‘Beyond Auditing’, Financial
Crisis and Competitiveness
Challenges: Remaking Global
Governance Standards/Norms
5th ESRC Seminar Series on ‘Changing
Cultures of Competitiveness’, 17th April 09
Ngai-Ling Sum
Politics and International Relations
Lancaster University
Outline: Six Parts
• Building on existing research on Wal-Mart
• ‘Going beyond auditing’
• Scaling Up Corporate Social Responsibility
(CSR): 2 Stages
• ‘Responsible Competitiveness’ as an
Emerging Knowledge Brand
• Recontextualizing for developing countries
• Concluding remarks
I Building on Existing Research
• Wal-Mart/ASDA’s bargain model of retailing
• Price-value competitiveness
– ‘Always Low Prices’
– Low cost accumulation strategy
• Labour issues and Wal-Mart watching by
SACOM and similar movements
• Adopting and enhancing self-regulated
corporate social responsibility (CSR)
• Managerial focus on codes of conduct, factory
inspection, certification, auditing, reporting,
scorecards, etc.
• Foucault: a process of rarefaction
– selective thinning of major elements (e.g., CSR) +
thickening of other aspects (e.g., codes of conduct,
reports, audits, scorecards, best practices, etc.)
– Technification and managerialization of the social
• More ‘corporate audit responsibility’ than
‘corporate social responsibility’ (Sum 2009)
• Recognizing some of these problems as
private governance failure
II ‘Going Beyond Auditing’
• Corporate-consultancy-NGO talks of
‘going beyond auditing’
• For example
• ‘To help bring trade justice to workers’
(ETI Training Programme 2005)
• ‘Identifying the root causes of noncompliance’ (Ethical Trading Action
Group 2006)
III Scaling Up CSR in 2 Stages
• Towards ‘responsible competitiveness’
• 2 overlapping stages
• 2001-9: the rise of responsible
competitiveness
• 2007-9: consolidation and extension
First Stage: 2001-9
• Nodal actors in discursive network of networks
– Simon Zadek + AccountAbility
– Harvard Kennedy School of Government + John
Ruggie + Global Compact
– Research institutes, corporate organizations, labour
organizations, NGOs, etc.
• Producing discourses & knowledging apparatuses around ‘responsible competitiveness’
– Chaining ‘corporate social responsibility’ with
‘competitiveness’ at corporate and national levels
‘Responsible Competitiveness’
• Corporate level
‘Responsible competitiveness’ stands for
markets that reward business practices that
deliver improved social, environmental and
economic outcomes
• Country level
‘Responsible competitiveness’ means economic
success for nations that encourage such
business practices through public policies,
societal norms and citizen actions.
[AccountAbility http://www.accountability21.net/default2.aspx?id=982]
‘Responsible
Competitiveness’
Competitiveness of nations
Corporate social responsibility
Source: Zadek 2003
“Responsible competitiveness is about
making sustainable development count in
global markets. It means markets that
reward business practices that deliver
improved social, environmental and
economic outcomes; and it means
economic success for nations that
encourage such business practices
through public policies, societal norms
and citizen actions”. (Zadek &
MacGillivray, 2007)
Stage 1 Rise of a New Knowledge Brand of ‘Responsible Competitiveness’: 2001-2007
Major Actors and
Institutions
Dr. Simon
Zadek
AccountAbility
Promoting Accountability
for Sustainable
Development
+ Responsible
Competitiveness
Consortium
Characteristics
Discourses/Knowledging Apparatuses
‘One of the leading big-picture
global thinkers’, ‘Citizen Zadek’,
‘Madonna of CSR’
Books and reports
Set up AccountAbility and ETI
CEO of AccountAbility
Involved in the building of the UN
Social Compact
Senior Fellow of the Harvard
Kennedy School – CSR Initiative
(2004)
MFA Forum convenor
ILO’s World Commission on
Social Dimension of Globalization
Civil Corporation (2001)
Established in 1996
Not-for-profit organization
Global think tank
Reports, journals + index
The Logic of Collaborative Governance (2006) CSRI No. 17
Governing Collaborative Governance (2006) CSRI No. 23
Corporate Responsibility and the Competitive Advantage of Nations
(2002)
Responsible Competitiveness: Corporate Responsibility of Clusters
in Action (2003)
The State of Responsible Competitiveness Report (2007)
The Responsible Competitiveness Index (2003)
Accountability Forum (journal)
AA 1000 Standard and Series (2008)
MFA
Forum
Established in 2004
Not-for-profit
organization
A collaboration of
brands and retailers,
trade unions, NGOs
and multi-lateral
institutions in the textile
and garment sector
after the MFA
Building Success:
Indicators of
Progress
Purchasing
Practices
Research
search MFA Forum
• home |
• about MFA Forum |
• participants |
• publications and research |
• contact us |
MFA Forum in Brief
The MFA Forum is a not-for-profit, participation-based open network established in early 2004 to address key concerns that
were predicted with the end of the Multi-Fiber Arrangement.
