An Era of Global Governance: the Power of Corporate Philanthropy
“The country is waiting. It is scanning the horizon hoping for some institution to distinguish itself, to step forward, to raise the bar, to be the standard bearer and the arena for social and civic responsibility – to fill a moral vacuum. What an opportunity. We only have to reach out and grab it.”
Paul Newman, Committee Encouraging Corporate Philanthropy (CECP) Founding Co-Chair, CEO of Newman’s Own Inc., and actor (1925-2008)
Giant private corporations are often portrayed as the baddies, rebelling against international goals and laws, revelling in the fruits of super-globalisation and, at times, seeming to threaten state sovereignty. But are they really? Private actors have emerged strong in the philanthropic arena for various reasons, both altruistic and strategic. However, their philanthropic ventures have increasingly aligned with a global humanitarian agenda, particularly through forging close partnerships with the UN. It has become clear that corporate actors are alive and well in influencing global policy and development.
The UN + Corporate Duo
Corporations are increasingly expected to fill the void in a global governance architecture concerned with the values of consensus, collectivity, humanitarianism, moral responsibility and obligation. In times of humanitarian crisis, the international community finds itself obliged to assist and even feels responsible for the crime of inaction. The 2005 World Summit, which coined the term ‘Responsibility to Protect’, and the subsequent UN Global Compact (UNGC) succeeded in transforming corporate identities from profit-guzzling actors to ‘corporate citizens’ with philanthropic obligations. The UNGC asked its participants to seek partnerships in support of broader UN goals, such as the Millennium Development Goals (MDG), aiming to reduce poverty and improve health, education and community development.
The UN is a believer in ‘“philanthrocapitalism”, as coined in Matt Bishop and Michael Green’s book of the same name, whereby the rich can ‘save’ the world. Between 1990 and 2005, private external capital flows to developing countries increased from $50 billion to over $640 billion. This funding has focused on the creation of democratic institutions, promoting human rights and ensuring the participation of all groups in democratic processes. Terms such as ‘development’, ‘citizenship’, ‘obligation’, ‘responsibility’ and ‘democracy’ have strengthened a liberalist discursive regime, creating normative identities that demand certain practices and capacities from corporations.
Pure Altruism(?)
PricewaterhouseCoopers’ 2009 report entitled ‘Doing the Right Thing’ described the process by which they raised $U.S.4 million ($A3,790,750) to build schools for four refugee camps in Darfur, Sudan (completed in early 2010). This will provide education for at least 20,000 children over the next five years.
Denim brand G-Star Raw, a partner of the UN Office of Partnerships, has also been applauded for increasing the publicity of MDGs since launching a series of events in 2009, such as the ‘Stand Up and Take Action’ campaign and the UN Millennium Campaign. In addition, they have been skyping with Kenyan youth on poverty, life experiences and how our governments should respond. Rather than merely directing money towards global problems, G-Star is also investing in sustainable fabrics such as organic cotton produced without the use of pesticides or synthetic fertilisers, to decrease ecological impacts and help local farmers. This both reflects and enhances norms of environmental sustainability, while simultaneously redefining such virtuous actions as ‘trendy’, making the brand and their customers appear to be politically-savvy fashionistas.
The list is endless. McDonald’s and Gloria Jeans’ ‘fair trade’ Rainforest Alliance is another one we see on almost a daily basis. One of the leading organisations promoting fairer trade includes the Fairtrade Labelling Organisation, which believes that “informed consumer choices” should contribute to a fairer international trade system. The fruits of the global fair trade movement can also be seen in the University of Sydney’s first referendum considering its Green Paper, which voted yes to fair trade coffee in May 2010.
It is questionable as to whether corporations have autonomously adhered to their corporate social responsibility in contributing to ecologically sustainable development to appeal to consumers, or if this was a pressured reaction from the international community in its global fair trade movement aiming to alleviate poverty. Nevertheless, consumer-advocates have clearly identified that corporations play a major role in setting coffee prices and providing the wages for families in developing countries, “so when you drink coffee, the people who produced it earn more than enough … to feed their family for a day”. Consumers and corporations are simultaneously affecting each other’s preferences and interests, in upholding greater purposes for the international community as good global and corporate citizens.
These highly visible mega-corporations are effectively raising awareness on such humanitarian global issues and building a popular culture around them. After transforming into ‘global corporate citizens’ themselves, they’re advocating that consumers become global citizens as well. In this sense, the UN-corporate duo has worked well: funding has increased, and corporations have been pressured to become responsible.
