Is Corporate Socialism’s Trojan Horse Running Lame?

Nick Nichols
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Posted: Jul 07, 2007 12:00 AM
Is Corporate Socialism’s Trojan Horse Running Lame?

While many of us were celebrating our nation’s hard won sovereignty, the United Nations (UN) was orchestrating a summit meeting of Global Compact leaders at its Geneva, Switzerland headquarters. The UN describes the seven-year-old Global Compact as “an international initiative that would bring companies together with UN agencies, labor and non-government organizations to support universal environmental and social principles.” In fact, The Global Compact appears to be an attempt by the UN to capitalize on the Corporate Social Responsibility movement and circumvent the sovereignty of its member nations.

Corporations that sign the Compact’s dotted line must subscribe to ten principles that are derived from:

1. The Universal Declaration of Human Rights

2. The International Labor Organization’s Declaration on Fundamental Principles and Rights at Work

3. The Rio Declaration on Environment and Development

4. The United Nations Convention Against Corruption

I visited the Global Compact’s website to view first-hand the ten principles that the UN wants businesses to embrace. Three of the principles are particularly noteworthy.

Principle 3 states that “businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.” There is no mention of a person’s right to work without having to join a union and pay dues.

Principle 7 states that “businesses should support a precautionary approach to environmental challenges.” Sounds simple enough but this is a not-so-veiled attempt to get corporations to adopt the so-called Precautionary Principle which holds that if some group, say Greenpeace, claims that your company’s new product is unsafe for the environment, it should be banned from the marketplace until you prove that it won’t hurt Mother Nature. Most high school science students know that it is impossible to prove the negative, but that is precisely the Kool-Aid that the UN requires the 3,000 plus companies that have signed the Compact to swallow.

Principle 10 is a real hoot given its authorship. It states that “businesses should work against corruption in all its forms, including extortion and bribery.” I, for one, would like to see the UN rid itself of widespread corruption before telling others how to stay pure in the global marketplace.

I belong to a growing number of cynics who believe that the Corporate Social Responsibility (CSR) movement is a Trojan horse that masks a worldwide effort to promote corporate socialism. CSR has commonly been described as a left-wing conspiracy dressed up as a right-wing conspiracy because its supporters would have us believe that CSR privatizes the regulation of human and worker rights as well as the environment.

Many corporate executives have been recruited to the CSR movement with promises that it is strictly voluntary and that their companies’ reputations will be enhanced by the great public relations benefits that CSR has to offer. To be sure, most business leaders deny that they have joined the social responsibility chorus solely because it makes for great PR.

No doubt, corporate executives should and do have an absolute responsibility to abide by the laws and regulations enacted by sovereign nations with whom they do business. They also have a fiduciary responsibility to protect shareholder investments. However, when executives voluntarily agree to take actions that are contrary to the best interests of their companies or that require the expenditure of resources for activities that do not enhance company earnings, they have violated their shareholders’ trust.

The Global Compact and other corporate socialization schemes pose a serious threat to shareholders, the free enterprise system and to representative government. However, there are indications that the CSR Trojan horse may be running lame.

On July 2nd, just three days prior to the big Global Compact meeting, the UN released a survey of 400 companies that had previously signed the Compact. The survey sought to gauge whether the companies were holding up their end of the bargain—obeying the ten principles. The results were not favorable, forcing Georg Kell, executive director of the Global Compact, to admit to journalists what my cynics support group has known all along—companies joined the Compact thinking they could use it to enhance their public relations. Kell further acknowledged that, “we delisted 600 participants last year and we expect another 500 to be delisted this year . . . .”

On the 4th of July, a day before the Global Compact leaders convened, Amnesty International, Greenpeace and ActionAid declared that the UN’s voluntary principles had done little to improve corporate practices. ActionAid called for “legally binding regulations to control corporate activities with respect to human rights.” Amnesty International also criticized the voluntary nature of the Compact.

So, there you have it. Hundreds of companies are discovering that there is no such thing as free PR in the Corporate Social Responsibility movement. Being removed from the UN’s do-gooders list should prove to be an interesting challenge for the spin doctors. Equally important, several left-wing activist groups have finally revealed the bait-and-switch strategy behind CSR—lure companies into the trap with the promise that all is voluntary, then demand legislation and regulation. Sweet, if you can get away with it.

What is my advice to corporate managers who may still be celebrating our nation’s independence? Continue to obey the law. Protect your shareholders’ investments. Beware of the Trojan horse called Corporate Social Responsibility! It may be lame, but it still has the potential to do great damage to your company and to free enterprise worldwide.