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October 28, 2003
Coordinate US Corporate Social Responsibility Policy, Kenan Institute Study Group Says
by William Baue
A study group convened by the Kenan Institute recommends synchronizing US public policy on CSR and
asking the SEC to consider requiring triple bottom line reporting.
SocialFunds.com --
What is the appropriate role for the US government to play in promoting global corporate social
responsibility (CSR), which takes into consideration companies’ social, environmental, and
ethical practices? This is the question addressed by a study group convened in 2003 by the
Washington, DC-based Kenan Institute
of Private Enterprise, a unit of the Kenan-Flagler Business School of the University of North
Carolina at Chapel Hill. The study group’s answer? Coordinate existing CSR initiatives,
which are currently so broad and various as to confuse corporations and nongovernmental
organizations (NGOs) alike.
 “The US government already has a wide
range of public policies that promote global CSR--there are many competing standards, guidelines,
and initiatives that clutter the international marketplace,” said James Reeves, the
institute’s associate project director.
The study group enumerated examples.
Securities and Exchange Commission (SEC) and
Environmental Protection Agency (EPA) regulations
address corporate disclosure of environmental liabilities. The Foreign Corrupt Practices Act,
passed by Congress, legislates ethical corporate behavior overseas. The Department of State
administers human rights policies globally, and also issues responsible procurement guidelines for
the General Services Administration (GSA) and the Department of Defense.
Even the tax codes applied by the Internal Revenue Services (IRS) determine whether or not corporations can move their
headquarters overseas to reduce their tax burdens.
Far from being devoid of CSR policies,
the landscape of corporate activity is littered with enough CSR obligations to government agencies
and departments to boggle the mind.
“Despite its activities, it is still unclear
whether the US government finds global CSR a priority,” said Mr. Reeves, as evidenced by the
lack of synchronization within the government. “What the study group agreed on was that the
appropriate role of the government is to clarify the ‘lay of the land’ and to stop
sending confusing signals to global actors.”
“The central point of our project
was to identify the areas that both activists and businesses could agree on the appropriate areas
for governmental involvement,” Mr. Reeves told SocialFunds.com.
The study group
consists of employees from corporations such as Hewlett-Packard (ticker: HPQ) and Starbucks (SBUX), as well as
from nongovernmental organizations such as Amnesty International, Friends of the Earth, and Oxfam.
The study group also includes organizations that promote socially responsible investing (SRI), such
as the Interfaith Center for Corporate Responsibility (ICCR) and the Social Investment Forum (SIF). However, all of the study group members endorsed the
recommendations as individuals, not as representatives of their companies or organizations
The group issued a series of 18
recommendations that fall under six broad categories:
- Promote transparency and
disclosure practices;
- Encourage adherence to internationally accepted social and
environmental standards;
- Offer resources to improve governance institutions worldwide;
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Strengthen U.S. government coordination and capacity to promote global CSR;
- Convene
multi-stakeholder dialogues to encourage and strengthen global CSR practices; and
- Provide
incentives and use government procurement policies as tools to promote global CSR.
The
study group recommends that the General Accounting Office (GAO) prepare a report reviewing existing US policies and programs
that promote or undermine global CSR.
“The GAO report is an obvious place to
start,” said Mr. Reeves, who co-authored a report last year for the National Policy
Association that surveyed global CSR policy, focusing particularly on US policy. “The public
could use an updated and more in-depth look at the current agencies’ and departments’
activities.”
The study group also recommends that the SEC establish a blue ribbon
commission to consider rulemaking to require triple bottom line reporting on social, environmental,
and financial issues as part of their annual filings. The SEC currently requires companies to
report material environmental liabilities, but has come under much criticism for failing to enforce
this rule.
“The SEC is inadequately involved in enforcement, which has led to
policy confusion by not defining materiality,” said Mr. Reeves. “The issue of what is
material and immaterial in environmental reporting will undoubtedly be addressed if/when this blue
ribbon commission is established.”
A bipartisan group of Congressmen will host a
brown bag lunch briefing on the study group recommendations on Capitol Hill on Thursday, October
30. Speakers include study group members with Paul Magnusson of Business Week moderating.
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