Globalization: Numerous Federal Activities Complement U.S.
Business's Global Corporate Social Responsibility Efforts
(08-AUG-05, GAO-05-744).
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.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-744
ACCNO: A32257
TITLE: Globalization: Numerous Federal Activities Complement
U.S. Business's Global Corporate Social Responsibility Efforts
DATE: 08/08/2005
SUBJECT: Developing countries
Federal agencies
Federal aid programs
Federal regulations
Foreign policies
Globalization
International relations
Policy evaluation
Government and business
Government/business relations
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GAO-05-744
United States Government Accountability Office
GAO Report to Congressional Requesters
August 2005
GLOBALIZATION
Numerous Federal Activities Complement U.S. Business's Global Corporate Social
Responsibility Efforts
a
GAO-05-744
[IMG]
August 2005
GLOBALIZATION
Numerous Federal Activities Complement U.S. Business's Global Corporate Social
Responsibility 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
Source: GAO illustration based on World Bank report.
United States Government Accountability Office
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
1 2 3
5
16
26 34 35
Appendixes
Appendix I: Objectives, Scope, and Methodology 37 Appendix II: Federal
Agency CSR-Related Programs and Activities 41 Appendix III: GAO Contact
and Staff Acknowledgements 69
Tables Table 1: Table 2:
Table 3: Table 4: Table 5: Table 6:
Table 7: Table 8: Table 9: Sample Definitions of Corporate Social
Responsibility Definitions of Terms Related to Corporate Social
Responsibility Responses from Department of Commerce Responses from
Department of Energy Responses from U.S. Environmental Protection Agency
Responses from Export-Import Bank of the United States Responses from
Inter-American Foundation Responses from Department of Labor Responses
from Overseas Private Investment Corporation 6
7 41 44 46
50 52 54
56
57 59 66
67
68 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
Contents
Figures Figure 1: Some Federal Programs and Activities Complement U.S.
Corporate CSR Practices 19 Figure 2: Illustrative U.S. Government
Activities Related to CSR Range from Endorsing CSR to Mandating CSR 22
AbbreviationsEUR
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
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.
A
United States Government Accountability Office Washington, D.C. 20548
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
freemarket 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.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 2004.2
Despite these efforts, some CSR advocates call for more government action
to
1The Frank Hawkins Kenan Institute of Private Enterprise - Washington
Center, www.kenaninstitute.unc.edu.
2U.S. Chamber of Commerce Web site, www.uschamber.com, April 28, 2005.
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 The term "CSR" is an umbrella concept with
many different definitions. Business Efforts to Address However, most
definitions suggest that, in addition to addressing the the Interests of
Its Many interests of its shareholders, business should address the
interests of its
other stakeholders, including customers, employees, suppliers, and the
Stakeholders 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 Definition of CSR
Business for Social "Achieving commercial success in ways that honor
ethical
Responsibility (BSR) values, and respect people, communities, and the
natural environment."a
European Commission "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
Institute of Business "The voluntary actions taken by a company to address
the
Ethics ethical, social, and environmental impacts of its business
operations and the concerns of its principle stakeholders."c
World Bank "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.
aBusiness for Social Responsibility, BSR Issue Briefs, Overview of
Corporate Social Responsibility.
bEuropean Commission, Directorate-General for Employment and Social
Affairs, Promoting a European framework for Corporate Social
Responsibility, Green Paper, July 2001, p. 8.
cInstitute of Business Ethics, Web site, http://www.ibe.org.uk.
dThe World Bank, Corporate Social Responsibility Practice, Public Sector
Roles in Strengthening Corporate Social Responsibility: Taking Stock,
January 2004, p. 3.
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.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
3The World Bank, Public Sector Roles in Strengthening Corporate Social
Responsibility: A Baseline Study, October 2002, p. 1.
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 Definition
Business Ethics "The application of ethical values to business behavior."a
Corporate Citizenship "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
Sustainable Development "[development that] meets the needs of the present
without compromising the ability of future generations to meet their own
needs."c
Triple Bottom Line "A method that allows companies to assess their
performance against three bottom lines: environmental, social, and
economic."d
Source: GAO compilation from sources listed.
aInstitute of Business Ethics, Web site, http://www.ibe.org.uk.
bLogan David, Roy Delwin, and Regelbrugge Laurie, Global Corporate
Citizenship - Rationale and Strategies, The Hitachi Foundation, Washington
D.C.: 1997, p. 7.
cReport of the World Commission on Environment and Development, (the
Brundtland Commission) Our Common Future, United Nations, August 1987, p.
24.
dThe 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.
Many U.S. Businesses' U.S. businesses conduct many different types of
actions that address CSR Actions Address CSR concerns that range from
voluntary, such as philanthropic donations, to Concerns 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.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 womenowned 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
4Business for Social Responsibility Education Fund, Corporate Social
Responsibility: A Guide to Better Business Practices, 2000.
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, Businesses play the central role in determining
their efforts to address CSR Investor Groups, concerns, but these efforts
can also be influenced by the actions of civil Multilateral Organizations
society, investor groups, multilateral organizations, and government.
and Government Play Important Roles in Shaping CSR
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.5
Threequarters 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
52002 Sustainability Survey Report, August 2002, PricewaterhouseCoopers,
LLP.
helps the bottom line." 6 Similarly, the majority of the respondents to
the second survey indicated "cost savings" as a reason for adopting
sustainable business practices.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.8 More recent studies also reach a
range of conclusions with some finding a positive association,9 some
finding at least a neutral association, and others finding no significant
or a mildly negative relationship.10 A recent paper on the business
justification for CSR
6The 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.
72002 Sustainability Survey Report, August 2002, PricewaterhouseCoopers,
LLP.
8They 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.
9Association 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).
10Laffer, Arthur B., Andrew Coors and Wayne Winegarden, "Does Corporate
Social Responsibility Enhance Business Profitability?" Laffer Associates,
2004 available via www.csrwatch.com.
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."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.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
11Association of Chartered Certified Accountants, Corporate Social
Responsibility: Making the Business Case, London, 2002.
12McWilliams, 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.
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 Agency13 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 GRI14 reporting guidelines in the
late 1990's. The Interfaith Center for Corporate Responsibility15 (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,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.
13www.cepaa.org. 14www.globalreporting.org. 15www.iccr.org.
16www.socialinvest.org.
