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World Review

Ian Doyle and Jem Bendell

The Journal of Corporate Citizenship

35

Autumn 2009

7-23

1470-5001

www.greenleaf-publishing.com/jcc35

© 2009 Greenleaf Publishing Limited

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JCC 35 Autumn 2009 7

World ReviewApril–June 2009

Jem BendellAssociate Professor, GBS

Ian DoyleAssociate, Lifeworth

A synopsis of the keystrategic developments incorporate responsibilityaround the globe over thelast quarter

Responsible tax management

the fallout from the westernfinancial crisis continued to bring govern-ment back into the picture in respect tohow business–society relations shouldunfold. In April, leaders of the world’s 20largest economies met in an attempt torevise the rules of global finance andreform the world’s financial institutions.One of the key agenda items at the G20concerned one basic corporate contribu-tion to society: the payment of taxes. Lead-ers sought agreement on controlling taxhavens and exchanging tax information—no doubt one attempt to recoup the largeborrowings necessary for bailing out thebanks. The outcome was an official com-

muniqué with a commitment by the G20‘to take action against non-cooperativejurisdictions, including tax havens’ and todeploy sanctions to protect public financesand financial systems.1 While the G20leaders can be congratulated for publiclytaking a stance against jurisdictions thatlack transparency in respect to the ex-change of tax information, and demon-strating a willingness to act at a politicallevel, it raises the question of what is theethical responsibility of the corporationwhen it comes to using tax havens. Asdeputy director of the Centre of EuropeanReform Ms Katinka Barysch questions, incommenting on the G20 agenda prior to

1 The London Summit 2009, ‘Global Plan for Recovery and Reform’, 2 April 2009; www.londonsummit.gov.uk/resources/en/news/15766232/communique-020409.

jcc35worldreview.qxd 1/12/09 20:27 Page 7

the meeting, is addressing tax havens thereal issue, or should it be improving globaleconomic governance?2

For instance, the day before the sum-mit, the French justice department an-nounced a preliminary investigation intothe possible fraudulent activity of theFrench oil giant Total. According to LeParisien, Elf Trading SA which is a sub-sidiary of Total, was suspected of launder-ing money via tax haven accounts inLiechtenstein.3 Total has since refuted theclaims by acknowledging that the Frenchgovernment is aware of the tax havens inwhich they operate, none of which is inLiechtenstein.4

Irrespective of the outcome of the inves-tigation, this particular example high-lights the fact that, for some corporations,using tax havens is a normal part of every-day business, permitted by the government,and supported by a legal framework thatenables their use.5 So should corporations

be taking advantage of such jurisdictionsjust because they can? Corporate socialresponsibility (CSR) has long been framedby the notions of social justice and envi-ronmental responsibility, but what aboutthe ethical dimensions of a business’sfinancial obligations to society throughgovernment taxes? If corporate gover-nance is management’s balance betweeneconomic and social goals, what is thescope of each of these concepts? Can eco-nomic responsibility be simply defined asa corporation’s duty to produce goods andservices while providing appropriatelypaid employment and still earning a profitfor its stakeholders? Is it democratic for anorganisation to privately define what itseconomic responsibilities are, and to usewhatever tax management vehicles toaccomplish them? As taxation is the majorsource of revenue for governments inmaintaining social cohesion, do compa-nies have the right to exempt themselvesfrom paying tax for the benefit of privateinterests?

Questions relating to tax justice andCSR are not new. In the 2004 LifeworthAnnual Review of Corporate Responsibility,Mr John Christensen, coordinator of theTax Justice Network, argued that

. . . curiously the CSR debate, whichhas touched on virtually every otherarea of corporate engagement withbroader society, has only recentlybegun to question companies in thearea where their corporate citizen-

world review

8 JCC 35 Autumn 2009

2 Katinka Barysch, ‘The Real G20 Agenda: From Technics to Politics’, 16 March 2009; www.opendemocracy.net/article/the-real-g20-agenda-from-technics-to-politics; and idem., ‘The Real G20Agenda’, 13 March 2009; www.centreforeuropeanreform.blogspot.com/2009/03/real-g20-agenda.html.

3 ‘Fraude Fiscale au Liechtenstein: la Justice Française Lance une Enquête’, 1 April 2009; www.lep-arisien.fr/liveafp-economie/fraude-fiscale-au-liechtenstein-la-justice-francaise-lance-une-enquete-01-04-2009-462399.php [in French]; John Lichfield, ‘Adidas and Michelin in Tax Haven FraudInquiry’, 1 April 2009; www.independent.co.uk/news/world/europe/adidas-and-michelin-in-tax-haven-fraud-inquiry-1658974.html [in English].

4 Olivier de Lagarde, ‘Christophe de Margerie et l’enquête sur les Paradis Fiscaux qui Viserait Total’, 4April 2009; www.franceinfo.fr/spip.php?article273935&var_recherche=total%20paradis%20fiscal&theme=81&sous_theme=257 [in French]; ‘Total CEO says its tax haven accounts are known’, Reuters.com, 3 April, 2009; www.reuters.com/article/rbssEnergyNews/idUSL338331120090403 [in Eng-lish].

5 John Christensen and Sony Kapoor, ‘Tax Avoidance, Tax Competition and Globalisation: Making TaxJustice a Focus for Global Activism’; www.definesolutions.org/SonyKapoorTaxAvoidanceTaxCom-petetion.pdf.

katinka barysch of the centre ofeuropean reform: are tax havensthe real issue?


ship is most tangible and most im-portant—the payment of tax.6

In a 2007 KPMG discussion paper enti-tled ‘Tax and Corporate Social Responsi-bility’, Mr David Williams of KPMG’s TaxBusiness School stated that

The application of CSR to tax issues,however, is an area that has not as yetreceived a great deal of attention. . . [partly because] . . . the paymentof tax liabilities is, to a great extent, anon-discretionary matter . . . [as com-panies] . . . can deal only with publicauthorities, and only on the termslaid down by them.7

With governments now making a stoicattempt to clamp down on tax havens inlight of the G20, there is a renewed impe-tus for corporations to reflect on the ethi-cal dimensions of their tax strategies, andthis to be assessed in terms of CSR. Thedifficulties facing governments in achiev-ing international cooperation on taxationmakes it important for business leaders tovoluntarily explore what a responsible ap-proach to tax management could involve,and encourage ways for governments togenerate tax revenues from companies inways that do not undermine the relativecompetitiveness of certain firms.

The importance of progressive businesspeople engaging in this debate becameclear as the first governmental initiativesregarding the new focus on taxation werealready appearing flawed in 2009.

