Corporate Social Responsibility and Development in the Philippine Special Economiz Zones
From an outset in internship experiences at SunPower Philippines Manufacturing, Ltd., a solar panel and assembly facilit...
CORPORATE SOCIAL RESPONSIBILITY AND DEVELOPMENT IN THE PHILIPPINE SPECIAL ECONOMIC ZONES
David Christensen Abstract From an outset in internship experiences at SunPower Philippines Manufacturing, Ltd., a solar panel and assembly facility in one of the Philippine Special Economic Zones, this article seeks to explore Corporate Social Responsibility (CSR) linkages with broader development issues within the environmental and social spheres, drawing a perspective to the conduct of the semiconductor and electronics industry segment as a whole. The paper makes use of a discursive and conceptual framework drawing from globalization and CSR literature to reflect on the internship experiences of participating in the daily functions of the host company’s Environmental, Safety and Health (ESH) unit and preparing for implementation of an ISO 14001 environmental management system. The paper holds that the experiences give a degree of credence to the ‘transformationalist’ thesis of globalization, by which globalization is seen as context-‐dependent and that positive developmental outcomes can me made possible if given the right conditions.
INTRODUCTION This paper is the result of the author’s revisited internship experiences with the solar panel assembly facility SunPower Philippines Manufacturing, Ltd. at the ‘Laguna Technopark’ Special Economic Zone south of the Philippine capital of Manila. Revisited, that is, as the internship was conducted in fulfillment of a previous Master’s degree in engineering (Environmental Management) and took place over a four month period in 2006 covering site-‐specific tasks relating to improving the facility’s environmental performance, but also covered appropriate problem areas within broader development studies within globalization, export-‐oriented growth and corporate social responsibility (CSR) in the Philippine Special Economic Zones that has enabled the experiences to be included as part of the author’s current 9th semester Master studies in Development and International Relations.
In focus in this paper, CSR is what at first glance may seem an oxymoron of a concept for those who are perhaps instinctively disinclined to consider the contribution of market actors in international development. For the Philippines, a country that has not been able to emulate the development trajectories of the East Asian tiger economies but could be placed among the newly industrialized countries (NICs) today through its pursuit of an export-‐oriented growth model (Christensen and Rasmussen 2007), its emphasis on attracting foreign direct investment (FDI) as a strategy make it especially pertinent to explore any CSR and development linkages. This is argued as follows: Considering that attracting FDI has been a cornerstone for stimulating economic development in the Philippine case, an initial healthy skepticism is in order when exploring what this has meant for broader socio-‐economic development, especially when considering that the Philippines continues to face a number of challenges such as wide income gap disparities, pervasive corruption and lax legislative enforcement e.g. (Christensen and Rasmussen 2007). The vacuum of effective state governance mechanisms may leave little cause to believe that unchecked private-‐sector driven development can be a viable alternative, but against this is the proposition that CSR can contribute by offering a conceptual framework for companies to integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (Prieto-‐ Carrón et al. 2006). On this basis, this paper therefore seeks to explore if the multinational companies that are provided incentives to establish part of their activities in the Philippines also bring about positive developmental effects in other arenas (e.g. within the environmental and/or social spheres), or if there is perhaps a more insidious side to their strategic business practices as claimed by many critics typically from e.g. NGOs and trade unions (Lodge and Wilson 2006). In this paper, this exploration is carried out with a focus on the conduct of multinational companies within the country’s co-‐called Special Economic Zones. More specifically, the findings will be based on the electronics and semiconductor industry segment to which SunPower Philippines Manufacturing, Ltd. belongs, and not least on the internship experiences themselves. First, the paper will describe Special Economic Zones in the Philippines as the institutional framework conditions within which multinational companies including SunPower Philippines Manufacturing Ltd. operate. This section also provides the historical backdrop concerning the Philippines’ choice to
pursue an export-‐oriented economic growth model. The next section handles emergent environmental and social issues that have arisen as multinational companies have established themselves within the Special Economic Zones. The following section then underpins the theoretical discussion concerning these problem areas by delving into globalization and CSR literature and identifying some propositions that the case study of the Philippine internship experiences might illuminate. Finally, the internship experiences themselves are presented as a case study in multinational company CSR conduct, which includes perspectives on the electronics and semiconductor industry as a whole.
