CSR World

Ramon Mullerat OBE Mullerat Abogados

INTRODUCTION

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. KOFI ANNAN, UN SECRETARY-GENERAL, AT THE WORLD ECONOMIC FORUM IN DAVOS,

SWITZERLAND ON 31 JANUARY 1999

Economic corporations play a prominent role in the 21st century, more prominent than ever. Although corporate social responsibility (CSR) is about corporations being good citizens, it affects everyone – corporations, governments, NGOs and international organisations. This chapter aims to examine the key international institutions that have played and are playing a leading role in promoting CSR. Some of these will already be familiar to the reader, although perhaps their work with regard to CSR is not so well known. Others are more recent reinforcements that have helped to catapult the CSR movement to a new level of international awareness.

The ILO Tripartite Declaration of Principles

The only irreplaceable capital an organisation possesses is the knowledge and ability of its people.

ANDREW CARNEGIE, QUOTED IN THOMAS A. STEWART, INTELLECTUAL CAPITAL, THE NEW WEALTH OF ORGANISATIONS, 1997.

The International Labour Organisation (ILO) was created in 1919 in order to combat the widespread problem of labour conditions involving injustice, hardship and privation and is the only remaining initiative arising from the Treaty of Versailles. The ILO produced an internationally applicable mandate on labour standards, which deals with social policy and human and civil rights matters and aims to set a touchstone for labour rights such as freedom of association, the right to organise, collective bargaining, abolition of forced labour and equality of opportunity and treatment.

The ILO adopted a Tripartite Declaration of Principles concerning Transnational Corporations (TNCs) and Social Policy in 1977, called ‘tripartite’ because it was signed by governments and employers’ and workers’ representatives. 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 economic actors: TNCs, governments, employers’ and workers’ organisations.

Because of the international nature of the ILO standards, they have been written with a certain degree of flexibility in order to respect the distinctions between national norms and to facilitate ratification globally. This is particularly true of the Tripartite Declaration. Nevertheless, the ILO is opposed to the idea of having different standards for different regions or countries, and “categorically refuses to accept the very idea that there could be sub-standards for sub-humans”. An example of the important recommendations that the ILO has implemented concerns labour in developing countries. The Tripartite Declaration stresses the need to use local resources where possible and to encourage the “progressive promotion of the local processing of raw materials”; it advocates “giv[ing] consideration to the conclusion of contracts with national enterprises for the manufacture of parts and equipment”; and urges TNCs to source and promote the labour resources in any host country that they may be conducting their affairs in. The Declaration was updated in 2000 in the light of the 1998 ILO Declaration of Fundamental Principles and Rights at Work. The parties to which the Declaration is dedicated (governments, workers, employers and TNCs) should “contribute to the realisation of the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up”.

Some complain that the success of the ILO has been limited by the fact that national business associations make up one third of the membership of the ILO and that some western states did not favour the channelling of their major concerns through the ILO. However, the Tripartite Declaration has had an undisputable impact in the improvement of labour conditions in the world.

Further information at www.ilo.org.

The Global Sullivan Principles

As a company which endorses the Global Sullivan Principles, we will respect the law, and as a responsible member of society we will apply these Principles with integrity consistent with the legitimate role of business. THE GLOBAL SULLIVAN PRINCIPLES, INTRODUCTION

The Global Sullivan Principles were drafted in 1977 by Reverend Leon H. Sullivan to encourage US companies operating in apartheid-era South Africa to treat their African employees and business partners the same as they would their American counterparts. The Principles, based on non-segregation, fair employment and equal pay for equal work, called for the initiation and development of training programmes, the promotion of non-whites to managerial positions and the improvement of the quality of employees’ lives outside the work environment. In an effort to expand the scope of the Principles beyond South Africa, the Reverend Sullivan created the Global Principles of Social Responsibility which were launched in 1999.

