CORPORATE SOCIAL RESPONSIBILITY
(A HUMAN FACE TO THE GLOBAL ECONOMY)
by
Ramon Mullerat1 2 3
“Creating wealth, which is business expertise, and promoting human
security in the broadest sense, the UN’s main concern, are mutually
reinforcing goals. Thriving markets and human security go hand in
hand. A world of hunger, poverty and injustices is one in which
markets, peace and freedom will never take root” 4
FIRST. RESPONSIBILITY TO SHAREHOLDERS OR TO
STAKEHOLDERS
“The 21st century company will be different.
Many of the world’s best-known companies are already redefining
traditional perception of the will of the corporation.
They are recognising that every customer is part of the community, and
that social responsibility is not an optional activity”5
“CSR is a concept whereby companies integrate social and
environmental concerns in their business operations and in their
interaction with stakeholders on a voluntary basis.”6
During the second part of the 20th century, two prominent positions have been held with
regard to whom a corporation is responsible. Are corporations exclusively responsible to
their shareholders, therefore, their only objective is to make profits for them, or are
1
Ramon Mullerat O.B.E. is a lawyer in Barcelona and Madrid, Spain; Avocat à la Cour de Paris, France;
Honorary Member of the Bar of England and Wales; Honorary Member of the Law Society of England and
Wales; Professor at the Faculty of Law of the Barcelona University; Adjunct Professor of the John Marshall
Law School, Chicago; Former President of the Council of the Bars and Law Societies of the European Union
(CCBE); Member of the American Law Institute (ALI); Member of the American Bar Foundation (ABF);
Chairman of Commission 2020 of the International Bar Association (IBA); Co-Chairman of the Human
Rights Institute (HRI) of the IBA; Member of the Board of the London Court of International Arbitration
(LCIA); Chairman of the Editorial Board of the European Lawyer.
2
The opinions in this paper are the personal opinions of the author and not necessarily of the organizations
he represents.
3
The author would like to thank James Atton and Alexis Kropp for their assistance in the preparation of this
paper.
4
Kofi Annan, UN Secretary-General.
5
Tony Blair, UK Prime Minister.
6
European Commission, Green Paper on “Promoting a European Framework for CSR”, 2001.
1
corporations responsible for all stakeholders, not just shareholders, but also employees,
suppliers, the ecological environment and the community in general?
The most clear exponent of the first position is undoubtedly Milton Friedman, a Nobel
Prize Laureate, who in 1970 wrote that “the one and only social responsibility of business
is to use its resources and engage in activities designed to increase its profit” and that “few
trends could so thoroughly undermine the very foundations of our free society as the
acceptance by corporate officials of a social responsibility other than to make as much
money for their stakeholders as possible. This is a fundamental corporate doctrine” 7.
The second position is Corporate Social Responsibility. Today, while there are still
remnants of Friedman’s thinking 8, most business leaders consider that, in addition to
making profits for the shareholders, companies also have duties to the stakeholders,
sustainable development and human rights.
Ella Joseph recently stated that “profit is naturally the lifeblood of a business, but would
people want to work for a company that deliberately set out to exploit its workers for
maximum productivity at minimum reward? Would consumers want to do business with a
company that was abusing human rights down its supply chain or polluting their
neighbourhood?” 9.
SECOND. CORPORATE SOCIAL RESPONSIBILITY (“CSR”)
“Corporate Social Responsibility is something that companies
operating internationally can’t ignore anymore”10
I. The concept of CSR
“The main purpose of the board of directors is
to seek to ensure the prosperity of the company
by collectively directing the company’s affairs,
whilst meeting the appropriate expectations of
its shareholders and relevant stakeholders” 11
“The corporate sector need not wait for government to take decisions.
We realise that only by mobilising the corporate sector we can make significant
progress” 12
Milton Friedman, “The Social Responsibility of Business is to Increase Its Profits,” The New York Times
Magazine, 13 September 1970.
8
Geoffrey Owen, “Time to promote trust, inside the company and out”, Financial Times, 30 August 2002:
“One of the responsibilities of managers is to defend the role of profit as the best available measure of the
contribution which business makes to society”.
9
Ella Joseph, centre-left think tank IPPR, The Observer, 2 February 2003.
10
Doug Miller, CEO of Environment International, “CSR is here to stay”, CSR Magazine, October 2002.
11
Institute of Directors, Standards for the Board, 1999.
12
Kofi Annan, Johannesburg Summit, 2002.
7
2
Peter Drucker states that an important task for top management in the Next Society’s
corporation will be to balance the three dimensions of the corporation – the corporation as
an economic organisation, a human organisation, and as an increasingly important social
organisation13.
The continued existence of companies is based on an implied agreement between
businesses and society. In effect, companies are licensed by society to provide the goods
and services which society needs. The freedom of operation of companies is therefore
dependent on their delivering whatever balance of economic and social benefits society
currently expects of them.
CSR is referred to by a myriad of different terms, including: CSR, responsible business
conduct, voluntary corporate initiatives, corporate citizenship14, etc.
CSR is defined as a concept whereby companies voluntarily decide to respect and protect
the interests of a broad range of stakeholders while contributing to a cleaner environment
and a better society through active interaction with all. CSR is the voluntary commitment
by businesses to manage their roles in society in a responsible way15. CSR is the
commitment of businesses to contribute to sustainable development working with
employees, their families, the local communities and society at large to improve their
quality of life16. CSR is cooperation between government, civil society and businesses.
However, CSR should not be mistaken with the recent efforts to restore “corporate
responsibility” arising out of the traumatic events of Enron and such situations, which
have shaken confidence in the effectiveness of the governance and disclosure systems of
corporations and the laws and ethical principles governing the role of executive officers,
directors, auditors, lawyers and other key participants designed to enhance the public trust
in corporate integrity and responsibility.
The key issues involved with CSR are: workers’ rights; environmental protection;
community involvement; supplier relations; and human rights. CSR maintains that
companies are not just profit-making machines. They have wider responsibilities, and must
treat employees with respect, limit damage to the environment, act with integrity to
customers17 and protect human rights.18
Peter F. Drucker, Managing the next society, 2002, p. 287, who adds “Each of the three models of
corporation developed in the past 50 years stressed one of these dimensions and minimised the other two.
The German world of the “social market economy emphasised the social dimension, the Japanese one, the
human dimension, and the American one (“shareholder sovereignty”) the economic dimension”.
14
Malcolm McIntosh et al, op.cit., p.16, argues that corporate citizenship is a form of CSR and a fuller
understanding of the role of business in society. Some research organisations have adopted this name: Deakin
University’s Corporate Citizenship Research Unit in Australia, Catholic University of Eichstate’s Centre for
Corporate Citizenship Research in Germany, etc.
15
ICC, A business vision for the 21st century, 11 January 2002.
16
World Business Council for Sustainable Development, 2002.
17
Nick Mathiason, “Company ethics? They are not business,“ The Observer, 17 November 2002.
18
Johnson & Johnson tells the stakeholders that its employees are called to honour with their business
decisions: first, customers; second, co-workers; third management; fourth, the community where the
company operates; fifth, shareholders. Cited by David Betsone, Saving the Corporate Soul, 2003, p.12.
Notice how the position of the shareholders is derived from Friedman´s Doctrine.
13
3
II. The precedents of CSR
“Corporate social responsibility is now in
every reasonable chief executive agenda
not always at the top but it’s there” 19
CSR is not a new phenomenon. There are many precedents of corporations making
decisions in the interest of society and not exclusively in the interest of the company itself.
An early example of CSR was the emergence of the sugar boycott in England. In 1790,
Elizabeth Heywick whipped the housewives of Leicester into a frenzy, which led to a
passionate protest against capitalist exploitation. Leaflets were distributed outside shops
announcing that “we the people can over-throw slavery”. The target was that “bloodystained luxury”: sugar. In those days sugar was brought into Britain from plantations in the
Caribbean, harvested and produced by slaves. Within thirty years, the East India Company
was satisfying the sweet tooth of British housewives with free-grown sugar from Bengal
and mobilising public opinion behind anti-slavery. This common boycott was the
precedent of many more recent, such as Chilean Chardonnay, Nike trainers, Shell petrol,
Nestlé baby milk, etc.20
Socially responsible investors have changed, with more and more people warming to the
concept, to move from a protest movement to more of an investment philosophy which,
while not wanting to lose money today, allows management teams the opportunity to think,
plan and act for long-term success – sustainable success. However, the themes that have
shown through the history of ethical money remain the same themes of decency, honesty,
consideration and adding real value that were derived from the strong religious beliefs of
early proponents of the idea 21.
Globalisation and the information technology revolution have resulted in increased
competition, greater shareholder activism and wider access to information worldwide. The
result is that many employees are seeking assurances that the goods and services they are
producing, financing or purchasing are not damaging the workers, the environment or the
communities where they live22 23.
III .Corporate governance and CSR
“In Shell, we believe that a responsible business must operate on the
basis of core global values. It should listen to society’s messages,
19
Steve Hilton and Giles Gibbons, Good Business, p. 55.
Steve Hilton and Giles Gibbons, op.cit., pp. 53 and 54
21
John Hancock, Ethical Money, 2002, p. 3.
22
Viewpoint: beyond compliances. Social accountability can protect businesses and profits, 13 April 2001,
cited by Joseph Weiss, Business Ethics, 2002, p. 157.
23
Business Ethics, a media company, ranks corporations in terms of citizenship. Variables in the ranking
include how companies treat stakeholders: customers, employees, shareholders, the community environment,
and non-US shareholders. High-ranking ethical companies included Proctor and Gamble, Hewlett-Packard,
Fannie Mae, Motorola, IBM, etc. Cited by Joseph Weiss, op.cit., p. 157.
20
4
justifying its legitimacy in the eyes of society and business leaders, and
regulate itself effectively and openly”24
In Europe there are two different approaches to corporate governance. Pursuant to the first
(in the UK for instance), corporate governance only legally requires that directors owe
fiduciary duties to the company. This means that they are required to: act in good faith in
the best interests of their company; exercise their powers for the proper purposes for which
they were conferred; and not place themselves in a position where there is a conflict
between their duty to the company and their personal interests or duties to third parties. In
principle, there is no legal duty to stakeholders such as employees, suppliers and the wider
community. The long-term benefits to the company of making a decision that is prompted
by the interests of other stakeholders may be difficult to quantify: indeed there may be
immediately identifiable short-term disadvantages to the company. In these circumstances,
directors may be concerned that in the absence of any specific legal duty outside of
company law to act in a specific way, acting in the interests of stakeholders could give rise
to a legal challenge alleging breached fiduciary duties to the company.
In continental Europe, the situation differs. In Germany, for example, where companies
have a two-tier structure, a supervisory board and a management board, the duty of
directors to the company is more widely expressed to include employees and the public
interest. In France, split boards with employee’s participation were introduced as an
optimal alternative to the traditional single board.
There then exists , two different attitudes. There are those who believe that “the ultimate
objective of companies as currently enshrined in law, i.e. to generate maximum value for
shareholders, is in principle the best means… of securing overall prosperity and welfare”25.
Then there are those who maintain a pluralist approach whereby “the ultimate objective of
maximising shareholder value will not achieve maximum prosperity and welfare”,
companies are required to serve a wider range of interests, and the interests of shareholders
should not override those of the company’s stakeholders.
Corporate Governance is binding and enforceable law. CSR is ethical aspirational rules.
IV. Corporate Citizenship
Corporate citizenship is a form of CSR, and a way to fully understand the role of business
in society. Some research organisations have adopted this title such as Deakin University’s
Corporate Citizenship Research Unit in Australia, Catholic University of Eichstate’s
Centre for Corporate Citizenship Research in Germany, etc.26 Corporate citizenship is
based on correct corporate governance, transparency in communications with stakeholders
and institutions, respect for the environment and protection of human rights.
M. Morley Start, 2000, “Putting principles into practice”, in Malcolm McIntosh Visions on Ethical
Business
25
Modern company law for a competitive economy: the strategic framework, February 1999, p.37 cited by
Daniel Summerfield in, “Corporate governance: the stakeholder debate“ in Chris Moon and Clive Boney,
Business ethics. Facing up to the issues, 2001, p.96.
26
Malcolm McIntosh et al., op.cit., p.16.
24
5
V. Stakeholder symbiosis
In any case, there is a need to convey the wishes of all the company’s stakeholders since
they are vital in the progress of the company, which is at the basis of their success. This is
defined as “stakeholder symbiosis”.
Stakeholder symbiosis is the belief in the multi-dependence of financial performance,
customer loyalty, employee motivation and good corporate practice. Because of the
competing nature of these groups (each one wants the best deal) many observers believe
that there is a conflict. The research evidence thus far indicates otherwise27.
VI. Different attitudes towards CSR
“A company’s values – what it stands for, what its people believe in –
are crucial to its competitive success”28
Businessmen adopt different attitudes towards CSR. Some corporate leaders see CSR as a
bit of a joke, although they will quite happily put their name to corporate statements of
social responsibility, share backslapping platforms with politicians and sanction
community projects or charitable donations. At the other end of the scale, there are those
businessmen who have embraced CSR with all the zeal of the convent, spending large
sums in “social audits”, “environmental consciousness” and “stakeholder dialogues”.
Curiously, these are the ones who attract the most frequent attacks from anti-business
critics. In between the sceptics and evangelists lie the majority – those who feel that they
probably ought to de doing something about CSR but don’t quite know what29.
VII. The modern drivers of CSR
“Now will come the era of corporate image,
in which economies will increasingly make purchases
on the basis of a firm’s whole role in society:
how it treats employees, shareholders and social responsibilities”30
The debate over CSR is not new, although it developed in the latter part of the 20th century.
There are 5 driving factors to this re-emphasis:



The globalisation of markets;
Increased knowledge of the economy;
The rise of global communication;
Ray Shaw, “Shareholders value or shareholders value? That is the question?, in Leo Schuster, Shareholders
value management in Banks, 2000, p.37.
28
Robert Haas, Chairman, Levi Strauss & Co, R. Howard, “Values make the company: An interview with
Robert Haas”, Harvard Business Review, Sept-Oct 1990, p.134.
29
Steve Hilton and Giles Gibbon, op.cit., p.65.
30
The Economist, 19 June 1993.
27
6


The coalescence of power, and therefore responsibility in the hands of a relatively
small number of international global corporations; and
The need for new social partnerships between corporations, states and civil
societies seeking solutions to local and global problems31.
Globalisation is one of the reasons for the unprecedented interest in CSR32. In recent years,
the scale of private sector involvement overseas has increased dramatically. Foreign direct
investment has expanded 20 times in 25 years, and is currently worth more than US$ 400
billion. To put this into perspective, in 1970, there were 7,000 companies operating
internationally and today there are more than 50,00033. Transnational companies (TNCs)
account for 30% of world output and up to 70% of world trade34. Business enterprises that
operate across national boundaries have a tremendous influence on the modern world. 29
of the world’s 100 largest economic entities are TNCs35. If we compare the revenues of the
25 largest TNCs with the revenues of states, we see that only 6 states have revenues larger
than the first 9 TNCs36.
VIII. Facets of corporate responsibility37
It is possible to distinguish three facets of company responsibility. The first is the
company’s responsibility to its shareholders, employees, customers, suppliers, creditors
and its duty to meet statutory or legal obligations. This primary responsibility is what is
commonly known as “corporate governance”, and it is what the company must fulfil to
avoid recognised sanctions, which are provided by law and competition.
The next two go hand-in-hand, and are what is commonly known as CSR. The second is
the company’s responsibility to the environment and making the most of its community’s
human resources when carrying out the functions of the first. There is no legal requirement
at this level for the company to meet, however, due to the competitive nature of the
capitalist system, it can be quantified and the board of directors can define the issues in
question and decide where to strike the balance between the different interests involved.
The third is harder to define. While the first two are internally specific to the company and
estimates can be made of the costs/benefits of the decisions taken in this area by the
company’s board, the third is much more open – the interaction between businesses and
society in a wider sense. It is the responsibility of business to envisage the wider
consequences of their decisions and to build that awareness into their decision-making
process.
31
Malcolm McIntosh et al, Living the corporate citizenship, 2003, p.15
Bennett Freeman, “Corporate Responsibility and Human Rights”, Global Dimensions Seminar, New York,
1 June 2002: Anthony G. McGrew, “Human Rights in a global age: coming to terms with globalisation” in
Tony Evans, Human Rights fifty years on, 1999, p. 188.
33
Andrew Wilson, op.cit.,.
34
David Held, A McGrew, D. Goldblatt and J. Perraton, Global Transformations, 1999, p. 282.
35
UN Conference on Trade and Development (UNCATAD), The Financial Times, 13 August 2002.
36
David P. Forsythe, Human rights in international relations, 2000, p.191.
37
Adrian Cadbury, Corporate Governance and Chairmanship, pp. 160-161.
32
7
While the second group is now being recognised and embraced by companies, through
CSR statements, it is this third group that companies must aim to achieve. The first two
levels are internally focused on the current performance of the company, but more
important is the company’s future impact on its stakeholders. Long-term decisions and
goals for the direction of a company must be taken with this in mind if CSR is going to
become a reality, and not just a mode or short-term fashionable expression of the late 20th
century.
IX. Four social responsible roles
Joseph Weiss discusses social orientations of businesses towards society and distinguishes
the Stockholder model (the primary responsibility of the corporation is to its economic
stockholders) and the stockholder model (the responsibility to its social stockholders
outside the corporation). Two motives underline these two orientations: self-interest and
social duty. The two stockholders orientations are productivity (which holds a free market
ethic and views the corporation’s social responsibility in terms of rational self-interest and
the direct fulfilment of stockholder interests) and philanthropy (which also has a
stockholder view of the corporation and holds that social responsibility is justified in terms
of a world duty toward helping law-advantaged members of society through organised,
tax-deductible charity and stewardship. The two social responsibility models in the
stakeholder model are progressivism (which between corporate behaviour is justified from
a motive of self-interest, but also holds that corporations should take a broader view of
responsibility toward social change); and ethical idealism (the belief that social
responsibility is justified when corporate behaviour directly supports stakeholders’
interests from model duty motives38.
X. No universal guidelines
“Civil responsibility, being a partnership between government, civil
society and the private market, necessarily depends on the active
collaboration of political leaders, citizens and business people” 39
CSR affects all sorts of business, large and small, national and multinational, industrial and
service oriented40.
However, as the decisions boards have to consider many factors. There can be no
universal approach as to how companies should take into account its CSRs. CSR
definitions are broad guidelines as to what company boards should bare in mind when
reaching their decisions. The company will have different priorities depending on the state
of the company. If the company is doing badly, its main priority will be to remain in
business and its decisions will usually reflect that hard-line reality. However, if the
company is successful, it will have more time and funds to devote to meet its CSRs.
38
Joseph Weiss, op. cit., p. 91.
B.R. Barber, “Civil society and strong democracy”, in Anthony Fidders, The global third world debate,
2001.
40
Leo Schuster, Stakeholders value management in banks, 2000
39
8
In addition, the contents of CSR are not the same in different market economies because
the relationships between businesses and society vary in different capitalisms41.
XI. Guidelines to be socially responsible
“Markets are good at creating wealth
but are not designed to take care of other social needs.
The needless pursuit of profit
can worsen the environment and conflict with other social values”42
Keith Davis43 discuses five guidelines business professionals should follow to be socially
responsible:
1. Businesses have a social role of “trustee for society’s resonancy”;
2. Businesses shall operate as a two-way open system with open receipt of input from
society and open disclosure of its operatives to the public;
3. Social costs as well as benefits of an activity, product or service shall be thoroughly
calculated and considered in order to decide whether to persevere with it;
4. The social costs of each activity, product or service shall be priced into it so that the
consumer pays for its consumption in society; and
5. Business institutions as citizens have responsibility for social involvement in areas
of their competence when major social needs exist.
XII. CSR a PR smokescreen
“CSR is a public relations device
designed to throw sand in your eyes”44
Some believe that the purpose of CSR is to avoid regulation because it permits
governments and the public to believe that compulsory rules are unnecessary as the same
objectives are being met by other means. Of course, the advantage of voluntary rules is that
one can break them whenever they cause some inconvenience45.
Others think that “there is still some cynicism surrounding CSR as it can be seen as a PR
smokescreen for companies to hide behind”46. Not only that, but it has been said that TNCs
use CSR as a PR tool to convince consumers it is all right to keep buying, and the reality is
41
Richard Whitley, Divergent capitalisms: the social structuring and change of business systems, 1999, cited
by Malcolm McIntosh, op. cit., p.17.
42
Georges Soros, On Globalisation, 2000, p. 5.
43
Keith Davis and R. Blomstrong, Business and its environment, 1966.
44
Stephen Timms, CSR Minister, The Observer, 2 February 2003.
45
George Mambiot, The Observer, 2 February 2003.
46
Ibid.
9
that TNCs have worsened conditions for workers and communities by pressing
governments to rewrite labour and environmental laws47.
Although these opinions may be correct in some cases, CSR remains a strong and honest
movement throughout the world.
THIRD. CSR AND LABOUR STANDARDS
“A company ought to be a community that you belong to , like a village. Nobody
owns a village. You are a member and you have rights. Shareholders will become
financers, and they will get rewarded according to the risk they assume, but they
are not to be called owners. And workers will not be workers, they will be
citizens, and they will have rights.
And those rights will include a share in the profits that they have created”48
1.
The UN Copenhagen World Summit for Social Development 1995
At this World Summit, governments reached a consensus on the need to put people at the
centre of development. The objectives of the Summit were to conquer poverty, establish
full employment and stable, safe and just societies.
Participating countries recognised that globalisation creates opportunities for sustained
economic growth and development of the world economy, as well as for sharing
experiences and for cross-fertilisation of ideals, cultural values and aspirations. The
Declaration contained 10 commitments which when completed would:
1. Eradicate absolute poverty by a target date to be set by each country;
2. Support full employment as a basic policy goal;
3. Promote social integration based on the enhancement and protection of human
rights;
4. Achieve equality and equity between women and men;
5. Accelerate the development of Africa and the least developed countries;
6. Ensure that structural adjustment programmes include social development goals;
7. Increase resources allocated to social development;
8. Create an economic, political, social, cultural and legal environment that will
enable people to achieve social development;
9. Attain universal and equitable access to education and primary health care; and
10. Strengthen cooperation for social development through the UN.
47
Kelly Dent, Programme director of labour rights NGO Transnational Information Exchange in Sri Lanka,
The Observer, 2 February 2003.
48
Charles Handy, The age of unreason, 2003 cited in Business Ethics, Winter 2003, p.5.
10
2.
The OECD Study on International Trade and Core Labour Standards 1996
In 1996 (updated in 2000), the OECD carried out a Study on International Trade and Core
Labour Standards (´The Study´). The Study provided an overview of key issues, aiming to
provide a common basis for constructive policy dialogue among the concerned parties in
the future. It focused on core labour standards, which differ in substance and in economic
impact from other labour standards. The Study concluded that the absence or inadequacy
of respect for core standards in a country is not a significant factor increasing that
country’s competitive advantage in international trade or in attracting direct foreign
investment, and that there is a positive interaction between the liberalisation of
international trade and the application of core labour standards.
3.
The Inter-American Human Rights Commission Report 1997
The Inter-American Human Rights Commission is one of two bodies in the Inter-American
system for the promotion and protection of human rights. The Commission has a unique
role to play in assisting the member states in their efforts to respect and ensure the rights of
the individuals subject to laws of their jurisdiction. The Commission passed a report in
1997 on the damage to indigenous peoples and their environment in the Amazon rainforest
as a means of exploration by TNCs whereby fundamental human rights protected under the
Inter-American Convention were violated.
4.
ILO’s Declaration on Fundamental Principles and Rights at Work 1998
The ILO plays an important role in targeting abusive labour practices. The ILO has
developed reasonable standards concerning international labour rights, pertaining to a safe
and healthy work environment, non-discrimination, fair wages, regulated working hours,
child labour or forced labour, freedom of association, rights to organise and collective
bargaining.
The 1998 ILO’s Declaration confirmed the 4 core labour standards as identified by the
Copenhagen Summit, which are as follows:
1. Freedom of association and the effective recognition of the right to collective
bargaining;
2. Elimination of all forms of forced or compulsory labour;
3. Effective abolition of child labour; and
4. Elimination of discrimination in respect of employment and occupation.
5.
Building Partnerships 2001
Building Partnerships (‘BP’), based on Toward Global Partnerships, a report submitted by
the UN Secretary-General to the General Assembly in November 2001, is a comprehensive
overview of the cooperation between the UN and the business community. It makes a case
that governments and inter-governmental bodies must work together with businesses and
civil society to find solutions for poverty, injustice, environmental degradation, disease
and international terrorism. BP aimed to address these challenges, with over 150 examples
from around the world, including private sector development and new forms of public-
11
private partnership as essential elements of sustainable development, the creation of
dynamic enterprises, and the ability to attract and retain foreign investments to harness
resources and to alleviate poverty.
6.
The Johannesburg UN World Summit on Sustainable Development 2002
"A global human society based on poverty for many and prosperity for a
few, characterized by islands of wealth, surrounded by a sea of poverty,
is unsustainable" 49
The World Summit on Sustainable Development took place in September, 2002, in
Johannesburg – ten years after the 1992 Earth Summit in Rio, which adopted Agenda 21,
an unprecedented global plan of action for sustainable development. In addition to
governments and NGOs, nearly 700 companies and approximately 50 chief executives
attended the Summit.
The Summit resulted in a scheme for actively for the furthering implementation of
sustainable development worldwide, with promised action on a great number of issues:










49
50
Desertification: Combat desertification and mitigate the effects of drought and floods;
Water: Halve, by 2015, the proportion of people who are unable to obtain safe drinking
water and do not have access to basic sanitation;
Energy: Develop alternative energy technologies, improve access to reliable,
economically viable, socially acceptable and environmentally sound energy services
and resources;
Chemicals: Achieve, by 2020, chemical production in such a manner that minimises
adverse effects on human health and the environment;
Climate: Enhance cooperation at the international, regional and national levels to
reduce air pollution, acid deposition and ozone depletion;
Biodiversity: Achieve, by 2010, a significant reduction in the current loss rate of
biological diversity;
Corporations: Improve social and environmental performance through voluntary
initiatives, including environmental management systems, codes of conduct,
certification and public reporting on environmental and social issues. Business Action
for Sustainable Development welcomed “the growing realization that business is an
indispensable part of the solution to the problem of the world” and stated that the final
document was a call to roll up one’s sleeves and get down to work50;
Trade: Promote open, equitable, rules-based, predictable and non-discriminatory
multilateral trading and financial systems that benefit all countries in the pursuit of
sustainable development;
Debt: Encourage exploring innovative mechanisms to comprehensively address the
debt problems of developing countries and countries with economies in transition; and
Partnerships: Business leaders launched a programme to promote greater investment by
TNCs in the world’s 50 poorest countries. It is the foundation of a developing
partnership between companies, governments and civil society and focused on ways
businesses and governments can work together to spread prosperity in the developing
President Thabo Mbeki of South Africa, The New York Times, 26 August 2002.
Barry James, “Johannesburg Summit: a triumph or a disaster”, International Herald Tribune, 6 Sept. 2002.
12
world while protecting the environment. This initiative should put pressure on
developed countries to give greater market access for the developing-world’s products.
FOURTH. CSR AND THE ENVIRONMENT
“We believe that we can show… that the products
we supply contribute to a progressive improvement of
air quality without denying the people the freedom of mobility”51
I. Origin of environmental protection
The UN Conference on the Human Environment in Stockholm (in 1972) was the first
global environmental meeting of governments, which resulted in a shared belief that longterm economic prosperity needs to be linked with environmental protection.
The UN Environment Programme (UNEP) has led international coordinated work on the
environment since its inception in 1973. UNEP has provided leadership and encouraged
partnerships to care for the environment, for example, through multi-lateral environmental
agreements, which have addressed all sorts of environmental issues.
The report “Our Common Future”, produced by the World Commission on Environment
and Development in 1987, laid the foundations for the environmental principles. This
landmark document highlighted that people needed to change the way they lived and did
business or they would be subject to unacceptable levels of human suffering and
environmental damage.
The Declaration of Principles and the International Sector Plan that emerged from the UN
Conference on Environment and Development (The Earth Summit), held in Rio de Janeiro,
in 1992, identified that the producers and operators of business and industry can play a
major role in reducing the impact on the use of natural resources.
II. Key environmental challenges
The previous initiatives identified the following main challenges: loss of long term damage
to the ecosystem; pollution of the atmosphere and the emergence of climate change;
damage to the aquatic ecosystem; land degradation; impact of chemical use and disposal;
waste production; and depletion of non-renewable resources.
51
BP’s declaration.
13
III. Current initiatives
The UNEP worked to encourage sustainable development through sound environmental
practices everywhere. Its activities cover a wide range of issues, from atmosphere and
terrestrial ecosystems and the promotion of environmental science to an early warning and
emergency response capacity to deal with environmental disasters and emergencies.
UNEP’s priorities include environmental information, assessment and research, including
environmental emergency response capacity and strengthening of early warning and
assessment functions; enhanced coordination of environmental conventions and
development of policy instruments; fresh water; technology transfer and industry; as well
as support to Africa.
There are a number of modern initiatives including the ISO 14001. This is just one in a
range of voluntary industry standards produced by the International Organisation for
Standardisation that were launched in 1996. The 1400D series, to which 14001 belongs,
provides a framework for the private sector and others looking to manage their
environmental issues. Specifically, the standard describes how a firm might manage and
control its organisational system so that it measures, controls and continually improves the
environmental aspects of its operations.
FIFTH. CSR AND HUMAN RIGHTS (HR)
“All companies have a direct responsibility to respect HR in their own
operations. Companies can no longer remain silent on HR issues. Their
employees and other people with whom they work are entitled to rights
such as freedom from discrimination, the right to life and security,
freedom from slavery, freedom of association, including the right to
form trade unions and fair working conditions”52.
I.
In general
There are people who say that CSR and HR are not really related, when in fact they are
extremely closely linked. One may go so far as to say that when CSR is mentioned, people
automatically assume it deals with HR.
Ella Joseph stated that “profit is naturally the lifeblood of a business, but would people
want to work for a company that deliberately set out to exploit its workers for maximum
productivity at minimum reward? Would consumers want to do business with a company
that was abusing human rights down its supply chain or polluting their neighbourhood?” 53
II.
52
53
Human rights trends in the 21st Century
Amnesty International, Human Rights Principles for Companies, January 1998.
Ella Joseph, centre-left think that IPPR, The Observer, 2 February 2003.
14
“…recognition of the inherent dignity of the equal and unalienable rights of all
members of the human family is the foundation of freedom, justice and peace in
the world” 54
1.
Human rights movement characterises this New World
“In the new millennium, there are at least three universal languages:
money, the internet and democracy and human rights”55
The shaping of a New World took place at the end of the Millennium through the
coincidence of three factors: 1) the information technology revolution; 2) the economic
crisis of both capitalism and statism; and 3) the blooming of some cultural social
movements such as humanitarianism, feminism, environmentalism and human rights 56.
This New World started politically with the fall of the Berlin Wall further accelerated by
9/11, and economically by the Enron-type scandals.
The crusade for human rights is undoubtedly one of the major components and probably
the greatest objective of this New World.
David Forsythe concludes the introduction of his “Human rights in international relations”
saying that as we look at global, regional, national and sub-national actions for
international human rights, we see that: a) the notion of human rights is here to stay in
international relations; b) human rights as soft law is important and pervasive; c) private
actors – not just public ones – play a very large role; and d) state sovereignty is not what it
used to be 57.
2.
Abandonment of traditional international law and consolidation of human
rights as rights of individuals
“…whereas the innovation of 17th century world politics was the creation
of a society of states, the revolution of the 21st century is the creation of a
prototype world society in which individuals have equal standing with
states…” 58
Traditionally, according to the Westphalian concept of legitimacy, only states were subject
to and had legal rights under international law. All matters concerning the citizen were
internal and the only redress a citizen had to any human rights violation was a matter for
the state to decide. Today, international law also applies to individuals who commit crimes
and protects them from human rights violations.
Following World War II, the fundamental notion at the core of the new international
human rights law development was that all human beings possess inherent dignity, enjoy
54
UN Universal Declaration of Human Rights, 10 December 1948, preamble.
Harold Hongju Koh, Country Reports on Human Rights Practices, US Department of State, 25 February
2000.
56
Manuel Castells, End of Millennium (1998), p. 336.
57
David P. Forsythe, Human rights in international relations (1999), p. 25.
58
Graham Evans and Jeffrey Newnham, The Penguin Dictionary of International Relations (1998), p. 229.
55
15
fundamental rights and bear the duty to respect the fundamental rights of others. This
focus represented a shift from the traditional emphasis of international law on the relations
between states, which in the end failed to prevent the atrocities of the War. As the Human
Rights Committee stated, human rights treaties are “not a web of inter-states exchanges of
mutual obligations”, but instead “concern the endowment of individuals with rights” 59
Never before have so many people in so many countries believed that they actually have
human rights and that governments and the international community have the duty to
respect and protect those rights.
3.
Shift from diplomacy to justice
“The road to hell is paved with good conventions”60
The close of the 20th century saw an end to ineffectual treaties and diplomacy and the
creation of global justice systems including a ‘prosecute or extradite’ regime for torturers
and a claim to intervene in the internal affairs of sovereign states out of humanitarian
necessity. TV has made human rights an essential part of our time 61.
After 50 years of the Universal Declaration of Human Rights, respect for human rights is
increasing on both an international and national level as a result of the international human
rights movement.
Today, there are already existing courts to determine the outcome of disputes between
states (the International Court of The Hague) and others that allow suing states for human
rights violations (the InterAmerican court of Human Rights, the European Court of Human
Rights, etc.). 50 years after the Nuremberg Tribunal, “ad-hoc” international courts have
been created for Rwanda and ex-Yugoslavia. The International Criminal Court set up in
2003 will play a significant role in the protection of human rights. Finally, there are also
several proposals for the creation of a court to sanction international economic crimes 62.
4.
Diversity of progress of human rights
“We are all of us guinea pigs in the laboratory of God.
Humanity is just a work in progress” 63
In spite of globalisation, the human rights movement is not progressing homogeneously.
Post-modern states need not create new human rights, but to advance them throughout the
implementation of conditions that are conducive to the de facto enjoyment of declared
rights by all citizens and non-citizens. In modern states, where the material conditions for
human rights have already evolved, the development of human rights cultures and
59
Human Rights Committee, General Comment 24 (52), p. 12, UN Doc. CCPR / C / 21 Rev. / Add. 6 (1994).
Bert Rolling, The Law of War and National Jurisdiction since 1945 (1960), p. 445.
61
Martin Shaw, “Global voices: civil society and the media in global crisis” in Tim Dunne and Nicholas
Wheeler, op. cit., p. 214, where he refers to TV coverage as a pressure to governments.
62
Nuri Albala, “Crimenes económicos impunes”, Le Monde Diplomatique (December 2003), p. 5.
63
Tenessee Williams, Camino Real (1953), p. 12.
60
16
democratic traditions is crucial. In pre-modern states, the main tasks are the creation of
elementary conditions (e.g. ending civil wars, eradicating extreme poverty and elevation
of education and health standards)64. Without eradicating poverty, resolving the most acute
health problems and elevating the standards of education, it is impossible to even seriously
discuss the real progress of human rights 65.
5.
Third generation of human rights
“Homo sum.
Humani nil a me alienum puto” 66
The Vienna Declaration and Programme of Action adopted by the World Conference on
Human Rights in 1993 affirmed that “all human rights are universal, indivisible and
interdependent and interrelated”. But several generations of human rights are
distinguished.
As well as the first and second generations of human rights - civil and political human
rights and social, economic and cultural human rights - respectively, a third generation has
emerged. This includes the right to development, peace, communication, being different,
a general satisfactory environment, enjoying the common heritage of mankind,
humanitarian assistance, etc.
6.
Human rights, economy and democracy
“We chosen people, riched and blessed,
Rarely comment or ask ourselves
If we should share our voice or power
Or a portion of our wealth” 67
In this globalised and technified world of the 21st century: 2/3 of the world’s population
still live in poverty (less $2 a day) and 1/3 in extreme poverty (less than $1); 1 billion
people do not have access to clean water; 6 million children die every year from
malnutrition; and 24.000 people a day die of starvation. In other words, somebody around
the world, in Africa or Asia, dies every 4 seconds (the “holocaust of neglect 68). By the
time you read this paper, more than 500 people will have died from starvation69.
While in the North, the rights of individuals to be free from the interference of others is
paramount, in the South economic and social rights take precedence over civil and
political rights. Third World countries to prefer the socialist view 70. As The Economist
64
Rein Mullerson, Ordering Anarchy, International Law in International Society (2000), p.96.
Rein Müllerson, op. cit., pp. 254 and 285.
66
Terence, Heaufon Timorumenos, 77.
67
Jimmy Carter, “The Universal Declaration of Human Rights: the next fifty years’ in Reflections on the
Universal Declaration of Human Rights (1998), p. 96.
68
Henry Sue, cited by Tim Dunne and Nicholas Wheeler, op. cit., p. 18.
69
A WHO’s report revealed recently that a girl who is born this year in Europe has a life expectancy of 83
years; in Japan, 85; but in Sierra Leone, 36 (when 10 ten years ago the expectancy was 46).
70
Tim Dunne and Nicholas Wheeler, op. cit., p. 13 refer to the people’s most important right: “the right to
subsistence”.
65
17
said, “the most pressing moral, political and economic issue of our time is third world
poverty” 71.
From the perspective of the highly developed countries of the North, human rights are
construed narrowly, pertaining mainly to civil and political rights (in essence, a
constitutional form of government based on periodic multi-party elections and the
protection of the individual against such direct forms of abuse such as torture). In contrast,
developing countries insist upon a far broader definition of human rights, extending it to
economic, social and cultural concerns including the idea of democracy, which is more
substantial in its modes of operation than the constitutional model with respect to such
matters as inclusion, participation, openness, and rule of law accountability and its
applicability to global arenas of policymaking and authority 72.
Human rights cannot thrive without the existence of democracy. Education, economic
prosperity and the institutional development of society – themselves interrelated – make
the soil fertile for democracy and human rights.
7.
Gap between declaration and enforcement of human rights
“You cannot be, I know nor do I wish to see you,
an inactive spectator…
We have too many high sounding words,
and too few actions that correspond with them”73
“Proclamarem la pau amb les paraules
mentre amb el gest afavorim la guerra?” 74
Thomas Hobbes said that covenants without swords are only words.
A wide gap exists between theory and action in the field of human rights. There is
evidence showing the ever-growing disparity between the globally accepted standard for
the protection of universal human rights and the daily denial of these basic rights to
millions of people 75. This enormous difference between theory and practical behaviour,
between the human rights commitments of states and their actual practices is the central
“problematique” of the contemporary human rights regime 76.
A large number of states ratify treaties without the intention to even apply them. Amnesty
International reported in 1997 that out of 185 sovereign states, 123 routinely practised
torture.
The Economist, 23 September 2000, “The case for globalisation”.
Richard Falk, op. cit., p. 69.
73
Abigail Adams, cited by David McCullogh, John Adams , 2001, p. 17.
74
Miguel Martí i Pol, “Per preservar la veu” (1985).
75
Tim Dunne and Nicholas J Wheeler, Human Rights in Global Politics , 1999, p. ix.
76
Jack Donnelly, “The social construction of international human rights”, in Tim Dunne and Nicholas J.
Wheeler, op. cit, p. 71.
71
72
18
The lack of progress in the fight for human rights made Mary Robinson, the former UN
Commissioner for Human Rights, propose to “count up the results of fifty years of human
rights mechanisms, thirty years of multibillion dollar developments programmes and
endless high-level rhetoric and the general impact is quite under-whelming … this is a
failure of implementation on a scale that shames us all” 77.
8.
Rights and responsibilities
“C’est le devoir qui crée le droit
et non le droit qui crée le devoir ”78
Gandhi said that rights that do not flow from duty well performed are not worth having 79.
Rights and duties are two sides of the same coin. Rights need to be joined with
responsibilities. In 1997, the InterAction Council (composed of former heads of state)
launched a proposal for a Universal Declaration of Human Responsibilities, citing the
common ethical standards for living together, not only for individuals, but also for
corporations and political authorities, and at the same time, stressing “the tendency to
emphasise rights while forgetting responsibilities have deleterious consequences” 80.
9.
Involving entities other than states: i.e. the Global Compact
“The experience of two world wars has shown
that a system based on the sovereignty of states
does not assure peace and stability”81
Large corporations often have more influence than governments on the economic
development and the quality of life in the countries in which they operate. Only 6 states
have revenues larger that the revenues of the largest 25 transnational corporations. The
challenge to international law is to encompass corporations, as they are becoming more
powerful than most governments.
CSR is emerging thanks to pressure being exerted by NGOs, activists, shareholders,
portfolio managers of investment funds and others. CSR makes business responsible, not
only to the company’s shareholders, but to all stakeholders, including employees, the
environment and human rights. Human rights, labour codes and environmental protection
are now at the top of the agenda of many corporate entities.
One of the paramount examples is the Global Compact. This was launched in 2000 by the
United Nations, and created to help organisations redefine their strategies and plans of
action so that everyone, not just a fortunate few, can enjoy the benefits of globalisation.
The Global Compact calls on companies to embrace nine principles in the fields of labour
standards, the environment and human rights.
77
Mary Robinson, 10 December 1998.
Chateaubriand, Mémoires d’outre-tombe, 1802.
79
Handas K Gandhi, Non-Violence in Peace and War , 1948.
80
Report of the Commission on Global Governance. Our global neighbourhood , 1995, p. 24.
81
George Soros, Open Society. Reforming global capitalism , 2000, p. xvi.
78
19
III. Promotion of HR by businesses
“Even though states have the primary responsibility to promote and
protect HR, TNCs and other business enterprises, as organs of society,
are also responsible for promoting and securing the HR set forth in the
Universal Declaration of HR”82
Companies are a fundamental part of society. As such, they have a moral and social
obligation to respect the universal HR enshrined in the Universal Declaration of Human
Rights.
Businesses should look to governments and civil societies to help define appropriate roles
and responsibilities and welcome efforts to facilitate dialogue and cooperation83.
According to the Amnesty International HR Principles for Companies, TNCs can improve
their ability to promote HR by:




Developing an explicit policy on HR;
Providing effective training for their managers and their staff in international HR
standards;
Consulting NGOs on the level and nature of HR abuses in different countries; and
Establishing a clear framework for assessing the potential impact on HR as a result of
the companies’ and their sub-contractors’ operations.
That does not mean that corporations have the same legal duties as states under
international law. It cannot be expected that companies substitute the role of governments
because governments still possess both wide powers over and primary responsibility for
the well being of their citizens and for the protection of HR.
IV. Respecting HR also crucial to business success
“After all we live in a global world. Unless we globalise HR, the global
world will be perilous for business. We all know that HR are good for
business because, without the rule of law, arbitrariness prevails,
without HR political instability will be looming and with instability,
investment will be at risk” 84
In addition to moral and legal aspects, the reality is that respecting HR also contributes to
business success.
82
Melinda Ching, Amnesty International oral statement on the working methods and activities of
transnational corporations, 1 August 2002.
83
Bennett Freeman, op.cit.
84
Pierre Sane, “Why Human Rights should matter to the business world”, Earth Times News, 8 January
2001, p.51.
20
A universal acceptance of the rule of law, outlawing of corrupt practices, respect for the
workers’ rights, high health and safety standards, sensitivity to the environment, support
for education, and protection and nurturing of children are not merely justifiable against
the criteria of morality and justice. These principles are also good for business and most
people in the business world recognize this85.
A good reputation earns a company more customers, better employees, more investors,
improved access to credit and greater credibility with government. The difference between
a company with ethical capital and one with an ethical deficit – perceived or real – can
even determine their ‘licence to operate’ in some emerging markets86.
Although bottom-line evidence of (good) citizenship’s benefits is scarce, anecdotal
validation in the form of enhanced corporate images, customer preferences, strong
employee relations and smoother regulatory approval is proliferating everywhere87 88.
Michael Porter, a professor of Harvard Business School89, said that in a more socially and
environmentally aware world, CSR in this sphere will itself be a source of corporate
advantages.
Then there are many arguments for businesses to care about HR including:





The moral argument;
The legitimacy argument: People around the world are struggling to hold their
governments accountable for the implementation of international law and view HR as a
matter of international law;
The responsibility argument: TNCs have an enormous influence and power in the
countries where they do their business, and with power comes the responsibility to
contribute to the promotion and protection of HR;
The Universal Declaration argument: The Universal Declaration of HR calls upon all
organs of society to protect and promote HR; and
The self-interest argument: It is in the interest of businesses to see HR protected. A
company tarnished by controversies around HR violations can see its reputation
destroyed and its profitability threatened90.
Forcese, “Putting Conscience into Commerce”, op.cit., p.12. For example, Reebok’s “Human Rights
Production Standards” say: “Reebok’s experience is that the incorporation of internationally recognized
Human Rights standards into its business practice improves worker moral and results in a higher quality
working environment and higher quality products”.
86
J. Nelson, “Business as Partners in Development: Creating wealth for countries, companies and
communities”, The Prince of Wales Business Leaders Forum, London, 1996, pp. 47, 52.
87
David Vidal, The link between financial performance and corporate citizenship, 1999.
88
Dibby Jones, director general of CBI, The Observer, 2 February 2003: “CSR is good for business; the 21 st
century employee and consumer wants to relate to a company that believes in “putting something back“.
89
Michael Porter, The Times, 17 May 2001.
90
Pierre Sane, “Why Human Rights should matter to the business world”, Earth Times News, 8 January
2001.
85
21
V.
Security and justice
“The world beyond Sept 11 must pursue a determined assault on poverty
global security would simply not be possible in a world of increasing poverty” 91
The psychosis of insecurity pervades the world of today. Security has become a primordial
obsession culminating in a crusade against terror, through severe security measures and
preventive wars. These actions have substantially affected international law and human
rights.
Ambassador Jonathan Dean said that “we must devote serious, ongoing study to the root
causes of terrorism and act systematically over a long period to diminish the intensity of
the motivations. Unless we can do this, suicidal terrorist attacks will take place again and
again, with increasing ingenuity and fatalities in each cycle… Poverty and gross
inequalities in economic, social, cultural and political freedoms contribute to the
motivations of terrorism. Stepped up, sustained development and economic assistance,
including debt forgiveness, increased effort at controlling the proliferating of weapons of
all kinds, as well as the promotion of human rights and democracy, will help to decrease
the appeal and capability of terrorism”.
As Nobel Prize winner Desmond Tutu once said: “the terrorists will have won the battle if
they cause you to jettison your own rights’ standards”. In these times, when the law
becomes the victim of circumstance, then we must be careful of any derailment.
Democracies need to defend themselves, but they cannot abhor from themselves. They
must control the responses regarding their security in order to continue being a democracy.
Robert Stein, the Executive Director of the ABA, summed it up perfectly when he said
that we cannot destroy ourselves defending ourselves.
SIXTH. CSR IN DEVELOPING COUNTRIES
“We all pay for poverty and unemployment and illiteracy. If a large
percentage of society falls into a disadvantaged class, investors will find
it hard to source skilled and alert workers; manufacturers will have a
limited market for their products; criminality will scare away foreign
investments, and internal migrants to limited areas of opportunities will
strain basic services and lead to urban blight. Under these conditions,
no country can move forward economically and sustain development
[…] it therefore makes business sense for corporations to complement
the efforts of government in contributing to social development”92
“La miseria y el hambre no pueden esperar. Es necesario que la
comunidad internacional emprenda la única guerra de la que
91
Bertram G. Ramcharan, Human rights and human security (2002), p. 3.
J. Ayala II, “Philanthropy makes business sense”, Business Day, Bangkok, 25 Sept. 1995, Ayala
Foundation Inc., Vol. 4, No. 2, July-Sept., Oct-Nov, 1995, p. 3.
92
22
saldremos vencedores: el combate contra la pobreza y la exclusión
social”93
I.
In general
“If we do not tackle poverty in the world, then we are going to have a safe, secure
world. You can shut the curtains and hope it goes away but it won’t work. This is a
text of our political system”94
“We want everyone to realise that they can help change the world. If you
are worried about globalisation, if you are concerned about social
justice, there is something you can do. If you think that it’s an obscenity
that one corner of the world lives in lavish wealth while most of it
struggles in degrading poverty, there is something practical you can do
about it”95
Companies expanding into developing countries may conduct business in countries that
violate HR. Companies may support political parties abroad or assist repressive regimes in
violation of HR. In addition, companies may directly abuse HR by not respecting the
established international minimum HR standards96 97.
In the last decade, direct foreign investment in developing countries has increased ten fold
while public development assistance has declined. Over the same period, governments
have changed their investment regimes in order to encourage investment but at the same
time have reduced their social welfare spending. Many of the world’s poorest countries are
characterised by this conflict or are associated with HR abuses. There is also evidence to
suggest that the poorest in those countries are becoming poorer, and although economic
growth prospects may be improving for some, there is a growing inequity98.
Corporations today must be vigilant in the way they deal with abusive regimes and ensure
that their factories and contractors have defensible policies on child labour and working
conditions99. Some TNCs have pulled out of countries in protest of HR violations100.
93
Lula da Silva, president of Brazil, at the award of Principe de Asturias Prize Oviedo, 24 October 2003.
Hilary Benn, UK International Development Minister, speech at Jubilee Debt Research Conference, The
Observer, 4 April 2004.
95
Steve Hilton and Giles Gibbon, op.cit., xviii.
96
Examples include Nike and Reebok in Asia, which subcontracted out the production of athletic shoes and
soccer balls to firms that operated sweatshops and employed child labour. Another example is Enron, which
made the largest single foreign investment in India. Innocent people were beaten, sometimes outside the very
gates of Enron’s power plant, because they were demonstrating against what they believed were the plant’s
adverse effects on the local environment. The police committing these abuses were under the command of
local headquarters, but the company paid their salaries. Arvind Ganesan, “Business and Human Rights. The
Bottom Line”, Corporation and Human Rights (Human Rights Watch), 1999.
97
There is a great deal of literature on abuses of TNCs in developing countries. Recent works include Daniel
B Liton, Commerce, conquest and social responsibility, 2003.
98
Alyson Warhurst & Bahar Ali Kazami, “Social performance management & corporate social
responsibility”, Warwick business school corporate citizenship master class, 8 July 2002.
99
Geoffrey Robertson, Crimes against humanity, 2nd edition, 2002, p.521.
94
23
Some industrial sectors, like the oil sector, have a great impact on the country in which
they develop goods due to the importance of their operations and their effect on open
markets. Thus, they need to ensure that developing societies also benefit 101.
II.
TNC’s complicity in HR’s violation
Unfortunately, some TNCs are sometimes guilty of complicity in HR violations
perpetrated by governments. There are cases where businesses have, for example,
promoted the forcible transfer of populations from land, which they required for business
operations, or companies have unintentionally aggravated HR disputes in cases where
minority groups have claimed autonomy over an area102. The notion of corporate
complicity in HR violations is not only confined to direct involvement in the execution of
illegal acts by others. It may also mean the indirect involvement, or silent complicity103.
As Geoffrey Chandler, Chair of Amnesty International (UK) Business Group, said:
“Silence is not neutrality. To do nothing is not an option”104.
III.
Trade and not aid
“The rich countries have a choice. Either let Africa have real access to
your markets for products, especially agriculture…, or acknowledge that
you prefer to keep us dependent of your handouts. But aid is a recipe for
permanent poverty. The only way we can break out of this vicious circle
is through trade and export-led growth…”105
SEVENTH. WORLDWIDE INITIATIVES ON CSR AND HR
“We are not asking corporations to do something different from their normal
business; we are asking them to do this normal business differently”106
Reebok from South Africa in 1986 or Levi Strauss, Macy’s, Liz Claiborne, Eddie Bauer, Heineken from
Burma due to its highly repressive military government.
101
Philip Swanson, “CSR and the oil sector”, speech in “Energy, new era, new governance”, London, 18
March 2002.
102
Margaret Jungk, Practical Guide to Addressing Human Rights Concerns for Companies Operating
Abroad, p. 171.
103
Geoffrey Chandler, “Business complicity and Human Rights abuses”, Global Dimension Conference,
New York, 21-22, March 2001. An example for indirect complicity was the Human Rights abuse within
several international oil companies that undertook a joint venture with the Burmese government and the state
oil company Myanmar Oil and Gas Enterprise in the early 1990’s.
104
Geoffrey Chandler, “Exploitation is our responsibility,” Sunday Business, 16 Aug. 1998; and “Oil
Companies and Human Rights”, Oxford Energy Forum, Nov. 1997, p. 3.
105
Yoweri Museveni, President of Uganda (The Wall Street Journal Europe), 7 March 2003.
106
Kofi Annan, UN Secretary-General, on the role of corporations in environment.
100
24
I. The global eight
“It is our goal to be better contributors to the betterment of society
through our products and services and through the manner
in which we provide them to the markets. Balancing the expectations
of corporate responsibility is a challenge, but through this balancing
process
we hope and expect that we will enhance the public respect for our
company”107
The 8 more prominent initiatives of the CSR initiatives are as follows:
1. The ILO’s Tripartite Declaration of Principles 1977
The ILO adopted a Tripartite Declaration of Principles concerning TNCs and Social Policy
in 1977. The Declaration was updated in 2000 in the light of the 1998 ILO Declaration of
Fundamental Principles and Rights at Work. The Declaration’s value lies both in its
comprehensive content, which covers all aspects of social policy from industrial relations
to training and employment, and in the fact that it addresses a wide range of key
economic actors: TNCs, governments, employers’ and workers’ organisations. However,
the success of the ILO in the HR battle has been mediocre due to the fact that national
business associations made up one third of the membership of the ILO and some western
states did not favour the channelling of their major concerns through the ILO.
2. The Global Reporting Principles (GRI), 2000
The Global Reporting Initiative (´GRI´) was established in 1997 with the mission of
developing globally applicable guidelines for reporting on the economic, environmental,
and social performance, initially for corporations, and eventually for any business,
governmental, or non-governmental organisation. The GRI’s three goals are to:
1. Elevate sustainability reporting practises on a worldwide level equalling that of
financial reporting;
2. Design, disseminate, and promote standardised reporting practises, core
measurements, and customised, sector-specific measurements; and
3. To ensure a permanent and effective institutional host to support such reporting
practises worldwide.
3. The Global Compact 2000 (“GC”)
“Let us choose to unite the power of markets with the authority of
universal ideals. Let us choose to reconcile the creative forces of private
entrepreneurship with the needs of the disadvantaged and the
requirements of future generations”108
107
108
Tom Gottschalk, Executive Vice-President, Law & Public Policy and General Counsel, General Motors.
Kofi Annan, UN Secretary-General.
25
A. The GC as an initiative to promote CSR. The GC was announced by the UN SecretaryGeneral at the World Economic Forum, in Davos in 1999, and was formally launched
in 2000 as one of several measures to respond to the challenges of globalisation. The
GC is an initiative intended to promote CSR and citizenship in the new global
marketplace. It brings companies together with UN organizations, international labour,
NGOs and other parties to foster partnerships and to build a more inclusive and
equitable global marketplace. In the words of Kofi Annan, it aims to contribute to the
emergence of “shared values and principles, which give a human face to the global
market”.
B. The GC as a voluntary initiative. The 400 companies engaged in the GC are diverse
and represent different industries and geographic regions. However, they all have two
common features: they are all leading companies; and they all aspire to manage global
growth in a responsible manner that takes into consideration the interests and concerns
of a broad spectrum of stakeholders (employees, investors, customers, advocacy
groups, business partners and communities). Corporate leaders participating in the GC
agree that globalisation, which only a few years ago was seen by many as an inevitable
and unstoppable economic trend, is in fact highly fragile and may have an uncertain
future. Indeed, rising concerns about the effects of globalisation on the developing
world – be they related to the concentration of economic power, income inequalities or
societal disruption – suggest that, in its present form, globalisation is not sustainable.
The GC was created to help organizations redefine their strategies and courses of
action so that all people can share the benefits of globalisation, not just a fortunate few.
The GC is neither a regulatory instrument (a legally binding code of conduct or a
forum for policing management policies and practices), nor is it a “safe-harbour”
allowing companies to sign-on without demonstrating real involvement and results.
The GC is a voluntary initiative that seeks to provide a global framework to promote
sustainable growth and good citizenship through committed and creative corporate
leadership.
C. The GC’s 9 Principles. Companies are asked to undertake 3 commitments with regard
to these 9 principles: to advocate the GC and its 9 Principles in mission statements and
annual reports; to post on the GC website all the steps they have taken to act on the 9
Principles; and to join with the UN Partnership Purpose of benefits to developing
countries. The 9 Principles grouped under three headings are:
Human rights

Support and respect the protection of internationally proclaimed HR; and

Make sure they are not complicit in HR abuses.
Labour Standards

Freedom of association and effective recognition of the right to collective
bargaining;

Elimination of all forms of forced and compulsory labour; and

Affective abolition of child labour.
26
Environment

Eliminate discrimination in respect to employment and occupation;

Support a precautionary approach to environmental challenges;

Undertake initiatives to promote greater environmental responsibility; and

Encourage the development and diffusion of environmentally friendly technologies
4. The OECD Guidelines for TNCs 2000
The OECD Guidelines are a set of recommendations addressed by governments to TNCs
operating in or from adhering countries. Although non-binding, they are supported by
OECD countries from which most TNCs originate. They aim to help TNCs operate in
harmony with government policies and societal expectations. In keeping with the notion of
CSR and to promote the contribution of business to social development and the promotion
of basic workers’ rights, the Guidelines provide voluntary principles for responsible
business conduct in fields such as employment, industrial relations, HR, environment,
competition, information disclosure and taxation, combating bribery, and consumer
protection.
5. The ICC draft Guidebook on Responsible Business Conduct, February 2002
The Group on Business in Society has developed the ICC Guidebook on Responsible
Business Conduct. Its main purpose is to make practical suggestions to companies on how
to approach CSR issues in order to help position individual company principles within the
existing framework of generic business principles, government codes of conduct and new
initiatives, as well as broader social values. The Guidebook’s secondary purpose is to
explain to those outside the business world how companies are addressing CSR issues.
Reinforcing the positive role of business society through the encouragement of CSR and
good corporate citizenship, constitutes one of the ICC’s strategic priorities.
6. Draft UN Responsibility of TNCs and Other Business Enterprises with Regard to
HR, August 2002
The Sub-Commission on the Promotion and Protection of HR of the UN published a new
Draft Responsibility of Transnational Corporations and Other Business Enterprises with
Regard to HR on 16 August, 2002. Accordingly, TNCs shall:




Ensure equal opportunities and treatment and eliminating discrimination;
Neither engage in nor benefit from war crimes, crimes against humanity, etc.;
Respect the rights of workers, especially the rights of children to be protected from
economic exploitation and in particular the right of development; and
Adopt, disseminate and implement internal rules of operation in compliance with these
responsibilities
7. Social Accountability (SA) 8000
The Council on Economic Priorities Accreditation Agency has established SA 8000.
This is a standard for assessing labour conditions in global manufacturing operations,
27
addressing prison labour, wages, child labour, health and safety issues, and relies on
certified monitors to verify factory compliance with the standard.
8. Global Sullivan Principles
These were developed in 1999 to guide the global behaviour of TNCs in labour, ethics
and environmental practices. The Global Sullivan Principles aim to promote equal
opportunity in South Africa.
II. Other initiatives which promote CSR and HR