The Forum works as a collaboration of brands and retailers, trade unions,
NGOs and multi-lateral institutions in the textile and garment sector. It aims to
improve sustainability while promoting social responsibility and
competitiveness in national garment industries that are vulnerable in the postMFA trading environment.
Major Actors and
Institutions
Harvard Kennedy School
of Government
Characteristics
Ruggie, Zabek and others
Corporate Social
Responsibility Initiative
Discourses/Knowledging
Apparatuses
Research reports
(e.g., Building Linkages for
Competitive and Responsible
Entrepreneurship 2007 with
UNIDO)
Training on CSR
Prof. John Ruggie
Kirkpatrick Professor of
International Affairs in Harvard
Kennedy School of Government
Faculty Chair of the HKS’s CSR
Initiative
Constructivist theory in
international relations (Ruggie
1982, 1983)
International norms shape/create
actions
Assistant Secretary-General and
Chief Advisor for strategic
planning to United Nations
Secretary-General Kofi Annan
(1997-2001)
Norms are productive (not
constraining)
Norms-changing and learning
strategies are the core in search
of the common good
Special Representative of the
UN Secretary-General on business & human rights (2005-)
Norms-mediated regulation (soft
law) of business community
Founder of the UN Global
Compact and the 10 Principles
Global governance and Global
Compact (Ruggie 2002, 2003)
Index, reports and standard
Learning Forum in Brazil
2003
Launching of the Responsible
Competitiveness Index
Global Policy Dialogue
Collaborative efforts of public institutions,
business and civil society
Leaders Summit 2007
State of Responsible Competitiveness Report
ISO
ISO 26000 standard on Social
Responsibility (2008)
UN Global Compact
Five core UN organizations in Global Compact
Building Linkages for Competitiveness and
Responsible Entrepreneurship (2007)
Responsible Entrepreneur Achievement
Programme 2007 (software tool)
UNIDO
UNEP
UNDP
Aligning with UN’s
Millennium Goals and the
Global Compact especially
the ’10 Principles’
County Carbon Competitiveness Index
Launching CSR project in development
countries
ILO/IFC
Better Work 2006
Commission on Human
Rights
Norms on the Responsibilities of
Transnational Corporations 2003
Greenleaf Publishing
CSR publications
Journals and Books
‘Sustainability,
Responsibility and
Accountability’
Journals
Journal of Corporate
Citizenship
AccountAbility Forum
Books
Tomorrow’s History (2004)
Learning to Talk (2004)
Rising the Bar (2004)
Putting Partnership to
Work (2004)
Stage 2 2007-9: Financial crisis and
competitiveness challenges
•
Challenges of the crisis upon corporations and nations
•
The intensification of the discourse on ‘responsible competitiveness’
•
Moving onto stage 2 – wider discursive resonance and chaining as well as suturing
•
Mediated and recontextualized by Obama, Saudi Arabia’s Global Competitiveness
Forum, UNEP, banking communities, etc.