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 Development17 (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 Compact18 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,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
17www.oecd.org. 18www.unglobalcompact.org. 19www.gcgf.org.
stakeholders on CSR.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.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.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.
20http://europa.eu.int/comm/employment_social/soc-dial/csr/.
21Public Sector Roles in Strengthening Corporate Social Responsibility: A
Baseline Study, the World Bank, October 2002.
22Public Sector Support For The Implementation of Corporate Social
Responsibility (CSR) in Global Supply Chains: Conclusions from Practical
Experience, the World Bank, December 2004.
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.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.
23In 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.
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.24 Figure 1 illustrates how federal agency programs
sometimes complement company CSR practices.
24Funding 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.
Figure 1: Some Federal Programs and Activities Complement U.S. Corporate
CSR Practices
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
Source: GAO.
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
presidential initiative led by the Department of Commerce,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.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.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
25Members 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.
26The 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.
27According 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.
around $20 million and $30 million are at the Department of Labor28 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.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.
28However, 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.
29See 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.
Figure 2: Illustrative U.S. Government Activities Related to CSR Range
from Endorsing CSR to Mandating CSR
Source: GAO illustration based on World Bank report.
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:
o 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,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.
o 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.
30Typically, 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.
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:
o 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
2003.31
o 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:
o 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
31This figure includes 183 commercial officers, 56 foreign service
national commercial specialists, and 21 domestic trade specialists.
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.
o 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:32
o An SEC rule,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
32In 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.
33Rule 14a-8 of the Securities Exchange Act of 1934.
Strengthening Enforcement and Compliance with CSR-Related Regulations in
Other Countries
corporate social responsibility, such as global warming and global labor
standards.
o 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.
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:
o 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.
o 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
Free-Market Economic Perspective
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.
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
freemarket 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."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
34Friedman, Milton, "The Social Responsibility of Business is to Increase
Profits." New York Times Magazine, September 13, 1970.
less effective in performance of their primary role."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:36
o Operational cost savings-Investment in environmental efficiency
measures such as waste reduction and energy efficiency can save money as
well.
o Enhanced reputation-Good company performance in relation to
sustainability issues can build reputation, while poor performance, when
exposed, can damage brand value.
o 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.
35Henderson, 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.
36Raynard, 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.
o 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.
o 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.
o 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.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
37Haufler, Virgina, A Public Role for the Private Sector: Industry
Self-Regulation in a Global Economy (Washington, D.C.: Carnegie Endowment
for International Peace) 2001.
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."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."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
38Holiday, Charles O. Jr.; Schmidheiny, Stephan; and Watts, Phillip,
Walking the Talk: The Business Case for Sustainable Development,
Greenleaf, Sheffield; 2002, p. 156.
39The 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.
addressing social problems.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.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.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.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).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
40Behind the Mask: The Real Face of Corporate Social Responsibility,
Christian Aid, p. 2.
41Consumers International and Corporate Social Responsibility, Consumers
International.
42Calder, 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.
43International Council on Human Rights Policy, "Beyond Voluntarism, Human
Rights and the Developing International Obligations of Companies,"
Versoix, Switzerland, 2002, p. 2.
44We 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.
Mixed Reactions Regarding the Impact of U.S. Government Efforts to Endorse
CSR through Awards
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.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.
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 awards46
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
45For 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.
46Respondents 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.
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 Many respondents from the various groups expressed
support for federal Government Efforts to Facilitate government efforts to
facilitate CSR, especially through providing
CSR Favorably
Respondents Generally Viewed Partnerships with Government on CSR Favorably
Mixed Views on Government Mandating CSR through Laws and Regulations
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.
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.
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.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
47Some companies held both views: that some regulations are burdensome,
while other regulations are useful in setting minimum standards and
leveling the playing field.
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 Some respondents expressed a desire for more
coordination among U.S.
Coordination among U.S. CSR activities related to global CSR and pointed
out that other countries are
Activities and Greater Role in more involved in CSR than the U.S.
government. Some noted that federal
Global Leadership on CSR 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 The globalization of recent decades has increased the breadth
and extent of U.S. corporations' operations in foreign markets, through
both increased
Observations 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
http://www.gao.gov.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4347 or at [email protected]. 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.
Loren Yager, Director, International Affairs and Trade
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:
o Department of Commerce,
o Department of Energy (DOE),
o U.S. Environmental Protection Agency (EPA),
o Export-Import Bank of the U.S. (Ex-Im Bank),
Appendix IEURObjectives, Scope, and MethodologyEUR
o Inter-American Foundation (IAF),
o Department of Labor,
o Overseas Private Investment Corporation (OPIC),
o U.S. Securities and Exchange Commission (SEC),
o Department of State,
o Department of the Treasury,
o U.S. Agency for International Development (USAID), and
o 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.,
Appendix IEURObjectives, Scope, and MethodologyEUR
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:
o 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;
Appendix IEURObjectives, Scope, and MethodologyEUR
o 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;
o Four investor groups-Calvert Group, Ltd.; Domini Social Investments,
LLC ; Dow Jones Sustainability Index; and the Interfaith Center on
Corporate Responsibility;
o 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
o 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.
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 Groups Budget
program/activity Objective Start year Legal basis targeted Activities
informationa Staff levelb
Training on Human To train 2003 15 U.S.C. Commercial Trainings. $500,000 One full-
Since
Rights, Rule of commercial 4051 et officers, inception, time
seq.c 260
Law and service foreign commercial equivalent
officers service employees
Corporate and foreign nationals, have been (FTE)
trained. The
Stewardship service domestic office is divided
planning both
nationals on trade a certificate
rule and an among
Sarah.Murphy@m of law, human specialists. award program three
to
ail.doc.gov, rights and recognize people plus
companies
Foreign and contractor
corporate commercial
Commercial stewardship. officers,
respectively, support.
Service for corporate
stewardship
activities.
To Report
The President's disseminate 2003d Executive U.S. and production One staff
and $18,311 for
Export Council's information Order foreign public publication works full
on 11753. awareness
Report on good companies, through the time, and
citizenship report's expenses.
