The Limits and Problems of ISO 26000
What Is the Intent of ISO 26000?
ISO 26000 is a general guideline but not a formal standard by the ISO. It seeks to bring social responsibility, also called corporate social responsibility, to companies.
Social responsibility certainly includes ensuring worker safety, not hiring young children, never using forced labor and paying fair wages. While it can be noble and even profitable to find under-educated groups and train them for high paying work or donate to local non-profits to help the community around it, ISO 26000 codifies these things and much more. It is a set of ISO guidelines telling companies to practice affirmative action, donate money to certain types of charities, invest in local education, take action against global warming / climate change, seek to improve wealth distribution, and give non-profits and consumer groups an equal stake at the negotiating table with owners, management, shareholders and employees.
What problems does ISO 26000 create? And what are the limits the standard faces even in the areas where it might be implementable?
Too Many Mandates Could Be Too Much to Manage
The triple-bottom-line mandate undermines the viability of a business. The triple bottom line of social responsibility for businesses says they are obligated to society, the environment and their financial bottom line. Creating independent obligations of the company to stakeholders and the environment leads to social control of the company. Official regulations created by nations adopting ISO CR as law enforces these additional obligations; this certainly brings social and government control of the business.
The triple bottom line concept undermines the success of the company by demanding it act as a non-profit in many regards and advocate of various social justice principles in others. The company is less likely to succeed financially when it is pushed to chase other goals set by those who don’t care about its financial stability. And while ISO 26000 sets many goals for an organization, none of which is the financial viability of the company.
A separate limit on ISO 26000 is the financial bottom line itself. Companies simply don’t have infinite resources to invest is social welfare, when their first and foremost purpose is to generate an income. This rule excludes the low-profit limited liability company (L3C), which are rare and relatively new.
Given the high rate failure of healthcare coops and other types of cooperatives, the low profit limited liability corporation or other “nonprofits that make a profit” do not prove that businesses that focus on social responsibility first manage to make a profit over the long term. However, there are many for profit companies that have been in business for decades, and in a few cases, centuries. The key to a business’ survival is identify its core and do it well for a reasonable price – and adding more mandates makes this hard if not impossible.
All for Show?
There have already been concerns that corporate social responsibility is green-washing, even as ISO SR was being developed. Paying for the certification after donating to a few environmental activist groups is easier than actually eliminating waste or pollution in a manufacturing process. And there is the possibility that large firms will adjust their charitable giving to meet ISO SR standards, hire a few more consultants and gain yet another credential without solving the broad problems ISO 26000 seeks to enlist business to solve.
Measuring Charity by Per Political Checklists, Not Impact
ISO SR precludes private charity by company owners, such as Julius Rosenwald, a partial owner of Sears who donated millions to African American education. Per the ISO social responsibility standards, a company owner who personally gives 50% of their income to various charities isn’t meeting the standard while a company that turns 5% giving to politically correct NGOs meets ISO 26000.
Creating What You Seek to Stop - Crony Capitalism
The non-certifiability of the ISO 26000 standard theoretically hinders its adoption. However, the non-certifiability was necessary for it to not hinder international trade. For example, you don't want international business hindered by more than a 160 nations requiring companies to meet ISO standards by hiring a specific number of people in that country in order to do business there, source a certain amount of materials from that nation or donate money to NGOs in that country. Yet this hasn’t stopped several dozen nations from adopting it by their national standards bodies, including local interpretations.
In theory, ISO 26000 is applicable to all organizations. In practice, though, ISO 26000 is only practical for large companies. If a company is required to meet ISO standards and guidelines like ISO 26000, small companies can be banned from doing business in that country while large ones get the permission.
Yet its implementation could hinder multi-national companies who have to meet complex rules and regulations to meet each nation’s definition of local sourcing, affirmative action (hiring preferences) and social investment. Setting up local subsidiaries everywhere you do business, however, would hinder small firms much more than it would large companies, and creating these subsidiaries to meet the ISO SR mandates already adopted by many nations sets the groundwork for the crony capitalism it is supposed to fight.
Chilling Legal Effects
ISO 26000’s promotion of the precautionary principle as the basis of consumer rights is likewise problematic. According to an Ethical Corp article, “ISO 26000: Sustainability as a standard?”, “Much of the concern revolves around ISO 26000’s embrace of the “precautionary principle” to resolve environmental conflicts.”
The precautionary principle abandons cost-benefit analysis and causes companies to shoulder the blame - and costs - of anything that goes wrong and that may not be their fault but can be blamed on them. The United States has already seen new product development drop off due to the shift toward precautionary principle in lawsuits; ISO 26000 makes this a worldwide, stifling effect.
And this is a separate problem with ISO 26000, where NGOs with irrational demands are accorded a seat at the table. Greenpeace’s war on fluorine, which is essential in medicine, and environmentalists fighting golden rice, a vitamin enriched grain that could save millions of children's lives each year, are but a few examples.
Social Justice by Whose Definition?
Social responsibility cannot be codified in a universally recognized manner, which is why it isn’t an industry standard but a general guidance even by the ISO’s admission. Its strength is being based on international consensus. However, international consensus falls apart in many areas, so those aspects can’t be included in ISO SR.
The definition of international norms of behavior are vague, and it doesn’t solve this problem at all. After all, several Muslim countries require women to wear headscarves, but most other nations would balk at telling female employees to wear them because so many others do.
While United States federal contracts give preference to companies that hire transgenders and homosexuals, telling other nations to do will cost the ISO its acceptance in many nations. ISO 26000 specifically excludes mandates to promote same sex marriage and transgenderism due to strong opposition by Middle Eastern and African countries. If social justice requires preferentially hiring homosexuals in nations where such a designation is a death sentence, what’s the consensus of “fair”?
Giving people formally recognized employment and thus security in their pay rate and job responsibilities is recommended by ISO 26000. However, it runs into problems if it attempts to universally define gender equity as 50% of the company board or ownership be female, especially if in a nation like Saudi Arabia where women have inferior legal status to men. Telling a company owned by two men to sell shares to a woman is illegal, and ordering a women’s coop to hire a few men will not garner public support.
Generic mandates to hire disadvantaged minorities become a challenge, if not impossible. Imagine the chaos if companies are told 2% of their workforce must be Native American and 3% Asian to have ISO certification, whether they are in mostly white Iowa or next to the Navajo reservation. A les specific mandate ordering a company to have 5% of its workforce come from disadvantaged groups that don’t live anywhere near their operations, as a requirement of being allowed to do business. Do they restructure their operations, subcontract to other areas and add transportation costs to the ledger, give up ISO certification or stop selling in specific markets?
A broad call to make special efforts to help vulnerable groups leads to questions such as, “Which groups?” and “Which groups get more assistance over others?” Favoring one group discriminates against others, and you end up with multiple groups that could sue for being discriminated against, and that is a separate problem with ISO 26000 from discriminating against the majority today for the supposed sins of their ancestors.
Too Many Votes By Those Without a True Stake
ISO 26000 becomes undemocratic in its implementation. By saying that all stakeholders must be involved, including those who claim to represent consumers and surrounding communities, existing and mostly left-wing NGOs get a vote at the table. Nor does it define which advocacy groups should get a seat at the table as stakeholders. And at what point do indirect stakeholders like NGOs get a vote over and above direct stakeholders like employees and business owners?
ISO 26000 only addresses shareholders once in their rights to bring up social issues as shareholders and demand a business change its practices or policies. Never does it address the potential problem of business owners or stock holders being outvoted by people who neither work for nor own shares of the company.