– Obama – ‘Hold Corporations Responsible’ (2008) + middle east dialogue
– Saudi Arabia emerging as another nodal point – imagined as the ‘House of
Wisdom’ and coordinating the Global Competitiveness Forum - adopting
‘responsible competitiveness’ as its central theme 2009
– UNEP’s call for ‘Green New Deal’ and ‘Green Economy Initiative’
– World Economic Forum in Davos – ‘Green New Deal for a Post-Crisis World’
– HSBC – responsible investment (sustainable finance)
– Wal-Mart – ‘Sustainability Summit’ in Beijing 2008
•
Consolidating and resonating among transnational socio-economic forces
Stage 2 in the Development of ‘Responsible Competitiveness’
Discourses and Practices 2007-9
Major Actors and
Institutions
Saudi Arabia Investment
Authority General (SAGIA)
King Khalid Foundation
Corporate Social
Responsibility Initiative at
Harvard Kennedy School
(CSRI)
Characteristics
Discourses/Knowledging
Apparatuses
Co-hosting a series of leadership
dialogues consisting of leading
Saudi Arabian and multinational
companies, educators, policy
makers, chambers of commerce, the
media, and global thought-leaders in
the area of corporate social
responsibility and responsible
competitiveness
Responsible Competitiveness
Leadership Dialogues
Global Competitiveness Forum 2009
– ‘responsible competitiveness’ as its
central theme
Forum reports and blogs
AccountAbility
World Bank Institute
The Prince of Wales
International
Business Leaders Forum
Tamkeen
Over 100 world leaders including former
Malaysian Prime Minister Mahathir Mohamed,
Shinzo Abe, former prime minister of Japan;
Carlos Ghosn, president and CEO of Nissan
Motor Company; and Mary Robinson,
seventh president of Ireland, will speak at this
international gathering.
Global
Competitiveness
Forum 2009
Other prominent speakers: Abdullah Zainal
Alireza, minister of commerce & industry,
Paolo Coehlo, renowned author; Timothy
Shriver, chairman, Special Olympics; Thomas
Enders, president and CEO of Airbus;
Nandan Nilekani, executive co-chairman of
Infosys; Mohammed Al-Mady, vice chairman
and CEO of SABIC (Saudi Basic Industries
Corp.); Thomas Russo, vice chair, Lehman
Bros; and Paolo Scaroni, CEO of Eni SpA.
Amr Al-Dabbagh, governor of Saudi Arabian
General Investment Authority (SAGIA), the
main organizer, said the forum would be
based on the theme entitled “Responsible
Competitiveness,” which is essential for the
world to confront future economic challenges
Selecting ‘Responsible
Competitiveness’ as its
central theme
Forum programme, reports
+ blogs
Recommendations in an
open letter to G20
IV ‘Responsible Competitiveness’ as
an Emerging Knowledge Brand
• Ruggie-Zadek + UN-Harvard Kennedy SchoolAccountAbility + research institutes, corporate
organizations, NGOs, etc.
• Gaining greater resonance since the crisis and
recontextualizing at different sites and scales
• Emerging as a new knowledge brand
How does it function as a knowledge brand?
• Claims problem-solving competencies – ‘beyond
auditing’, ‘financial crisis’
• Quality guarantee from Harvard Kennedy School
• Many technologies (theories, principles, methodologies,
reports, indexes, best practices) marketed by network
of UN agencies, national research institutes, think tanks,
NGOs, etc.
• Popularized by journals, business press, reports,
forums, blogs, etc.
• Circulated by idea entrepreneurs from think tanks,
trade bodies, financial institutes, etc.