Corporate activities of U.S. launch. The four staff
U.S. missions, Council
Stewardship corporations. foreign maintains work part
subcommittees time on all
governments. to
http://www.ita.doc. pursue its of the
own
gov/td/pec/ interests Council's
and, in 2003,
created a activities,
subcommittee which are
on
corporate
stewardship ongoing.
to produce
this report.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget
program/activity Objective Start year Legal basis targeted Activities
informationa Staff levelb
Placing
Digital To promote Executive U.S. business No One
Freedom economic 2003 Order business and NGO specific person
Initiativee 13317. community, volunteers funding.f works 50
in
small
growth by government businesses percent
in on
partner
agencies countries. this
www.dfi.gov providing and For
information business example, in program.
and Senegal, f
communications community an E-market
in training
technology to four
partner program was
businesses in countries. implemented
in
the developing partnership
with two
world through large U.S.
information
partnership technology
with companies.
U.S. business
volunteers.
Good Governance To 2000 15 Foreign Training, $1,065,585 Three
increase U.S.C. providing for full
Program market 1512. companies tools and FY time, i
access resources, 2002-2003h one
and and individual capacity part
ensure a building, time
www.ita.doc.gov/g level awareness staff.j
playing entrepreneurs, building,
field and
for U.S. business outreach.
oodgovernance In FY
companies in associations, 2003, over 1,000
emerging civil society companies/individuals
markets by groups, and were trained directly
training foreign foreign federal through the program or
companies on and regional indirectly through train
business ethics, governments. the trainer programs.g
corporate
governance and
rule of law
issues.
HIV/AIDS To further 2003 U.S. U.S. Information No Five
Initiative publication specific people
private Leadership companies and funding. work on
sector dissemination,
shalizeh.nadjmi@ engagement Against and trade liaison However, this
on between
HIV/AIDS associations, businesses and $15,000 initiative
mail.doc.gov by HIV/AIDS, other from
fostering publicprivate partnerships with other key stakeholders focused
on HIV/AIDS.
Tuberculosis and Malaria Act of 2003, See P. L. 108-25.
and chambers of commerce.
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.
the $500,000 ranging appropriation from 15 listed above for percent to
training 80 percent commercial of their service officers timek was spent
on [Estimate]. the Forum.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget
program/activity Objective Start year Legal basis targeted Activities
informationa Staff levelb
Implementation of the Labor Standards Provision of the Bilateral Textile
Agreement with Cambodia
Ross_Arnold@ita. doc.gov
To provide 1999 U.S.-Government
incentives to the Cambodia of Cambodia
Government of Bilateral
Cambodia to Textile
improve working Agreement,
conditions in the paragraph
Cambodian 10, as
textile and notified
apparel industry under Article
through effective 2.17 of the
enforcement of World Trade
local labor laws Agreement
and on Textiles
internationally and Clothing.
recognized core
labor standards.
Two consultations $7,500 One staff
every year between the [Estimate]. for 2
governments of the weeks. Five
United States and staff for 1
Cambodia to discuss day apiece.
labor standards, [Estimate].
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
Source: GAO based on information provided by agency officials.
aBudget information is for fiscal year 2003 unless otherwise noted.
bStaff located in the Russia and Independent States Division.
cThe 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.
dThis is the year when the Subcommittee on Corporate Stewardship was
created to work on this report. The report was released in September 2004.
eIn 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.
fOther 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.
gSince 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.
hThe 2003 program initiatives were fully funded through Freedom Support
Act Funds through the Department of State.
iStaff located in the Russia and Independent States Division.
jStaff located in the Latin America Division. In FY 2004, the program had
three full time and two part time employees.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
kThe 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.
lThe International Labor Organization and the Departments of State and
Labor provided input into this process.
Table 4: Responses from Department of Energy
CSR-Related Legal Budget
program/activity Objective Start year basis Groups targeted Activities
information Staff levela
Office of Energy To strengthen Not Various Private Select No Not
sector, programs discrete
Efficiency and America's available. acts. b academia, work with budget. available.e
states, the U.S.
Renewable Energy energy local private
security, governments, sector on
-Select environmental trade global
Activities energy
within the Office quality, and organizations, issues,
of such as the
Technology economic research Clean
vitality Cities
Development in organizations, Program and
public-private
partnerships other federal Freedom
that
michael.mills@ee. agencies and Cooperative
enhance energy the Auto
doe.gov efficiency. U.S. Congress, Research
(CAR).d
foreign
governments
and
multilateral
cagencies.
Carbon To develop and Sequestration make available Leadership Forum
internationally
improved costcslfsecretariat@hq effective .doe.gov technologies for
the separation and capture of carbon dioxide, a greenhouse gas, for its
transport and long-term safe storage.
2003 Presidential Foreign initiative. governments, intergovernmental
organizations, U.S. and foreign-owned companies that produce and/or
utilize energy, environmental organizations, and international experts on
energy and environment.
Under Not available. Six people
development. Ten work part
projects that were time on this
proposed by effort
Carbon [Estimate].
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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Legal Budget
program/activity Objective Start year basis Groups targeted Activities
information Staff levela
Secretariat for To organize 2003 Presidential Governments, Under No Two to
the and discrete three
International coordinate initiative. international development. budget. FTE plus
two
Partnership for multinational organizations, However, full-time
civil seven
Hydrogen research and society, companies contractors
Economy projects companies. sponsored [Estimate].
among the
16 member inaugural
meeting
michael.mills@ee. nations to of the
member
doe.gov advance the nations, and
the
transition to Department
a of
global Energy
hydrogen engages in
economy. f ongoing
discussion
with U.S.
companies to
obtain their
input.
Source: GAO based on information provided by agency officials.
aStaff levels are for fiscal year 2003 unless otherwise noted.
bSee 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).
cThe 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.
dThe 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.
eAccording 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.
fHydrogen is considered an alternative, cleaner energy source.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
Table 5: Responses from U.S. Environmental Protection Agency
CSR-Related Budget
program/activity Objective Start year Legal basis Groups targeted
Activities informationa Staff levelb
To enlist Clean
Climate Leaders major 2002 Air Large U.S. Training and 15 percent of 15 percent
Act,
Program U.S. section companies. technical the total of three full
companies 103. assistance
to to help budget of time staff
voluntarily partners
www.epa.gov/clim set and complete $900,000 was members'
track
ateleaders/ their greenhouse used for time was
success gas
toward inventories. international
meeting By the spent on
an end of efforts international
aggressive fiscal year
greenhouse 2003, close [Estimate]. efforts
to 50
gas partners had [Estimate].
reduction signed
up. EPA
target. plans to
provide
recognition
in later
years for
partners who
meet
or exceed
their
targets.
