The Reality of Corporate Social Responsibility: Experiences from China, South Korea, India and Indonesia


Defining Corporate Social Responsibility (CSR) is a bit trickier. A popular, if not particularly concise, explanation seems to be ‘the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.’[1] This definition reflects the predominant philanthropic dimension of CSR, as commonly practiced in many Asian countries. However, CSR takes a plethora of forms, including sponsoring awards, adopting voluntary codes of conduct, reporting on social and environmental impacts, engaging in dialogue with ‘stakeholders’ among others. The latest craze in the CSR market, of course, is concerning climate change issues, which has prompted an excitable chatter about energy efficiency and carbon offsetting. The talk of ‘green economy’, ‘green job’ and the like has been alarmingly widespread, that many activists take for granted.



The biggest problem with CSR is not that it has limitations, nor is it concerning its questionable ability to sufficiently address the problems it intends to ameliorate. Rather, it is the fact that it takes people to a completely wrong direction. For many large corporations, CSR is primarily a strategy to divert attention away from the negative social and environmental impacts of their activities. In the Asian context, CSR mostly involves activities like adopting villages for what they call a ‘holistic development’, in which they provide medical and sanitation facilities, build school and houses, and helping villagers become self-reliant by teaching them vocational and business skills. Such corporate strategies have been effectively hegemonic, providing a strong legitimacy and license for corporations to sustain the exploitation of human and natural resources. More importantly, it leads people to wrongly assume that the business houses, and not the states, are responsible for citizens' basic rights to better education, clean water, healthcare, etc. It disciplines the un-informed poor motivating them to behave in ways that make state regulation obsolete, while leaving them at the mercy of market forces.

Asia Monitor Resource Centre (AMRC) has been working to understand and deal with the unprecedented impacts of CSR on the working population. In the past few years, AMRC developed a core position paper on the CSR that highlighted the magnitude of the problem and critically analysed its implications for the labour movement, besides its undemocratic nature. The position paper was shared in a regional consultation meeting in May 2010 engaging critical CSR practitioners, which resulted in the circulation of a joint position statement on CSR, followed up by a collaborative research that resulted in publication of this book, The Reality of Corporate Social Responsibility: Case Studies on the Impact of CSR on Workers in China, South Korea, India and Indonesia.

It is true that more and more labour organisations and activists in the region have been attracted to CSR and the code-based strategy, almost as if they provide an alternative to labour unions and other forms of organising labour. Against this tendency, we believe that assisting workers to organise in workplaces largely managed by Asian TNCs is the sustainable way to improve labour conditions in the region, rather than being entrapped in CSR activities which in many cases has forced the unions and workers to put their energy and time in pressuring brand-names to implement codes in supplying factories. This publication is one of our efforts to get CSR unmasked and to help workers organise without harming their autonomy.

CSR as Corporate Political Agenda

Like in the circle of global value chain where a consumer’s need is being constantly created, CSR too is being marketed in very sophisticated ways. Recently the corporate world introduced a new term, corporate social investment. It is often used to describe a company’s investment in a variety of community activities aimed to (1) improve the company’s financial performance and reduce its operating costs, (2) enhance its brand image and reputation, (3) increase customer loyalty and sales, (4) increase the ability to attract and retain workers, (5) a reduced regulatory/activists' oversight, and (6) reduce risk, thereby facilitating easier finance or access to capital.[2]

There is no doubt that by undertaking CSR activities the corporate gains more profit, benefit, and legitimacy all at once. In particular, the ‘license to operate’ from the company’s host environment and community is as important as the company’s financial resources. This investment finds its returns in the form of helping the company avoid the cost of compensating the community affected by its operation. These political agenda have been acknowledged explicitly by the CSR advocates, including in business and academic circles.[3]