Strategic Philanthropy: the Committee to Encourage Corporate Philanthropy
Established in 1999, CECP was initially comprised of 30 Chief Executive Officers, but that number has since grown to over 175. CECP considers philanthropy necessary in order to address global challenges “from terrorism and climate change to pandemic disease and poverty”. But corporations don’t just fund any cause; it can also be a very strategic process. It’s no accident that CECP finds education imperative, especially in places like the Arab and Muslim worlds and post-conflict societies, because a peaceful environment ultimately creates a good business environment for better profits.
At CECP’s February 2010 Board of Boards Conference, Chairman of Hasbro Alan Hassenfeld questioned: “If you take what were the developing countries; the Chinas, the Brazils, the Indias, they are really creating – we believe a new paradigm in the globalised world. However we, in the United States and in Europe – we’re trying to protect an old paradigm. And the question is how people feel about how we begin to join or … are we going to get left behind?” This highlights the intentional orchestration of power generated by CECP in solidifying liberalist and capitalist ideologies for their hegemony in the world economy.
But corporations have also realised that building a better image and reputation can result in higher revenues in the long term. In this way, they’ve identified that there is a ‘win-win’ aspect of philanthropy that aligns their interests with the broader values of international civil society. They were so enthusiastic that they even created International Corporate Philanthropy Day.
One Step Further with the: “OH! Look over there!” Tactic
Corporations can and do take advantage of the virtuous image. Stephen Brammer and Andrew Millington demonstrate that the link between reputation or corporate image and philanthropy is stronger in industries that have significant negative social externalities. The corporate image of the tobacco industry is clearly difficult to cast in a positive light, given that it can be blamed for an estimated 10 million deaths globally by 2020. Philip Morris focused on hunger relief as the subject of philanthropy, diverting attention away from tobacco-related issues. This hunger relief campaign, labelled PM21, started in 1990; by 2005, it had donated more than $1.5 billion to over 700 U.S. organisations and 70 countries. Morris mobilised all forms of media to advertise PM21 and to de-link the consequences of cigarettes from the company that sold them.
Another unfortunate example is the Gates Foundation. The Foundation provided vaccinations for polio and measles for residents who contracted respiratory diseases from a neighbouring oil plant in which the Gates’ had invested. Furthermore, they supported intellectual property laws that limited access to AIDS medication.
Rather than focusing on the underlying motives, acts of corporate philanthropy display prevailing liberal norms and values under global governance. As a result, such corporations’ negative externalities are also mitigated.
Conclusion
Certainly, philanthropy does not address the key causes of poverty, ill health and environmental injustice. We can all easily take the Dependency-Marxist view and point to the greater structural reasons: the North-South international division of labour, with the North increasing the inequality gap that forces the poor to remain poor and replaces the overtly colonial empire with a capital empire. This, of course, should be addressed.
However, the pro-philanthropy argument set forth by Jeffrey Sachs in The End of Poverty is valid, in the sense that philanthropy is practical and valuable in alleviating poverty in the short term. His policies, based on the MDGs, require that the rich provide 0.7 per cent of their GNP for foreign aid, which should be used for investment in infrastructure and human capital. Undeniably, these services and goods are urgent requirements for the survival of poor countries, and they can be provided efficiently.
Sometimes it’s hard to tell whether a corporation is acting out of genuine altruism, strategic interest or merely faking the act entirely in its philanthrocapitalistic ventures. But it is clear that the prevailing global governance architecture embedded in liberalist cultures, values, norms and policies has had an effect in increasing corporate philanthropy – and vice versa. The UN has successfully promoted the ideas of both ‘good corporate citizenship’ and corporate social responsibility through integrating its democratic ideologies, promoting human rights (MDGs) and environmental sustainability. Direct partnerships with corporations like PwC and G-Star have highlighted this and shown the flow-on effect in shaping consumer-advocate identity, trends and culture.
The idea of philanthropy itself has powerful underlying connotations of virtue, selflessness and higher purpose which have been advocated by international civil society. But in return, this idea has been strengthened by the corporate sector, and so the process can be seen as a virtuous cycle. The strengthening normative culture of becoming responsible corporate and individual global citizens can be seen as an important positive outcome arising from the practice of corporate philanthropy.