Climate To recognize 1998 Section U.S. and To date, over $25,000 One staff
foreign 100
Protection Awards and provide 13103(b)(13) companies, individuals, [Estimate]. person
incentive to of the foreign companies, works 2
Pollution and
http://www.epa.go businesses, Prevention organizations months per
Act governments, from
v/cppd/awards/cli organizations of 1990, institutions, all over the year on
Pub. globe this
mproawards.htm and L. 101-508. nonprofit have received
individuals program
who organizations, awards. Award [Estimate].
voluntarily
make individuals. winners are
recognized at
significant a
achievements special
dinner,
in climate along with
the
protection. Stratospheric
Ozone
Protection
Award
winners.
Stratospheric To recognize 1990 Section U.S. and To date, 477 $25,000 One staff
foreign
Ozone Protection and provide 13103(b)(13) companies, individuals, [Estimate]. person
Awards incentive to of the foreign companies, spends
Pollution
businesses, Prevention organizations, about 150-
Act governments, and
http://www.epa.go organizations, of 1990. institutions, teams from 200 hours
over 40
v/docs/ozone/awa and nonprofit countries have
individuals per year on
rds/ who organizations, earned the this
voluntarily award.
make and
individuals. program,
significant plus some
achievements additional
in protecting support
the ozone
layer. [Estimate].
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Budget
program/activity Objective Start year Legal basis Groups targeted
Activities informationa Staff levelb
Energy Star To 1995d Various U.S. $30,000 was One staff
promote acts. e
Program manufacturing member
-international spent on
International international
consistency in companies, spends 25
Efforts retailers, effortsf percent of
specifications energy
for energy efficiency [Estimate]. her time on
schmeltz.rachel@ the
efficient program
epa.gov products sponsors/ international
in
voluntary utilities, efforts
foreign
programs. c governments. [Estimate].
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.
Bilateral and To increase the 1990 Various acts.g Government In fiscal
year 2003, Not available. One full-
Regional capacity of officials. EPA trained officials timeh staff
Trainings on governments to from several plus
Environmental ensure countries including additional
Compliance, compliance Panama, support.
Inspections and with Nicaragua,
Enforcement environmental Honduras, Costa
standards. Rica, El Salvador, jones.davis@epa. Belize, Guatemala, gov
Mexico, India and
Brazil.
Co chair of the INECE is a International network of Network for government
Environmental and non-Compliance and government Enforcement enforcement
(INECE) and compliance
practitioners
www.inece.org from over 100 countries. It aims to increase the capacity of
governments to monitor and detect violations of domestic environmental
laws by corporations.
1989 1985 Governmental INECE connects
Memorandum environmental developed and
of enforcement developing
Understanding authorities, governments'
between EPA including environmental
and Dutch prosecutors, compliance and
Ministry of investigators, enforcement
Housing, environmental authorities.
Spatial ministries, and Specifically, INECE
Planning and provides training,
nongovernmental
the organizations holds conferences,
Environment working to and issues
led to creation increase publications.
of INECE.i environmental
compliance.
EPA and the One FTE
Dutch spread
government among
each provide several
about half of people
the expenses working on
totaling INECE.
$200,000
250,000 a
yearj
[Estimate].
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Budget
program/activity Objective Start year Legal basis Groups targeted
Activities informationa Staff levelb
China-U.S. Cooperation in Industrial Pollution Prevention and Energy
Efficiency Cooperative Agreement
gianninispohn.suzanne@ epa.gov
To assist China to develop voluntary governmentindustry partnership
programs in industrial pollution prevention and energy efficiency.
2001 Clean Air Act, Section 103 and National Environmental Policy Act,
Sec. 102(2)(f).
Companies in Training, awards,k $300,000 One staff China, including and
information total person U.S. companies, provision. approved works 25-50
and the Chinese costs for the percent of government. project.l her time
[Estimate].
Chair of the To track the 2004 The ANSI As a member No One
National members, of the discrete staff
American strategic and Technology including Interagency budget. person
National policy Transfer consumer Committee on works
and groups, part
Standards implications of Advancement industry, Standards time on
Policy this
Institute CSR work in Act (NTTAA) government, composed of effort.
(ANSI)'s and the
Ad Hoc Group the of 1995 and NGOs. Standards
on
CSR International OMB Executives
Circular from all
A-119. federal
Organization agencies,
www.ansi.org for the EPA
member
Standardization coordinates
input
(ISO). from federal
agencies
regarding
the
development
and utility
of an
international
standard in
CSR.
Party to To improve 2003 A side Corporations The No Two
in commission specific staff
the U.S., held a work
Commission for voluntary Canada, workshop budget. part
agreement to of
Environmental the North and Mexico, experts in time on
corporate as early this
Cooperation, disclosure of American well as 2003 and effort.
published
Financially- environmental Agreement on institutional background
and papers
information other for the
Relevant that Environmental investors workshop,
as
Environmental is Cooperation who are users well as a
financially of report.
Information relevant. (NAFTA) financially
Project established relevant
the information.
correa.sylvia@ep Commission
a.gov for
Environmental
Cooperation,
See P. L.
103-
182, title V.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Budget
program/activity Objective Start year Legal basis Groups targeted
Activities informationa Staff levelb
U.S.-Chile Free The objective is The U.S.-Annex 19.3, Companies, in The
project will try $25,000 Three staff Trade Agreement to facilitate Chile
FTA Section 1(d) of particular to build and through FY work part (FTA) -
CSR exchange of went into the U.S.-Chile business councils promote
networking 2005. time on this Project information and effect in Free Trade
for sustainable and exchange of effort.
expertise on January Agreement. development, information between
Hill-Macon.Cam best practices 2004. This Chilean National business
councils. @epa.gov that have been project is Environmental EPA, USTR, the
used by likely to Council Department of State companies to start in
(CONAMA). and CONAMA held promote spring/ a workshop on sustainable summer
corporate development. 2005. responsibility in
Chile in 2004 as part of the FTA.
Partnership for To address 2002 Clean Air Governments, Clearinghouse $700,000 Two
Act, of FTEs.
