Globalization
Numerous Federal Activities Complement U.S. Business's Global Corporate Social Responsibility Efforts Gao ID: GAO-05-744 August 8, 2005The trend toward globalization has intensified the debate about the proper role of business and government in global "corporate social responsibility" (CSR),which involves business efforts to address the social and environmental concerns associated with business operations. The growth in global trade and the dramatic increase in foreign direct investment in developing countries raise questions regarding CSR-related issues such as labor, environment, and human rights. U.S. firms with operations in many countries employ millions of foreign workers and conduct a range of CSR activities to address these issues. However, there is controversy as to the proper government role. GAO describes (1) federal agency policies and programs relating to global CSR and (2) different perspectives regarding the appropriate U.S. government role and views on the impact of current federal activities on corporate global CSR efforts.
Although there is no broad federal CSR mandate, we identified 12 U.S. agencies with over 50 federal programs, policies, and activities that generally fall into four roles of endorsing, facilitating, partnering, or mandating CSR activities. Many of these programs have small budgets and staff and aim to accomplish broader agency mission goals, rather than being specifically designed to facilitate or promote companies' global CSR activities. The U.S. government endorses CSR by providing awards to companies, such as the Department of State's Award for Corporate Excellence. Federal programs facilitate CSR by such activities as providing information or providing funding to engage in CSR. For example, a Department of Commerce program facilitates CSR by providing training on corporate stewardship. Some agencies partner with corporations on specific projects related to their core mission. For example, the U.S. Agency for International Development (USAID) partnered with one U.S. corporation operating in post-war Angola to build up the country's business sector and workforce. Other agencies, such as the Overseas Private Investment Corporation, mandate CSR by requiring companies to meet CSR-related criteria to obtain their services. While perspectives on the government's role are tied to perspectives on CSR and its connection to profit, many we spoke with who are actively involved in global CSR desired a government role supporting business's voluntary CSR efforts. Those with a free-market economic perspective believe corporations should be primarily concerned with earning a profit and government should not promote CSR as it reduces profits. Those with a "business case" perspective often welcome government assistance with their voluntary efforts because they view their CSR efforts as increasing profits and business value. Finally, those with a social issues perspective believe that business should contribute to broader social goals but split on whether business action should be voluntary or mandatory. Most groups we spoke with at U.S. companies and others actively engaged in CSR were generally supportive of U.S. federal agency efforts to endorse and facilitate CSR and partner with companies voluntarily pursuing CSR actions. For example, several groups supported a government role in providing CSR-related information and convening stakeholders to address CSR-related issues.
GAO-05-744, Globalization: Numerous Federal Activities Complement U.S. Business's Global Corporate Social Responsibility Efforts
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Report to Congressional Requesters:
August 2005:
Globalization:
Numerous Federal Activities Complement U.S. Business's Global Corporate
Social Responsibility Efforts:
GAO-05-744:
GAO Highlights:
Highlights of GAO-05-744, a report to congressional requesters:
Why GAO Did This Study:
The trend toward globalization has intensified the debate about the
proper role of business and government in global ’corporate social
responsibility“ (CSR),which involves business efforts to address the
social and environmental concerns associated with business operations.
The growth in global trade and the dramatic increase in foreign direct
investment in developing countries raise questions regarding CSR-
related issues such as labor, environment, and human rights. U.S. firms
with operations in many countries employ millions of foreign workers
and conduct a range of CSR activities to address these issues. However,
there is controversy as to the proper government role. GAO describes
(1) federal agency policies and programs relating to global CSR and (2)
different perspectives regarding the appropriate U.S. government role
and views on the impact of current federal activities on corporate
global CSR efforts.
What GAO Found:
Although there is no broad federal CSR mandate, we identified 12 U.S.
agencies with over 50 federal programs, policies, and activities that
generally fall into four roles of endorsing, facilitating, partnering,
or mandating CSR activities. Many of these programs have small budgets
and staff and aim to accomplish broader agency mission goals, rather
than being specifically designed to facilitate or promote companies‘
global CSR activities. The U.S. government endorses CSR by providing
awards to companies, such as the Department of State‘s Award for
Corporate Excellence. Federal programs facilitate CSR by such
activities as providing information or providing funding to engage in
CSR. For example, a Department of Commerce program facilitates CSR by
providing training on corporate stewardship. Some agencies partner with
corporations on specific projects related to their core mission. For
example, the U.S. Agency for International Development (USAID)
partnered with one U.S. corporation operating in post-war Angola to
build up the country‘s business sector and workforce. Other agencies,
such as the Overseas Private Investment Corporation, mandate CSR by
requiring companies to meet CSR-related criteria to obtain their
services.
While perspectives on the government‘s role are tied to perspectives on
CSR and its connection to profit, many we spoke with who are actively
involved in global CSR desired a government role supporting business‘s
voluntary CSR efforts. Those with a free-market economic perspective
believe corporations should be primarily concerned with earning a
profit and government should not promote CSR as it reduces profits.
Those with a ’business case“ perspective often welcome government
assistance with their voluntary efforts because they view their CSR
efforts as increasing profits and business value. Finally, those with a
social issues perspective believe that business should contribute to
broader social goals but split on whether business action should be
voluntary or mandatory. Most groups we spoke with at U.S. companies and
others actively engaged in CSR were generally supportive of U.S.
federal agency efforts to endorse and facilitate CSR and partner with
companies voluntarily pursuing CSR actions. For example, several groups
supported a government role in providing CSR-related information and
convening stakeholders to address CSR-related issues.
Range of U.S. Government Activities Related to Global CSR:
[See PDF for image]
[End of figure]
What GAO Recommends:
www.gao.gov/cgi-bin/getrpt?GAO-05-744.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Loren Yager at (202) 512-
4347 or yagerl@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Global Corporate Social Responsibility Is an Umbrella Concept Covering
Many Business Actions and Involving Many Players:
Although No Broad Federal CSR Mandate Exists, Federal Agencies Conduct
Many Activities Related to Global CSR:
Perspectives on the Appropriate Government Role in CSR Vary, but Many
Support Federal Assistance for Voluntary Efforts:
Concluding Observations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Federal Agency CSR-Related Programs and Activities:
Appendix III: GAO Contact and Staff Acknowledgements:
Tables:
Table 1: Sample Definitions of Corporate Social Responsibility:
Table 2: Definitions of Terms Related to Corporate Social
Responsibility:
Table 3: Responses from Department of Commerce:
Table 4: Responses from Department of Energy:
Table 5: Responses from U.S. Environmental Protection Agency:
Table 6: Responses from Export-Import Bank of the United States:
Table 7: Responses from Inter-American Foundation:
Table 8: Responses from Department of Labor:
Table 9: Responses from Overseas Private Investment Corporation:
Table 10: Responses from U.S. Securities and Exchange Commission:
Table 11: Responses from the Department of State:
Table 12: Responses from the Department of Treasury:
Table 13: Responses from U.S. Agency for International Development:
Table 14: Responses from Office of the U.S. Trade Representative:
Figures:
Figure 1: Some Federal Programs and Activities Complement U.S.
Corporate CSR Practices:
Figure 2: Illustrative U.S. Government Activities Related to CSR Range
from Endorsing CSR to Mandating CSR:
Abbreviations:
CSR: Corporate Social Responsibility:
DFI: Digital Freedom Initiative:
EPA: U.S. Environmental Protection Agency:
Ex-Im Bank: Export-Import Bank of the U.S.
HIV/AIDS: human immunodeficiency virus/acquired immune deficiency
syndrome:
IAF: Inter-American Foundation:
GRI: Global Reporting Initiative:
NGO: nongovernmental organization:
OECD: Organization for Economic Cooperation and Development:
OPIC: Overseas Private Investment Corporation:
SEC: U.S. Securities and Exchange Commission:
USAID: U.S. Agency for International Development:
USTR: Office of the U.S. Trade Representative:
Letter August 8, 2005:
The Honorable David E. Price:
House of Representatives:
The Honorable Sander M. Levin:
House of Representatives:
The trend toward globalization--as evidenced by the growth in global
trade and the dramatic increase in foreign direct investment in
developing countries, from $22 billion in 1990 to $154 billion in 2002-
-has intensified the debate about the role of business and the U.S.
government in addressing "corporate social responsibility" (CSR)
related issues. Presently, for example, some opponents of the U.S.-
Central American Free Trade Agreement (CAFTA) have complained that the
agreement does not do enough to ensure that workers in these countries
have adequate labor protections. The term CSR is often used to refer to
business efforts to address the impact of business operations on such
concerns as labor, environment, and human rights. U.S. multinational
corporations, which conduct operations in many countries and employ
millions of foreign workers, have sometimes responded to the varying
pressures they face by adopting CSR efforts to address social and
environmental concerns. Some advocates argue that the U.S. government
should embrace CSR more actively and use policies such as trade
agreements to encourage or require its adoption by U.S. multinational
corporations. Others state that CSR should be a voluntary corporate
activity, and the federal government should neither regulate nor
promote CSR.
Given the role of U.S. corporations in the growth of trade and
investment in developing nations and your interest in issues related to
globalization, this report describes (1) global corporate social
responsibility, (2) federal agency policies and programs relating to
global CSR, and (3) different perspectives regarding the appropriate
U.S. government role and views on the impact of current federal
activities on corporate global CSR efforts.
To describe global corporate social responsibility, we reviewed
business and ethics literature and interviewed selected corporations
and other groups interested in CSR. To determine what policies and
programs federal agencies have adopted that relate to global CSR, we
surveyed federal legislation and spoke with agency officials and
experts in CSR. We obtained information on specific agency programs and
policies related to CSR using a two-step process. First, we provided a
general description of global CSR to agency officials and asked them to
identify relevant programs, policies, and efforts within their agency.
We then sent a questionnaire to officials responsible for each
identified program and interviewed officials to obtain further
information. To identify different perspectives regarding the role of
the U.S. government related to corporate global CSR efforts, we
reviewed CSR-related trade and business literature and interviewed, on
a nonattribution basis, representatives from 14 selected U.S.
multinational corporations; 4 business interest groups; 4 investor
groups; 6 nongovernmental organizations; and 4 academic institutions
that are leaders in the CSR field. We conducted our work from May 2004
through May 2005 in accordance with generally accepted government
auditing standards. (Appendix I provides detailed information on our
objectives, scope, and methodology.)
Results in Brief:
Global CSR is an umbrella concept that can best be described through
the definitions used for the term, the actions companies take to
practice CSR, and the roles of key players. CSR can be broadly defined
as addressing the interests of all company stakeholders, which include
not only shareholders but also customers, employees, suppliers, and the
surrounding community on issues such as environmental protection,
worker safety, and ethical conduct. Global CSR addresses these issues
within international markets, particularly in developing countries.
U.S. businesses take a variety of actions related to CSR that range
from voluntary, such as philanthropic donations, to government
mandated, such as disclosure of significant environmental conditions.
Businesses play a central role in determining if and how to address
social and environmental issues they face in their operations. Civil
society, investor groups, multilateral organizations, and governments
play key roles in identifying issues of concern and in encouraging
businesses to adopt CSR efforts to address these issues.
Although the United States has no broad federal CSR mandate, we
identified 12 U.S. agencies with over 50 programs, policies, and
activities that generally fall into four key government roles of
endorsing, facilitating, partnering, and mandating company CSR
activities. However, many of these programs have small budgets and
staff and aim to accomplish broader agency mission goals, rather than
being specifically designed to facilitate or promote companies' global
CSR activities. The U.S. government endorses CSR by providing awards to
companies, such as the Department of State's Award for Corporate
Excellence and discussing CSR in public speeches. Federal programs
facilitate CSR primarily by providing information or providing funding
and incentives to key players to engage in CSR. For example, the
Department of Commerce facilitates CSR by training its commercial
service officers specifically on corporate stewardship. The U.S. Agency
for International Development's (USAID) Global Development Alliance
provides an example of a federal program that partners with
corporations to leverage additional resources. Finally, some agencies,
such as the Overseas Private Investment Corporation (OPIC), mandate CSR
by requiring companies to meet criteria consistent with CSR to obtain
their services.
While varying perspectives of the government's role are tied to
perspectives on CSR and its connection to profit, many we spoke with
from groups that are actively involved in global CSR reported that a
government role supporting companies' CSR efforts would be useful.
Those with a free-market economic perspective state that corporations
should be primarily concerned with earning profits and that government
should not promote CSR because it reduces profit. Those with a
"business case" perspective contend that CSR efforts can increase
business long-term profits and value, and welcome government assistance
with voluntary business efforts. Finally, those with a social issues
perspective believe that business should contribute to broader social
goals but have mixed opinions of whether this should be accomplished
through voluntary CSR actions or more extensive regulation. Most
representatives we spoke with at U.S. companies and other groups who
were actively engaged in CSR were generally supportive of U.S. federal
agency efforts to endorse and facilitate CSR and partner with companies
voluntarily pursuing CSR actions. For example, several groups supported
a government role in providing CSR-related information and convening
stakeholders to address CSR-related issues.
Background:
The expansion of world trade and investment has led to the increasing
integration of the world economy in recent decades--a process often
referred to as "globalization." Total trade in developing countries,
exports and imports, rose from less than $1.5 trillion in 1990 to $3.8
trillion in 2002, while foreign direct investment in developing
counties grew even faster during this period, from $22 billion to $154
billion. Some view globalization as fostering economic growth,
increasing employment, and improving living standards in both developed
and developing nations. At the same time, others view globalization as
resulting in negative social impacts and raise concerns about the
expanding activities of multinational corporations, particularly in
developing countries. U.S. multinational corporations are now faced
with difficult issues, such as the treatment and conditions of foreign
workers in corporate supply chains, environmental and health issues
associated with production in diverse local communities, and human
rights issues associated with authoritarian governments in countries
where multinationals operate. In addition, some negative incidents
involving U.S.-based companies have been widely publicized, hurting
their own and the United States' image, such as the use of sweatshops
in the manufacture of clothing and other products. In another example,
a U.S.-based company recently came under allegations that its overseas
mining operations produced toxic waste that have caused illnesses.
U.S. corporations are increasingly building operations or buying
products from sources in developing countries. However, the legal,
regulatory and ethical environments in which U.S. businesses and their
suppliers operate vary across countries. For example, some have
asserted that developing countries have inadequate or poorly enforced
environmental and labor laws. Given the limited capacity of some
developing countries, CSR advocates argue that corporations themselves
must establish and maintain codes of conduct regarding operating
standards in these environments. Companies face increasing pressure
from nongovernmental organizations (NGO), the media, "socially
responsible" investor groups, and other stakeholders to adhere to high
standards globally in their own operations and throughout their supply
chains. In addition, some members of Congress have shown support for
CSR-related policies, similar to those advocated by working groups
convened by the Kenan Institute.[Footnote 1]
In response to these business challenges and outside pressures,
companies are increasingly adopting "corporate social responsibility"
programs. For example, recently U.S. electronics companies signed a
joint code of conduct to protect working conditions, workers' rights,
and the environment in the electronics industry supply chain. A number
of U.S. companies have instituted programs to address HIV/AIDS and
other diseases in their operations in developing countries, for
example, by raising awareness or providing access to treatment. Most
recently, U.S. companies provided nearly $453 million to relief efforts
in the wake of the tsunami that hit South and Southeast Asia and East
Africa in December 2004.[Footnote 2] Despite these efforts, some CSR
advocates call for more government action to promote CSR, with some
noting that several national governments in Europe have put in place
mechanisms to encourage or require the adoption of CSR practices.
Global Corporate Social Responsibility Is an Umbrella Concept Covering
Many Business Actions and Involving Many Players:
Global CSR is an umbrella concept that can best be understood by
describing the different definitions used for the term, the actions
businesses take to practice CSR, and the roles of key players involved
in CSR. Although groups use different definitions and terms, CSR
generally involves business efforts to address a broad range of issues,
including the environment, labor, and human rights. Businesses perform
many different actions to address CSR concerns. The extent and type of
these actions are influenced by key players in CSR that include not
only businesses, but also the civil society, investor groups,
multilateral organizations and governments that seek to influence them.
The term "global CSR" is sometimes used to refer to business efforts to
address the social impacts of business in the global economy.
Discussions of global CSR in the context of developing countries
focuses on the need for business to address the gaps from inadequate or
poorly enforced laws to protect the environment, labor, human rights,
and other social resources.
CSR Is Generally Defined as Business Efforts to Address the Interests
of Its Many Stakeholders:
The term "CSR" is an umbrella concept with many different definitions.
However, most definitions suggest that, in addition to addressing the
interests of its shareholders, business should address the interests of
its other stakeholders, including customers, employees, suppliers, and
the local community. CSR definitions cover a broad range of potential
social concerns, including business ethics, community development,
labor, environment, and human rights. Table 1 presents sample CSR
definitions.
Table 1: Sample Definitions of Corporate Social Responsibility:
Name of group: Business for Social Responsibility (BSR);
Definition of CSR: "Achieving commercial success in ways that honor
ethical values, and respect people, communities, and the natural
environment."[A].
Name of group: European Commission;
Definition of CSR: "A concept whereby companies integrate social and
environmental concerns in their business operations and in their
interactions with their stakeholders on a voluntary basis."[B].
Name of group: Institute of Business Ethics;
Definition of CSR: "The voluntary actions taken by a company to address
the ethical, social, and environmental impacts of its business
operations and the concerns of its principle stakeholders."[C].
