Voluntary, vague, and unenforceable

In a Corporate Watch report on Corporate Social Responsibility (CSR), Claire Fauset (2006) concluded: “Ultimately, CSR is not a step towards a more fundamental reform of the corporate structure but a distraction from it. Exposing and rejecting CSR is a step towards addressing corporate power.”

The United Nation’s Global Compact is CSR magnified tenfold. At first glance, it is an attempt to globalise certain standards, tackling ten principles that encompass aspects of the UN's Charter on Universal Human Rights. Nonetheless, the Compact is problematic. The reasons are that:
– it only suggests, but does not enforce, solutions for global issues;
– there is no tribunal mechanism for companies who breach any of the ten principles; the only punishment available is “delisting” from the Compact; and
– it involves companies with a dubious track record in human rights and environmental reporting.

On 9 July this year, The New York Sun – a right-of-centre newspaper – reported that, for participating companies, the Compact’s benefit lies in “public relations, particularly for corporations with spotty records on labour and the environment”. The same day, The Washington Times – equally a right-of-centre paper – ran an article stating that, in 2006, 600 companies had been delisted from the Compact. That figure, in itself, indicates that things are not running smoothly.

Coca Cola and Nestlé are two of the Global Compact's signatories. Their records, however, are certainly “spotty”. Nonetheless, they are among the ten companies that signed up to the Global Compact's recent “CEO Water Mandate” in July.

This Mandate is designed as a 'private-public' initiative, and congratulates itself in acknowledging that it is really a “voluntary and aspirational” vision. This vision culminates in a series of pledges, most of which, one might believe, are self-evident to any responsible person. Among others, such pledges include that companies should
– conduct comprehensive water-use assessments,
– set targets for water conservation and waste-water treatment,
– seek to invest in and use new technologies to achieve these goals,
– raise awareness of water sustainability within corporate culture,
– include water-sustainability considerations in business decision-making, and
encourage suppliers to improve their water conservation.

However, there is apparently no urgency. The CEO Water Mandate repeats several times that such action will be taken “where appropriate” and “over time”. Therefore, the document is practically meaningless. It highlights once more that what is needed are not stringent regulations imposed by governments, nor mere rhetoric from corporations, but bottom-up initiatives from communities who should be able to autonomously control their own water supplies.

“Devious initiative”

After the CEO Water Mandate went public, Richard Girard (2007) of the Polaris Institute, a Canadian think-tank, published an accurate assessment, stating that the Mandate only seemed to be an “extraordinary call to action”, but was really “a devious initiative by some of the global water giants to position themselves as environmental stewards”. According to Girard, corporations that rely on water as the primary resource in their supply chain have understood that communities are beginning to fight for water justice: “This Water Mandate sets out how companies can exploit this movement to the level where they will become the new water managers and water policy makers.”

The Washington Times reported that Neville Isdell, Coca-Cola Chairman and Chief Executive Officer, stressed the Compact's voluntary nature, and defended it by saying that, “governments can enforce accountability, but they cannot engender responsibility. Responsibility is a choice, and a global compact allows us business people to make that choice.”

Indeed, it would seem that it is high-time for Coca Cola to make that choice. One wonders to what extent the timid pledges in the CEO Water Mandate will bear on the corporation’s performance. Media reports of the company abusing power in the past years include:
2004: investigations conducted by the Ground Water
Board in India revealed that the plant in Rajasthan was extracting large amounts of water and disturbing the deeper aquifers causing an ecological imbalance (The Hindu, 16th June 2004).
2004: controversy reigned when it was revealed that Dasani, its brand of bottled water, was no more than mineral-enhanced tap water (PR Week, 5th March 2004).
2006: research revealed that both Coca Cola and Pepsi Cola sell softdrinks which contain high traces of pesticides in India (Down to Earth, August, 2006).
2004: allegations are made that Coca Cola, along with Drummond, Chiquita, and several oil companies, were complicit in the killing of union activists in Colombia (International Herald Tribune, 28th June 2007).

Trade unions around the world, including unions in the UK, have therefore called for a global boycott of Coca-Cola products.

Since 2001, Coca-Cola has been working in partnership with Nestlé in a joint venture called Beverage Partners Worldwide. Nestlé, however, is facing challenges of its own. For decades, it has been under attack for irresponsible marketing of baby food. IBFAN (the International Baby Food Action Network) reports that products of this multinational are boycotted in 20 countries. The reason is that Nestlé “aggressively markets baby foods, breaking World Health Assembly marketing requirements...contributing to the death and suffering of infants around the world”. The international anti-Nestlé campaign is supported by IBFAN’s UK-based member Baby Milk Action.

Joel Bakan (2004), a law professor at the University of British Colombia, notes that “the only concern [companies] can have is to concentrate wealth in the hands of their shareholders”. Accordingly, corporate leaders are prone to say nice things about social and environmental matters, and then carry on business as usual. If corporate dominance is not addressed, no global attempt to make the world a more equitable place will succeed.

Corporations should have neither role nor legitimate relevance in global development. Top-down approaches cannot work; decentralised solutions and alternatives must come from the grassroots.