Principles for Global CSR, developed by the US-based Interfaith Centre on CSR,
the Canadian-based Ecumenical Council for CSR and the UK-based Taskforce on
Churches and CSR, include principles based on international covenants regarding
the rights of indigenous persons, employees and women.
Declaration of Principles on HR and the Environment, 1994, convened by the UN
and prepared by a group of experts on HR and environmental protection, was the
first international instrument that addressed the linkage between HR and the
environment. It demonstrated that accepted environmental and HR principles
embody the right of everyone to a secure, healthy and ecologically sound
environment.
Social Responsibility for Businesses is a concept in which large corporations, such
as Levi Strauss, played a key role during the establishment.
The World Business Council for Sustainable Development is a coalition of 125
TNCs committed to the environment and the principles of economic growth and
sustainable development. It develops cooperation between businesses, governments
and other organisations concerned with the environment and sustainable
development, encourages high standards of environmental management in
businesses, and business leadership, undertakes policy development to create a
framework for businesses, shares the best practices, and has developed a global
network.
International Business Leaders Forum (IBLF) is an organisation that promotes
international leadership and responsible business practices to benefit businesses and
society. Operating in over 60 countries, it works with leaders in businesses, civil
societies and the public sectors in transitional economies in order to achieve social,
economic and environmentally sustained development. The IBLF encourages
continuous improvement in responsible business practices, develops geographic or
issue-based partnerships, contributes to an enabling environment, and provides the
conditions for these partnerships to flourish.
The Institute for Social and Ethical Accountability focuses on helping companies
audit and report on their social and environmental performance.
Aarhus Convention - UN ECE is a new type of environmental agreement. It links
environmental rights and HR, and it establishes that sustainable development can
be achieved only through the involvement of all the stakeholders. It focuses on
interactions between the public and governmental authorities in a democratic
context, and it is forging a new process for public participation in the negotiation
and implementation of international agreements.
28



The UN Draft Declaration of Indigenous Peoples Rights has established provisions
on ethnocide, cultural and physical genocide, protection from forcible land removal
(displacement), cultural development, protection of cultural property, religious
freedom and control of education. Arguably, the most significant right established
under this regime is the right to self-determination, which encompasses the right to
autonomous control over local territory and resources. In relation to this right, this
declaration accords compensation to indigenous groups that have been deprived of
their traditional means of subsistence.
The Apparel Industry Partnership (AIP) was initiated in 1996 to take steps to
protect workers worldwide and to give the public the information it needs to make
informed purchasing decisions. AIP is comprised of apparel and footwear
companies, a university, HR groups, labour-religious organizations and consumer
advocates. AIP released an historic agreement establishing a Workplace Code of
Conduct and Principles of Monitoring.
Voluntary principles on security and HR 2000
“I hope these guidelines will greatly reduce the scope for HR abuses
associated with the way companies protect themselves and their
employees overseas. They demonstrate the UK’s commitment to put HR
and conflict prevention at the heart of Britain’s overseas activities. The
fact that all sides have agreed these guidelines shows what can be
achieved when industry, NGO’s and Governments work together. Now
we must ensure that they are put into operation effectively”109
Some governments, companies in the extractive and energy sectors (BP, Shell,
Chevron, Texaco, Conoco, Freeport, McMoran, Rio Tinto) and NGOs (HR Watch,
Amnesty International, International Alert, Lawyers Committee for HR) have
developed a set of Voluntary Principles to guide companies in maintaining the
safety and security of their operations within an operation framework that ensures
respect for HR and fundamental freedoms. These Principles are designed to provide
practical guidance that will strengthen HR safeguards in company security
arrangements in the extractive sector. They address engagement with private
security, engagement with public security; and risk assessment supporting security
arrangements consistent with HR.
 The Institute of Social and Ethical Accountability (ISEA) combines the terms
“social” and “ethical” to refer to “the systems and individual behaviour with an
organisation and to the impact of an organisation’s activity on stakeholders”. The
core of the new international standard, AccountAbility 1000, is the importance of
stakeholder engagement in the social and ethical accounting process.
 The US Sarbanes-Oxley Act (July, 2002) is an immediate consequence of the
events of Enron and Enron-like situations. A rule on corporate governance rather
than CSR, it introduces new rules designed to strengthen corporate governance,
constitutes a far-reaching change in the system of the free market and will have an
impact on CSR. The Act creates a SEC oversight board, prohibits auditors from
offering certain types of consulting services to corporate clients, requires
accounting firms to rotate partners, requires CEOs and CFOs to forfeit profit and
109
Robin Cook, UK Foreign Secretary.
29


bonuses when earnings are restated due to securities fraud, prohibits executives
from selling company stock during blackout periods, requires insiders to report all
company stock trades within two days and prevents executives from receiving
company loans unavailable to outsiders.
The New Partnership for Africa’s Development (NEPAD), established in Nigeria in
2001, is comprised of 15 African countries. The organisation was modelled after
the Marshall Plan, which was a program of development that successfully re-built
Europe after World War II. NEPAD hopes to ensure political and economic
stability in return for increased foreign investment, as well as better access to trade
and debt relief.
The Hewlett-Packard Chair on CSR created in October 2003 at Toronto Schulich
School of Business at York University in Ontario, to explore new models of
stakeholder engagement and the role of IT in a global economy.
In the last several years, HR organisations (Amnesty International, HR Watch, Lawyers’
Committee on HR), labour organisations (International Confederation of Free Trade
Unions), corporate accountability organisations (Global Exchange, Clean Clothes
Campaign, Global Witness) and anticorruption organizations (Transparency International),
religious, shareholder, student and environmental organizations have committed greater
resources and attention to CSR.
In addition to the publication of the hundreds of CSR organisations around the world,
many publications such as Corporate Citizen, Journal of Corporate Citizenship, Ethical
Performance, Ethical Corporation amongst Business Ethics others are in circulation. Prizes
to promote CSR are proliferating in the world 110
EIGHTH. EUROPEAN INITIATIVES
“We need to move away from a time of awareness-suiting, to a time of
stronger justification, which will provide us with the necessary
credibility for CSR” 111
Europe differs from some of the other models of capitalism.
1. Manifesto of Enterprises against social exclusion
At the EU level, the debate on CSR and HR dates back to 1995, when a group of EU
companies and Jacques Delors, then President of the EU Commission, launched this
Manifesto.
110
See for instance the Environmental Reporting Award, the Environmental Excellent Award, the Social
Legacy Award created by Business Ethics annually.
111
Vincent Etienne Davignon, European Presidency Conference on CSR, November 2001.
30
2. EU Lisbon Summit, March 2000
The Manifesto, in 1 above, led to the creation of a European Business Network to promote
the business-to-business dialogue and exchange of best practices on CSR-related issues.
However, it was at the European Lisbon Summit in March 2000 that CSR was put at the
top of the political agenda of the EU. For the first time, EU heads of state made a special
appeal to companies’ sense of responsibility to help in achieving the new EU strategic goal
of becoming the most competitive and inclusive economy in the world by 2010.
3. EU Commission’s Green Paper on promoting a European framework for CSR,
2001
The EU published a Green Paper in July, 2001112, covering a wide range of topics,
including responsible actions during corporate restructuring, promoting of “work/live
balance” and corporate codes of conduct and social rights. It is intended to function as a
“launch-pad for debate”; encouraging companies to take the “triple-bottom-line” approach,
i.e. giving attention to social and environmental concerns in addition to economic goals.
The Green Paper consists of an internal section, focusing on the CSR practice involving
employees relating to issues, such as investing in human capital, health and safety, and
managing change, while environmentally responsible practices relate mainly to the
management of natural resources in production, and an external section, focusing on CSR
in a wider range of stakeholders, including local communities and international
communities, business partners and HR. The consultation process hopes to develop a new
framework for the promotion of CSR based on European values.
4. Council Resolution, December 2001
The Council Resolution, on follow-up of the Commission Green Paper, recognised that the
CSR can contribute to reaching the objectives laid out by the European Councils in Lisbon,
Nice and Göteborg for the EU to become the most competitive and dynamic knowledge
based economy in the world, fostering both social integration and sustainable development.
5. Communication of the EU Commission concerning CSR, July 2002
“CSR can play an important role in advancing sustainable development.
Many businesses have already recognized that CSR can be profitable
and CSR schemes have mushroomed. (…) CSR is no longer just a job for
marketing departments”113
In July 2002, the EU Commission published a new strategy to promote business
contribution to sustainable development. The policy paper calls for a new social and
environmental role for businesses and sets up a ‘European Multi-Stakeholder Forum’ for
all players, social partners, business networks, civil society, consumers and investors to
exchange best practices, establish principles for codes of conduct, and seek consensus on
112
Brussels COM (2001) 416 Final, Commission of the European Community.
European Commission: Corporate Social Responsibility: new Commission strategy to promote business
contribution to sustainable development, IP/02/985, 2 July 2002.
113
31
objective evaluation methods and validation tools, such as ‘social labels’. The
Commission’s strategy is designed to:




Promote CSR for businesses in order to make it attractive to more companies, in
particular TNCs;
Promote external evaluation and benchmarking of companies’ social and
environmental performances in order to make CSR more credible;
Manage a European Multi-Stakeholder Forum designed to focus discussions on CSR;
and
Ensure that EU policies are CSR-friendly.
6. European Parliament’s Code of Conduct, December 1998 and 2002
In 1998, the EP published a European Code of Conduct regarding the activities of TNCs
operating in developing countries114. The EP passed a resolution to promote the
accountability of European-based TNCs by supporting initiatives for codes of conduct. In
the resolution, the EP declared its support for the substitution of voluntary codes of
conduct for international regulations, further called upon the EU Commission and Council
to come to terms with the subject of a "European Monitoring Platform" and proposed to
organise hearings on the subject.
In May 2002, the EP voted for a new legislation requiring companies to publicly report
annually on their social and environmental performance115, to make board members
personally responsible for these practices and to establish legal jurisdiction against
European companies' abuses in developing countries. The package is part of a new EU
Framework for CSR, and represents a major step towards establishing international
regulation for TNCs. The EP also voted to:





Set up a European CSR Forum giving rights to stakeholders, such as consumer and
activist groups, to oversee policies alongside businesses and trade unions;
Set up a European Social Label to endorse products where there is respect for human
and trade union rights;
Introduce a wider social and environmental impact of companies' performance in
European negotiations between employers and trade unions;
Make all EU financial assistance to businesses subject to compliance with basic
standards, including setting up a blacklist against companies guilty of corruption; and
Mobilise the EU's trade and development programmes to tackle abuses by companies
in developing countries.
114
European Parliament: European criteria for companies operating in developing countries LDCs: towards a
European code of conduct, INI/1998/2075.
115
From 2003, French corporations will have to demonstrate their commitment to CSR by giving detailed
accounts of their social and environmental reporting. The Guardian, 26 September 2002.
32
7. Council Resolution, February 2003116
This Council Resolution calls upon Member States to promote CSR on a national level by
making companies aware of its benefits and highlighting the potential results of
cooperation between governments, businesses and other societies; continue to promote
dialogue with social partners and civil dialogue; to promote transparency of CSR practices;
to exchange information and experiences; to integrate CSR national policies; and to
integrate CSR into their own management.
8. EU Conference on CSR in Venice
CSR was included among the top 5 priorities of the Italian Presidency 2003, and Italy
hosted the III European Conference on CSR in Venice to promote active coordination of
enterprises and stakeholders to contribute to economic and social progress.
9. Other initiatives to promote CSR in Europe







