While governments can certainly help to promote corporate social responsibility, citizen movements are even more important actors pressuring both governments and TNCs to implement and institutionalize this objective. In fact, there exists a rich history in many countries of such citizen involvement, originating primarily in unions, religious groups, farm groups, environmental organizations, consumer groups and women's organizations.

Citizen organizations have attempted to foster corporate social responsibility through a variety of methods, including targeting the board of directors, generating negative publicity for the corporation, instituting law suits, pressuring governmental agencies, engaging in dialogue with company officials and mobilizing communities. This section will focus on three particularly interesting and successful tactics that citizen groups have undertaken: organizing corporate boycotts, formulating corporate codes of conduct and pursuing alternative investment strategies.

Corporate Boycotts

One of the most salient and successful tactics citizen groups have undertaken is the corporate boycott. For example, as previously mentioned, in the 1980s, consumer groups organized the famous boycott of infant formula manufacturer Nestlé for its practices of marketing and distributing this product. Through the boycott, these citizen organizations successfully compelled Nestlé to change its harmful practices and convinced the World Health Organization to promulgate its International Code of Marketing of Breast Milk Substitutes. Citizen organizations, particularly religious groups, were also formative in organizing the crippling boycott of apartheid South Africa and successfully convinced numerous companies to divest from the country. Citizen groups in the United States persuaded 27 states and 101 cities to enact sanctions on South Africa; as a result of the boycott, two thirds of all US-based companies sold off their equity shares in their South African operations.¹⁷⁶ Citizen groups organized yet another successful boycott of the Heinz Company: environmentalists forced this company to terminate its policy of catching tuna in nets that snared dolphins.

Codes of Conduct

Citizen groups have also attempted to promote TNC social responsibility by formulating codes of conduct. The Coalition for Environmentally Responsible Economies (CERES) has promulgated a particularly effective code entitled the CERES Principles, which emerged in 1989 from the Exxon/Valdez disaster off the coast of Alaska.¹⁷⁷ This coalition attempts to foster co-operation between environmental organizations and the business community and to convince corporations to adhere to the voluntary CERES Principles. Companies that endorse this code of conduct commit themselves to follow responsible practices in a number of environmental arenas, including the protection of the biosphere, the sustainable use of natural resources, the reduction and disposal of natural waste, energy conservation and environmental restoration.¹⁷⁸ As of 1994, dozens of companies had endorsed these Principles, including the Sun Oil Company and General Motors.¹⁷⁹ It is important to note, however, that the CERES Principles are not legally binding. Companies endorsing this code are responsible for evaluating their own compliance by completing a detailed CERES report that the Coalition for Environmentally Responsible Economies then disseminates to the public.

Japanese-based citizen groups have also formulated a code of conduct for transnational corporations. The "Guidelines for Restricting the Activities of Japanese Companies Abroad" cover a wide range of issues. They require Japanese transnational corporations to conform with domestic and international law, respect social and cultural values, disclose relevant information, maintain safe working conditions, promote consumer and environmental protection, and refrain from political activity.

The Australian-based International Organization of Consumer Unions constitutes another citizen group dedicated to promoting corporate social responsibility through a code of conduct. At the 1994 International Conference on Fairplay in Global Business held in India, this organization suggested the establishment of Guidelines for Global Business. Participants in this symposium discussed the ways in which existing codes and charters could be synthesized to produce a streamlined code of conduct for transnational corporations.¹⁸⁰ Because the United Nations has shelved discussions on the United Nations Code of Conduct for Transnational Corporations, efforts to promulgate the Guidelines for Global Business could replace and expand upon previous attempts by the disbanded United Nations Commission on Transnational Corporations.

Alternative Investment Strategies

Non-governmental organizations have also attempted to promote corporate social responsibility through creative investment strategies. Such tactics have assumed two primary forms. First, numerous groups have emerged promoting socially responsible investing practices. Such private organizations screen opportunities for potential investors to ensure that their clients' money contributes only to companies engaging in socially responsible activities. These investment groups attempt to demonstrate that corporate social responsibility and profit-making are not mutually exclusive endeavours. There exists significant debate, however, as to whether socially responsible investment strategies offer returns as high as traditional investment tactics.

Second, citizen organizations have attempted to promote TNC social responsibility by introducing shareholder resolutions. Instead of advocating change from outside the company, citizen groups acquire shares in a corporation so that they can promote change from within the company. During the past few years, the influence of shareholders over the corporate process has been increasing, aided by the concentration of shareholder power in institutional investors.¹⁸¹ Active investors are increasingly seeking to change corporate policy by using the public process to educate shareholders and to propose alternatives to the policies of the incumbents.¹⁸²

The Interfaith Center on Corporate Responsibility has emerged at the forefront of this shareholder resolution movement. Founded in 1971 and dedicated to merging social values with investment decisions, this organization is a coalition of nearly 250 health care corporations, pension funds, as well as Protestant, Jewish and Roman Catholic orders, denominations, agencies and dioceses. This centre not only sponsors shareholder resolutions but also conducts dialogue with corporate management, applies social screens to investors' portfolios, divests stock, publishes special reports, testifies at the United Nations, leads consumer boycotts and letter writing campaigns, advises socially responsible mutual funds, and acts as a clearinghouse for alternative investments and community economic development.