SPECIAL ECONOMIC ZONES IN THE PHILIPPINES More commonly known as Ecozones, Special Economic Zones in the Philippines are institutional arrangements that have taken the form of geographically demarcated pockets of the country designed to provide an especially favorable investment environment for FDI (Richardson 2004). In rare cases, individual buildings may be designated as Ecozones as well. Notwithstanding these exceptions, in physical terms today (described from this author’s own observations) these industrial estates are often laid out as large-‐scale gated communities with manned vehicle and personnel security checkpoints which are serviced by high quality and well-‐maintained infrastructure, e.g. roads, electricity and wastewater treatment facilities that are often above the norm compared with the adjacent areas. Operating within their boundaries are numerous manufacturing or assembly facilities often belonging to some of the most recognizable brand names in e.g. the global apparel, automotive or electronics industries. The Ecozones help spur (economic) growth via a number of incentives including, among others: tax holidays for businesses established within them; 0% import duty on capital equipment, spare parts and accessories; and simplified customs procedures (Executive Order No. 226, 1987; The Special Economic Zone Act, 1995). Activities taking place within the Ecozones cover all manner of nontraditional export segments from garment manufacturing to small-‐scale car assembly activities, but also within non-‐tangibles such as services (call centers) and information technology. In many
cases, Ecozones have been organized to be specially oriented to favor clustering of similar kinds of businesses in e.g. designated ‘Manufacturing Economiz Zones’ (which make up the majority of Ecozones) or for instance ‘Information Technology Parks’ (PEZA 2010). Overseeing and administrating the collective Ecozone system is the Philippine Economiz Zone Authority (PEZA), attached to the Department of Trade and Industry. The Philippine electronics and semiconductor industry in particular is an industry segment that has made extensive use of the Ecozone arrangements very early on to become firmly established today. The first wave of investments within this sector came when the microprocessor giant Intel took the pioneering decision to establish a subsidiary in the country as early as 1974 (Pineda-‐Ofreno 1985). Helped on by the Ecozone arrangements since that initial wave of investments, the segment has since then grown to account for the largest percentage of foreign exchange earnings for the country, with electronics products and components alone accounting for approximately 70-‐86% of total exports, with companies within the electronics and semiconductor industry accounting for more than half of all companies inside the Ecozones (Austria 2006; Peralta et al. 2003). Philippine Ecozones are distinct from often larger, commercial Free Trade Zones (FTZs) for trans-‐ shipment, storage and re-‐export of goods of which the Panama Canal Zone, Singapore and Hong Kong provide some of the most ready historical examples (Wong and Chu 1984). Focused at export-‐ oriented industrial development, Philippine Ecozones mirror similar institutional arrangements in several other Asian countries and elsewhere, first successfully tried out in Ireland in 1956 and followed by developing country examples in Puerto Rico (1962) and India (1965), and with the Philippines together with Taiwan, the Dominican Republic, Mexico, Panama and Brazil following suit in the 1966-‐1970 period. As observed by Wong and Chu (1984), in the Asian experience the development of Special Economic Zones (also termed Export Processing Zones) was brought about due to an inability for some countries to stimulate economic growth by way of import-‐substitution industrialization, as protective tariffs were linked with high capital costs and inefficient production. As an alternative, export-‐oriented production sought to make use of cheap and abundant labor resources (a perceived comparative advantage, in the international division of labor) to gain access to capital, technology and international markets. Because the Philippines at the time could not say it had
access to either of these perceived prerequisites for economic growth, multinational companies thereby became an important vehicle to achieve this objective. Drawing a perspective to the domestic political context during the time that the Ecozones began to be part of the Philippine economic landscape, one may consider that the country has had a tainted history that has oftentimes been dogged by political instability marked infamously by the strongmanship of the Marcos regime (1965-‐1986) (Christensen and Rasmussen 2007). This president was at the helm in executing domestic economic policy throughout much of the period that saw the Philippines both beginning to be overshadowed by the economic performance of today’s Asian ‘tigers’, and rush headlong into the period of structural adjustment. In an interesting retrospective on the political economy at the time relating to the decision to pursue export-‐orientation, Bello et al. (2006) contend that the main reasons for the failure to achieve comparable economic growth to the Asian tigers was twofold. First was the problem that securing land reforms and income redistribution was never carried out to the same extent as in the Asian tiger economies, eventually resulting in fundamental structural problems and massive income inequality that undermined any developmental efforts. Secondly, and somewhat paradoxically, export orientation was seen as more rhetorical than real, with export-‐orientation amounting to no more than a symbolic set-‐up of a few export enclaves within an essentially domestically-‐oriented industrial and manufacturing structure.
