China Development Brief, No.54 (Summer 2012)
As civil society organizations (CSOs) grow and diversify, can they continue to work together to counter excesses in the government and corporate sector? Can CSOs best carry out their work by cooperating with companies or by confronting them? The author reminds CSOs about their responsibilities to the public interest and to providing a check on government and corporate power and misbehavior. He ends by encouraging CSOs to keep this bigger picture in mind, even as they become more professional and specialized, and to do more to promote exchanges, understanding and collaboration between CSOs from different issue areas so as to maintain a sense of their common identity.
In March 2012, more than 88,000 people participated in the People in the Public Eye Awards’ annual selection of the world’s worst company. Brazil’s Vale received 25,042 votes, topping the list and winning the dubious “award”.
Vale is the second largest company in Brazil, and is also the world’s second largest mining company. To ensure the electricity demand of mining operations in the Amazon region, Vale recently acquired $17 billion in investment capital and has significant investor equity in the Belo Monte dam currently under construction. Environmental organizations have said that if this giant dam was built, it would have disastrous social and environmental consequences: 40,000 local residents would be forced to relocate, and 80 percent of the Amazon’s most important tributary, the Xingu River basin, will be converted into artificial reservoirs, destroying the local ecosystem. This ecosystem is the basis of survival for local indigenous communities, communities along the river, and fishermen. The planning for the project excluded from participation local communities and the public. During the decision-making process, local residents had a hard time making their voices heard and also failed to obtain adequate compensation. For this important investment, Vale did not fully take responsibility for the dam’s potential impact.
Vale made the People in the Public Eye’s list of worst companies not just because of the Belo Monte dam, but also because of various labor and environmental problems in the company’s 70-year history. According to a publication by an international NGO network, Vale and local communities were frequently coming into conflict in other regions of the world. In 2009, alone, the company was named as a defendant in 111 lawsuits around the world, and was the target of 151 criminal investigations due to its infringement of worker and community rights.
Environmental organizations, which have been at the forefront of NGO advocacy, have been responsible for supervising polluting enterprises in an “ombudsman” role. By investigating, collecting evidence, communicating privately and exercising public pressure, they seek to correct corporate misconduct. While seeking win-win cooperation with corporations in the promotion of sustainable development, these “ombudsman” organizations often come into conflict with “problem” corporations, starting environmental protection wars in the process. Aside from environmental protection, these organizations also enter into disputes with Chinese multinational companies and domestic companies over labor rights.
Along with economic globalization, the negative impact of multinational enterprises (including Chinese multinationals) has already spread across borders, as have independent checks and balances and international civil society’s active monitoring and responses. Through the actions of civil society and consumers and the evolution of modern business ethics, corporate social responsibility (CSR) has extended from individual enterprises to related parties in the supply chain, including corporate lenders in the banking sector. NGO evaluation and oversight of the behavior of multinational corporations has also moved from single country analysis toward an examination of behavior in all countries in which the enterprise has operations. At the same time, more and more enterprises have established a CSR department and have become involved in the public welfare. The hope is that they will assume the responsibility of being good public citizens, outside of their profit-driven behavior in the market.
However, the performance of enterprises on CSR has been, at best, uneven. Some corporations see environmental and social issues as primarily a public relations problem. On the one hand, donations to the public good are generous and their aid is innovative in the fields of scholarships, help to the poor, disaster aid, and similar. Companies also repeatedly place highly on lists of charitable giving. However, these same companies’ environmental and labor records invite public anger. This kind of behavior causes people to view CSR skeptically, seeing it as an attempt to cleanse the stains of their bad deeds. It also leads to a great deal of criticism concerning their public welfare actions. Due to their appearance on the NGOs’ list of shame, these enterprises have invested heavily in trying to repair their public image but end up doing more harm than good.
There is no doubt that cooperation between NGOs and responsible businesses in public welfare projects is a win-win situation. However, both the issue of extending an olive branch to problem corporations and how to manage cooperation on public welfare initiatives, has presented many NGOs with contradictions and confusion. For the same company, some NGOs may advocate a public boycott of its misconduct, but others may choose to cooperate with them, helping the company to build their brand.
In 2011, while the world’s NGOs boycotted Vale, domestic Chinese public interest organizations cooperated to sponsor an environmental award program. The award program specifically sought to recognize individuals and NGOs that contributed to outstanding environmental successes in western China. There are also other cases in which some corporations blacklisted by Greenpeace and domestic environmental organizations as problem corporations were also likely to partner with other NGOs in other sector. In both cases, the NGOs’ efforts were diametrically opposed which raises the question: does civil society’s desire to achieve multiple social objectives cancel each other out?
In fact, civil society has a consensus on the overall concept, and perhaps this is true in the literal sense. However, in reality, it is more a demonstration of diversity and differences. In diverse areas of public service, it is not uncommon to see mutually offsetting social effects, even in the same issue area. Moreover, it is common to see interest groups divide and work at cross-purposes. In some cases, it is possible to find a middle way of taking into account two different objectives. For example, to balance the interests between forest conservation organizations and indigenous peoples’ rights groups, the organizations involved produced an agreement that protected the environment and economic development. It allowed the community residents to continue to enjoy the right to development, while becoming the main protectors of the forest.
But not all conflicts can be so easily reconciled. One example is resolving differences in climate talk proposals. On this issue, differences have emerged between NGOs of the North and the South, between environmental and development NGOs, and between elite NGOs and grassroots movements. These differences are mainly focused on four questions. First, whether countries of the North or South should bear more of the responsibility? Second, should we support or oppose to choose the market mechanism for achieving energy efficiency? Third, should we introduce a green model of development under the current system, or advocate for radical changes in the climate justice system? These differences originate from variations in organizations’ basic understanding of the problem, and are also reflected in the disparate solutions suggested by each organization. On one hand, these differences reflect the diverse perspectives of civil society to explore and deal with complex issues and challenges. On the other hand, the differences weaken civil society’s ability to influence government and corporate policy.