• Appeals to fear/anxieties of crisis and restructuring
Knowledge brands can be defined as sets of
hegemonic meaning-making devices that are
promoted by “world-class” guru-academicconsultants who claim unique understanding
of the economic world and who translate this
into pragmatic policy recipes and
methodologies that address crisis, social
contradictions and also appeal to pride and
anxieties of subjects in the process of socioeconomic changes
V Recontextualization
• Building on work of World Bank and UNDP
• Harvard Kennedy School of Government and UNIDO
– Report on Building Linkages for Competitiveness and
Responsible Entrepreneurship (2007)
• Re-contextualize ‘corporate responsibility’ for Developing Countries
• Linking ‘corporate responsibility’ with ‘poverty
reduction’ (one of the Millennium Development Goals)
– Narrates growth in terms of job creation, income
generation and provision of livelihood for the poor
– Requires ‘new types of public-private partnership and
business linkages between large corporations and small
enterprises offer great potential to improve economic
opportunities, productivity and growth’ (2007)
• Builds new kind of clusters
– ‘Corporate responsibility clusters’ to promote enterprise
development, poverty reduction and spread more
competitive and responsible business practices
– Targets ‘governments of developing countries’, ‘smalland-medium-enterprises’ and ‘the poor’ as sites of
intervention
• Such reinvention of ‘cluster’ metaphor echoes what
neo-Foucauldians call a ‘technology of agency’
– a mix of participation, capacity-building and control
• Creates agency in terms of ‘partners’ but also
controls sites for exercising agency and types of
agency
Technology of Agency: Sites and Types of Agency
Sites of Organising
Agency
Government
Types of Agency
•
•
•
•
Development partners
Creating necessary enabling environment
Part of multi-sector partnership to promote business impact
Attract FDI
• Create jobs and develop human resources
Multinational and
domestic
corporations
Small and medium
enterprises
NGOs
The poor
• Upgrading the value chains
• Adopt CSR strategies and social investment
• Public policy advocacy for small enterprises
• Involved as key producers, employers, distributors, innovators, and wealth creators
• Important part of a vibrant private sector
• Implement responsible business practices
• Multi-sector partnership
• Strengthen development impact of business
• Competitive, entrepreneurial, self-help, self-improved, and
self-managed individuals
• This technology partners government, NGOs
and people with markets in new ways
• It imbues their relationship with new
meanings of responsibilities
– To participate in clusters, production, the
markets and global trade
– To become builders of ‘social capital’ and
‘catalyzers’ of entrepreneurship
– To become self-help, self-improved, and
self-managed individuals
VI Concluding Remarks
• Examine the scaling up of CSR in face of private
governance failure
• The making of a new global governance
standard/norm
– through suturing different knowledging techniques
and apparatuses (e.g., reports, indexes, journals,
best practices) a project related broadly to
‘responsible competitiveness’
– two overlapping stages
• mediated by knowledge brand that resonate among
transnational socio-economic forces
• Recontextualize in different sites and scales
• Examine recontextualization of corporate responsibility to developing countries
• For example, ‘corporate responsibility clusters’
– ‘Making markets work better for the poor’ or ‘making
the poor works for markets’?
– ‘Marketization of the social’ or ‘socialization of the
market’?
– Moving to post-Washington Consensus or a case of
enhanced neoliberalism/neoliberalism
expansionism?
• Cultural Political Economy Approach to ‘changing
cultures of competitiveness’ in neo-liberalism
– Beyond how question and materiality of the technical
– Who is involved? What is involved? And why?
The End
Thank you!
1. Build on Existing Research
• CPE of competitiveness, Wal-Mart and
corporate social responsibility
• Wal-Mart – largest service company in the
world
• Its brand – ‘Always Low Prices’/
‘Save Money, Live Better’
– The bargain model of retailing - price-value
competitiveness
– Low-cost accumulation strategy
– Entering into ‘ultimate joint partnership’ with
China
• Two ways these two systems meeting
points
– The role of dormitory labour regime in
industrial clusters
• Lengthening of the workday
• Easy access to labour
• Daily labour reproduction (food,
accommodation, etc)
• Compression of work/life
– Disciplining of suppliers’ costs and margins
through scorecards
• A body of knowledge enables W-M managers to have
key-hole views into suppliers’ costs and margins
• A mechanism of control – evaluate its costs and require
them to match its lowest price, comparing their costs
with the average, etc.