EMERGENT SOCIAL AND ENVIRONMENTAL ISSUES Whether because of insufficient policies to truly reorient the domestic market structure internationally (Bello et al. 2006), or perhaps because of fundamental insufficiencies inherent in the Ecozones and the multinational companies themselves, what quickly became apparent was that export-‐orientation in the Philippines (and by extension the Ecozone system) only contributed toward overall industrial and economic development to a limited degree (Wong and Chu 1984). More specifically, some of the overall specific objectives fell short of being reached including e.g. employment generation, foreign exchange earnings and export growth, transfer of technology and management skills and backward linkages with the domestic sector. For Asian countries as a whole,
Wong and Chu (1984) attributed this at the time to the relatively small scale of these enclaves compared with the domestic sector, the conflicts of interest between investors and host countries as regards e.g. reinvestments of profits, and the sensitive nature of FDI in these zones towards global economic conditions, especially under recession periods. At a level below these macroeconomic effects to the Philippine economy, Pineda-‐Ofreneo (1985) analyzed in particular how the electronics and semiconductor industry fared under the contemporary conditions of maturing export-‐orientation. Any disconnect with the domestic sector did not hamper this growth industry’s activities. Under what were effectively booming conditions at the time, multinational companies operated with ease under the Ecozone arrangements, making full use of the opportunities to concentrate their labor-‐intensive assembly activities in the value chain where there was a cheap and abundant manpower supply. This factor especially was identified as key, as multinational companies within the electronics and semiconductor industry in the 1970s began to relocate away from the initial Asian countries where they had invested in during the 1960s (Taiwan, Hong Kong, South Korea and Singapore) due to a combination of both increasing unionization, and a growing labor shortage. This relocation followed in time with technological developments, as electronics products grew in sophistication and the markets and consumer demand expanded. Semiconductors, used in microchips, then as today continue to make up some of the basic needed components for computers and electronic devices, and proved especially ideal for assembly in low-‐ wage countries because of their characteristics as being high-‐value commodities which can easily be transported great distances because of their low weight and volume. Accrued advantages in favor of the semiconductor and electronics industry during this global expansion period may be argued to have fit hand-‐in-‐hand with the need for employment among unskilled labor groups in the Philippines, in effect a ‘win-‐win’ situation for both sides. The counter-‐ perspective, however, is that these multinational companies didn’t contribute as positively to development and acted purely out of an imperative to maximize competitiveness through shaving labor costs to the fullest extent that the international trade system allowed. This meant skirting unionizing tendencies elsewhere in Asia and leveraging their position in the Philippines by unfairly taking advantage of highly vulnerable labor groups. Pineda-‐Ofreneo (1985) highlights this as the focal
problem encountered with the establishment of the semiconductor and electronics companies in the Philippines, particularly pointing to the effects of employing women, who have ended up forming the backbone of production force. The employment of predominantly unmarried women aged 16-‐25 in the Philippines (characteristic for the industry throughout Asia) offered advantages for the companies in that the workforce thereby consisted of young girls with ‘inexperience’ who could then be ‘easily manipulated’ and ‘disciplined’ through e.g. production quotas, layoff threats and the hiring of managers who could project the type of authoritarian paternal figure that is present in many Asian cultures (Pineda-‐Ofreneo 1985). The workforce could be more easily kept to minimum wage earning levels, and more easily laid off as they were not perceived to be main family providers. Occupational health and safety is also identified as a key issue for the semiconductor and electronics industry in general, as the labor-‐intensive production steps often mean monotonous, repetitive work, degraded vision over time and exposure to e.g. hazardous chemicals and carcinogens eventually leading to varying degrees and types of acute or chronic illness. At the broader institutional level, the labor relations situation was aggravated by pressure to prevent unionization, the interest of both the multinational companies themselves and the Philippine state (so as not to discourage FDI to the country). Besides the social issues presented above, Richardson (2004) provides insight into a separate yet perhaps interlinked host of environmental issues relating to the effects of Asian export-‐orientation and increasing FDI. As argued by Richardson, it is a misnomer to consider environmental issues as falling outside the economic sphere, and almost a fallacy to fail to see how rapid industrialization in Asia (helped on by the establishment of Special Economic Zones throughout the continent) has led to pervasive, incremental and long-‐term negative environmental effects. This includes among many others the proliferation of consumer waste and the dispersal of chemicals, which accumulate in ecosystems and degrade their capacity to support human development. Taken as a whole, however, environmental degradation in Asia is tied in with rapid widespread urbanization and upscaling in industrial and economic activity in general, whereas the degree to which this is directly because of the Special Economic zone arrangements may perhaps be a great deal more ambiguous. Richardson’s findings suggest that there are certainly Special Economic Zone examples in a number of Asian countries where environmental issues have clearly taken secondary priority and, as in e.g. the case of
such zones in Vietnam, described so far as to be in a state of ‘environmental crisis’ owing to air and water pollution. As well, there is the pervasive issue in some countries of lax environmental legislative enforcement, e.g. in China. On the ‘flipside’, Richardson also presents research showing that environmental conditions are no worse off compared with other areas, e.g. because of the greater access to pollution control technologies and more systematic spatial planning in the Special Economic Zones. Richardson argues that while Special Economic Zones can be hotspots for environmental mismanagement, it can also be argued that they in some cases have effectively served as laboratories for innovative environmental policy and regulative measures, where in some cases enforcement has been tighter than outside the zones. In addition, access to international markets has in some cases addressed regulatory weakness by giving the benefit, by extension, of access to technologies, management techniques and financial resources for improved environmental performance.
