‘Beyond Auditing ’, Financial Crisis and Competitiveness Challenges: Remaking Global Governance Standards/Norms

1. ‘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

2. 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

3. 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.

4. 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

5. 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 non-compliance’ (Ethical Trading Action Group 2006)

6. 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

7. 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 apparat-uses around ‘responsible competitiveness’ • Chaining ‘corporate social responsibility’ with ‘competitiveness’ at corporate and national levels

8. ‘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]

9. ‘Responsible Competitiveness’ Competitiveness of nations Corporate social responsibility Source: Zadek 2003

10. “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)

11. Stage 1 Rise of a New Knowledge Brand of ‘Responsible Competitiveness’: 2001-2007

14. 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 post-MFA trading environment.

19. 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

20. Stage 2 in the Development of ‘Responsible Competitiveness’ Discourses and Practices 2007-9

22. IV ‘Responsible Competitiveness’ as an Emerging Knowledge Brand • Ruggie-Zadek + UN-Harvard Kennedy School-AccountAbility + 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

23. 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

24. Knowledge brands can be defined as sets of hegemonic meaning-making devices that are promoted by “world-class” guru-academic-consultants 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 socio-economic changes

25. 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 Develop-ing 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)

26. 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’, ‘small-and-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

27. Technology of Agency: Sites and Types of Agency

28. 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

29. 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

30. Examine recontextualization of corporate respons-ibility 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?

31. The End Thank you!

32. 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

33. 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

35. 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 supplier-manufacturers – pass their costs onto workers

36. Table 1: Knowledge Produced in Wal-Mart Supplier Scorecards (Source: American Logistics Association, Exchange Roundtable, March 8, 2005, Dallas TX, http://www.hoytnet.com/HTMLobj-315/ALA2005R3-FINAL_with_Pics_March_8_2005.ppt, accessed on 12 May 2008)

38. Wal-Mart’s Ethical Standards Programmes (Source: http://www.bworld.com.ph/Downloads/2006/Outsourcing4.ppt, accessed on 4th September 2007 and other sources)

39. Wal-Mart Watching • Anti-Wal-Mart groups • alternative voices, campaigns, exposure of abuses, name and shame strategies etc.

40. Table 1: Examples of Anti-Wal Mart Groups Involved in Corporate Watching

41. 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

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43. 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.

44. 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.

45. 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.

46. 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.

47. 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