Master Thesis:
Corporate Social Responsibility in the banana sector in Peru
Angélica Kroon
Master International Relations and International Organization 2013 University of Groningen, The Netherlands
S0896349
Table of contents Page Glossary……….4 Foreword………...6 Acknowledgements………..………...7 Hypothesis……….……….8 Introduction……….……….8 Research Methodology………..………..11
Chapter 1: History and international regime of CSR 1.1. Introduction………..12
1.2. History of CSR………..12
1.3. History of CSR in Latin America………16
1.4. CSR and Fair Trade in Peru………..18
1.5. History of Fair Trade………20
1.6. International regime of CSR……….………21
1.7. Conclusion………..25
Chapter 2: Theoretical Framework 2.1. Introduction………..27
2.2. Concept of CSR……….27
2.3. Concept of Fair Trade………..29
2.4. Concept of Bio-Trade………...30
2.5. Theories explaining the drivers of CSR……….………31
2.6. Conclusion………..33
Chapter 3: CSR in the banana sector in Sullana, Peru 3.1. Introduction………...34
3.1. General picture of the banana sector, with a focus on Sullana………...34
3.2. Analysis of CSR in the banana sector in Sullana………..41
3.2.1. Economic responsibility……….42
3.2.2. Environmental responsibility…. ………...45
3.2.3. Social responsibility………..47
3.3. Conclusion………...49
Chapter 4: Drivers of CSR in the banana sector in Sullana, Peru 4.1. Table and explanation of the CSR drivers……….51
4.2. Economic drivers……….53
4.2.1. Consumer demand………..53
4.2.2. Competitive advantage……….55
4.2.3. Associativity………....59
4.2.4. Pressure from business partners………...64
4.2.5. Company image……….65
4.3. Political drivers……….66
4.3.1. National government……….66
4.3.2. Regional government………....71
4.3.4. International organization: European Union………..73
4.4. Social drivers: CSOs……….75
4.4.1. AVSF………..76
4.4.2. Solidaridad………...77
4.4.3. SNV………....79
4.5. Conclusion……….81
4.6. Summary in table: Contribution of government, EU and CSOs to CSR……….83
Conclusion………....84
Annexes………..88
Bibliography………...90
Glossary
Associations of organic banana producers in Sullana1 APBOSMAN APOQ APPBOSA APPT APROBOVCHIRA BOS
Centrals of organic and Fair Trade banana producers2
CENBANOR: Central of Northern banana producers
ASOBAN: Association of organic banana producers in Sullana
CEPIBO: Piuran central of small producers of organic and Fair Trade banana
REPEBAN CJ: Network of small producers of organic and Fair Trade banana
Exporting companies of organic banana in Sullana3 Copdeban S.A.C.: subsidiary of Dole Company
Biorganika S.A.C: later renamed Group Hualtaco Biocosta S.A.C.
Pronatura
Other organizations in the banana sector:
CPAF: Cooperative of producers of Agrofair
Agrofair: Dutch importer and distributor of Fair Trade Fruits
DALE Foundation: CSR Foundation in Peru funded by Dole
INIBAP: International Network for the Improvement of the Banana and
Plantains Government institutions (Peru):
MINAG: Ministry of Agriculture
MINCETUR: Ministry of Trade and Tourism
CONAPO: National Commission of Organic Products
SENASA: National Service of Agricultural health
PROMPEX: Export promoting agency
CERX: Regional committee for Exportation
Government Programs4: AGROIDEAS AGRORURAL INCAGRO PROABONOS PROCOMPITE PROSAAMER
1 These are some of the associations mentioned in the thesis, but there exist many more (see Annexes). 2 These are second degree organizations that group several banana producer associations in Sullana. 3 These are the main exporting companies of organic banana in Sullana.
Civil Society Organizations (CSOs):
AVSF: Agronomists and Veterinarians without Borders is a non-profit
association for international solidarity and supports smallholder farming.
SNV: Dutch Development Organization.
Solidaridad: Dutch network organization working on sustainable supply chains.
OIKOS: Portuguese non-governmental development organization.
CEDEPAS Norte: Ecumenical Centre for Promotion and Social Action in the North
Swisscontact: Swiss business-oriented independent foundation for international
development cooperation.
TASTE: Technical Assistance for Sustainable Trade and Environment. Organizations promoting CSR in Latin America5
Acción RSE: non-profit organization that groups companies that work for
corporate social responsibility and sustainable development in Chile.
Ethos Institute: non-profit organization that promotes CSR in Brasil.
Peru 2021: non-profit organization that promotes CSR in Peru.
Fundemas: Business foundation that contributes to CSR in El Salvador.
Forum Empresa: Latin America alliance of the main business organizations of CSR. Fair Trade Organizations
FLO: Fair Trade Labelling Organizations International.
IFAT: International Federation for Alternative Trade.
NEWS!: Network of European Worldshops.
EFTA: European Fair Trade Association.
FINE: an informal network that involves the Fairtrade Labelling
Organizations International (FLO), the International Federation for Alternative Trade (IFAT), the Network of European Shops (NEWS!) and the European Fair Trade Association (EFTA).
International Organizations
EU: European Union.
EC: European Commission.
UN: United Nations.
UNEP: United Nations Environmental Program.
IO: International Organization.
CSR: Corporate Social Responsibility.
NGO: Non-governmental organization.
CSO: Civil society organization.
Foreword
As a woman with a Dutch father and a Peruvian mother, I find myself in the privileged position to write my Master thesis about a topic, that is near to my heart and that has the Netherlands and Peru indirectly connected. When I visited Peru as a young girl I was confronted with large social and economic differences in this society. Ever since, it was my desire to contribute to better living and working conditions for underprivileged people. At the same time I have always been in favor of organic products; to consider the environment we live in. In a strange way, destiny has led me to write my thesis about a topic that combines these two concerns.
This thesis investigates to what extent the Peruvian government, international organizations and civil society organizations have contributed to more responsible economic, social and environmental practices in the banana sector in the Chira Valley in Sullana, Peru. Although the government and (inter)national cooperation have made an important contribution to developing the organic banana sector and to the advancement of small producers in the banana chain (among others), it seems that high external demand for organic and Fair Trade products has been more decisive in lifting the living and working standards here. Noteworthy is that the first Fair Trade label was created in 1988 in the Netherlands and now Fair Trade is a successful practice in Peru and in many other regions of the world.
Acknowledgements
My gratitude goes out primarily to the Mayor of the Regional Municipality of Sullana, Sir Jorge Camino Calle, who arranged for a guided tour around the banana plantations in Sullana in June 2013, and scheduled several reunions with central actors in the banana sector. Thanks also to our hospitable tour guide Juan Carlos Risco, who accompanied me and my travel companion during our stay in Sullana.