CONFLICTING PERSPECTIVES ON GLOBALIZATION AND CSR The emergent social and environmental issues tied with the export-‐orientation in Asia in general and in the Philippines (beginning in the 1970s and gaining momentum onward) persisted as problem areas for multinational companies to deal with as globalization increasingly took (and takes) hold. As a more complex mode of internationalization and development, globalization is asserted here to have provided the contextual conditions for CSR to take to the fore as a reflexive/reactive framework. As presented by Angeles (2003), globalization in this respect is understood not only as the more abstract integration of economic, political, cultural and technological activities spanning the globe, but is also expressed at the level of local sites and at the industry and firm levels. In pure economic terms, this means ever-‐increasing amounts of FDI in developing countries, the creation of networks and increasingly flexible production strategies along the value chain in sourcing, production, distribution, marketing and research and development. The effects and impacts of globalization on the social and environmental spheres remain contested areas, however, making it worthwhile here to dwell on some of the propositions as well as explore the CSR concept in more detail.
One useful classification of ontological standpoints on globalization of relevance to the discussion of multinational companies in the Philippine Ecozones is provided by Held et el. (1999), who speak of the following globalization ‘discourses’, in their terminology: the hyperglobalist, skeptical and transformationalist theses. The hyperglobalist thesis takes a positively normative stance toward the effects of globalization, and is perhaps championed by people such as the pro-‐market economist Jagdish Baghwati (2004) whose overall claim is that the question of social and environmental problems is not one rooted in trade liberalization as fundamentally dysfunctional in and of itself, but on market and intervention failures (Christensen 2008). Hyperglobalists shed a positive light on the developmental effects of FDI -‐ for instance, considering the social issues in the Philippine semiconductor and electronics industry illustrated in the previous section, Baghwati provides the parallel example of women in the Bangladeshi call center service industry who, he argues, are effectively treated to wage levels higher than the norm, and who are empowered by virtue of breaking free from domestic household roles. The skeptical globalization thesis, on the other hand, takes the opposite view and is perhaps embodied by e.g. James H. Mittelman (2000), who places great emphasis on power relations and how this leads to conflicts across the globe that play out on all levels, both overtly and covertly (Christensen 2008). Mittelman understands globalization to be a transformative process through which this power play occurs, fostering both support and resistance and dividing the conflicting parties between what he terms the ‘contents’ and ‘discontents’ of the globalization process. Mittelman in fact holds forth the very same example of Philippine female Ecozone workers previously mentioned to illustrate; In the Philippines, he contends, a woman working in one of the country’s Ecozones will likely be living on less than the legal minimum wage, in poor living and working conditions and with the overhanging menace of sexual harassment by work supervisors (Mittelman 2000). In between the two positions above is the transformationalist thesis (Held et al. 1999), through which globalization is not viewed as the inherent cause of either positive or negative effects, but that a variety of outcomes are possible depending on how globalization is handled as a transformative force. This position recognizes that there are problems of increasing inequalities between and within countries, but that globalization remains open-‐ended, with the possibility of positive effects if given the right conditions (Christensen 2008). This position is perhaps given credence in the case of
Philippine Ecozones on the basis of e.g. Richardson’s findings reviewed in the previous section. Here, there was no clear-‐cut evidence for linkages between FDI and environmental degradation in Asian Special Economic Zones. Rather, it appears that for each individual country, the effects of globalization are entirely a context-‐dependent issue, and a matter of getting the market and institutional framework conditions to balance appropriately. With this paper’s intention of exploring CSR and development linkages with an outset in the Philippine Ecozones and the semiconductor and electronics industry, the revisiting of the internship experiences with SunPower Philippines Manufacturing, Ltd. can be framed within the overall globalization discussion above. One pertinent matter in this sense would be to consider which of the three theses the internship experiences support. To speak of ‘evidence’ based on a singular, even in-‐ depth case study might perhaps be stretching the extent to which hard conclusions may be drawn, even if e.g. Flyvbjerg (2006) has put forward a comprehensive set of arguments going against established ‘conventional wisdom’ in social science research methodology that generalizations cannot be drawn from single case studies. Here, it is put forward that the internship experiences at least generate a useful set of insights of (as will be shown further on) a unique multinational company that not only has the production of an environmentally friendly technology as its core business, but through its conduct gives some support to the transformationalist thesis of globalization. During the time of the internship itself, no fully developed framework was considered to put the Philippine experiences in such a context, but this author did have the opportunity to reflect briefly upon the experiences in this manner during a master thesis study on sustainability, innovation, FDI and globalization in the Costa Rican electronics sector in 2007. The small passage is worth recounting in its entirety below (Christensen 2008), which uses the terminology by Held et al. (1999) and lays bare this author’s position. However, it is not fully argumentative or conclusive concerning the case of SunPower Philippines Manufacturing Ltd. A main part of the exercise in this paper is to substantiate the position further. “Sometimes personal experience counts for something. The author of this study has been fortunate enough to have been able to see the globalization at play in developing countries first hand, first from a childhood growing up in the Philippines, Indonesia and
