In 1851, Great Britain organized the first world's fair, which attracted some six million visitors to London. By comparing foreign and British products, the "Great Exhibition" celebrated British industrial prowess. It implicitly highlighted British democratic capitalism as a model for other nations to follow.
One hundred fifty years later, the British are again advancing a new vision of how democratic capitalism should evolve, this time by promoting global corporate citizenship. They seemed to understand early on that policymakers would need new tools and strategies to govern globalization. In 1990, Prince Charles formed the Prince of Wales Business Leaders Forum to promote responsible business practices in Britain and around the world. On March 7, 2000, Dr. Kim Howells became Britain's Minister for Corporate Social Responsibility. Dr. Howells is the first government minister in the world to have such a portfolio. He is working to convince business that corporate social responsibility "can create win-win situations for both business and communities."
However, policymakers, activists, and executives are finding it is not easy to create win-win situations for all the stakeholders in the global economy. Citizens have become more vocal in demanding that global business be held accountable for conduct that could undermine economic, social, or environmental progress. Yet there is no road map for how firms should operate around the world. Nor is there one set of norms for governing the global corporation.
Globalization puts governments in a bind. On the one hand, policymakers want to encourage further economic integration. All nations--rich and poor alike --need the investment, technology, employment, and cost efficiencies global firms bring to national economic growth. At the same time, most policymakers want to ensure that such corporations don't despoil the environment, produce defective products, or abuse workers. Yet while they must act to cushion citizens from the side effects of capitalism, such as environmental degradation, policymakers are less able to regulate at the national level because such regulation may make their nations less attractive to global investors. Thus, those activists and policymakers who want to promote global business citizenship must find a strategy that holds corporations accountable without thwarting the many benefits that such companies bring to their stakeholders. As a result, a growing number 6f policymakers have focused on promoting global corporate citizenship.
To many analysts, voluntary codes of conduct are an attractive alternative to direct regulation. They are formal statements of the values and business practices of a corporation. While they are non-binding, many companies expect their employees to be guided by such codes everywhere they operate. Some companies have had codes of conduct since the Nineteenth Century. But after the ITT scandal in Chile and the Nestle boycott (where activists boycotted the marketing of infant formula) in the 1970's, activists, executives, and policymakers began to develop codes as a tool to govern global economic interdependence.
The International Chamber of Commerce noted that as of May 2000 there were more than forty codes, existing or in preparation, designed to govern the activities of global corporations. As Chart 1 illustrates, some of these codes are sector specific; other codes were designed to apply to all companies operating across borders. The codes also differ as to authorship; some were developed by civil society activists; others by executives acting on their own initiative; and still others were devised by executives working in tandem with activists. With the prominent exception of the Global Reporting Initiative (which is a system of disclosure on environmental, social and economic aspects of corporate performance) and the SA 8000, which sets verifiable standards for certifying corporate performance in human and labor rights, most of these codes lack mechanisms for monitoring and accountability. Thus, many social and environmental activists will continue to insist on enforceable international agreements to govern the global commons and work conditions.