Name of group: World Bank;
Definition of CSR: "The commitment of business to contribute to
sustainable economic development--working with employees, their
families, the local community and society at large to improve the
quality of life in ways that are both good for business and good for
development."[D].
Source: GAO compilation from sources listed.
[A] Business for Social Responsibility, BSR Issue Briefs, Overview of
Corporate Social Responsibility.
[B] European Commission, Directorate-General for Employment and Social
Affairs, Promoting a European framework for Corporate Social
Responsibility, Green Paper, July 2001, p. 8.
[C] Institute of Business Ethics, Web site, [Hyperlink,
http://www.ibe.org.uk].
[D] The World Bank, Corporate Social Responsibility Practice, Public
Sector Roles in Strengthening Corporate Social Responsibility: Taking
Stock, January 2004, p. 3.
[End of table]
CSR definitions vary on whether CSR is considered exclusively voluntary
or whether it includes mandatory requirements for business regarding
social and environmental issues. Some definitions of CSR limit it to
voluntary business decisions and actions, above and beyond what is
required by law. Others organizations have reasoned that CSR should
include mandatory efforts, especially because in developing countries
it can be a tool to encourage compliance with laws and
regulations.[Footnote 3] This voluntary compliance with laws and
regulations assumes a greater role in developing countries, because
even where developing countries have adequate laws and regulations
concerning social and environmental concerns, they often have limited
enforcement resources.
Some groups prefer other terms to address all or some of the ethical,
social, and environmental issues addressed by CSR. For example, one
business group preferred the term "corporate citizenship" because
business social and environmental efforts are indicative of business's
effort to be good citizens, while they believe the term "CSR" implies
that those efforts are a responsibility rather than voluntary. Others
prefer the terms "sustainable development" or "triple bottom line,"
reasoning that business decisions and performance should be evaluated
in terms of their economic, social, and environmental impacts. Other
terms such as "business ethics" deal with one of the many concerns of
CSR. Table 2 presents definitions of some terms related to CSR.
Table 2: Definitions of Terms Related to Corporate Social
Responsibility:
Term: Business Ethics;
Definition: "The application of ethical values to business
behavior."[A]
Term: Corporate Citizenship;
Definition: "The conduct of business in ways that reflect proactive,
responsible behavior in business and in dealings with all constituents
and with respect to communities, society, and the natural environment
more generally."[B]
Term: Sustainable Development;
Definition: "[development that] meets the needs of the present without
compromising the ability of future generations to meet their own
needs."[C]
Term: Triple Bottom Line;
Definition: "A method that allows companies to assess their performance
against three bottom lines: environmental, social, and economic."[D]
Source: GAO compilation from sources listed.
[A] Institute of Business Ethics, Web site, [Hyperlink,
http://www.ibe.org.uk].
[B] Logan David, Roy Delwin, and Regelbrugge Laurie, Global Corporate
Citizenship - Rationale and Strategies, The Hitachi Foundation,
Washington D.C.: 1997, p. 7.
[C] Report of the World Commission on Environment and Development, (the
Brundtland Commission) Our Common Future, United Nations, August 1987,
p. 24.
[D] The Sustainable Business Network and Ministry for the Environment,
New Zealand, Enterprise3 Your Business and the Triple Bottom Line,
Economic, Environmental and Social Performance, June 2003, p. 2.
[End of table]
Many U.S. Businesses' Actions Address CSR Concerns:
U.S. businesses conduct many different types of actions that address
CSR concerns that range from voluntary, such as philanthropic
donations, to government mandated, such as disclosure of significant
environmental conditions. These actions may or may not be part of a
formal CSR effort. Although groups categorize business actions
addressing CSR concerns differently, they can broadly be grouped as
relating to (1) business ethics, (2) community development, (3)
environment, (4) governance, (5) human rights, (6) marketplace, and (7)
workplace.[Footnote 4] In our discussions with representatives of U.S.
corporations, which are noted as leaders in CSR, we identified
illustrative examples of U.S. companies' actions that address these
categories of CSR concerns.
Business Ethics:
Business actions addressing the CSR concern of business ethics involve
values such as fairness, honesty, trust and compliance, internal rules,
and legal requirements. Among the actions taken to address business
ethics are incorporating ethics into corporate value and mission
statements, developing ethics codes, conducting ethics training, and
monitoring ethical performance. In one example from the companies we
interviewed, the company had recently trained its workforce--including
all levels of management--on its standards of business conduct and now
publishes these standards in 20 languages.
Community Development:
Business actions addressing the CSR concern of community development
involve business policies and practices intended to benefit the
business and the community economically, particularly for low-income
and underserved communities. Community development activities include
employing and training disadvantaged workers, partnering with minority-
and women-owned businesses, and locating facilities in underserved
communities. One business we interviewed with a factory in South Africa
works with its employees to develop the physical structures of schools
for youth and adults in that community.
Environment:
Business actions addressing the CSR concern of the environment involve
company policies and procedures to ensure the environmental soundness
of its operations, products, and facilities. Examples include pollution
prevention, energy efficiency, and supply-chain environmental
management. One company we interviewed stated that it strives to exceed
minimum U.S. government standards for toxic emissions, even in foreign
countries. The company stated that it had sent a team of specialists to
Mexico to bring a Mexican facility to the U.S. standard.
Corporate Governance:
Business actions addressing the CSR concern of corporate governance
involve the broad range of policies and practices that boards of
directors use to manage themselves and fulfill their responsibilities
to investors and other stakeholders. Examples include developing
processes for communication with stakeholders, adopting formal board
guidelines, and implementing board and Chief Executive Officer (CEO)
performance evaluations.
Human Rights:
Business actions addressing the CSR concern of human rights involve
assuring basic standards of treatment to all people, regardless of
nationality, gender, race, economic status, or religion. Among the
concerns in developing human rights policies are to avoid child labor
in manufacturing, government action depriving citizens of basic civil
liberties, and forced or prison labor. For example, a company we
interviewed said it had signed the United Nations Global Compact, which
requires businesses to comply with human rights requirements as one of
its 10 principles.
Marketplace:
Business actions addressing CSR marketplace concerns involve business
relationships with its customers and such issues as product
manufacturing and integrity; product disclosures and labeling; and
marketing, advertising, and distribution practices. Marketplace-
related actions include establishing ethical marketing and advertising
policies, ensuring safety and efficacy of products, and employing
ethical sales tactics. One company we interviewed that views water,
health, and hygiene as their business stated it had developed low-cost
water purifying systems and products to save water in hand washing and
improve the lives of consumers in developing countries.
Workplace:
Business actions addressing CSR workplace concerns generally involve
human resource policies that directly impact employees, such as
compensation and benefits, career development, and health and wellness
issues. Examples of workplace CSR actions include adoption of global
workplace standards, involvement of employees in business decisions,
and establishment of employee grievance policies and procedures.
Business, Civil Society, Investor Groups, Multilateral Organizations
and Government Play Important Roles in Shaping CSR:
Businesses play the central role in determining their efforts to
address CSR concerns, but these efforts can also be influenced by the
actions of civil society, investor groups, multilateral organizations,
and government.
Businesses' Role in CSR:
Businesses play a central role in CSR by determining which social and
environmental issues are addressed and how they are addressed. CSR
literature notes that there is a growing recognition by businesses that
CSR includes the way the company runs its core business, not just its
philanthropic activities. Businesses can further influence CSR in their
relationships with other firms through business networks,
intermediaries, and supply chains. For example, a business may require
or promote CSR among its business partners.
Available but not necessarily representative data on U.S. business
efforts to address CSR concerns suggests that many firms conduct some
CSR efforts and that a small number of firms hold themselves to more
rigorous non financial reporting standards on social, economic and
environmental information. A 2002 survey of U.S. firm involvement in
sustainability (a closely related term to CSR) included responses from
140 U.S.-based firms that were likely among the most active U.S.
companies in CSR.[Footnote 5] Three-quarters of responding firms
reported practicing some form of sustainability. Large firms, defined
as those having revenues over $25 billion annually, were more likely
than smaller firms to issue sustainability reports, according to that
same survey. Over half of the firms issuing a sustainability report
indicated that they were following Global Reporting Initiative (GRI)
guidelines. The GRI is an independent institution that disseminates
globally applicable sustainable reporting guidelines for companies use
in reporting on economic, environmental and social dimensions of their
activities, products, and services. As of March 2005, 69 U.S. firms had
registered to use the GRI guidelines for reporting CSR Issues.
Similarly, 71 U.S. firms have signed onto the United Nations Global
Compact. Signatories to the Global Compact voluntarily agree to support
its 10 principles in areas of human rights, labor, environment, and
anticorruption policies.
Available information from some surveys suggest that business leaders
address social issues for business as well as for other reasons,
including consistency with their core operating values. Two recent
surveys of business executives reported that businesses practiced
corporate citizenship or sustainable business practices for a variety
of reasons. The voluntary nature of these surveys makes it impossible
to project to the universe of all firms. In the first survey, the
majority of business respondents concurred with the statement that
"good corporate citizenship helps the bottom line."[Footnote 6]
Similarly, the majority of the respondents to the second survey
indicated "cost savings" as a reason for adopting sustainable business
practices.[Footnote 7] The majority of firms responding to the first
survey also indicated that their founding traditions and core
organizational values of their companies dictate their commitment to
corporate citizenship. Similarly, the second survey reported that the
majority of responding firms indicated the CEO/Board commitment as a
contributing reason for their sustainable business practices. Further,
this survey reported that a number of respondents stated that one
reason for adopting sustainable practices was because it was "the right
thing to do."
Despite over 30 years of research, no consensus has been reached on the
relationship between business social and financial performance.
Numerous empirical research studies have attempted to determine whether
those firms that engage in socially responsible practices also do well
in terms of financial performance. A 1997 study that surveyed 25 years
of research observes that, many studies find a negative relationship
between these practices and financial performance, although the largest
number of studies find a positive relationship.[Footnote 8] More recent
studies also reach a range of conclusions with some finding a positive
association,[Footnote 9] some finding at least a neutral association,
and others finding no significant or a mildly negative
relationship.[Footnote 10] A recent paper on the business justification
for CSR concludes, "It has not yet been possible to make a strong,
causal, quantitative link between CSR actions and financial indicators
such as share price, stock-market value, return on assets and economic
value added."[Footnote 11]
The difficulty in accurately measuring CSR benefits to business
complicates any assessment of CSR. CSR literature, as well as
discussions with CSR experts, indicates that it can be very difficult
to assess the profitability of CSR actions because benefits may occur
far into the future and involve intangibles such as enhanced brand and
company image or other goodwill. Furthermore, the authors of a recent
study suggest that the provision of CSR will vary across industries,
products, and firms. For example, they argue that larger, more
diversified firms, and those that produce more highly differentiated
products, may be more likely to engage in CSR practices than smaller
firms or those that produce in less differentiated markets. The authors
further suggest that if a firm is successful in implementing a CSR
action, competitors may adopt similar measures, and this may have the
effect of eroding any profit advantage. As a result, they argue that
there should be a neutral relationship between CSR activity and firm
performance.[Footnote 12]
Civil Society's Role in CSR:
CSR literature recognizes the impact of civil society on raising
awareness of social issues among businesses. The World Bank defines
civil society as the wide array of nongovernmental and not-for-profit
organizations that express the interests and values of their members or
others based on ethical, cultural, political, scientific, religious, or
philanthropic considerations. Civil society organizations include
community groups, nongovernmental organizations (NGO), labor unions,
indigenous groups, charitable organizations, faith-based organizations,
professional associations, and foundations. A recent report by the
Kennedy School of Government notes that the growth in civil society is
one of the drivers making CSR more mainstream.
Civil society groups can serve to strengthen the links between CSR
activities and business profits by increasing the transparency of
corporate operations. For example, civil society activities exposing
sweatshops or other questionable corporate activities can provide an
incentive for firms to act in ways that would not damage their
reputation. Further, civil society sometimes establish standards that
business can use to signal compliance or to enhance their reputation
with their customers and other stakeholders, potentially increasing
profits and firm value. In 1997, the Council on Economic Priorities
Accreditation Agency[Footnote 13] released its Social Accountability
(SA) 8000, a voluntary standard to help companies monitor a variety of
workplace concerns. The SA 8000 provides verification of corporate
performance. The Coalition for Environmentally Responsible Economies
(CERES) partnered with the United Nations Environmental Program (UNEP)
to oversee the development of the GRI[Footnote 14] reporting guidelines
in the late 1990's. The Interfaith Center for Corporate
Responsibility[Footnote 15] (ICCR), composed of over 275 religious
institutions, published a guide to be used as a reference tool by
companies to monitor policies in such areas as community development,
environment, ethics, human rights and workplace issues.
Investor Groups' Role in CSR:
Investor groups such as mutual funds and pension plans are responsible
for a growing proportion of U.S. investments and therefore, are a
potentially increasing influence over business's CSR actions. According
to a report by the Social Investment Forum,[Footnote 16] a national
membership organization of social investment practitioners and
institutions, firms using some type of socially responsible investment
strategy manage over 11 percent of all U.S. investment assets under
professional management. The report further indicated that between 1995
and 2003 social-invested assets grew faster than all other types of
professionally managed investment assets in the United States. CSR
literature notes the increased activism of some institutional investors
and their calls for increased corporate accountability and
transparency.
The Role of Multilateral Organizations in CSR:
Multilateral organizations have played an active role in developing
standards relating to CSR and in promoting the concept of CSR. The
Organization for Economic Cooperation and Development[Footnote 17]
(OECD) first published its guidelines for multinational enterprises in
1976. These guidelines include recommendations by OECD-member
governments to multinational enterprises on appropriate business
conduct in such areas as business ethics, labor relations,
environmental practices, and information disclosure. The OECD revised
the guidelines in 2000 to include a call for companies to respect human
rights, abolish forced and child labor, and take a more active role in
promoting environmental sustainability. The United Nations launched its
Global Compact[Footnote 18] in 1999, and it now consists of 10
principles covering concerns with human rights, labor, environment, and
anticorruption. The World Bank also has a number of program goals
related to CSR, including supporting the development of environmental
and social practices in individual businesses in emerging markets,
working with national governments to help countries better understand
and address CSR, and cosponsoring (with the OECD) the Global Corporate
Governance Forum,[Footnote 19] which helps countries improve standards
of governance for their corporations.
The Role of Governments in CSR:
A 2002 World Bank study identified four major CSR roles for government:
endorsing, facilitating, partnering, and mandating. Government
endorsement of CSR can take a variety of forms, including direct
recognition of businesses with awards. In their facilitating role,
governments enable or provide incentives to companies to engage in CSR
to obtain social and environmental improvements. Government partners
with the private sector and civil society in tackling complex social
and environmental problems. In the mandating role, governments require
minimum CSR-related actions in laws and regulations.
Some industrialized countries have established programs to foster CSR.
For example, in 2001, the European Commission published a green paper
to launch debate on how the European Union could promote CSR.
Subsequently, the commission held a forum to foster dialogue among the
business community, trade unions, civil society organizations, and
other stakeholders on CSR.[Footnote 20] In May 2001, France became the
first country to require all publicly listed companies to report on the
social and environmental consequences of their activities. In 2000, the
United Kingdom appointed a Minister for Corporate Social
Responsibility, who maintains a central Web site that highlights
government departments with CSR responsibilities.
Although the social and economic priorities vary among developing
countries, the high incidence of poverty and weak civil society means
there are often fewer conventional drivers for CSR. Most developing
country governments seek foreign investment to help them grow and
develop and must attempt to balance development with other social and
environmental goals. A 2002 World Bank report notes that developing
country governments do not often participate in the development of CSR
policies and standards.[Footnote 21] Another report on public sector
support for CSR among global supply chains states that the lack of
resources for developing country governments, which do not view export
sector workplaces as the highest priority for social and environmental
intervention, hinders progress in addressing CSR-related issues in
global supply chains.[Footnote 22]
The effectiveness of government programs supporting CSR in achieving
public policy goals has not been established, in part because of the
difficulties inherent in such assessments. CSR literature notes that it
is difficult to assess the impact of CSR-related partnerships on public
policy goals because it is difficult to measure or compare their
intangible inputs and outputs. Representatives from the four academic
institutions we interviewed agreed that it was difficult to assess the
impact of CSR on social goals. Several of these academicians also noted
that they had not seen good work measuring the benefit of CSR to
society. One noted that CSR is incremental and that it is hard to
measure incremental improvements.
Although No Broad Federal CSR Mandate Exists, Federal Agencies Conduct
Many Activities Related to Global CSR:
While the federal government does not have a formal role in global
corporate social responsibility, we identified over 50 programs,
policies, and activities at 12 agencies that are related to global CSR
using a data collection instrument completed by agency officials. We
narrowed down the programs to those that were ongoing in fiscal year
2003 or afterwards, those that may affect U.S. corporations' CSR
efforts overseas, including their supply chains, and those that touch
on key components of CSR, such as labor, environment, human rights,
community development and corporate governance. As illustrated in the
text below, most of these activities can be loosely categorized into
the four key roles of governments in global CSR identified by the World
Bank: endorsing, facilitating, partnering and mandating.[Footnote 23]
Appendix II catalogs all the programs we identified by agency.