Thailand (right at the time the Thai Baht collapsed and set off the East Asian crisis). Recently, the author has undergone an internship with an American transnational solar cell producer in an export processing zone near Manila in late 2006, working in the Environmental, Safety and Health unit. It is the author’s opinion that the issue of FDI and sustainability is of extremely vast importance to the developing world, but that it would be apathetic and cynical to cast aside belief that globalization can be harnessed to facilitate sustainable development. It is not blind faith in the market that is behind the belief in the transformationalist thesis, however, but a pragmatic stance that alternative pathways to development are growing harder to envision as globalization takes hold in the international political economy. The problems are real and exist. Seeing first-‐hand how developing countries go out of their way to attract transnationals, for instance by setting up special economic zones that offer tax-‐exemption incentives, it is easy to be skeptical to the notion of environmental and social benefits and spillovers. And so it should be. Critical thinking is the foundation of solid research. When Mittelman speaks of exploited workers in the Philippines living in squalid conditions, this author can profess to have seen the problems based on personal interaction with the very same workers, at a level entirely different from an academic researcher working on the topic. Globalization in this and many other cases seemingly does strongly favor its contents over the discontents, yet the transformationalist thesis persists, in the author’s view, so long as examples of success can be found.” Before entering into the case study itself, it is necessary to further elaborate on the CSR concept that has only been mentioned in passing so far. A common definition given by the European Commission states that it 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.” (European Commission 2001; Prieto-‐Carrón et al. 2006) To be sure, it is far from a new concept. If framed as a more principled discussion on the responsibilities of business in a market society, this has been argued from some quarters to pre-‐date the era wherein the ‘globalization’ concept has become a popular catchword (Scherer and Palazzo 2009). Before the advent of globalization, a clearer distinction between the roles of business vis-‐á-‐vis the state was the conventional understanding,
which took a direct outset from Smithian economic ‘invisible hand’ thinking. By establishing the ‘rules of the game’ for a market system to operate, the state’s role was seen to ensure the business prerogative of exclusively pursuing profits, and was assumed to have the capacity to simultaneously make sure that this occurred to the general wellbeing of society. However, the shortcomings of this assumption became increasingly visible and in the vacuum of effectively regulated markets that resulted, demands were increasingly placed on business to be socially responsible by either adhering to ill-‐enforced regulation or even go beyond compliance. The effects of globalization in the modern era have served to intensify the negative effects of business, and at the same time put pressure on business to respond accordingly. At the most current apex of CSR discussion, some optimists have put forward the case that business can pursue CSR to be a so ingrained a core value as to be value-‐ creating for themselves and society as a whole in a leadership role, see e.g. Hart (2007). Scherer and Palazzo (2009) assess, however, that seeing businesses as fully both economic and political leadership actors in this manner requires a shift in paradigm, and remains contested. On an operational level, a number of CSR initiatives and managerial or instrumental tools have been developed over the years to assist businesses in addressing perceived areas of responsibility in the social and environmental spheres. The reasons for a company to adopt CSR practices along these lines are, in ascending order of value added to society at large (Roepstorff and Serpa 2005): •
Positioning in markets
Positioning in society
At any point in time, including in the present era in which business is increasingly expected to contribute more broadly to societal development, it can be reasonably argued that there will be great disparities concerning the attitudes and reasoning behind individual companies’ adoption of CSR practices (as above) within any industry segment, sector or geographic clustering. In this context, CSR operational managerial or instrumental tools can be seen as an emerging, even maturing form of
private governance framed within the previous globalization discussion. Within the environmental sphere in particular, Falkner (2003) explores links between private governance and international relations, seeing one of the first concrete examples in the development of ‘good practice’ voluntary environmental and safety principles in the chemical industry in the United States in the 1980s. Of further relevance to this paper in particular, Falkner also highlights the work done by the International Organization for Standardization (ISO) to create a global standard for environmental management systems, called the ISO 14000 series, which provides guidance for companies and organizations to systematize their efforts and seek third-‐party certification. It is worth to note here that the internship experiences with SunPower Philippines Manufacturing Ltd. were directly related to setting up a formalized ISO 14000 environmental management system at the facility. Within the CSR field directly, parallel attempts at converging and standardizing business practices have taken place which have resulted in managerial or instrumental tools at the framework level and, similar to the ISO 14000 series, at the practical level. One of the most important framework tools has been the UN Global Compact (an important endorsement for responsible business has thus come from the United Nations), which lays out ten principles within human rights, labour, environment and anti-‐ corruption for businesses to align their operations in accordance with (United Nations 2010). The UN Global Compact is a effectively a soft measure which provides overall guidance within the four core issues, a dialogue platform and which relies on peer monitoring. On the other hand, a number of actual CSR standards have also been created which allow for third-‐party certification in some cases (Hohnen 2007). Some examples of these include e.g. the AA 1000 series focused on business and sustainability performance, or the SA 8000 standard for workplace conditions developed by Social Accountability International (SAI), a US-‐based non-‐profit. Most recently, a process was set in motion in 2005 finally led to ISO publishing its ISO 26000 guidance manual on Social Responsibility in November 2010 (ISO 2010). With ISO being perhaps the most widely recognized international standardization body, this may be seen as important step for global CSR convergence. However, ISO 26000 is in fact distinct from an actual certifiable management system standard such as in the case ISO 14000 series -‐ this point was one strongly contested point throughout the stakeholder consultation process in developing ISO 26000, and goes to illustrate that it is ‘easier said than done’ to simply standardize such a complex issue as CSR, and make it approvable via third-‐party certification.