I am grateful as well to Juancarlos Landaure Olavarría. Through his contacts he made it possible for me to do a field trip to the banana plantations in Sullana and to interview several key figures. He also made arrangements for the trip to Sullana, accompanied me on the trip, helped me with making a questionnaire and advised me with my thesis. Thanks also for all the people that allowed me to interview them: Sir Jorge Camino Calle (Mayor), Juan Carlos Risco (production manager of the Regional Municipality of Sullana), Angelica Fort Meyer (former general manager of Group Hualtaco), Carlos Espinosa Nieto (General Manager Foundation Dale), Willy Paredes (NGO OIKOS), Mario Tavera (Adviser of the General Office of Agrarian Competitiveness from the Ministry of Agriculture), José Lecarnaqué (former director of CEPIBO), Raúl Eduardo Torres (social planner in Piura), Esteves Lijap Muñoz (former sub-manager of productive management at the Regional Municipality of Sullana) and several others.
Thanks to my supervisor Mrs. van Roozendaal of the University of Groningen, who evaluated my drafts and gave me valuable advice on how to set up and improve my thesis. I am also thankful to Pieter Levenbach, who checked my final thesis draft.
My appreciation also for my ex-colleagues at the Delegation of the European Union in Peru, in particular Helena Guarin and Patrick Gallard. During my internship they gave me the opportunity to do research for the Euro Eco Trade Program. This research inspired me to write my thesis about CSR in the banana sector in Peru.
Hypothesis
CSR in the banana sector in Peru has grown more because of external demand for organic and Fair Trade bananas than because of government policy or cooperation with international organizations and civil society organizations.
Introduction
Corporate Social Responsibility (CSR) is hot at the moment. There is a growing recognition that private enterprises should be held accountable for the social and environmental consequences of their activities, both at a national and international level. This is shown by the adoption of CSR in legislation and policies of many countries, and organizations like the United Nations and the European Union. But also by the way governments, NGOs and the media have put large companies in the spotlight for harmful activities with respect to the environment and human rights. Openness and transparency with respect to a firms' actions are increasingly demanded. The last
decade CSR has been one of the top priorities for enterprises.6
In Peru, generally speaking, CSR is in its beginning stages, but the production of organic and Fair Trade products in Peru by small farmers is increasing, which can also be considered as a form of social and environmental responsibility. At the same time
because of food security problems in the world7, agricultural productivity needs to
increase. Small-scale producers in Peru could benefit from this situation if they obtain a good share of the value generated by the agri-food chains. The industry will then be able to improve the income and livelihoods of small (in general poor) farmers and fight
poverty, which is one of the Millennium Development Goals8 and save Peruvian
biodiversity, which is one of the greatest in the world.9 Contradictory however in the
6 Hartmann, Monika, “Corporate social responsibility in the food sector” in: European Review of Agricultural Economics, Vol 38 (3), University of Bonn, Germany (2011) 297–324.
7 UNEP (United Nations Environment Program), Issues for the 21st century. Results of the UNEP Foresight Process on Emerging Environmental Issues, Alcamo, J., Leonard, S.A. (Eds.), Nairobi, Kenya (2012) 17-18. 8 The eight Millennium Development Goals are goals agreed to by all the world’s countries and all the world’s leading institutions to meet the needs of the poorest people. The goals are eradicating extreme poverty and hunger, providing universal primary education, ensuring environmental sustainability, reduce child mortality, halting the spread of HIV/AIDS, promote gender equality and empower women, improve maternal health and global partnership for development, all by the target date of 2015.
United Nations. “We can end poverty. Millennium development goals and beyond 2015.” Home. Accessed http://www.un.org/millenniumgoals/
9 Convention on biological diversity. “Peru-Country profile. Status and trends of Biodiversity.” Information. Accessed January 15, 2014.
case of Peru is the limited demand for ecological products by the Peruvian people and the fact that the exports of ecological products from Peru to Europe and the United States need long-distance transportation, which is not environmentally friendly.
An example of successful CSR in the agricultural sector in Peru is the Fair Trade certified and organically produced banana in the Chira Valley, which lies in the northern coastal province of Sullana (in the region of Piura), where banana producers have organized themselves in associations to gain a better position in the international market and have achieved a better standard of living and relatively fair prices for their products.
The Peruvian success in Bio- and Fair Trade10 raises the question of how it has
come about. This is especially important considering both the national policy of the Peruvian government to promote the exports of ecological products and the support of international organizations for this policy. The European Union is supporting this national policy with financial and technical assistance through the Euro Eco Trade program. The United Nations Program for Environment is implementing the Andean Bio-Trade project, which among others, facilitates the funding of trade based on bio-diversity. Jaime Cardenas, the national coordinator of the Bio-Trade project indicated that Peru is bringing its products successfully to the international markets, but that investigation is necessary to consolidate this trend.11
Against this background, this study intends to contribute to the investigation in the field of both Corporate Social Responsibility and Bio- and Fair Trade in Peru.12 Perhaps the lessons learned in the banana sector might be replicated in other sectors. Another objective of this study is to gain more insight in the role of the government,
10 Trade in the Peruvian organic banana, with the Fair Trade certification, meets many of the criteria of Bio-Trade. According to the United Nations Conference on Trade and Development, Bio-Trade refers to “those activities of collection, production, transformation, and commercialization of goods and services derived from native biodiversity under the criteria of environmental, social and economic sustainability”. United Nations Conference on Trade and Development. “What is Bio Trade?” About Bio Trade. Accessed January 16, 2014. http://www.biotrade.org/index.asp.
11 Grupo Agronegocios. “Peru necesita invertir en investigación para posicionar productos de
international organizations and civil society organizations (CSOs)13 in promoting CSR in the banana sector in Peru. Finally, this study wants to describe both the national context and the international context of CSR and Fair Trade in the banana sector in Peru. There are international standards of CSR and Fair Trade that can have effects on the functioning of producer organizations and companies within national states.
The central thesis question is as follows:
To what extent have the Peruvian government, international organizations and civil society organizations stimulated the development of CSR activities in the banana sector in the Chira Valley in the province of Sullana, the region of Piura in Peru, in the period from 1998 to 2012?
The central question will be analyzed by a combination of the theory of Piotr Mazurkiewicz and the theory of John Campbell, because their theories are applicable to this study. In the first chapter their theories will be explained more elaborately.
The thesis is set up as follows: in chapter 1 the global (but Western oriented) history and the international standards of CSR and Fair Trade will be described. Chapter 2 defines the concepts of CSR, Fair Trade and Bio-Trade. Furthermore, the theories explaining the reasons for CSR strategies will pass in review and the theoretical framework is presented in a table. Chapter 3 evaluates to what extent and in what form economic, social and environmental responsibility takes place in the banana sector in Sullana, Peru. In chapter 4 the economic, social and political drivers of CSR in the banana sector in Piura will be analyzed. This chapter focusses on the role of the government, the EU and several civil society organizations, amongst other drivers, in fomenting CSR in the banana sector. At the end of chapter 4, on page 83, a table can be found, summarizing the contribution of the Peruvian government, the EU and the CSOs to CSR in the banana sector in Sullana, Peru. In the last chapter the conclusion will be presented.