It is obvious that CSR is one of the tools to increase corporate power in the society. Numerous big corporations have increased the resources they devote to CSR in order to gain legitimacy and higher profit, simultaneously. CSR has become a major global industry in its own right, and as of 2007 it has been valued at US$ 31.7 billion.[4] However, despite the huge resources it acquired, evidences show that CSR practices are hardly adequate to address the problems, and in reality most firms’ CSR expenditures fall well within their limits of voluntary spending. Even the above-average expenditures of some big corporations such as BP, Shell, Nike, HP, the Gap, Timberland, M&S, and Merck, are quite small in comparison with the profit they make.[5]

The corporate response to public pressure has been strategic and persuasive in promoting CSR by promulgating a number of fancy parlances for CSR and engaging academic experts and consultants among others. Although there are a number of attempts to define CSR, its actual theoretical development occurs in business practices. In many CSR practices, business often uses the concept of “stakeholder management”, “stakeholder engagement”, “business values” or “business ethics”. Another common term used is “corporate citizenship”, which is based on the premise that corporations are citizens. By introducing these fancy terms, CSR becomes more complex, attractive and accommodative. For instance, corporations use different sophisticated terms of certification, labelling, standardisation schemes, and codes, involving consultants and experts that ultimately leave people in puzzle. That is a major reason why CSR is neither known among the public in many Asian countries, as shown in various chapters of this volume, nor are its harmful effects properly understood. In other words, there is always a huge gap between the discourse and the practice of CSR, which has been barely successful in dealing with the real problems the corporations themselves have created.

Corporate houses use CSR projects as a green-washing[6] and marketing strategy rather than as responsibility. The rights of workers at shop floors have, in fact, been deliberately neglected and violated for the sake of higher profit, exposing the real corporate sense of responsibility. The most notorious case is the glossy CSR report of Hindustan Lever Limited (Hindustan Unilever), the Indian subsidiary of Unilever PLC, the country’s largest packaged mass consumption goods company that deals in home and personal care products, food and beverages. The CSR report of Hindustan Unilever on “improving health and well-being of People” in India[7] is in extreme contrast with the company’s ruthless ways of dealing with workers. In its Doom Dooma factory in Assam about 700 workers and union leaders have been attacked since 2007 for asserting their basic rights. Hindustan Unilever has been involved in a number of CSR initiatives by promoting programmes such as Project Shakti of Unilever. The project is aimed at creating rural entrepreneurs by providing training to 13,000 underprivileged Indian women, who are trained to distribute the company’s products to 70 million rural consumers. Working with women’s self-help groups, the company teaches them selling and book-keeping skills and equips them with commercial knowledge.[8]

The case clearly shows that CSR is merely marketing gimmick and an effective exercise in green-washing. On the one hand, the company deliberately neglects the rights of its own workers at the workplace, while, on the other hand, builds a good image of contributing to the society. Exploiting a large number of women under the banner of CSR by involving them in selling and distributing the Unilever’s products, Hindustan Unilever in fact has increased its profit manifold. The women participating in the project have been reaching out to the Indian domestic market that helped Unilever to get 30 per cent more consumers in rural areas since the inception of the project in 2000.

Corporate Code of Conduct: Its Contradictions and Impacts


In the labour movement, CSR has transformed into a voluntary mechanism called the corporate code of conduct. The code of conduct is a corporate response to public pressures. Corporations on their part do not see these codes as obligatory, rather they become part of their strategy to gain legitimacy. The most distinctive element of corporate codes of conduct is that they are designed for the workers by the so-called 'other stakeholders', which include stockowners, management, NGOs and international organisations. The undemocratic nature of the stakeholder approach to this code is intrinsic to its conceptualisation, which is meant to give a full control to capital. [9]

Code of conduct effectively alters labour relations in the workplace promoting a harmonious industrial relation that sustains the violations of labour rights with least resistance from the side of workers. It aims at appeasing labour, consumer, and civil society movements, and has a mission to protect TNCs' interests in international sub-contracting. These codes of conduct domesticate the movements by engaging labour organisations in the supervision work of the manufacturing process of TNCs encouraging them to forsake their core work at the grassroots.