The discussion on CSR managerial or instrumental tools primarily aims at illustrating that globalization is linked with CSR convergence and standardization in business practices, and may be seen as a form of private governance that has followed a similar development as within the environmental sphere as illustrated by Falkner (2003). The brief overview of some existing CSR tools shows some examples of how this can take concrete form. Beyond the ISO 14000 environmental mangement system implementation work at SunPower Philippines Manufacturing Ltd., however, it is unknown to this author whether the company at this present time is actively working on adopting some of the formalized CSR tools, which do handle broader CSR aspects in carrying out business. In the following, the internship experiences will be presented with this limitation. The ISO 14000 implementation work described as part of the case study is considered an example of early CSR work at a multinational company within the Philippine Ecozones, though specifically within the environmental sphere.
SUNPOWER PHILIPPINES MANUFACTURING LTD. Sunpower Philippines Manufacturing Ltd. is a Philippines-‐based solar panel assembly facility that is vertically integrated into and part of Sunpower Corporation headquartered in San Jose, California. A multinational company, Sunpower Corporation produces high-‐efficiency solar photovoltaic (PV) cells and panels for electricity production in e.g. residential use, primarily for markets in Germany and the US. The internship was task-‐related to assisting the Philippine facility in setting up a formalized handling system for managing the negative environmental impacts associated with its on-‐site production processes, in preparation for third-‐party certification in accordance with the ISO 14000 series (the ISO 14001 standard specifically, dealing with environmental management system requirements) over the long term. Anchored at the facility’s Environmental, Safety and Health (ESH) unit, the internship activities meant close daily liaising with ESH and production staff as well as contact with management and HR personnel; but the scope of the work was also expanded to include an institutional, contextual analysis of environmental performance of foreign-‐owned companies in the Philippine Ecozones more broadly, and specifically within the company’s industry segment (the semiconductor and electronics industry). Besides the experience of interacting with Sunpower Philippines staff on a daily basis, the internship thereby also afforded the opportunity for site visits at
similar facilities at other locations. Three interviews were carried out with environmental engineers from three other multinational companies operating in the same industry segment (electronics and semiconductors) in the Ecozones. These were, respectively, Cypress Semiconductor, Intel and Analog Devices. Further, the Intel representative interviewed by this author was also the representative of an industry networking committee dealing with environmental issues, AESSEP (Association of Electronics and Semiconductors for Safety and Environmental Protection), which is a committee that is part of SEIPI (Semiconductor and Electronics Industries in the Philippines, Inc.), the overall industry association. The practical company-‐centered internship activities at Sunpower Philippines were thereby also seen in a societal and developmental perspective. The practical tasks that the internship covered, and also the empirical basis for the findings this paper, were (in the following chronological order): •
Participating in NEOP (New Employee Orientation Program) training for a 2-‐week duration together with a batch of newly recruited production line staff.
Conducting a clause-‐by-‐clause, so-‐called ‘gap analysis’ between current company practice vis-‐ á-‐vis the individual ISO 14001 standard requirements.
‘Clean room’ personnel safety training; prerequisite for being allowed to enter the production area, which is a tightly controlled environment regarding parameters such as humidity, temperature, particle density, etc. and requires full-‐body protection equipment.
Developing an impact assessment methodology that covered all of the production steps at the facility, as well as non-‐production related impacts from support activities e.g. bus shuttle fleet operations, canteen activities and the water purifying system. This was a key prerequisite step in the ISO 14001 standard, and was conducted in order to identify the most significant environmental aspects at the facility.
Internal stakeholder consultations with e.g. ESH, production, HR, facilities, procurement and financial accounting staff for quantitative data gathering, in order to try out the environmental impact assessment methodology and which was conducted in parallel with developing it.
Participating in ESH coordination meetings, which set quarterly overall objectives for the ESH unit as a whole.
Presenting environmental impact assessment methodology to the ESH unit, which together with an executive decision to actively challenge for ISO 14001 certification (a top-‐down decision from corporate headquarters in the US independent of the internship activities) led to the decision to designate a cross-‐departmental ISO 14001 committee.