Triumphant claims by the G20 that ‘theera of banking secrecy [was] over’ weresomewhat premature due to the politicaland administrative barriers in enforcingtransparency under the current arrange-ments. For example, the G20 agreed toname and shame those countries andjurisdictions that are yet to comply withthe international standard for exchange oftax information, according to the Organi-sation for Economic Cooperation and De-velopment (OECD). The definition of asecrecy jurisdiction or tax haven is impor-tant to note. The central feature of a havenis that its laws and other measures can beused to evade (the illegal and deliberatefailure to pay tax), or avoid (the minimisa-tion of tax liability by lawful methods), thetax laws or regulations of other jurisdic-tions. According to the OECD, tax havenshave four characteristics that facilitateboth tax evasion and tax avoidance:

t Low or zero tax rates, as an indicatorto determine situations in which anal-ysis of the other criteria is necessary

t Lack of tax information exchange withother countries

t A high degree of bank secrecy

t And lack of real economic activity as-sociated with the income generated8

However, in a Tax Justice Network (TJN)report to identify tax havens and offshorefinance centres (OFCs), they conclude thatthere is no precise definition of either con-cept and suggest that OFCs are a purerform of tax haven.9 This is because the reg-ulatory criteria such as that of the OECD


april–june 2009

6 Jem Bendell, ‘Tax Justice?’, 2004 Lifeworth Annual Review of Corporate Responsibility; www.jembendell.com/lw2004/summer4.html.

7 David F. Williams, ‘Tax and Corporate Social Responsibility: A Discussion Paper’, September 2007;www.kpmg.co.uk/pubs/Tax_and_CSR_Final.pdf, p. 4.

8 Organisation for Economic Cooperation and Development, ‘Tax Haven Criteria’; www.oecd.org/document/63/0,3343,en_2649_33745_30575447_1_1_1_37427,00.html.

9 Tax Justice Network, ‘Identifying Tax Havens and Offshore Finance Centres’; www.taxjustice.net/cms/upload/pdf/Identifying_Tax_Havens_Jul_07.pdf, pp. 1, 7.

john christensen, of the tax justicenetwork: the csr debate is only beginningto address tax


above, may not be consistent with otherorganisations and they are based on dif-ferent methods and indicators to identifysuch jurisdictions. The City of London inthe United Kingdom is a case in point asit has a preferential tax regime that ex-empts foreign source income from resi-dent-country tax. This means that, byresiding in Britain, wealthy internationalscan find tax solace to avoid taxation ontheir foreign earnings.10 According toOECD criteria it is not a tax haven but,according to the International MonetaryFund (IMF)’s criteria, it is.11 Judging by thenumber of wealthy individuals havingflocked to London, in practice the IMF’sdefinition appears closer to the mark.12

The ironic corollary, of course, is thatthe ‘name and shame’ game being playedby the G20 powers is not being applied ina universal sense, so it is not surprisingthat, with the large influx of wealth com-ing into Britain, the City of London is con-sidered the world’s largest OFC. The Cityof London is not a borough of London perse, but a defined geographical area withinLondon that is home to Britain’s largest‘offshore’ financial district. It is managedby the City of London Corporation whichis also the political representative body.According to TJN, it is the most powerfullobby in Britain and possibly the worldand, as a result

. . . exerts enormous political influ-ence to resist regulation and extracttax exemption. It has fostered crimi-

nality by ensuring that the City ranksamongst the least accountable of finan-cial centres on the face of the Earth.13

This kind of power is not surprising be-cause the City of London Corporation is ineffect the provider of services that wouldnormally be fulfilled by the local authorityand is thus an example of a private com-pany operating under the auspices of apublic service.14 Promoting sustainabilityis a part of the corporation’s ‘offer’ and thisis outlined in a partial sustainability pol-icy.15 That policy makes no mention of taxjustice, nor is there mention of humanrights, labour or anti-corruption issues asper the Global Compact. For such a pow-erful institution that attracts so muchinternational money, could it set the stan-dard by implementing these principlesthemselves? The anti-corruption measurealone would mean that they would beengaged to work against corruption pro-viding a potential barrier to the invest-ment of corrupt money. Being a financialdistrict, it could promote the UN Princi-ples for Responsible Investment. Whilethe City has put in place the London Prin-ciples in conjunction with Forum for theFuture, the principles are only a guide tothe conditions to enhance the financing ofsustainable development; the integrity oftheir own operations is not in question.16

This may be the explanation as to why thecorporation limits their reporting to com-munity activities through the London

world review


10 Nick Mathiason, ‘Tax Savings: Only the Rich Need Apply’, The Guardian, 22 April 2007; www.guardian.co.uk/business/2007/apr/22/theobserver.observerbusiness1.

11 Richard Murphy, ‘The UK is an Offshore Finance Centre—According to an IMF Study’, Tax ResearchUK, 19 April 2007; www.taxresearch.org.uk/Blog/2007/04/19/the-uk-is-an-offshore-finance-centre-according-to-an-imf-study; Ahmed Zoromé, ‘Concept of Offshore Financial Centers: In Search of anOperational Definition’, April 2007; www.imf.org/external/pubs/ft/wp/2007/wp0787.pdf, p. 26.

12 Nick Mathiason, ‘Welcome to London, the Onshore Tax Haven’, The Guardian, 8 July 2007; www.guardian.co.uk/money/2007/jul/08/tax.business1.

13 Tax Justice Network, ‘The City of London Corporation: The State within a State’, 7 February 2009;taxjustice.blogspot.com/2009/02/corporation-of-london-state-within.html.

14 Claire Whatley, ‘What is the City of London?’, City of London, 22 September 2009; www.cityoflondon.gov.uk/Corporation/LGNL_Services/Council_and_democracy/Council_departments/whatis.htm.

15 Tony Blair, ‘Foreword to the UK Sustainable Development Strategy 2005: Sustainability Policy’, 2005;www.cityoflondon.gov.uk/NR/rdonlyres/0144E43D-84CB-4034-B0A8-C6F0122FC22/0/SUS_sustainability.pdf.

16 Financing the Future: The London Principles, ‘The Role of UK Financial Services in SustainableDevelopment’, Department for Environment, Food and Rural Affairs; www.responsible-credit.net/media.php?t=media&f=file&id=3478, pp. 48-49.



april–june 2009

Benchmarking Group, with no social andenvironmental report ever being pub-lished by them.17

The City of London was not the onlyjurisdiction that escaped the OECD list.Hong Kong and Macau did not make iteither, distorting the progress that needsto be made by China, nor was there men-tion of the US states Delaware, Wyomingor Nevada. With the French pushing hardto combat tax havens, it was also a littleironic that they let one of their own paradisfiscal (tax haven), namely French Polyne-sia, slip away unannounced.18

While Hong Kong and Macau havecommitted to the internationally agreedtax standard, but have not yet substantiallyimplemented it, the omission gives theimpression that China is well on its way toimplementing the standard; yet, in actual

fact, two of its biggest financial centres arefar from being ready. By calling these juris-dictions ‘Special Administrative Regions’,those that write the rules are manipulat-ing language and in turn deflecting theattention towards tax havens other thantheir own.19

But what constitutes progress, or sub-stantial implementation of the interna-tional standard is in itself questionable.The subjectivity of the OECD’s method isdemonstrated in a letter from the OECD