But the biggest problem with the codes of conduct is that it creates privatization of labour law and promotes self-regulation in the workplaces.[10] By promoting codes of conduct, employers divert the focus of labour movement towards setting up localised regulation, neglecting the national constitution and the labour laws. Employers try to convince workers and the local governments that voluntary standards are better than their existing labour laws, which suffer from a lack of implementation. However, the Asian context has visibly shown that CSR has exactly similar limitation – its core principles to “protect, respect and remedy” are hardly implemented. For example, although most of the Dutch multinationals operating in India do have a policy or codes of conduct for labour and environmental issues, their Indian daughter companies by and large do not fulfil the code of conduct principles. Like in many other Asian countries, the Indian operations of the Dutch companies lack monitoring of the policy implementation, and they generally do not verify if the production in subcontracting chain follow the internationally agreed labour and other human rights and environmental standards.[11]

It is very clear that the codes of conduct are undemocratic in nature and unfairly imposed upon the workers. It also intentionally makes the government’s work on labour inspection practically complicated and dysfunctional, if not impossible. Furthermore, codes of conduct and other types of CSR have the ‘divide and rule’ effect.[12] At the workplace level, CSR hampers the development of genuine, free and independent unions, which are further stigmatised as trouble-makers in society. At the community level, CSR affects the loss of harmony within the society, as a limited number of people get benefits through jobs, gifts or trade opportunities, while others get none; some people remain deprived, even when they given up their land. At the national level, the impact of CSR is obviously seen in the ever-widening rupture between the proponents and opponents of CSR. Meanwhile, at the global level, Northern and Southern workers are less and less likely to reach out to each other, as they get co-opted by multi-stakeholder initiatives and are more invested in them, than in the task of developing solidarity across divisions. CSR has impacted workers to the extent that it provides them with an alternative to solidarity building. In a nutshell, CSR undermines solidarity between workers.

Self-regulation that CSR promotes is bound to remain largely ineffective, and will fail to provide an adequate solution for the real problem that society faces today. One major reason why workers’ problem will remain unattended is that the current CSR agenda and practices are mainly market-driven initiatives. Only those firms that are part of the global supply chain of large TNCs are the ones that voluntarily adopt “standardised” labour practices, either with the intention of competing with their rivals from other regions, or in response to pressures from international buying houses, retail chains, or consumer groups in the North.

Needless to say, researchers have hardly found any example of companies producing for domestic markets that voluntarily adopt codes dealing with labour issues. Thus, there is a gap between firms that supply to the domestic market and those that supply to the global market and thus are tied to the global supply chain. Companies producing for local markets do not experience the same demands and pressures to carry out corporate social and environmental responsibilities. Therefore, it is not surprising that the response to corporate responsibility pressures has occurred mostly in export-led sectors and where the business is part of a global supply chain. For that reason the chief problem of CSR is that it sustains the very system that exploits people and natural resources.

As a legitimacy tool, CSR maintains the global production and supply system that hurt working people across the core-periphery divide. The system has resulted in the shift of manufacturing from industrialised countries to developing nations in the period of internationalisation of monopoly of capital. This trend started in the 1970s and has escalated in recent decades. This economic architecture has had a tremendous impact on working people. The system has adversely affected the working people both in the core and peripheral economies. In the core, such as the U.S. and Japan, economies receive less investment and fewer employment opportunities, and wages are being driven down through globalised competition. In the U.S., the share of manufacturing in GDP has dropped from around 28 per cent in the 1950s to 12 per cent in 2010.[13] Japan has also seen a similar decrease.[14] In the peripheries, the competition between countries for foreign direct investment and export markets is leading to a systematic establishment of anti-labour regimes drawing comparative advantages based on cheaper, more manageable labour.

