WikiLeaks and CSR - The Era of Radical Transparency

By Wayne Visser

Julian Assange, founder of Wikileaks, a Web 2.0 style whistle blowing site founded in 2006, has this week received a set of leaked documents that threaten to expose illicit activities of the clandestine Swiss banking industry. This is the latest chapter in the WikiLeaks saga, which has been one of the most explosive and significant CSR (and political) stories of recent times.

Without question, WikiLeaks has raised the debate on transparency, responsibility and the role of new media to a whole new level. There are major implications in two related, but distinct areas: whistle blowing and activism. It also raises questions about the sometimes blurry line between legality and ethics, the big-bully tactics of major corporations, and the accountability of whistleblowing organisations.

Whistle blowing - the act of raising concern (usually by anonymously leaking incriminating evidence) about alleged illegal or unethical activities by individuals or organisations - is widely regarded as improving transparency and being in the public interest. Hence, most countries have legislation to protect whistleblowers. In the U.S., this practice dates back to the Lloyd-La Follette Act of 1912, and was most recently reinforced and strengthened through the Sarbanes-Oxley Act of 2002.

Some argue that Wikileaks has simply continued the honourable tradition of whistleblowing, and raised it to another level, appropriate to the open access age of the Internet – part of what Daniel Goleman, author of Ecological Intelligence, calls "radical transparency" (although he used it more in a supply chain context).

For instance, in September 2009, WikiLeaks posted a leaked internal report from Trafigura, a commodities multinational, exposing it for dumping hazardous waste in Côte d’Ivoire. The site has also been threatening since 2009 to release damaging information about the Bank of America, and caused their stock price to fall by 3% when it made the announcement. In a July 2010 TED interview, Assange claimed to have damaging inside information from BP as well.

Unsurprisingly, companies (and governments) are extremely nervous – even hostile – about the activities of Wikileaks. The issue came to a head in 2010 with ‘megaleak’ releases to The Guardian, New York Times and others of over 92,000 classified documents on the War in Afghanistan (released in July), around 390,000 previously secret US military field reports on the Iraq war (released in October) and more than 250,000 cables from more than 250 U.S. embassies around the world (released in November). When the U.S. government declared these releases ‘illegal’, several companies with commercial ties to WikiLeaks, notably Mastercard and Paypal, froze their transactions, resulting in a funding crisis for WikiLeaks.

What happened next revealed the new face of activism in the 21^st century. Using methods that The Economist calls “guerrilla transparency” and which have been dubbed by the media as “hacktivism”, attempts by governments and commercial partners to shut Wikileaks down or cut off its financial oxygen led to a rapid proliferation of mirror sites – more than 700 in one week, according to The Economist – and counter-attacks by hacker groups like Anonymous. One of the tactics of these groups is to bombard the websites of organisations that are perceived to be obstructing WikiLeaks with online requests, thus causing them to crash. In the case of Mastercard, one such orchestrated DDoS (distributed denial of service) campaign by Operation Payback was successful.

Whatever we think of the merits or demerits of these tactics, one thing is clear: WikiLeaks has blown the debate about transparency wide open, raising many more questions than it answers. For instance, what is the role of CSR when one leak about a corporate malpractice can destroy years of conscientious work on corporate citizenship? Will this new generation of online whistleblowing – whether by WikiLeaks or others – increase transparency, or will it simply cause governments and companies to clam up even tighter; to invest more in data security and counter-hacking measures? And if they do react defensively, will this result in what Assange called an unwittingly self-imposed “secrecy tax”, whereby those organisations with the most to hide end up being less competitive as a result of their security-related expenditures?