Secretary-General Angel Gurría to theLuxembourg Justice Minister prior to thesummit.20 Mr Gurría stated, ‘the OECD

noted that a good indicator of progresswas whether or not a jurisdiction [had]twelve or more agreements that [met] theOECD standards’ which the OECD subse-quently confirmed in their June 2009progress report on countering offshore taxevasion.21 What form an agreement takesis important to note because there are twotypes: Double Taxation Agreements (DTAs)and Tax Information Exchange Agree-ments (TIEAs). A DTA is a treaty betweenstates to avoid the double taxation ofincome and thus indicating that taxationis a structural part of each nation’s eco-nomic stability. But, for jurisdictions withno or low taxes, this type of agreement isnot considered appropriate and the pre-ferred type of treaty is a TIEA. TJN esti-mates that there are anywhere between 50and 72 secrecy jurisdictions in the world,yet there are well over 100 countries withwhich they could negotiate informationexchange agreements. With only 55 TIEAshaving been signed between OECD coun-tries and secrecy jurisdictions prior to theG20, the so-called indicator of progress is

oecd secretary-general angelgurría: what constitutesprogress in tax transparency

17 One author’s personal correspondence with the City of London Corporation’s CSR Team, 25 June2009.

18 Alternatives Economiques, ‘Les Entreprises Françaises et les Paradis Fiscaux’; www.alternatives-economiques.fr/fic_bdd/article_pdf_fichier/1236789681_Entreprises_francaises_et_paradis_fiscaux.xls [in French].

19 Tax Justice Network, ‘The OECD Global Forum: The List’, 3 April 2009; taxjustice.blogspot.com/2009/04/oecd-global-forum-list.html.

20 Letter addressed to Mr Luc Frieden from Angel Gurría, Organisation for Economic Cooperation andDevelopment, 13 March 2009; www.gouvernement.lu/salle_presse/communiques/2009/04-avril/03-frieden-ocde/lettre.pdf.

21 OECD, ‘Overview of the OECD’s Work on Countering International Tax Evasion: A Background Infor-mation Brief’, 13 November 2009; www.oecd.org/dataoecd/32/45/43757434.pdf.


clearly not applicable in any universalsense.22

So, having satisfied the OECD require-ments, do these agreements enforce agreater transparency? In a Financial Times(FT) article in April, Raymond Baker ofGlobal Financial Integrity explained thatwithout serious reforms to undermine thevehicles used to ensure secrecy, theseagreements will be ineffective.23 Firstly,countries such as Switzerland have lawsthat prevent such exchanges so, withoutchanges to these laws, an extremely time-consuming process, the agreements willhave little effect. Secondly, in the event

that there is tax evasion, according toOECD guidelines there must be proof ofthe fraud to authorise any exchange ofinformation. Such a course of action is animpediment because a detailed case mustbe made, with the criteria set out in alengthy legal document.24 Furthermore,in light of the many jurisdictions thatrequire absolutely no traceability to set upaccounts, how will it be possible to estab-lish fraudulent activity?25 In May, a politi-cal scientist at Australia’s Griffith Univer-sity, Dr Jason Sharman, demonstrated justhow rife the problem is by circumventingprohibitions on banking secrecy and form-ing seventeen anonymous shell compa-nies and five secret bank accounts withonly AUS$20,000 and the internet.26 Thir-teen of these shell companies were inOECD countries and, of the secret bankaccounts, four were in the United Statesand Great Britain.

In an article from Tax Analysts they say,

Before deterrence of evasion can be-gin, a haven must negotiate bilateraltax information exchange agreements,enact legislation, and—usually after amultiyear transition period—set upand maintain the bureaucratic machin-ery to enforce the agreements27

Again the poor lose, leaving a questionmark over the political feasibility of theG20’s confidence to eliminate tax havens.

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22 OECD, ‘Tax Information Exchange Agreements (TIEAS)’, 2009; www.oecd.org/document/7/0,3343,en_2649_33745_38312839_1_1_1_1,00.htm.

23 Raymond Baker, ‘India’s Curse of “Black Money” ’, Financial Times, 23 April 2009; www.ft.com/cms/s/1fdc10ac-303c-11de-88e3-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F1fdc10ac-303c-11de-88e3-00144feabdc0.html&_i_referer=http%3A%2F%2Ftaxjustice.blogspot.com%2F2009%2F04%2Fraymond-baker-of-global-financial.html; idem.,‘Global Financial Integrity in the FT’, Tax Justice Network, 24 April 2009; taxjustice.blogspot.com/2009/04/raymond-baker-of-global-financial.html.

24 Martin A. Sullivan, ‘Lessons from the Last War on Tax Havens’, 30 July 2007; www.taxanalysts.com/www/features.nsf/Articles/F3AA18739F0EFF008525744B0066459B?OpenDocument.

25 Tax Justice Network, ‘Tax Information Exchange Arrangements’, April 2009; www.taxjustice.net/cms/upload/pdf/TJN_0903_Exchange_of_Info_Briefing_draft.pdf [in English]; Anne-Catherine Hus-son-Traore, ‘G20: Réactions Mitigées sur la Nouvelle Donne’, Novethic, 4 March 2009; www.novethic.fr/novethic/planete/institution/institutions_internationales/g_20_reactions_mitigees_nouvelle_donne/119898.jsp [in French].

26 ‘The G20 and Tax Haven Hypocrisy’, The Economist, 26 March 2009; www.economist.com/displaystory.cfm?story_id=13382279; Richard Murphy, ‘Britain and the US may be the dirtiest taxhavens’, Tax Research UK, 27 March 2009; www.taxresearch.org.uk/Blog/2009/03/27/new-study-britain-and-the-us-may-be-the-dirtiest-tax havens.

27 Sullivan, op. cit.

raymond baker of global financialintegrity: blocks to informationexchange must be removed


Ultimately, for the agreements to work,the blockages to effective exchange needto be removed. Raymond Baker puts itsuccinctly in his FT article:

What needs to happen now is for theG20 to broaden its dialogue on infor-mation exchange agreements, inter-national co-operation and internationalfinancial protocols. Most effective incurtailing the massive illicit outflowsfrom developing countries would bea requirement for automatic cross-border exchange of tax informationon personal and business accountsand country-by-country reporting ofsales, profits and taxes paid by multi-nationals.28

The emphasis on automatic cross-borderexchange is imperative if the G20 are seri-ous about tax exchange and ensures a levelplaying field in respect to transparency.Exchange upon request is simply too bur-densome on an administrative and costlevel. In an Internal Revenue Service (IRS)study on compliance, the IRS observed thatthe compliance rate is 96% when there iscomprehensive information reportingrequirements as in the case of US divi-dends and interest, which is analogous toautomatic information exchange. Whenthere is little or no information reportingrequired, the compliance rate drops to46%, suggesting that the ‘upon request’approach is not sufficiently coercive inassuring the exchange of tax informa-tion.29

If the G20 had the political will, there area variety of ways to economically coerce taxhavens into exchanging tax information,including restrictions on providing finan-cial services such as wire transfers, or the

refusal of deductions related to transac-tions with listed tax havens, to name two.Sanctioning tax havens is not the onlysolution either. The revenue lost by gov-ernments is significantly more than thefee and service income that tax havensearn so there is also scope for incentivesto ensure that tax-haven economies do notcrash.30 Regulatory measures such as theadoption of a General Anti-AvoidancePrinciple (GAAP) as tabled in the Britishparliament by Mr Michael Meacher MP inMay 2009, could also provide recourse intax avoidance issues.31 Such legislationwould give courts the power to decide onwhether certain tax practices are beingused to avoid paying tax and thereby alsoassisting directors in understanding theirduties on the payment of tax.32

