Company Codes of Conduct and International Standards: an Analytical Comparison
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The World Bank Group • Corporate Social Responsibility Practice The CSR Practice advises developing country governments on public policy roles and instruments they can most usefully deploy to encourage corporate social responsibility. COMPANY CODES OF CONDUCT AND INTERNATIONAL STANDARDS: AN ANALYTICAL COMPARISON PART I OF II: Apparel, Footwear and Light Manufacturing Agribusiness Tourism The CSR Practice is part of the Private Sector Development Vice Presidency, jointly operated by the International Finance October 2003 Corporation and the World Bank. Telephone: 202 473 7646 Facsimile: 202 522 2138 2121 Pennsylvania Avenue, NW E-mail : [email protected] Washington, DC 20433 USA Internet: www.worldbank.org/privatesector/csr COMPANY CODES OF CONDUCT AND INTERNATIONAL STANDARDS: AN ANALYTICAL COMPARISON PART I OF II: Apparel, Footwear and Light Manufacturing Agribusiness Tourism Gare Smith, Partner and Chairperson, Corporate Social Responsibility Practice Group, Foley Hoag LLP Dan Feldman, Attorney, Corporate Social Responsibility Practice Group, Foley Hoag LLP October 2003 TABLE OF CONTENTS i This report is a product of the staff of the World Bank. The findings, interpretations and conclusions expressed herein do not necessarily re- flect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guaran- tee the accuracy of the data included in this work. Printed on Acid-Free Recycled Paper. Table of Contents 1.0 Introduction . 1 2.3 Findings Regarding Environmental Standards . 12 1.1 Overview . 1 2.3.1 General Policy Statement. 12 1.2 World Bank Group Project Overview . 2 2.3.2 Materials . 13 2.3.3 Emissions . 13 2.0 Apparel, Footwear and Light 2.3.4 Pollution Control and Manufacturing Sector . 5 Hazardous Substances . 14 2.3.5 Waste Management . 14 2.1 Scope and Methodology . 5 2.3.6 Packaging and Transport . 14 2.2 Findings Regarding Human Rights and Labor Rights . 6 3.0 Agribusiness Sector . 17 2.2.1 Forced Labor . 6 2.2.2 Child Labor . 7 3.1 Scope and Methodology . 17 2.2.3 Wages, Benefits, and Terms of 3.2 Findings Regarding Human Rights Employment. 8 and Labor Rights . 18 2.2.4 Hours of Work . 9 3.2.1 Forced Labor . 18 2.2.5 Discrimination . 9 3.2.2 Child Labor . 19 2.2.6 Harassment, Abuse, and 3.2.3 Wages, Benefits, and Terms Disciplinary Action . 10 of Employment. 20 2.2.7 Freedom of Association and Collective 3.2.4 Hours of Work . 21 Bargaining . 11 3.2.5 Discrimination . 21 2.2.8 Health and Safety Policies . 11 3.2.6 Harassment, Abuse, and Disciplinary Action . 22 iii 3.2.7 Freedom of Association and Collective Annex A Apparel, Footwear and Bargaining . 22 Light Manufacturing Sector 3.2.8 Health and Safety Policies . 23 Labor and Human Rights Standards . 35 3.3 Findings Regarding Environmental Standards . 24 3.3.1 General Environmental Policy Statements . 24 Annex B Apparel, Footwear and 3.3.2 Energy . 24 Light Manufacturing Sector 3.3.3 Water . 25 Environmental Standards . 87 3.3.4 Emissions, Effluents and Waste. 25 3.3.5 Biodiversity . 26 Annex C Agribusiness Sector Labor and Human Rights Standards . 123 4.0 Tourism Sector . 27 4.1 Scope and Methodology . 27 Annex D Agribusiness Sector 4.2 Findings Regarding CSR Practices . 28 Environmental Standards . 151 4.2.1 Human Rights and Labor Rights . 28 4.2.2 Health and Safety Issues . 29 Annex E Tourism Sector 4.2.3 Environmental Issues. 29 Labor, Human Rights and 4.2.4 Specific Programs and Initiatives. 30 Environmental Standards . 179 iv TABLE OF CONTENTS COMPANY CODES OF CONDUCT AND INTERNATIONAL STANDARDS: AN ANALYTICAL COMPARISON 1 Introduction 1.1 Overview attacks on corporate property, divestment campaigns, hostile share- Globalization is the cornerstone of business in the new millennium, holder resolutions, and the enactment of sanctions laws. and the media focus on corporate globalization has led to increasing During the past few years, corporate leaders have recognized that the scrutiny of multinational conduct during the past decade. External success of their brands is tied to whether their business is conducted stakeholders, including students; human rights organizations, orga- in a manner acceptable to those affected by it. In an effort to respond nized labor, religious institutions, consumer advocates, universities, to the growing number of social and environmental concerns and to representatives of local, state, and federal governments around the protect their brands, firms have adopted programs that reflect support world, and the Secretary General of the United Nations have de- for international norms and promote sustainability. In fact, the con- manded greater transparency and accountability by corporate institu- tinuing success of these firms suggests that there have been business tions with respect to business decisions that have a social and benefits from adopting these programs. It is becoming clear that ap- environmental impact. plication of these standards can bring benefits to suppliers, in addition Pressure from this wide array of stakeholders has led consumers and to the benefit of a continuing