In the brave new Wikileaks world, CSR laggard companies will clam up and adopt a seige mentality. They will bog down their staff with crippling red tape under the guise of better risk management and more secure document controls. By contrast, CSR leaders will see this as an opportunity to be pro-actively and proudly transparent. They will continue to invest in open engagement with stakeholders, while encouraging employees to safely raise concerns internally before going public with their complaints. CSR leaders know that in a WikiLeaks world, the only effective defence is to create a caring workplace where there are no disgruntled employees seeking revenge, and an ethical culture that has no dirty secrets waiting to be exposed.
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Note: This blog is partly based on research and writing done for the forthcoming edition of the Journal of Corporate Citizenship.

10 Paths to the Future for NGOs/CSOs

By Wayne Visser

John Elkington recently asked me 'how the NGO landscape will morph over next decade', especially in non-OECD countries, to feed into some research he is doing on the Future of NGOs. Drawing especially on my work for the World Guide to CSR, and my travels on the CSR Quest world tour, I have tried to capture my insights as 10 Paths to the Future for Civil Society Organisations (CSOs, which I prefer rather than the term NGOs). Using examples from around the world, I believe that in the future, CSOs will increasingly be ...

1. Platforms for transparency – The role of CSOs as agitators for, and agents of, greater transparency seems set to continue. For example, in Senegal, Benin, and Guinea, CSO intervention has been critical in the development of a free press. And in India, Karmayog allows citizens to report specific instances of bribery and corruption on a live, public website.
2. Brokers of volunteerism – As companies increasingly see the benefits of volunteerism (greater job satisfaction, productivity, commitment and loyalty), CSOs are increasingly becoming people-brokers, as sources of projects for employee volunteers. For example, the Voluntary Workcamps Association of Ghana (VOLU) coordinates volunteers to help with the construction of schools, reforestation and AIDS campaigning.
3. Champions of CSR – While some CSOs remain sceptical about CSR, in many countries they are the main agents for promoting CSR. For example, in Iran, a group of CSOs have joined forces with the UNDP to promote CSR through targeted training for managers under the umbrella of the UN MDGs. And in Senegal, CSR awareness has grown mainly due to an CSO called La Lumière in Kédougou.
4. Advisors of business – A combination of genuine expertise, valuable perspectives and a crunch on funding means that many CSOs are turning to consultancy, working with and advising companies not only on specific social and environmental issues, but also more generally on sustainability and responsibility. For example, in Hungary, as opposed to the traditional role of watchdog, many CSOs engage in consultancy on CSR.
5. Agents of government – The phenomena of GONGOs (government organised NGOs), GINGOs (government-inspired NGOs), GRINGOs (government regulated/run and initiated NGOs) and PANGOs (party-affiliated NGOs) are becoming more widespread, no longer just seen in China. Even where governments are not setting up or running the CSOs, they are supporting them as key catalysts. For example, Belgian CSOs receive €3 government funding for every €1 they raised themselves.
6. Reformers of policy – Realising that the ‘rules of the game’ need to change, CSOs are increasingly getting involved in legal reform. For example, in Indonesia, it was largely due to rising pressure from CSOs that the Law No. 40/2007 concerning Limited Liability Companies was introduced to make CSR mandatory.
7. Makers of standards – In an effort to raise the bar on voluntary action by companies, many CSOs are developing their own social and environmental codes and standards, then inviting business to comply with them. For example, in Israel, the Public Trust Organisation established The Public Trust Code, covering advertising, transparency, disclosure, service and product guarantees, honesty in contracts and privacy of information.
8. Channels for taxes – In some countries, the effectiveness of CSOs has earned them the ability to source tax dollars directly. For example, in Mexico, the FECHAC (Federation of the Chihuahuan Industry) is an CSO, set up after devastating floods in 1990, that is funded through a special annual tax on more than 38,000 industries. And in Romania, the 2% Law (in terms of the Fiscal Code) allows citizens to redirect 2% of personal income tax to an CSO.
9. Partners in solutions – Not only are CSOs collaborating with business more and more, but also with governments and multilateral agencies. For example, in South Korea, ‘Cross Sector Alliance’ is one of 5 approaches to CSR being promoted, while in Africa the New Nigeria Foundation provides a platform for mobilizing non-traditional resources through public-private partnerships. In Turkey, TUSEV promotes linkages between domestic and international CSOs and encourages CSR by putting foreign and domestic firms in contact with appropriate CSOs.
10. Catalysts for creativity – CSOs are increasingly expected to provide solutions, not just point out the problems, especially by launching or supporting social enterprises. For example, in Bangladesh, BRAC (formerly Bangladesh Rural Advancement Committee) has been crucial in the microcredit movement, and in Singapore, the National Trades Union Congress (NTUC), has 12 social enterprises and 4 related organisations that are owned by more than 500,000 workers.