13According to the United Nations civil society organizations (CSOs) - also referred to as
Research methodology
There have been several stages in preparing for and writing the thesis. In the first stage, reading about the success of CSR in the banana sector in Peru during my internship gave inspiration to choose this subject and make a research plan. After approval of this plan, an exploration began of academic literature about concepts of CSR, Fair Trade and Bio-Trade as well as theories that explain the motivations for CSR strategies.
In a second stage, a field trip has been made from the 22nd to the 26th of June of
2013 to the Chira Valley in Sullana. The production of organic and Fair Trade banana is namely concentrated in the Chira Valley, which lies in the province of Sullana. Several reunions were organized by the Mayor of the Regional Municipality of Sullana, Sir Jorge Camino Calle. During these reunions interviews have been conducted with representatives of important banana exporting companies (Copdeban-Dole and Group Hualtaco) and several producer associations (CEPIBO, REPEBAN and APBOSMAN), with some social actors (CSOs such as OIKOS and Solidaridad) and with political actors (representatives of the Regional Municipality of Sullana). After the trip several other interviews have been conducted in Lima, among others with a consultant from the Ministry of Agriculture, Mario Tavera and with the former manager of Group Hualtaco, Angelica Fort Meyer. The interviews were not structured and thus not conducted in the form of a survey. The interviews were done to get a general impression of CSR in the organic banana sector in Sullana. A questionnaire has been handed out to some representatives of the associations of banana producers, but this was not filled in clearly or properly by everyone and has hardly been used for the thesis.
Most interviews have been filmed and photographed. A video of the trip to Sullana has been compiled in Lima as well. This video will be used to make a short informative video about the organic banana sector in Sullana. Hopefully it can be handed over to the Mayor of Sullana in January 2014.
After the trip, back in the Netherlands, more literature has been gathered, the theoretical framework has been revised two times and a few more interviews have been done either by Skype or email. The writing process could begin.
will be presented, referring here to export figures of organic and/or Fair Trade bananas, and indications of salaries and turnover. These figures are mainly expressed in US dollars. It is essential to point out that the growth of the Peruvian economy in the last decade, the increased exports, the improved balance of trade and sound monetary policy 14have resulted in an increased value of the Peruvian Nuevo Sol currency vs. the US dollar. A dollar today buys about 20% fewer Soles than 5 years ago. This means that an increased sales volume of bananas in American Dollars does not necessarily increase the purchasing power in the local economy. However, a large part of the Peruvian economy is still "dollar based", reducing the effect of the decline of the dollar.15
Chapter 1: History and international regime of CSR
1.1. Introduction
This chapter describes the history of CSR and Fair Trade. CSR and Fair Trade have evolved in the course of time, which is why a brief description of their history cannot be omitted. Finally, this chapter discusses the international regime of CSR, consisting of the main international standards of CSR.
1.2. History of CSR16
Has CSR always existed or not? The history of CSR seems to have two sides. On the one hand one might say that CSR is as old as business itself as social and environmental
concerns about business have always existed.17 Issues of ethics in business go way back
in history. The practice of usury for example (the charging of interest on loans) has been
condemned for more than 4000 years.18 In the early Greek and Roman cultures and in
the Middle Ages commercial activities were more or less seen as despicable under influence of philosophic and Catholic ideas. The value of sharing wealth and helping the
14 Worldbank. “Peru Overview”. Overview. Last modified April 14, 2014. Accessed January 15, 2014. http://www.worldbank.org/en/country/peru/overview
15 Levenbach, Pieter, E-mail correspondence between 12 and 31 december 2013.
16 The history of CSR described here is mainly Western-oriented (Europe and the Americas).
17 Vayanos, Stylianos, “History of CSR”, Journal of Business and Public Policy, vol.1, number 2 (Spring 2007) 8.
needy is already expressed in the Bible and in traditional African societies the well-being
of the community had priority over the interests of the individual businessman.19
Yet, on the other hand, if looked at the majority of business practices in the last centuries, capitalist ethics without regulation seems to have had the upper hand (especially in the Western world) and CSR has usually not been a common practice. From the 15th to the 19th century trade and capitalist ethics grew and human rights have been violated along the way. For example, from the 17th to the 20th century slave
trade20 and colonialism were a part of business in the world.21 A lot of enterprises and
industries that flourished in the early 19th century, stimulated by the Industrial Revolution and new technologies, did not take into consideration the wellbeing of their employees nor the protection of the environment. As a consequence the deplorable
situation of many workers in the 19th century was occasion for some scientists (such as
Karl Marx and Friedrich Engels) to write about new concepts of labor, for the working class to form labor unions and for the consequent rise of socialism and communism. But of course this does not mean that more responsible companies in this period did not exist. According to a White Paper of CSR Quest, the early roots to CSR can be found in
business practices by some successful companies in the 18th and 19th century, such as
the Cadbury chocolate factory in Bournville that was dedicated to employee welfare with democratic consultation. It had a medical department, pension funds, education
and training for employees.22 This is also confirmed by Percy Marquina who mentions
that in the last decades of the 19th century the term welfare capitalism and corporate philanthropy emerged, referring to company programs and facilities for the workers and
the community.23
Although CSR does not have a fixed start date, several authors and organizations have mentioned a certain periodization of the stages of CSR. According to Peru 2021, the national platform of CSR in Peru and a publication of Percy Marquina, the history of CSR
starts in the last decades of the 19th century. Depending on the author, four to six stages
can be distinguished. The first stage, from 1880 to 1929, can be characterized as the
19 Vayanos, Stylianos, “History of CSR”, Journal of Business and Public Policy, vol.1, number 2 (Spring 2007) 8.
20 Britain and the United States acted to abolish the transatlantic slave trade in respectively 1807 and 1808.
21 Oldfield, John, The abolition of the slave trade (University of Southampton, 2013) 1.
22 Katsoulakos, Dr. P. et al., CSR Quest, A historic perspective of the CSR movement, in: A CSR oriented Business Management Framework. Part A - CSR foundations (Athens University of Economics and Business, 20 December 2004) 5-6.