Clean Fuels and vehicular air Section 103; private information,
sector,
Vehicles pollution National NGOs, publications,
worldwide by Environmental international technical
assistance
metcalfe.jane@ep eliminating Policy Act, organizations. to African
lead countries
in gasoline Section 102. to phase out
a.gov and lead in
phasing down Africa, and
related
sulfur in projects in
diesel other
and gasoline, countries.
U.S.
and adopting companies
cleaner participate
vehicle on the
technologies. Advisory
Board,
which steers
the
partnership.
Source: GAO based on information provided by agency officials.
aBudget information is for fiscal year 2003 unless otherwise noted.
bStaff levels are for fiscal year 2003 unless otherwise noted.
cThe 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.
dThe 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.
eStatutory 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.
fThe total budget for the Energy Star program was approximately $50.3
million in FY 2003.
gClean Air Act S: 103; Clean Water Act S: 104; Solid Waste Disposal Act S:
8001; Federal Insecticide, Fungicide, and Rodenticide Act S: 20; Toxic
Substances Control Act S: 10; National Environmental Policy Act S:
102(2)(f).
hThis 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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
iSee also Clean Air Act S: 103; Clean Water Act S: 104; Solid Waste
Disposal Act S: 8001; Federal Insecticide, Fungicide, and Rodenticide Act
S: 20; Toxic Substances Control Act S: 10; National Environmental Policy
Act S: 102(2)(f).
jThis figure does not include resources for staffing or additional funding
that came from the State Department.
kThe 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.
lA total of $200,00 had been funded as of March 2005.
Table 6: Responses from Export-Import Bank of the United States
CSR-Related Groups Budget
program/activity Objective Start year Legal basis targeted Activities
informationa Staff levelb
Environmental To take 1995c Export-Import Foreign During FY $531,000 Three FTEs
buyers 2003,
Procedures and into account Bank Act of and U.S. Ex-Im Bank [Estimate]. [Estimate].
Guidelines the potential 1945, as exporters screened
beneficial amended, participating approximately
and in 70
http://www.exim.gov/ adverse codified at foreign applications
projects. for
products/policies/ environmental 12 U.S.C. their
potential
environment/ effects of 635. environmental
environment.html goods and effects. The
services for Bank's
Engineering
which support and
is requested Environment
under its Division
direct
undertook
lending formal
and guarantee environmental
evaluations
programs. of the
projects
related
to 21
separate
applications
for
financing.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget
program/activity Objective Start year Legal basis targeted Activities
informationa Staff levelb
Environmental To 1993 Export-Import U.S. suppliers The $148,000 0.80 of an
of
Exports Program encourage the Bank Act of environmentally Environmental [Estimate]. FTE
use of its 1945, as beneficial Exports Program [Estimate].
amended, was
http://www.exim.gov programs to products, and instrumental
products/policies/ support the codified at participantsd in enabling
12
environment/ export of U.S.C. 635. undertaking Ex-Im Bank to
environment.html goods and projects that
are support over
services that beneficial to $173 million of
the
have environment.
beneficial environmentally
effects on beneficial
the goods
environment and services in
or
mitigate FY 2003,
potential including $13
adverse million in
environmental products and
effects. technologies
related to
renewable
energy.
Source: GAO based on information provided by agency officials.
aBudget information is for fiscal year 2003 unless otherwise noted.
bStaff levels are for fiscal year 2003 unless otherwise noted.
cInterim guidelines were established in 1993.
dParticipants refer to both U.S. suppliers and/or foreign buyers.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
Table 7: Responses from Inter-American Foundation
CSR-Related Groups Budget program/activity Objective Start year Legal
basis targeted Activities Information Staff levela
U.S. Government To provide 2003 Authorizing U.S. A web portal will be
$37,000 was 20-25 CSR Web Portalb public access to legislation, companies
launched in 2005 obligated in percent of U.S. See 22 and other housing
each agency's FY 2003, but one staff
[email protected] government U.S.C. 290f. organizations activities related to
CSR activities were person's time CSR programs, operating in or corporate
carried out in [Estimate]. case studies, the U.S. and stewardship. FY
2004. events, and abroad. contacts.
Program Office To meet 1991 Authorizing U.S., Latin Supports $1,039,500. 0.75 of an
- IAF's innovative d
Corporate mandate of legislation, American and projects in FTE divided
Latin America
Outreach providing See 22 Caribbean and the
grants Caribbean in among
U.S.C. 290f. corporations partnership several
to support with staff
[email protected] and business companies that
grassroots want to persons
initiatives associations, invest in [Estimate].
by grassroots
cofunding local development;
Facilitates
projects tax-deductible
with governments
corporations and NGOs. contributions
by U.S.
interested corporations
in to support
developing grassroots
or development
enhancing programs in
their Latin
CSR efforts America and
in the
Caribbean;
the region. Provides
technical
assistance to
corporate
partners to
create more
sustainable,
participatory
CSR
programs.
RedEAmerica To 2002 Authorizing U.S. and Learning $1,848,560 Two full
encourage exchanges time
Initiativee companies legislation, foreign among for FY staff
and members, 2004 starting
See 22 companies strategy in FY
corporate formulation, 2004.
[email protected] foundations U.S.C. 290f. and development
to corporate of trainings
take foundations. in all
leadership countries,
in mobilizing
grassroots corporate
and
development other
in resources;
At the
the end of FY
Americas. 2004, 52
companies
were in the
network,
several of
which
represented
multiple
companies.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget program/activity Objective Start year Legal
basis targeted Activities Information Staff levela
Cosponsor for To bring CSR Americas together Conferencef government,
civil society,
[email protected] business, the academic world and other institutions to
develop effective and sustainable
CSR principles for the Western hemisphere.
2002 Authorizing Private, Provides funding, $35,800 10-15
public for
legislation, and participated on FY 2004.g percent of
steering
See 22 nongovernme and operating one staff
U.S.C. 290f. ntal sectors. committee. person's time
[Estimate]. h
Source: GAO based on information provided by agency officials.
aStaff levels are for fiscal year 2003 unless otherwise noted.
bThe Inter-American Foundation is leading this interagency effort.
