The attention at social, environmental and labor aspects of the production by the companies, so called Corporate Social Responsibility (CSR), is becoming day by day more important for companies and their stakeholders. How do companies and civil societies (NGOs)
Which role plays the civil societies organizations on corporate social responsibility? In particular the role of international network organizations is changing the relation between companies and countries and international law systems, the relation of between companies and civil societies (roughly NGOs) and finally the difference between companies belonging at the same production chain.
Maria Teresa de Carolis and Paolo Sospiro (Economy of globalization,ª_ Globalizzazione, University of Macerata, Italy)
The AP&P (Asia Pulp & Paper) case represents all of the mentioned aspects. AP&P is a Chinese-Indonesian company established in Singapore, producing pulp and papers . AP&P main production activities are established in Indonesia while its companies supply several companies all over the world.
On the other side, Indonesia Forests are the third most important rainforest in the world but, for instance, over 75% of Borneo rainforests disappeared in the last decades. Moreover the IV IPCC report of 2007 estimated that 18% of the total emissions are the results of the transformation of the soil in particular deforestation. Indonesia is the third CO2 emission country in the world after USA and China.
At the end, only International organizations are on the position for monitoring companies behavior in the countries.
The Asia Pulp &Paper (AP&P) is a multinational company based in Singapore that supply pulp and paper companies all over the world extracted mainly from Indonesia. Since is based and produce in countries where environment, labor and human rights regulations are weak and since it doesn't sell to the final consumers therefore it's difficult for the NGOs to press it. However organizing an international network of organizations and pressing the final consumers companies of the production chain of the AP&P, the network achieved to isolate the company.
In this section are emphasized some aspects that characterized NGOs activities and their strategies in order to avoid exploitation of workers, indigenous or environment by the companies.
On our point of view two are the main instruments used by NGOs in order to change companies behavior: negotiation and campaign. However negotiation and campaign are the bottom and the top of another two important activities of the NGOs: research and monitoring. Therefore, this section shed some lights on all of the aspects mentioned above.
Research (see the chart) is the first step in order to discover bad behavior by the companies. Thus, for the NGOs is foremost important to be in contact with local communities all over the world, getting access of datasets and get ability to analyze them, relationship with research institute and finally organize a network of organizations.
Negotiation should be the second step. In fact, generally speaking, NGOs use to contact the companies once they have enough information on their bad behavior in order to open a negotiation table. If the company recognize its mistakes then they, the company and the NGO, can organize a road map in order to improve the situation.
In this case, the NGO will start monitoring the company behavior in order to follow the road map established by an agreement. This kind of activity could last for several years.
While if the company doesn't want to change its behavior then the second instrument on the hand of the NGO is the campaign. In this case, the NGO will organize a campaign against the company at any level informing about its behavior: institutional (local and national Government and international Institution) and economical (mainly consumers). ª_
The probability of success for the NGOs are subject at: the grade of sensitivity of the institutions and/or consumers or of the company; but the level of sensitivity of the institutions are subject at several aspects such as culture and economical interests while the level of sensitivity of the consumers are subject mainly at the visibility of the company on the market. On the other hand, the level of sensitivity of the company is subject at the consumers and institution reactions.
Therefore, as mentioned on the premise it's very important the place in which the company is established, produces and sells its product. In this case, those instruments and strategies will not be enough thus the NGOs should find others ways.ª_ ª_
The Asia Pulp & Paper caseª_ ª_
Indonesia Forests are the third most important rainforest in the world but, for instance, over 75% of Borneo rainforests disappeared in the last decades. Moreover the IV IPCC report of 2007 estimated that 18% of the total emissions are the results of the transformation of the soil in particular deforestation. Indonesia is the third CO2 emitting country in the world after USA and China. Today, Indonesia has the highest rate of deforestation on earth and just under half of its original forest cover remains. Every year 1.7 million hectares of forests are destroyed: 51 square kilometres per day, equivalent to 300 football fields per hour. The country forest cover has declined from 82 percent in the 1960s to less than half today.
AP&P- SINAR MAS GROUP,ª_ is one of the biggest extraction company in Indonesia,ª_ one of the ten
largest producers worldwide and it supply several companies all over the world. The main problems are: in Indonesia and Singapore there are notª_ strict environmental regulation, the civil societies are not so sensitive on the issueª_ and on the meanwhile it's not possible pressing it through an international campaign since it doesn't sell to the final consumers. During the last decade, many NGOs organized a campaign against AP&P, as we can see below, but no one produced significative effects.
The WWF after a heavy and long pressing made an agreement with AP&P on august 2003 in which they planned to improve the standard behavior of the company in the next 12 years: deserving part of the land and improving the production system. However, nothing had been done by AP&P and a WWF documents reported the failure of the projectª_ and the worst was that the company used that agreement for improving its imagine at international level while AP&P still logging such as in the Riau province, in Sumatra. Therefore WWF had been forced to close the project.