corporate era; business was unregulated and had detrimental effects on society. However, as mentioned before, in this period also emerged practices of philanthropy by companies. The second stage which starts in 1929, with the Great Depression, was a normative and ethical-philosophical period, with a focus on managerial values and
principles.24 People blamed the failure of businesses and banks and the loss of jobs to
the greediness of businessmen and their extreme preoccupation with their own interests. As a consequence new laws were made that described and enlarged the role of business to protect and better the general well-being of society. Not surprisingly in the 1930s arose the first publications on social responsibility and the government assumed a greater responsibility to combat the economic crisis. In this phase the concept of corporate social responsibility was coined in 1953 by Howard Bowen, which he defines as “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society”.25
The third stage, the 60s and 70s, is the era of social activism, where social movements appeared, where consumers changed their demands, where social responsibility appeared in Latin America and where the social business model was born. In this period, according to the White Paper of CSR Quest the main themes were environmental problems like climate change and global warming which led to the creation of numerous national environmental protection agencies and the UNEP (United
Nations Environmental Program).26 During this stage Carroll (1979) worked further on
the founding concept of Bowen and developed a more structured analysis of CSR as consisting of mainly four responsibilities namely the economic, the legal, the ethical and the philanthropic responsibility.27
The fourth stage, the 80s and 90s, is the era of social consciousness, where people are more aware of economic globalization and where intense campaigns by ecological movements take place. Other concepts of CSR appeared, often related to environmental subjects such as sustainable development. The principles of sustainable development
24 Marquina, Percy, Measuring the Impact of Corporate Social Responsibility on Consumer Behavior: The Case of Peruvian Consumers (Florida International University, Miami 2007) 4.
25 Marquina, Percy, Measuring the Impact of Corporate Social Responsibility on Consumer Behavior: The Case of Peruvian Consumers (Florida International University, Miami 2007) 4.
26 Katsoulakos, Dr. P., CSR Quest, A historic perspective of the CSR movement, in: A CSR oriented Business Management Framework. Part A - CSR foundations (Athens University of Economics and Business (20 December 2004) 14.
were established by the Brundtland report in 1987, which defined sustainable development as “development that meets the needs of the present without
compromising the ability of future generations to meet their own needs”.28 The
introduction of the term sustainable development had an important impact on the concept of CSR, because now not only the social and economic responsibilities matter, but also the environment and sustainability are considered to be important aspects of CSR. As a consequence, instead of CSR being discussed mainly on a theoretical and philosophical level; the environmental concern made it necessary to draw CSR to a
practical level; the companies had to respond to its environment.29 Not surprisingly, in
this stage a measuring instrument for Social Responsibility called Social Balance was
consolidated and a number of tools for reporting and measuring were created.30 In this
same period another theory that influenced the development of CSR is the stakeholder theory. This theory proposes that a firm has solely a responsibility to its legitimate stakeholders such as shareholders, employees, customers, suppliers, and local
communities and not to society at large.31
In the fifth stage, from 1991 to 2000 CSR rose incredibly in political and economic debate. Yet, in 1992, despite the activities of social and ecological movements in previous years, the concept of CSR was just forged and CSR was still not much
discussed in the world.32 In this same year the United Nations Conference on
Environment and Development (the Rio Summit) took place, which would lead to further developments in the field of CSR. Here global warming, eco-efficiency and the need for environmental management were put on the world agenda. Recognition of sustainable development was now really considered as one of the most important issues and soon after the Rio Summit the WBCSD (World Business Council for Sustainable Development) was founded (1995). This is now a CEO-led organization consisting of CSR
oriented companies throughout the world.33 CSR reporting measures were also created
28 World Commission on Environment and Development, United Nations, Our Common Future (1987) 25. Available at: http://www.un-documents.net/our-common-future.pdf.
29 Marquina, Percy Measuring the Impact of Corporate Social Responsibility on Consumer Behavior: The Case of Peruvian Consumers (Florida International University, Miami 2007), 4.
30 Canessa Illich, Giuliana y Garcío Vega, Emilio, El ABC de la Responsabilidad Social Empresarial en el Perú y en el Mundo (Peru 2021, Lima 2005) 22-23.
31 Marquina, Percy, Measuring the Impact of Corporate Social Responsibility on Consumer Behavior: The Case of Peruvian Consumers (Florida International University, Miami 2007), 5.
32 Fundación AVINA, In Search of Sustainability. The road of CSR in Latin America and Avina Foundation's contribution (Buenos Aires, 2011) 5.
in 1997, namely the GRI (Global Reporting Initiative)34 and the norm SA 800035. Furthermore, with the Kyoto Protocol in 1997 the EU member states decided to reduce the greenhouse gas emissions. Finally, in this period, principles for responsible business were established, for example through the United Nations Global Compact (1999/2000)
and through the Global Sullivan Principles36 (1999).
In the last phase (from 2001 until now) the trend is mainstreaming CSR and CSR
reporting. Social responsible investing is now a more established practice.37 In 2001, the
European Union officially defined its concept of CSR through its Green Paper, entitled
“Promoting a European Framework for Corporate Social Responsibility38 and in 2003
the “UN Norms on the Responsibilities of Transnational Corporations and other business enterprises with regard to Human Rights” were approved. These norms are an
authoritative guide to CSR for transnational enterprises and other companies.39
1.3. History of CSR in Latin America
Until the 19th century “social responsibility” in Latin America took place in the form of
philanthropy (charity and assistance to the poor) mainly exercised by religious
institutions. From the early 20th century also small- and medium-sized companies were
active in local charity activities. The owners of such companies made donations to good
World Business Council for Sustainable Development (WBSCD), “History.” Home. Accessed January 15, 2014. http://www.wbcsd.org/about/history.aspx.
34 “Global Reporting Initiative (GRI) is a leading organization in the sustainability field. GRI promotes the use of sustainability reporting as a way for organizations to become more sustainable and contribute to sustainable development.” Citation from:
Global Reporting Initiative, “What is GRI?”, Information. About GRI. Accessed January 15, 2014. https://www.globalreporting.org/information/about-gri/what-is-GRI/Pages/default.aspx.
35 “SA 8000 is one of the world’s first auditable social certification standards for decent work places, across all industrial sectors”. Citation from:
Social Accountability International, “SA8000® Standard.” SA8000 Standard. Accessed January 15, 2013. http://www.sa-intl.org/index.cfm?fuseaction=Page.ViewPage&pageId=937.
36 Global Sullivan Principles are principles to support economic, social and political justice by companies where they do business. In 1977 the Reverend Leon Sullivan launched the original Sullivan Principles, which were designed to help persuade US companies in South Africa to treat their African employees the same as their American employees. These principles were then launched in 1999 as the Global Sullivan Principles for Corporate Social Responsibility.
37 Katsoulakos, Dr. P. et al., CSR Quest, A historic perspective of the CSR movement, in: A CSR oriented Business Management Framework. Part A - CSR foundations (Athens University of Economics and Business, 20 December 2004) 18.
38 Katsoulakos, Dr. P. et al., CSR Quest, A historic perspective of the CSR movement, in: A CSR oriented Business Management Framework. Part A - CSR foundations (Athens University of Economics and Business, 20 December 2004) 18.