contract with their multinational buyer. employees to hold businesses to higher and broader social and envi- These benefits can derive from suppliers distinguishing themselves ronmental standards than in the past. On today’s media stage, firms within the local marketplace as responsible firms to do business with, are judged not only by their own behavior, but also by the behavior of and they can also relate to productivity and quality gains. those with whom they are associated, including sourcing facilities, li- This practice has come to be known as corporate social responsibility censees, agents, partners, and host governments. Moreover, firms are (CSR), and focuses on a wide range of issues, including worker’s no longer simply accountable under local law, but to international rights (particularly child labor, freedom of association, forced labor, norms and standards, such as those promulgated by the International and freedom from discrimination), health and safety issues, environ- Labor Organization (ILO), the Universal Declaration of Human mental concerns, compensation, migrant labor issues, human rights, Rights (UDHR), and corporate best practices. security arrangements, community engagement, ethical conduct, Firms can face not only reputational damage from their corporate good governance, and rule of law. To address these CSR issues ef- practices and monitoring mechanisms (as many apparel and footwear fectively, firms are adopting a series of new tools. These include firms discovered when they first confronted serious legal and reputa- human rights and environmental risk assessments, monitoring sys- tional challenges in the 1990s related to allegations of labor abuses in tems, management standards, and the engagement of external stake- foreign sourcing facilities), but they can also face protests, boycotts, holders in dialogue and decision-making processes. The tools that 1 have been most widespread, however, are the adoption by many firms flected on the attached matrices, which were drawn from similarly of CSR codes of conduct, as well as the compliance and monitoring themed sub-categories developed by the Global Reporting Initiative schemes used to implement and enforce those codes once they have (GRI) in the GRI Sustainability Reporting Guidelines. been established. Foley Hoag LLP has been engaged to research the codes of conduct Codes of conduct stipulate the human rights, environmental, social of roughly 100 firms, as well as the codes of conduct of other, non-cor- and ethical requirements for suppliers. The World Bank estimates that porate entities, including non-governmental organizations (NGOs), there may now be an estimated 1,000 codes in existence today, devel- multi-stakeholder groups, and trade unions. Originally, firms were oped by individual multinational firms on a voluntary basis, depend- chosen for participation in the project that were in an industry sector ing on firms’ business needs. They play a complementary role to with a direct nexus to a particular geographic region that supported the national legislation, helping firms implement standards beyond those World Bank’s technical assistance program. Therefore, the initial that are typically enforced locally. The most significant and system- firms that were chosen for inclusion in this project had direct opera- atic contact that most people in low-income countries have with the tions in Vietnam, El Salvador, the Philippines, and Angola. However, rule of law is in the workplace. Helping ensure an effective compli- given the increasingly globalized nature of many of the multinational ance regime thus has national governance implications and has public enterprises (MNEs) examined, and the fact that some codes needed to good justification beyond the firm or industry level. be included in the project to give the most comprehensive portrait of the state of the industry, even though they did not have the relevant nexus to one of the four geographic areas targeted, the regional focus 1.2 World Bank Group Project Overview of this project is not dominant. A significant number of firms have started formulating and imple- The industry sectors which were analyzed were: menting CSR codes of conduct in the past decade, but there has been little research conducted to compare and contrast these various codes. Ⅲ Apparel, footwear and light manufacturing; It is critical to gather this information and build a database of codes of Ⅲ Agribusiness (and in particular, banana, coffee, sugar, and cut conduct, and to begin determining the areas of similarity and differ- flower industries); ence between the various codes, in order to identify any potential Ⅲ Tourism; emerging “trends” in the various codes. Ⅲ Mining; and Ⅲ Oil and gas. In an effort to support ongoing technical assistance, the World Bank Group’s Investment Climate Department has commissioned a series For each of these five broad industry sectors, key corporate and non- of research analyses to determine the content of CSR codes of conduct corporate players were identified, researched, and their codes of con- in targeted industry sectors, and the extent to which code content de- duct summarized.