More poignantly, however, the tragedyof the G20 was not the superficial state-ments that did not recognise the systemiccomplexity underlying the tax haven andsecrecy jurisdiction problems. The trag-edy was that the G20 leaders missed theiropportunity to create a new financial sys-tem: one that incorporates responsiblegovernance, the environment and the so-cial well-being of every citizen; a financialsystem no longer focused on short-termgain but rather long-term sustainability;one that seeks a cooperative role betweencorporations and governments for thebenefit of society instead of the accumu-lation of private wealth; and one whereworth in monetary terms is secondary tothe values that encapsulate the greatergood. Moreover, it was an inevitable out-come when the very committee advisingthe G20 comprised some of the biggestnames in banking orthodoxy, in turn lim-


april–june 2009

28 Baker, op. cit.29 Sullivan, op. cit.30 Ibid.31 Michael Meacher, ‘Is the government serious about stopping tax avoidance?’, 9 May 2009;

www.michaelmeacher.info/weblog/2009/05/is_the_government_serious_abou_1.html.32 John Christensen and Sony Kapoor, ‘Tax Avoidance, Tax Competition and Globalisation: Making Tax

Justice a Focus for Global Activism’; www.definesolutions.org/SonyKapoorTaxAvoidanceTaxCompetetion.pdf, p. 14.


iting any possibility of an alternative dia-logue.33

The implications for the CSR movementare many. In an April 2009 report, theFrench magazine Alternatives Economiques(Economic Alternatives) reported that apartfrom four companies in the CAC 40 (theFrench equivalent to the Dow Jones orFTSE), for which information was notavailable, all companies had subsidiariesin a tax haven or secrecy jurisdiction ofsome sort, many in the City of London.The admission by Total that the Frenchgovernment was aware of their activitiesin such jurisdictions reduces this numberto three. While illegal activity cannot beimplied by this observation, it nonethelessshows the ubiquitous use of such juris-dictions by large companies—the loca-tional smoke to the tax avoidance fire.Topping the list was BNP Paribas with 189subsidiaries, with another three Frenchbanks making the top ten. While BNP

asserts that it uses such jurisdictions forthe purposes of its international branches,and states it in its 2007 and 2008 CSR

reports, it does not mention why there issuch a large concentration (40% in theCity of London) nor their purpose.34

There are also repercussions for respon-sible investment (RI) managers and in-deed banks offering socially responsibleor ethical investment products. In the caseof BNP Paribas, which has a number offunds dedicated to ethical and responsibleinvestment, should there be more detaileddisclosure in respect to tax havens, notonly for the funds themselves, but for the

very institution promoting them?35 Suchdisclosure could include the purpose ofthe tax havens, and their contribution tothe profitability of the group, which wouldbe a measure of the legitimacy of suchsubsidiaries. Similarly, the ratings agen-cies that analyse environmental, socialand governance (ESG) performance couldverify how the tax havens are used toensure the ethical integrity of the fundsand the institution. According to MrRobin Edme, President of FrenchSIF, andVice-President of EuroSIF, current ratingagency practices do not address this issueexplicitly, but it is an area that is now astrong point of discussion for investors,and hence examining the financial indus-try sector is already a major concern.36

But questioning the effectiveness of atax agreement or justifying the purpose ofa tax haven are side issues to the essentialquestion underlying all the systemic com-plexity of tax transparency: are corpora-tions actually paying the tax they shouldbe paying and what are the appropriatelevels of tax management? What about theethical dimension of tax avoidance? Is nottax avoidance totally incompatible withthe claims of good corporate citizenship?A 2005 survey on ‘Tax, Risk and CorporateGovernance’ conducted by HendersonGlobal Investors showed that most com-panies did not address the questions re-lated to tax strategy and CSR, while someperceived that there was a tension be-tween the two.37 How this in turn can bemeasured will be another dilemma for therating agencies as it represents an overlap

world review


33 Attac France, ‘G20: Analyse du Rapport Larosière: La Politique du Renard Libre dans un PoulaillerLibre: Pour Regler la Crise, l’Union Européenne s’en Remet aux Banquiers’, 3 April 2009; www.france.attac.org/spip.php?article9627 [in French]; Kenneth Haar, Andy Rowell and Yiorgos Vassa-los, ‘Would you bank on them? Why we shouldn’t trust the EU’s financial “wise men” ’, February2009; www.scribd.com/doc/13317915/EUs-wise-men-on-financial-system-reform [in English].

34 BNP Paribas, ‘Rapport sur la Responsabilité Sociale et Environnementale 2008’; media-cms.bnpparibas.com/file/66/6/bnp_rse_complet.6666.pdf, pp. 153-54 [in French]; idem., ‘Report onEnvironmental and Social Responsibility 07’; media-cms.bnpparibas.com/file/88/5/5885.pdf, p. 84[in English].

35 Novethic, ‘Chercher un Fonds ISR’; www.novethic.fr/novethic/developpement-durable/liste-fonds-investissement-socialement-responsable-isr/?societe=23214 [in French].

36 One author’s personal correspondence, 26 July 2009.37 Henderson Global Investors, ‘Task, Risk and Corporate Governance: Findings from a Survey of the

FTSE350’, February 2005; www.henderson.com/content/sri/publications/reports/taxriskcorporategovernance.pdf, p. 11.


between ethics and the claimed objectivenotions of accounting, a subject alreadyraised in Issue 6 of JCC following theEnron scandal.38

As an example, PricewaterhouseCoopershas developed an initiative ‘Total Tax Con-tribution’, a tool for companies to demon-strate their effective tax contribution tosociety and improve transparency inrecognition of this nexus.39 But, as MrRichard Murphy of Tax Research LLP cau-tions, transparency is far from improvedas the PwC framework is simply the addi-tion of various different taxes such as VAT,national insurance and employee payrolltax, and thus not a reflection of whether areasonable amount of tax is being paid.The individual components in the com-putation have no value either because thereporting framework has no requirementto state the underlying base data: that is tosay, for example, the profit or employeepayroll on which the tax calculation wasbased; nor does it take into considerationthe location of where the profits weremade.40 John Christensen calls it a ‘crockof nonsense’ and has recommended thatcorporations looking for a more prudentapproach to tax justice should consider the‘SEE What You Are Buying Into’ labellingscheme, which incorporates tax justiceissues as part of their matrix of social,environmental and ethical issues.41

The SEE scheme’s approach incorpo-rates the base data necessary to determinewhether an appropriate amount of tax isbeing paid, where the

‘Appropriate levels of tax’ are the ratesstipulated by the relevant tax author-ity within the country where the com-pany’s tax liability falls minus 3%.[The 3% is recognition that account-ing and taxable profits are not alwaysidentical.]