There Is No Comprehensive Mandated Federal Role, Definition, or Agency
Coordination in Global CSR:
There is no comprehensive legislation mandating a federal role in
global corporate social responsibility, and few agencies actually
define CSR. Many agencies work with the private sector on issues that
are generally covered by the concept "corporate social responsibility,"
such as labor, environment, human rights and corporate governance, but
few agencies define corporate social responsibility or label their
activities CSR. Some agencies noted that they use other terms, such as
corporate stewardship or corporate citizenship, to refer to similar
issues.
While there is no law designating a lead agency to coordinate federal
government activities related to global corporate social
responsibility, United States agencies are currently in the initial
stages of creating a Web site to catalogue federal CSR initiatives.
This informal interagency initiative, led by staff at the Inter-
American Foundation (IAF), initially involved the Department of State,
USAID, the Department of Commerce, the Environmental Protection Agency
(EPA), and the Overseas Private Investment Corporation (OPIC). The
purpose of the initiative is to publicize the U.S. government programs
and resources that promote good corporate practices or CSR to
businesses and NGOs. The IAF expects to make the Web site publicly
available sometime in 2005.
Some agencies also reported that while they do not have a formal
program focused on global corporate social responsibility, they have a
number of initiatives that relate to global CSR. For example, officials
at the Department of State, which had the greatest number of
initiatives related to global CSR, told us that they house their CSR-
related activities in several bureaus linked through informal
coordination. Likewise, at the EPA, which also had a large number of
related initiatives, an official told us that the agency does not have
a specific CSR program, but acknowledged there were many links between
EPA programs on the environment and the goals of CSR. Further, EPA
recently completed an internal inventory of its voluntary initiatives
that partner with corporations to improve coordination and policy
consistency.
While Agency Perspectives on CSR Vary, Many Federal Programs in Pursuit
of Broader Mission Goals Are Related to Global CSR:
Agency perspectives on global corporate social responsibility vary from
active endorsement to reluctance to labeling their programs CSR. For
example, several bureaus in the Department of State foster corporate
CSR practices as a means to enhance their own efforts aimed at public
diplomacy, protecting human rights, and other areas. Similarly, the
Department of Commerce has officially endorsed corporate social
responsibility, stating that American companies must follow the highest
standards of conduct anywhere they do business and that American
companies contribute to the communities in which they do business.
Through good corporate governance and global corporate social
responsibility, the Department of Commerce maintains that American
companies are helping to spread democratic values and prosperity around
the globe, which leads to greater economic freedom, higher standards of
living, and greater social and political freedoms. However, other
agencies do not want their programs to be labeled CSR because they do
not see it as part of their mission or believe they lack authority to
engage in CSR activities. For example, while officials from the Office
of the U.S. Trade Representative acknowledged that the agency
undertakes some activities that might complement CSR, they stated that
the agency's mission is to negotiate trade agreements, not to engage in
CSR efforts. Similarly, a senior official at the Department of Labor
said that, while the department has many activities that could
conceivably be seen as supporting global CSR, the department is not
doing them for that reason. He believes the department lacks specific
authority to do work on CSR.
Some agencies without a formal position on CSR actively take advantage
of mutual interests between their missions and company CSR practices to
achieve their broader mission goals. For example, USAID and the IAF
leverage resources from corporations for development missions, and EPA
intends to control pollution through voluntary programs with
corporations. Specifically, USAID's Global Development Alliance aims to
achieve the agency's development goals by leveraging resources from the
private sector and other partners. USAID's alliances address a range of
issues, such as encouraging economic growth, developing businesses and
workforces, addressing health and environmental problems, and expanding
access to education and technology. To illustrate, USAID partnered with
one U.S. corporation operating in post-war Angola to build up the
country's business sector and equip Angola's workforce with necessary
business skills. The company and USAID each agreed in 2002 to provide
$10 million over 5 years for a series of projects to strengthen small
and medium-sized businesses, including helping refugees and former
soldiers to return to agriculture, developing an enterprise development
bank, and supporting the creation of an agricultural training center.
From fiscal years 2002 to 2004, USAID reported funding approximately
290 public-private alliances with over $1.1 billion in federal money
and over $3.7 billion in partner contributions.[Footnote 24] Figure 1
illustrates how federal agency programs sometimes complement company
CSR practices.
Figure 1: Some Federal Programs and Activities Complement U.S.
Corporate CSR Practices:
[See PDF for image]
[End of figure]
Other agencies, such as OPIC, the Export-Import Bank of the United
States (Ex-Im Bank), and the U.S. Securities and Exchange Commission
(SEC) engage in activities that are related to CSR, generally in
response to statutory or congressional requirements rather than based
on a formal agency decision on CSR.
Many Federal CSR-Related Programs Are Recent, Focus on a Range of
Countries and Sectors, and Have Small Budgets and Staffs:
Many of the programs we identified started in the last 5 years. For
example, the Department of State's Partnership to Eliminate Sweatshops
Program started in 2000 to provide grants to address unacceptable
working conditions in manufacturing facilities overseas that produce
goods for the U.S. market. In fiscal year 2003, the program funded the
development of a confidential database of factory monitoring reports
that would be accessible by companies seeking compliance information on
factories in their supply chains. The effort was in response to U.S.
companies that have cited lack of information about factory compliance
as an obstacle to improving their own compliance efforts and
responsible behavior.
Since 2001, several presidential initiatives aimed at foreign
assistance have partnered with companies to achieve the initiative
goals, which also complement corporate CSR practices. For example, one
interagency presidential initiative led by the Department of
Commerce,[Footnote 25] the Digital Freedom Initiative, was announced in
2003 to partner with U.S. businesses to transfer the benefits of
information and communication technology to businesses in the
developing world.[Footnote 26] The program has over 90 U.S. corporate
and nonprofit organization partners that provide volunteers and other
resources to support its activities. As part of the initiative, in
Senegal, a U.S. information technology company is developing 12
academies to train Senegalese to install, manage, and maintain modern
computer networks.[Footnote 27]
Federal agency activities related to CSR focus on a range of countries
and sectors. For example, the International Child Labor Program at the
Department of Labor funds projects in Bangladesh, Pakistan, Central
America, and West Africa that work with various industry associations
to address the use of child labor. The Department of State funds a
number of projects in China and other countries in various sectors,
including the apparel industry and the extractives sector. Federal
programs and activities assist U.S. companies with their philanthropic
efforts, as well as with their efforts to be socially responsible in
their core business operations, including their supply chains. None of
the programs we identified were specifically designed to monitor
company CSR activities.
Most federal programs, policies, and activities related to CSR have
small budgets and staffs. Many programs do not specifically track
budget and staffing information for their CSR-related activities. Of
the programs reporting budget and staffing information, most are
relatively small. The Departments of Commerce and State and EPA, which
identified the largest numbers of discrete initiatives related to CSR,
reported relatively modest budgets and staffing for their initiatives.
In total, only four programs reported budgets at or over $2 million in
fiscal year 2003 for CSR-related activities. The two programs that
reported the largest annual budgets of around $20 million and $30
million are at the Department of Labor[Footnote 28] and USAID,
respectively. Similarly, many federal CSR efforts are staffed by agency
officials with multiple responsibilities, working part time on the
effort.
Federal Agencies Conduct a Range of Activities that Endorse,
Facilitate, Partner and Mandate Company CSR Activities:
Most U.S. government programs, policies, and activities related to
global CSR can be loosely categorized into the World Bank's four public
sector roles: endorsing, facilitating, partnering, and
mandating.[Footnote 29] These roles range from the least government
involvement--endorsing companies' voluntary efforts above and beyond
compliance with laws and regulations--to the most government
involvement through mandating behavior consistent with CSR. Although
some federal efforts related to CSR can be classified as serving more
than one role, roughly two-thirds of the U.S. government programs,
policies, and activities, that we identified fell in the middle of the
spectrum by either facilitating and/or partnering with companies on
their voluntary CSR efforts. The remainder either fell into the
mandating and endorsing roles, or outside the World Bank's roles.
Figure 2 illustrates the range of U.S. government activities in the
World Bank framework. See appendix II for a complete listing and brief
description of the 54 CSR-related programs and activities that we
identified at 12 U.S. agencies.
Figure 2: Illustrative U.S. Government Activities Related to CSR Range
from Endorsing CSR to Mandating CSR:
[See PDF for image]
[End of figure]
Endorsing:
The U.S. government has a number of awards programs that endorse CSR by
recognizing companies for socially responsible activities. U.S.
officials also endorse the concept to audiences through public speeches
on an ad hoc basis. Some examples of endorsing include:
* The Department of State's annual Award for Corporate Excellence,
which emphasizes the role U.S. businesses play to advance good
corporate governance, best practices, and democratic values overseas.
Since 1999, 12 businesses have received the Award for Corporate
Excellence,[Footnote 30] following nominations submitted by Chiefs of
Missions at U.S. Embassies and Consulates abroad. In fiscal year 2004,
the Department of State received 50 award nominations from Chiefs of
Missions.
* The EPA's Climate Protection and Stratospheric Ozone Protection
Awards, which encourage and recognize outstanding corporate
environmental efforts in climate protection. For example, a 2002
corporate recipient of EPA's Climate Protection Award reduced its
energy use by over 30 percent internationally and offset all the
remaining greenhouse gas emissions both in the United States and
overseas.
Facilitating:
The U.S. government facilitates CSR by providing information, funding
or incentives to companies and other players to engage in CSR-related
issues. Some examples include:
* The Department of Commerce's training on rule of law, human rights,
and corporate stewardship for commercial service employees. The
training helps these officers provide information on corporate
stewardship issues to companies involved in the export promotion
process. Additionally, commercial service officers can use this
information in their work with overseas chambers of commerce. As of
March 2005, 260 commercial service employees had received the training
since the program's inception in 2003.[Footnote 31]
* The Ex-Im Bank's Environmental Exports Program, which began in 1993.
The program enhances the Ex-Im Bank's financing package for such U.S.
goods and services, thereby encouraging foreign buyers to purchase U.S.
exports that are beneficial to the environment. Specifically, the
program extends loan repayment terms, finances the interest accrued
during the disbursement period, and finances local costs to an amount
equal to 15 percent of the contract price. Exports eligible for the
program include renewable energy projects, water treatment projects,
air quality monitoring instruments, equipment for waste collection and
clean up, services for environmental assessments and ecological
studies, and other projects that meet specified emission thresholds.
During fiscal year 2003, Ex-Im Bank supported over $173 million of
environmentally beneficial goods and services, including $13 million in
products and technologies related to renewable energy.
Partnering:
Several U.S. government programs partner with corporations or convene
partnerships with key stakeholders, which can help companies accomplish
their CSR initiatives. In addition to USAID's Global Development
Alliance discussed earlier, representative examples include:
* EPA's Climate Leaders Program, which partners with companies to
achieve EPA's goal of protecting the environment. The Climate Leaders
Program is a voluntary government partnership that enlists major U.S.
companies to set an aggressive greenhouse gas reduction target. EPA
established inventory protocols to assist the companies in tracking
their success toward their greenhouse gas target. Partners receive
training and technical assistance in completing the greenhouse gas
inventories, and EPA works with each partner to develop standard
Inventory Management Plans. EPA plans to provide recognition in later
years after partners have met or exceeded their targets, which are
publicly available on the EPA Web site.
* The Voluntary Principles on Security and Human Rights, which provide
guidance to oil and mining companies on how to ensure respect for human
rights in their security procedures. In 1999, together with the
government of the United Kingdom, the Department of State convened
international NGOs with U.S. and United Kingdom oil and mining
companies concerning human rights abuses by hired security forces. A
set of voluntary principles was developed through collaboration with
the relevant stakeholders. According to a State Department official,
nearly every major oil and mining company is now a participant in the
Voluntary Principles process.
Mandating:
While there is debate over whether complying with laws and regulations
constitute CSR, a number of federal requirements and regulatory
mechanisms that mandate social and environmental issues could fall
under the CSR umbrella. Examples of regulations and agencies that
require participating companies to comply with CSR-related requirements
include:[Footnote 32]
* An SEC rule,[Footnote 33] which provides anyone who owns more than
$2,000 in a company's stock for more than 1 year with the opportunity
to propose issues for shareholders to vote on. SEC ensures that
companies do not exclude shareholder proposals for vote at annual
company meetings, unless they meet the legal criteria for exclusion
outlined in the rule. According to an investor group that tracks
shareholder proposals, out of 1,052 shareholder proposals that were
filed at U.S. companies for 2005 meetings, approximately 350 proposals
focused on issues related to corporate social responsibility, such as
global warming and global labor standards.
* The Overseas Private Investment Corporation (OPIC), which provides
long-term financing and/or political risk insurance to U.S. companies
investing in over 150 emerging markets and developing countries,
requires that all beneficiary companies comply with certain CSR
criteria. These requirements cover issues that include host country
development impact, environmental protection, international labor
rights, and human rights. The requirements are written into contracts,
and OPIC specifies that they must be carried down to the subcontract
level.
Strengthening Enforcement and Compliance with CSR-Related Regulations
in Other Countries:
In addition to the four roles discussed above, a number of U.S.
programs foster a business environment conducive to CSR by working with
other national governments to strengthen compliance and enforcement of
social and environmental regulations in countries where U.S. companies
operate. These efforts serve to protect U.S. businesses from competing
with companies that are not complying with weakly enforced laws and
regulations. Some examples include:
* The Department of Labor's program on Protecting the Basic Rights of
Workers, which works with host country ministries of labor to improve
adherence to international core labor standards and acceptable
conditions of work in developing countries. In accordance with a
congressional appropriation, in fiscal year 2003 the office allocated
$20 million for these efforts worldwide, including in a number of
countries in Africa, the Americas, Asia, and in Ukraine. However,
according to an agency official, the budget decreased significantly in
subsequent years to $2.5 million in fiscal year 2004 and no funding in
fiscal year 2005.
* EPA's International Compliance Assurance Division, which works with
governments to ensure compliance of companies with environmental
standards. Since 2001, approximately 20 trainings have been held for
officials from a wide range of countries, including South Africa,
Nigeria, Indonesia, Vietnam, Brazil, Guatemala, and Egypt, among
others.
Perspectives on the Appropriate Government Role in CSR Vary, but Many
Support Federal Assistance for Voluntary Efforts:
Our review of CSR literature revealed support for government
involvement in CSR varied with views of CSR's connection to business
profit. Opinions of those we interviewed on the impact of existing
federal agency efforts and the appropriate government role related to
CSR generally revealed a desire for government involvement and the
widest support for federal agency activities that assist businesses in
their voluntary efforts.
Perspectives on the Appropriate Government Role in CSR Vary with Views
of CSR's Connection to Business Profits:
Based on our review of CSR literature, perspectives on the appropriate
role of government in CSR vary, but generally correlate with three
major perspectives on the connection of CSR to business profits: (1)
free-market economic, (2) "business case," and (3) social issues.
Free-Market Economic Perspective:
Those with a free-market economic perspective generally view businesses
engaging in CSR as a potential taking of profits from the business
owners that will ultimately diminish the effectiveness of the business
and a free-market economy. The well known economist, Milton Friedman
refers to the doctrine of "social responsibility" as fundamentally
subversive in a free society, stating, "there is one and only one
social responsibility of business--to use it[s] resources and engage in
activities designed to increase its profits so long as it stays within
the rules of the game, which is to say, engages in open and free
competition without deception or fraud."[Footnote 34] According to this
free-market economic perspective, business managers have a primary duty
to maximize value for shareholders and in doing this businesses serve
the general welfare by directing resources to produce goods and
services society wants. In this view, engaging in CSR actions that are
not based on profitability can affect not only business performance but
also potentially reduce the general welfare of society. David
Henderson, an economist who has written extensively questioning the
value of CSR, recently wrote "The general adoption of CSR, in response
to social pressures, would undermine the market economy and make
businesses less effective in performance of their primary
role."[Footnote 35] While this free-market economic perspective
recognizes that government has a role in structuring the legal
framework of a market economy, those with this view do not support
government involvement in the general adoption of the concept of CSR.
Business-Case Perspective:
Many CSR proponents cite a "business-case" perspective, in which
business CSR efforts are supported based on their contribution to
business profit and value. Those with the business-case perspective
reason that businesses can undertake CSR actions that will increase
businesses' value or return on investment in terms of increased
revenue, increased asset value, or reduced cost. Business leaders often
indicate that their CSR practices help their bottom line. Supporters of
the business-case perspective assert that addressing important social
issues in the business environment can contribute to the long-term
value of the firm. Supporters of this perspective have developed many
different lists of potential benefits to a business in adopting CSR.
For example, one discussion of the business case identified the
following six potential business benefits:[Footnote 36]
* Operational cost savings--Investment in environmental efficiency
measures such as waste reduction and energy efficiency can save money
as well.
* Enhanced reputation--Good company performance in relation to
sustainability issues can build reputation, while poor performance,
when exposed, can damage brand value.
* Increased ability to recruit, develop, and retain staff--These can be
direct results of introducing 'family friendly' policies. Also,
volunteering programs may improve employee morale and loyalty to the
company.
* Better relations with government--More favorable government relations
and regulatory rulings are key for many companies looking to extend
their business in politically unstable conditions.
* Anticipation and management of risk--Managing risk is increasingly
complex in a global market environment. Greater oversight and
stakeholder scrutiny of corporate activities makes managing risk key to
company success.
* Learning and innovation--The interaction required with a wide range
of individuals and organizations outside the traditional business
relationships can encourage creativity, which can lead to increases in
profitability.