The Reality of CSR: Experiences from China, South Korea, India and Indonesia

CSR has been practiced in many different ways, and this publication tries to present its Asian context by investigating how it has been impacting people on the ground. In this volume, we provide case studies from China, South Korea, India and Indonesia, disclosing the ugly face of CSR. It begins with the overarching paper written by Surendra Pratap of Centre for Workers Education that unmasks the political agenda of the corporate. This chapter explains that CSR took hold as an offshoot of the free market ideology of the 1980s and matured within the context of the new world economic order established by the World Trade Organization. It argues that CSR is basically the perspective of capital in general and TNCs in particular, and is a consequence of neoliberalism. The political agenda of CSR, it concludes, is very clear – and that is to prevent any kind of legislation at the international level which would control the behaviour and restrict the activities of the corporate. Inherent in the agenda is the task of projecting a socially responsible image of the corporate and diluting the anti-corporate and anti-globalization sentiments. The chapter also discloses the real face of the corporates where CSR provides a space for them to hide illegal and morally questionable activities from public eyes.

The next chapter by Elaine Sio-ieng Hui problematises the CSR in China by questioning whether CSR is able to address Chinese workers’ need in a changing socio-economic context. The chapter describes how CSR gained prominence in the 1990s as a tool of TNCs in mediating labour relations in supplying to countries interlinked in their global production chains. It reviews the implementation of CSR from the perspective of grass-root workers in China, one of the largest supplying countries in the south, and argues that CSR in China has always failed to protect workers’ substantial rights, despite the minor improvement of working conditions it has brought about, because many TNCs have taken advantage of CSR to deflect attention away from their exploitative policies. It explains that CSR continues to fail to address workers’ pressing concerns, including demands for decent wages and genuine trade union representation in a new socio-economic and legal context. This chapter suggests that CSR should no longer be on the top of the labour agenda and trade unionists, labour activists and scholars should devote more attention to how to support workers activism on the ground, and how to strengthen workers’ rights to freedom of association and collective bargaining, which are the crucial foundations for the effective protection of their rights.


The case study on South Korea is authored by Wol-san Liem, a researcher with the Research Institute for Alternative Workers Movements in Seoul. The chapter investigates CSR in South Korea by looking particularly at what it means for workers and unions, and carries out a case study of Samsung Group’s CSR strategy. Korean conglomerates’ CSR activities, it argues, focus heavily on philanthropic activities which provide corporations a means for presenting a moral image of themselves and for distracting people's attention from low wages and job insecurity. They also involve ‘green management’, which allows corporations to improve their reputation while taking advantage of new markets. Many corporations in South Korea use CSR to mask violations of labour rights. Despite this fact, South Korean unions see participation in CSR activities as a useful means for achieving their goals. In some cases, unions use CSR mechanisms to pressurise corporations to meet their demands in connection to wider campaigns. In other cases, unions approach CSR from a perspective of cooperation with capital. In the case study on Samsung Group, the chapter analyses how Samsung uses CSR to paint a positive image of its ‘no union management’ with detrimental consequences for workers’ rights. Overall, the chapter argues that when used by unions as part of comprehensive campaigns, CSR discourse and mechanisms can be useful in winning sympathy for workers’ demands. It also argues that much of Korean unions’ participation in CSR feeds into corporations’ CSR strategies, supporting capital’s power. 

The Indian case study is presented in the next section by Surendra Pratap and Sanjiv Pandita. In this chapter the authors describe that India is a country with a long tradition of philanthropy yet it has also a long history of highly irresponsible and inhuman behaviour of the corporate. It argues that CSR in the present era is different from philanthropy, and, as it emerges in practice, is also different from the Global Compact or other CSR initiatives. There is nothing in it for labour, and it is generally focused on education, health, public amenities, vocational training, awareness building etc. It is now a part of business and business promotion strategy, but most significantly, it is a political strategy. CSR is targeted to pacify the anger of the people against the corporate. CSR activities are targeted to project a good image of the corporate and weaken the people’s movement against them. The case study on GMR Group, a global infrastructure company in India, illustrates how CSR is used as a tool to pacify the displaced and dispossessed people of Odisha in India. GMR has acquired huge amount of land affecting more than 1,300 families of four villages in Angul region of Odisha, India with the majority being dalits and tribals. The GMR uses CSR to appease people’s anger against the taking over of their inherited resources. One local activist furiously voiced, “companies are destroying all the livelihood of the people and destroying all their water resources to make them and their generations face hunger and thirst for whole life, and then [through CSR] they are doing a charity by offering good clothes and good shoes.”[15]