CHART 1 A Content Comparison of Various Initiatives, Codes of Conduct, and Corporate Accountability Name of Code Global Compact Global Sullivan Agreement Principles Code United Nations Rev. Leon Sullivan, Proponents major multinationals Focus of Code Voluntary Aspirational (Whom is it UN-sponsored global code for addressing?) platform for companies of encouraging and all sizes, promoting good corporate practices. CONTENT: - Freedom of Respects right Respects voluntary Association to associate right to associate - Right to Respects right Not addressed Bargain to bargain Collectively collectively - Sustainable Not addressed Meets basic Living needs and Wage increases skills - Human Rights ILO, UN Human Supports Rights Declara- Universal Human tions Rights Conventions - Discrimination Non- Equal opportunity discrimination - Health Safe & Safe & healthy & Safety healthy workplace in the workplace Workplace - Vendor Not addressed Promotes Standards principles to all partners - Child Labor Promotes No exploitation abolition of of children child labor; none under 15 - Environment Greater Promote environmental sustainable responsibility development and clean technology - Corporate Not addressed Companies Governance/ will respect Ethics and obey local laws; promote fair competition, ACCOUNTABILITY Transparency: Not addressed Expected Reporting to - Shareholders Transparency: Yes. Must issue Expected Reporting statement of to - General support for GC. Public Transparency: Yes. Expected to Annual report to Reporting post examples Rev. Sullivan to - Code of improvements Proponents made, engage in partnership with UN agencies, Internal None N/A Monitoring System by Corporation External None N/A Monitoring By Auditors Monitoring None None by Code Proponents Name of Code OECD Guidelines for ILO Tripartite Multinational Declaration of Enterprises Principles Concerning Multinational Enterprises and Social Policy Code OECD International Labor Proponents Organization (ILO) Focus of Code Recommendations Seeks the promotion (Whom is it designed of social justice addressing?) to establish and/ and internationally or clarify recognized human and shared expectations labor rights. for business conduct and sustainable development. CONTENT: - Freedom of Respects the right to Free association Association associate - Right to Respects right Freedom to bargain Bargain to bargain collectively Collectively collectively - Sustainable Not addressed Must provide Living for basic needs Wage - Human Rights Respect for ILO Human Rights Human Rights at Work, UN Human rights Declarations - Discrimination Non-discrimination Non-discrimination - Health Adherence to local law Safe and healthy & Safety work place in the Workplace - Vendor Encourage vendors' Not addressed Standards adherence to Guidelines - Child Labor Contribute to Advocates the abolition of elimination of child labor child labor - Environment Promote sustainable Not addressed development and responsible use of resources - Corporate Supports anti-bribery/ Not addressed Governance/ corruption Ethics measures, free competition and trade, use of international dispute mechanisms, must obey local laws. ACCOUNTABILITY Transparency: Encouraged Individual companies Reporting have no reporting to - requirement. Shareholders Transparency: Reports should be made Yes. Country reports Reporting available to the public. to ILO are publicly to - General Public Transparency: No formal requirement Member countries Reporting must submit an annual to - Code report on measures Proponents taken to satisfy ratified Conventions and Recommendations. Internal Encouraged Encouraged Monitoring System by Corporation External None None Monitoring By Auditors Monitoring None None by Code Proponents Name of Code SA8000 Caux Principles Code Social Accountability Caux Roundtable: Proponents International (SAI) and Business Leaders- advisory group of COs, Europe, Japan & USA. NGOs and unions. Focus of Code Establishes a uniform, Moral foundation for (Whom is it auditable standard for business leaders, addressing?) third party verification, Modeled on ISO 9000 and ISO 14000. CONTENT: - Freedom of ILO standard Not addressed Association - Right to ILO standard Not addressed Bargain Collectively - Sustainable Basic needs, supports fair, Living discretionary income competitive Wage wage. - Human Rights Respects ILO, Promote HR in countries UN Declarations of business - Discrimination Non-discrimination Equal treatment guaranteed - Health Safe & healthy Health & dignity & Safety work place respected in the Workplace - Vendor Suppliers selected by Seeks suppliers who Standards adherence to standard respect dignity - Child Labor None under 15; Not addressed provides school support - Environment Not addressed Business Should protect /improve the environment - Corporate Not addressed Promotes spirit of Governance/ trust, respect Ethics for rules/ laws, free trade, avoidance of illicit operations, social justice, ACCOUNTABILITY Transparency: Yes Yes Reporting to - Shareholders Transparency: Yes No Reporting to - General Public Transparency: Reports tO SAI No established Reporting mechanism to - Code Proponents Internal Yes N/A Monitoring System by Corporation External Yes, by certified N/A Monitoring auditors By Auditors Monitoring SAI accred organizations N/A by Code which certify factories Proponents Name of Code "Benchmarks" Global Reporting Global Principles Initiative (GRI) Code Religious CERES, UNEP, group of Proponents shareholders: experts, COs, NGOs & ICCR, ECCR, TCCR(1) academics Focus of Code Comprehensive Global guidelines (Whom is it principles, criteria, for COs in issuing addressing?) benchmarks to evaluate sustainability company performance. reports; primarily environmental. CONTENT: - Freedom of ILO Standard (GRI is not a Association code, but set of guidelines for reporting enviro'tal, social and economic sustainability) - Right to ILO Standard N/A Bargain Collectively - Sustainable Yes, and PPI studies N/A Living Wage - Human Rights ILO, UN Human N/A Rights Declarations - Discrimination Non-discrimination N/A - Health Regular H & S N/A & Safety inspections in the Workplace - Vendor Company responsible N/A Standards for supplier conditions & monitoring - Child Labor Company, &/or N/A suppliers must not employ children - Environment Implementation of Provide credible, environmentally consistent responsible policies information on environmental performance, Est. common metrics for measuring env. sustainability, - Corporate Not directly addressed Not addressed Governance/ Ethics ACCOUNTABILITY Transparency: Yes Yes Reporting to - Shareholders Transparency: Yes Yes Reporting to - General Public Transparency: Reports on company's Yes Reporting compliance program to - Code Proponents Internal Company compliance Encouraged Monitoring process- training, System by on-site inspections Corporation External Viewed as part of Encouraged Monitoring company monitoring By Auditors Monitoring Principles used as Will establish by Code accountability tools new institution Proponents for GRI Name of Code CERES Principles Worldwide Responsible Apparel Manufacturing (WRAP) Principles Code Coalition for Environ- WRAP is an Proponents mentally Responsible independent Economies (CERES) non-profit launched by the American Apparel Manufacturers Association. Focus of Code Establish an ethic and Minimum standards (Whom is it criteria by for production addressing?) which investors facilities and others participating can assess in the Worldwide corporate Responsible environmental Apparel Production performance. Certification Program. CONTENT: - Freedom of Not addressed Respects the right Association to associate - Right to Not addressed Not addressed Bargain Collectively - Sustainable Not addressed Pays at least min. Living wage required Wage by law - Human Rights Not addressed Not addressed - Discrimination Not addressed Non-discrimination - Health Not addressed Safe & healthy & Safety work place in the Workplace - Vendor N/A Not addressed Standards - Child Labor Not addressed None under 14 - Environment Commitment to Environmentally sustainable use of conscious resources, waste practices in all reduction, energy locations where conservation, product they operate. safety. and public disclosure. - Corporate Board of Directors and Must comply Governance/ top management will be with local laws, Ethics fully informed and customs regulations, responsible for and will environmental policy, cooperate with local and international drug enforcement agencies. ACCOUNTABILITY Transparency: Yes Not addressed Reporting to - Shareholders Transparency: Yes: annual CERES Not addressed Reporting report to - General is public. Public Transparency: Endorsing companies will Reports to WRAP Reporting complete an annual Certification to - Code CERES reports. Board Proponents Internal Expected Factories perform Monitoring self-assessment System by Corporation External None By certified auditors Monitoring By Auditors Monitoring None Certification by Code Board certifies Proponents factories for a negotiated term Name of Code Fair Labor Charter US Business Agreement Principles for Human Rights of Workers in China Code Fair Labor Association Global Exchange/ Proponents -- (FLA) government, Int'l Labor Rights companies, NGOs and Fund, Levi Strauss, universities Mattel, Reebok Focus of Code Member COs and suppliers Promotes human (Whom is it in the apparel rights & addressing?) & footwear