The Principles offered a framework to align socially responsible companies and organisations working in disparate industries and cultures so as to promote the common goals of human rights, social justice and economic development. By providing an early example of the effectiveness of leveraging voluntary public commitments by private actors, the Sullivan Principles have helped provide the foundations for many recent initiatives, ranging from the US-based Apparel Industry Partnership (the predecessor to the Fair Labour Association) to the UN Global Compact.

In November 1999, at a United Nations meeting hosted by Secretary General Kofi Annan, Rev. Leon Sullivan released the Global Sullivan Principles, a global code of conduct for companies of all sizes. Rev. Sullivan was supported in this launch by the presence of the CEOs of GM, Colgate Palmolive, Sun Oil, and Chevron, as well as top executives of other corporations, representing the broad appeal of the Principles. The objectives of the Global Sullivan Principles are to support economic, social, and political justice by companies where they do business, to support human rights and to encourage equal opportunity at all levels of employment.

The Global Sullivan Principles are unique in their brevity. They were designed as an ‘aspirational framework’: concise, rather than detailed, and universal, rather than reflective of any particular social tradition. Most of all they were designed so as to be understood by all stakeholders, making it everyone’s business to support the efforts of corporations to ‘advance the culture of peace’. Also, unlike many recent codes of conduct such as the Social Accountability 8000 or the Global Principles of Religious Shareholders, the Global Sullivan Principles do not stipulate reporting on adherence to the code to shareholders or the general public. An annual report on progress is sent directly to Rev. Sullivan to provide evidence of the company’s commitment to the objectives of the Principles. The Global Sullivan Principles stand to make a valuable addition to improving the quality of life, equality, and dignity for communities wherever TNCs operate.

Further information at www.globalsullivanprinciples.org.

The Caux Round Table

The activity of the Caux Round Table is based on a common respect, for the highest moral values, and on responsible action by individuals in their own sphere of influence.

HARRY A. HAMMERLY, THE CASE FOR THE CAUX ROUND TABLE PRINCIPLES FOR BUSINESS, OCTOBER 1995

The Caux Round Table (CRT) organisation was set up in 1986 with the aim of promoting moral capitalism. Whilst recognising that the aim of business is to make money, the CRT Principles also point out the many ways that companies can use ethical methods to sustain and develop the economy from which they derive their livelihood. There are seven General Principles, that seek to clarify the spirit of kyosei (a Japanese concept that means living and working together for the common good, enabling co-operation and mutual prosperity to coexist with healthy and fair competition) and human dignity, and specific Stakeholder Principles concerned with practical application in the workplace. The seven General Principles are: Beyond Shareholders toward Stakeholders; Toward Innovation, Justice and World Community; Beyond the Letter of Law Toward a Spirit of Trust; Respect for Rules; Support for Multilateral Trade; Respect for the Environment; and Avoidance of Illicit Operations. Each of these principles gives a measure of direction on how businesses can establish themselves as socially upright enterprises by following their guidance. Whilst bearing in mind the difficulty in implementing such principles, the CRT has developed the Arcturus method of implementation which leans towards a goal orientated regime that assists companies to adopt the CRT principles and borrows from some self-assessment ideologies.

The founders of the CRT had to overcome initial scepticism to the codification of ethical principles to produce the CRT Principles as they are today. They noted that such scepticism is often most prevalent in the business community – and that for such moral, as opposed to legal, initiatives to be implemented, one has to understand the hierarchical system that operates in business. The top echelons of a company have to respect the principles before they have any hope of being implemented; the natural trend would be for the moral message to filter down and permeate the entire workforce. One can see then that, without the backing of company chairmen and directors, these initiatives might very easily be shelved and not given the attention that they need to attract to be able to make a difference to business philosophy. The CRT Stakeholder Principles may be summarised as follows: æ Customers: To treat all customers with dignity, irrespective of whether they purchase

products and services directly from the company or otherwise acquire them in the market. This involves providing customers with the highest quality products and services, treating customers fairly in all aspects of business transactions, including a high level of service and remedies for their dissatisfaction, making every effort to ensure that the health and safety of customers, as well as the quality of their environment, will be sustained or enhanced by products and services and to assure respect for human dignity in products offered, marketing, and advertising and respect the integrity of the culture of customers.