39 Hillemanns, Carolinn F., UN Norms on the Responsibilities of the Transnational Corporations and other business enterprises with regard to Human Rights, in: German Law Journal (2003) vol.04, nr. 10, 1065. Available at:
causes, such as art promotion, assistance to public hospitals and support to sports
associations.40 Concepts as social responsibility gradually gained force in Latin America
after international consensus on human and labour rights after the Second World War, among others through the UN Charter of Human Rights. In the 1960s the first manifestations of the CSR movement appeared, starting with the Association of Christian Regulators of the companies of Brasil in 1965 which was dedicated to spreading the concept of CSR in Latin America. In the 1970s some Latin American enterprises started with social reporting models, measuring for example working life quality and in the 1980s several events and seminaries on CSR were organized.
National organizations promoting CSR began to sprout up in Latin America by the end of the twentieth century. In this period many Latin American countries entered democratization processes and the global economy. At the same time, on the international stage, the importance of sustainability was recognized. In 1996 the non-profit association called Peru 2021 was founded by socially engaged entrepreneurs to promote and spread CSR in Peru and it is now the principal platform of CSR in Peru. In 1998 a similar organization was set up in Brazil, namely the Ethos Institute, which is the most emblematic one in Latin America. Other examples of Latin American CSR organizations are Acción RSE in Chile (2000) and Fundemás from El Salvador (2000). In 1997 Forum Empresa was created; this is a hemispheric Latin America alliance of the main business organizations of CSR and other important actors such as NGOs, public
institutions and universities.41 Important entities that have supported the CSR
movement in Latin America in the late nineties and thereafter, were the W.K. Kellogg
Foundation42, the Swiss AVINA Foundation43 and the Inter-American Bank for
Development (BID).44
40 Fundación AVINA, In Search of Sustainability. The road of CSR in Latin America and Avina Foundation's contribution (Buenos Aires, 2011) 19.
41 Canessa Illich, Giuliana y Garcío Vega, Emilio, El ABC de la Responsabilidad Social Empresarial en el Perú y en el Mundo (Peru 2021, Lima 2005) 23-24.
42 W.K. Kellog Foundation belongs to the largest philanthropic foundations in the United States. It is founded in 1930 as a private foundation by breakfast cereal pioneer Will Keith Kellog.
43 The Swiss Avina Foundation is founded by Stephan Schmidheiny in 1994. Its objective is to contribute to sustainable development in Latin America.
Fundación AVINA, “History.” About AVINA. Accessed January 15, 2013, http://www.avina.net/eng/timeline_entry.
1.4. CSR and Fair Trade in Peru
Generally speaking, in Peru CSR has gained more importance as a subject of debate during the 1990s with the rise of economic globalization and democratic processes in the country, but it is still in its beginning stages. As the economic recovery is relatively recent (since the end of President Alberto Fujimori’s dictatorship in 2000), companies are primarily preoccupied with growth. Large segments of the population still care
mostly for their subsistence.45 Government programs or initiatives that advocate CSR
practices are mostly directed to the mining industry and are voluntary on the part of the
company. Peru as a country is on the list of the OECD Guidelines46, but has not
implemented all the ILO standards47 yet. There is Peruvian constitutional,
environmental, labour and corporate law that refer to social responsibility. For example, Peruvian constitutional law precises that “social responsibility constitutes a required behavior to companies, in an inescapable manner”. The constitutional court’s record 008-2003-AI-TC also points out that “the social market economy should be exercised with corporate social responsibility”. Concerning labor law, Law 29381(16.7.09) points out in article 7.8 that the exclusive function of the Ministry of Work is to promote national norms and standards of CSR in labour matters. Furthermore, the General Law of Environment develops in article 78 that the State promotes, spreads and facilitates the voluntary adoption of policies, practices and mechanisms of CSR. Finally, there are also
voluntary norms of good corporate conduct that companies can adopt.48
There are some large companies that have integrated CSR practices into their Peruvian operations. Especially exporting companies are dedicated to CSR, whereas companies producing for the national market generally are not. Apart from several mining companies such as Milpo, Barrick and Xstrata, there are insurance companies, banks and other types of large companies such as Coca Cola, PepsiCo, Nestle and Grupo
45 CSR-Weltweit. German business-Global citizen, “Peru.The role of CSR.” Country profiles. Accessed January 15, 2013. http://www.csr-weltweit.de/en/laenderprofile/profil/peru/index.nc.html. 46 See paragraph 1.5 of this thesis for definition of the OECD Guidelines.
47 ILO standards are international labour standards developed by the International Labour Organization. 48 Taquía Gutiérrez, Rossana Mag., Aplicación de la Responsabilidad Social Empresarial al Derecho Peruano (Exposition, Universidad San Martín de Porres, Centro de Investigación en Responsabilidad Social Empresarial, La Molina, Peru). Available at:
Backus that are acknowledged for their CSR practices.49 Several companies exporting agricultural products (such as the organic banana) are socially engaged as well.
Although the government seems to play a small role in promoting CSR, civil society organizations and international organizations play a relatively more important role in promoting CSR in Peru. The main national organizations of civil society that promote CSR in Peru are Perú 2021 and SASE. Perú 2021 is a coalition of businesses that targets mainly large companies for membership. This national platform for CSR gives courses and consulting services on CSR, it makes a yearly list of companies with best CSR practices and organizes symposia. In the World Business Council for Sustainable Development (WBCSD) Peru 2021 is Peru’s representative. SASE consists of an institute dedicated to investigation and practices of CSR and of a consulting service for
government, business and civil society.50
Important international organizations and intermediaries promoting social and environmental responsibility in Peru are, the Swiss AVINA Foundation, the Inter-American Foundation, the Kellogg Foundation, the Inter-Inter-American Bank, the UN and the EU. For example by giving financial or technical assistance or through creating awareness. Also several chambers of commerce and embassies have made efforts to promote corporate social responsibility in Peru.
With respect to Fair Trade and organic production, the picture in Peru looks promising. Peru’s production system is mainly in the hands of small farmers, which because of their small parcels do not use chemicals and therefore already comply with the basic requirements of the market for organic products. This practice has favored the development of organic agriculture in Peru, which is the second largest country in Latin America in the number of small scale organic producers and that is now the sixth country in the world in the number of producers that implement systems of organic production.51 The main organic products that are exported in Peru are coffee, banana and cacao. In Peru the CNCJ-Perú (National Coordinator of Fair Trade) is the main national organization binding all the organized small producers in Peru that work in the Fair Trade system, specifically with the Fair Trade certification. It represents 60,000 producers of 36 organizations. The president Arnaldo Neyra affirmed that Peru is the