To become SEE-listed, companies are re-quired to respond to 35 closed questionson a range of social, environmental andethical (SEE) issues. SEE What You AreBuying Into Ltd initiates a dialogue withcompanies in the event that there is aquestion mark over their responses orthey are unclear. To answer the tax ques-tion, co-authored with TJN, companiesmust declare the date of publication oftheir financial statements for the last twofinancial years, the applicable tax bracketfor their business, and the percentage oftax that they paid. If they are not payingthe defined appropriate rate, they mustadditionally explain and justify why not.All details are housed on the SEE What YouAre Buying Into website where they areavailable for public scrutiny, commentand rating. Thus businesses participatingin the scheme offer a transparent pictureof their performance on tax, among manyother material corporate responsibilitymatters.

SEE Company’s approach could indi-cate a change in the wind for an area ofCSR that remains undeveloped, but theissue of tax havens and secrecy jurisdic-tions has a long way to go because what itdemonstrates is that the law, in theinterim, is not sufficient. When the legalundercurrent supports the corporatemachine for the purposes of gain, it is very


april–june 2009

38 Jem Bendell and Rupesh Shah, ‘World Review’, Journal of Corporate Citizenship 6 (Summer 2002).39 PricewaterhouseCoopers, ‘Total Tax Contribution: What are your true tax costs?’, 2009; www.pwc.

com/ca/en/tax/total-contribution.jhtml. 40 Richard Murphy, ‘PwC’s Total Tax Contribution’, Tax Research UK, 24 August 2006; www.taxresearch.

org.uk/Blog/2006/08/24/pwcs-total-tax-contribution.41 ‘See What You are Buying Into: Social, Environmental, Ethical’, 2003–2009; www.

seewhatyouarebuyinginto.com.

richard murphy of tax researchllp: pwc’s framework does notimprove transparency


easy for corporations to hide behind thelaw without actually breaking it. As a result,questions of legitimacy, social responsi-bility and managerial discretion are diffi-cult to challenge. But, if the law is notequal for everyone, then values are theultimate guide in determining how a busi-ness person understands their role in soci-ety, and whether they should adopt a morepolitical role. What the tax haven agendaquestions, from a CSR perspective, is: arecompanies willing to be transparent sothat they are whole participants in society?It also raises the issue of whether both eth-ical and practical considerations couldlead more business people to push formore effective intergovernmental actionon tax matters, so their own companiescan make a fair contribution, without beingunfairly disadvantaged by those who avoidtaxes more actively. These issues havebeen in the background of CSR for sometime and, after the economic crisis, theyare set to become even more important.

Francophone CSR

interest in french approaches tocapitalism and economic managementhas grown in some circles as a result of theWestern financial crisis. Pointing to thederegulation of the financial services sec-tor, many commentators regard the crisisas emanating from an Anglo-Saxon modelof capitalism, where the government ismeant to enable market forces, ratherthan curb them. Experience of business–society relations in France may becomeincreasingly relevant to discussions of therole of government and business acrossthe West. Therefore the French experienceof voluntary corporate responsibility, andits connection to government, is worthreflecting on.

In May 2009, HEC Paris hosted theirsixth annual Social Business Conferencein conjunction with Net Impact, bringingtogether mostly MBA students and someprofessionals. The session on SustainableFinance proved to be an interesting indi-cator on how mind-sets, with respect toresponsible investing, are changing inFrance. Jean-Philippe Desmartin, the SRI

Research Manager from Oddo Securities(France’s largest independent investmentbroker), stated that the socially responsi-ble investment (SRI) market was in anexciting transition phase. In respect totheir own client base, the number of insti-tutional investors that required invest-ment services that incorporated ESG cri-teria had increased from approximately150 in 2005 to 350 in 2008. More impor-tantly, he added that there had been a shiftin paradigm because, out of their respon-sible investment client base, 80% selecteda predefined product with ESG criteria aspart of their portfolio in 2005 but, by2008, 50% were using their own ESG cri-teria to select their whole portfolio.

Supporting this trend, in June 2009,Novethic, the French government-spon-sored research centre for CSR and SRI,released their annual review on responsi-ble investment in France.42 They statedthat, for the first time since their inaugural2002 review, there was more money in-vested according to ESG criteria, directlytailored by institutional investors’ ethical

world review


42 Novethic, ‘Chiffres 2008 et Analyse du Marche Français de l’ISR’, 2009; www.novethic.fr/novethic/upload/etudes/Synthese_marche_ISR_2008.pdf [in French]; Hugh Wheelan, ‘RI Round up June 22:RI’s Regular Round-up of the Most Important RI News Stories’, Responsible Investor, 22 June 2009;www.responsible-investor.com/home/article/ri_round_up_june_22/P1 [in English].

jean-philippe desmartin ofoddo securities: sri is in anexciting transition phase


needs, than in predefined products. Thissubtle change represented an ethicalreflection within the investment selectionprocess on the buy side that went beyondmere portfolio diversification in the inter-ests of spreading risk, to incorporating val-ues other than profit-making. In a countrywhere the public has traditionally lookedto the government as their guiding force,it was also a sign that the French aremobilising in respect to issues related tothe broader dimensions of sustainabledevelopment.

France is also an interesting case as it isone of the world’s largest economic pow-ers and has a presence right around theglobe.43 Apart from their European neigh-bours, the French also have departments(administrative divisions of the state) thatneighbour Australia, Brazil, Venezuelaand Canada, and so their economic influ-ence is a genuinely global phenomenon.44

France is also characterised by a publicsector that supports a centralised politicalsystem which in turn influences relation-ships between business and society. So, ina country where the roles of business andgovernment are defined differently, thediscourse around CSR will naturally beimpacted.

The concept of ‘corporate social respon-sibility’ (CSR) is a source of confusion forlinguistic reasons because in the Frenchlanguage there is no distinction betweenthe word ‘responsibility’ and the legal con-cept of ‘liability’. In French, ‘responsibil-ity’ can also be likened to ‘accountabil-ity’.45 In the same vein, the word ‘social’ inEnglish integrates society as part of itsmeaning which therefore includes exter-nal stakeholders. In French, however, ‘so-

ciety’ is translated to société but it has twoadjectives, sociale and sociétale. The adjec-tive sociale is traditionally linked moredirectly to labour-related issues. Conversely,the word sociétale focuses on broader mat-ters relating to society at large and henceexternal stakeholders.46 Using one andnot the other, however, risks excluding cer-tain aspects of CSR that would normally beimplicit in the English definition. Anadded confusion is that the French trans-lation of CSR, responsabilité sociale de l’entre-prise (RSE) is the same acronym for respon-sabilité sociale et environnementale, whichmakes no explicit reference to a corpora-tion, raising the question of whether suchconcepts should be simplified to accom-modate international dialogue. The terms‘corporate responsibility’ and ‘responsibleenterprise’ would be better alternatives forthis reason.

It is worth noting, however, that not allfrancophone territories reflect these dis-tinctions. The French Canadian provinceof Québec shares the Anglo-Saxon defini-tion of CSR, probably due to the influenceof the surrounding anglophone provincesembedded within a federation, and theUnited States.47

Québec is nonetheless active on CSR is-sues with a social network called Catalé-thique, previously the Montreal chapter ofNet Impact, and a research centre dedi-cated to CSR and sustainable developmentat the University of Québec in Montréal.Québec also boasts a political party, QuébecSolidaire (Solidarity Québec), which seeksto address systemic issues relating to thefinancial crisis.48 In their May 2009 man-ifesto, ‘Pour Sortir de la Crise: Dépasser lecapitalisme?’ (‘Resolving the Crisis: Going


april–june 2009

43 OECD, ‘OECD in Figures 2009’; www.oecd.org/document/47/0,3343,en_2649_34489_43896303_1_1_1_1,00.htm.

44 J.B. Nadeau and J. Barlow, Sixty Million Frenchmen Can’t Be Wrong: What Makes the French so French?(London: Robson Books, 2004): 283.