æ Employees: To promote the belief in the dignity of every employee and to take employee interests seriously. This represents providing jobs and compensation that improve workers’ living conditions; providing working conditions that respect each employee’s health and dignity; being honest in communications with employees and open in sharing information limited only by legal and competitive constraints; listening to and acting on employee suggestions, ideas, requests and complaints; engaging in good faith negotiations when conflict arises; avoiding discriminatory practices and guaranteeing equal treatment and opportunity; promoting in the business itself the employment of differently abled people in places of work where they can be useful; protecting employees from avoidable injury and illness in the workplace; encouraging employees in developing relevant and transferable skills and knowledge and being sensitive to unemployment problems; and working with governments, employee groups and each other in addressing these dislocations.

æ Owners/investors: To honour the trust that investors place in the company, which means applying professional and diligent management in order to secure a fair and competitive return on owners’ investment; disclosing relevant information to owners/investors subject to legal requirements and competitive constraints; conserving, protecting and increasing the owners/investors’ assets; and respecting owners/investors’ requests, suggestions, complaints and formal resolutions.

æ Suppliers: Carry on a relationship of mutual respect with suppliers. This gives rise to the responsibility to seek fairness and truthfulness in all activities, including pricing, licensing, and rights to sell; ensure that business activities are free from coercion and unnecessary litigation; foster long-term stability in the supplier relationship in return for value, quality, competitiveness and reliability; share information with suppliers and integrate them into planning processes; pay suppliers on time and in accordance with agreed terms of trade; and seek, encourage and prefer suppliers and subcontractors whose employment practices respect human dignity.

æ Competitors: Promote the belief in fair economic competition leading to the responsibility to foster open markets for trade and investment; promote competitive behaviour that is socially and environmentally beneficial and demonstrates mutual respect among competitors; refrain from either seeking or participating in questionable payments or favours to secure competitive advantages; respect both tangible and intellectual property rights and refuse to acquire commercial information by dishonest or unethical means.

æ Communities: With regard to the contribution to human rights at work across communities, respect human rights and democratic institutions, and promote them wherever practicable; recognise government’s legitimate obligation to society at large and support public policies and practices that promote human development through harmonious relations between business and other segments of society; collaborate with those forces in the community dedicated to raising standards of health, education, workplace safety and economic well-being; promote and stimulate sustainable development and play a leading role in preserving and enhancing the environment and conserving the earth’s resources; support peace, security, diversity and social integration; respect the integrity of local cultures and be a good corporate citizen through charitable donations, educational and cultural contributions, and employee participation in community and civic affairs. The CRT has in the past been looked upon as somewhat idealistic by people who are of the

belief that practicalities will always dictate how a company does business and that the CRT

objectives are just not commensurate with such a scale of practicality. However, they echo the

necessity to make such aims practicable and have certainly gone a long way in making them

more attainable to companies of all sizes and potential. Established in 1986, the CRT is one

of the original organisations to take CSR seriously and to make companies face up to the ever

increasing need to incorporate such philosophies into their ways of doing business. Further information at www.cauxroundtable.org.

Amnesty International Guidelines for Companies

As an organ of society, a company has a responsibility to uphold universal human rights towards its employees and towards the communities within which it operates. It also has a responsibility to use legitimate influence to encourage governments to uphold these rights.

THE PRINCE OF WALES INTERNATIONAL BUSINESS LEADERS FORUM, WWW.PWBLF.ORG

The Amnesty International Guidelines for Companies are aimed at company managers and offer a rationale and guidelines for companies developing and implementing a human rights policy. They draw on case studies of eight leading TNCs, exploring their approach to various human rights issues, such as indigenous peoples’ land rights, the use of security forces, working conditions and child labour. The Guidelines seek to assist companies in situations where they must tackle and manage human rights violations or the potential for such violations. The integration of human rights considerations into the fabric of a company’s operations requires an explicit policy. This should include sections which:

Companies should maintain their own internal accounting controls that are periodically verified by outside independent auditors to ensure integrity. Similarly, there should also be periodic independent verification of these procedures and the reports they generate.

According to the Amnesty International Human Rights Guidelines for Companies, TNCs can improve their ability to promote human rights by: æ Developing an explicit policy on human rights; æ Providing effective training for their managers and their staff in international human rights

standards; æ Consulting NGOs on the level and nature of human rights abuses in different countries;

and æ Establishing a clear framework for assessing the potential impact on human rights as a

result of the companies’ and their sub-contractors’ operations. Further information at www.amnesty.org.

Social Accountability 8000

I believe that corporations should be membership communities because I believe that corporations are not things, they are the people who run them.

CHARLES HANDY, INTERVIEWED ON STRATEGY AND BUSINESS, 1995

The Council on Economic Priorities Accreditation Agency has established Social Accountability 8000 (SA8000), a standard for assessing labour conditions in global manufacturing operations, addressing prison labour, wages, child labour, health and safety issues, and relies on certified monitors to verify factory compliance with the standard. SA8000 is promoted as a voluntary, universal standard for companies interested in auditing and certifying labour practices in their facilities and those of their suppliers and vendors. It is designed for independent third party certification. This initiative specifies requirements that companies can follow to develop and enforce policies to manage CSR, and to enable companies to demonstrate to any interested parties that their policies and practices are in conformity with this standard.

This initiative is based on the principles of international human rights norms as described in ILO conventions, the UN Convention on the Rights of the Child and the Universal Declaration of Human Rights. It measures the performance of companies in nine key areas: child labour, forced labour, health and safety, free association and collective bargaining, discrimination, disciplinary practices, working hours and remuneration, each of them with their specific duties (criteria). SA8000 also provides for a social accountability management system to demonstrate ongoing conformance with the standard. A company therefore maintains appropriate records to demonstrate conformity with the requirements of this standard. Companies wishing to be certified for SA8000 must be monitored, assessed and accredited by external certification agencies or organisations. Social Accountability International (SAI) hosts a SA8000 conference each year, and raises awareness of SA8000 through its International Consultative Workshops project, by encouraging local partnerships among NGOs, business and trade unions. Further information at www.sa8000.org.

The OECD Guidelines for Multinational Enterprises

Voluntary principles and standards for responsible business conduct consistent with applicable laws. The Guidelines aim to ensure that the operation of these TNCs enterprises are in harmony with government policies, to strengthen the basis of mutual confidence between enterprises and the societies in which they operate, to help improve the foreign investment climate and to enhance the contributions to sustainable development made by multinationals.

OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES

The Organisation for Economic Cooperation and Development (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 OECD Guidelines provide voluntary principles for responsible business conduct in fields such as employment, industrial relations, human rights, environment, competition, information disclosure and taxation, combating bribery, and consumer protection.

The Guidelines are part of the OECD Declaration on International Investment and Multinational Enterprises, the other elements of which relate to national treatment, conflicting requirements on enterprises and national investment incentives and disincentives. They contain a preface and ten sections related to Concepts and Principles, General Policies, Disclosure, Employment and Industrial Relations, Environment, Combating Bribery, Consumer Interests, Science and Technology, Competition and Taxation. All the Guidelines encourage application across multinational supply chains as well as in the organisations that they manage. The OECD recognises that many enterprises have developed internal programmes, guidance and management systems that underpin this commitment to good corporate citizenship, good practices and good business and employee conduct which includes consulting and auditing.

The aim of the OECD is to highlight the fact that by making such enormous contributions to society in terms of the number of jobs generated and the revenue received, TNCs have a duty to carry on their business responsibly, this being their fundamental activity. Given that companies are subject to a host of legal regulation, the OECD recognises the need for non-voluntary participation in more flexible initiatives such as the Guidelines for TNCs. Key members of the OECD recognise the inherent difficulties in voluntary initiatives and understand the need to balance flexibility with the power of enforcement, in order to avoid negative publicity and criticism aimed at organisations who seem present little more than a public relations ploy to businesses. Governments adhering to the Guidelines are committed to continual improvement of both domestic and international policies with a view to improving the welfare and living standards of all people.

Further information at www.oecd.org.

The UN Global Compact

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.

KOFI ANNAN, UN SECRETARY-GENERAL, AT THE WORLD ECONOMIC FORUM IN DAVOS, SWITZERLAND, ON 31 JANUARY 1999

The Global Compact (GC) was announced by the UN Secretary-General 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 intended to promote CSR and citizenship in the global marketplace; it brings companies together with UN organisations, 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 at the GC launch, the GC aims to contribute to the emergence of “shared values and principles, which give a human face to the global market”.

The companies engaged in the GC, a total of 1896 at a recent count, 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 very fragile and may have an unsure future. Indeed, mounting concerns about the effects of globalisation on the developing world suggest that, in its present form, globalisation is not sustainable. The GC was created to help organisations 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 safety net that allows corporations to sign on without demonstrating true 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.

The proposals have subsequently won widespread support from leading businesses, business associations, NGOs and representatives of labour organisations as a good and practical basis for businesses to establish operational policies and benchmark standards. At a time when business behaviour is coming under closer scrutiny by the public, consumers and activists, and the best businesses are making clear public commitments to good standards, the GC is a useful framework to promote progress. In the GC companies are asked to undertake four commitments with regard to ten principles, which are grouped under four headings as follows:

Human rights

æ Support and respect the protection of internationally proclaimed human rights; and æ Make sure they are not complicit in human rights abuses.

Labour standards

The environment

æ Support a precautionary approach to environmental challenges;
æ Undertake initiatives to promote greater environmental responsibility; and
æ Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

æ Businesses should work against all forms of corruption, including extortion and bribery.

The last principle (Anti Corruption) was added and announced by Kofi Annan at the Executive Leaders Summit in New York on 24 June 2004. Further information at www.unglobalcompact.org.

International Chamber of Commerce Steps for Responsible Business Conduct

Rather than reacting to outside pressures, a company’s voluntary adoption of its own business principles should be motivated by the desire to express the values that guide its approach to doing business. EXTRACT FROM THE ICC NINE PRINCIPLES, PRINCIPLE NUMBER ONE

The Group on Business in Society has developed the International Chamber of Commerce (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. One of ICC’s strategic priorities is to reinforce the positive role of business in society, by encouraging CSR and good corporate citizenship. If a company is considering developing its own business principles or supporting external codes, the nine practical steps to responsible business that are suggested are as follows:

1. Confirm CEO/board commitment to give priority to responsible business conduct;
2. State company purpose and agree on company values;
3. Identify key stakeholders;
4. Define business principles and policies;
5. Establish implementation procedures and management systems;
6. Benchmark against selected external codes and standards;
7. Set up internal monitoring;
8. Use language that everyone can understand; and
9. Set pragmatic and realistic objectives.

The ICC strongly encourages voluntary corporate responsibility initiatives. Various studies have shown that companies practice good corporate citizenship by spreading best practice among customers and employees, suppliers and business associates, in areas such as labour, the environment and human rights in countries where they operate (see Sources, below). Responsible, long-term entrepreneurship is the driving force for sustainable economic development and for providing the managerial, technical and financial resources needed to meet social and environmental challenges.

Further information at www.iccwbo.org.

The Global Reporting Initiative

The birth of the Global Reporting Initiative is welcome because the GRI has the potential to increase the transparency and accountability needed to build sustainable societies. The inclusion of labour as an independent stakeholder in this initiative will be an essential component of its success.

GUY RYDER, GENERAL SECRETARY, INTERNATIONAL CONFEDERATION OF FREE TRADE UNIONS, APRIL 2002

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:

The GRI Guidelines include Principles such as Transparency, Inclusiveness, Auditability, Completeness, Relevance, Sustainability Context, Accuracy, Neutrality, Comparability, Clarity and Timeliness.

There is no doubting the importance of this initiative. What bedevils current CSR reporting is the lack of any agreed framework. Even if financial reporting post-Enron has been revealed to be no panacea, nevertheless financial analysts understand where the core data lies within financial reports that enables them to make judgements about the health of the company in question. There is no such consensus relating to CSR reporting: people simply don’t yet agree what constitutes core data with this kind of report. As a result, there are still too many reports being produced which contain photos of happy smiling children and not much else. It goes without saying that this is an area that calls for a good measure of improvement.

At the launch of the GRI, UN Deputy Secretary-General Louise Frechette praised the initiative “for successfully bringing together actors from all sectors of society in a coalition for change”. This is GRI’s strength: it has been a wide ranging combined effort, bringing together businesses and a broad range of other stakeholders across the world. Many committees and subcommittees have resulted directly, with the aim of ensuring that everyone’s voice is heard. There is little doubt about the legitimacy of the forum and there is a large will for it to succeed in a large number of quarters.

Further information at www.globalreporting.org.

UN Norms on the Responsibilities of Transnational Corporations and other Business Enterprises with regard to Human Rights

Recognising that even though States have the primary responsibility to promote, secure the fulfilment of, respect, ensure respect of and protect human rights, transnational corporations and other business enterprises, as organs of society, are also responsible for promoting and securing the human rights set forth in the Universal Declaration of Human Rights. PREAMBLE OF THE UN NORMS The Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights came before the UN Commission on Human Rights at its session in April and May of 2004. They had been submitted by the Commission’s Sub-Commission on the Promotion and Protection of Human Rights and, while the subject of intense debate in the corridors, they received little attention during official meetings. The Sub-Commission recommended that governments, UN bodies, business, NGOs and other interested stakeholders disseminate information and apply the Norms and were invited to give feedback to the sessions of the Commission on Human Rights in 2004. The aim of the public debate is to raise awareness about the Norms for business, to address the outcomes of the 2004 Human Rights Commission meeting and discuss the different arguments being put forward by governments, business, NGOs, political parties and trade unions about the Norms.

The Preamble of the Norms recalls the principles of the Universal Declaration of Human Rights, underlines that TNCs are obliged to respect such principles, including a large list of international initiatives and takes into consideration most of the guidelines that we have looked at in this chapter. It produces the General Obligations and Rules of the Norms urging that every effort be made so that they become generally known and respected. The Norms consist of a number of obligations to be respected by TNCs, such as general obligations and the rights to equal opportunities; non-discriminatory treatment; the right to security of persons; workers’ rights; the right to respect for national sovereignty and human rights; obligations regarding consumer protection and environmental protection and general provisions relating to implementation. They oblige the TNCs to adopt internal rules, to report and take measures to implement the Norms and to incorporate them into their contracts. TNCs shall be subject to periodic monitoring by the UN and shall provide compensation to those persons adversely affected by failure to comply with the Norms.

Stakeholders, including governments, have expressed a range of views on the Norms. Some do not see how the Norms add value to existing international instruments such as the OECD Guidelines and the Global Compact. Others see the Norms as an important universal and standard-setting framework based on existing international laws and standards and consider that the Norms add value in their comprehensiveness and clarification about the scope of human rights responsibilities of companies.

The International Chamber of Commerce, the International Organisation of Employers and other organisations argued that only states, and not business corporations, could be subjected to international human rights responsibilities and that the Norms would, in fact, undermine the protection of human rights. They asked the Commission to state unambiguously that the duty-bearers of human rights are states, not private persons, and that the draft Norms were of no legal significance without adoption by UN law-making organs. However, this may not be representative of the views of all businesses across the world nor of all members of the organisations. NGOs presented the opposite view to Commission members. (Information on this at www.business-humanrights.org).

In the event, the Commission adopted a decision which, after expressing its appreciation to the Sub-Commission, agreed that the Norms, as a draft proposal not requested by the Commission, had no legal standing; it also asked the Sub-Commission not to perform any monitoring functions in that regard. (The decision was adopted as a recommendation to the Commission’s parent body, the Economic and Social Council (ECOSOC) (see UN document E/2004/23); the Council then adopted the Commission’s text on 22 July 2004 as its Decision 2004/279. The US noted that the Sub-Commission had exceeded its mandate and that the process followed at the Sub-Commission had failed to obtain inputs from all interested parties; no comments were made by other delegations.)

However, on the broader question of CSR for human rights, the Commission confirmed the importance and priority of the question and set as an objective for its 2005 session the identification of options for strengthening standards on the responsibilities of TNCs on human rights, and possible means of implementation. For this purpose, the Commission asked the Office of the High Commissioner for Human Rights to prepare a study for its next session on the scope and legal status of standards relating to human rights and TNCs, and to do so based, inter alia, on the draft Norms and wide consultations.

Business responsibility for human rights is clearly on the agenda of the Commission on Human Rights and the Norms, while not in themselves legally binding on companies, are very much alive as an authoritative and comprehensive listing of responsibilities corporations may have in human rights. They provide a useful checklist of risks and responsibilities and a valuable base line for future work.

Further information at www.un.org.

The Integrity Pact

Transparency International’s vision is a world in which government, politics, business, civil society and the daily lives of people are free of corruption.

FROM THE MISSION STATEMENT OF TRANSPARENCY INTERNATIONAL

In the 1990s Transparency International (TI) developed the Integrity Pact as a tool to be used by governments and businesses as an anti-corruption measure in the field of public contracting. It contains rights and obligations to the effect that neither side will pay, offer, demand or accept bribes, or collude with competitors to obtain a contract or while carrying it out. It also provides that bidders will disclose all commissions and similar expenses paid by them to anybody in connection with the contract and that sanctions will apply when violations occur. These sanctions range from loss or denial of contract, forfeiture of the bid or performance bond and liability for damages, to blacklisting for future contracts on the side of the bidders, and criminal or disciplinary action against employees of the government. The Integrity Pact seeks to accomplish two primary objectives: æ To enable companies to abstain from bribing by providing assurances that (i) their

competitors will also refrain from bribing, and (ii) government procurement, privatisation

or licensing agencies will undertake to prevent corruption, including extortion, by their

officials and to follow transparent procedures; and

æ To enable governments to reduce the high cost and the impact of corruption on public

procurement, privatisation or licensing .

The worldwide overview of experience suggests that the Integrity Pact concept is both a sound and workable initiative for the CSR movement. One of the strengths of the concept seems to be that it is flexible enough to adapt to the many local legal structures and requirements as well as to the different degrees in which governments are willing to proceed along the lines set forth here.

Further information at www.transparency.org/integrity_pact.

Other initiatives

The broad range of initiatives heralded to deal with CSR are many in number. I have touched upon a selection of those which I feel are better known or have made a greater impact upon the progress of CSR. Here I cite a few more of them: The Good Corporation, Business Link, Business in the Community, the Observatory of European SMEs, AccountAbility, the World Bank Equator Principles, the Fair Labour Organisation, CERES, SIGMA, the Rio Declaration on Environment and Development, World Resources Institute, Business Impact, Good Money, Green Money Journal, Responsible Wealth, SVN Member Organisations, Co-op America, InvestorsÆ Circle, Human Rights Watch, Earthjustice, the Union of Concerned Scientists, the Calvert Group and UNIDO.

Also in Europe a good deal of organisations and groups are promoting CSR such as Community Mark, the Copenhagen Centre, CSR Europe, the UK Government Department of Trade and Industry, the Manifesto of Enterprises against social exclusion, Business and Society (Belgium), the European Parliament’s Code of Conduct, the European Commission on CSR, SustainAbility UK, UK Ethical Trading Initiative, Small and medium sized enterprises and CSR and the CCBE with its Guide for European Lawyers advising on CSR issues.

