corporate social responsibility and development in the philippine special economiz zones

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.

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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

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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

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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

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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,

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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

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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

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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.

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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

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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

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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,

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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):

• Risk management

• Organisational structuring

• 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

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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.

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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

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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.

16

• 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.

17

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

18

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

19

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

20

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

21

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.

22

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