116
117
SustainAbility UK, an independent management consultancy to promote the business
case for sustainable development, has a mission to help create a more sustainable world
by encouraging the adoption of socially responsible, environmentally sound and
economically viable practices, which satisfy the triple-bottom-line of sustainable
development.
Business in the Community, a UK club chaired by Prince Charles, promotes
regeneration of urban areas.
UK Ethical Trading Initiative (‘ETI’), 1998, focuses on managing an organisation’s
supply chain in a socially responsible manner. ETI seeks to encourage a shared
approach to the sourcing of goods and services that leads to a raised standard of living
for workers around the world.
CSR Europe helps companies to share their knowledge and experience on CSR. It is a
business-driven membership network with a mission to encourage companies to
prosper in ways that stimulate job growth, increase employability and prevent social
exclusion thereby contributing to a sustainable economy and a more just society. CSR
Europe’s Resource Centre includes a ‘best practice’ database, a publications list, links
to related organisations and details of CSR Europe’s programs.
The Copenhagen Centre (‘TCC’) promotes voluntary partnerships between businesses,
governments and civil society in order to provide opportunities for the less privileged
to be self-supporting, active and productive citizens. TCC aims to become a ‘European
house for CSR’, providing forums to facilitate the continuing debate.
The European Academy of Business in Society was established in July 2002, by
leading European business schools and more than 60 major multinational companies
who teamed up to launch a large research and teaching project on the business case of
CSR.
Small and medium sized enterprises (SMEs) and CSR. CSR is not just business of
TNCs. According to a recent survey117, 50% of Europe’s SMEs are already involved in
CSR ranging from 32% in France to 83% in Finland, and according to another
OJ. 2003/C 39/2.
Observatory of the European SMEs, “European SMEs and Social environmental responsibility”.
33

survey118 41% have an environmental policy, 28% make charitable donations, 15%
consider ethical issues when outsourcing and 13% have a diversity policy.
National Grid Transco UK leads the group’s community investment and coordinates
the Transco Affordable Warmth Programme to relieve fuel poverty for homes outside
the gas supply areas, the National Grid practical tree and wood-related projects, and
Creative Education for teenagers failing in conventional schools.
NINETH. CODES OF CONDUCT: SELF- REGULATION
I. Introduction
Many companies have altered their policies to establish codes of conduct and policies
integrating CSR principles into their business practices and allowing independent
monitoring of such. These codes reflect the growing pressure placed on companies by
NGOs, shareholders, and socially responsible investments funds. According to the OECD,
there were 296 codes of conduct in the year 2000119. The proliferation of such codes has
led to some claiming there is a “code mania”.
Codes of conduct represent a formalised and uniform way of dealing with a range of
complex issues that is both a strength and a weakness. At their best, codes offer an
opportunity to companies to think differently and to act in new ways. They make
companies give attention to new questions and raise issues that have hitherto been the
concern of others120.
II. Types of code
There are five types of codes:
1.
Company codes (Shell, Phillips, Levi Strauss, etc);
2.
Trade association codes (ICC, British Toy and Hobby Association, Bangladesh
Garments Headquarters and Expatiates Association, Kenya Flower Council Code,
etc.);
3.
Multi-stakeholder codes (Accountability 1000, goodcorporation.com, Project
Sigma UK, Ethical Trading Initiatives UK, Apparel Industry Partnership USA,
Social Accountability 8000);
4.
Intergovernmental codes (ILO Convention, OECD Guidelines on TNCs, EU
CODE of conduct, etc); and
5.
World codes (ICFTU Code of Conduct Covering Labour Bodies, Principles in
Global Corporate Responsibility)121.
Grant Thronton, “European Business Survey 2002”.
OECD Codes of Conduct. An expanded review of their contents, working party of the committee 2000.
120
Malcolm McIntosh, op.cit., p. 92.
121
Ralph Jenkins, “Corporate Codes of Conduct: Self-regulation in a global economy, business and society
programme”, 2001 UN Research Institute in Social Development.
118
119
34
III. Advantages
Some companies may have viewed the adoption of higher standards as necessary, but an
expense without any rewards. However, companies that have adopted codes of conduct
reap many benefits including compliance with local and international law, promotion of
rule of law, brand image protection, avoidance of trade sanctions, better management of
suppliers, increased worker productivity, alleviated shareholder and consumer concerns,
and maintain and increase their goodwill within the community122.
IV. Contents
In general, codes of conduct should123:





Be applied at every level of the organisational and production line;
Be based on the 1998 ILO Declaration on Fundamental Principles and Rights at Work
and the OECD guidelines for TNCs;
Be included in training for local management, workers and communities on
implementation;
Emphasise a “development approach”, which stresses continuing gradual
improvements to standards, and to the code itself; and
Develop and perform following carefully defined standards and rules, ongoing
verification.
Although the number of companies that have invested time and effort into creating policies
is relatively small, some of the world’s largest corporations are represented and more
companies are currently introducing such policies. Many encouraging examples have
emerged:





A number of footwear and apparel companies have created codes of conduct and
monitoring mechanisms;
Several leading auto and oil companies acknowledge the real impact of global climate
change and pledge to reduce emissions;
The largest diamond company in the world altered its global buying and marketing
practices because of the conflict diamonds issue;
A number of major oil and mining companies implemented a new set of voluntary
principles on security and HR; and
In recent months, major pharmaceutical companies have announced that they are
cutting prices on HIV/AIDS medicines in the developing world124.
122
Ambassador Ahmad Kamal, Human Rights and Corporate Responsibility, De Paul University, 1 June
2001.
123
Green Paper - Promotion a European framework for CSR, COM (2001) 366, July 2001.
124
Bennett Freeman, op.cit.
35
V. Codes of conduct and labour rights
Codes of conduct have privatised the implementation of national labour legislation and
international labour standards. Their proliferation is in part a reflection of the failure of the
governments to implement effective labour legislation and of the ILO to enforce
internationally agreed basic minimum labour standards.
Despite pressure from unions and NGOs that codes of conduct contain, at least, the core
ILO standards, most codes are often less than what is demanded by national law and
international labour standards, but typically include references to the non-use of forced
labour, child labour and the implementation of reasonable health and safety standards.
Some include a reference to the payment of minimum wage levels, but to date, very few
have included a commitment to recognizing the right of workers to organize and to bargain
collectively. Until fairly recently, no company code had made commitments to the
payment of a living wage125.
VI. Voluntary or binding
Most of the instruments and methods (codes of conduct, GC, etc.) are voluntary and not
legally binding. The corporations may or may not adopt them, and if they do, they do it
more often than not for moral reasons, ethical pressure, or for public relations objectives.
However, the codes are not binding.
Therefore, while voluntary codes of conduct can contribute to the promotion of CSR, their
effectiveness depends on proper implementation and verification. Binding rules ensure that
a minimum standard is applicable to all, while codes of conduct and other voluntary
initiatives can only complement these and promote higher standards for those who
subscribe to them.
The reality is that ethical codes are weak because industries self-produce them. They are
often cost-driven, and companies rarely pursue ethical standards when their competitors
are ignoring them. Thus, the passage from ethical codes to legal rules is a necessary step in
this era of globalisation.
Some say that there is a risk that codes facilitate the translation of CSR into “business as
usual”, that they will simply be absorbed within the business processes in ways which do
not bring about significant changes in behaviour and priorities. One often hears that
companies “must be seen to care about social issues”126.
Arguments have been made that these obligations should be made erga omnes, legally
binding duties for TNCs as much as for states127, but the absolute legislation of these codes
into enforceable law is different.
125
S. Picciotto and R. Mayne, Regulatory International Business: Beyond Liberalization, 2000, p. 208.
Malcolm McIntosh, op.cit., p.92.
127
Edwards Alden, “Fight in US for factory workers abroad”, The Financial Times, 24 September 2002. US
Human Rights and trade groups have launched a campaign aimed at restricting US imports of goods made
126
36
TENTH. SOCIALLY RESPONSIBLE INVESTING. THE ETHICAL
PRODUCT
“It takes twenty years to build a reputation
and five minutes to ruin it”128
Many companies are facing increasing pressure from activists who are using shareholder
resolutions and proxy solicitation to influence company policy on social and environmental
issues.
The development and growth of socially responsible investing (‘SRI’) has gone through 3
stages. At first, the major concern of investors was to exclude companies in certain fields
such as arms, tobacco, pornography or gambling. Later environmental factors were added,
called “green investing”. The emphasis changed from negative to positive, from exclusive
to inclusive. More recently, the wider concept of responsibility in investing has developed.
Sustainability, one such element, is where companies engage in activities that will lead to
sustainable activities, such as switching from fossil fuels to renewable fuels129.
Furthermore, many organisations such as Fairtrade, Co-op Bank’s Ethical Purchasing
Index, Ethical Training Initiative, etc. promote products produced fairly, which are called
“ethical products”.
Morey, for instance, has developed a five-level matrix that not only takes into account
industry sector sustainability but also management “vision and strategy”. The matrix
distinguishes between those that are “fundamentally in conflict with sustainable
development (e.g. tobacco) and those that could address problems through strategic shifts
(e.g. energy)130.
ELEVENTH. CORPORATE SOCIAL LEADERSHIP
“Leadership is about communicating a vision and making it happen.
Our commitment to sustainable development is today being integrated
into the way Shell makes decisions.
For example, I do not approve new investments unless they address the
key sustainable development aspects of the project”131
Some maintain that today’s businessmen need to go further than CSR, that CSR is
essentially a risk reduction strategy, designed to avoid the more glaring gaffes that could
lead to litigation or a damaged reputation. In business, however, something will always go
under sweat-shop conditions and at putting in place new laws that punish companies that fail to uphold their
own declared standards.
128
Warren Buffett.
129
Garry Topp, The Financial Times, 28 February 2001.
130
Roger Cowe, “Sustainable responsible... but not puritanical”, The Observer, 2 February 2003.
131
Philip Watts, Chairman of the Committee of Managing Directors, Shell.
37
wrong. Hence the need for a new way for companies to prepare for the worst while
showing the world the best aspects of business. It is called “corporate social leadership”
(’CSL’), and it involves companies using their cultural power, grassroots presence and
unique capabilities to go out of their way help to solve social problems, not through
philanthropy, corporate giving, employee volunteering or community involvement, but
through finding a dual purpose, social as well as commercial, for every component of the
corporate anatomy.
Examples of CSL are Coca-Cola and its new role in Africa (helping public health
authorities to deal with the AIDS crisis); British Sky TV using the youth appeal of its
brand to inspire teenagers about their future careers; Daimler Chrysler and Richmont using
sports to tackle social problems around the world; and Starbucks Coffee purchasing green
coffee at outrigtht negotiated prices, independent of depressed community prices 132
At the same time, the supporters of CSL point out that it is time for the capitalists and anticapitalists to have a common cause – time that campaigners for social justice and
environmental protection see businesses as allies, not as enemies133.
TWELFTH. CSR AND GOVERNMENT RESPONSIBILITY
“What about the politicians – are they abdicating their own social
responsibilities by encouraging businesses to get involved in issues that
were previously felt to be the job of government, or are they entrusting
the support of a powerful additional support in pursuit of their
objectives?”134
There are differences between the private sector and the public sector. The former has a
more limited sphere of operations and obligations that sovereign states 135. Another
difference between the two sectors is that the private sector has been seen to have more
ease and success when implementing prevention and treatment measures and putting their
money where it is most beneficial 136. An example of this is with AIDS relief in parts of
Africa. This is much more difficult for the public sectors to achieve and begs the question
of whether private sector companies are in a better position to change the norms and
business practices that are deemed the traditional ways of doing business. One difficulty
that both private and public sector companies face is what is the extent of their own
responsibility. Right now, the boundaries are extremely blurred, with each not knowing
where their responsibility ends and the other’s begins. One solution to this problem is to
132
Business Ethics, Winter 2003, p. 17.
Steve Hilton, ¨The corporate manifests”, The Financial Times, 20-21 April 2002.
134
Steve Hilton and Giles Gibbon, op.cit., p.62
135
Peter Woicke, Executive Vice-President of the International Finance Corporation A Member of the World
Bank Group Conference on Human Rights and Development: Toward Mutual Reinforcement, 1 March 2004.
136
Ibid.
133
38
have a greater transparency and improved reporting mechanisms in existing codes of
conduct and to implement these methods in forthcoming codes and policies 137.
A different kind of pressure put on companies is for them to become actively involved in
social fields like education or urban renewal, which are basically the responsibility of local
and national governments. This presents companies with a dilemma: Should the company
play a bigger role in society by providing infrastructures and social services where
government does not deliver? Or should it concentrate on what it does best: serving its
customers and getting the best return for shareholders?138.
George Monboit once stated that “if the state is failing to supply enough school books, or,
in sub Sahara Africa, an AIDS education program, it is because decades of corporate
lobbying have ensured that its scope and its spending have been curtailed. As companies
appear to fill the gaps they have helped to create, they can present themselves as
indispensable vehicles for social provision, enabling them to argue for a further reduction
in state services. Gradually, universal public gives way “not… to a new inclusive
movement, but to an old fashioned philosophy in which the survival of the poor depends
on the wishes of the rich”139
The key point is that companies need to be clear about the terms on which they are
becoming involved. Firstly, the goals should be decided politically through the government
and not left for businesses to decide. Secondly, businesses should not take on
responsibilities for which governments should be solely responsible for, nor those in which
they do not have matching authority. Lastly, governments should not try to offload their
responsibilities to companies.
THIRTEENTH.
LAWYERS AND CSR140
HR 141
“… adequate protection of the human rights and fundamental freedoms to which
all persons are entitled, be they economic, social and cultural, or civil and
political, requires that all persons have effective access to legal services
provided by all independent legal profession”
Basic Principles on the Role of Lawyers 142
Joseph FX Zahra, Bank of Valletta Chairman’s speeches, ʺ A profitability and corporate social
responsibility compatible?"
138
Shell International (1998), Profits and principles- does there have to be a choice? , p. 2 cited by Adrian
Cadbury, Corporate Governance and Chairmanship, Oxford, p.165.
139
George Monbiot, The Guardian, 31 July 2003.
140
CCBE, “CSR. Corporate social responsibility and the role of the legal profession. A guide for European
Lawyers advising on corporate social responsibility issues.” September 2003.
141
This chapter is based on the author’s article: “The international lawyer and human rights” at the
International Law News of the ABA Section of International Law and Practice.
142
Adopted by the 8th UN Congress on the Prevention of Crime and the Treatment of Offenders, Havana,
Cuba, 27 August to 7 September 1990.
137
39
Many centuries ago, somewhere in Europe, a cathedral was being built. Three stonecutters
were cutting stones at the site for the construction of the basilica, when a passer-by
questioned them each separately: “What are you doing?”. “I am cutting stones”, answered
the first one; “I am earning one cent a day”, said the second; “I am building a cathedral for
God”, replied the third proudly.
A lawyer’s duties depend on the perception that each lawyer holds of the lawyer’s
mission. There are some lawyers who consider that their function is merely a means of
livelihood, whereby they provide their legal expertise for a fee. In this case, human rights
may not be of a particular concern to them. But, if, in addition to assisting their clients,
they believe that a lawyer has a primary duty towards society - as Roscoe Pound, the dean
of the Harvard Law School, evoked when he referred to the professional’s calling in the
spirit of public service - human rights acquire paramount transcendence and become their
ultimate aim and “raison d´être”.
The legal profession is not just a money-getting occupation. It has an excellent mission in
society - to defend the rights and liberties of citizens. Furthermore, lawyers’ special
mediation function of telling the ordinary citizens what people in power (legislative,
judicial, executive branches) decide and order and conversely telling people in power what
the ordinary citizens think and wish, is a fundamental element of democracy and an
essential factor of peace and justice. That is why all dictators, including Shakespeare’s
Henry IV, Napoleon, Hitler, Castro, etc., indefectively detest lawyers.
The United Nations Universal Declaration of HR proclaimed 50 years ago that “every
individual and every organ of society” should play its part in securing the Universal
Declaration of Human Rights. The Universal Declaration programme is strong in rhetoric,
but weak in force. It is a special obligation of all lawyers to further the fundamental rights
as a basis for civil, economic and social justice.
There is an unfortunate tendency for many, including lawyers, to consider HR as another
discipline of law, on the same level as company, tax or administrative law. This
conception needs to be abandoned. HR must interest and concern all lawyers. Human
rights are not the business of a few criminal or activist lawyers, but of the legal community
as a whole without exception.
Lawyers assisting in the myriad of cross-border transactions that take place everyday,
exert an enormous influence over economic and human relationships, and must be the
promoters and protectors of the rights of humanity. Lawyers, who give advice to the over
53,000 existing transnational corporations and their 400,000 auxiliary companies, which
control two-thirds of the world’s trade, are also the conscience of such entities and the
watchdogs against fundamental rights violations. If a lawyer, in whichever field he
practices, excels in his speciality, but his client breaches HR, the work of that lawyer is
questionable.
If the rule of law and HR are about legality, they are the special role of lawyers.
Lawyers can cooperate in the protection of human rights in many ways:
40











