Research Handbooks on Globalisation and the Law series
Edited by John Linarelli
Chapter 6: Human rights issues in multinational value chains
When William Lever built Port Sunlight as the ideal place for factory workers to work and live, and when Henry Ford paid premium wages to his workers at the Ford assembly plant in River Rouge, both were motivated not only (or at all) by altruism, but by a keen sense of what was required for the long-term sustainability of their businesses. While owner-entrepreneurs still maintain a great deal of latitude in terms of how their corporate citizenship duties are discharged, with the retreat of the state from some of its social welfare functions, and the increasing use of market-based mechanisms and instruments to guide the supply of public goods, the boundaries of corporate citizenship for publicly listed companies have undergone a transformation over the past three decades. On one hand, good corporate citizenship is higher on the agenda than it has ever been before, and increasingly visible in annual reports and separate social performance reports. On the other hand, the options available to managers in executing corporate social responsibility are circumscribed by the perceived demands of shareholders as owners of the firm. While the goal of shareholder value maximization is consistent with improving corporate social performance as a means of controlling risk, the discourse on shareholder value maximization also incorporates a suspicion that managers as agents might be inclined to enhance their private social standing by engaging in charitable activities.