INTERNATIONAL LABOR AFFAIRS ALERT
April 1999
CORPORATE CODES OF CONDUCT: A REVIEW OF RECENT INITIATIVES
Staff Contact: John Ritchotte
Phone: (212) 703-5047
email: jritchotte@uscib.org
Pressure on companies to adopt codes of conduct increasing
Over the past several months, governments, trade unions, non-governmental organizations (NGOs) and international organizations have stepped up the pressure on corporations to adopt codes of conduct on social, labor, and environmental issues. The purpose of this document is to describe the most important of these activities and explain their significance to U.S. corporations. The debate over codes is a debate over (a) who controls corporate investment and sourcing decisions and (b) union and NGO access to corporate property and information.
European Parliament passes resolution on European Code of Conduct
In January 1999 the European Parliament overwhelmingly approved a Resolution calling on the European Commission and the European Council to develop a model code of conduct for European companies. The non-binding Resolution calls for the creation of a monitoring mechanism and would create tribunals within the Parliament to which companies would be invited to defend their conduct abroad.
The model code of conduct would be drawn from ILO core Conventions and the OECD Guidelines for Multinational Enterprises; the UN Declaration on Human Rights; the UN Convention on Biological Diversity and the Rio Declaration; the OECD Guidelines on Bribery and Corruption; and several other international agreements.
While not directly addressed to U.S. corporations, the Resolution clearly represents a troubling development. The terms of the debate in the Parliament reveal that its members are both unaware of the benefits of FDI and unable to distinguish between what is the appropriate role of government and of business. With the Parliament gaining a stronger institutional role, these protectionist and anti-business impulses could have much greater impact. The European Commission has taken up the codes issue and will push for them at the international, multilateral level.
It is also clear that European governments (particularly the UK) as well as the U.S. and Canadian governments, have taken up the codes issue and are using various international forums to promote them. For copies of the Resolution, please contact John Ritchotte.
European industry and employers confederation seeks dialogue with NGOs to reduce pressures
UNICE, the main European employers confederation, has responded well to the Parliament’s Resolution thus far. In a one-page statement, it strongly objected to the proposal, highlighting its weak legal basis and calling instead for an approach that supports sound business practices. However, there are indications that UNICE may be adopting a more conciliatory stance. In a recent draft position paper, it proposes to have a dialogue with NGOs and trade unions in order to “prepare adjustment” of the UNICE position. UNICE will hold a series of workshops with trade unions and various consumer, environmental, and human rights NGOs in order to search for specific areas where they might cooperate.
The USCIB is communicating with UNICE on these issues and is explaining our views on them. We will keep the Committee updated on any developments.
EU Committee of the American Chamber of Commerce in Brussels releases draft statement inconsistent with majority of the business community
The EU Committee of the American Chamber of Commerce (EUC) represents U.S. business interests before the European Commission. It recently issued a draft statement on codes of conduct that called for a model code of conduct, independent monitoring, and even for a linkage between worker rights and trade at the WTO. These positions contravene not only the positions of virtually every U.S., European, and global business organization, but are also inconsistent with the USCIB position paper on codes of December 1998.
The USCIB and many members of the EUC responded quickly to the draft statement, written by representatives of the apparel and footwear industries. It appears that certain prominent companies within these industries, having developed their own detailed codes and monitoring systems, are seeking to have those same systems endorsed by the larger business community. The EUC will redraft the paper taking into account the concerns raised by its members.
The USCIB will continue to track this issue and keep our members informed of developments. Members are urged to contact their representatives in Brussels to express their views directly with the EU Committee. For further information, please contact John Ritchotte.
International Labor Organization seeks to carve out role for itself
The ILO has, over the last 18 months and at the urging of the U.S., UK, and Canadian Governments (among others), attempted to establish itself in the codes debate. Thus far it appears that the Organization has been solely engaged in research and providing information. Trade unions, industrialized country governments, and the Office itself seek a much broader role. This includes direct assistance to companies in developing, implementing, and auditing a labor code of conduct; developing a model code of conduct with benchmarked indicators; and developing a global auditing, verification, and certification scheme. These proposed activities were strongly opposed by developing country governments and the Employers’ group.
There are several specific concerns. First, in advising companies directly, the ILO would go beyond its Constitutional mandate of dealing with employers’ organizations and unions. Much more troubling, however, is that the ILO could in effect place itself in a position of approving or disapproving codes, if it agreed to help one company and not another. For example, would the ILO, given its trade union constituency, help a corporation whose code of conduct did not include freedom of association? On which ILO Conventions would a code of conduct be based? Would an ILO code of conduct reflect the detailed requirements of the relevant Conventions?
