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Germany

G8 Labor Ministers Call for More Social Engagement by Business

G8 Labor Ministers are debating whether to require big businesses to promote social and environmental programs, with the aim of a fairer globalization. But employers are nervous.

G8 labor ministers

G8 labor ministers argue that more social responsibility would change the minds of globalization critics

The Group of Eight labor ministers, representing the world's leading industrialized nations plus Russia, convened on Monday for a two-day meeting in Dresden, Germany. There, a new buzzword has emerged: "Corporate Social Responsibility" -- or CSR for short.

The idea behind this somewhat ambiguous, perhaps even euphemistic term is that big businesses -- especially those operating on a global scale -- should "integrate social and environmental issues into their business activities," in the official wording of the European Union Commission.

"Economy, ecology and social action have to be carried out in a way that is fair and balanced," German Minister of Labor and Social Affairs Franz Müntefering wrote in the pre-released text of a Tuesday speech to his G8 colleagues. Müntefering is concurrently Vice-Chancellor in the cabinet of Angela Merkel, who currently controls the rotating EU Presidency.

Whose responsibility is it, anyway?

footprint

Who will shoulder the social and environmental burden?

The idea has rattled the nerves of business representatives, who fear that the government wants to rid itself of its own social responsibilities. Renate Hornung-Draus of the Confederation of German Employers' Associations (BDA) told the G8 that social commitments in the business sector "shouldn't be seen as a substitute for government action."

Meanwhile, the German Confederation of Trade Unions (DGB) has demanded regulations that would set out basic requirements for Corporate Social Responsibility. DGB chairman Michael Sommer told the German news service DPA that "the spoils of globalization should benefit all, not just a few" people, a statement that Hornung-Draus has echoed.

Müntefering defended CSR, arguing that a socially responsible process of globalization would bring about widespread prosperity, which in turn would elicit a more accepting attitude from globalization's skeptics.

"We have to share this insight with the world: Social action is a strong economic force."

But the anti-globalization network Attac has accused Müntefering of glossing over reality. "In fact, the German government is enacting cutbacks to social standards -- at home and worldwide," the activists wrote in a press release. Any way you look at it -- in the G8, the EU or at the federal level -- the government has been "instrumental to advancing the neoliberal globalization in the interest of corporate groups," Attac claims.

Different standards in China

Chinese shoe factory

A shoe factory in China, where labor practices can be very different than in the west

Minimum social standards are particularly problematic for enterprises with production sites in developing countries. There, Western companies face enormous problems, including extreme poverty, inadequate medical care, corruption, child labor, sub-standard education and the absence of worker's rights or meaningful environmental safeguards, to name a few.

Ingo Schoenheit, managing director of the University of Hanover's Institute for Market/Environment/Society, exemplifies the difficulty of conducting business in developing countries in a recent book on Corporate Social Responsibility in China.

"On the one hand, they (Western corporations) want to take advantage of the cost benefits China has to offer, which result from its low wage, social and environmental standards." But, the author writes, companies active in China are under constant pressure from markets and the public to "protect the reputation of their brands."

The core question, according to author Schoenheit, is this: "Do the same principles and criteria apply to Europe and China?"

Contradicting approaches in Europe

Even inside the European Union, there seems to be no consensus over how to encourage more social action from business leaders. A study commissioned by the Bertelsmann Foundation, Germany's largest private non-profit organization, examines the approaches of various EU-countries to CSR, and finds that there is no unified concept.

Sweden, the United Kingdom and the Netherlands are at the forefront of corporate responsibility, the study finds. In Denmark, larger companies are required to present an annual environmental report to the government. And in France, the government has put similar regulations in place, although many businesses have lobbied to remove some of them.

Germany, on the other hand, is behind the times, the study says. "No strategy, no contact persons, no transparency. The (German) federal government has a lot to catch up on."

However, Germany also demonstrates that CSR may be possible without potentially inhibiting state regulations. Financial consulting firm Ernst & Young's "Mid-Sized Business Barometer 2007" finds that mid-sized businesses with positive growth rates have shown above-average commitment to social issues.

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