Advising clients of what can and cannot be done and dissuading them from using
illicit practices in their activities and businesses.
Enhancing ethics. The lawyer cannot simply advise on the letter of the law but
must advise on its spirit on the basis of a moral and ethical interpretation.
Treating people without discrimination. An IBA Resolution urges members of the
legal profession to treat all people with whom they come into professional contact
without discrimination or harassment 143.
Lifting their voices when, at home, the fundamental rights of individuals are
breached.
Playing a part, through legal education, in promoting the values of HR and in
teaching the next generation the way in which such rights can be secured in
practice 144.
Improving the quality of the administration of justice fostering the independence of
judges and lawyers and enhancing the principles of a true rule of law, adequate
legal defence and presumption of innocence.
Carrying out the defence function and balancing the defendant’s legal position with
that of the prosecution.
Stopping bribery and corruption.
Promoting corporate social responsibility. Promoting and enforcing codes of
conduct. Promoting that, in addition to annual financial and environmental audits,
companies issue social and HR audits.
Involving themselves in civil society organisations that promote and protect human
rights. The Human Rights Institute of the IBA is one such example.
Last but not least, by performing their functions professionally. As co-ministers of
justice, all lawyers in their daily work, modestly but efficiently, should facilitate
peace and justice. In the words of John W Davies, founder of Davis Polk &
Wardwell: “We build no bridges. We raise no towers. We construct no empires.
We paint no pictures. There is little of all we do which the eye of man can see. But
we smooth out difficulties, we relieve stress, we correct mistakes, we take up other
men’s burdens, and by our efforts we make possible the peaceful life of men”.
At this difficult moment in history - when international law has experienced a step back lawyers should exercise their function as social mediators and proclaim that society must
seek justice and not vengeance, peace not war.
Elie Wiesel, at the ABA Conference on the Anniversary of the Declaration of Human
rights in 1998, referred to lawyers and human rights and said:
“It is the lawyers who are at human rights groups, the International
League and other rights leagues.
Lawyers. Why? Because you realize that the law must be on the side of
humanity –not on the side of power, but on the side of humanity.
And if it is a suffering humanity, the least we can do is allocate its
suffering, the least we can do is to say: look, we are here. We know that you
143
IBA, Resolution on Non-discrimination in Legal Practice, Vancouver, 13 September 1998.
Justice Marshall Kirby, “Educating the legal profession in human rights”, IBA, 25th Anniversary
Conference, Boston 2 June 1999.
144
41
are suffering. The very knowledge that you are suffering pains me and we
do not sleep at nights”.
FOURTEENTH. CRITICISMS DIRECTED AT THE CSR MOVEMENT
“CSR is a large glasshouse
in which everyone should be careful of throwing stones” 145
“We have to be seen to be doing it”146
As the notion of CSR has matured to take a more prevalent position in the market place, it
has been critiqued quite a bit.
It is increasingly more common to hear that companies should be run in the interests of
wider society, not just shareholders. However, some still like to resurrect the old Friedman
theory that the only responsibility of business is to make profit. They insist that when a
company is successful and produces high profits, then society at large benefits. Employees
benefit directly through direct shareholdings in the company or through a salary increase.
Profits are also recycled through the tax that companies pay on their profits, taxes that
contribute to the funding of public services and social welfare. Finally, society benefits
through profits by the investment into new products and technologies.
In relation to the criticism above, there are critics who maintain that, while there is nothing
wrong with companies meeting basic requirements, in particular environmental, health and
safety, etc., the CSR doctrine has gone way overboard, and will make everyone worse off
in the end by undermining the commercial performance of corporations by saddling them
with unnecessary costs. These critics argue that corporations have run up the flag and
simply caved in to a very small number of unaccountable pressure groups where scare
tactics on environmental and social issues are based on an ignorance of how the world
actually works.
Another criticism is, that as we have seen, many business leaders are even becoming
concerned that governments are trying to offload responsibility for tackling social
problems onto the shoulders of businesses147 (See Thirteenth).
Finally, it is said that CSR is still in an undeveloped stage. The vocabulary versus
regulation debate (whether CSR should be imposed on businesses) makes no sense from
the South’s point of view. CSR may favour larger producers and manufacturers because
these companies have the resources to satisfy elevated labour and environmental standards.
Smaller companies, those that form the vast majority of businesses in the developing
145
Sarah Hoggs Chairman of ·i Group PLC, Cadbury Corporate Governance and Chairmanship. A personal
view, 2002, p. XIII.
146
Head of public affairs of a large supermarket chain, The Observer.
147
IOD conference in London on CSR, The Guardian, 26 September 2002. Andrew Wilson, Director of
Ashride Management College, “They (corporate leaders) are now keen to know from government exactly
what the limits are for CSR compared to its own responsibility”.
42
world, are in danger of being overlooked by the Northern buyers who are under pressure
from head offices and host country consumers to ensure imported products are traceable
and ethically sound148.
FIFTEENTH. CONCLUSION
“CSR may have entered our national vocabulary
but it has not taken root in our consciousness”149
CSR has become increasingly more important in recent years as a result of the recognition
of the essential contributions of businesses to social, environmental and HR progress and
growing pressures from consumers, investors, employers, governments, NGOs and public
opinion.
An increasing number of businesses already have CSR as a priority in their agendas.
Businessmen are now more convinced that adopting ethical standards is in the company’s
best interests, and that they gain competitive advantages from raising their ethical
standards both internally and externally.
However, there is still a low adherence of companies to the CSR doctrine. The Institute of
Public Research of the UK revealed that only 4 out of 10 company boards discuss social
and environmental issues routinely or even occasionally; only one-third of organisations
have a board member with an environmental remit; and only one-fifth have a board
member with an interest in social issues150. There is a piecemeal application of CSR, and
there is no systematic or sincere change in big businesses151.
A few months ago, a teacher, a consultant, an advisor and a management educator
published a book on CSR152. They end the book with these following words that I would
like to adopt:
“Unless engagement with these initiatives is underpinned by truth, righteousness,
peace, love and non-violence, they will result only in processes that undermine
their intentions. If there are those who believe that we can reach the Millennium
targets without reference to these five fundamental human values, then we may
fail. You have to love children to not want them to be exploited, you have to
believe in peace and non-violence to engage in the lengthy process of stakeholder
148
Tom Fox, senior research associate at Jurisdictional Institution for Environment and Development, The
Observer, 2 February 2003.
149
Ella Joseph, centre-left think-tank IPPR, The Observer, 2 February 2003.
150
Nick Mathiason, “Company ethics? They are not business”, The Observer, 17 November 2002.
151
Naomi Klein, No logo, 2000, cited by Steve Hilton and Giles Gibbons, op.cit., p. 66: “There is absolutely
no evidence that any of this reform activity is coalescing into a universal standard of ethical corporate
behaviour... instead what we have with the proliferation of voluntary ethical codes of conduct and ethical
business activities is a haphazard and piecemeal mass of crisis management”.
152
Malcolm McIntosh, Ruth Thomas, Deborah Leipzigen, Gill Coleman, Living Corporate Citizenship.
Slapstick rules to socially responsible business, 2003.
43
consultation, and you have to believe that the truth is sacred to expose you
decision making to scrutiny”.
44