49 Peru 2021. “Primer portal en responsabilidad social en Peru.” Principal. Accessed January 15, 2014. www.peru2021.org.
50 Grupo SASE. “Inicio.” Accessed January, 15, 2013. http://www.sase.com.pe.
country with the greatest level of diversification of Fair Trade products and the greatest
number of Fair Trade certified organizations.52
1.5. History of Fair Trade
How did Fair Trade begin? Literature is mixed on when the Fair Trade movement started. According to Geoff Moore, the Fair Trade movement originated with the development of the cooperative movement in the late nineteenth century and more recognisably with trade of the Mennonite Central Committee in the United States with
poor communities in the South in the 1940s.53 The Fair Trade Resource Network on the
other hand states that the oldest and largest Fair Traders were church institutions in North America that bought handcrafts from poor Puerto Ricans and Europeans after World War II. 54
The first formal “Fair Trade” shop, selling products from poor communities in the South, opened in 1958 in the USA.55 In Europe the first Fair Trade Organization was created by Oxfam in the United Kingdom in 1964 and the first importing organization “Fair Trade Original” was established in 1967. In 1969 Third World groups in the Netherlands opened the first Third World Shop (also called Fair Trade Shops elsewhere). The Third World Shops have played an important role in the Fair Trade Movement, not only being selling points for products from developing countries, but also in creating consciousness about and campaigning for Fair Trade. The amount of Third World shops grew to more than 1000 in the United Kingdom and Switzerland in the mid-1980s. In 1988 the first Fair Trade label and the first product certification system for coffee was created by the Dutch Fair Trade organization Max Havelaar. Hereafter other countries in Europe and North America created Fair Trade label organizations.
In 1997 the international Fair Trade Labelling organization (FLO) was created, responsible for setting international Fair Trade standards, for certifying and labelling production. This labelling has made it possible for Fair Trade products to enter the
52 Maldonado Rocha, Gina Mariell, Determinantes e impactos de la asociatividad para el comercio justo: El caso de REPEBAN desde 2005 hasta 2010 (Lima, 5 de junio de 2012) 53.
53 Moore, Geoff, “The Fair Trade Movement: Parameters, Issues and Future Research” in: Journal of Business Ethics 53: 73–86 (2004) 2. Available at:
https://wiki.gonzaga.edu/alfino/images/7/75/Moore,_Geoff_Fair_Trade.pdf. 54 Fair Trade Resource Network, Brief history of Fair Trade. Available at:
http://www.fairtraderesource.org/wp/wp-content/uploads/2007/09/History-of-Fair-Trade.pdf
mainstream market. A monitoring system for Fair Trade has also been created, launching the IFAT56 Fair Trade Mark in 2004 to give credibility to the Fair Trade organizations. Another important development in the Fair Trade movement is the establishment of the Network of European World Shops (NEWS!), representing 3000 world shops in Europe. The Fair Trade movement nowadays is a global movement, that is organized in four international associations57: FLO, EFTA (the European Fair Trade Association), IFAT and NEWS!, with products being sold in thousands of World Shops or Fair Trade shops, supermarkets and other sales points in the North, but more and more also in the South.58
1.6. International regime of CSR
An international regime can be defined as “the implicit or explicit principles, norms, rules and decision-making procedures around which actors' expectations converge in a
given area of international relations.”(Krasner, 1982)59 Several international
organizations have set up international CSR goals, standards or principles, which all together might be considered as an international regime. Before describing these international standards of CSR the developments that have triggered the growing CSR movement will be shortly discussed.
Globalization of trade and markets, (social) media and communication technology have contributed to growing attention for CSR. As we live in a globalized economy, changes in one place can have immediate effects in other places of the world. For example, bananas being sold against very low prices in European supermarkets effects the income of small banana producers in Latin America. Furthermore, the international trade system often seems to benefit the big corporations more than small producers who are not as competitive. In the words of a UN Special Representative: “[t]he rights of transnational firms – their ability to operate and expand globally – have
56 The IFAT is the International Federation for Alternative Trade. This is a global network of Fair Trade Organizations, with 270 members in 61 countries. The members are producers, exporters, importers and retailers who all believe that trade should improve the lives of marginalized people without harming the planet.
57 European Parliament. “Report on Fair Trade and Development A6-0207/2006.” Last modified January 27, 2007. Accessed January 15, 2014.
http://www.europarl.europa.eu/sides/getDoc.do?objRefId=122170&language=EN.
58 Kocken, Marlike (European Fair Trade Association (EFTA), Sixty Years of Fair Trade. A brief history of the Fair Trade movement (November 2006) 1 -4.
increased greatly over the past generation as a result of trade agreements, investment treaties and domestic liberalization”.60 Nowadays we can speak of global value chains where different companies (stakeholders) are involved. Therefore the range of activities for which companies can be held accountable has increased. Globalization has lead to a bigger social and environmental footprint of companies. Serious environmental disasters caused by big corporations and shockingly bad labor conditions among employees working for multinationals have resulted in protests from many world citizens. Because of (social) media and modern communication technology consumers are more aware of these business practices as news spreads very rapidly around the globe. Not surprisingly, consumers increasingly demand that goods and food are produced in a sustainable and honest manner. All these developments have led to the growth of movements and organizations worldwide striving for more fair and responsible corporate practices and trade. (International) organizations (EU, UN, OECD, FLO et cetera) have come up with standards and/or certifications and labels to promote and guarantee more responsible ways of production and commerce.
On an international level the following documents are considered to be fundamentally important for setting the CSR standards in the world: the Millennium Goals, the Global Compact, the tripartite Declaration of the International Labour Organization for multinational enterprises and social politics and the OECD Guidelines
for Multinational Enterprises.61 According to the European Commission the global
framework of CSR consists of five main standards among which the last three before
mentioned documents.62 These five standards will be explained here below.
Firstly, the OECD guidelines for Multinational Enterprises set up by the
Organization for Economic Co-operation and Development (OECD).63 These provide
voluntary principles and standards for responsible conduct of enterprises concerning transparency, relations with employees, environment protection, struggle against
60 United Nations Environmental Programme (UNEP), Corporate social responsibility and regional trade and investment agreements (2011). Available at:
http://www.unep.ch/etb/publications/CSR%20publication/UNEP_Corporate%20Social%20Responsibilit y.pdf.
61Taquía Gutiérrez, Rosanna Mag., Aplicación de la Responsabilidad Social Empresarial al Derecho Peruano (Exposition, Universidad San Martín de Porres, Centro de Investigación en Responsabilidad Social Empresarial, La Molina, Peru). Available at:
http://www.derecho.usmp.edu.pe/centro_resp_social/conferencias/promoviendo_aprendizaje/materiale s/Exposicion_Rossana_Taquia.pdf
62 European Commission, An Analysis of Policy References made by large EU Companies to Internationally Recognised CSR Guidelines and Principles (2013). Accessed January 16, 2014.
corruption and competition.64 The guidelines are adhered by 44 governments, representing all the regions in the world.
Secondly, the United Nations Global Compact, launched in 2000, which contains ten principles in the areas of human rights, labour, environment and anti-corruption to be followed by companies who adhere to the Compact. The adhering companies have to present a yearly report to communicate their progress. Nonetheless, the Compact is criticized for considering the profits-driven market to be guaranteeing the protection of
human rights by creating wealth.65 To some critics the current economic system
contradicts with the human right to a fair remuneration as large corporations will give low salaries for reasons of competitiveness.