According to the Interfaith Center on Corporate Responsibility, as of early 1994, there were at least 286 socially responsible shareholder resolutions outstanding.¹⁸³ These resolutions cover an extraordinarily wide range of subjects including alcohol and tobacco sales, marketing and advertising; labelling; corporate governance; executive compensation; corporate philanthropy; development lending; community reinvestment policies; the environment; energy conservation; employee equality; indigenous peoples; labour policies; pharmaceuticals; weapons sales; Myanmar; and Northern Ireland.¹⁸⁴ Sponsors include the Pension Fund of Minnesota, the United Brotherhood of Carpenters, the Calvert Social Investment Fund and the Friends of the Earth.

Specific resolutions, for example, request that Time Warner and Knight Ridder analyse whether advertisements in their publications encourage minors to smoke; that Chase Manhattan and Citicorp establish human rights, social, political and ecological criteria for extending loans in developing countries; that Pepsico promote packaging reduction and recycling systems; that Exxon report on the impact of its mining operations on indigenous peoples; and that SPRINT establish a committee on plant closings with employee and community representatives.¹⁸⁵

Conclusion

The era of the transnational corporation has clearly arrived. As national governments increasingly lose power to these global economic entities and as the free-market ideology becomes even more predominant, TNCs remain some of the most powerful economic, social and political agents in the world. The expanding array of global opportunities for transnational corporations to transfer money, capital and technology around the world renders more difficult the reconciliation of the long-term public interest with short-term TNC interests. Furthermore, the increased leverage of transnational corporations has allowed them occasionally to play nations and communities off against one another in an effort to receive the most advantageous benefit package, a dynamic that generates a "downward harmonization" of labour, consumer and environmental standards.

Although transnational corporations could potentially play an important role in social development, their current impact on this process is moderate at best. While these entities certainly provide jobs, the quality of such jobs is often low and TNCs have demonstrated little proclivity towards protecting job security. While transnational corporations certainly produce important consumer goods, their marketing and distribution tactics sometimes produce harmful health ramifications. They are sometimes at the forefront of developing technology for protecting the environment, yet transnational corporations have historically followed ecologically irresponsible practices and have plundered the natural resources of developing countries. While TNCs provide taxes that can be used to fund social programmes, these entities are constantly using their expansive powers to lobby against such taxes and engage in manipulative transfer pricing policies designed to avoid paying governments the revenues they are due. Transnational corporations develop and employ important technological innovations, but they rarely transfer this technology to developing countries and the technology they do employ in developing countries is often inappropriate. While TNCs might foster economic growth, it is even less clear whether this alleged economic growth produces socially beneficial results. Finally, transnational corporate activity can sometimes perpetuate disparities in standards of living. Instead of creating a global village, these firms are weaving webs of production, consumption and finance that offer benefits to only a small minority of the world's inhabitants. Most people are marginalized, excluded or hurt by these webs of activity.

As described above, transnational corporations sometimes unintentionally advance social development as a by-product of their profit maximizing activities. However, with the exception of corporate philanthropy and a few self-imposed codes of conduct, they rarely consider themselves obligated to advance such social goals. TNC officials often advance disingenuous and morally suspect arguments against corporate social responsibility. In fact, recent developments in bilateral investment treaties, multilateral trade agreements, privatization efforts, weakened national regulations and the predominance of the free-market ideology reinforce this perspective by minimizing TNC responsibilities while expanding their rights.

The extent to which a trend exists towards or away from greater corporate social responsibility is difficult to assess. On the one hand, some business associations have emerged espousing the importance of socially responsible activities and some individual firms have unilaterally pursued (and often marketed) such policies. On the other hand, however, transnational corporations have been heavily involved in promoting and lobbying for an international economic environment that expands their rights while minimizing their responsibilities.

Because of the current environment in which TNCs operate as well as their profit maximizing nature, it is important that both governments and citizen organizations continue to pressure TNCs into advancing socially responsible goals. Sub-national and national governments can achieve such objectives through their traditional regulatory efforts and creative trade-related investment measures. However, because the GATT limits the regulatory power of sub-national and national governments and because transnational corporations are increasingly able to play communities and nations off against one another, international governmental regulation is crucial. In addition, an international code of conduct for transnational corporations could be beneficial. However, the real burden for fostering corporate social responsibility lies with citizen organizations. They must continue to pressure both governments and transnational corporations to institute more socially responsible policies. Available and effective tactics include consumer boycotts, codes of conduct, shareholder resolutions and socially responsible investment practices. Such efforts are crucial if the power of transnational corporations is to be harnessed towards achieving positive social change.

176 76. Shuman, op. cit..

177 77. Information for this section comes from CERES (1994).

178 78. Ibid., pp. 4-5.

179 79. Ibid., p. 3.

180 80. Asher, 1994, p. 8.

181 81. Pound, 1993, p. 1008.

182 82. Ibid., p. 1007.

183 83. Interfaith Center on Corporate Responsibility, 1993, p. 2.

184 84. Ibid.

185 85. Ibid., pp. 9-11.