• Informational super-vision – allow Wal-Mart managers to
demand lower prices, benchmark average and demand
refunds
• Power asymmetry between retailer and suppliermanufacturers – pass their costs onto workers
Table 1: Knowledge Produced in Wal-Mart Supplier Scorecards
Measurement Criteria
Sales Measurements
Markdown
Measurements
Margin Measurements
Measurement Components
Overall % increase
 Comps
 Avg. Sales/Store
 Sales at Full Prices vs. Markdown
• Mark-ups and Markdowns (dollars, units and %)
 Prior and current retail price
 Initial margin
 Average retail price
 Average cost
 Gross profit at item level
 Gross profit/item/store
 Margin mix
• Replenishable store inventor
Inventory Measurements
Return Measurements
 Non-replenishable store delivery
 Warehouse inventory
 Lost sales from OOS
 Excess inventory
 DC outs
 Total owned inventory
Customer defective returns
 Store Claims
(Source: American Logistics Association, Exchange Roundtable, March 8, 2005, Dallas TX, http://www.hoytnet.com/HTMLobj315/ALA2005R3-FINAL_with_Pics_March_8_2005.ppt, accessed on 12 May 2008)
Wal-Mart’s Ethical Standards Programmes
1992
Wal-Mart’s Factory Certification programme
 Include Standards for Suppliers according to local employment and labor laws
 Focus on Bangladesh and China
First Factory Certificate programme manual
1993-96
 Pacific Resources Exports Ltd. auditing factories directly producing for Wal-Mart
 PriceWaterhouseCoopers was involved auditing at a later stage
1997-2001
Factories in Egypt, Pakistan, India and Nicaragua were added
2002
Assuming its own global procurement and directly managing its Factory Certificate
programme
2003
Wal-Mart Ethical Standards associates train buyers, suppliers and factory managers on
Wal-Mart Supplier Standard – a product quality assurance programme (including
reviews and internal audit)
2006
Now includes environmental elements in the audit process (e.g., packaging scorecard)
2008
‘Sustainability Summit’ in Beijing
(Source: http://www.bworld.com.ph/Downloads/2006/Outsourcing4.ppt, accessed on 4th September 2007 and other sources)
Wal-Mart Watching
• Anti-Wal-Mart groups
alternative voices, campaigns, exposure of
abuses, name and shame strategies etc.
Table 1: Examples of Anti-Wal Mart Groups Involved in Corporate Watching
Name of Union/NGO/
Community Group
AFL-CIO
CorpWatch
Wal-Mart Watch
Nature of the Group
 Largest union in the USA
 Runs the ‘Paying the Price at Wal-Mart’ website
 News and specialized topics on Wal-Mart (e.g., job exports, environment)
 A research group based in Oakland, California, USA
 Campaigns against sweatshops (e.g., Wal-Mart and Nike) and private military contractors
 A US-wide public education campaign
 Sponsored by the Service Employees International Union (SEIU)
 A watchdog on Wal-Mart business practices
Wake Up Wal-Mart
 Sponsored by the Union of Food and Commercial Workers (US)
 Critic of Wal-Mart and its business practices (e.g., sub-standard wages)
Sprawl-Busters
 Consultancy group to design and implement campaigns against megastores
 Pro-local business and community
Frontline: Is Wal*Mart
good for America?
 A foundation-funded group
 Specialized interviews with Wal-Mart insiders
 Anti-Wal Mart news from America and China
Wal-Mart Class Website
 Female workers in Wal-Mart and their class lawsuit
Student Against Corporate
Misbehaviour (SACOM)
 A Hong Kong-based NGO
 Partly sponsored by the Service Employees International Union
 Campaigner for workers’ rights and monitor of workers’ conditions in China (e.g., Wal-Mart
subcontractors)
2008 Presidential Debate
•
•
•
•
•
We need Wall Street responsibility BEFORE financial crises
Q: Are you going to vote for the Senate bailout plan?