Additional participating agencies include the Departments of Commerce and
State, USAID, and EPA.
cThis estimate includes only IAF staff time.
dThis 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.
eThe full name of the RedEAmerica Initiative is the Inter-American Network
of Corporate Foundations and Companies for Grassroots Development.
fThe 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.
gThis figure does not include resources dedicated to the conference from
the Department of State.
hThis estimate does not include staff time dedicated to the conference
from the Department of State.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
Table 8: Responses from Department of Labor CSR-Related Groups Budget Staff
program/activity Objective Start year Legal basis targeted Activities
informationa levelb
Bureau of International Labor Affairs (ILAB) - Protecting the Basic Rights
of Workers program
www.dol.gov/ilab
To improve the capacity of developing country governments to achieve
compliance with national labor laws and internationally -recognized
workers rights.
2000 Annual appropriations legislation. Current authority isP. L. 108-447,
Div. F, Title 1 (Department of Labor Appropriations Act, 2005).
Foreign Training, Governments, equipment workers and provision,c
employers. drafting of
training materials and promotional activities. The
$20 milliond Nine staff work part time on this program.
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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget Staff program/activity Objective Start year Legal
basis targeted Activities informationa levelb
ILAB - International To support Child Labor Program efforts to
- activities working eradicate with industry exploitive child
associationse labor
worldwide. www.dol.gov/ilab
1993 Annual appropriations legislation. Current authority isP. L. 108-447,
Div. F, Title 1 (Department of Labor Appropriations Act, 2005).
Children, The program
parents, has funded
community several projects
leaders, for various
government lengths of time
officials, and in Bangladesh,
industry Pakistan,
associations. 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.
About $35 million Not
between fiscal available.
years 1999-2004
for all projects
working with
industry
associations.
Source: GAO based on information provided by agency officials.
aBudget information is for fiscal year 2003 unless otherwise noted.
bStaff levels are for fiscal year 2003 unless otherwise noted.
cExamples of equipment include computers or vehicles to access workplaces.
dThe budget for this program decreased significantly in fiscal years 2004
and 2005 to $2.5 million and no funding, respectively.
eThe 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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
Table 9: Responses from Overseas Private Investment Corporation
CSR-Related Groups Budget
program/activity Objective Start year Legal basis targeted Activities
information Staff level
Corporate social To develop and
responsibility implement
requirements policies and procedures to
www.opic.gov 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.
1971a Various actsb Companies receiving OPIC support in the form of direct
loans, loan guaranties, political risk insurance and "subprojects"
obtaining funds from OPICsupported financial intermediaries.
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.
Not available. Not available.
Corporate To ensure that
governance OPIC users'
requirements corporate governance
www.opic.gov policies and practices follow and implement OPIC policies and
procedures in compliance with OPIC's statutory responsibilities and risk
management requirements.
1971c Overseas Private Investment Corporation Amendments Act of 1977, See
P. L. 95268, Sec. 237(1).
U.S. investors All major that receive sponsors of an OPIC support OPIC
financed and the project must companies in answer which they questions
invest. 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.
Not available. Not available.
Source: GAO based on information provided by agency officials.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
aCertain 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
bForeign 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.
cCertain policies and procedures have been in effect since OPIC began
operations in 1971 with periodic updates in response to subsequent
statutory requirements.
Table 10: Responses from U.S. Securities and Exchange Commission
CSR-Related Groups Budget
program/activity Objective Start year Legal targeted Activities information Staff
basis level
Implementation To ensure Late 1960s Rule 14a-8 SEC The Not Not
of Rule that reporting available.
14a-8 on companies [Estimate] of the companies. Shareholder available.
Shareholder do
Proposalsa not exclude Securities Proposal
shareholder Exchange Taskforce
[email protected] proposals Act of corresponds
for 1934,
vote at See 17 with
annual companies
company C.F.R. regarding
meetings, 240.14a-8. requests to
including exclude
those
related to shareholder
proposals
global CSR, that
unless they do not meet
the
meet the criteria
legal
criteria according
for to
exclusion Rule 14a-8.
outlined in
Rule
14a-8.
Full Disclosure Program - Office of Global Security Risk
[email protected]
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.
2004b Securities Act of 1933 and the Securities Exchange Act of 1934c
Foreign Review companies and company U.S. documents to companies ensure
that with foreign companies are subsidiaries aware of the that have
disclosure contacts with standard countries of applicable to concern.
their operations
or contacts.
Not available. Three full time staff in FY 2004.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget
program/activity Objective Start year Legal basis targeted Activities
information Staff level
Full Disclosure To ensure that
Program companies whose
[email protected] 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.
1933 Securities SEC reporting Review Not available. Not Act of 1933
companies. company available. and the disclosure and Securities provide
Exchange comments to Act of 1934. companies.
Source: GAO based on information provided by agency officials.
aRule 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.
bThe Office of Global Security Risk was established in 2004. However, the
Division of Corporate Finance began focusing on this type of disclosure in
2001.
cSee 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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
Table 11: Responses from the Department of State CSR-Related Groups Budget Staff
program/activity Objective Start year Legal basis targeted Activities
informationa levelb
Bureau for To address 2000 State
Democracy, Human unacceptable Department
Rights and Labor working Basic
Authorities
(DRL) - conditions in Act of 1956, as
Partnership
to Eliminate manufacturing amended, See
Sweatshops facilities 22 U.S.C.
Program overseas that 2651a(c)(2) and
produce goods 22 U.S.C.
camponovocn@ for the U.S. 2151n(d)(3).
state.gov market.
NGOs, The Partnership has
governments, provided several
U.S. and million dollars to
foreign support public and
companies. private sector initiatives to establish codes of conduct,
encourage effective workplace monitoring and auditing systems, and conduct
research, trainingand 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.
$1,994,554c One staff person works 60 percent of his time and one staff
person works 25 percent of her time on this effort [Estimate].
DRL To provide 1999 State NGOs, U.S. The bureau $10,000 One staff
-Voluntary convenes in
Principles guidance to Department and U.K. oil companies, FY 2004
on NGOs, person
Security and extractives Basic and mining and local works15-
Human Authorities
Rights companies on Act of 1956, companies, governments 20 percent
as to
how to ensure amended, See and corporate implement of his time
the
camponovocn@ respect for 22 U.S.C. responsibility principles, on this
and is
human rights 2651a(c)(2). organizations. working to effort
state.gov in include
the creation additional [Estimate].
and
implementation governments.
Nearly
of security every major
oil and
procedures. mining
company is a
participant
in the
Voluntary
Principles
process.