The Indonesian case study is investigated by the Institute for Crisis Study and Alternative Development Strategy (INKRISPENA). The chapter focuses on how CSR was implemented and how it affected workers and trade unions in four companies. Reinforcing our previous argument, the research team of INKRISPENA argues that CSR is a subtle means by which the companies have been able to showcase their concern for workers’ welfare and thereby arm themselves with the tools to persuade unions and workers to cooperate with the management. This section shows CSR’s effective influence which varies from no impact or minimum impact to the busting of unions. The result of the research shows that the formation and development of trade unions is necessary for the workers to avoid a violation of their rights, and to control the company’s CSR implementation with a collective labour agreement.

Ways forward

Analysing these studies, the major problem of CSR as a part of neoliberal agenda is the structure in which CSR is embedded, which is capitalism. The chapters in this volume explain in different contexts of four Asian countries that the aim of CSR is to do the minimum possible, and it is the cheapest but effective way to increase corporate legitimacy and to avoid regulation. Above all, it helps sustain the existing capitalist social relation. Through CSR, the corporate manipulates people's values and principles by promoting the parlance of corporate citizenship. In fact, the corporate always undermines efforts to empower people, by co-opting activists and NGOs, getting them into the boardroom instead of out on the streets, by isolating the radicals, cultivating the idealists into realists.[16]
Against capitalist social relations, we need a co-operative system that would meet people's needs in a more egalitarian way. We need to put our energy into thinking about the principles by which our society should be organised. Thus, to demystify CSR is our first and foremost priority, and it is crucial to find alternative ways of re-structuring the social relations it has created. We should convince people that the corporate is not in any way altruistic. They always pursue their best interests against the interests of the larger society. They undermine the collective bargaining powers of workers and destroy the livelihoods of many local communities.

CSR has won the battle of ideas and served the neoliberal agenda of a reduced role of states. States are getting evermore integral to the political agenda of the corporate and both state and capital are aggressively disciplining people to behave in a way that makes public or state regulation obsolete, thus establishing the hegemony of market forces. Thus, it is necessary to attack every frontier of accumulation, and this effort requires united struggles of the working class. This publication is aimed at providing a better understanding of the real face of corporate responsibility to those who are fighting against the corporate for their rights. With the help of this publication along with other efforts in our networks and alliances, we hope that the working class becomes aware of unprecedented impacts of CSR, and is able to demystify its rhetoric, unmasking and de-legitimising it, and ultimately is able to have significant power to reclaim workers' dignity and rights.***

A Preface, published in Asia Monitor Resource Centre, The Reality of Corporate Social Responsibility: Case Studies on the Impact of CSR on Workers in China, South Korea, India and Indonesia, Hong Kong: AMRC, 2011.

