Index
CONTROLLING CORPORATE WRONGS: THE LIABILITY OF MULTINATIONAL CORPORATIONS Legal possibilities, initiatives and strategies for civil society Report of the international IRENE seminar on corporate liability and workers' rights held at the University of Warwick, Coventry, United Kingdom, 20 and 21 March 2000

IV Discussion: Codes of conduct

'Voluntary labels and codes of conduct are no substitute for legislation and binding international agreements. However, they can be helpful in promoting fundamental labour and human rights all over the world.'
(India Committee of the Netherlands)

A major discussion thread running through the seminar concerned the value and usefulness of codes of conduct. Codes of conduct are currently mushrooming, being created by governments, companies, and NGOs; and there was a clear division of opinion between those who considered them at best ineffectual and at worst dangerous, and those who found value in promoting meaningful codes and lobbying for them to be treated by companies as a mechanism of public accountability to society at large, even though they are not legally binding. This division of opinion coincided to some extent with the two constituencies present, lawyers and NGOs/activists. Lawyers' principal interest is in getting legal redress for victims of abuses, while that of NGOs is in non-legal means, which have a wider appeal to public opinion and can therefore have some public impact even if a legal action fails.

The NGO position, broadly speaking, is that while legal methods are both valuable and necessary, successes are still very small, and attempts by civil society to push MNCs towards more acceptable practice, such as work on codes of conduct, should be seen not as an alternative but as a support or complement to legal actions. Some participants also felt that codes of conduct were valuable in establishing general, agreed principles which could then be developed on the evidence of individual cases, leading subsequently to binding legislation.

The main problem with both internal codes of conduct and international standards and guidelines is implementation. In the case of internal company codes the public relations component is invariably high; internal codes have even been described as a form of advertising. But there is a serious danger of abuse of them by companies if they are not subject to tough, independent, binding supervisory mechanisms. These should consist not of internal accounting mechanisms set in place by the company itself, but of independent mechanisms to which victims of abuses by companies can submit complaints. Without such mechanisms, codes of conduct remain at the level of a PR exercise and can be flouted or perversely interpreted by companies at will.

Another danger of internal codes of conduct is revealed when corporations change, for instance through breakup or merger. Shell, for instance, accepted a minimum code of conduct which allowed it to claim the moral high ground and bask in a good deal of credit. When Shell in Nigeria later sold off parts of the corporation to small companies far less accountable than Shell and without codes of conduct, affected workers and communities were left without even the minimal protection offered by Shell's minimum code. Similar fears - and a strategic dilemma for those seeking MNC accountability - arise when MNCs leave an area, perhaps even as a result of successful actions against them, and smaller and even less accountable companies move in to replace them. An example is Petronas, a Malaysian-based oil company which is moving into areas abandoned by Northern oil companies. Internal, company-based codes cannot address situations of this kind: independent international mechanisms are the only option.

The weak implementation mechanisms of the relevant international codes and standard-setting instruments have been discussed above. A chief advantage of standard-setting is that it applies across the board and in many cases includes reporting mechanisms. But there is still an urgent need for meaningful implement-ation, putting the right procedures in place and getting them applied.

In the end, codes of conduct, particularly internal ones, make corporations look and feel good without addressing the actual or potential victims, whereas legal methods are based around the victim. However, neither lawyers nor NGOs and campaigners can afford to lose sight of the double objective: to get justice for the victims of past abuses, and to put systems in place to ensure that such abuses don't recur.