DRL To utilize 2001 State U.S. Ongoing or Equatorial One staff
-Bilateral private planned
investment projects
efforts to Department companies, in Guinea -
Equatorial person
strengthen Basic NGOs, Guinea, $225,000; works 20
Authorities Oman and
camponovocn@ human Act of 1956, foreign China. percent of
rights as Oman -N/A;
and the amended, See China - his time on
state.gov rule of governments.
law in 22 U.S.C. $400,000 this effort
select in
countries. 2651a(c)(2). FY 2004. [Estimate].
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget Staff program/activity Objective Start year Legal
basis targeted Activities informationa levelb
DRL - Work Within Multilateral Institutions
camponovocn@ state.gov
To promote and Not State Multilateral
protect U.S. available. Department organizations
government Basic Authorities and their
interests in the Act of 1956, as member
area of CSR and amended, See states.
human rights 22 U.S.C.
within 2651a(c)(2).
multilateral
institutions.
Prepares guidance No specific One staff
for U.S. delegations budget. person
and responds to works 5
requests for percent of
information from his time on
United Nations this effort
organizations when [Estimate].
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.
Bureau of To promote 1999 Mission U.S. small Award $6,000d One staff
best of the nominations,
Economics and business Bureau of and medium- public
ceremony. In person
Business practices, Economics sized FY 2004, the works 30-
Affairs good and
(EB) - Business companies Department 40 percent
Secretary of corporate Affairs. received
State's Award governance, and a record of her
for and number of time
50
Corporate democratic multinational nominations on this
from
Excellence values corporations. U.S. Chiefs efforte
overseas. of
Mission Estimate].
worldwide.
smith-nissleyn@
state.gov
EB -US-Mexico To recognize 2003 Presidential U.S. and Award Not One staff
the nominations,
Good Partner role that initiative. Mexican public available.g
Award U.S. ceremony. person
and Mexican businesses, Seventy works 100
nominations
were
smith-nissleyn associations received in
enterprises, FY percent on
@state.gov business and academic 2003. More the award
than 900
associations, institutions. people
attended the program
and academic Award from April
Ceremony and
institutions Gala, which - June and
play received
in advancing extensive 30 percent
the media
goals of the coverage, for the
especially
Partnership
for in Mexico. remainder
Prosperityf of the year
to
boost the [Estimate].
social
and economic
well-being of
Mexican
citizens.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget Staff program/activity Objective Start year Legal
basis targeted Activities informationa levelb
EB -OECD To raise 1976 Requirement Companies, Promotes No One staff
National as discrete
Contact Pointh awareness signatory to labor understanding budget.
the unions of the person
among U.S. OECD and NGOs. OECD spends 33
Guidelines
[email protected] companies of Declaration and helps percent of
and companies,
the OECD Decisions on labor unions his time on
and
Guidelines International NGOs in their this effort
for efforts
Multinational Investment to resolve and one
and issues that
Enterprisesi Multilateral may arise office
and with
to facilitate Enterprises. respect to director
the
resolution Guidelines; spends 10-
when From
parties raise 2000-2004, 16 15 percent
issues specific of his time
instances
concerning were brought on this
U.S. to the
companies' attention of effort
the
treatment of National [Estimate].
the Contact
guidelines. Point.
EB-U.S. Lead to To combat 1999 See Pub. L.
100-
OECD Working transnational 318, The
Group on Briberyj bribery of Omnibus Trade
foreign public and
[email protected] officials and Competitiveness
monitor Act of 1988,
Foreign Leads U.S. No separate One governments, delegationk to the
funding. deputy enforcement of asking the the OECD Executive Convention on
Branch, led by Combating State, to Bribery of negotiate a Foreign Public
convention on Officials in bribery at the International OECD. See also
Business Senate Transactions Resolution of (Antibribery Advice and
Convention). Consent to the
OECD
Antibribery
Convention, of
July 31, 1998.
companies. 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.
office director spends 50 percent of his time on this effort [Estimate].
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget Staff program/activity Objective Start year Legal
basis targeted Activities informationa levelb
EB-U.S. Lead to G-8 To reduce 2003 22 U.S.C. Georgia,
2656.
Anticorruption and corruption Nicaragua,
and
Transparency Pilots enhance Nigeria, Peru,
transparency to other G-8
brownpa@state. ensure that governments.
gov development
assistance
resources and
budget revenues achieve their intended purposes.
Provide assistance $150,000 1.25 FTEs.
through the Bureau of (cost of
International contractor
Narcotics and Law who serves
Enforcement Affairs as project
to develop a series of coordinator).
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
EB - Liaise with No 0.25
Coordinate To increase 2002 Presidential Governments, USAID, separate of
an
U.S. input to initiative. companies, Treasury, funding. FTE.
the transparency the private
United over industry sector and
Kingdom's payments civil
Extractive and revenues associations, society,
Industries in coordinate
Transparency the international U.S. policy
extractives toward the
Initiative sector in organizations, EITI, a
(EITI) United
countries civil society, Kingdom-led
heavily
brownpa@state. dependent on investors. initiative.
these
gov resources.
Bureau of Oceans and International Environmental and Scientific Affairs
(OES) - CSR-Related Activities
lbrutten@state. gov
To promote 2001 Foreign
corporate Assistance Act
responsibility of 1961, as
through its amended.
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.
U.S. companies and business groups, civil society, foreign governments,
and international organizations.
Meets with No specific Not
representatives from budget. available.
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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget Staff program/activity Objective Start year Legal
basis targeted Activities informationa levelb
Office of Private To 2004 Coordinating U.S. Manages a Web No One
coordinate site specific full-
Assistance, Iraq U.S. private function commercial, for donations, budget. time
donations operating academic or coordinates
and referrals person.
GramagliaTR@state private through the cultural from Congress,
and
partnerships bureau. contacts with other
.gov and agencies,
intended for civic
the groups. presents to
Iraqi gatherings of
people,
including individuals or
financial organizations
and in- with an
kind interest in
donations, supporting
and reconstruction
mentoring. and
humanitarian
needs
in Iraq.
Middle East Partnership Initiative
- Business Internship Program
FranceskiS@state. gov 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.
2003 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.
U.S. U.S. companies host
companies. interns for three months at their own expense. In fiscal year
2003, more than 35 companies hosted interns.
$2,000,000 One part time plus contractor support.
Middle East Partnership Initiative
- Junior Achievement Program
FranceskiS@ state.gov
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.
