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Monday, January 18, 2010

Google China and the Existential Question of CSR

Public deliberations by Google Inc. regarding its operations in China bring to the fore an important and very difficult topic in the field of CSR - what should be done when it becomes impossible to do business in a socially responsible way?

I will define "socially responsible" to mean acting in accordance with social obligations (which include but are not necessarily limited to the laws of states). The "existential" question of CSR arises where corporations have adopted a social responsibility objective, and are presented with business opportunities that may render such a mandate unattainable. This can occur where business operates in an oppressive or patrimonial state jurisdiction, or where operational conditions on the ground are such that violations of fundamental expectations (like violations of human rights, corruption of public officials, complicity in violence or coercion) will inevitably occur.

While a CSR mandate necessitates carrying out business in a socially responsible manner, there is a more fundamental (though less considered) assumption upon which the concept is based. That is, "business", "trade" or "commerce" itself is a social good per se that will and ought to occur and be allowed to occur. This is not an incontestable point, and many ideological perspectives actively challenge that assumption. The concept of CSR, on the other hand, accepts as a fundamental assumption that business is generally acceptable, and in fact should be promoted, with the caveat that it should be promoted within the constraints of legitimate social and stakeholder expectations. The existential question of CSR arises when the very capacity of business to conduct itself within such constraints is called into question. If social responsibility becomes impossible, then a business must choose to abandon a social responsibility objective, or withdraw entirely from the market place.

If one believes that business (reasonably constrained) is a social good, then a decision to withdraw from a market should be seen as a very grave one. The inevitable result will be a decline in commercial activity, diminished product offerings, declining accessibility to new technologies, potential unemployment and lost training or educational opportunities. Such consequences are significant, and must be considered in evaluating the existential question.

The concept of "social obligation" is also not a simple one. The answer to the existential question depends on whether business operations cannot be conducted in a manner that could be considered socially responsible. This would likely necessitate violation of fundamental international laws and norms, such as those found in the International Bill of Rights, including the International Covenant on Civil and Political Rights and the Universal Declaration on Human Rights. It might also include circumstances of forced labour that are proscribed by the core conventions of the International Labour Organization. The growing international customary law expectation of "non-complicity" in human rights abuses is also important, and affects how business interacts with entities that may be in violation of human rights standards.

Local laws will also be of relevance. In the case of China, local laws purport to protect freedom of speech and the press, though there exists a clear gap between the theory and practice of such concepts. In this respect, the actions of state officials may in fact be at odds with state laws. Google, as a US company, is also affected by US law. The United States Congress is considering the re-introduction of an Act entitled the Global Online Freedom Act, which would restrict the way in which US internet service providers and technology companies do business in states that censor or restrict the internet, and use information collected by US companies to persecute people for religious or political expression.

These legal and normative frameworks set out some of the constraints that must be considered when answering the existential question. Others may be discovered through direct stakeholder engagement initiatives, for example with civil society. In the case of Internet privacy, there also exists a multinational normative framework called the Global Network Initiative (the "GNI"). The GNI is a voluntary framework that seeks to monitor and promote privacy and freedom of expression in information and communication technologies. Google itself is a signatory. The organization is a custodian of principles, and also a think tank on best practices. It also has a mandate of seeking collaborative solutions to problems that may arise in these areas through "multi-stakeholder collaboration". The organization could be seen as analogous to other international frameworks like the "Global Compact".

Aside from these external constraints, rational considerations must also be identified. In the case of Google, this might include the capacity to protect proprietary information, the market potential, possible reputational risk, and the cost-benefit of remaining in the market. Google has also adopted internal codes of conduct and corporate objectives (i.e. do no harm) that have internalized external social expectations affecting CSR.

In light of all of the foregoing, the question will be how business can be conducted in a manner consistent with such social constraints and rational objectives, or if it is even worth it.

Time will tell what Google ultimately decides. In the meantime they have taken the strategic step of making their concerns public. This approach is consistent with the "transparency" objective of a CSR mandate. It is also a prudent move from an international legal perspective. By speaking out against what may be inappropriate state demands, Google may be laying the groundwork towards a defense against allegations of complicity. Moreover, by being public, Google will better be able to hold actions of Chinese officials up for scrutiny in relation to Chinese laws, at the least by the general public if not legal administrators. It has been said that "sunlight is the best disinfectant" when it comes to dealing with social ills. A transparency approach allows sunlight to be shone on behaviour that could evolve into corporate complicity in human rights abuse if left in the dark.

Undoubtedly there could be political and legal fallout for such a decision (i.e. disapprobation from Chinese officials; new legislation in the US). The question becomes whether such risks outweigh the risks associated with doing nothing. In this case, Google appears to have concluded that they did not, and chose the route of transparency, with a public consideration of ceasing operations entirely.

That ultimate decision to stay or go will be a decision that Google should take very seriously. Google could be a force for social good in China, as it and other businesses can be in any society. Moreover, to the extent that freedom of expression should be promoted, Google has the capacity to promote that principle even where it is stifled by state actions. Withdrawal will prevent such benefits from being realized. On the other hand, co-option by a patrimonial state is completely unacceptable within a CSR mandate, and must be resisted to the greatest extent possible, or complicity will be sure to result. Transparency is an excellent method of resistance, even if it results in greater scrutiny of Google's corporate conduct. Openness about the challenges facing the company are a show of good faith, and will make it more difficult for unacceptable behaviour to continue without criticism. Any fallout that results should be considered an inevitable result of doing socially responsible business, and can be justified as such by corporate management.

I would go one step further however, and suggest that multilateral framework organizations like the GNI should take or be given a larger and more constructive role in dealing with these sorts of dilemmas. While a corporate organization like Google cannot hold the Chinese government to account through legal mechanisms of the state, organizations like the GNI have the capacity to expose and report on alleged abuses by states, as well as companies. In the same way as it is good for companies to be transparent, so should these international bodies be. Moreover, they should proactively evaluate behaviour in relation to their principle frameworks, and render decisions, similar to the process followed by a court. By making such evaluations and communicating their findings, these organizations can allow the public to better understand what is occurring, and aid in determinations of whether corporate or government actors are behaving contrary to accepted standards of society. This will allow all stakeholders - businesses, governments, investors and the public - to make more informed decisions, and increase accountability for those entities or individuals that choose to defy fundamental social norms.

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