45 ‘Répertoire des Producteurs de Terminologie’, Le Grand Dictionnaire: Terminologique; www.granddictionaire.com/btml/fra/r_motclef/index800_1.asp [in French]; www.granddictionaire.com/btml/fra/r_motclef/index800_1.asp [in English].

46 One author’s conversation with Jean-François Jenni, Chief Certification Officer of Ethics SA, 25 March2009.

47 One author’s personal observations.48 ‘Pour Sortir de la Crise: Dépasser le Capitalisme?’, Manifeste de Québec Solidaire, May 2009; www.

quebecsolidaire.net/files/2009-05-Manifeste-Crise.pdf [in French].


Beyond Capitalism?’), they propose aneconomic platform that is a vehicle forpromoting social and environmental val-ues and they openly challenge the laissez-faire approach to markets, specifying that,without systemic change, the moralisa-tion of the financial sector will simply bea short-term solution, in turn raising thesame questions of the financial tri-umphalism of self-regulating markets asin the Winter 2008 issue of JCC.49

Beyond the linguistic challenges of aFrench CSR, there are also particularitiesrelated to history and culture. The Frenchrecognise the essential role of govern-ment, which is expected to exercise itsinfluence, and so it is of no surprise thatthere is a considerable body of legislationrelating to CSR. Two examples are manda-tory corporate social reporting, introducedin 1977, and the 2001 legislation requir-ing listed companies to include some 40social and environmental indicators intheir annual reports to shareholders whichimpacts some 700 companies.50 This leg-islation is nonetheless not without itsflaws because there are neither sanctionsnor external audit requirements. In a2004 report submitted to the French gov-ernment, most small to medium listedcompanies were found to provide inade-quate information, perhaps explained bythe lack of sanctions.51 This documentalso highlighted that publishing the re-ports had little effect because the publicdiscourse linked to social and environ-mental reporting was undeveloped. Thismay be linked to the historical context ofthe initial social reporting guidelines cre-

ated in 1977 which were submitted to agovernment agency rather than beingopen to public scrutiny. So, while the leg-islation is not necessarily well applied dueto the above factors, and also because ofthe traditional understanding of ‘social’, atleast the government has underlined thelegitimacy for the concepts of CSR.52 It alsomeans that French corporations will belooking toward the government for con-tinued guidance in the future.

A more recent example is France’sGrenelle de l’environnement which is theFrench equivalent of a commission for theenvironment. The initial phase, ‘GrenelleI’, provided the general objectives and thesecond phase will outline in more detailits application. While the redrafting of theinitial phase was still being debated in theNational Assembly as of June 2009, oneof the agenda items for the second phaseis governance with respect to carbon emis-sions.53 According to the French Energyand Environmental Management Agency(ADEME in French) in their May 2009Grenelle II report, the legislation will obligeall companies with high emission levelsand more than 500 employees to report ontheir carbon footprints by 2011.54 Thesame legislation will also require that allnon-SMEs (small to medium enterprises)will be subject to the same environmentaland social reporting requirements as thatof listed companies, levelling the playingfield in respect to the original 2001 law.

The legislation will also address the lownumber of companies with environmen-tal certification. ADEME estimates thatthere are around 6,000 French compa-

world review


49 J. Bendell et al., ‘World Review’, Journal of Corporate Citizenship 32 (Winter 2008).50 Actu-Environnement, ‘Responsabilité Sociétale des Entrepreneurs: Comment se Distinguer?’, 6 Sep-

tember 2009; www.actu-environnement.com/ae/news/parlement_entrepreneurs_avenir_7550.php4[in French].

51 ‘Rapport de Mission Remis au Gouvernement: Bilan Critique de l’Application par les Enterprises del’Article 116 de la loi NRE’, April 2004; www.oree.org/docs/grenelle/rapport-nre.pdf, pp. 17, 65 [inFrench].

52 A. Antal and A. Sobczak, ‘Business and Society’, Corporate Social Responsibility in France: A Mix ofNational Traditions and International Influences 46.1 (2007): 9-32.

53 ‘Le Projet de Loi Grenelle 1 Revient Devant les Députés’, Liberation.fr, 6 September 2009; www.liberation.fr/terre/0101572422-le-projet-de-loi-grenelle-1-revient-devant-les-deputes [in French].

54 ‘Regard sur le Grenelle 2: Projet de loi Engagement National pour l’Environnement’, May 2009;www2.ademe.fr/servlet/getBin?name=D43B973704BB7A8F2806A1FCA2495CD11244122407037.pdf,pp. 47-49 [in French].


nies that have been certified to ISO 14001,and that such programmes remain inac-cessible for smaller organisations. As aresult, the legislation will provide fiscalincentives for SMEs to improve environ-mental reporting. It is worth noting thatthere is a proportional increase in thenumber of French companies being ISO

14001-certified with an approximate dou-bling between 2006 and 2008 based onADEME estimates.55 The long-awaitedguide to social responsibility, ISO 26000,may prove to be more accessible as it pro-vides guidance rather than a certifiablestandard. Seeing that French municipali-ties have already developed an applicationguide for its implementation based on thedrafts, this may serve as an example forFrench companies, irrespective of theirsize.56 Furthermore, there promises to bea ripple effect as ISO 26000 will affect theprocurement and tendering processeswhen dealing with the state departments.

The low number of environmental cer-tifications is also reflected in the numberof directors that are wholly responsible forCSR issues. In a March 2009 study, CadreEmploi (the French job search engine formanagers) estimated that there werearound 100 directors in total dedicated toCSR within French corporations.57 How-ever, these positions are not necessarilyanswerable to top management, indicat-ing that CSR for some of these companiesis not a strategic issue but merely an exer-cise in communications.

But, while the French look to the gov-ernment for guidance, a number of initia-tives indicate that the French public is

alert to the CSR agenda. The SustainableLuxury Fair in May offered a novel per-spective on how luxury goods can con-tribute to a more sustainable world andhow contemporary art can be a catalyst inraising awareness with respect to sustain-ability issues.58 The fair featured a num-ber of eco-inventions and eco-luxury goodsas well as an exhibition called ‘Consumer’,an artistic interpretation challenging par-ticipants to look at the systemic cycle ofconsumption. The fair was also an indica-tor that various sectors and communitiesin France are now taking it upon them-selves to promote sustainability ratherthan relying on government intervention.