labor standards industry in China. monitored against code. CONTENT: - Freedom of Respects the right to "Undertakes Association associate to promote" - Right to Respects right "Undertakes Bargain to bargain to promote" Collectively collectively - Sustainable Pays legal Meets China's Wage Living minimum wage guidelines, Wage as a floor basic needs - Human Rights Not directly Endorses addressed ILO Conventions & UN HR Covenants - Discrimination Non-discrimination, no Nondiscrimination; sexual harassment prohibits sexual harrassment - Health Safe & healthy work Safe production & Safety place methods in the Workplace - Vendor Vendors must Not addressed Standards also comply - Child Labor None under 15, Prohibited unless law under China's allows 14 labor laws - Environment Not addressed Environmentally responsible methods of production - Corporate Not addressed Transparency in labor Governance/ conditions, Ethics fair treatment of workers ACCOUNTABILITY Transparency: Not addressed Not addressed Reporting to - Shareholders Transparency: Yes Not addressed Reporting to - General Public Transparency: Annual report to FLA. Annual Report Reporting Periodic report to HR for to - Code to FLA by Workers Working Group Proponents company's monitors Internal Members required to Internal monitoring Monitoring monitor suppliers expected of System by companies Corporation External Auditing firms N/A Monitoring certified by By Auditors FLA Monitoring FLA certifies Evaluate by Code monitors and company reports Proponents companies. and provide feedback Name of Code Code of Labor Practices Ethical Trade Initiative Base Code Code Clean Clothes Ethical Trade Proponents Campaign, an Initiative (ETI), international network an alliance of trade unions, of companies, consumer organizations non-governmental and other organizations (NGOs), groups and trade union organizations Focus of Code End labor abuses Fair labor practices (Whom is it in the apparel addressing?) industry; inform consumers on labor conditions. CONTENT: - Freedom of ILO standard Respects right of Association free association - Right to ILO standard Respects right Bargain to bargain Collectively collectively - Sustainable wage Supports Living living wage Wage - Human Rights ILO standard UN/ILO standards - Discrimination ILO standard Non-discrimination - Health ILO standard Safe and healthy & Safety work place in the Workplace - Vendor Vendors must comply Not addressed Standards with standards - Child Labor ILO standard ILO standard - Environment Not addressed Not addressed - Corporate Not addressed Not addressed Governance/ Ethics ACCOUNTABILITY Transparency: Not addressed Not addressed Reporting to - Shareholders Transparency: Yes. Informing Must publicly endorse Reporting consumers is key the code and provide to - General public information in Public annual report Transparency: Yes Not addressed Reporting to - Code Proponents Internal Expected Internal monitoring Monitoring expected System by of companies Corporation External Yes. Through a "forum" Yes. Annually. Monitoring made up of members, By Auditors NGOs, and trade unions. Monitoring Yes. Also via Not addressed by Code the "forum". Proponents Name of Code ICTI Code of Business Keidanren Charter Practices for Good Corporate Behavior Code International Council of Keidanren (Japan Proponents Toy Industries (ICTI) Federation of Economic Organizations Focus of Code Fair labor practices Improved Corporate (Whom is it in the citizenship addressing?) toy industry CONTENT: - Freedom of Respects right of free Not addressed Association association - Right to Not addressed Not addressed Bargain Collectively - Sustainable Must be humane, comply High wages should Living with local law be a corporate Wage goal - Human Rights Not addressed Respect for employee and human dignity - Discrimination Non-discrimination Not addressed - Health Safe and healthy work Safe and healthy & Safety place work place in the Workplace - Vendor Contractors must comply Not addressed Standards with standards - Child Labor Comply with local law; Not addressed otherwise none under 14 - Environment Not addressed Maintain environmental safety - Corporate Not addressed Transparency, Governance/ communication, Ethics healthy and sound relations with government, respect for local law when operating abroad. ACCOUNTABILITY Transparency: Not addressed Yes Reporting to - Shareholders Transparency: Yes. Must publish Yes Reporting annual to - General report Public Transparency: Not specified Not required Reporting to - Code Proponents Internal Expected. Member Top management Monitoring companies must also is expected System by monitor their to ensure that Corporation contractors, principles are met. External