Endnotes

[1] As defined by World Business Council for Sustainable Development, quoted in Worth, Jess, ‘Companies who care?’ in New Internationalist, December 2007, p.5.
[2] Agarwal, Sanjay K, Corporate Social Responsibility in India, Delhi: Response Books, 2008, p.33-47.
[3] See ibid., p.50-51; See also Justin I. Miller, Doug Guthrie, ‘Communities, Labor, and the Law: The Rise of Corporate Social Responsibility in the United States,” in Christopher Marquis, Michael Lounsbury, Royston Greenwood (ed.) Communities and Organizations (Research in the Sociology of Organizations, Volume 33), Emerald Group Publishing Limited, 2011, pp.143-173. Miller and Guthrie wrote that “in highly unionized environments, corporations use CSR as a way of deflecting attention from more expensive ways of fulfilling the social contract. In other words, corporations increase their philanthropic activity as a way of showing they are committed to the public good when environmental labor pressures are stronger”; Forbes also issued an article recognising that CSR is cheap and effective. See “Corporate Social Responsibility: Cheaper than a Pension Fund”, available online: http://www.forbes.com/sites/dougguthrie/2012/02/08/corporate-social-responsibility-cheaper-than-a-pension-fund/.
[4] Worth, Jess, loc.cit., p.4.
[5] Vogel, David, The Market for Virtue: The Potential and Limits of Corporate Social Responsibility, Virginia: The Brookings Institution, 2005, p.165.
[6] Greenwashing is an amalgam of "green" and "brainwashing". Environmentalists often use greenwashing to explain the actions of energy companies, which are traditionally the largest polluters. See http://en.wikipedia.org/wiki/Greenwashing for further explanation. The term was coined by New York environmentalist Jay Westervelt in a 1986 essay regarding the hotel industry’s practice of placing placards in each room promoting reuse of towels ostensibly to "save the environment". Westerveld noted that, in most cases, little or no effort toward reducing energy waste was being made by these institutions—as evidenced by the lack of cost reduction this practice effected. Westerveld argued that the actual purpose of this "green campaign" on the part of many hoteliers was actually increased profit. Westerveld thus labeled this and other outwardly environmentally conscientious acts with a greater, underlying purpose of profit increase as greenwashing. The term is generally used when significantly more money or time has been spent advertising being green (that is, operating with consideration for the environment), rather than spending resources on environmentally sound practices. This is often portrayed by changing the name or label of a product to evoke the natural environment or nature – for example, putting an image of a forest on a bottle containing harmful chemicals.
[7] The report on ‘Improving Health and Well-being of People’ is available at: http://www.hul.co.in/Images/USLP%20India_tcm114-241468.pdf (accessed on 1 November, 2011).
[8] Muruganantham, G, ‘Case study on Corporate Social Responsibility of MNC’s in India,’ International Trade & Academic Research Conference (ITARC), London, 2010. Available online at: http://abrmr.com/pdf/Case%20study%20on%20Corporate%20Social%20Responsibility%20of%20MNCs%20in%20India%20-%20G%20Muruganantham%20.pdf

[9] Chang, Dae-oup, ‘Demystifying Corporate Codes of Conduct: Towards Critical Engagement with TNCs,’ in Asia Monitor Resource Centre, A Critical Guide to Corporate Codes of Conduct: Voices from the South, Hong Kong: AMRC, 2004, p.113.
[10] Van Regenmortel, Hilde, ‘Corporate Social Responsibility (CSR): A Vehicle for International Solidarity? Asian Labour Update, Issue 75, April-June 2010. Availabe online at: http://amrc.org.hk/node/1022.
[11] See Arora, Bimal, and Puranik, Ravi, “A Review of Corporate Social Responsibility in India”, Development, 47(3), (93–100). 2004.
[12] Van Regenmortel, loc.cit.
[13] Bellamy-Foster, John, McChesney, Robert W., Jonna, Jamil R., “The Global Reserve Army of Labor and the New Imperialism”, Monthly Review, Vol.63 No.6 November 2011, p.27-29.
[14] See Fumio, Kaneko, and Haruhi, Tono, “Trends in Japan’s Direct Overseas Investments and their Impact on Asian Workers”, in Asia Monitor Resource Centre, Capital Mobility and Workers in Asia: Case Studies on Japan, China, Philippines and Thailand, Hong Kong: AMRC, 2011.
[15] See Indian case study, The Reality of Corporate Social Responsibility: Case Studies on the Impact of CSR on Workers in China, South Korea, India and Indonesia, Hong Kong: AMRC, 2011.
[16] ‘The Big Debate: Reform or Revolution,’ New Internationalist, December 2007, p.14-16.
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