Cecilia Chirieleison University of Perugia NGOs and CSR: which strategies to become critical stakeholders? Cecilia Chirieleison University of Perugia Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008

NGOs and CSR: which strategies to become critical stakeholders? Growing interest of NGOs for the business: attempt to improve environmental and social context by influencing the level of CSR In the perspective of the stakeholder theory, are NGOs able to be critical stakeholders? Mitchell et al. (1997): legitimacy, urgency and power NGOs often don’t have the power to directly influence the firm’s financial and competitive performance The indirect strategies (Frooman, 1999): NGOs acting through an ally that can threaten to withhold its resources Traditionally two main stakeholders targeted: the national government and the consumers Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008 Cecilia Chirieleison University of Perugia

NGOs and CSR: which strategies to become critical stakeholders? a)The government Different objectives of the NGO’s lobbying activities: Enforceable national and international legal obligation directly imposing social standards or disclosure to the corporations Regulation indirectly persuading the corporation to adopt higher CSR standards strengthening or influencing other stakeholders (unions, consumers associations, institutional investors, etc.) In general NGOs are quite weak in influencing the public policies Government’s action tend to be less effective because of globalization The MNCs escape both the international e the national law b)The consumers Documentation of abuses and moral shaming are useful only if they really influence consumers behaviour Consumers’ action has demonstrated to be often too weak Consumers are in general not very interested and informed about CSR and have a short memory Only few successful boycotts Cecilia Chirieleison University of Perugia Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008

NGOs and CSR: which strategies to become critical stakeholders? Emerging influencing strategies. In search of others stakeholders-allies: shareholders and executives a)The shareholders: they own an essential resource and can choose the exit option Different tactics used: Shareholder activism (NGOs become shareholders) Partnership whit SRI; collaboration in social and ethical screening Persuasion of traditional institutional investors to adopt a social screening by emphasizing financial risks associated with social and environmental poor performance Cecilia Chirieleison University of Perugia Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008

NGOs and CSR: which strategies to become critical stakeholders? b)The executives: from confrontational strategies to engaging and collaborative strategies Support in voluntary CSR and advocacy of social accounting and independent verification schemes: versus self-compliance From the CRM to the cooperation in dealing with firm’s specific social and environmental issues The collaboration between NGOs and business in defining higher standard in case of absence or insufficient regulation of global social issues: versus a “civil regulation” (the Forest Stewardship Council) Engagement NGOs need the confrontational ones demonstrating to be able (even in a few cases) to damage the corporate reputation and the brand name (CorpWatch) The interaction with the mass-media: visibility only for few big NGOs Cecilia Chirieleison University of Perugia Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008

NGOs and CSR: which strategies to become critical stakeholders? The effectiveness of the NGOs strategies and the core resources: funds, legitimacy and information 1)Fund rising and dimension’s growth: the ability to intervene on global issues requires global dimensions Private and public donors The risk of conflicting interests when engaging with the business (NGOs “selling” legitimacy for subsidizing: greenwash and bluewash) The public subsidizing and the autonomy in defining objectives and ways of intervention Trade-off between dimensional growth and maintenance of independency? In search of new instruments to protect independency (Charity SRI: donor and partner screening) 2)The maintenance of the legitimacy The legitimacy of the claims: a cost/benefit evaluation (i.e. child labor vs. prostitution) The cultural legitimacy: the ethical hegemony of the Northern NGOs The internal legitimacy: the need for improving governance and democracy (which accountability for the NGOs? Who is the “principal”?) The legitimacy of the reputation: the violent no-global movement Cecilia Chirieleison University of Perugia Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008

NGOs and CSR: which strategies to become critical stakeholders? 3)The information as strategic resource: the influence on the stakeholders-allies depends on the ability to obtain, process and diffuse information Obtaining information The ability to understand the corporate social disclosure The ability to show “double standards” and to obtain information about the MNCs operations in the developing countries: the role of the Southern NGOs and the transnational networks Processing information The screening to verify information’s reliability –The NGOs reputation depends on the quality and the trustworthiness of the information they provide –The reputation of the partners for the reliability of the information –The importance of the relationship with an international scientific network Combining pieces of information to turn them in a global message Diffusing information Only few and well known NGOs can access the mass media to obtain a global resonance To carry information to the others stakeholders Cecilia Chirieleison University of Perugia Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008

NGOs and CSR: which strategies to become critical stakeholders? The needs to develop new competences to engage with shareholders, executives and others NGOs Competences in processing accurate information in a global context and in communicating with mass media and other stakeholders Competences in scientific fields to engage with scientists Competences in finance and in CSP measurement to engage with shareholders Competences in management to engage with executives Competences to improve NGOs governance and accountability Competences in promoting and managing transnational networks between NGOs (specially Northern and Southern) and with other private and public actors How to develop new competences without loosing ethical value (professionals or volunteers?) Cecilia Chirieleison University of Perugia Corporate and Stakeholder Responsibility. Theory and Practice Milan, May 2008