2003 Emergency U.S. and Wartime foreign Supplemental companies.
Appropriations Act, 2003 (See Pub. L. 108-11) and chapter 4 of Part II of
the Foreign Assistance Act of 1961, as amended.
Through a $2,400,000m One part
cooperative time plus
agreement to the contractor
Junior Achievement support.
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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
(Continued From Previous Page)
CSR-Related Groups Budget Staff program/activity Objective Start year
Legal basis targeted Activities informationa levelb
Bureau of To ensure Not United United Negotiations No Several
that Nations over specific
International initiatives available.n Participation Nations resolutions, budget. staff
related Act work in this
Organization to CSR at of 1945. programs and bureau
Affairs the programs,
- select United funds, budgets in devote
activities Nations United
and its affiliated agencies and Nations time to DaleyPB@state.
organizations other organizations, and CSR on an gov remain organizations.
reviews of programs ad hoc
consistent with and activities. basis.
the imperatives
of the
marketplace and
compatible with
United States
interests.
Office of the To combat 2004 The U.S. Private The private No Not
U.S. sector is specific
Global AIDS HIV/AIDS, Leadership sector. a critical budget. applicable.
partner at
Coordinator promoting Against the country
(OGAC) level.p
- Public-Private integrated HIV/AIDS, These
partnerships
Partnershipso prevention, Tuberculosis, facilitate
company
treatment and and Malaria workplace
Act programs
Moloney-KittsMA@ care of 2003, See to create
awareness
interventions Section 101 about the
state.gov of spread of
with an P.L. 108-25. HIV/AIDS,
urgent decrease
focus on 15 stigma among
those
countries who know their
that HIV
status, and
are among the provide
most antiretroviral
afflicted therapy
nations in to employees
the and
world. their
families. The
office began
keeping
track of the
number of
partnerships
in FY
2005.
Source: GAO based on information provided by agency officials.
aBudget information is for fiscal year 2003 unless otherwise noted.
bStaff levels are for fiscal year 2003 unless otherwise noted.
cThis represents grants that were funded in fiscal year 2003. Grants
funded in fiscal years 2001 and 2002 were also ongoing in fiscal year
2003.
dThis 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.
eMore than 50 additional staff help to plan and organize the award
ceremony.
fThe 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.
gThe 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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
hIn addition to the Department of State, USTR, EPA and the Departments of
Treasury, Commerce, and Labor help resolve complaints against companies.
iThe 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.
jThe 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.
kThe Departments of Commerce and Justice are also members of the U.S.
delegation.
lThese 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.
mFiscal year 2003 funds are also being spent in fiscal year 2004.
nAccording 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.
oOGAC 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).
pAt the local level, U.S. government offices work with pharmaceutical
companies on an ad hoc basis to facilitate drug donations in specific
countries.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
Table 12: Responses from the Department of Treasury
CSR-Related Groups Budget
program/activity Objective Start year Legal basis targeted Activities
information Staff levela
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
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.
2003 Clean Diamond Trade Act (P.L. 108-19), Executive Order 13312, and
Rough Diamonds Control Regulations, 31 C.F.R. part 592 (Regulations).
Companies or individuals involved in the export from and/or import into
the United States of rough diamonds.
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
No specific Three FTEs.f
e
budget.
Source: GAO based on information provided by agency officials.
aStaff levels are for fiscal year 2003 unless otherwise noted.
bOFAC 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.
cThe 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.
dAs 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.
eThis does not capture the resources of additional agencies involved in
the implementation of the Clean Diamond Trade Act.
fAccording 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.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
Table 13: Responses from U.S. Agency for International Development
CSR-Related Legal Groups Budget
program/activity Objective Start basis targeted Activities informationa Staff
year levelb
Global To encourage
Development public-
Alliance private
partnerships
for
development
www.usaid.gov/gda projects.
2001 Foreign Assistance Act of 1961 (P. L. 87195), as amended.
Foundations, Trains USAID for-profit firms, staff on publiccivil society
private organizations, alliances and foreign conducts governments.
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.
c
$29.8 million. Six full time staff plus contractors and field support.d
Volunteers for To deploy 2003 Executive U.S.-based By the end of No Three
skilled specific full
Prosperitye volunteers Order organizations, FY 2004, budget. time
in U.S. staff.g
foreign 13317. Volunteers for
assistance including
www.volunteersforprosp programs. corporations. Prosperity
f
erity.gov 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.
Source: GAO based on information provided by agency officials.
aBudget information is for fiscal year 2003 unless otherwise noted.
bStaff levels are for fiscal year 2003 unless otherwise noted.
cIn addition, according to officials, USAID overseas missions and
USAID/Washington funded alliances to the total amount of $360 million.
Appendix IIEURFederal Agency CSR-Related Programs and EURActivitiesEUR
dEach USAID mission office and bureau has a Global Development Alliance
point of contact, and each mission office manages at least one
public-private alliance.
eUSAID 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.
fThe 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.
gAs of March 2005, three full-time staff were approved, although two staff
were in place.
Table 14: Responses from Office of the U.S. Trade Representativea
CSR-Related Legal Groups Budget
program/activity Objective Start year basis targeted Activities
information Staff levelb
Negotiating To ensure Trade Negotiating No
Free that 2002. Act Foreign terms of discrete FTA
of
Trade trade
Agreements negotiating 2002. agreements budget. negotiators
governments. with
objectives U.S.
on labor trading address CSR
partners.
and the USTR will as warranted
www.ustr.gov consider
environment including during
laid CSR issues
out in the and
Trade projects in negotiations.
trade
Act of 2002 agreements
and if the
issue
issues of is raised
concern by trading
to trading partners.
partners For
example,
are CSR
included in language is
free trade included in
the US-
Chile and
agreements. US-
Singapore
free trade
agreements.
To USTR meets No One
Outreach to improve Not Not Business with discrete percent
labor
standards business of one
Business and available. available. groups on budget. staff
groups. an
business ad hoc
Associations conduct basis to person's
discuss
in U.S. a range of time.
business issues. On
occasion,
overseas. this
www.ustr.gov includes
encouraging
businesses
to
implement
corporate
codes of
conduct.
Source: GAO based on information provided by agency officials.
aOfficials 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.
bStaff levels are for fiscal year 2003 unless otherwise noted.
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.
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