Conducting basic ISO 14001 training for the committee, which included e.g. production staff who had no prior knowledge of environmental management systems.
Participating in planning workshops with the ISO 14001 committee and preparing a detailed ISO 14001 implementation plan on this basis.
Presenting the ISO 14001 implementation plan to a management meeting in the final week of the internship, which secured final management ‘buy-‐in’ for the implementation project.
When reflecting upon the internship experiences with and broader CSR and development perspective, the ISO 14001 specific tasks were perhaps not as insightful in and of themselves. However, the day-‐to-‐ day observations throughout the process gave very deep insider information into the daily activities of an otherwise quite closed, corporate world of a multinational company within a Philippine Ecozone. The social labour relations between the company and its workforce were glimpsed at, as well as environmental and occupational health and safety issues for the very apparent reason that gaining an insight into this was a significant part of the internship activities. What will be presented in the following will be some of the most striking, important impressions and observations within the social and environmental spheres relating to the company’s handling of CSR issues. Concerning environmental on-‐site issues, what was perhaps most remarkable was that that producing a core business product as environmentally ‘friendly’ as a solar PV cell involves the use of staggering amounts of toxic and otherwise hazardous gases, acids, high-‐energy consuming production processes, high resource usage of water and the resulting high production of wastewater, necessitating an on-‐ site wastewater treatment facility. However even without a formalized ISO 14001 environmental management system to systematically identify, prioritize and reduce the company’s environmental impacts, a number of environmental control technologies were already in place at the facility, such as efficient emission scrubbers. What could not be said was that they company was ‘dirty’ in any sense.
Effectively, the company was aware that any environmental mishaps would have serious repercussions for its production activities. Concerning environmental institutional issues, it was interesting to note that some of the primary functions of the ESH unit and its staff were to constantly maintain a monitoring and follow-‐up system of all applicable environmental legislation, maintain contact with both regulatory stakeholders as well as industry networks within occupational safety and the environment, and maintain contact with the corporate ESH headquarters. Especially interesting was the chance to see an internal environmental audit conducted by ESH headquarters staff, through which American ESH staff paid a visit and double-‐ checked to make sure the Philippines site had all documentation in place to prove it was both in compliance with internal and legislative environmental obligations. As well, it was interesting to note that the EHS staff at regular intervals invited local regulatory bodies to see its emergency preparedness system and routines, which was a purely volunteer initiative. Concerning social issues, it was far from the overall impression that the workforce consisted of predominantly female workers who were afforded poor working environment conditions as might have been the case in the earlier years of FDI in the Philippine Ecozones within the semiconductor and electronics industry segment. The workforce was roughly split between males and females. Observing and interacting with the workforce, this author also was surprised to learn that every single member of the production staff (‘shop floor’ workers, though this is misleading term when production took place in a controlled cleanroom environment) was in possession of higher education qualifications, and were all engineers by training. As this author surmised, it was perhaps an indication of how low the wage levels in the country were in general as much as it showed how sophisticated the production processes were, that SunPower Philippines Manufacturing Ltd. felt it necessary to have such a high-‐skilled workforce trained in technical, engineering skills. Unionizing was unheard of, which this author learned was the norm in the Ecozones, but collective bargaining did take place in some form as there was a worker’s representative association for the workers at the site. The occupational health and safety regime was included in the areas of responsibility of the ESH unit at the company, which had a thorough regime of procedures and routines in place. In fact, it was the
impression that these issues were weighted higher than environmental issues. In case of emergency, the facility did have a medical clinic, as per legislative requirements. However, the company’s efforts were not entirely faultless concerning e.g. work-‐related injuries. While there was an incentive system in place to keep injuries at a minimum level (e.g. production team salary bonuses for a certain amount of time gone by without injury), this same incentive system in some cases encouraged injuries to be deliberately unreported by the production staff. Concerning broader social concerns, e.g. with the surrounding communities, this issue was raised during an interesting event when the company’s corporate CEO paid the Philippine facility a visit and, as per the company’s norms, presented the quarterly financial report to the entire gathered Filipino staff at the large canteen facility. The CEO made himself open to a question-‐and-‐answer session, and one of the questions from the floor showed open concern regarding expansion plans in a new geographical area. At the time of the internship, plans were underway to invest in developing another production facility at another Ecozone further south of the existing one. However, this area was notorious for being crime-‐ridden, as was explained to this author later, and the questioner pointedly asked the CEO how the company was taking this into consideration. Interestingly, the CEO evaded the question, simply responding that it was a very good one, but that a local plant manager was in a better position to answer the expansion plan details. Of course, this shows only slim anecdotal indication of the company’s community relations, but is perhaps indicative of a possible point of critique, with corporate headquarters far removed from social community concerns at the local level in the Philippines. When conducting site visits at other multinational companies in the Philippine Ecozones and interviewing representatives from Cypress Semiconductor, Intel (and the AESSEP networking committee) and Analog Devices, the internship experiences were seen in broader context. It was interesting to garner that in terms of ISO 14001 certifications, the semiconductor and electronics industry segment accounted for the majority share (exact numbers are difficult to come by). In addition, it is worthwhile to note that the first ten companies to have ever gained ISO 14001 certification in the country were also from this industry segment (Philippine Business for the Environment 1998). The SEIPI industry association itself believed its relationship with authorities to be