However the future unfolds, it is clear that CSOs will be a significant player in the new landscape of responsible governance and accountability, both as a counter-balancing force and a partner to governments and business. I believe CSOs will be the glue that holds society together in the turbulent years ahead.

Video: Vinay Somani on Transparency & Stakeholder Partnerships in India

Vinay Somani is Founder and Trustee of Karmayog, a unique free platform for concerned citizens on social and civic issues in Mumbai, India. In this interview with Dr Wayne Visser, Director of CSR International, he talks about their role during a flood crisis in Mumbai and tackling corruption through transparency. The interview took place in Mumbai on 17 April 2010.

The State of CSR Reporting in Asia

CSR Asia has just launched their inuagural Business Barometer, which measures CSR disclosure among the top 20 listed companies in Hong Kong, Malaysia, Singapore and Thailand. 

The ranking is based on 62 indicators across the following categories:

1. Company (codes and policies)

2. CSR strategy and communications

3. Marketplace and supply chain

4. Workplace and people

5. The environment

6. Community investment and development.

The findings make interesting reading:

TOP ISSUES - Company (codes and policies) are the most reported CSR issue (scoring 59%), compared with workplace and people scoring only 19%. This seems to imply a continued lack of transparency on Asia's thorniest CSR issue, namely labour conditions.

TOP COUNTRIES - The companies' overall score remains low (30%), but there is some national variation, with Hong Kong scoring best (42%), as compared with Malaysia (29%), Thailand (25%) and Singapore 24%).

TOP COMPANIES - The top companies - China Light and Power and HSBC, both listed in Hong Kong - scored 93%, as compared with the poorest performer - Hong Kong Land - scoring only 3%. The top company in Malaysia was, somewhat controversially, BAT (British American Tobacco) Malaysia; in Thailand, it was Siam Cement, and in Singapore, City Developments.

What can we understand about CSR in Asia from these findings? 

1. LAG EFFECT - Transparency and reporting is not a strong tradition in the East (some would even argue that it is contrary to many cultural norms), so companies are playing catch-up on the overall trend. It remains, by and large, an expectation imposed by the West.

2. LARGE SPECTRUM - The huge variation between the best and worst performers, as well as the overall poor performance, suggests that there is a general lack of awareness, expectation and standards on CSR reporting in Asia.

3. SIZE DOES NOT MATTER - An analysis of the findings showed that there was no correlation between company size and CSR reporting performance. Hence, we need to take other factors into account - international aspirations and strength of leadership for example.

4. IMPLICIT CSR - We should remember that CSR reporting does not necessarily equate to CSR performance. It is quite possible that many Asian companies, much like in Europe, engage in what Matten & Moon call "implicit" CSR (as compared with "explicit CSR" in America).

5. GLOBALISATION MATTERS - However, any Asian company now engaged internationally, either through the supply chain or foreign direct investment, will increasingly need to meet minimum standards for transparency (such as the Global Reporting Initiative) and for CSR (such as the Global Compact). Only 5 of the 80 companies were Global Compact signatories.

My expectation is that we will see overall performace in the Barometer leap up over the coming year or two, as a combination of domestic awareness and international pressure raises CSR further up the politcal and economic agenda in Asia.

For more information, see www.csr-asia.com.