Commerce with Conscience

Around the world, consumer pressure and media attention have encouraged companies to address corporate social responsibility resulting in the adoption of a variety of codes of conduct. In February 1999 in Ottawa, Canada, the International Centre organized a seminar entitled Commerce with Conscience: Options for Business in the Global Economy, which brought together leading thinkers and activists to share their experiences and to discuss Canada's options for respecting human rights in the global economy.

Summary of the  " Commerce with Conscience ? Human Rights and Corporate Codes of Conduct - " Volume1 by Craig Forcese - 1997.  You can order by E-mail at : ichrdd@ichrdd.ca

International businesses are becoming increasingly important players on the world stage.  Human rights activists are focusing their attention more and more on large corporations who are being called to account for the impact of their practices on international human rights. Human rights organizations such as Human Rights Watch in New York and the International Secretariat of Amnesty International have either actively promoted the use of human rights-sensitive codes of conduct by firms operating internationally or have expressed an interest in doing so. In the United States, groups such as the National Labor Committee Education Fund in Support of Worker and Human Rights in Central America have launched protest campaigns designed to oblige corporations to effectively implement their codes of conduct, particularly those relating to the treatment of workers in Export Processing Zones. A
similar campaign focusing on Levi Strauss and Nike has been launched by the Canadian Organization for Development and Peace, a Canadian non-governmental organization.

Governments have also begun promoting voluntary codes of conduct for national businesses operating overseas. In the United States, the Clinton Administration has sought to defuse criticism of its failure to consider human rights concerns during its
renewal of China's most favoured nation trading status by promoting, however softly, a voluntary code of conduct for US businesses overseas. A number of Congressional bills that would encourage US businesses to adhere to human rights standards in international operations have been introduced in both the House of Representatives and the Senate in recent sessions of Congress. Similarly, in 1994, the then-governing Labour Party of Australia called for a national voluntary code for Australian businesses operating in the South Pacific. In Canada, meanwhile, corporate human rights codes of conduct are beginning to generate interest among business and political leaders.

Arising from the present preoccupation with corporate codes of conduct are concerns that a focus on such voluntary measures will take pressure off governments to work towards more systematic means of encouraging respect for international human rights, such as linkages between trade and human rights. Many critics of codes see them as largely ineffectual, unenforceable and ultimately counterproductive, in part because corporations treat codes as public relations measures rather than obligatory covenants.
Supporters see codes as pragmatic means to effect real change in a world where governments are increasingly reliant to impose
mandatory measures. Ethical behaviour and adherence to, and promotion of, international human rights norms, some observers argue, is in the corporation's best interest as human rights abuses lead ultimately to unstable economic and business   environments. The job of the human rights movement is to make business leaders see this and act accordingly.

The dilemma implicit in the use of corporate codes of conduct as means of promoting human rights is illustrated by the example of South Africa. In 1977, the Reverend Leon Sullivan, a member of the General Motors board of directors, proposed the Sullivan
Principles dealing with the behaviour of US corporations in South Africa. The Principles outlined a code of conduct designed to allow US corporations to operate in South Africa without partaking in the systematic human rights abuses characteristic of the apartheid regime. Many observers feel that firms generally did a good job abiding by the Principles. Still, others note  that corporations could not operate in South Africa without implicitly benefiting from a system whose economic purpose was the maintenance of cheap labour and without bolstering the staying power of the apartheid regime. The success of the code stemmed not so much from the altruism or social responsibility of the corporations as from the realization that the alternative to the code was full-scale economic sanctions. Corporations were also motivated by potent shareholder pressure from large public pension funds and constraints imposed by US state and municipal governments on procurement from businesses operating in South Africa. In the absence of these "big sticks," adherence to the Principles may well have been less marked.

This conclusion echoes findings from studies on Canadian domestic voluntary codes: "[t]ypically voluntary codes are a response to real or perceived threats: of a new law or regulation; of competitive pressures or trade sanctions; or of consumer pressures or boycotts."   A 1978 UK study of advertising codes of ethics from around the world came to similar conclusions. It found that:            industry will dedicate resources to code administration only if it expects benefits such as consumer goodwill or the removal of government regulation; industry will pay lip service to codes but may not change its behaviour where profits are at issue;  code enforcement mechanisms are more likely to be clandestine and prone to conflict of interest problems than are government regulations.

These critiques suggest that corporate codes of conduct have both strengths and significant weaknesses. If the human rights movement is shifting its focus from governments to private corporate actors, this move should be accompanied by a systematic
attempt to resolve the contentious questions surrounding the use of codes and to spell out strategies available to human rights advocates to ensure that adoption of codes is not counterproductive.

The report that follows is the first in a series of two on the role of business in international human rights protection and promotion. This series summarizes the findings of a research study conducted by the Canadian Lawyers Association for International Human
Rights (CLAIHR) in late 1996.

Conclusion of the report

In concluding their study of child labour and codes of conduct in the US apparel industry, the US Department of Labor described corporate codes of conduct as a new and promising approach that can contribute to the elimination of child labor in the global garment industry. They involve the private sector - rather than governments and international organizations - in developing solutions to this complex problem.

At the same time, the study cautioned that "[i]t is important to  keep in mind ... that codes of conduct are not a panacea." The warning is particularly significant in light of the limitations on actual implementation and enforcement of codes identified by the
study and other observers.

This report has examined human rights codes of conduct employed by US firms in their overseas operations. It also represents a first effort to measure the prevalence and content of human rights codes of conduct in the Canadian context. The report suggests that the largest Canadian companies, like many of their US counterparts, are beginning to consider human rights issues in their international practices. This awareness is gratifying.  At the same time, the report flags a number of shortcomings in codes of conduct that may reduce their utility. First, the study suggests that the majority of large Canadian businesses operating or
sourcing abroad do not have codes containing reference to even the most basic human rights standards. Second, most codes lack the independent monitoring requirements viewed as essential by many code analysts.  Third, companies appear to be reluctant to share their codes with the public, even when they report having codes containing human rights language. This recalcitrance runs counter to the call for transparency in code development, implementation and administration promoted by code analysts.

This report also raises the question of what inducements drive businesses to adopt codes and how business implementation and observance of codes can be promoted.  The second publication in this series will take up this question by looking at how companies can be encouraged to remedy code shortcomings identified here to better ensure that Canadian companies operating abroad respect basic human rights.

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There is also a publication from North south Institute called 'Canadian Corporations and Social Responsibilities.  You can find a summary at http://www.nsi-ins.ca/ensi/news_views/news01.html

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