Developing Code of Ethics for Indian Industry
Total Page：16
File Type：pdf, Size：1020Kb
Developing Code of Ethics for Indian Industry Final Report National Human Rights Commission An Initiative by Institute for Corporate Sustainability Management Trust PROJECT TEAM PRINCIPAL INVESTIGATOR Debasis Bhattacharya PhD INVESTIGATOR Prabhat K. Singh ADVISOR Prof. R. R. Singh PhD EXPERTS Prof. YSR Murthy Shounak Roy Chowdhury PhD Vandana Bhattacharya ASSOCIATES Rehan A Abeyratne Gunja Kirti NHRC TEAM Jaideep Singh Kochher Savita Bhakhry PhD Nishith April 2012 CONTENTS Prologue .................................................................................................................................... i Executive Summary ................................................................................................................ ii Chapter – I ........................................................................................................1-6 Historical Preview and Evolution of Corporate Ethics 1.1. The “ethics in business” sense of business ethics 1.2. Emergence of Societies 1.3. Business Ethics as a Movement 1.4. Embedding Business Ethics 1.5. Globalization of Business Ethics 1.6. Need for Standardisation of Ethical Conduct Ethical Fallouts ................................................................................................ 7-10 A. Nike B. Primark Realisation from Ethical Fallouts Introspection Chapter – II ................................................................................................... 11-14 Contemporary National and International Practices and Experience on Corporate Ethics 2.1. Need for Formulating Industry-wide Code of Ethics 2.2. Code of Ethics: Beyond another Accounting Standard 2.4.1. International status 2.4.2. National status Introspection Chapter – III ................................................................................................. 15-44 Legal Introspections… The Need for Code of Ethics for Indian Industry 3.1 Jurisdictional barriers in enforcing human rights obligations against Trans - National Corporations (TNCs) 3.2 International legal framework 3.2.1 Human Rights 3.2.2 Labour 3.2.3 Environment 3.2.4 Anti-Corruption 3.3 The UN Global Compact 3.5 Access to remedy: 3.6 Core elements of Human Rights due diligence: 3.7 Duties on the State to respect, protect and fulfil: 3.8 Corruption 3.9 Role of Civil Society : 3.10 NHRC’s jurisdiction over matters relating to human rights and business: 3.11 Philosophical reasons on why human rights law should apply to business 3.11.1 These are the following examples all across the world which illustrates gross Human Rights violations by corporates due to absence of a mandatory code of ethics 3.12 Globalisation and human rights violations: need to incorporate ethics in legal system 3.13 Corporations Owe an Ethical Duty towards Society (CSR) 3.13.1 India’s Step towards Adopting Mandatory CSR Policy 3.14 Existing Guidelines and Principles Supporting the Implementation of a code of ethics for corporations 3.15 Human Rights norms for business 3.16 Need for a Corporate Code of Ethics: 3.17 Indian Scenario Introspection Chapter – IV .................................................................................................. 45-49 Review of Global Norms and Standards 4.1. Key International Norms and Standards 4.2.1. Early Development 4.2.2. Recent Development Introspection Chapter –V .................................................................................................... 50-54 Social and Economic Aspects of Corporate Ethics 5.1. The Debate on Sphere of Corporate Accountability 5.2. The Debate on Moving Beyond Adoption of Codes Introspection Chapter –VI ................................................................................................... 55-63 Methodology 6.1. Introduction 6.2. Research Methodology Objective of the Study Hypothesis Nature of study: Exploratory in Nature Methods of Data collection 6.3 Triangulation Methodology Need for Triangulation in this Study 6.4. Data Collection 6.5. Procedure for data collection Project at a Glimpse Chapter VII: ................................................................................................. 64-90 Data and its Interpretations 7.1. Methodology 7.2. Top Management Interview Results 7.3. Results from Questionnaire Survey 7.4. Quantitative Analysis 7.5. Qualitative Analysis 7.6. Qualitative Analysis of the 13 Focus Group Discussions Chapter –VIII ................................................................................................ 