Thirdly, the ISO 26000 guidance standard (launched in 2010) represents an international consensus between representatives of governments, NGOs, industry, consumer groups and labor organizations. The ISO 26000 is not a standard which can be certified to, it is really a guidance for organizations to put into practice CSR principles and it shares best practices of CSR globally.66
Fourthly, the UN Guiding Principles on Business and Human Rights (endorsed in 2011). These principles provide a global standard for preventing and addressing negative impacts of business activity on human rights.
Finally, the International Labor Organization Tripartite Declaration of Principles concerning Multinational Enterprises (MNEs) and Social Policy, were laid down in 1977 to guide MNEs, governments, and employers’ and workers’ organizations in such areas as employment, training, conditions of work and life, and industrial relations.
The reason why these international CSR standards form an international regime is because they have the main principles in common. All these standards refer to companies taking into consideration mostly three aspects, namely economic,
environmental and social sustainability. According to a draft ISO67 set of guidelines the
most common CSR principles that guide businesses in their decision-making and management-processes are: business accountability, business transparency, going
64 Stanislavská, L., et al. International Standards of Corporate Social Responsibility (Czech University of Life Sciences Prague, Faculty of Economics and Management, 2010) 67-68.
65 Rabet, Delphine, “Human Rights and Globalization: The Myth of Corporate Social Responsibility?” Journal of Alternative Perspectives in the Social Sciences, Vol 1, No 2 (University of Sydney, Australia, 2009) 473.
66 Intenational Standardization Organization (ISO), “ISO 26000.”, Standards. Accessed January 16, 2014. http://www.iso.org/iso/home/standards/iso26000.htm.
beyond legal compliance, honouring international norms and human rights, ethical behavior and applying a precautionary approach (which means taking measures to prevent possible environmental and/or health damage as a result of business activities).68
Other relevant international standards that need to be mentioned here are those
concerning reporting on CSR; for example the Global Reporting Initiative69 (GRI) and the
International Integrated Reporting Council (IIRC).70
International principles of Bio Trade have been established through UNCTAD’s 71
Bio Trade Initiative in 1996.72 This initiative is an indirect result of the Convention on
Biological Diversity in 1993, which is an international agreement on biodiversity and legally binding to 193 member countries. It links conservation of biodiversity to its sustainable use and has principles for fair sharing of the benefits, particularly if it is used
for trade.73 The concept of Bio Trade is further discussed in the next chapter.
There are also international sector-based standards which can be certified to and specifically concern sustainable agriculture. Examples are the Rainforest alliance/SAN Sustainable Agriculture Standards, the Fair Trade Labelling Organizations International
(FLO), Global GAP74, USDA Organic Program and the EU Regulation (EEC) N° 2092/91.75
Apart from the creation of international standards, international governmental organizations have expressed their support for CSR and Fair Trade through
68 United Nations Environmental Programme (UNEP), Corporate social responsibility and regional trade and investment agreements (2011). Available at:
http://www.unep.ch/etb/publications/CSR%20publication/UNEP_Corporate%20Social%20Responsibilit y.pdf
69 These are guidelines on reporting. The most recent generation of reporting guidelines are called the G4 Sustainability Reporting Guidelines.
Global Reporting Initiative, “G4 Sustainability Reporting Guidelines.” Reporting. Accessed January 16, 2014. https://www.globalreporting.org/reporting/g4/Pages/default.aspx.
70 An Integrated Report communicates about value creation of the company as a result of its organization strategy, governance, performance and prospects, in the context of its environment.
Integrated Reporting, “What is integrated reporting?” Home. Accessed January 16, 2014. http://www.theiirc.org/.
71 United Nations Conference of Trade and Development (UNCTAD)
72 United Nations Conference of Trade and Development (UNCTAD) Bio Trade Initiative, “Bio Trade principles and criteria.” About Bio Trade. Accessed January 16, 2014.
http://www.biotrade.org/aboutPRINC.asp
73 Convention of Biological Diversity, “History of the Convention.” The Convention. Accessed January 16, 2014. http://www.cbd.int/history.
74 Global GAP stands for a worldwide standard assuring safe and sustainable agricultural practices. Global GAP, “Global GAP, putting food safety and sustainability on the map.” Who We are. Accessed January 16, 2014. http://www.globalgap.org/uk_en/who-we-are/.
75 Genier, Claudia, Stamp, Mike and Pfitzer, Marc, Corporate Social Responsibility in the Agrifood Sector: Harnessing Innovation for Sustainable development, Annex A: Selected Standards and Codes in Sustainable Agriculture, 31. Available at:
communications and papers. In 2001 the European Commission (EC) defined CSR in its Green Paper. For the European Commission CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis”.76
With respect to Fair Trade, in 2006 the European Parliament presented a report
where it called the European Commission to promote and support Fair Trade.77 In the
same year the European Council, in its renewed sustainable development strategy, encouraged Member-States to buy sustainable products: "Member States should support information campaigns with retailers and other organizations to promote sustainable products inter alia products that stem from organic farming and Fair Trade as well as
environmentally sound products".78 In 2009 the European Commission presented a
communication on the contribution of Fair Trade and other non-governmental trade-related sustainability assurance regimes to sustainable development. Finally, in September 2013 the EU Commissioner of Development Andris Piebalgs publicly
demonstrated its support for the Fair Trade beyond 2015 Declaration79, which calls for
“trade rules to be reformed to allow trade to be a tool of empowerment, a fundamental
driver of poverty reduction and engine for sustainable development”.80 More
importantly, the EU promotes sustainability and supports economic empowerment of small farmers through their programs and projects in development countries, for example with financial or technical assistance.
1.7. Conclusion
In this chapter the history and international standards of CSR and Fair Trade have been generally described. It has become clear that although ideas and practices related to social and environmental responsibilities of companies have existed for centuries, the
76 European Commission, “Promoting a European Framework for Corporate Social Responsibility”, Green Paper, COM (2001)366 Final.
