Don’t Believe a Corporation That Promises to Do Better
Corporate responsibility pledges are an increasingly common response to public scrutiny. But trusting private companies to keep their promises hasn’t worked in the past, and it won’t work in the future.
At the end of March, the UN announced that it was establishing a committee to study whether companies adhere to their promises to reduce greenhouse gas emissions. The UN won’t publicly name the ones that don’t, but we can guess that the answer is most of them. Net-zero pledges are the latest attempt by companies to distract from their role in the climate crisis. Even when fully implemented, they’re woefully insufficient, but that’s secondary to the fact that implementation is impossible to enforce.
Civil society continues to embrace the net-zero pledge concept, even though we’re surrounded by examples of corporate failures to adhere to the promises they’ve made. The Harkin–Engel Protocol was announced in 2000 for cocoa producers to stamp out the “worst forms” of child labor and human trafficking in their supply chains in West Africa. They failed in 2015 and again in 2020 to meet even those nebulous benchmarks. Apple’s supplier code of conduct did nothing to change labor conditions at Foxconn that were so awful that workers killed themselves in protest. Human Rights Watch asked corporations with operations in Xinjiang to abide by a code of ethics, but that hasn’t stopped companies like Hugo Boss from relying on cotton sourced from slave labor.
Despite all evidence to the contrary, many still believe that with the right balance of public pressure, incentives, and promises, companies might finally behave ethically. That hope is naive. Corporate social responsibility is a mirage. There is no path to voluntary corporate action. For a good illustration of the concept, we can simply look at the conditions that gave rise to the modern concept of corporate pledges: the fight against apartheid in South Africa and a resulting investor code called the Sullivan Principles.
Promise or Pretense?
For supporters of the anti-apartheid movement in the 1960s, finding ways to advance the cause of liberation proved very difficult. The US government was unwilling to consider meaningful sanctions against South Africa, in no small part because anti-communist South Africa was a Cold War ally. Consumer boycotts were not especially effective because most of South Africa’s exports to the United States were from mining. However, South Africa was also dependent on foreign capital and a foreign business presence, and this dependency created a weakness that activists could exploit. While activist shareholders demanded the exit of companies from South Africa, other opponents of apartheid began agitating for divestment, or the withdrawal of an investor’s funds from companies operating in South Africa.
Divestment was effective at mobilizing people, particularly the student left. By the mid-1970s, campus-level divestment movements were starting to force universities to rethink their investment policies. Facing a new wave of public pressure, previously disorganized corporate responses coalesced into something more organized: the Sullivan Principles. Their creator was a preacher named Leon Sullivan who had been active in Philadelphia’s civil rights movement. Sullivan’s personal interest was in black capitalism, and he sought to apply his own political framework to South Africa.
Developed in conjunction with business executives from Ford, GM, and IBM, the principles included six relatively modest recommendations for corporations operating in South Africa: nonsegregation, equal pay, fair employment practices, training black South Africans for skilled careers, hiring black South Africans into management, and improving quality of life by funding social programs. More radical demands, like support for unionization, were initially left out at the request of the South African ambassador.
The Sullivan Principles failed to satisfy liberation activists, but they won support from investment boards and politicians in both parties. They also had the backing of the federal government. The State Department had actively pushed for the creation of a corporate code of conduct beginning in the early 1960s, one that would function on a purely voluntary basis. It was a way to “do something” without any action on the government’s part — and, crucially, it would stand in lieu of sanctions or anything else that could threaten US–South African ties. Both the Jimmy Carter and Ronald Reagan administrations backed the Sullivan Principles. Even politicians who were seen as allies by anti-apartheid activists supported the principles.
Sullivan’s intentions are hard to fathom, in no small part because he had a habit of telling people what they wanted to hear. He claimed however that the principles were supposed to undermine apartheid from within by enriching black South Africans and undermining the norms of apartheid. Over time, they would put business leaders in conflict with apartheid laws and would be forced to lobby against them, eventually bringing the system down.
One occasionally encounters claims that the Sullivan Principles led to the end of apartheid, but these are wildly overstated. In reality, the Sullivan Principles did not meaningfully challenge apartheid. Even taken on their own terms, the principles were easy to get around. Employers could and did maintain segregated workplaces by simply regrouping employees of one type or another into separate facilities; because black South Africans were concentrated in the lowest-paying positions, separating those positions from the others kept racial groups apart.
Objectives like hiring black South Africans stalled for years on end, and their impact would have been minimal anyway, as American companies employed only around a hundred sixty thousand people in South Africa. Meanwhile, South African workers largely rejected the principles, seeing some issues, like desegregation, as cosmetic compared to unionization. When Sullivan finally expanded the principles to include unionization, US companies fought unionization drives.
The Sullivan Principles, then, led to little change. Sanctions were eventually passed in 1986 against South Africa with the goal of ending apartheid. It seemed that corporate promises were not good enough, and a forceful government intervention was necessary after all. Sullivan eventually called on companies to withdraw, a call they largely ignored.
So why do ideas like the Sullivan Principles persist? One reason is historical ignorance. The global anti-apartheid movement is a blank spot for many Americans because it’s so rarely taught in school, so it’s been easy to rehabilitate Sullivan and assign him a role in ending apartheid that he never truly occupied — while also ignoring the anti-capitalist and anti-globalization movements that truly fueled the fight against apartheid.
The Sullivan Principles were extremely useful for corporations that did not want to sever their business ties with South Africa. They were a major drain on movement energy: in addition to arguing for divestment, activists also had to demonstrate that the Sullivan Principles were not an effective solution to apartheid. Hearings had to be held, the issue had to be studied, and so the can was kicked down the road for years at a time. Having gone through Sullivan’s letters, it’s striking how many thank-yous he received from state comptrollers and university presidents for helping them defer divestments.
This is Sullivan’s legacy: helping to create a new rhetoric of corporate activism that delays meaningful change. Governments — especially the US government — welcome this development because it frees them from the burden of having to regulate business.
But the truth is that the corporate responsibility model has never worked, and it’s time to finally abandon it. Attempts to transform companies into moral entities are doomed to fail, as even the genuine idealists who worked with Sullivan discovered.
Corporations exist to make profits. Whatever other promises they make, from combatting racial segregation to reducing carbon emissions, that mandate always takes precedence. The UN establishing a committee to determine whether net-zero pledges are effective is a waste of time, and it’s time that we don’t have.