McCAIN: Sure. But there’s also the issue of responsibility. I’ve been heavily
criticized because I called for the resignation of the chairman of the SEC.
We’ve got to start also holding people accountable, and we’ve got to reward
people who succeed.
OBAMA: McCain’s absolutely right that we need more responsibility, but we
need it not just when there is a crisis. We’ve had years in which the reigning
economic ideology has been what’s good for Wall Street but not what’s
good for Main Street. There are folks out there who have been struggling
before this crisis took place. And that’s why it’s so important we look at
some of the underlying issues that have led to wages and incomes for
ordinary Americans to go down, a health care system that is broken, energy
policies that are not working. Unless we are holding ourselves accountable
day-in, day-out, not just when there’s a crisis for folks who have power and
influence and can hire lobbyists.
Source: 2008 first presidential debate, Obama vs. McCain Sep 26, 2008
2009 Global Competitiveness Forum is Launched
Tue, 06/01/2009 - 5:32pm
Under the Patronage of His Majesty King Abdullah bin Abdulaziz, for the third year, the Global
Competitiveness Forum in Riyadh is a global platform for constructive dialogue on core
competitiveness issues. Since the last forum, the world has faced unprecedented social,
environmental, and economic crises that challenge nations, companies, and individuals to
react in ways that place competition on a responsible footing. More than ever, the world needs
its leaders to discuss, debate, and take action on issues such as:
- How can we avoid similar economic crises in the future?
- What does responsible competitiveness mean for a company and for a nation?
- What are the barriers to creating a responsible business, and how can they be
overcome?
- What does the financial crisis teach us about responsible business? How can firms
compete responsibly amid crisis?
- Is collaboration implied in competition?
- Are efficiency and responsibility mutually exclusive?
- Are we maximizing the value of our national resources?
- What leadership role should businesses play on environmental challenges?
Achieving responsible competitiveness amid economic upheaval requires a vital
rethinking of the role of the public and private sectors in fostering sustainable
prosperity. The Global Competitiveness Forum strives to be the premier gathering for
provoking comprehensive thought and leadership on this pressing challenge.
HSBC website
The UN Principles for Responsible Investment (UNPRI)
Environmental, social and governance (ESG) concerns such as climate
change, water shortages, the use of arable land for competing needs or the link
between health and nutrition are generating new risks and opportunities for
companies.
HSBC believes that the ability of companies to manage these risks and
opportunities impacts the value of our investments. The business case for
responsible investment is clear. We believe it is in the interest of our clients and
society at large to encourage the companies we invest in to manage
environmental, social and governance issues appropriately, as well as to
understand the materiality of these issues and to incorporate them into our
investment decisions. These beliefs underpin our commitment to the United
Nations Principles for Responsible Investment.
Launched in April 2006 by former UN Secretary General Kofi Annan, this
initiative consists of a set of voluntary principles for asset owners and
investment professionals. The six principles are not prescriptive, but instead
provide a framework to incorporate environmental, social and governance
issues into mainstream investment decision-making and ownership practices.
Approximately 300 financial institutions have signed the UNPRI, representing a
total of over US$12 trillion in assets under management as of January 2008.
• AccountAbility has joined with the United
Nations Global Compact and a network of
research institutes, business schools and
civil society organisations to explore how
responsible business practices can most
effectively become an embedded feature
of global markets.
• relies on technologies of agency to
• shape the conduct of targeted populations.
These include techniques of
• self-help, self-improvement and
empowerment to instil habits of
selfmanagement.
• Technologies of agency operate in schemes
as diverse as
• human rights education, economic
development and poverty reduction.
• Technologies of capacitation – capacity building
– targeting the poor as agents of ‘decision and
choice’ (Isin 2005) – an assemblage of people
and institutions to form entrepreneurial
communities – it partners people with markets in
new ways and imbue their relationship with new
meanings of rights and responsibilities – to
participate in clusters, production, the markets
and global trade - best practices, training,
builders of ‘social capital’ and ‘catalyzers’ of
entrepreneurship