77 European Parliament. “Report on Fair Trade and Development A6-0207/2006.” Last modified January 27, 2007. Accessed January 15, 2014,
http://www.europarl.europa.eu/sides/getDoc.do?objRefId=122170&language=EN
78 Council of the European Union, Renewed EU Sustainable Development Strategy (9 June 2006) 13. Available at: http://register.consilium.europa.eu/pdf/en/06/st10/st10117.en06.pdf
79 Fair Trade Advocacy Office. “EU Development Commissioner supports Fair Trade Beyond 2015.” Fair Trade beyond 2015 campaign. Accessed January 16, 2014.
http://www.fairtrade- advocacy.org/beyond2015/98-projects/fair-tade-beyond-2015/news/635-eu-development-commissioner-supports-fair-trade-beyond-2015.
concept of Corporate Social Responsibility has developed since the 1950s. Especially since the 1990s debate and awareness about CSR and sustainable development have grown and as a result, measuring CSR and reporting on CSR have become a more mainstream business practice. An increasing number of enterprises have incorporated CSR programs and numerous international goals and standards related to CSR have been created to stimulate compliance with social and environmental responsibilities such as the Millennium Goals, the OECD Guidelines, ISO 26000, the UN Global Compact and many more. These international CSR standards can be considered to form an international regime as they have certain CSR principles in common. Furthermore, also international sector-based certifications and labels have been set up; for example with regard to sustainable agriculture, organic production and Fair Trade. Examples are the lables of the Rainforest Alliance, Global GAP and FLO.
Chapter 2: Theoretical framework
2.1. Introduction
In this chapter the concepts that are central in this study – CSR, Fair Trade and Bio-Trade- will be defined, as these concepts are closely related. Finally, a few theories explaining the drivers of CSR will pass in review and the theoretical framework will be demonstrated in a table.
2.2. The concept of CSR
In chapter 1 on the history of CSR, it has become clear that the concept of CSR has evolved. It has moved from companies having mainly economic and legal responsibilities to incorporating also ethical, philanthropic and environmental responsibilities. CSR thus goes further than compliance with legal requirements and means that companies have to get involved in voluntary activities to meet these other
responsibilities.81 Definitions of CSR are abundant, but here only a few popular concepts
will be shortly discussed. Well-known concepts of CSR are produced amongst others by Archie Carroll, John Elkington and Wayne Visser. In Carroll’s CSR Pyramid (1991) CSR consists of four layers, with at the base economic responsibility, moving up to legal, ethical (acting justly and rightly towards workers and the environment) and philanthropic responsibility (social projects that are not necessarily related to the company). A company has to perform on all the components of the Pyramid to be
considered socially responsible. John Elkington82 was the first to coin his CSR
philosophy through the concept of the Triple Bottom line, which refers to CSR as the inclusion of the interests of Profit, People and Planet in the strategic considerations of companies. In sum, the Triple Bottom Line (TBL) aims to measure the financial, social and environmental performance of the corporation over a period of time. Only a company that produces a TBL is taking account of the full cost involved in doing business. This theory is different from the CSR Pyramid in that it specifically
81 United Nations Environmental Programme (UNEP), Corporate social responsibility and regional trade and investment agreements (2011). Available at:
http://www.unep.ch/etb/publications/CSR%20publication/UNEP_Corporate%20Social%20Responsibilit y.pdf
distinguishes the environment as a category of CSR.83 Wayne Visser, another international CSR expert goes a step further. He claims that until now the different forms of CSR have not halted the pressing problems of poverty and environmental degradation. He discerns five forms of CSR, namely defensive, charitable, promotional, strategic and transformative CSR. Defensive CSR is a limited CSR, only done out of self-protection by share-holders; charitable CSR is CSR as charity (donations); promotional CSR is CSR as a strategy through social and environmental management systems and finally transformative CSR (also called CSR 2.0) means that the company really looks at the root causes of unsustainability and irresponsibility and deals with these through innovating business models and lobbies for progressive national and international
policies.84 In concrete this means that the codes and standards that companies adhere to
will not be considered sufficient anymore to tackle environmental and social problems, but that in the future it will be more important that companies innovate with products and processes to tackle social and environmental problems and apply better practices such as for example cradle to cradle practices.85
The stakeholder theory has also been important in the evolution of the concept of CSR. CSR namely encourages companies not only to take into account the needs of shareholders, but also those of stakeholders such as employees, civil society groups, costumers, community leaders, international organizations and government entities. When stakeholders are included in corporate decision-making, companies get important feedback about their social and environmental impact and get a more realistic view of their company.86
There have been made other categorizations of CSR theories. Elisabet Garriga and Domènec Melé for example discern instrumental theories, political theories, integrative theories and ethical theories of CSR. These theories all have their own focus. Instrumental theories put emphasis on corporations achieving economic objectives through social activities. Political theories focus on a responsible use of business power in the political arena. Integrative theories are about the integration of social demands by
83 Forsman-Hugg, S et al., Building the content of CSR in the food chain with a stakeholder dialogue MTT Agrifood Research Finland/Economic Research, Helsinki, Finland, 1.
84 Visser, Wayne “Future Trends in CSR. The next 10 years” CSR International Inspiration Series no. 11 (2012). Available at:
http://www.waynevisser.com/wpcontent/uploads/2012/12/inspiration_csr_trends_wvisser.pdf. 85Cradle to Cradle practices entail producing systems and products according to the principles of Cradle
to Cradle. There are 3 principles: 1. Waste is food; 2. Use of sustainable energy (sun, water, wind or bio-based) and 3. Use diversity (biodiversity, cultural diversity etcetera).
the company. Finally, ethical theories concentrate on what is the right and just thing to achieve in society by a corporation. Examples are the UN Global Compact (1999), the Global Sullivan Principles (1999) which focus on human rights, and the Brundtland
Report (1987), which aims at sustainable development.87
2.3. Concept of Fair Trade
Within the broad spectrum of CSR Fair Trade has a special place. CSR is not equal to Fair Trade, as Fair Trade specifically focuses on poor small associated producers and workers. Although Fair Trade favours environmental friendly practices, it does not automatically entail organic or ecological production. There exist four international Fair Trade networks (together these form the informal network FINE), that jointly agreed on a definition of Fair Trade in 200188: “Fair Trade is a trading partnership, based on
dialogue, transparency and respect that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers– especially in the South. Fair Trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.”89 Fair Trade products usually guarantee the implementation of their standards and principles with the Fair Trade certification and labels. When a producer has a Fair Trade Certification for its products, it means he has to
comply with the Fair-Trade standards. Key components of these standards are90:
The producers are guaranteed a Fair-Trade minimum price, this protects their
income when market prices fall;
The producers get a Fair Trade Premium, in the case of Fair-Trade bananas it
refers to the dollar extra the producers receive for each box of Fair-Trade bananas sold. This creates additional funds for producers to invest in community or business development projects;
87 Garriga, Elisabet and Melé, Domènec, “Corporate Social Responsibility Theories: Mapping the Territory”, Journal of Business Ethics 53: 51–71 (2004).
88 FINE is an informal network that involves the Fairtrade Labelling Organizations International (FLO), the International Federation for Alternative Trade (IFAT), the Network of European Shops (NEWS!) and the European Fair Trade Association (EFTA).
89 Moore, G. (2004) ’The Fair Trade movement : parameters, issues and future research.’, Journal of business ethics 53, 73-86. Available at: http://dro.dur.ac.uk/6787/1/ (page. 2).
90 Fair Trade International (FLO), Fair Trade at a glance (Brochure 2012). Available at:
