Retailing Behemoths Agree on Code of Conduct

by Peter Spiro

The story here (also fronted in the FT). With half a trillion dollars in annual sales, this effort of Wal-Mart, Tesco, Carrefour and Metro — the world’s four largest superstores — is bound to be of consequence.

One question mark: can a code such as this, labeled the Global Social Compliance Program and purporting to regulate the company’s suppliers on such issues as child labour and wages, succeed without the support of the labor/human rights community? My guess is that the NGOs will have to be brought on board in some formal way (via an advisory council of some sort) or the project will fail as insufficiently inclusive of stakeholder voices. There’s also the question of whether this model of privately-sponsored and supervised social responsibility will carry the day, or whether some public umbrella (in the way of the UN Global Compact, in which none of these companies participate) is necessary as a legitimating institutional feature.

One Response

  1. I agree that a a corporate code such as this, emblematic of the shift from public to private regulation (As Bob Hepple notes, ‘The story may be described as one of retreat from public international labour law, embodied above all in the conventions and recommendations of the ILO, to privatised “soft” regulation.’) and illustrative of the fragmented nature of transnational labor regulation (e.g.: public codes from international sources, codes produced at regional levels, codes promoted by national governments and, of late, private initiatives, i.e., internal self-regulatory internal codes) will require the ‘support of the labor/human rights community,’ be it the International Labour Organisation, international trade unions, or human rights NGOs. And I further agree that there’s the pressing if not most important question of whether private initiatives or some transnational regulatory ‘public umbrella’ will prevail.

    In addition to the UN Global Compact, there’s the ILO’ Declaration of Fundamental Principles and Rights at Work (1998), and its Decent Work Agenda (1999), although the Global Compact integrates labor, human rights and environmental standards for transnational corporations. On the other hand, something like the Global Social Compliance Program might be seen as an endeavor to avoid unionization efforts, something that will be easier to discern if the Program is silent on such matters as ‘freedom of association’ or collective bargaining. There’s always the lurking suspicion that this is just an elaborate public relations exercise, a suspicion that can be allayed with a close scrutiny by outside stakeholders of the process of formulating and interpreting such a code/Program, and an examination of its methods for monitoring and implementation. The absence of trade unions or NGOs at any point in the process does not speak well for such a code/Program. Surveys in this area ‘have found that a significant number of companies did not deal with the issue of monitoring at all, and of those that did so, almost all stated that in-house staff would monitor compliance’ (Bob Hepple). Another survey found codes initiated by NGOs are most likely to provide for independent monitoring. ‘But requirements for inspection and publication are rare’ (Hepple). Of note is the fact that in the past TNCs have brought NGOs into the picture as a substitute for dealing with trade unions.

    Hepple’s conclusion on this score is revealing: The popularity of private, voluntary codes serves to avoid the issue of promoting sustainable development in the world’s poorest countries, development that would entail the active participation of the people in these countries. Voluntary codes also directly or by default neutralize unionization efforts. Finally, and intentionally or not, they ‘tend to export American conceptions of corporate social responsibility’ rather than reflect existing international legal norms.

    With the exception of the EU, there remains a conspicuous ‘absence of positive obligations on states to require TNCs to observe both core and core-plus [labour] standards.’ In the era of widespread and feverish deregulation, the international system still tends to largely rely on national labor laws (with little or no enforcement of same in LDCs). In short, there remains a ‘transnational regulatory void’ that cannot be adequately filled by a hodgepodge of globally uncoordinated private, volunatary initiatives, however laudable in some respects they may be when viewed in incrementalist or myopic terms. ‘What is lacking is a public international regulatory mechanism which can ensure that TNCs observe international norms, their best practices are disseminated, and, at the same time, countries are enabled to build on their comparative institutional advantages without interference by TNCs.’

    Please see: Bob Hepple, Labour Laws and Global Trade (Oxford, UK/Portland, OR: Hart Publ., 2005).

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