Another organization, Amnesty International, opened a procedure regarding the December 2008 facts where the police of Riau burned an entire village in Suluk Bongka killing two kids. While some peasants had been put on a trial and condemned for incitement of violence and burglary. On the meanwhile AP&P acquire the permission for exploiting other forests . This had been the end of 12 years of guerrilla of the indigenous, the Sakai, against the Arara Abadi, another company of the AP&P group . (This is the tragic epilogue of a guerrilla war lasted 12 years, between indigenous people, Sakai, against Arara Abadi Indah Kiat Pulp and supplier of paper, of Asia Pulp and Paper Group) Indonesia is home to over 300 Indigenous cultures andª_ 742 different languages and dialects. Thirty million people rely directly on the forest for their livelihood.
The province of Riau is the area in which had been registered the higher number of fires in Indonesia. Since many years, Sumatra is victim of logging by the company, often the areas have been deforested by the company without any permission. Actually only the 35% of 700.000 hectares of the protected forests by the Unesco are natural forests while the rest are dominated by acacia plantations.
Moreover, in 2010 the Indonesian Government allowed the AP&P to cut the trees for another around 200.000 hectares of forests within the national Park Bukit Tigapuluh .
The main result of this part of the paper is that that Indonesian and Singapore governments, legislations and regulations aren't in the position for controlling the AP&P actions and even the International organizations as well.
Thus, the question is: why AP&P is not interested on improving its social responsibility?
Our hypothesis is thatª_ the AP&P stands at the beginning of the production chain of the pulp and paper process thus it doesn't have any interest on improving its image and behaviorª_ since it doesn't sell to the final consumers who is the most sensitive agent of the process.
Despite the fact that AP&P is not a packaging or paper selling company, doesn't have the same visibility of a distribution company, it's based and have its main activities in countries without strict regulations on social responsibility.
A new campaign organized by the Rainforest Action Network, supported in Europe by an Italian organization Terra!,ª_ achieved some good indirect results at the end. All the organizations of the network contacted the companies supplied by the AP&P and organize a campaign against them. Some of the campaigns achieved the results to sensitive the final consumers or the companies thus the network open up a negotiating table with those companies.ª_ ª_
At the beginning the network direct its campaign against the affiliated companies and finally to the final destination companies of the production; suddenly the results is starting to be seen, groups such Fuji Xerox, Ricoh, Corporate Express, Metro Group, Woolworths Ltd. And Idisa Papel stopped to buy by AP&P. This year Gucci holding group (Yves Saint Laurent, Alexander McQueen, Stella McCartney e Balenciaga), Ferragamo, Tiffany e H&M decided to stop to acquire product by the AP&P as well. Moreover, they decided that for the end of the 2010 they'll only buy paper product certified by FSC (Forestry Stewardship Council).
Another results of the campaign had been the official request by PAK 2000, the provider of many of the aforementioned groups, to the AP&P to disinvest by PAK 2000.
The second result had been the signature of a memorandum of understanding betweenª_ PAK 2000 and the RAN that foresees a plan in order to achieve a high level standard of production and respect of environment .
Hence, although the events went for a while against the campaign, the organizations through their actions against the final production chain companies achieved a very important results. In fact, the campaign had been able to isolate the AP&P.
Although it should be taken into account that the company still abuse of its position thus the campaign achieved just the result to isolate it.
Although the difficulty of the campaign the organizations, working in a network and mainly following the production chain and pressing the final consumers provider companies, they achieved an unexpected results.
This kind of sensitization campaign so called Black Campaign - by the organizations already highly damaged the pulp and papers industries for more of 1 billion dollars .
In conclusion, there are some good news and further questions that should be developed at academic level in order to improve the strategy.
The good news is: working as a network on the direction of the final users seems to give a very good results even in very difficult case such as the AP&P company.
The questions that should be further developed are a model, a research approach and a dataset on the topic.
In fact, nowadays even the international community recognizes that the abuse and damage of the environment is also dangerous for the economy. Of course the first result is the natural disaster but it becomes soon an economic disaster as well. At global level, deforestation cause more than 15 billion dollars per year .
The second question is that environmental damage are caused most of the time by initial supplier chain companies that are difficult to monitor.
Finally, once they are identified it takes too long and doesn't change the company behavior.
Therefore it's necessary, first of all, to improve the NGOs strategy and methodology in order to improve their efficiency. The best way to improve their approach seems to develop an indicator that take into account: social-labor-environmental legal protection on the countries of production or registration. In fact, as higher the protection of workers, consumers and environment on the country of production as easier will be to contrast company bad behavior.
Thus we can imagine an indicator that consider the maximum difficulty when the company is establish and produce in countries where social responsibility is weak and it's an initial supplier while is easy if the company produce and established on very sensitive country and sell to the final consumers.
Finally, it's necessary to develop a theoretical approach that take into account these aspects.