The academic community has not beensilent either. In contrast to the aestheticaspects of the Sustainable Luxury Fair, amore sober approach to CSR was evidentat the Symposium for CSR Indicators inLyon held the following month.59 Organ-ised by the Socioeconomic Institute ofFirms and Organisations (ISEOR in French),the symposium led an academic reflectionon the harmonisation of the plethora ofnorms and standards available to organi-sations in order to provide better mea-surements for CSR. What was interestingto note, however, was that, while beingorganised by a French institute, the sym-posium was conducted in French, Span-ish and English, reflecting not only itsinternational character, but also indicat-ing a possible convergence in respect toCSR concepts.

In a rather innocuous article in theFinancial Times in June, there was furthersuggestion of this convergence with Groupe


april–june 2009

55 ISO, ‘The ISO Survey’, 2007; www.iso.org/iso/survey2007.pdf, p. 26.56 Actu-Environnement, ‘ISO 26 000, une Révolution Silencieuse ?’, 10 August 2008; www.actu-

environnement.com/ae/news/ISO_26000_5908.php4 [in French]; Sarah le Quere, ‘ResponsabilitéSociétale des Organisations: Guide d’Application de l’ISO 26 000 aux Départements’; www.afqho.com/Images/GUIDE%20ISO%2026%20000.pdf [in French]; ACI (Action Catholique des MilieuxIndépendants), ‘La Responsabilité Sociale des Entreprises, La Responsabilité Sociétale des Entreprises(Corporate Social Responsibility)’, 20 February 2009; rse-et-ped.info/IMG/pdf/RSE-Definitions-Projet_de_norme.pdf, p. 7 [in French].

57 Valérie Froger, ‘Le Poste de Responsable du Développement Durable est-il . . . Durable?’, Cadremploi.fr, 26 March 2009; www.cadremploi.fr/edito/actu-et-conseils/vie-professionnelle/coaching-carriere/d/1/le-poste-de-responsable-du-developpement-durable-est-il-durable?xtor=EPR-375 [in French].

58 Sustainable Luxury Fair, ‘1.618: The Concept’, 2009; www.1618-paris.com/1618_english.html. 59 ‘Indicateurs d’Evaluation de la Responsabilité Sociale et Environnementale (RSE) des Entreprises’,

iaelyon, 10 June 2009; iae.univ-lyon3.fr/1227194956090/0/fiche_04__actualite [in French].


ESC Rouen, announcing a name change toRouen Business School in an attempt todiversify internationally.60 While RouenBusiness School is not necessarily re-nowned for CSR, this rebranding reflecteda continuing trend towards opening upFrench schools to international perspec-tives and students to the French experi-ence.61 As Antal and Sobczak have ob-served in their study on CSR in France,historically the orientation of French man-agement researchers has been limited toa national focus, with some exposure toother francophone territories such as Bel-gium, Canada and Switzerland throughconferences and publications.62 So, whileFrench business schools were providinginternational training, they had little influ-ence on global research and theories be-cause of the language barrier. While notdirectly linked to CSR per se, the promiseof more articles in English from Frenchmanagement schools with an interna-tional focus will continue to reduce thegap between different concepts of CSR,including the role of government.

These changes also represent a culturalshift for the French. For historical reasonsthat date back to the Revolution, someclaim that the French have a relativelyhigher distrust of private actors to providethe general good, and hence their faith inthe government.63 Albeit a small percent-age, with the French public becomingmore and more active with respect to sus-tainability issues, these examples illus-trate that not all the French are willing towait for the government to always take thelead. More importantly, though, the gov-ernment has been willing to explore dif-

ferent ways of using its influence. Encour-aging voluntary initiatives, such as ISO

26000, are a testament to the fact that theFrench government sees room for manda-tory approaches and voluntary initiatives.It also indicates that there is a new open-ness in accepting CSR definitions that aretraditionally not a part of French culture.

This is also reflected at policy level. AJanuary 2007 release by the Ministry ofSustainable Development as part of thegovernment’s National Sustainable Devel-opment Strategy stated that,

Although sustainable development isa growing concern, the ways in whichcompanies act are very diverse. Inorder to facilitate their efforts towardssustainable development, a consen-sus was reached on the necessary bal-ance between voluntary efforts andlegal and regulatory measures.64

In her analysis of EU, UK and French CSR

Policy, Dr Jenny Fairbrass of the Univer-sity of Bradford observed that this is anadjustment to the French government’scontribution to the 2001 Green Paperdefining the EU’s CSR policy.65 At the timeof writing, the French government sawvoluntary initiatives as useful in assistingcorporations in going beyond the law, butthe principles of CSR should be embeddedin the law as opposed to being main-streamed in line with market forces. Itstated,

The Green Paper . . . affirms that vol-untary instruments [. . .] are neithera substitute nor an alternative for reg-ulation. The legal and regulated frame-work is, in effect, indispensable for

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60 Della Bradshaw, ‘Name Change for Rouen Business School’, FT.com, 11 June 2009; www.ft.com/cms/s/0/2af74156-5674-11de-9a1c-00144feabdc0,dwp_uuid=02e16f4a-46f9-11da-b8e5-00000e2511c8.html.

61 Ann Graham, ‘Out in Front: Top Ranking French Business Schools’, in ‘Top Grad School Guide2009’, issuu, 2009; issuu.com/jamesiandonald/docs/qstgsg2009/50, pp. 49-50; Doreen Carvajal,‘In Many Business Schools, the Bottom Line is in English’, New York Times, 10 April 2007; www.nytimes.com/2007/04/10/world/europe/10iht-engbiz.2.5212499.html?_r=1&scp=1&sq=in%20many%20business%20schools&st=cse.

62 Antal and Sobczak, op. cit.63 Ibid.; Nadeau and Barlow, op. cit.64 ‘Company and Sustainable Development Forum’, developpement-durable.gouv.fr, 24 January 2007;

www.ecologie.gouv.fr/-Company-and-sustainable-.html.65 J. Fairbrass, ‘University of Bradford Working Paper Series’, EU, UK and French CSR Policy: What is the

Evidence for Policy Transfer and Convergence? 8/20 (October 2008): 9-10.


guaranteeing equality of treatment ofall workers.66 [Fairbrass’s translation]

As there are strong parallels between UK

and EU policies in respect to voluntary ini-tiatives, Fairbrass concludes that this is asign of convergence in approaches to CSR

at a national level. Seeing that the Frenchgovernment has taken the lead on har-monising their sustainable developmentstrategy with that of the EU, continuedEuropeanisation of French traditions willno doubt lead to a progressive merging ofCSR concepts in the future.67

The question is whether actors fromother countries can draw on French con-cepts of CSR. What the French CSR experi-ence has demonstrated is a willingness tolet the government play a role in guidingbusiness and its relationship to society. So,while the government intervention is farfrom being perfect, it has legitimised theconcept of CSR and mainstreamed itthrough a regulatory framework, as op-posed to market-led initiatives. This inter-action with public authorities may prove auseful model for stakeholders in othercountries in attempting to further the dia-logue around CSR.

In the same vein, French CSR has beendriven by the internal dimensions of busi-ness as it relates to labour issues. This hasbeen, and remains, a traditional focuswithin France. The regulations aroundlabour could also be a source of debate but,more importantly, how non-francophoneactors could learn from the traditionalprocesses that embed such regulation.68

The ISEOR conference in Lyon is an exam-ple of how thinking is going beyond bor-ders and also how researchers are trying

to tap into the French experience. AsFrance begins to develop its own field ofcorporate responsibility, it stands ready toexert greater influence on the interna-tional field of corporate responsibility.

