OECD’s CSR Guidelines: Corporate State Department Responsibility?

COMMENTARY International Economies

OECD’s CSR Guidelines: Corporate State Department Responsibility?

Feb 3, 2012 2 min read

Former Research Fellow For Economic Freedom and Growth

James M. Roberts' primary responsibility was to edit the Rule of Law and Monetary Freedom sections of Index of Economic Freedom.

This week the U.S. State Department announced the launch of the Stakeholder Advisory Board for the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises.

Nanny-state scolds on the left have increasingly called for more corporate social responsibility (CSR). Their mantra is “doing well by doing good,” and they have enshrined CSR principles not only at the OECD but in such vehicles as the U.N. Global Compact and the International Organization for Standardization’s ISO 26000 International Standard: Guidance on Social Responsibility.

Membership on the advisory board is weighted heavily in favor of pro-CSR NGO activists as well as representatives from big business and public-sector unions. While the mandate of the U.S. National Contact Point (NCP) sounds innocuous enough—to “promote awareness of the Guidelines; work with other governments’ NCPs, foreign businesses, international labor and civil society organizations; and offer a forum for confidential discussion between business and stakeholders”—the establishment of the NCP is itself another big step in CSR mission creep.

Early efforts of CSR advocates were supposed to be “voluntarily” adopted by businesses, but this latest and more radical phase of CSR is more intrusive and changes the focus from voluntary initiatives to mandated standards, from targeted projects to comprehensive obligations, from flexible communications to highly structured reporting.

As Jim Kelly of the Federalist Society and Good Governance Watch points out:

International non-governmental organizations (“NGOs”) and national civil society organizations (“CSOs”) are using a matrix of human rights governance networks to bypass national courts, democracy, and the rule of law to develop “soft law” human rights norms, with which multinational business enterprises will have to comply from the early stages of project research, design, and planning through project completion and beyond.

The definition of CSR has increasingly cast aside the traditional responsibility of company management to the firm’s owners and has instead coalesced around the claim of a “triple-bottom-line” obligation of companies to deliver economic, social, and environmental “returns” to justify what the left calls the “license to operate.”

In the CSR world, private companies that operate in these markets become “responsible” only by meeting codes such as ISO 26000. Companies are thus thrust into a quasi-governmental role to address issues ranging from human rights to global warming. This completely ignores the fundamental benefits that companies provide to society through the goods and services they supply, the jobs they generate, and the economic freedom that results.

The State Department has enough on its hands ensuring that their diplomatic efforts keep America safe and free. It does not need to assume the role of gatekeeper for the U.S. private sector.