADEWATCH will be harmonised with these codes to prevent any lowering of ethical standards. All inspection work of TRADEWATCH will be done by qualified professionals within a system of multiple checks and safeguards.


Rehabilitation of Released Children - In keeping with a child rights based approach, TRADEWATCH will take all possible steps to ensure that children released from work are given the education and rehabilitation they deserve. At the local level, TRADEWATCH will be working closely with existing government and NGO programs. Whenever possible, the costs of rehabilitation programs will be financed directly by the businesses involved.


Empowerment of the Grassroots - The vision of TRADEWATCH is a movement guided by the brave efforts of organisations working at the grassroots level. By directly informing consumers about the harsh reality of the workers, TRADEWATCH will be putting tremendous power into the hands of local organisations. Presently those grassroots activists may be on the losing side of a difficult struggle against powerful interests and a corrupt administration. With the support of TRADEWATCH, however, they will be able take their case directly to the consumer and turn the economic table.


Constructive Dialogue with Businesses - The experience of SACCS and other campaigners have shown that in every industry there are a few genuinely concerned businesspeople who sincerely support movements for social change. TRADEWATCH will work hard to identify and encourage those businesses and help them become moral leaders for their industry. On a broader level, TRADEWATCH will identify major industries that use child labour and initiate dialogue with the appropriate industry association to begin the process of change. TRADEWATCH will offer constructive, realistic proposals for the time-bound elimination of child labour and the protection of other basic labour rights.


Promotion of Ethically Produced Goods - The promotion of goods made under fair and equitable working conditions can be one of the most effective actions for the upliftment of people. Just as Rugmark, Fair Trade, and other programs have helped encourage ethical business practices by providing an opening in the market, TRADEWATCH will also emphasise this positive force. Easier access for ethically made goods can be seen as one of the simplest and most cost effective methods for generating greater income among poorer sections. TRADEWATCH will build links with existing "ethical marketplaces" and advocate directly with governments for increased market access for ethical goods.


Wide Dissemination of Information About Companies and Industries - The globalisation of the economy will simply be a path to untold injustice if it is not matched by a globalisation of information about businesses and their practices. Only when consumers plainly know what businesses are doing in remote areas of India or other countries, can a natural balance in the economy be restored. TRADEWATCH will freely distribute information about the practices of companies (both good and bad).


Mobilising Public Pressure - The experience of SACCS and other groups has shown that mobilising support from the public at large can be tremendously effective in pushing for change. In a few select cases, TRADEWATCH will call for a large public campaign against ruthless companies and industries. The actions may include demonstrations, political lobbying, legal actions, and boycotts. The media will be involved at all stages to share the message with the widest possible audience.


Solidarity with like-minded Activists - TRADEWATCH will establish bonds of solidarity with other groups in the South working for the same ultimate goal. In the era of globalisation, no single nation can stand-alone against the powerful economic forces sweeping our planet. TRADEWATCH will build relations of genuine cooperation with consumers groups and campaigning organisations in the North so that each can benefit from the other's strengths.


Let me conclude with a very simple remark. The businesses with violation of human rights and eco-destruction soon will become a sad past. Future businesses will only be socially responsible businesses. One should also not forget that benefits of globalisation may become bigger disaster without justice and human concern. The genuine practice of Corporate social responsibility could be the first effective step in a positive direction.


Thank you very much.

Kailash Satyarthi... the seeker of truth
Copyright © 2014 Kailash Satryarthi