Corporate Social Responsibility Is Smart Business

By Eric Green
USINFO Staff Writer

Corporate Social Responsibility Seen as Smart Business Move

Times have changed since famed economist Milton Friedman wrote in his 1962 book Capitalism and Freedom that the only social responsibility for corporate executives was to maximize the income and wealth of their companies' stockholders.

Progressive companies today are recognizing that maximizing profits is not all that should matter in their business practices: companies also should contribute to the broader public good and treat their employees, at a minimum, with dignity and respect. Such business practice is termed corporate social responsibility (CSR).

James Viray, director of the State Department's Office of International Labor and Corporate Social Responsibility, told USINFO August 2 that companies have "multiple motivations" for being good citizens in their community, nation and world.

Viray said some companies practice CSR "because they believe that being socially responsible is good for their business -- whether it's through building their brand reputation, mitigating risk or improving employee retention and productivity, just to name a few benefits." Other companies engage in CSR, he added, "because they just believe that it's the right thing to do," while "others may do it for a combination of those reasons."

Viray said the participation of companies in the State Department's own CSR initiatives demonstrates a "genuine concern for human rights and worker rights."

State Department initiatives, Viray said, include the Voluntary Principles on Security and Human Rights and the "multistakeholder dialogue on child labor in the cocoa sector."

The Voluntary Principles are a set of standards that guide companies in maintaining the safety and security of their operations while ensuring respect for human rights and fundamental freedoms. The dialogue on child labor involves a project in West Africa where U.S. funding for nongovernmental organizations provided education and training to children who had been forced into cocoa production. More than 6,000 children rescued from some of the worst forms of child labor through this program now are enrolled in school.

Larry Palmer, president of the Inter-American Foundation (IAF), told USINFO that "prosperous communities are good for business," as are "quality companies that care for their communities."

"When businesses and communities combine forces at the local level, where people live and face their daily problems, they create stronger societies," said Palmer, whose foundation is a U.S. agency dedicated to promoting development in Latin America and the Caribbean.

Palmer said his agency has "witnessed the spread" of CSR in Latin America. In this connection, he said, "we have tried, successfully, to persuade leading Latin American companies and corporate foundations that resources channeled into their CSR programs can be wisely invested in the grassroots efforts that we have effectively funded for four decades."

Palmer said RedEAmerica, a network of 61 Latin American and Caribbean corporate foundations that have joined with his agency to support grassroots development, is the IAF's main vehicle for drawing more corporate resources into community self-help efforts. In addition, as part of its program of development grants, the IAF has funded projects that bring corporations and nongovernmental and grassroots organizations into "dynamic partnerships," Palmer said.

He pointed to Bolivia-based Irupana Andean Organic Foods, which works closely with an IAF grantee called the Bolivian Association for Rural Development (known as PRO RURAL) that helps indigenous farmers improve the quality of their organically grown quinoa and grow amaranth for use as an herb. Quinoa is a grain used as a substitute for rice.

"A strong world market for good quinoa has meant more profits for the farmers and for Irupana [Foods], whose quinoa exports have increased more than tenfold in just four years," Palmer said. He added that "this is a promising example involving a socially responsible corporation, an effective nongovernmental organization and various organizations of hardworking people, all engaged at the grassroots."

Human Rights Watch On CSR

A dramatic shift in corporate attitudes toward CSR has occurred in the past decade, says Arvind Ganesan of the nongovernmental group Human Rights Watch.

Ganesan, the group's program director for business and human rights, told USINFO that companies 10 years ago might have denied they have human rights responsibilities. Now, all companies, to some degree, recognize their responsibilities on this issue.

Whether companies actually carry out those human rights responsibilities is "a separate issue," said Ganesan, who also spoke on CSR at a July 18-20 State Department conference on human rights. (See related article.)

Ganesan said CSR can work when a company puts human rights policies and procedures in its portfolio and is committed to carrying them out.

Ganesan will be one of a number of speakers at an October 23-26 CSR conference in San Francisco. Several U.S. officials also are expected to attend the conference, which is sponsored by the group Business for Social Responsibility.

ENDS

(USINFO is produced by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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