Beyond Legal Versus Self-Compliance

In the face of increasingly powerful consumer politics in most Northern countries, many companies are beginning to introduce new environmental and social policies for their operations in Southern countries. These initiatives range from codes of conduct and certification schemes to purchasing policies and partnerships. As noted earlier, Shell has added support for human rights and sustainable development to its Statement of General Business Principles. BP is collaborating with a group of British development NGOs to improve its social and environmental performance in Colombia. Wood product retailers throughout Western Europe and North America are committing themselves to sourcing only from FSC-certified forests. Leading sporting goods companies are working to eliminate the use of child labour in the production of soccer balls in Pakistan. Many other examples of new corporate environmental and social policies affecting the South can be found in other industrial sectors, including chemicals, clothing and food production.

Many would characterize these changes as evidence of the self-compliance agenda - a second stage business response to sustainable development which is currently the dominant paradigm of environmental management. Self-compliance is championed as a way of promoting sustainable development by allowing flexibility in addressing environmental issues and by creating incentives for environmental innovations (WBCSD, 1997). However, self-compliance is criticized by both environmentalists and academics for not going far enough and for being used by industry as a means of discouraging new environmental legislation (Welford, 1997; FoE-UK, 1995). The United Nations Research Institute for Social Development (UNRISD) has also voiced these concerns, contending that “international business cannot be expected to author their own regulation: this is the job of good governance” (UNRISD, 1995:154 and 19).

We do not believe that all the corporate environmental initiatives which are not demanded by governments are “voluntary”. Certainly, some of the impetus for the changes is coming from the business community itself, through organizations such as the WBCSD and the ICC. Key individuals within companies are also playing instrumental roles in the process of change. However, we believe it is the catalytic roles of Northern and Southern NGOs as business provocateurs and partners that are driving these changes.

Northern NGOs are playing major roles in challenging the environmental and social impacts of Northern-based businesses operating in the South. Greenpeace International has been one of the leading NGOs in the worldwide campaign against Shell’s activities in Nigeria. Key Northern catalysts for public awareness about the destruction of tropical forests included the Rainforest Action Groups (RAGs) in the United Kingdom, United States and Australia, Friends of the Earth (FoE) groups in the United Kingdom and Netherlands, and numerous other grassroots campaign groups throughout Western Europe. On the partnership front, WWF-International, with numerous national affiliates, has been the lead collaborator with business on forest-product certification and labelling. Likewise, SCF-UK and Oxfam-UK have been the first development NGOs to embrace partnership with sporting goods manufacturers and clothing retailers respectively.

The process of “civilizing” global corporations also depends upon the active participation of Southern NGOs. On both social and environmental fronts, Southern NGOs have raised global awareness through their activism and networking. Only when rainforest protests by Southern trade unions and NGOs encountered a violent backlash during the 1980s did the deforestation issue gain greater prominence in the international political arena. The recent work of the Tupinikim and Guarani and the subsequent media attention in Norway shows the power of Southern activists to transform local struggles for land rights and conservation in the South into tangible consumer and political issues in the North.

Our argument is that these initiatives represent the emergence of a new form of regulation for international corporations, called civil regulation. Civil regulation occurs where organizations of civil society, such as NGOs, set the standards for business behaviour. Companies then chose to adopt or not to adopt these standards. For those that adopt the standards a number of commercial and non-commercial benefits are available (credible marketing, staff motivation, etc.). For those companies that choose not to adopt these standards, the confrontational tools of consumer politics can be expected from civil society (boycotts, direct action, etc.), with deleterious effects on company sales, costs and social capital. Whereas government fines for pollution violations now rarely affect company value, consumer politics brings greater financial risks. Although governments may have the purported monopoly on force - and therefore the “final say” - in reality the ability of civil society organizations to regulate business behaviour through financial carrots and sticks is rapidly becoming more powerful.

In our discussion of the politics of corporate environmentalism in part 1, our intention was to question the current stand-off between those who argue environmental management is a rational business response and those who argue it is only greenwash. In putting forward a theory of civil regulation, we aim to move the debate on effective corporate policy responses to sustainable development from the current self-compliance versus legal compliance divide to something more empowering. We believe that conceiving of corporate environmentalism as a political process - and seeing the changing relations between businesses and NGOs as the emergence of civil regulation - offers new policy opportunities for businesses, NGOs and governments, which may vary depending on whether they are based in the industrialized North or less-industrialized South. In the following sections of this paper we turn to these policy options.