an open dialogue based on constant communication, and claimed to be very active in engaging communities and the general public, pointing to community outreach programs that some companies practice. If taken at face value, these claims draw an impression of an industry segment which is very much aware of its influence, but which chooses to pursue interests in an open, non-‐confrontational manner (Christensen and Rasmussen 2007). Further points of interest were noted: It was mentioned that AESSEP initiated a ‘Philippine Environmental Partnership Program’, a voluntary measure where the industry would try to use peer oversight to monitor their member companies. And when asked about bottom-‐up grassroots engagement from local communities, the AESSEP and Intel representative responded that the general public in the Philippines becomes very active only when their direct livelihoods are under threat, such as during the case of an oil spill near the island of Guimaras which happened near the time of the interview. Ongoing engagement with industry was not deemed to take place, but when legislation is enacted, multi-‐partite groups did participate in consultations, including both industry associations and non-‐industry affiliated NGO’s (Christensen and Rasmussen 2007). Taken together, the inclination on the basis of the above is to see state-‐market-‐civil society relations with the semiconductor and electronics industry as one where the industry actively participates in dialogue and action, but where perhaps the symptoms are indicative of ineffective or under-‐ resourced state and public control mechanisms, indicating an imbalance in favour of industry. On the other hand, the concrete internship experiences at SunPower Philippines Manufacturing Ltd. in a CSR and development perspective gave no real indication of anything decidedly ‘insiduous’ in the company’s activities, although some points of critique can be levelled e.g. with occupational health and safety issues. Following the typology of Roepstorff and Serpa (2005), CSR engagement with the company could be described to be as high as the level of ‘positioning in markets’ as this author had the impression of an extremely competitive, corporate environment which took all matters of business operations seriously, including the activities of the ESH unit. However, there was far from any real indication that the company saw itself in a societal leadership role, thus excluding the level CSR engagement as ‘positioning in society’. Altogether, this gave a nuanced picture that this author believes can still give some credence to Held et al.’s ‘transformationalist’ thesis of globalization. Although SunPower Philippines Manufacturing Ltd. did not and does not see its role as a driver of
broader socio-‐economic development, it is interesting to see that the industry segment as a whole practices stakeholder collaboration with the state and civil society (to an extent) on e.g. environmental issues. This tells of a story other than multinational companies in Ecozone enclaves that go about their business completely unmindful about local developmental implications of their activities.
CONCLUSION This paper has sought to consider the internship experiences at SunPower Philippines Manufacturing Ltd. in an overall CSR and development perspective. This has been set against the historical backdrop of the Philippine export-‐oriented economic growth strategy and emergent environmental and social problem areas within the institutional framework of Special Economic Zones in Asia. As well, contemporary globalization and CSR discussions have served to set the stage for considering whether the internship case study lends any credence to the ‘transformationalist’ thesis of globalization. Here, globalization is seen as context-‐dependent issue where CSR driven business operations may be seen as possibly being able to contribute to positive developmental outcomes if given the right conditions. As recognized by this author, social and environmental problems are real and exist in the analysed Philippine setting and the investigation has identified an imbalance in state-‐market-‐civil society relations in favour of the semiconductor and electronics industry, which wields a significant deal of influence and ‘agenda setting’ as regards institutional conditions for multinational companies to operate under the Philippine Ecozone framework. Through the internship experiences, however, and a rare glimpse into the daily activities of such a multinational company, it can be asserted that this doesn’t necessarily imply negative developmental outcomes within the environmental and social spheres. In the case of SunPower Philippines Manufacturing, Ltd., CSR is not conceptualized explicitly as such by the company itself, but is developed to the extent that the company makes use of CSR engagement as a way of improving its market positioning. Interviews with other companies and the industry networking committee indicate this to be generalizable to an extent for the semiconductor
and electronics industry segment as a whole. The transformationalist thesis of globalizatio can be given some credence on this basis. Further final perspectives may be drawn from how SunPower Philippines Manufacturing, Ltd. has fared since the time of the internship in 2006. It is interesting to note that the company has expanded with another production facility in the same country, and that both production sites have now had third-‐party verified ISO 14001 environmental management system certifications for a number of years running. It is not known whether the company is active towards making use of explicit CSR frameworks such as the ISO 26000 guidance manual on social responsibility, but this perspective is interesting in that is shows how much further institutionalized environmental management has become.
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