Gap Inc prefaces their 2004/5 CSR report with the question: what is a company’s role in society? Their answer is that a company ‘only realizes its full potential when it embraces its role as a global citizen’.
This raises two interesting points; the first is that the answer to the question ‘what is a company’s role in society?’ will be conditioned by normative assumptions about business/government relations in a firm’s country of incorporation.
David Detomasi in ‘The Political Roots of CSR’ suggests that institutional and political drivers will influence whether and for what purpose firms pursue CSR.
He posits two types of institutional models and locates the United States in that model in which government is reluctant to constrain via regulation managers’ freedom in pursuing shareholder return and the expectation of CSR is weak.
The second idea is that of GAP as a ‘global citizen.’ Although a multinational company such as GAP operates over national boarders, there exist no laws at International level to govern their activities. The multinational corporation exists at a level governed by international organisations designed by and for agreement between states.
Kline notes that ‘The domain of International law is limited and generally applies to corporate entities only through the intermediary of national legal authorities in the enterprises country of incorporation.’
Labour laws in the country of manufacture are often limited in their scope and enforcement and there exists tension and trade offs between growth and social and environmental issues in developing countries.
Note the response of India’s Commerce Minister Kamal Nath to the Observer exposé of child labour used by the unauthorised subcontractor of one of GAP’s suppliers. ‘The minister cautioned against the use of non-tariff barriers, like raking up the issue of child labour, as a protectionist device by the developed countries.’ (timesofindia.indiatimes.com).
What is the business case?
GAP has seen that a business case for CSR exists around avoiding risk and financial penalties and also enhancing quality.
Avoidance of risk can be divided into risk to the brand and risk to the business. In the case of GAP, high profile exposes by NGOS and the media have placed it firmly in the sights of anti-globalisation protesters and countercultural movements such as adbusters and culturejammers who subvert the GAP logo in spoof advertisements in order to make a statement.
Companies like the Gap depend on younger demographics and take notice of the age of the activists who question them. When students get energized to not only boycott, but also actively campaign against certain labels, the Gap has to step up PR to fend off becoming a tainted brand. (When Activism Works and Making Transparency a Risk Worth Taking Farzin Mojtabai & Jason Cangialosi http://www.associatedcontent.com/article/33681/gap_inc_and_sweatshops.html?page=3&cat=3)
GAP became one of the subjects of a lawsuit over human rights abuses bought by garment workers in Saipan, a U.S. territory in the Pacific Islands. GAP and other companies eventually settled with workers in 1999 for nearly $20,000,000 and made themselves subject to monitoring by the International Labour Organisation. This example clearly evinces a strong business case for practicing CSR as a way of avoiding financial penalties and increased regulation.
There can also be a business case for taking strategic social responsibility risks. In 2003, when GAP published its first Social Responsibility Report, the Nike Corporation followed suit.
Attention to CSR can also win awards and plaudits as GAP has done, including Business Ethics Awards category for social reporting and a ranking in the top100 corporate citizens of 2008 (Corporate Responsibility Officer).
GAP recognise in their 2004/5 CSR report that maximising the triple-bottom line is quite simply ‘good business.’ ‘Our...