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For multinational corporations to adopt socially responsible business practices, voluntary adopt socially res are not enough. business practices, voluntary measures are not enough.
Hardly a day goes by without trouble facing an American multinational corporation somewhere in its vast global operations. Occidental Chemical has been charged with abetting a peasant massacre deep in the rainforests of Ecuador. A United States court found Unocal guilty of complicity in human rights abuses in Burma. IBM settled a $40 million lawsuit alleging that exposure of workers to toxic fumes in the manufacture of semiconductors caused severe birth defects.
There are many other stories about the good things multinational corporations have done in response to social concerns, however. Shell set up a consultation process with the indigenous people in Peru. Hewlett Packard, Intel, and other high-tech companies increased their energy efficiency in response to California's energy crisis. Levi's, Nike, and the Gap have adopted management policies and practices to reduce the use of child and sweatshop labor.
The increasing pace of globalization in the past decade has catapulted U.S. multinational corporations into ethical quagmires around the globe. Often faced with weak, nonexistent, or non-enforced national environmental and social standards-and the absence of global standards-multinational corporations have increasingly become rule-makers rather than ruletakers. How they make and follow rules on environmental protection, labor standards, and human rights has become a controversial topic.
Globalization has brought with it an upsurge in social advocacy aimed at enhancing corporate social responsibility. Consumers, religious leaders, investors, labor, environmental and human rights advocates, and others have urged multinational corporations to embrace a triple bottom line-financial, environmental, and social-in both their domestic and overseas operations.
This interplay between activists and corporations has created a new, non-statutory paradigm of corporate governance based on a company's willingness to embrace environmental and social standards beyond simple compliance. In 2000, a survey by the Investor Responsibility Research Center found that about half of the S&P 500 companies had adopted a code of conduct or other form of environmental or social impacts management system.
But are voluntary initiatives enough? Can corporate social responsibility keep multinationals out of ethical quagmires? Can voluntary initiatives generate enough of a reward to business for doing "good" that they become the industrywide standard for...