None None Monitoring By Auditors Monitoring Not specified None by Code Proponents Name of Code ICC Charter Responsible Care[R] for Sustainable Development Code International Chamber of American Chemistry Proponents Commerce Council (ACC) Focus of Code Provide global basis for Improve the (Whom is it sounds environmental management of addressing?) management. chemicals worldwide including production, distribution, pollution control, and disposal. CONTENT: - Freedom of Not addressed Not addressed Association - Right to Not addressed Not addressed Bargain Collectively - Sustainable Not addressed Not addressed Living Wage - Human Rights Not addressed Not addressed - Discrimination Net addressed Not addressed - Health Not addressed Safe and & Safety healthy workplace in the Workplace - Vendor Encourage adoption Work with Standards of principles contractors to among suppliers improve safety, reduce environmental impact - Child Labor Not addressed Not addressed - Environment Companies must recognize Continually improve environmental management health, safety, as a key concern; and environmental Promote performance; energy efficiency listen to public and sustainable concern about use of environmental resources in all and safety company functions; concerns; assist promote cleaner other members technologies, in achieving optimum environmental performance. - Corporate Not addressed Not addressed Governance/ Ethics ACCOUNTABILITY Transparency: Yes Yes Reporting to - Shareholders Transparency: Yes Yes Reporting to - General Public Transparency: No Yes. Annual report Reporting to ACC. Note: to - Code adherence to Proponents Responsible Care is a membership obligation of ACC. Internal Yes. Internal Yes Monitoring periodic audits System by Corporation External No No Monitoring By Auditors Monitoring No No by Code Proponents Name of Code Electronic Privacy Principles Code Computer Proponents Professionals for Social Responsibility Focus of Code Guidelines to guarantee proper (Whom is it respect for the privacy and addressing?) dignity of employees, customers, and citizens. CONTENT: - Freedom of Responsibilities Association of employers: - must inform employees of company policy regarding privacy. - Right to Resp. of service providers: Bargain - notify users of personal data Collectively collection - Sustainable Resp. of mailing list and database Living operators: Wage - Only necessary info may be - Human Rights collected - Discrimination - User must be notified - Health Resp. of software developers: & Safety - Network software should in the protect privacy Workplace Individuals: - Vendor - Must take measures to protect Standards their privacy - Child Labor Governments: - No restriction on encryption - Must not hinder privacy pro- tection via law enforcement - Environment Not addressed - Corporate Transparency in company and Governance/ service provider privacy policies. Ethics ACCOUNTABILITY Transparency: There are no reporting Reporting requirements. to - Shareholders Transparency: Reporting to - General Public Transparency: Reporting to - Code Proponents Internal None Monitoring System by Corporation External None Monitoring By Auditors Monitoring None by Code Proponents (1) ICCR - The Interfaith on Corporate Responsibility (USA); ECCR - Ecumenical Council for Corporate Responsibility (UK); TCCR - Taskforce on the Churches and Corporate Responsibility (Canada) Source: Global Accountability Program, ICCR, January 2000. Expanded by Honeywell November 2000.
Many governments have tried to find a middle way, between directly regulating their multinationals and promoting voluntary adherence to codes of conduct. Some have designed their own codes; others have combined voluntary and governmental initiatives. For example, on December 21, 2000, the U.S. State Department and British Foreign Office in tandem with multinationals, unions, and human rights organizations announced yet another code, designed to prevent human rights abuses by governments in developing nations where these companies operate. Still others have tried to foster multinational cooperation. The Danish government established an international institution, the Copenhagen Center, to promote corporate social responsibility partnerships.
As Chart 2 shows, international organizations have taken the lead in promoting a middle way. In 1977, the International Labor Organization adopted a code of conduct for multinational enterprises, the Tripartite Declaration. This voluntary code addresses social justice, human and labor rights, but it does not address the environment, corporate governance or ethics issues. Consequently, many groups active in social reform believe its scope is too limited to serve as a universal code of conduct.