The benefits of CSR can also be viewed in a global context, with the
interaction between multinational businesses and foreign host-country
governments concerning issues of foreign direct investment and business
operations in host countries, generally. Engaging in CSR practices may
help the multinational business manage certain political and reputation
risks in their operations, particularly with regard to host countries
in the developing world.[Footnote 37]
Negative publicity can seriously undermine the reputation of
multinational business internationally, and it can create a political
climate that may lead a host government to take actions, such as
regulation or other restrictions, that can undermine the firm's
efficiency and profitability. In addition, some developing countries
may not have adequate laws to address concerns about workers rights or
the local environment, and even where they do, these countries may not
have the resources, technical expertise, or the willingness to
adequately enforce their laws and regulations. By demonstrating a
commitment to good business practices, such as through CSR,
multinational businesses may send a signal that they are committed to
helping mitigate problems or issues that may arise regarding their
operations, thus creating a more positive climate in which to pursue
business opportunities.
Those with a "business case" perspective view a major role of
government as supporting business's voluntary CSR-related efforts.
Surveys of business leaders indicate that they believe that CSR should
be completely voluntary. This perspective stresses business involvement
in the development of CSR efforts because the business knows its
resources and constraints and can best identify potential benefit to
the business. Supporters of this perspective look for business to work
with civil society and government to develop CSR approaches that
address relevant social issues. Subscribers to this view see advantages
of government working with business. For example, in a recent book
Walking the Talk the Business Case for Sustainable Development, the
authors state, "Governments too, have a vested interest in
collaborating with companies. Governments are spending less time on
command-and-control regulations and more on forms of cooperation with
industry to produce workable, incentive based solutions. They are
finding that historically intractable social and environmental
problems, such as poverty, disease, and threats to biodiversity, can
only be solved through partnership."[Footnote 38]
Social Issues Perspective:
Those with a social issues perspective focus on the extent to which
business addresses social issues, but opinions within this group are
mixed on whether to rely on voluntary or mandatory CSR approaches. A
1999 survey of 25,000 consumers worldwide found that two-thirds of the
population in countries surveyed indicated that "they want companies to
go beyond their historical role of making a profit, paying taxes,
employing people and obeying all laws; they want companies to
contribute to broader societal goals as well."[Footnote 39] Some
supporters of the social issues perspective cite successes of some
business voluntary CSR efforts in contributing to social issues. Some
also call on business to voluntarily adopt CSR practices to address
social issues beyond what might be justified by business profit. Such
organizations see a role for government in fostering voluntary
corporate CSR actions.
Others with a social issues perspective take a very different view.
They believe that business is primarily concerned with profit and thus
should not be trusted to develop solutions for important social issues
on their own. According to those with this view, business involvement
in CSR efforts can become merely a branch of public relations instead
of effectively addressing social problems.[Footnote 40] As a result,
they feel that governments should move to mandate CSR. Several groups
have argued for increased government engagement in CSR initiatives
aimed at ensuring that business adhere to international norms. For
example, one consumer group's position paper on CSR calls on
governments and international agencies to introduce legislation to set
standards that transnational corporations must observe and also a
framework for monitoring corporate behavior.[Footnote 41] Similarly,
another group noted that there is a need for increased government
engagement in CSR initiatives aimed at ensuring that businesses adhere
to international norms because governments are the only actors with
jurisdiction over the private sector.[Footnote 42] Another human rights
NGO states that voluntary initiatives will often be ineffective and
insufficient. This organization further states that more attention
should be given to the role international law can play in anchoring
these responsibilities in a legal framework that crosses national
boundaries.[Footnote 43]
Views of Groups Actively Engaged in CSR Vary on the Appropriate Role of
the U.S. Government and the Impact of Current Federal Activities
Related to CSR:
In addition to reviewing the available literature, we also interviewed
32 individuals representing groups actively engaged in CSR to obtain
their views on the appropriate role for the federal government and the
impact of current federal activities on their CSR efforts.
Specifically, we interviewed 14 companies, 4 business groups, 6 NGOs
focused on environmental, human rights and labor issues, 4 investor
groups, and 4 academic institutions (See app. I for a complete list of
the respondents).[Footnote 44] A majority of respondents supported a
government role in global CSR, yet views varied regarding the
appropriate federal role and the impact of current activities. Most
respondents generally supported government assistance with voluntary
CSR efforts such as endorsing, facilitating, and partnering, while some
also expressed an interest in government-mandated CSR, especially to
increase disclosure of CSR-related information. Most respondents saw a
need for the U.S. government to encourage foreign governments to
enforce CSR standards to help level the playing field for U.S.
companies adhering to high CSR standards.[Footnote 45] Some respondents
based their discussion of the government role on their knowledge of
current U.S. government activities related to global CSR, yet we found
that several were unaware of these efforts. Also, some said they were
aware of U.S. government efforts, but primarily cited domestic CSR
efforts or initiatives that are not led by the U.S. government. Several
respondents called for a greater U.S. government role in CSR, as in
some other countries, and greater coordination of existing U.S.
efforts.
Mixed Reactions Regarding the Impact of U.S. Government Efforts to
Endorse CSR through Awards:
A number of respondents were aware of U.S. government award programs
that endorse CSR, but had mixed reactions regarding their
effectiveness. Whereas a majority of companies we interviewed who
commented on awards[Footnote 46] said they have a positive impact, for
example, by motivating employees and validating the company's efforts,
some were not motivated by awards. One company in favor of government
endorsing CSR through awards said that, although there are a lot of
awards given to companies for corporate social responsibility, an award
from the U.S. government or another government is credible and
valuable. However, another company said it receives so many awards that
receiving one more is not very useful, unless it is accompanied by
significant media attention. Most of the business groups reacted
positively to federal government awards, stating that awards call
attention to success stories and provide a signal of the type of
behavior the government likes, help to motivate companies, and provide
a positive counterbalance to regulations and compliance by rewarding
voluntary efforts. Most of the NGOs that were aware of federal
government awards for global CSR activities were skeptical of the
impact of the awards, questioning the nominations and selection
processes and whether the awards are a good indicator for companies'
CSR performance. The two investor groups that were aware of federal
government awards programs thought they were a positive influence. In
addition to awards, a few respondents also suggested the government
should more actively endorse CSR in its own procurement processes and
in government pension investments.
Respondents Viewed Government Efforts to Facilitate CSR Favorably:
Many respondents from the various groups expressed support for federal
government efforts to facilitate CSR, especially through providing
information. Representatives from companies and other groups suggested
that the government could play a more active role in providing
information on setting benchmarks in areas such as the environment and
human rights, providing information on best practices and how to start
CSR activities in other countries, or establishing a clearinghouse with
CSR-related information. A few respondents suggested that providing
information or assistance would be particularly helpful for small and
medium-sized companies and companies just getting started with CSR.
Respondents Generally Viewed Partnerships with Government on CSR
Favorably:
Many respondents viewed government partnerships with companies and
efforts to convene stakeholders to accomplish CSR goals favorably and
thought it was an appropriate role for the U.S. government. One company
that has worked with USAID and the Centers for Disease Control on a
health-related issue in Haiti said that the government is well placed
to help companies focus on the needs of those living in poverty and
that companies have a lot to contribute by helping to provide safe
drinking water, fight HIV/AIDS, and improve education and economic
welfare. Two NGOs that are aware of partnership programs had mixed
reactions. For example, while one NGO said partnerships are helpful in
bringing parties together and leveraging private sector resources,
another NGO was concerned about potential conflicts of interest.
Respondents from business groups, investor groups, and academic
institutions who commented on federal efforts to partner with companies
on CSR issues were generally positive about these partnerships. Many
organizations supported a federal role in partnering by convening
stakeholders to address specific CSR issues or to share information.
For example, the Department of State's involvement in developing the
Voluntary Principles on Security and Human Rights was cited as an
example of a positive effort by the U.S. government to convene
stakeholders to address a CSR-related issue.
Mixed Views on Government Mandating CSR through Laws and Regulations:
Companies and business groups generally held mixed views regarding the
impact of laws and regulations on company global CSR efforts, whereas
NGOs and investor groups largely believed that laws have a positive
impact on CSR. In general, these latter groups desired a government
role in mandating CSR, especially to increase disclosure and
transparency of company CSR activities. A few respondents cited the
lack of U.S. legislation or involvement in CSR as an impediment to
companies' CSR efforts.
While some companies were concerned about burdensome mandates, several
said that certain existing regulations and government efforts create
minimum standards and level the playing field internationally, which is
helpful to companies with active CSR programs.[Footnote 47] According
to one director of CSR, the company's initial reaction to CSR
requirements, such as import controls, is negative because they are
costly and burdensome. However, the company recognizes that new rules
can help level the playing field, as not all companies voluntarily
adopt high standards. Another company said the Foreign Corrupt
Practices Act has had a positive impact on the company's CSR activities
by enhancing the visibility of CSR and helping to raise standards of
transparency and governance. Similarly, customs legislation that set
minimum criteria allows the company to discuss CSR standards with its
suppliers and ensures that it is not the only company focusing on these
issues, which could create a competitive disadvantage. A business group
expressed concern that codes can also lead to two moral principles
conflicting with each other, such as policies to prevent harm to
animals or the environment may inhibit the ability of companies from
discovering life-saving treatments or technologies. One multinational
company said it upholds homogenous standards globally, so in that
sense, U.S. programs could affect its global standards in reporting,
building design standards, and worker health and safety. However, the
company also noted that its own standards often exceed legal standards.
Many respondents agreed that government should play a role in promoting
transparency and disclosure of companies' CSR efforts. Some companies
strongly supported a federal role in promoting transparency, yet others
warned against regulation and adverse consequences, for example, if
U.S. companies face regulatory burdens and are forced to disclose more
than their foreign competitors. For example, the Sarbanes-Oxley Act of
2002 was cited by companies as a costly and burdensome mandate.
However, some NGOs and investor groups supported government mandating
that companies should disclose information on CSR-related issues. Three
academic institutions cited recent European regulations on disclosure
of CSR issues as a model for the U.S. government.
A majority of respondents from the various groups supported a
government role in encouraging other governments to enforce their own
laws and standards related to common CSR issues. A few suggested that
trade agreements offer an opportunity to encourage other governments to
enforce CSR standards. According to one business group,
"The single most useful activity of the U.S. government to promote
corporate responsibility would be to promote the implementation and
enforcement of existing national laws in other countries and to assist
national governments in this regard. The majority of countries around
the world have adequate laws, but such laws are not implemented or
enforced. Commercial activity and private enterprise depend on national
governments to set a level playing field so that competitive markets
can flourish for the benefit of consumer and society. This requires . .
. appropriate legal frameworks in areas such as corporate governance,
financial disclosure, bribery and corruption, environmental protection
and labor rights."
Some Respondents Want More Coordination among U.S. CSR Activities and
Greater Role in Global Leadership on CSR:
Some respondents expressed a desire for more coordination among U.S.
activities related to global CSR and pointed out that other countries
are more involved in CSR than the U.S. government. Some noted that
federal efforts are not well coordinated, which can make it difficult
for companies to participate in U.S. government activities, and called
for increased coordination among U.S. government agencies for CSR
activities. Several respondents also expressed a desire for a greater
U.S. government role in CSR, stating that the United States is absent
from world leadership, especially the European Union, on this issue.
According to one company, many European countries are involved in CSR
activities; and if the U.S. government does not play a role regarding
U.S. companies' international CSR activities, leadership will go
elsewhere. Similarly, another company wanted the U.S. government to
participate in the global debate on CSR and to continue its efforts to
represent U.S. interests in the face of the European Union's more
regulatory approach to CSR.
Concluding Observations:
The globalization of recent decades has increased the breadth and
extent of U.S. corporations' operations in foreign markets, through
both increased investment and trade. These globalization trends have
led to increased pressure on U.S. multinational corporations to adopt
more CSR-related activities in their global operations, particularly
for developing countries. Nevertheless, the extent that U.S.
multinationals adopt CSR practices continues to vary by industry,
location, and by individual firm priorities. At the same time, if the
recent CAFTA debate in Congress is any guide, the U.S. government also
faces calls to strengthen labor, environmental, and social conditions
abroad. Thus, the debate over the right balance between private sector
and government roles in achieving these CSR-related goals will likely
continue.
Important public policy questions have been raised by the trends in
globalization and global corporate social responsibility such as
whether the U.S. government should adopt an official position regarding
global CSR. However, the dichotomy of views regarding the benefits of
CSR to business and society complicates any consensus on the
appropriate government role. Our research shows that U.S. federal
agencies already conduct a number of programs and activities that
overlap and/or interact with corporate global CSR efforts. In addition,
our interviews with agency officials indicate many view CSR as a useful
complementary tool for attaining their broader policy missions. Key
private sector players in CSR, meanwhile, indicate that they generally
found current U.S. government activities helpful in their voluntary CSR
efforts. More generally, it appears that CSR--even if not a substitute
for regulation--has resulted in the commitment of U.S. multinational
resources, and focus on issues of importance to the U.S. and to host
countries. The challenge for the U.S. government is to determine how
global CSR fits within the broader range of policy tools directed at
achieving sustainable improvements in the quality of life for both U.S.
and foreign citizens.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Administrator, Agency for
International Development; the Administrator, Environmental Protection
Agency; the President, Export-Import Bank; the President, Inter-
American Foundation; the President, Overseas Private Investment
Corporation; the Executive Director, Securities and Exchange
Commission; the U.S. Trade Representative; and the Secretaries of the
Departments of Commerce, Energy, Labor, State, and the Treasury. We
received technical comments from the Agency for International
Development; the Environmental Protection Agency; the Export-Import
Bank; the Inter-American Foundation; the U.S. Trade Representative; and
the Departments of Commerce, Labor, and State. We revised the text
based on these comments, where appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the date of this letter. At that time, we will send copies of this
report to interested Congressional Committees and to the Agency for
International Development; Environmental Protection Agency; the Export-
Import Bank; the Inter-American Foundation; the Overseas Private
Investment Corporation; the Securities and Exchange Commission; the
U.S. Trade Representative; and the Departments of Commerce, Energy,
Labor, State, and Treasury. We will also make copies available to
others upon request. In addition, this report will be available at no
charge on the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4347 or at [Hyperlink, yagerl@gao.gov]. Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix III.
Signed by:
Loren Yager,
Director, International Affairs and Trade:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Members of the House of Representatives asked us to provide information
on the federal involvement in global corporate social responsibility.
This report describes (1) global corporate social responsibility (CSR),
(2) federal agency policies and programs relating to global CSR, and
(3) different perspectives regarding the appropriate U.S. government
role and views on the impact of current federal activities on corporate
global CSR efforts.
To describe global corporate social responsibility, we reviewed
business and ethics literature and interviewed corporations and other
groups interested in CSR. Specifically, we reviewed documentation from
academic institutions, business associations, and multilateral
organizations, including the European Commission and the World Bank CSR
Practice. However, the information on foreign law in this report does
not reflect our independent legal analysis, but is based on interviews
and secondary sources. We collected major definitions and descriptions
of CSR and global CSR and related terms and obtained information on
different perspectives that have led to different definitions for CSR
and CSR-related terms.
To determine what policies and programs U.S. federal agencies have
adopted that relate to global CSR, we surveyed federal legislation,
reviewed literature, and spoke with agency officials and experts in
CSR. To select the federal agencies to involve in our review, we first
considered which agencies' missions suggest possible involvement with
promoting, facilitating, or monitoring global corporate social
responsibility efforts, which yielded seven agencies. We then added two
additional agencies to include all of the agencies that participate in
the interagency working group developing a Web portal to publicize the
U.S. government programs and resources that promote good corporate
practices or CSR. We added the remaining three agencies, following
referrals by agency officials or CSR experts, and had discussions with
some agency officials to determine if their agencies had relevant
programs for this review. The agencies we identified with CSR-related
programs were:
* Department of Commerce,
* Department of Energy (DOE),
* U.S. Environmental Protection Agency (EPA),
* Export-Import Bank of the U.S. (Ex-Im Bank),
* Inter-American Foundation (IAF),
* Department of Labor,
* Overseas Private Investment Corporation (OPIC),
* U.S. Securities and Exchange Commission (SEC),
* Department of State,
* Department of the Treasury,
* U.S. Agency for International Development (USAID), and:
* Office of the U.S. Trade Representative (USTR).
We identified specific agency programs and policies related to CSR
using a two-step process. First, we provided a standard Data Collection
Instrument (DCI) with a general description of global CSR to agency
officials and asked them to identify current programs, policies, and
efforts within their agencies that directly or indirectly promote,
facilitate, or monitor global CSR efforts. The description discussed
the general elements that a global CSR program can involve, including
labor, human rights, environmental and corporate governance efforts. In
addition, we also asked agencies about programs that we identified
through interviews or literature review. We then sent a more detailed
DCI to officials responsible for each identified program to obtain
further information, such as the program's objective, start year, legal
basis, targeted groups, and activities. Most of the programs have other
goals and objectives, and some only relate to CSR in particular aspects
of their activities. We collected budget information and staffing
levels, where available, to estimate the level of effort dedicated to
the CSR activities by the agency.