91-94 Code of Ethics for Indian Industry 8.1. The Code of Ethics A. Inclusive Business: B. Accountable Business: C. Transparent Business Standards: D. Commitment to Professed Quality and Representation Accuracy: E. Fair Competition: F. Equal opportunities employer: G. Upholding of Employee Human Rights: H. Health, safety and environment I. Corporate Citizenship J. Stakeholder Representation K. Business Association L. Conflict of interest Chapter – IX ................................................................................................ 95-107 Parameterizing Codes 9.1. Code Parameters A. Inclusive Business B. Accountable Business C. Transparent Business Standards D. Commitment to Professed Quality and Representation Accuracy E. Fair Competition F. Equal opportunities employer G. Upholding of Employee Human Rights H. Health, safety and environment I. Corporate Citizenship J. Stakeholder Representation K. Business Association L. Conflict of interest 9.2. Notes 9.3. Comments Chapter –X ................................................................................................. 108-109 Issues and Challenges in Implementation 10.1. Implementation Aspects Highlighted During Interactions 10.2. Guidelines for Implementation Chapter –XI ............................................................................................... 110-111 Conclusion and Suggestions Annexure-I.I............................................................................................... 112-153 Profile of the Organization Annexure – I.II, I.III & I.IV ...................................................................... 154-173 Questionnaires Annexure - II. ............................................................................................. 174-187 (i) Millennium Development Goals (MDGs) (ii) The Narmada Valley Development Project (iii) The Bhopal Disaster Case (iv) Shriram Fertilizer Case Abbreviation ............................................................................................... 188-189 Bibliography………………………………………………………………….190 Author’s Introduction………………………………………………………..191 [i] Prologue Second decade of this new millennium megatrend is ‘responsible business’. The consumer movement and human rights activists have become increasingly empowered, and they actively publicize news of unethical conduct of companies. These in turn have tremendous political ramifications in India. Operations of many multinational and Indian corporations have been put under scrutiny by these groups. They demand the companies to have appropriate Code of Ethics (CoE); to end the use opportunistic and discriminatory business practices; or to establish fair wage policies for the local employees, or to have the clear cut public relation norms so far as paid news and derogative advertisements are concerned, etc. Active implementation of ethical conduct in business is a relatively new phenomenon, although its roots can be traced in history; business ethics is as old as business itself. It is very much in the interest of long-term business with the backdrops of stakeholders’ dependence; this development has been instrumental in introducing ethical business conduct as an integral part of international human rights movement. Among others, the seven conventions of the International Labour Organization (ILO); the United Nations Universal Declaration of Human Rights (UDHR) 1948, the ensuing International Covenant for Civil and Political Rights (ICCPR), and the International Covenant for Economic and Social Rights (ICESR), both are in force from 1976. These have given structural legislative support to the development of guidelines for ethical business conduct, especially for multinational corporations. Although the interest in business ethics has increased in the recent years, the commitment shown by the Indian Parliament in the New Companies Bill to social responsibility is not yet very common to other country, even though the term “good corporate citizen” is becoming an integral part of the global trade rhetoric. An open, extensive, and effective CoE facilitates communication between people and thus promotes democracy. The positive effect of CoE on the other hand will protect the interest of business vis-a-vis society at large. It is a positive sign that, despite the absence of pressure from external entities or any other groups, this attempt have paved the way for Companies to have ethical codes of conduct. It’s an effort to build the nation with transparent and accountable mechanism. But the real Litmus test for the degree of their ethical commitment is, whether or not they allow an independent, outside specialist or non-governmental organization to monitor their compliance in their production plants and their vendors’ plants for the existing conditions. At the moment neither one of the companies in this study allows it. However, to translate the CoE into reality, the issue is critically important and is therefore worth a proper handholding towards conduct ‘facilitating workshops’ with the cross section of industry