With regard to the principles of cooperating with enterprises, aside from working with tobacco, weapons, and similar harmful industries, international civil society has not yet come to a consensus on a standard for accepting industry support and cooperation. However, it is important that, through disputes, dialogue, and discussion, these issues become public topics of discussion for civil society. Only through open discussion, exchange, and sharing of information can public interest organizations in various fields be able to work together, and ultimately make their own decisions based on a full disclosure of corporate behavior.
On the level of a single organization, before a public interest organization accepts a corporate donation, there are several important questions to consider. First is whether or not the NGO should assess the public social and environmental impact of the enterprise. Second, what information and criteria should public service organizations use to make a decision to accept support? Finally, should an organization only consider the domestic performance of enterprises or include their actions overseas in their evaluation?
At the level of the NGO community as a whole, there are a different set of questions. For example, many companies in today’s society engage in serious employment discrimination. Should a company criticized by a rights protection NGO, also be boycotted by civil society as a whole? In the area of labor rights violations, should NGOs in other fields think twice about working with an enterprise that has been criticized by a labor rights organization for not reforming its policies towards workers? In today’s globalized world, should Chinese NGOs consider foreign media, NGO, and citizen protests against a Chinese corporation’s actions overseas before asking for donations from or cooperating with that corporation? Also, with respect to cooperation with multinational companies, when domestic NGOs are evaluating the company’s actions in China, should they, at the same time, give consideration to their actions overseas?
There are some signs that China’s civil society is maturing. The 2010 China Charity Awards flatly refused to consider an award for any company from the tobacco industry. In July 2011, the Hunan Tobacco Monopoly Bureau sponsored the “Charity Medical Card,” an activity that attracted intense attention from both the public interest sector and the public at large, and the sponsorship generated challenging and opposing voices. These events show that public interest organizations and media have started considering the legitimacy of donors from a broader perspective. These two examples also indicate that organizations face a conscious choice with regard to resources, and have the courage to refuse. Still, despite the current environment, acquiring the resources to survive remains the primary challenge facing many NGOs. As a result, there are still very strong pressures to adopt a pragmatic strategy.
In terms of the effectiveness of positioning and technical operations, NGO can only specialize rather than be comprehensive. A division of labor is the inevitable path for all NGOs. However, at the same time NGOs are specializing, if they lack concern and sensitivity to higher-order social problems, they open themselves up to accusations of “selfish departmentalism” and “each doing things their own way.” Similarly, they can also lose sight of the connectedness of different social issues, and, immersed in their own projects, they can find the impact of civil society actions canceling each other out, setting back the overall goal. Organizations that are satisfied with merely tilling their own little patch of land will likely lose the ability to respond to urgent practical problems. Currently, elevating NGO specialization and professionalism allows these organizations to more effectively use public resources to respond to social problems; this has already become the universal consensus of the industry. At the same time, we need to be cautious about going to the extreme of specialization, which can cause us to lose sight of the larger goal.
Despite the lack of trust and social services in today’s society, traditional charity still has an important place. However, given the social background behind the conflicts in China’s transitional period, Chinese civil society, in contrast to traditional charities, are not limited to just providing compassion and helping people in distress. They also are taking responsibility for enlarging the public sphere, promoting civil rights and pushing for structural changes in the government and market. Apart from the communication and interaction between the government, business and civil society (or third) sectors, civil society organizations should promote more exchange and discussion within their own sector – between service and advocacy organizations, and between organizations working on different issue areas.
◇ July 13, 2011. The environmental organization Greenpeace released the report called “Dirty Laundry: Unraveling the corporate connections to toxic water pollution in China,” in which 14 global clothing brands were exposed to criticism for failing to effectively solve the issue of their suppliers’ emissions of toxic and hazardous substances, resulting in water pollution in China. Greenpeace’s polluter list includes Adidas, Nike, Puma and other international brands and also local brands such as Li Ning and Youngor – an astonishing list. Before the report was released, Greenpeace conducted a time-consuming year-long thorough investigation. They went so far as to spending 24 hours day outside of factories monitoring and recording the condition of the pollution discharge. Greenpeace demanded of these brands that they immediately commit to phasing out emissions of toxic and hazardous substances from enterprises in their supply chains.
◇ April to August 2011. The Environmental NGO Network – Green Choice Alliance released three copies of the “IT Supply Chain Heavy Metal Pollution Research Report,” which interrogated Apple, Nokia, LG and 29 other well-known IT brands’ foundry pollution. It also focused on supply chain and downstream enterprise emissions of heavy metal.
◇ April 2012. The Institute of Public & Environmental Affairs, with five other environmental organizations and the UN jointly issued a report which said, through the investigation of 6000 domestic illegally polluting textile enterprises and suppliers for more than 130 well-known apparel brands were represented. A total of 48 brands’ suppliers have serious water pollution violations, many of which are well known, such as clothing brands Li Ning, Nike and Zara. The environmental organizatiosn sent a letter explaining the situation to these brands, but the majority did not respond.
Editor’s Note: These cases are included here to provide examples of brand-name companies with supply chains that contribute significantly to environmental pollution in China. Some of these companies make generous donations to social causes and place highly on lists of charitable giving but show considerably less initiative in responding to criticism by NGOs of their contribution to environmental and social justice. ↩