After we received the responses from the agencies, we followed up with
many of the identified federal programs to obtain additional
information, which helped us determine whether we should include the
program in our review. We also obtained additional documentation from a
subset of the programs to verify the information and conducted a
thorough review of all of the responses identifying the legal basis for
the program/activity. We narrowed down the programs to those that met
the following criteria: (1) were ongoing in fiscal year 2003 or
afterwards; (2) may affect U.S. corporations' CSR efforts overseas,
including their supply chains (e.g., government to government efforts);
and (3) touch on key components of CSR, such as labor, environment,
human rights, community development and corporate governance. We also
obtained agency concurrence that the program is related to CSR.
We excluded programs or activities that are primarily aimed at U.S.
corporations' CSR efforts within the United States, although they may
influence a company's CSR efforts overseas, and efforts that are
primarily targeted at the federal government, such as government
procurement policies. Due to the lack of federal legislation on, and a
generally accepted definition of, corporate social responsibility,
there are likely additional programs, policies, and efforts related to
global CSR within the federal government that we did not identify.
To obtain different perspectives regarding the role of the U.S.
government in corporate global CSR efforts, we reviewed CSR literature.
In addition, we conducted and synthesized information from a structured
interview with 32 individuals representing a diverse variety of groups
actively engaged in CSR. We initially identified 25 U.S. companies that
were (1) leaders in CSR, based on companies that appeared on the
Business Ethics Magazines's Top 100 to Corporate Citizens list each
year from 1999 to 2004 and (2) had international operations. Fourteen
of these companies agreed to participate in interviews with us.
However, their views may not represent those of all 25 leaders we
identified, or those of all U.S. companies. We identified
representatives from other groups actively engaged in CSR through a
review of CSR literature and referrals from experts and agency
officials. We selected these groups and organizations to help us obtain
a broad range of knowledgeable and informed views on global CSR and the
federal government's role in global CSR; our selection was not intended
to be representative in any statistical sense. Groups that are not
active in global CSR may have different views and opinions, especially
in terms of the federal government's role. Specifically, we
interviewed:
* Fourteen U.S. multinational corporations that appeared on the
Business Ethics Magazine's Top 100 Corporate Citizens list for each
year from 1999 to 2004--Brady Corporation; Coors Brewing Company;
Cummins, Inc; Deere & Company; Herman Miller, Inc; Hewlett-Packard
Development Company, L.P; International Business Machines Corporation;
Intel Corporation; Merck & Co., Inc; Modine Manufacturing Company;
Motorola, Inc; Procter & Gamble; The Timberland Company; and Whirlpool
Corporation;
* Four business interest groups that have been active in CSR--Business
for Social Responsibility; the Conference Board; the U.S. Chamber of
Commerce Center for Corporate Citizenship; and the U.S. Council for
International Business;
* Four investor groups--Calvert Group, Ltd; Domini Social Investments,
LLC ; Dow Jones Sustainability Index; and the Interfaith Center on
Corporate Responsibility;
* Six nongovernmental organizations--Coalition for Environmentally
Responsible Economies; Fair Labor Association; Human Rights Watch;
Social Accountability International; World Resources Institute; and
Worldwide Responsible Apparel Production; and:
* Four academic institutions--Center for Corporate Citizenship, Boston
College; Center for Responsible Business, the Haas School of Business,
University of California at Berkeley; the Corporate Social
Responsibility Initiative, John F. Kennedy School of Government,
Harvard University; the Frank Hawkins Kenan Institute of Private
Enterprise, University of North Carolina's Kenan-Flagler Business
School.
The structured interview instrument included questions designed to
obtain information from these organizations on their definition of CSR
and similar terms; efforts related to evaluating the effectiveness of
CSR activities; the impact of current U.S. government programs,
policies and practices; and opinions regarding the appropriate U.S.
government actions or role regarding U.S. companies' global CSR
activities. However, in this report, we do not evaluate the concept of
CSR nor the justification or efficacy of any government role with
regard to CSR activities.
We conducted our work from May 2004 through May 2005 in accordance with
generally accepted government auditing standards.
[End of section]
Appendix II: Federal Agency CSR-Related Programs and Activities:
This appendix provides a listing and brief description of the 54
programs and activities we identified at 12 U.S. agencies that relate
to global CSR. Currently, an inventory of U.S. government efforts
related to global corporate social responsibility is unavailable. To
develop this list, we provided a standard DCI to 12 agencies with a
general description of global CSR to obtain information on current
programs, policies, and efforts within their agency that directly or
indirectly promote, facilitate, or monitor global CSR efforts. For
programs or activities that are interagency in nature, we list the
program or activity with the lead agency and indicate other agencies
involved with a footnote. Due to the lack of federal legislation on,
and a generally accepted definition of, corporate social
responsibility, we do not consider this list exhaustive. See appendix I
for a more detailed description of our data-collection process.
Table 3: Responses from Department of Commerce:
CSR-Related program/activity: Training on Human Rights, Rule of Law and
Corporate Stewardship; Sarah.Murphy@mail.doc.gov, Foreign Commercial
Service;
Objective: To train commercial service officers and foreign service
nationals on rule of law, human rights and corporate stewardship;
Start year: 2003;
Legal basis: 15 U.S.C. 4051 et seq.[C];
Groups targeted: Commercial officers, foreign service nationals,
domestic trade specialists;
Activities: Trainings. Since inception, 260 commercial employees have
been trained. The office is planning both a certificate and an award
program to recognize companies and commercial officers, respectively,
for corporate stewardship activities;
Budget information[A]: $500,000;
Staff level[B]: One full- time equivalent (FTE) divided among three
people plus contractor support.
CSR-Related program/activity: The President's Export Council's Report
on Corporate Stewardship; http://www.ita.doc.gov/td/pec/;
Objective: To disseminate information on good citizenship activities of
U.S. corporations;
Start year: 2003[D];
Legal basis: Executive Order 11753;
Groups targeted: U.S. and foreign companies, U.S. missions, foreign
governments;
Activities: Report production and public awareness through the report's
launch. The Council maintains subcommittees to pursue its own interests
and, in 2003, created a subcommittee on corporate stewardship to
produce this report;
Budget information[A]: $18,311 for publication expenses;
Staff level[B]: One staff works full time, and four staff work part
time on all of the Council's activities, which are ongoing.
CSR-Related program/activity: Digital Freedom Initiative[E];
www.dfi.gov;
Objective: To promote economic growth by providing information and
communications technology to businesses in the developing world through
partnership with U.S. business volunteers;
Start year: 2003;
Legal basis: Executive Order 13317;
Groups targeted: U.S. business community, government agencies and
business community in four partner countries;
Activities: Placing business and NGO volunteers in small businesses in
partner countries. For example, in Senegal, an E-market training
program was implemented in partnership with two large U.S. information
technology companies;
Budget information[A]: No specific funding.[F];
Staff level[B]: One person works 50 percent on this program.[F].
CSR-Related program/activity: Good Governance Program;
www.ita.doc.gov/goodgovernance;
Objective: To increase market access and ensure a level playing field
for U.S. companies in emerging markets by training foreign companies on
business ethics, corporate governance and rule of law issues;
Start year: 2000;
Legal basis: 15 U.S.C. 1512;
Groups targeted: Foreign companies and individual entrepreneurs,
business associations, civil society groups, and foreign federal and
regional governments;
Activities: Training, providing tools and resources, capacity building,
awareness building, and outreach. In FY 2003, over 1,000
companies/individuals were trained directly through the program or
indirectly through train the trainer programs.[G];
Budget information[A]: $1,065,585for FY 2002-2003h;
Staff level[B]: Three full time,[I] one part time staff.j.
CSR-Related program/activity: HIV/AIDS Initiative;
shalizeh.nadjmi@mail.doc.gov;
Objective: To further private sector engagement on HIV/AIDS by
fostering public-private partnerships with other key stakeholders
focused on HIV/AIDS;
Start year: 2003;
Legal basis: U.S. Leadership Against HIV/AIDS, Tuberculosis and Malaria
Act of 2003, See P. L. 108-25;
Groups targeted: U.S. companies and trade associations, and chambers of
commerce;
Activities: Information publication and dissemination, liaison between
businesses and other U.S. government organizations, multilateral
organizations, NGOs and academia. Hosted 2004 forum on business
involvement in HIV/AIDS for more than 200 companies and other entities;
Budget information[A]: No specific funding. However, $15,000 from the
$500,000 appropriation listed above for training commercial service
officers was spent on the Forum;
Staff level[B]: Five people work on this initiative ranging from 15
percent to 80 percent of their time[K] [Estimate].
CSR-Related program/activity: Implementation of the Labor Standards
Provision of the Bilateral Textile Agreement with Cambodia;
Ross_Arnold@ita.doc.gov;
Objective: To provide incentives to the Government of Cambodia to
improve working conditions in the Cambodian textile and apparel
industry through effective enforcement of local labor laws and
internationally recognized core labor standards;
Start year: 1999;
Legal basis: U.S.-Cambodia Bilateral Textile Agreement, paragraph 10,
as notified under Article 2.17 of the World Trade Agreement on Textiles
and Clothing;
Groups targeted: Government of Cambodia;
Activities: Two consultations every year between the governments of the
United States and Cambodia to discuss labor standards, specific
benchmarks, and the implementation of the program. Based on those
consultations, the U.S. Government made a determination as to whether
working conditions in the Cambodia textile and apparel sector
substantially comply with such labor law and standards, and apply quota
increases commensurate with progress on labor issues.[L];
Budget information[A]: $7,500; [Estimate];
Staff level[B]: One staff for 2 weeks. Five staff for 1 day apiece;
[Estimate].
Source: GAO based on information provided by agency officials.
[A] Budget information is for fiscal year 2003 unless otherwise noted.
[B] Staff located in the Russia and Independent States Division.
[C] The conference committee for H.J. Res. 2, the Consolidated
Appropriations Resolution, 2003, instructed the department to establish
this program. See p. 684 of H. Rept. 108-10.
[D] This is the year when the Subcommittee on Corporate Stewardship was
created to work on this report. The report was released in September
2004.
[E] In addition to the Department of Commerce, members of the Digital
Freedom Initiative Interagency Working Group include USAID, the
Department of State, the Peace Corps, the Small Business
Administration, and the Federal Communications Commission.
[F] Other agencies, such as USAID, contribute resources to this
initiative, which are not reflected here. For example, there are local
Digital Freedom Initiative coordinators in Senegal and Peru that are
funded through USAID funds.
[G] Since 2003, the Program has expanded to additional countries in
Eastern Europe and Latin America, published manuals on Corporate
Governance and on Business Ethics, and is facilitating institutional
capacity building through partnerships with private sectors, government
and nongovernmental organizations, and international institutions. In
fiscal years 2005 to 2006, the Business Ethics manual will be
translated and published in five other languages.
[H] The 2003 program initiatives were fully funded through Freedom
Support Act Funds through the Department of State.
[I] Staff located in the Russia and Independent States Division.
[J] Staff located in the Latin America Division. In FY 2004, the
program had three full time and two part time employees.
[K] The one staff person who worked 80 percent of her time on the
HIV/AIDS Initiative in fiscal year 2003 noted that her time dedicated
to the initiative decreased in fiscal years 2004 and 2005 to 33 percent
of her time.
[L] The International Labor Organization and the Departments of State
and Labor provided input into this process.
[End of table]
Table 4: Responses from Department of Energy:
CSR-Related program/activity: Office of Energy Efficiency and Renewable
Energy - Select Activities within the Office of Technology Development;
michael.mills@ee.doe.gov;
Objective: To strengthen America's energy security, environmental
quality, and economic vitality in public- private partnerships that
enhance energy efficiency;
Start year: Not available;
Legal basis: Various acts.[B];
Groups targeted: Private sector, academia, states, local governments,
trade organizations, research organizations, other federal agencies and
the U.S. Congress, foreign governments and multilateral agencies.[C];
Activities: Select programs work with the U.S. private sector on global
energy issues, such as the Clean Cities Program and Freedom Cooperative
Auto Research (CAR).[D];
Budget information: No discrete budget; Staff level[A]: Not
available.[E].
CSR-Related program/activity: Carbon Sequestration Leadership Forum;
cslfsecretariat@hq.doe.gov;
Objective: To develop and make available internationally improved cost-
effective technologies for the separation and capture of carbon
dioxide, a greenhouse gas, for its transport and long-term safe
storage;
Start year: 2003;
Legal basis: Presidential initiative;
Groups targeted: Foreign governments, intergovernmental organizations,
U.S. and foreign-owned companies that produce and/or utilize energy,
environmental organizations, and international experts on energy and
environment;
Activities: Under development. Ten projects that were proposed by
Carbon Sequestration Leadership Forum; members have been endorsed.
Stakeholder registry is forthcoming. U.S. companies have participated
in discussions as observers, but a formal role for companies is yet to
be developed;
Budget information: Not available; Staff level[A]: Six people work part
time on this effort; [Estimate].
CSR-Related program/activity: Secretariat for the International
Partnership for Hydrogen Economy; michael.mills@ee.doe.gov;
Objective: To organize and coordinate multinational research and
projects among 16 member nations to advance the transition to a global
hydrogen economy.[F];
Start year: 2003;
Legal basis: Presidential initiative;
Groups targeted: Governments, international organizations, civil
society, companies;
Activities: Under development. However, seven companies sponsored the
inaugural meeting of the member nations, and the Department of Energy
engages in ongoing discussion with U.S. companies to obtain their
input;
Budget information: No discrete budget; Staff level[A]: Two to three
FTE plus two full-time contractors [Estimate].
Source: GAO based on information provided by agency officials.
[A] Staff levels are for fiscal year 2003 unless otherwise noted.
[B] See Department of Energy Organization Act of 1977 (See P.L. 95-91),
The Energy Policy Act of 1992 (P.L. 102-486), Energy Security Act of
1980 (P.L. 96-294), Hydrogen Research, Development and Demonstration
Act of 1990 (P.L. 101-566) and the Hydrogen Future Act of 1996 (P.L.
104-271).
[C] The office's efforts with foreign governments and multilateral
agencies are indirect via relationships established and maintained by
the U.S. Department of State and USAID.
[D] The Clean Cities program promotes public-private partnerships to
increase the use of alternative fuel vehicles. Freedom Cooperative Auto
Research (CAR) partners with automobile companies to research cleaner,
more efficient transportation systems.
[E] According to an agency official, it would be difficult for anyone
to identify how much time they spend on CSR activities. The office
takes on a broad portfolio of activities, and with the problem of
defining what constitutes CSR, it is not possible to identify budget
and staffing for the office's CSR activities.
[F] Hydrogen is considered an alternative, cleaner energy source.
[End of table]
Table 5: Responses from U.S. Environmental Protection Agency:
CSR-Related program/activity: Climate Leaders Program;
www.epa.gov/climateleaders/;
Objective: To enlist major U.S. companies to voluntarily set and track
their success toward meeting an aggressive greenhouse gas reduction
target;
Start year: 2002;
Legal basis: Clean Air Act, section 103;
Groups targeted: Large U.S. companies;
Activities: Training and technical assistance to help partners complete
greenhouse gas inventories. By the end of fiscal year 2003, close to 50
partners had signed up. EPA plans to provide recognition in later years
for partners who meet or exceed their targets;
Budget information[A]: 15 percent of the total budget of $900,000 was
used for international efforts; [Estimate];
Staff level[B]: 15 percent of three full time staff members' time was
spent on international efforts; [Estimate].
CSR-Related program/activity: Climate Protection Awards;
http://www.epa.gov/cppd/awards/climproawards.htm;
Objective: To recognize and provide incentive to businesses,
organizations and individuals who voluntarily make significant
achievements in climate protection;
Start year: 1998;
Legal basis: Section 13103(b)(13) of the Pollution Prevention Act of
1990, Pub. L. 101-508;
Groups targeted: U.S. and foreign companies, foreign governments,
institutions, nonprofit organizations, individuals;
Activities: To date, over 100 individuals, companies, and organizations
from all over the globe have received awards. Award winners are
recognized at a special dinner, along with the Stratospheric Ozone
Protection Award winners;
Budget information[A]: $25,000; [Estimate];
Staff level[B]: One staff person works 2 months per year on this
program; [Estimate].
CSR-Related program/activity: Stratospheric Ozone Protection Awards;
http://www.epa.gov/docs/ozone/awards/;
Objective: To recognize and provide incentive to businesses,
organizations, and individuals who voluntarily make significant
achievements in protecting the ozone layer;
Start year: 1990;
Legal basis: Section 13103(b)(13) of the Pollution Prevention Act of
1990;
Groups targeted: U.S. and foreign companies, foreign governments,
institutions, nonprofit organizations, and individuals;
Activities: To date, 477 individuals, companies, organizations, and
teams from over 40 countries have earned the award;
Budget information[A]: $25,000; [Estimate];
Staff level[B]: One staff person spends about 150-200 hours per year on
this program, plus some additional support; [Estimate].
CSR-Related program/activity: Energy Star Program - International
Efforts; schmeltz.rachel@epa.gov;
Objective: To promote international consistency in specifications for
energy efficient products in voluntary programs.[C];
Start year: 1995[D];
Legal basis: Various acts.[E];
Groups targeted: U.S. manufacturing companies, retailers, energy
efficiency program sponsors/utilities, foreign governments;
Activities: The program has signed international agreements with the
European Commission, Japan, Canada, Australia, New Zealand and Taiwan
and is starting to harmonize product specifications with China. The
program is working with international partners on a common database of
Energy Star qualified products;
Budget information[A]: $30,000 was spent on international efforts[F]
[Estimate];
Staff level[B]: One staff member spends 25 percent of her time on the
international efforts [Estimate].
CSR-Related program/activity: Bilateral and Regional Trainings on
Environmental Compliance, Inspections and Enforcement;
jones.davis@epa.gov;
Objective: To increase the capacity of governments to ensure compliance
with environmental standards;
Start year: 1990;
Legal basis: Various acts.[G];
Groups targeted: Government officials;
Activities: In fiscal year 2003, EPA trained officials from several
countries including Panama, Nicaragua, Honduras, Costa Rica, El
Salvador, Belize, Guatemala, Mexico, India and Brazil;
Budget information[A]: Not available;
Staff level[B]: One full-time[H] staff plus additional support.
CSR-Related program/activity: Co chair of the International Network for
Environmental Compliance and Enforcement (INECE); www.inece.org;
Objective: INECE is a network of government and non-government
enforcement and compliance practitioners from over 100 countries. It
aims to increase the capacity of governments to monitor and detect
violations of domestic environmental laws by corporations;
Start year: 1989;
Legal basis: 1985 Memorandum of Understanding between EPA and Dutch
Ministry of Housing, Spatial Planning and the Environment led to
creation of INECE.[I];
Groups targeted: Governmental environmental enforcement authorities,
including prosecutors, investigators, environmental ministries, and
nongovernmental organizations working to increase environmental
compliance;
Activities: INECE connects developed and developing governments'
environmental compliance and enforcement authorities. Specifically,
INECE provides training, holds conferences, and issues publications;
Budget information[A]: EPA and the Dutch government each provide about
half of the expenses totaling $200,000-250,000 a year[J] [Estimate];
Staff level[B]: One FTE spread among several people working on INECE.
CSR-Related program/activity: China-U.S. Cooperation in Industrial
Pollution Prevention and Energy Efficiency Cooperative Agreement;
giannini-spohn.suzanne@epa.gov;
Objective: To assist China to develop voluntary government-industry
partnership programs in industrial pollution prevention and energy
efficiency;
Start year: 2001;
Legal basis: Clean Air Act, Section 103 and National Environmental
Policy Act, Sec. 102(2)(f);
Groups targeted: Companies in China, including U.S. companies, and the
Chinese government;
Activities: Training, awards,[K] and information provision;
Budget information[A]: $300,000 total approved costs for the
project.[L];
Staff level[B]: One staff person works 25-50 percent of her time
[Estimate].
CSR-Related program/activity: Chair of the American National Standards
Institute (ANSI)'s Ad Hoc Group on CSR; www.ansi.org;
Objective: To track the strategic and policy implications of CSR work
in the International Organization for Standardization (ISO);
Start year: 2004;
Legal basis: The National Technology Transfer and Advancement Act
(NTTAA) of 1995 and OMB Circular A-119;
Groups targeted: ANSI members, including consumer groups, industry,
government, and NGOs;
Activities: As a member of the Interagency Committee on Standards
Policy composed of the Standards Executives from all federal agencies,
the EPA member coordinates input from federal agencies regarding the
development and utility of an international standard in CSR;
Budget information[A]: No discrete budget;
Staff level[B]: One staff person works part time on this effort.
CSR-Related program/activity: Party to Commission for Environmental
Cooperation, Financially-Relevant Environmental Information Project;
correa.sylvia@epa.gov;
Objective: To improve voluntary corporate disclosure of environmental
information that is financially relevant;
Start year: 2002: 1998: 1990: 1995[D]: 1990: 1989: 2001: 2004: 2003;
Legal basis: A side agreement to the North American Agreement on
Environmental Cooperation (NAFTA) established the Commission for
Environmental Cooperation, See P. L. 103-182, title V;
Groups targeted: Corporations in the U.S., Canada, and Mexico, as well
as institutional and other investors who are users of financially
relevant information;
Activities: The commission held a workshop of experts in early 2003 and
published background papers for the workshop, as well as a report;
Budget information[A]: No specific budget;
Staff level[B]: Two staff work part time on this effort.
CSR-Related program/activity: U.S.-Chile Free Trade Agreement (FTA) -
CSR Project; Hill-Macon.Cam @epa.gov;
Objective: The objective is to facilitate exchange of information and
expertise on best practices that have been used by companies to promote
sustainable development;
Start year: 2002: 1998: 1990: 1995[D]: 1990: 1989: 2001: 2004: The U.S.-
Chile FTA went into effect in January 2004. This project is likely to
start in spring/summer 2005;
Legal basis: Annex 19.3, Section 1(d) of the U.S.-Chile Free Trade
Agreement;
Groups targeted: Companies, in particular business councils for
sustainable development, Chilean National Environmental Council
(CONAMA);
Activities: The project will try to build and promote networking and
exchange of information between business councils. EPA, USTR, the
Department of State and CONAMA held a workshop on corporate
responsibility in Chile in 2004 as part of the FTA;
Budget information[A]: $25,000 through FY 2005;
Staff level[B]: Three staff work part time on this effort.
CSR-Related program/activity: Partnership for Clean Fuels and Vehicles;
metcalfe.jane@epa.gov;
Objective: To address vehicular air pollution worldwide by eliminating
lead in gasoline and phasing down sulfur in diesel and gasoline, and
adopting cleaner vehicle technologies;
Start year: 2002: 1998: 1990: 1995[D]: 1990: 1989: 2001: 2004: 2002;
Legal basis: Clean Air Act, Section 103; National Environmental Policy
Act, Section 102;
Groups targeted: Governments, private sector, NGOs, international
organizations;
Activities: Clearinghouse of information, publications, technical
assistance to African countries to phase out lead in Africa, and
related projects in other countries. U.S. companies participate on the
Advisory Board, which steers the partnership;
Budget information[A]: $700,000;
Staff level[B]: Two FTEs.
Source: GAO based on information provided by agency officials.
[A] Budget information is for fiscal year 2003 unless otherwise noted.
[B] Staff levels are for fiscal year 2003 unless otherwise noted.
[C] The objective of the Energy Star product labeling program is to
reduce greenhouse gas emissions in the United States by encouraging
consumers and businesses to purchase and use more efficient products.
[D] The Energy Star program was introduced in 1992. The first agreement
with another country to recognize the Energy Star label internationally
was in 1995 with Japan.
[E] Statutory Authorities for EPA's Climate Programs: Clean Air Act, 42
U.S.C. 7401 ct sew. - section 103(a), (b), (g); National Environmental
Policy Act, 42 U.S.C. 4321 ct seq. - section 102(2)(F); · Global
Climate Protection Act of 1987, 15 U.S.C. 2901 - section 1103.
[F] The total budget for the Energy Star program was approximately
$50.3 million in FY 2003.
[G] Clean Air Act § 103; Clean Water Act § 104; Solid Waste Disposal
Act § 8001; Federal Insecticide, Fungicide, and Rodenticide Act § 20;
Toxic Substances Control Act § 10; National Environmental Policy Act §
102(2)(f).
[H] This staff person works full time on these efforts as well as
efforts related to the International Network for Environmental
Compliance and Enforcement (INECE), although more of the time is spent
on this effort.
[I] See also Clean Air Act § 103; Clean Water Act § 104; Solid Waste
Disposal Act § 8001; Federal Insecticide, Fungicide, and Rodenticide
Act § 20; Toxic Substances Control Act § 10; National Environmental
Policy Act § 102(2)(f).
[J] This figure does not include resources for staffing or additional
funding that came from the State Department.
[K] The awards are incentives offered by China's State Environmental
Protection Administration to companies operating in China (including
U.S. companies) named "China Environmentally Friendly Enterprises." The
local environmental protection bureau reduces the frequency of routine
inspections and gives a higher priority to loans for capital
environmental improvements to these companies.
[L] A total of $200,00 had been funded as of March 2005.
[End of table]
Table 6: Responses from Export-Import Bank of the United States:
CSR-Related program/activity: Environmental Procedures and Guidelines;
http://www.exim.gov/products/policies/environment/environment.html;
Objective: To take; into account the potential beneficial and adverse
environmental effects of; goods and services for which support is
requested under its direct lending; and guarantee programs;
Start year: 1995[C];
Legal basis: Export-Import Bank Act of 1945, as amended, codified at 12
U.S.C. 635;
Groups targeted: Foreign buyers and U.S. exporters participating in
foreign projects;
Activities: During FY 2003, Ex-Im Bank screened approximately 70
applications for their potential environmental effects. The Bank's
Engineering and Environment Division undertook formal environmental
evaluations of the projects related to 21 separate applications for
financing;
Budget information[A]: $531,000 [Estimate];
Staff level[B]: Three FTEs [Estimate].
CSR-Related program/activity: Environmental Exports Program;
http://www.exim.gov; products/policies/environment/environment.html;
Objective: To; encourage the use of its programs to support the export
of goods and; services that have beneficial effects on the environment
or mitigate; potential adverse environmental effects;
Start year: 1993;
Legal basis: Export-Import Bank Act of 1945, as amended, codified at 12
U.S.C. 635;
Groups targeted: U.S. suppliers of environmentally beneficial products,
and participants[D] undertaking projects that are beneficial to the
environment;
Activities: The Environmental Exports Program was instrumental in
enabling Ex-Im Bank to support over $173 million of environmentally
beneficial goods and services in FY 2003, including $13 million in
products and technologies related to renewable energy;
Budget information[A]: $148,000 [Estimate];
Staff level[B]: 0.80 of an FTE [Estimate].
Source: GAO based on information provided by agency officials.
[A] Budget information is for fiscal year 2003 unless otherwise noted.
[B] Staff levels are for fiscal year 2003 unless otherwise noted.
[C] Interim guidelines were established in 1993.
[D] Participants refer to both U.S. suppliers and/or foreign buyers.
[End of table]
Table 7: Responses from Inter-American Foundation:
CSR-Related program/activity: U.S. Government CSR Web Portal[B];
ajones@iaf.gov;
Objective: To provide public access to U.S. government CSR programs,
case studies, events, and contacts;
Start year: 2003;
Legal basis: Authorizing legislation, See 22 U.S.C. 290f;
Groups targeted: U.S. companies and other organizations operating in
the U.S. and abroad;
Activities: A web portal will be launched in 2005 housing each agency's
activities related to CSR or corporate stewardship;
Budget: Information: $37,000 was obligated in FY 2003, but activities
were carried out in FY 2004; Staff level[A]: 20-25 percent of one staff
person's time [Estimate].[C].
CSR-Related program/activity: Program Office - Corporate Outreach;
ajones@iaf.gov;
Objective: To meet IAF's mandate of providing grants to support
grassroots initiatives by cofunding projects with corporations
interested in developing or enhancing their CSR efforts in the region;
Start year: 1991;
Legal basis: Authorizing legislation, See 22 U.S.C. 290f;
Groups targeted: U.S., Latin American and Caribbean corporations and
business associations, local governments and NGOs;
Activities: Supports innovative projects in Latin America and the
Caribbean in partnership with companies that want to invest in
grassroots development; Facilitates tax-deductible contributions by
U.S. corporations to support grassroots development programs in Latin
America and the Caribbean; Provides technical assistance to corporate
partners to create more sustainable, participatory CSR programs;
Budget: Information: $1,039,500.[D]; Staff level[A]: 0.75 of an FTE
divided among several staff persons; [Estimate].
CSR-Related program/activity: RedEAmérica Initiative[E];
wprice@iaf.gov;
Objective: To encourage companies and corporate foundations to take
leadership in grassroots development in the Americas;
Start year: 2002;
Legal basis: Authorizing legislation, See 22 U.S.C. 290f;
Groups targeted: U.S. and foreign companies and corporate foundations;
Activities: Learning exchanges among members, strategy formulation,
development of trainings in all countries, mobilizing corporate and
other resources; At the end of FY 2004, 52 companies were in the
network, several of which represented multiple companies;
Budget: Information: $1,848,560 for FY 2004; Staff level[A]: Two full
time staff starting in FY 2004.
CSR-Related program/activity: Cosponsor for CSR Americas Conference[F];
ajones@iaf.gov;
Objective: To bring together government, civil society, business, the
academic world; and other institutions to develop effective and
sustainable; CSR principles for the Western hemisphere;
Start year: 2002;
Legal basis: Authorizing legislation, See 22 U.S.C. 290f;
Groups targeted: Private, public and nongovernmental sectors;
Activities: Provides funding, participated on steering and operating
committee;
Budget: Information: $35,800 for FY 2004.[G]; Staff level[A]: 10-15
percent of one staff person's time [Estimate].[H].
Source: GAO based on information provided by agency officials.
[A] Staff levels are for fiscal year 2003 unless otherwise noted.
[B] The Inter-American Foundation is leading this interagency effort.
Additional participating agencies include the Departments of Commerce
and State, USAID, and EPA.
[C] This estimate includes only IAF staff time.
[D] This figure represents grants from IAF for which corporations are
cofunding part of the activities with cash or in-kind contributions.
These figures are not exhaustive as not all foundation representatives
had submitted their figures.
[E] The full name of the RedEAmérica Initiative is the Inter-American
Network of Corporate Foundations and Companies for Grassroots
Development.
[F] The Inter-American Development Bank is the lead organizer for the
conference. The U.S. Department of State has also played a role
coordinating U.S. government involvement in the conference.
[G] This figure does not include resources dedicated to the conference
from the Department of State.
[H] This estimate does not include staff time dedicated to the
conference from the Department of State.
[End of table]
Table 8: Responses from Department of Labor:
CSR-Related program/activity: Bureau of International Labor Affairs
(ILAB) - Protecting the Basic Rights of Workers program;
www.dol.gov/ilab;
Objective: To improve the capacity of developing country governments to
achieve compliance with national labor laws and internationally -
recognized workers rights;
Start year: 2000;
Legal basis: Annual appropriations legislation. Current authority is P.
L. 108-447, Div. F, Title 1 (Department of Labor Appropriations Act,
2005);
Groups targeted: Foreign Governments, workers and employers;
Activities: Training, equipment provision,[C]; drafting of training
materials and promotional activities. The program works in a range of
sectors and countries in Africa, the Americas, Asia, and in Ukraine.
One project in Cambodia is establishing an independent monitoring
system to generate reliable information on the implementation of core
labor standards in the garment sector;
Budget information[A]: $20 million[D];
Staff level[B]: Nine staff work part time on this program.
CSR-Related program/activity: ILAB - International Child Labor Program
- activities working with industry associations[E]; www.dol.gov/ilab;
Objective: To support efforts to eradicate exploitive child labor
worldwide;
Start year: 1993;
Legal basis: Annual appropriations legislation. Current authority is P.
L. 108-447, Div. F, Title 1 (Department of Labor Appropriations Act,
2005);
Groups targeted: Children, parents, community leaders, government
officials, and industry associations;
Activities: The program has funded several projects for various lengths
of time in Bangladesh, Pakistan, Central America, and West Africa that
involve industry associations to combat child labor. For example, the
program provided a $6 million grant to the International Labor
Organization to prevent child labor in the coffee industry in Central
America and the Dominican Republic, which included the creation of a
child labor monitoring system, among other activities;
Budget information[A]: About $35 million between fiscal years 1999-2004
for all projects working with industry associations;
Staff level[B]: Not available.
Source: GAO based on information provided by agency officials.
[A] Budget information is for fiscal year 2003 unless otherwise noted.
[B] Staff levels are for fiscal year 2003 unless otherwise noted.
[C] Examples of equipment include computers or vehicles to access
workplaces.
[D] The budget for this program decreased significantly in fiscal years
2004 and 2005 to $2.5 million and no funding, respectively.
[E] The International Child Labor Program generally provides technical
assistance and funds international projects designed to eliminate the
most hazardous and exploitive forms of child labor; researches and
reports information to inform U.S. foreign policy, trade policy, and
development projects; and raises awareness of the U.S. public to
increase their understanding of the issues relating to international
child labor and recent efforts to combat the problem. For example, the
program works with foreign governments to improve their capacity to
handle the issue of child labor and has provided funds to the
International Labor Organization to address trafficking of children for
labor exploitation. However, the program informed us that they consider
their work with industry associations to be most relevant to global
corporate social responsibility.
[End of table]
Table 9: Responses from Overseas Private Investment Corporation:
CSR-Related program/activity: Corporate social responsibility
requirements; www.opic.gov;
Objective: To develop and implement policies and procedures to comply
with OPIC statutory mandates and management policies with respect to
host country development impact, environmental protection,
international labor rights, human rights and related risk management
responsibilities;
Start year: 1971[A];
Legal basis: Various acts[B];
Groups targeted: Companies receiving OPIC support in the form of direct
loans, loan guaranties, political risk insurance and "subprojects"
obtaining funds from OPIC-supported financial intermediaries;
Activities: Evaluates each project's expected impact on development,
the environment, and requires projects to meet all applicable host
country labor laws or international conventions on labor rights;
Budget information: Not available; Staff level: Not available.
CSR-Related program/activity: Corporate governance requirements;
www.opic.gov;
Objective: To ensure that OPIC users' corporate governance policies and
practices follow and implement OPIC policies and procedures in
compliance with OPIC's statutory responsibilities and risk management
requirements;
Start year: 1971[C];
Legal basis: Overseas Private Investment Corporation Amendments Act of
1977, See P. L. 95-268, Sec. 237(1);
Groups targeted: U.S. investors that receive OPIC support and the
companies in which they invest;
Activities: All major sponsors of an OPIC financed project must answer
questions relating to the Foreign Corrupt Practices Act and OPIC
ensures that support does not go to persons and practices restricted by
Treasury's Office of Foreign Assets Control. OPIC monitors loan
projects on an ongoing basis;
Budget information: Not available; Staff level: Not available.
Source: GAO based on information provided by agency officials.
[A] Certain policies and procedures have been in effect since OPIC
began operations in 1971 with periodic updates in response to evolving
statutory requirements, U.S. executive branch requirements and
international best practices:
[B] Foreign Assistance Act of 1969, OPIC Amendments Act of 1985, Export
Enhancement Act of 1999, Jobs through Exports Act of 1992, and annual
appropriations since 1992.
[C] Certain policies and procedures have been in effect since OPIC
began operations in 1971 with periodic updates in response to
subsequent statutory requirements.
[End of table]
Table 10: Responses from U.S. Securities and Exchange Commission:
CSR-Related program/activity: Implementation of Rule 14a-8 on
Shareholder Proposals[A]; lynnd@sec.gov;
Objective: To ensure that companies do not exclude shareholder
proposals for vote at annual company meetings, including those related
to global CSR, unless they meet the legal criteria for exclusion
outlined in Rule 14a-8;
Start year: Late 1960s; [Estimate];
Legal basis: Rule 14a-8 of the Securities Exchange Act of 1934, See 17
C.F.R. 240.14a-8;
Groups targeted: SEC reporting companies;
Activities: The Shareholder Proposal Taskforce corresponds with
companies regarding requests to exclude shareholder proposals that do
not meet the criteria according to Rule 14a-8;
Budget information: Not available; Staff level: Not available.
CSR-Related program/activity: Full Disclosure Program - Office of
Global Security Risk; blyec@sec.gov;
Objective: To ensure that companies disclose all material information
regarding their operations in, or contacts with, countries identified
as supporting terrorism or associated with the production or
proliferation of weapons of mass destruction or human rights abuses;
Start year: 2004[B];
Legal basis: Securities Act of 1933 and the Securities Exchange Act of
1934[C];
Groups targeted: Foreign companies and U.S. companies with foreign
subsidiaries that have contacts with countries of concern;
Activities: Review company documents to ensure that companies are aware
of the disclosure standard applicable to their operations or contacts;
Budget information: Not available; Staff level: Three full time staff
in FY 2004.
CSR-Related program/activity: Full Disclosure Program;
ParrattS@sec.gov;
Objective: To ensure that companies whose securities trade in the U.S.
capital markets or that sell securities through public offerings
provide appropriate narrative and financial disclosure regarding their
operations, their financial condition, and the terms of their
securities offerings;
Start year: 1933;
Legal basis: Securities Act of 1933 and the Securities Exchange Act of
1934;
Groups targeted: SEC reporting companies;
Activities: Review company disclosure and provide comments to
companies;
Budget information: Not available; Staff level: Not available.
Source: GAO based on information provided by agency officials.
[A] Rule 14a-8 provides shareholders owning more than $2,000 of company
stock for more than 1 year with the opportunity to place a proposal in
the company's proxy materials for presentation to a vote at an annual
or special meeting of shareholders. The rule generally requires the
company to include the proposal unless the shareholder has not complied
with the rule's procedural requirements or the proposal falls within 1
of the 13 substantive bases for exclusion contained in the rule. For
some or most of the proposals, the company accepts the proposal or
negotiates with the shareholder and the issue never reaches the SEC.
However, if a company intends to exclude a proposal from its proxy
materials, the company must submit its basis for excluding the proposal
to the SEC. The Shareholder Proposal Taskforce reviews these requests
for exclusion. Accordingly, the task force considers proposals that
address a range of issues, including global CSR issues.
[B] The Office of Global Security Risk was established in 2004.
However, the Division of Corporate Finance began focusing on this type
of disclosure in 2001.
[C] See conference report at H. Rept. 108-221. The conference committee
considering the Commerce Justice State Appropriations Act, 2004
(enacted in Div. B of P. L. 108-299) requested the establishment of
this initiative.
[End of table]
Table 11: Responses from the Department of State:
CSR-Related program/activity: Bureau for Democracy, Human Rights and
Labor (DRL) - Partnership to Eliminate Sweatshops Program; camponovocn@
state.gov;
Objective: To address unacceptable working conditions in manufacturing
facilities overseas that produce goods for the U.S. market;
Start year: 2000;
Legal basis: State Department Basic Authorities Act of 1956, as
amended, See 22 U.S.C. 2651a(c)(2) and 22 U.S.C. 2151n(d)(3);
Groups targeted: NGOs, governments, U.S. and foreign companies;
Activities: The Partnership has provided several million dollars to
support public and private sector initiatives to establish codes of
conduct, encourage effective workplace monitoring and auditing systems,
and conduct research, training and education initiatives. The program
has funded projects in a number of countries, including China and other
Asian countries, Central America, the Middle East and Africa;
Budget information[A]: $1,994,554[C];
Staff level[B]: One staff person works 60 percent of his time and one
staff person works 25 percent of her time on this effort [Estimate].
CSR-Related program/activity: DRL - Voluntary Principles on Security
and Human Rights; camponovocn@ state.gov;
Objective: To provide guidance to extractives companies on how to
ensure respect for human rights in the creation and implementation of
security procedures;
Start year: 1999;
Legal basis: State Department Basic Authorities Act of 1956, as
amended, See 22 U.S.C. 2651a(c)(2);
Groups targeted: NGOs, U.S. and U.K. oil and mining companies, and
corporate responsibility organizations;
Activities: The bureau convenes companies, NGOs, and local governments
to implement the principles, and is working to include additional
governments. Nearly every major oil and mining company is a participant
in the Voluntary Principles process;
Budget information[A]: $10,000 in FY 2004;
Staff level[B]: One staff person works15-20 percent of his time on this
effort [Estimate].
CSR-Related program/activity: DRL - Bilateral efforts; camponovocn@
state.gov;
Objective: To utilize private investment to strengthen human rights and
the rule of law in select countries;
Start year: 2001;
Legal basis: State Department Basic Authorities Act of 1956, as
amended, See 22 U.S.C. 2651a(c)(2);
Groups targeted: U.S. companies, NGOs, foreign governments;
Activities: Ongoing or planned projects in Equatorial Guinea, Oman and
China;
Budget information[A]: Equatorial Guinea - $225,000; Oman - N/A;
China - $400,000in FY 2004;
Staff level[B]: One staff person works 20 percent of his time on this
effort [Estimate].
CSR-Related program/activity: DRL - Work Within Multilateral
Institutions; camponovocn@ state.gov;
Objective: To promote and protect U.S. government interests in the area
of CSR and human rights within multilateral institutions;
Start year: Not available;
Legal basis: State Department Basic Authorities Act of 1956, as
amended, See 22 U.S.C. 2651a(c)(2);
Groups targeted: Multilateral organizations and their member states;
Activities: Prepares guidance for U.S. delegations and responds to
requests for information from United Nations organizations when issues
arise related to corporate responsibility. DRL also represents the
State Department and the U.S. Government at a variety of conferences
and meetings related to corporate responsibility, where human rights
issues are directly relevant;
Budget information[A]: No specific budget;
Staff level[B]: One staff person works 5 percent of his time on this
effort [Estimate].
CSR-Related program/activity: Bureau of Economics and Business Affairs
(EB) - Secretary of State's Award for Corporate Excellence; smith-
nissleyn@ state.gov;
Objective: To promote best business practices, good corporate
governance, and democratic values overseas;
Start year: 1999;
Legal basis: Mission of the Bureau of Economics and Business Affairs;
Groups targeted: U.S. small and medium-sized companies and
multinational corporations;
Activities: Award nominations, public ceremony. In FY 2004, the
Department received a record number of 50 nominations from U.S. Chiefs
of Mission worldwide;
Budget information[A]: $6,000[D];
Staff level[B]: One staff person works 30-40 percent of her time on
this effort[E] Estimate].
CSR-Related program/activity: EB - US-Mexico Good Partner Award; smith-
nissleyn @state.gov;
Objective: To recognize the role that U.S. and Mexican enterprises,
business associations, and academic institutions play in advancing the
goals of the Partnership for Prosperity[F] to boost the social and
economic well-being of Mexican citizens;
Start year: 2003;
Legal basis: Presidential initiative;
Groups targeted: U.S. and Mexican businesses, associations and academic
institutions;
Activities: Award nominations, public ceremony. Seventy nominations
were received in FY 2003. More than 900 people attended the Award
Ceremony and Gala, which received extensive media coverage, especially
in Mexico;
Budget information[A]: Not available.[G];
Staff level[B]: One staff person works 100 percent on the award program
from April - June and 30 percent for the remainder of the year;
[Estimate].
CSR-Related program/activity: EB - OECD National Contact Point[H];
usncp@state.gov;
Objective: To raise awareness among U.S. companies of the OECD
Guidelines for Multinational Enterprises[I] and to facilitate
resolution when parties raise issues concerning U.S. companies'
treatment of the guidelines;
Start year: 1976;
Legal basis: Requirement as signatory to the OECD Declaration and
Decisions on International Investment and Multilateral Enterprises;
Groups targeted: Companies, labor unions and NGOs;
Activities: Promotes understanding of the OECD Guidelines and helps
companies, labor unions and NGOs in their efforts to resolve issues
that may arise with respect to the Guidelines; From 2000-2004, 16
specific instances were brought to the attention of the National
Contact Point;
Budget information[A]: No discrete budget;
Staff level[B]: One staff person spends 33 percent of his time on this
effort and one office director spends 10-15 percent of his time on this
effort [Estimate].
CSR-Related program/activity: EB-U.S. Lead to OECD Working Group on
Bribery[J]; brownpa@state.gov;
Objective: To combat transnational bribery of foreign public officials
and monitor enforcement of the OECD Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions
(Antibribery Convention);
Start year: 1999;
Legal basis: See Pub. L. 100-318, The Omnibus Trade and Competitiveness
Act of 1988, asking the Executive Branch, led by State, to negotiate a
convention on bribery at the OECD. See also Senate Resolution of Advice
and Consent to the OECD Antibribery Convention, of July 31, 1998;
Groups targeted: Foreign governments, companies;
Activities: Leads U.S. delegation[K] to the OECD Working Group on
Bribery to monitor implementation and enforcement of the OECD
Antibribery Convention, and to assess areas where the Convention could
be amended to decrease bribery and other corrupt activity. Meet with
the private sector and civil society groups regarding implementation of
the OECD Antibribery Convention;
Budget information[A]: No separate funding;
Staff level[B]: One deputy office director spends 50 percent of his
time on this effort [Estimate].
CSR-Related program/activity: EB-U.S. Lead to G-8 Anticorruption and
Transparency Pilots; brownpa@state. gov;
Objective: To reduce corruption and enhance transparency to ensure that
development assistance resources and budget revenues achieve their
intended purposes;
Start year: 2003;
Legal basis: 22 U.S.C. 2656;
Groups targeted: Georgia, Nicaragua, Nigeria, Peru, other G-8
governments;
Activities: Provide assistance through the Bureau of International
Narcotics and Law Enforcement Affairs to develop a series of projects
with four countries that signed compacts with G-8 countries in 2004
committing to reduce corruption and enhance transparency in their
budgets, government procurements and concession-letting procedures.[L];
Budget information[A]: $150,000 (cost of contractor who serves as
project coordinator);
Staff level[B]: 1.25 FTEs.
CSR-Related program/activity: EB - Coordinate U.S. input to the United
Kingdom's Extractive Industries Transparency Initiative (EITI);
brownpa@state. gov;
Objective: To increase transparency over payments and revenues in the
extractives sector in countries heavily dependent on these resources;
Start year: 2002;
Legal basis: Presidential initiative;
Groups targeted: Governments, companies, industry associations,
international organizations, civil society, investors;
Activities: Liaise with USAID, Treasury, the private sector and civil
society, coordinate U.S. policy toward the EITI, a United Kingdom-led
initiative;
Budget information[A]: No separate funding;
Staff level[B]: 0.25 of an FTE.
CSR-Related program/activity: Bureau of Oceans and International
Environmental and Scientific Affairs (OES) - CSR-Related Activities;
lbrutten@state. gov;
Objective: To promote corporate responsibility through its efforts on
sustainable development, particularly through voluntary public-private
partnerships, and on making trade liberalization and natural resource
protection mutually supportive of our Free Trade Agreement (FTA)
objectives;
Start year: 2001;
Legal basis: Foreign Assistance Act of 1961, as amended;
Groups targeted: U.S. companies and business groups, civil society,
foreign governments, and international organizations;
Activities: Meets with representatives from the private sector and
civil society on a regular but ad hoc basis, includes representatives
from the private sector and civil society on official U.S. delegations
relating to sustainable development, provides information about and
encourages sustainable development partnership efforts. In addition,
OES leads negotiations for environmental side agreements to trade
agreements;
Budget information[A]: No specific budget;
Staff level[B]: Not available.
CSR-Related program/activity: Office of Private Assistance, Iraq;
GramagliaTR@state.gov;
Objective: To coordinate U.S. private donations and private
partnerships intended for the Iraqi people, including financial and in-
kind donations, and mentoring;
Start year: 2004;
Legal basis: Coordinating function operating through the bureau;
Groups targeted: U.S. commercial, academic or cultural contacts and
civic groups;
Activities: Manages a Web site for donations, coordinates referrals
from Congress, and with other agencies, presents to gatherings of
individuals or organizations with an interest in supporting
reconstruction and humanitarian needs in Iraq;
Budget information[A]: No specific budget;
Staff level[B]: One full-time person.
CSR-Related program/activity: Middle East Partnership Initiative -
Business Internship Program; FranceskiS@state; gov;
Objective: To provide women from the Middle East with skills to promote
successful businesses in the region while promoting mutual
understanding and ongoing relationships between people in the United
States and the Middle East;
Start year: 2003;
Legal basis: Emergency Wartime Supplemental Appropriations Act, 2003
(See P. L. 108-11) and chapter 4 of Part II of the Foreign Assistance
Act of 1961, as amended;
Groups targeted: U.S. companies. ;
Activities: U.S. companies host interns for three months at their own
expense. In fiscal year 2003, more than 35 companies hosted interns;
Budget information[A]: $2,000,000;
Staff level[B]: One part time plus contractor support.
CSR-Related program/activity: Middle East Partnership Initiative -
Junior Achievement Program; FranceskiS@ state.gov;
Objective: To help the Middle East region's youth gain the skills
required to build and succeed in their nations' economies and to become
productive and participative citizens;
Start year: 2003;
Legal basis: Emergency Wartime Supplemental Appropriations Act, 2003
(See Pub. L. 108-11) and chapter 4 of Part II of the Foreign Assistance
Act of 1961, as amended;
Groups targeted: U.S. and foreign companies;
Activities: Through a cooperative agreement to the Junior Achievement
program, MEPI is setting up chapters throughout the region to promote
entrepreneurship, such as job training, among high school-aged youth.
U.S. and foreign companies serve as long-term sponsors and mentors for
this program;
Budget information[A]: $2,400,000[M];
Staff level[B]: One part time plus contractor support.
CSR-Related program/activity: Bureau of International Organization
Affairs - select activities; DaleyPB@state. gov;
Objective: To ensure that initiatives related to CSR at the United
Nations and its affiliated organizations remain consistent with the
imperatives of the marketplace and compatible with United States
interests;
Start year: Not available.[N];
Legal basis: United Nations Participation Act of 1945;
Groups targeted: United Nations programs, funds, agencies and other
organizations;
Activities: Negotiations over resolutions, work programs and budgets in
United Nations organizations, and reviews of programs and activities;
Budget information[A]: No specific budget;
Staff level[B]: Several staff in this bureau devote time to CSR on an
ad hoc basis.
CSR-Related program/activity: Office of the U.S. Global AIDS
Coordinator (OGAC) - Public-Private Partnerships[O]; Moloney- KittsMA@
state.gov;
Objective: To combat HIV/AIDS, promoting integrated prevention,
treatment and care interventions with an urgent focus on 15 countries
that are among the most afflicted nations in the world;
Start year: 2004;
Legal basis: The U.S. Leadership Against HIV/AIDS, Tuberculosis, and
Malaria Act of 2003, See Section 101 of P.L. 108-25;
Groups targeted: Private sector;
Activities: The private sector is a critical partner at the country
level.[P] These partnerships facilitate company workplace programs to
create awareness about the spread of HIV/AIDS, decrease stigma among
those who know their HIV status, and provide antiretroviral therapy to
employees and their families. The office began keeping track of the
number of partnerships in FY 2005;
Budget information[A]: No specific budget;
Staff level[B]: Not applicable.
Source: GAO based on information provided by agency officials.
[A] Budget information is for fiscal year 2003 unless otherwise noted.
[B] Staff levels are for fiscal year 2003 unless otherwise noted.
[C] This represents grants that were funded in fiscal year 2003. Grants
funded in fiscal years 2001 and 2002 were also ongoing in fiscal year
2003.
[D] This figure represents expenses only, incurred by the Bureau of
Economics and Business Affairs. This figure does not include staff
salaries or the Secretary's representation funds for ceremony
hospitality and the design, manufacture and shipping of the awards.
