This series of blog posts looks at the new ISO 26000 standard for corporate social responsibility. In five parts, it summarizes the report, How Material is ISO 26000 Social Responsibility to Small and Medium-sized Enterprises (SMEs)?, written by Oshani Perera in Sept, 2008.
PART V: MAINSTREAMING SOCIAL RESPONSIBILITY: THE WAY FORWARD
This study establishes that ISO 26000 has the potential to introduce the social responsibility agenda to SMEs. However, it also establishes that only a particular profile of SMEs can be expected to join the debate. Further, it indicates that social responsibility practices need to move from mock compliance to a component of mainstream business acumen, and the debate needs to move from “doing-the-right-thing” to a useful way to maintain market position and differentiate from competitors.
It is also important for social responsibility proponents to move from building on the big-business case to experimenting with alternative tools and models to help SMEs develop the right mix of strategies to suit their businesses. Policy makers also need to design market instruments that will reward responsible enterprises.
But perhaps the very first step to bring ISO 26000 Social Responsibility to life is to acknowledge that the sustainable development debate tends to protect itself from the economic realities and linkages in the global economy. In particular:
- At the global level, growth in emerging countries is not substituting for outputs in industrialized countries, but is adding to it—driving down production costs and increasing productivity. This is why multinational companies (except in the banking sector) are still reporting gains, for they are achieving greater economies of scale and maintaining per-unit-cost margins.
- The global economy is focused on supplying to the middle classes in emerging and industrializing countries, and to a great extent their demands have yet to account for environmental and social attributes. We have also yet to realize that the biggest loser in the globalizing world is likely to be the worker, who lies at the very heart of the social responsibility debate. Social responsibility is, after all, about making living conditions more equitable and sustainable for all. And in economically advanced countries, workers are losing their bargaining power to those entering the workforce from poorer countries. This is manifested, not only the loss of jobs in the first world, but in a real decline in wages – for both lower-skilled workers and professionals.
In a similar vein, workers in developing countries have even less bargaining power, as the labor they bring to the global economy is rarely combined with capital. And with capital being increasingly free to move now, the loss of jobs in these countries is even more of a threat than the lowering of wages, as high inflation rates have already ensured that wages remain low. As a direct consequence of these trends, income inequalities are likely to increase even further.
Standards are an important tool in defining and leveling the playing field for more equitable trade and development. But just as they provide incentives for responsible enterprise, they can also be played out as trade barriers, especially vis-à-vis SMEs in industrializing countries that may lack the resources to comply. We need to intensify the debate on how standards can indeed open opportunities for sustainable trade – all along the value chain. For to remain competitive, global value chains are increasingly designed to pass on the costs and responsibilities of compliance to those at the primary tiers of the supply chain. And there is legitimate concern that environmental and social standards may be used as an excuse to consolidate supply chains and drastically reduce the number of supplier units in both developed and developing countries. Suppliers, therefore, who are unable to comply with environmental and social specifications, meet just-in-time schedules, and reduce production costs, are being left out – which will only add to the concentration of profits and expertise in limited pockets of society.
Standards, especially ISO 26000, also need to be flexible in their application to the social and environmental realities of industrializing countries. While we are all aware that there is no one-size-fits-all model, we also need to acknowledge that social responsibility issues cannot be universally interpreted. As much as we work to safeguard and enhance labor standards, we need to do so in a way that promotes flexible and dynamic workforces. As much as we work towards employment for all, we need to look for newer ways to enable job conversion, re-skilling, and up-skilling. And as much as we work to enable decent work and abolish child- and forced-labor, we need to tackle the economic and social realities that create these conditions in the first place.
This study was published in the run up to the development of the ISO 26000 Social Responsibility committee draft. This was necessary to ensure that the survey was conducted on the most recent and integrated draft versions of ISO 26000. IISD looks forward to continued learning and debate on responsible entrepreneurship, focusing on both trickle-down and on bottom-up strategies for sustainable development in the middle of the pyramid.