Francophone African CSR

may 2009 also marked the seventhmeeting of the ISO 26000 working groupin Québec City. In conjunction with themeeting, a public conference was organ-ised with the objective of helping stake-holders to understand the implementa-tion and the organisational impacts of ISO

26000.69

One of the sessions was dedicated to‘How Africa Puts Sustainable Develop-ment in Action in its Industry’, whichanalysed an Ivory Coast corporation, Sifca.Sifca is a private agro-industrial companyof over 11,000 employees with a presencein the Ivory Coast, Liberia, Nigeria, Ghanaand Benin, and has several strategic part-nerships including Michelin.70 Its princi-pal areas of industry are sugar, palm oiland rubber.

Sifca’s focus is an interesting one as ithighlights the community-oriented natureof its CSR, also confirming a Global Com-pact impact study in 2007 which con-cluded that African CSR projects wereprimarily aimed at local communities andpoverty reduction.71 Sifca’s focal point isto meet workers’ immediate needs throughhealth and safety. To do this, each site hasa working group dedicated to sustainabledevelopment, suggesting that suppliersand workers are conscious of social re-


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66 Ibid.67 ‘French National Sustainable Development Strategy 2003–2008’, developpement-durable.gouv.fr, 13

November 2006; www.ecologie.gouv.fr/-French-National-Sustainable-.html [in French].68 Antal and Sobczak, op. cit.69 ‘International Event About ISO 26000 Social Responsibility for Organization’, Québec: About ISO

26000, 14 May 2009; www.iso26000quebec2009.qc.ca/en/public/program_2.html.70 SIFCA, ‘A Regional Agribusiness Stakeholder in West Africa’, 2009; www.groupesifca.com.71 Ellen Kallinowsky, ‘The Global Compact’s Role in Facilitating and Fostering CSR Policy and Practice

in Different Regions: Findings of Impact Assessment Global Compact Regional Learning Forum,Sub Saharan Africa’, October 2007; www.globalcompact.de/fileadmin/PDFs/en-gc-2007-ws4-gc-regional-learning-forum.pdf, p. 9.


sponsibility and that they are being inte-grated at the beginning of the supplychain. Furthermore, it also demonstratesthat CSR is understood as a participativeprocess whereby the structure allowsworkers to initiate continuous improve-ments to respond to social needs. Anexample is Sifca’s response in adapting tothe rural nature of the supply chain: rede-ployed workers are provided lodging and,according to Mr Franck Eba, Sifca’s headof sustainable development, the companypays for the electricity and water costs aswell.72

At a governance level, the company hasalso undergone a pre-audit based onSA8000, ISO 14001 and OHSAS 18001,which was conducted by the Belgian CSR

consulting specialists Cap Conseil, andthey plan to issue their first sustainabilityreport in July 2009.73

However, Sifca is the exception in fran-cophone Africa. While Sifca is activelyembedding CSR as part of its strategy, ithas assumed large levels of responsibilitythat the state would normally provide. Itsactive conviction to meet the needs ofworkers to make up for weak state welfareis commendable, but it stresses an urgentneed for institutional development at agovernment level.74 Quoting Mr Eba, ‘Wejust can’t do it all.’

African concepts of CSR also reflect thisas the philanthropic side is prioritised,due to its immediacy in providing eco-nomic welfare, over the more governance-related ethical dimensions of CSR and theenvironment.75 As Wayne Visser, CEO ofCSR International, has observed

. . . economic responsibilities still getthe most emphasis. However, phil-anthropy is given second highest pri-ority, followed by legal and thenethical responsibilities.76

Dr Ulf Richter, Assistant Professor forPolitical Economy at the InternationalUniversity of Grand Bassam in the IvoryCoast also confirms, ‘. . . most see it[African CSR] as quality management andthe fight against poverty’.77 ISO statisticswould lend support to these statements.In a 2007 report, francophone countriesincluding non sub-Saharan nations hadproportionately higher numbers of ISO

9001 quality assurance certifications toensure trade with developed countries,with only a handful of ISO 14001 certifica-tions, potentially ignoring environmentalconsiderations.78

There are also other complicating fac-tors at play. While the same Global Com-pact study concluded that the role andinterest of governments in respect to CSR

is lacking in sub-Saharan countries, con-ditions for funding require that govern-ments focus on poverty reduction, and soCSR is understandably not a primaryfocus. It would also be easy to look at thenumber of Global Reporting Initiative(GRI) reports from 2006 to 2008 and con-clude that francophone Africa was com-pletely inactive with respect to CSR, asthere were none.79 But the landscape ofFrench-African economic activity in gen-eral is not geared to respond to an initia-tive such as the GRI because most busi-nesses are SMEs and there are few TNCs of

world review


72 Honoré Kouassi, ‘Développement Durable: Le Groupe SIFCA se dote d`une Charte d`Hygiène et deSécurité’, 31 October 2008; news.abidjan.net/article/?n=308788 [in French].

73 One author’s personal correspondence with Cap Conseil, 13 July 2009.74 Marie d’Huart, ‘Afrique-Chine: Une Vision Sud-Nord de la Chaine d’Approvisionnement’, Québec:

About ISO 26000, 14 May 2009; www.bnq.qc.ca/documents/iso-26000_marie-dHuard.pdf [inFrench].

75 Kallinowsky, op. cit.76 Wayne Visser, Business Frontiers: Social Responsibility, Sustainable Development and Economic Justice

(Hyderabad: ICFAI University Press, 2005): 116-17, 120.77 One author’s personal correspondence with Dr Richter, 23 April 2009.78 ISO, ‘The ISO Survey’, 2007; www.iso.org/iso/survey2007.pdf, p. 26.79 www.globalreporting.org/NR/rdonlyres/E033E311-68E7-41F9-A97F-9F3B94F3FE40/3626/19992009

reportslist_11nov.xls.



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French-African origin.80 The Global Com-pact may actually be a better measure dueto its accessibility and less onerous report-ing requirements. According to the GlobalCompact 2008 annual review, of theFrench sub-Saharan countries, Senegaland the Ivory Coast had a Global Compactnetwork with another emerging networkin Cameroon.81

The case of Sifca shows there is anopportunity for TNCs to learn from a

French-African company and its activitieswithin local communities. An analysis ofits local working groups dedicated to sus-tainable development could provideinsights into traditional ways of embed-ding social responsibility at the bottom ofthe supply chain and, more importantly,potentially open doors to a better under-standing and respect of the French-African CSR experience.

q

80 V. Commene, Responsabilité Sociale et Environnementale: L’engagement des acteurs économiques (Paris:Editions Charles Léopold Mayer, 2006): 64, 229.

81 Carrie Hall, ‘United Nations Global Compact 2008 Annual Review’, March 2009; www.unglobalcompact.org/docs/news_events/9.1_news_archives/2009_04_08/GC_2008AR_FINAL.pdf.

Opinions expressed in this World Review are the authors’ and do not necessarily reflect those of Green-leaf Publishing.


World Review April-June 2009

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