[E] More than 50 additional staff help to plan and organize the award
ceremony.
[F] The Partnership for Prosperity is a bilateral initiative between
Mexico and the United States designed to leverage private sector
resources and expertise to boost the social and economic well-being of
Mexican citizens, particularly in regions where economic growth has
lagged.
[G] The cost is the responsibility of the host country. The U.S. will
host the ceremony in 2005, but the program had not yet established a
budget for the costs.
[H] In addition to the Department of State, USTR, EPA and the
Departments of Treasury, Commerce, and Labor help resolve complaints
against companies.
[I] The guidelines are a set of nonbinding recommendations that have
been agreed upon by OECD member countries. Their aim is to provide
guidance for companies on a range of business activities, including
industrial relations, human rights, environment, information
disclosure, competition, taxation, and science and technology.
[J] The Department of State also coordinates with the Departments of
Commerce and Justice to address, as appropriate, alleged incidents of
bribery of foreign public officials (by foreign-based corporations)
that adversely affect the opportunity for U.S. companies to compete on
a transparent and level playing field for international tenders and
contracts.
[K] The Departments of Commerce and Justice are also members of the
U.S. delegation.
[L] These projects implement the Evian Declaration on Fighting
Corruption and Improving Transparency that was signed by G-8 leaders in
2003, and proposes specific actions to reduce corruption and enhance
transparency as part of a strategy to ensure that development
assistance resources and budget revenues achieve their intended
purpose. According to a State Department official, the Declaration
proposed a partnership between donor and recipient countries to change
the incentives to make corruption less attractive to public officials,
expose the economic and political costs of corruption, and
institutionalize effective checks and balances on corrupt regimes.
[M] Fiscal year 2003 funds are also being spent in fiscal year 2004.
[N] According to an agency official, this has been a continuing effort
that has become more or less intense as CSR issues have become larger
or smaller pieces of the work programs at these UN agencies.
[O] OGAC is not an implementing office. Actual implementation of
partnerships with the private sector and other workplace activities are
put forth from its implementing agency partners, primarily USAID and
The Department of Health and Human Services (HHS).
[P] At the local level, U.S. government offices work with
pharmaceutical companies on an ad hoc basis to facilitate drug
donations in specific countries.
[End of table]
Table 12: Responses from the Department of Treasury:
CSR-Related program/activity: Implementation of the Clean Diamond Trade
Act and Executive Order 13312 by the Treasury Department's Office of
Foreign Assets Control (OFAC) - (with the Department of State)[B];
www.treas.gov/ofac;
Objective: To implement the Kimberley Process Certification Scheme,
pursuant to which participating countries, including the United States,
seek to prevent rough diamonds used to fuel armed conflict aimed at
undermining or overthrowing legitimate governments from entering the
legitimate world diamond trade;
Start year: 2003;
Legal basis: Clean Diamond Trade Act (P.L. 108-19), Executive Order
13312, and Rough Diamonds Control Regulations, 31 C.F.R. part 592;
(Regulations);
Groups targeted: Companies or individuals involved in the export from
and/or import into the United States of rough diamonds;
Activities: The Regulations provide that trade in rough diamonds is
prohibited unless the rough diamond is controlled through the Kimberley
Process Certification Scheme as set forth in the Regulations.[C] The
U.S. also participates in Kimberley Process multilateral working groups
on Monitoring and Statistics.d;
Budget information: No specific budget.[E]; Staff level[A]: Three
FTEs.[F].
Source: GAO based on information provided by agency officials.
[A] Staff levels are for fiscal year 2003 unless otherwise noted.
[B] OFAC administers the Rough Diamonds Control Regulations. In
addition, pursuant to the Clean Diamond Trade Act (Act), OFAC (as the
designee of the Secretary of the Treasury) and the Department of State
cochair a Kimberley Process Implementation Coordinating Committee to
coordinate implementation of the act and the Kimberley Process
Certification Scheme for the United States. The Committee meets
periodically to evaluate implementation issues, and, if necessary, take
steps to improve performance. Other agencies, including the U.S. Census
Bureau and Customs and Border Protection (CBP) are also involved with
the implementation.
[C] The Kimberley Process Certification Scheme as set forth in the
regulations includes, among other requirements, trading rough diamonds
only with other Kimberley Process participants having a validated
Kimberley Process Certificate accompanying all exports and imports, and
keeping accessible records about these transactions for at least 5
years.
[D] As part of the Kimberley Process, the diamond industry undertook to
implement a voluntary system of self-regulation through a system of
warranties that allows for the traceability of rough diamond
transactions.
[E] This does not capture the resources of additional agencies involved
in the implementation of the Clean Diamond Trade Act.
[F] According to an official at Treasury, most of the staff time is at
the Department of State. This does not capture the resources of
additional agencies involved in the implementation of the Clean Diamond
Trade Act.
[End of table]
Table 13: Responses from U.S. Agency for International Development:
CSR-Related program/activity: Global Development Alliance;
www.usaid.gov/gda;
Objective: To encourage public-private partnerships for development
projects;
Start year: 2001;
Legal basis: Foreign Assistance Act of 1961 (P. L. 87-195), as amended;
Groups targeted: Foundations, for-profit firms, civil society
organizations, foreign governments;
Activities: Trains USAID staff on public-private alliances and conducts
outreach to private sector and civil society partners. For fiscal years
2002-2004, USAID leveraged over $3.7 billion in partner assets through
$1.1 billion in agency funding;
Budget information[A]: $29.8 million.[C];
Staff level[B]: Six full time staff plus contractors and field
support.[D].
CSR-Related program/activity: Volunteers for Prosperity[E];
www.volunteersforprosperity.gov;
Objective: To deploy skilled volunteers in U.S. foreign assistance
programs.[F];
Start year: 2003;
Legal basis: Executive Order 13317;
Groups targeted: U.S.-based organizations, including corporations;
Activities: By the end of FY 2004, Volunteers for Prosperity recruited
nearly 200 for-profit and nonprofit organizations, representing a pool
of at least 34,000 skilled American professionals available to serve as
volunteers. Participating organizations reported having deployed nearly
7,000 volunteers;
Budget information[A]: No specific budget;
Staff level[B]: Three full time staff.[G].
Source: GAO based on information provided by agency officials.
[A] Budget information is for fiscal year 2003 unless otherwise noted.
[B] Staff levels are for fiscal year 2003 unless otherwise noted.
[C] In addition, according to officials, USAID overseas missions and
USAID/Washington funded alliances to the total amount of $360 million.
[D] Each USAID mission office and bureau has a Global Development
Alliance point of contact, and each mission office manages at least one
public-private alliance.
[E] USAID serves as the interagency coordinator for this initiative.
Per the executive order, USAID, the Departments of State, Commerce and
Health and Human Services were required to set up Volunteers for
Prosperity offices or operating units.
[F] The volunteers serve to support efforts related to six presidential
initiatives: The Emergency Plan for AIDS Relief, the Trade for African
Development and Enterprise Initiative, the Water for the Poor
Initiative, the Digital Freedom Initiative, the Middle East Partnership
Initiative, and the Millennium Challenge Corporation. Organizations
that become Volunteers for Prosperity participants and support the
deployment of highly skilled American volunteers are given priority for
federal funds for these initiatives.
[G] As of March 2005, three full-time staff were approved, although two
staff were in place.
[End of table]
Table 14: Responses from Office of the U.S. Trade RepresentativeA:
CSR-Related program/activity: Negotiating Free Trade Agreements;
www.ustr.gov;
Objective: To ensure that negotiating objectives on labor and the
environment laid out in the Trade Act of 2002 and issues of concern to
trading partners are included in free trade agreements;
Start year: 2002;
Legal basis: Trade Act of 2002;
Groups targeted: Foreign governments;
Activities: Negotiating terms of trade agreements with U.S. trading
partners. USTR will consider including CSR issues and projects in trade
agreements if the issue is raised by trading partners. For example, CSR
language is included in the US-Chile and US- Singapore free trade
agreements;
Budget information: No discrete budget;
Staff level[B]: FTA negotiators address CSR as warranted during
negotiations.
CSR-Related program/activity: Outreach to Business Associations;
www.ustr.gov;
Objective: To improve labor standards and business conduct in U.S.
business overseas;
Start year: Not available;
Legal basis: Not available;
Groups targeted: Business groups;
Activities: USTR meets with business groups on an ad hoc basis to
discuss a range of issues. On occasion, this includes encouraging
businesses to implement corporate codes of conduct;
Budget information: No discrete budget;
Staff level[B]: One percent of one staff person's time.
Source: GAO based on information provided by agency officials.
[A] Officials from the USTR acknowledged that the agency undertakes
some activities that might complement CSR, but emphasized that the
agency's mission is to negotiate trade agreements, and not to engage in
CSR-related efforts.
[B] Staff levels are for fiscal year 2003 unless otherwise noted.
[End of table]
[End of section]
Appendix III: GAO Contact and Staff Acknowledgements:
GAO Contact:
Loren Yager (202) 512-4347:
Acknowledgements:
In addition, Kate Blumenreich, Kenneth Bombara, Martin De Alteriis,
Mark Dowling, Tim Fairbanks, and Kim Frankena made key contributions to
this report. Shirley Brothwell, Emilie Cassou, Jeanette Espinola and
Richard Lindsey also provided assistance.
(320271):
FOOTNOTES
[1] The Frank Hawkins Kenan Institute of Private Enterprise -
Washington Center, www.kenaninstitute.unc.edu.
[2] U.S. Chamber of Commerce Web site, www.uschamber.com, April 28,
2005.
[3] The World Bank, Public Sector Roles in Strengthening Corporate
Social Responsibility: A Baseline Study, October 2002, p. 1.
[4] Business for Social Responsibility Education Fund, Corporate Social
Responsibility: A Guide to Better Business Practices, 2000.
[5] 2002 Sustainability Survey Report, August 2002,
PricewaterhouseCoopers, LLP.
[6] The State of Corporate Citizenship in the U.S.: A View from inside
2003-2004, The Center for Corporate Citizenship at Boston College and
the U.S. Chamber of Commerce Center for Corporate Citizenship, 2004.
[7] 2002 Sustainability Survey Report, August 2002,
PricewaterhouseCoopers, LLP.
[8] They further caution, "Even though there is hope in the large
number of studies that have shown a positive relationship, academics
and practitioners alike should be concerned with the variability and
inconsistency in these results. Some of the reasons for these
contradictory results stem from conceptual, operationalization, and
methodological differences in the definitions of social and financial
performance." Griffin, Jennifer J., and John F. Mahon, "The Corporate
Social Performance and Corporate Financial Performance Debate: Twenty-
Five Years of Incomparable Research," Business and Society, Mar. 1997,
pp. 5-31.
[9] Association of Chartered Certified Accountants, Corporate Social
Responsibility: Making the Business Case, London, 2002; Orlitzky, Marc,
Frank L. Schmidt and Sara L. Rynes, "Corporate Social and Financial
Performance: A MetaAnalysis," Organization Studies, Vol. 24, no. 3 (May-
June 2003).
[10] Laffer, Arthur B., Andrew Coors and Wayne Winegarden, "Does
Corporate Social Responsibility Enhance Business Profitability?" Laffer
Associates, 2004 available via www.csrwatch.com.
[11] Association of Chartered Certified Accountants, Corporate Social
Responsibility: Making the Business Case, London, 2002.
[12] McWilliams, Abigail and Donald Siegel, "Corporate Social
Responsibility: A Theory of the Firm Perspective," Academy of
Management Review, 2001, Vol. 26: No. 1, pp. 117-127.
[13] www.cepaa.org.
[14] www.globalreporting.org.
[15] www.iccr.org.
[16] www.socialinvest.org.
[17] www.oecd.org.
[18] www.unglobalcompact.org.
[19] www.gcgf.org.
[20] http://europa.eu.int/comm/employment_social/soc-dial/csr/.
[21] Public Sector Roles in Strengthening Corporate Social
Responsibility: A Baseline Study, the World Bank, October 2002.
[22] Public Sector Support For The Implementation of Corporate Social
Responsibility (CSR) in Global Supply Chains: Conclusions from
Practical Experience, the World Bank, December 2004.
[23] In trying to categorize programs into these roles, we identified 9
programs that did not clearly fit into these categories. We also
identified 13 programs that appear to have elements of more than one
category.
[24] Funding reported by USAID includes moneys obligated in the
planning stage as well as actual expenditures. The partner
contributions include committed contributions that are projected for
future years as well as contributions already expended by partners.
[25] Members of the Digital Freedom Initiative Interagency Working
Group include the Department of Commerce, USAID, the Department of
State, the Peace Corps, the Small Business Administration, and the
Federal Communications Commission.
[26] The Digital Freedom Initiative is part of the Volunteers for
Prosperity Initiative. Managed by USAID's Office of Volunteers for
Prosperity, this is also an interagency Presidential initiative that
promotes international voluntary service by highly skilled American
professionals in support of the nation's global health and prosperity
agenda.
[27] According to a Commerce official, the Digital Freedom Act (DFI)
has no specific funding. The program uses some USAID money already
assigned to projects that complement the DFI program. For example,
these training efforts are a component of an ongoing alliance the
company has through the USAID Global Development Alliance.
[28] However, an official from the Protecting the Basic Rights of
Workers program at the Department of Labor, which reported a $20
million budget in fiscal year 2003, said the program received no
funding from the fiscal year 2005 appropriations.
[29] See Fox, Tom; Ward, Halina; and Howard, Bruce. Public Sector Roles
in Strengthening Corporate Social Responsibility: A Baseline Study. The
World Bank, 2002. The report describes four principle public sector
roles as follows (The report acknowledges overlaps across the four
categories):
Endorsing: Political support and public sector endorsement of the
concept of CSR and in particular, CSR-related initiatives.
Facilitating: Enabling or incentivizing companies to engage with the
CSR agenda or to drive social and environmental improvements.
Partnering: Bringing the complementary skills and inputs of the public
sector, the private sector, and civil society in tackling complex
social and environmental problems.
Mandating: Defining minimum standards for business performance embedded
within the legal framework.
[30] Typically, one award is given to a multinational enterprise and
one award is given to a small and medium-sized enterprise each year,
but that is flexible and up to the selection committee to decide.
[31] This figure includes 183 commercial officers, 56 foreign service
national commercial specialists, and 21 domestic trade specialists.
[32] In addition to the regulations listed here, various respondents
also mentioned the Foreign Corrupt Practices Act; the Sarbanes-Oxley
Act of 2002; the Alien Tort Claims Act; and import controls, such as
those prohibiting the importation into the United States of merchandise
produced by forced or indentured child labor as laws or regulations
that impact companies' CSR activities.
[33] Rule 14a-8 of the Securities Exchange Act of 1934.
[34] Friedman, Milton, "The Social Responsibility of Business is to
Increase Profits." New York Times Magazine, September 13, 1970.
[35] Henderson, David, "The Role of Business in the Modern World:
Progress, Pressures and Prospects for the Market Economy." (Landover
Maryland, Competitive Enterprise Institute) 2004, p. 20.
[36] Raynard, Peter and Forstater, Maya, Corporate Social
Responsibility: Implications for Small and Medium Enterprises in
Developing Countries, The United Nations Industrial Development
Organization, Vienna, 2002, pp. 8 and 9, with reference to: Raynard, P
& Forstater, M (2001) The Business Case for Sustainability. London,
SIGMA.
[37] Haufler, Virgina, A Public Role for the Private Sector: Industry
Self-Regulation in a Global Economy (Washington, D.C.: Carnegie
Endowment for International Peace) 2001.
[38] Holiday, Charles O. Jr; Schmidheiny, Stephan; and Watts, Phillip,
Walking the Talk: The Business Case for Sustainable Development,
Greenleaf, Sheffield; 2002, p. 156.
[39] The Millennium Poll on Corporate Social Responsibility, Conducted
by Environics International Ltd. In cooperation with the Prince of
Wales Business Leaders Forum and the Conference Board. Consumers in 23
countries were surveyed.
[40] Behind the Mask: The Real Face of Corporate Social Responsibility,
Christian Aid, p. 2.
[41] Consumers International and Corporate Social Responsibility,
Consumers International.
[42] Calder, Fanny and Culverwell, Malaika, Following Up the World
Summit on Sustainable Development Commitments on Corporate Social
Responsibility, Options for Action by Governments, Royal Institute of
International Affairs, February, Chatham House, 2005, p. 36.
[43] International Council on Human Rights Policy, "Beyond Voluntarism,
Human Rights and the Developing International Obligations of
Companies," Versoix, Switzerland, 2002, p. 2.
[44] We selected these groups and organizations to help us obtain a
broad range of knowledgeable and informed views on global CSR and the
federal government's role in global CSR; our selection was not intended
to be representative in any statistical sense. Groups that are not
active in global CSR may have different views and opinions, especially
in terms of the federal government's role.
[45] For example, see The Frank Hawkins Kenan Institute of Private
Enterprise, Washington Center, Statement of Findings: Promoting CSR in
China, Sept. 2004 and Promoting Global Corporate Social Responsibility:
The Kenan Institute Study Group Consensus, Sept. 2003.
[46] Respondents tended to speak generally of U.S. government and non-
U.S. government awards, as they were not always clear whether or not a
particular award was given by the U.S. government.
[47] Some companies held both views: that some regulations are
burdensome, while other regulations are useful in setting minimum
standards and leveling the playing field.
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