4.1 CSR and the role of NPOs
4.1.2 NPOs as CSR advocacy organisations
create value for key stakeholders and fulfil our responsibilities to them. And
“responsibility” implies that we cannot separate business from ethics’ (see also Chapter 3.1). They conclude that ‘taking a stakeholder approach to business is ideally suited to integrate business, ethics, and societal considerations’.
As discussed in Section 2.2, NPOs meet certain characteristics of a business entity: nonprofits create services or products on the market which are provided to members, consumers, or beneficiaries. For this, nonprofits rely on manpower, use natural resources, and require financial resources. By selling their products and services, a nonprofit usually makes money. As every company, an NPO needs money to run services, thus earnings are taken to cross‐finance unprofitable service areas. Another source of income for NPOs – which is not available to economic entities – are financial and non‐financial donations made by stakeholders.
Considering Freeman’s argumentation above, the relevance of the three‐
domain model for nonprofits as introduced in Chapter 4.1.1.2, and broad applicability of the ISO definition described later on in Chapter 4.3.4, this dissertation uses the operational definition of CSR as following:
Company Stakeholder Responsibility (CSR3) is the responsibility of an organisation to take care of the impact of decisions made or activities conducted. By implementing CSR3 the organisations show responsibility for society, the environment and government through transparent and ethical behaviour in the present and future.
tasks for which there is a demand that neither the state nor not‐for‐profit organizations are willing to fulfil or (3) to influence the direction of policy in the state, the for‐profit sector or other nonprofit organizations’ (Bahmani et al., 2012, p. 272). In other words, they work between civil society, economic entities and the government. NPOs assume themselves trustworthy experts, who have a legitimacy to take the role of a spokesperson within their area of expertise (Baur, 2011, pp. xiii, 8‐10; Runte et al., 2012; Zimmer, 2016, p. 175). Therefore, NPOs place themselves as either advocacy organisations or as partners of the government and economic entities, aiming for improvements of their social behaviour (Utting, 2000, p. 22; Baur and Palazzo, 2011, p. 596; Baur, 2011, pp. 11–17).
On the one hand, as already mentioned, the role of a spokesman may be defined as a secondary goal of an organisation. In this case, an NPO aims to communicate its requirements through its social networks. On the other hand, people also establish organisations to deal explicitly with the topics of social stability and the carrying out of social requirements. Such advocacy NPOs take the role of opponents for both market entities and the government to enforce good behaviour by uncovering misconduct in public. Key demands of such organisations are (Muchitsch, 2012, pp. 15–16; CorA, 2017; ECCJ, 2017c):
Financial and non‐financial disclosure, especially in terms of social behaviour, ethical conduct, sustainable environmental behaviour
Linking social requirements with public procurement
Binding statements on corporate obligations with international economic agreements
Fair company taxation
Effective sanctions and rules on liability
Strengthening product responsibility and support of sustainable consumptions patterns as well as production patterns
The aim of these organisations is confronting misconduct in terms of CSR issues. The culture of ‘boycott, naming and shaming’ (Riemer, 2015, p. 108), as discussed in Chapter 2.1.4.3, denounces misconduct with the aim of increasing pressure on politics and other stakeholders.
To give an example, in Europe there is the European Coalition for Corporate Justice (ECCJ). ECCJ (2017b). This organisation is, according to the organisations own information, an alliance of 250 nonprofit organisations operating in 15 countries. The ECCJ is officially recognized member of the Coordination Committee of the Multistakeholder Forum on CSR (EC, 2017c) launched by the European Commission. The ECCJ claims to be ‘the only European coalition bringing together European campaigns and national platforms of NGOs […] to promote corporate accountability’ (ECCJ, 2017a). With respect to CSR issues around the world they proclaim their vision statement: ‘Our vision is of a sustainable world in which corporations’ drive for profit is balanced by the interest of society at large and respects human, social and environmental rights’ (ECCJ, 2017b). The ECCJ as well as it members, like the Corporate Accountability network (CorA) in Germany, are calling for politicians to keep pressure on market entities for specific corporate activities.
Of course, NPOs are not only opponents of market sector economic entities;
they also build partnerships with business entities not only to support the good cause. Runte et al. (2012) state that there are ʹseveral reasons’ for such partnerships,
‘including as a mechanism for increasing their moral legitimacy to the public’. Partnerships are either of loose ties or of strong connections between NPOs and economic entities, which serve the purpose of carrying out social activities with an independent partner. Over and above this, partnerships allow companies to fight their pressure groups, asses the threat posed by other nonprofits, and manipulate the debate. Riemer (2015, p. 108) emphasises that co‐operation through dialogue leads to value adding for both the organisation as well as the corporation.
NPOs, however, may entail a risk of greenwashing activities by an economic entity. Greenwashing means marketing and advertising to the consumer as a green company, even though implementing environmental activities with business is not intended or to conceal misconduct (Oxford University Press, 2017). A company that just claims to be green while not operating responsibly in terms of ethics, society, or environment, reflects badly on their partner NPO. As a consequence, the NPO may lose its legitimacy and credibility. This may all end up in a vicious cycle, as
described in Section 2.2.5.3, where the loss of legitimation leads to the demise of an organisation.
Finally, there is criticism in terms of NPOs self‐image as a legitimate representative. The relevant issues have been discussed in Chapter 2.1.4.3.
In short, NPOs understand themselves per se as guardians of morality, who focus on good conduct as either a primary objective or a secondary objective. For this, they either encounter or co‐operate with other entities or government. NPOs use the public’s attention and the public’s voice, and thus become an opinion leader in terms of CSR.