Kevin Becraft (IBM), Vice Chairman of our Codes of Conduct Subcommittee, will attend a meeting of corporate executives sponsored by the ILO and will present the USCIB position.
International Organization of Employers will advise its members on how to respond to codes pressure
The IOE is developing a position paper and guidance for employers’ associations and companies based in the some 130 countries with IOE members. The paper will also attempt to influence and direct the ILO activity described above. While supportive of company efforts to develop codes, the position paper will point out that mandatory codes of conduct and independent monitoring constitute an infringement on both management authority and state sovereignty by reaching into the global supply chain. It will argue that such codes are a means to link investment and trade to labor standards outside of the WTO. It will note that codes reflect a particular company’s needs and philosophy and will therefore vary from company to company. The USCIB is assisting in the drafting of this paper.
“Global Sullivan Principles,” endorsed by a few U.S. and European companies, to be formally issued in May
At the behest of Reverend Leon Sullivan, a small group of U.S. and European companies developed a set of principles entitled the “Global Sullivan Principles.” Procter & Gamble, General Motors, Colgate-Palmolive, and Sun Oil are the U.S. companies that have thus far endorsed them. Shell and Rio Tinto of the UK and TATA Industries of India have also done so. Enclosed is a copy of the Principles.
Intended as an aspirational statement to which companies can align their internal policies, the Principles cover such things as equal opportunity; freedom of association; safety and health; and ethical business dealings.
While there will be no independent verification associated with the Principles, each endorsing company will self-monitor and self-report to Leon Sullivan’s organization. It is envisioned that annual meetings would take place at which endorsing companies would share best practices and benchmarks. The Principles will be formally launched at the African/African-American Summit in Accra, Ghana in May. Leon Sullivan is urging UN Secretary-General Kofi Annan to endorse them.
In order to learn more about the Global Sullivan Principles, Members are encouraged to attend the Labor & Employment Policy Committee meeting on May 11 and 12, where a General Motors executive will discuss the thinking behind adopting the Principles. For more information, please contact John Ritchotte.
Council on Economic Priorities seeks accreditation by major international agencies
An NGO that has traditionally evaluated companies according to their environmental and other performance, the CEP has developed an auditing and certification scheme on labor and social issues entitled SA 8000. Superficially patterned after ISO 9000 and ISO 14000, SA 8000 contains a detailed list of benchmarks against which a “certified” inspector would judge a company. The CEP is engaging in a concerted effort to achieve official certification with the various industry certification agencies.
SA 8000 would evaluate companies on such sensitive political issues as freedom of association and a living wage. It makes indiscriminate references to various ILO Conventions on occupational safety and health in addition to the core Conventions.
The USCIB has not endorsed this initiative and has alerted some of the certification industry agencies of our position. Kevin Becraft has spoken at meetings of certification authorities on SA 8000.
Review of the OECD Guidelines for Multinational Enterprises would add burdens to U.S. corporations
A review of the OECD Guidelines for Multinational Enterprises is underway. Of particular concern to trade unions, NGOs, and governments are the employment and environment chapters of these Guidelines. They seek to expand the scope of the employment chapter to cover such issues as prior information and consultation in the case of layoffs and restructuring; human rights; privacy; and child labor and forced labor. They also seek to include reference to the new ILO Declaration on Fundamental Principles and Rights at Work and to ILO Conventions.
Equally troubling, many of these groups have confused ideas about the voluntary nature of these Guidelines. On the one hand, most insist that they remain voluntary. On the other hand, they will speak in terms of enforcement and implementation. Another goal is to expanding the application of the Guidelines beyond OECD countries. This proposal would not only raise jurisdictional problems, but would also expose companies to criticism within the OECD for their worldwide practices. In addition trade unions are pushing to be able to name individual companies in the OECD procedures that determine violations of the Guidelines.
BIAC is resisting any change to the text and procedures of the Guidelines that is not carefully and fully negotiated. BIAC recently held consultations with the OECD where several OECD-based corporations (including 4 from the U.S. – Coca-Cola, Pfizer, General Motors, Motorola) explained the various employment, training, human resource management, and health and safety improvements that resulted globally from their FDI. We also explained why the OECD must be cautious about expanding the scope of the Guidelines beyond the OECD countries. The USCIB drafted the BIAC summary of the meeting and the BIAC position paper on the employment chapter that was presented to the OECD for its review. For copies of the paper, please contact John Ritchotte.