The common denominator: the three bottom lines of CSR

After analysing the initiatives of these organisations, it is fair to say that, despite the differences in their focus, objectives and implementations, there is a minimum common denominator among them which is encapsulated in the three principal aims of CSR, namely labour improvement, environmental protection and respect for human rights. As we have seen, some of the initiatives focus on only one of these principles, whilst others have a broader scope and embrace two or more of them. For example:

Labour improvement

In its main body of objectives, the ILO focuses for the most part on the concept of labour improvement. It seeks to ameliorate economic and social conditions, improve living standards, create more employment opportunities and facilitate the enjoyment of human rights across the world. In its Tripartite Declaration, the ILO attempts to encourage TNCs to make a contribution to these ideals of labour standards, by highlighting the ways in which they can bring such ideals to the forefront of their agenda. The Global Sullivan Principles also concentrate mainly on conditions in the workplace, advocating allowing workers to enjoy the freedom of association and to protect them from any kind of exploitation, discrimination, abuse or any form of involuntary servitude.

The environment

The UN Global Compact dedicates three of its ten principles to the protection of the environment as follows:

• Support a precautionary approach to environmental challenges;
• Undertake initiatives to promote greater environmental responsibility; and
• Encourage the development and diffusion of environmentally friendly technologies.

Human rights

Most CSR initiatives touch directly or indirectly on human rights. The UN Sub-Commission for the Promotion and Protection of Human Rights approved the UN Norms on the Responsibilities of TNCs and other Business Enterprises with regard to Human Rights. They are the first set of norms specifically aimed at the responsibilities of business in human rights. With increasing demand from society for accountability and transparency, with heightened vigilance by pressure groups via the internet, and with the growing influence of ethical investors, the question of human rights is rapidly penetrating the mainstream corporate agenda and the Norms aim at imposing binding obligations on TNCs. The great majority of these organisations’ initiatives are of a voluntary nature and therefore not mandatory or legally binding. The UN Norms are in fact the only guidelines that companies are, if and when finally adopted, legally obliged to follow.

CONCLUSION

The importance of the role that international organisations are playing in the CSR movement is unquestionable. Even if most of their principles and guidelines are of voluntary commitment, they have been crucial for the development of social business conscience and practice. Opinions on CSR are as diverse as the organisations themselves, with some hailing CSR as a beacon of hope in the face of our greed-driven monetary outlook, whilst others mainly regard it as window-dressing. Much criticism has focused on the fact that CSR initiatives have no legal force behind them, and their flexibility allows companies to change the self-imposed rules whenever it suits them. Of course, this is a cynical view, and whilst we do not live in a Disney-like world where virtue always receives the highest reward, CSR initiatives have made vast improvements to businesses previously oblivious to the need to promote fairness in business practice. But there remains much to be accomplished, which is why it would be a tremendous boost to labour, our environment and human rights if the work of these international organisations goes from strength to strength, with the support of all who believe we can make the earth a slightly better place.

SOURCES

On the International Chamber of Commerce Steps for Responsible Business Conduct:
United Nations Conference on Trade and Development, World Investment Report 1999,
Foreign Direct Investment and the Challenge of Development, July 1999.
Deborah Spar, “The Spotlight and the Bottom Line: how multinationals export human
rights”, Foreign Affairs, Volume 77, No. 2, March/April 1998.
On the UN Norms for Transnational Corporations:
The Norms are contained in UN document E/CN.4/Sub.2/2003/12/Rev.2
“Business and Human Rights: What do the New UN Norms Mean for the Business
Lawyer?” International Legal Practitioner, November 2003.
Tim McCarthy: Up date on the UN Norms for business and human rights; they are still
with us!, October 2004.

The author would like to thank Kathy Mathews for her assistance in the preparation of this chapter.