CHART 2 Voluntary Global Codes that Involve Government at the National and/or International Level Name UN Global Compact (est. 1999) Scope Based on long accepted principles of international law that were signed by UN, ILO member nations. Covers labor rights, human rights, and the environment. The UN is the largest and most comprehensive international organization, and has a history of trying to promote both foreign investment and responsible corporate citizenship. Who Signs Corporations Who Corporations, but can partner with other Implements groups with reporting or monitoring expertise. Description of No formal role, UN tries to encourage. Government's Role Mode of Ac- No formal mode of accountability, but can countability be linked to SA 8000. However, at any point, people can go public alleging a viola- tion. Each year, corporations must report in writing to the UN on how they put one or several of the principles into action. Corporate View Mixed. Sponsors include individual corporations and organizations such as Business for Social Responsibility, Confer- ence Board, International Chamber of Commerce, World Business Council on Sustainable Development. Who dissemi- Corporations play the key role here. nates to employ- ees of corpora- tion or citizens NCO Supported by Amnesty Intl; WRI; World- supporters Wide Fund for Nature; Human Rights Watch. NCO view Less enthusiastic as no modes of account- ability. Name ILO Guidelines on Multinational Enterprises and Social Policy (est. 1977) Scope These Guidelines address labor rights, employment, and training. They are based on ILO Covenants, which are widely ac- cepted and have the force of international law. The Guidelines however, are recom- mendations. Who Signs Governments sign. Governments promote to their corporations, as does ILO. ILO provides technical assistance, surveys governments regarding how firms imple- ment these guidelines. Who Corporations in tandem with workers. Implements Description of At national level, government tries to en- Government's courage. However, although the Declara- Role tion is not legally enforceable, there are established procedures for interpretation of its provisions in cases of disputes aris- ing over its application. The ILO thus, may play a mediative role. Mode of Ac- Governments and in certain circum- countability stances employers or workers' organiza- tions may ask ILO for an interpretation of the provisions of the Declaration in the event of disputes over their operation. Corporate View ? Who dissemi- ? nates to employ- ees of corpora- tion or citizens NCO Supported by NGOs and unions. supporters NCO view ? Name OECD Guidelines (est.1976) Scope The most comprehensive--covers human rights, labor standards, environment, corrup- tion; and information disclosure. In its most recent revision, corporations were asked to try to hold their suppliers and subcontractors accountable. Who Signs Governmental agreement--currently 33 nations, including 4 non-OECD members: Slovakia, Argentina, Brazil, and Chile. Who Governments are responsible for disseminating Implements to all national businesses. Businesses implement, but as with UN Compact and Global Sullivan, no legal sanctions for violations are attached. Description of Government disseminates material, and encour- Government's ages compliance. No monitoring role. However, Role if a violation is alleged, a national contact point has authority to investigate and if a violation is found, national contact point tries to mediate a settlement between the parties. Thus, government also plays a Mediative ROLE. Mode of Ac- No formal mode of accountability. However, if countability national contact point can not mediate a solu- tion, claimant can go public alleging violation of guidelines. Corporate View Mixed, although corporations played a role in negotiating Guidelines. Many corporations think it will be difficult for business to take responsibility for the practices of their suppliers and subcontractors, given the comprehensive nature of the Guidelines. Who dissemi- Governments have responsibility to disseminate nates to employ- to all of its corporations; corporations have ees of corpora- responsibility to implement. tion or citizens NCO Negotiations involved NGOs such as Amnesty supporters International, Oxfam, and Friends of the Earth. Many were also impressed that the OECD posted negotiating drafts on the web. NCO view Since latest revision, proof of utility lies in implementation by governments at the national level. Susan Ariel Aaronson. Senior Fellow, NPA
The United Nations has also tried to play a constructive role in encouraging global corporate citizenship. In January 1999, United Nations Secretary General Kofi Annan challenged business leaders to enact the Global Compact--nine core principles on labor standards, human rights, and environmental protection. Many prominent companies responded, including Procter and Gamble and Daimler Chrysler. But the Compact has no mechanisms for accountability. Companies are simply asked to demonstrate their adherence by taking corporate action and to publicize this action through reports posted on the UN Website and in their annual reports. Governments at the national level play no role in promoting the Compact. Ironically, because of this lack of accountability, many social activists, as well as corporate officials denounce the Global Compact as "pretty words."
In 1976, the OECD--long considered a club and a think-tank for the industrialized nations of the world--developed the OECD Guidelines for Multinational Enterprises, which address the environment, labor standards, human rights, corruption, and competition policy. They are the only global strategy built on the recognition that foreign investment is a crucial tool for economic development in many countries.
The Guidelines have been revised several times since the 1970's. In the most recent revision, the OECD invited social activists to work with labor and business groups, as well as policymakers in the redrafting. In this way, the OECD hoped to build a broad constituency for the Guidelines. But while activist groups insist that the Guidelines must change corporate behavior, business groups insist that the Guidelines are voluntary.
However, in contrast with every other code, the Guidelines set up a governmental process to encourage positive business behavior. The thirty-three signatory governments, which include the United States, Mexico, Korea, and Europe as well as non-OECD members Argentina, Brazil, and Chile, have promised to put in place a governmental mechanism, called a National Contact Point, to investigate allegations of violations of the Guidelines. If the National Contact Point finds a complaint to be legitimate, it would then offer its good offices to try to resolve the issue. However, if the issue could not be mediated, the National Contact Point will make a public statement about the complaint. The negative publicity that such a statement might bring could press a corporation into changing its behavior.
Business groups are divided about the potential of these codes, whether they involve government or not. Some worry that by agreeing to adhere to such codes, business could be held liable in domestic courts. Executives also worry that under the OECD Guidelines, they will be held responsible for the actions of their suppliers or subcontractors.
There is no one code that can fit all sectors, all corporations, or all the issues that make globalization controversial. Yet the diversity of codes and their voluntary nature send misleading and confusing signals to market actors. Governments can help provide guidance to corporate officials on how to respond to the plethora of codes on the environment, labor standards, etc. In this way, governments may help promote a rationalization among the codes, many of which are redundant. Moreover, by promoting business adherence to such codes, governments can help ensure that responsible corporate actors are not disadvantaged in global markets.
To encourage adherence to codes, governments might provide incentives and, when necessary, disincentives. For example, the U.S. and British government both give widely publicized awards for responsible global business. Many policymakers recognize that they may also need to use disincentives to encourage compliance with voluntary codes. Some countries have proposed that the OECD Guidelines should be linked to government procurement. Only those companies that adhere to such voluntary Guidelines can bid on governmental contracts. This kind of action would be a strong incentive to adherence, should it be approved. But some executives are concerned that this strategy would compromise the voluntary nature of the Guidelines.
Nevertheless, a growing number of governments, such as Canada, Denmark, Australia, the Netherlands, and Great Britain are developing tools that combine voluntary adherence to codes with government incentives and disincentives for compliance. Governments, however, can only go so far short of regulation. Ultimately, it is corporate behavior that will decide whether globalization can be managed through self-policing or the heavy hand of government.
Susan Ariel Aaronson is Senior Fellow at the National Policy Association and the author of Taking Trade to the Streets: The Lost History of Public Efforts to Shape Globalization (University of Michigan Press, 2001). NPA has grants from the Ford and Boeckler foundations to examine how governments can encourage global corporate citizenship.
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|Title Annotation:||voluntary corporate codes of conduct|
|Author:||AARONSON, SUSAN ARIEL|
|Publication:||The International Economy|
|Date:||Mar 1, 2001|
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