Corporate Social Responsibility (IVOR nr. 77) 2010/6.2:6.2 The spectrum of CSR private regulation

Corporate Social Responsibility (IVOR nr. 77) 2010/6.2

6.2 The spectrum of CSR private regulation

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

'Private regulation' is commonly defined as a set of norms regulating individual (corporate) conduct that did not, or at least did not originally, stem from public authorities' formal legislative powers.1 It has also been described as 'bottom-up lawmaking'. An initial distinction is often made between 'internal' and 'external' private regulation. Internal private regulation refers to self-regulatory systems that companies set to regulate their own behavior, whereas external private regulation includes norms adopted collectively by private actors to regulate their conduct and that of third parties. Common examples of external private regulation are industry and cross-sector regulation as well as multi-stakeholder initiatives.2

Regulation runs the gamut from public to private, in its multiple variations and combinations. For instance, the Dutch Arbeidsomstandighedenwet 1998 [Dutch Working Conditions Act 1998] employs a 'co-regulatory regime'. Since the governmental authorities do not have sufficient staff to verify and control the day-to-day health and safety conditions at all workplaces in the Netherlands, the system relies on self-action: an employer has to establish an action plan concerning the health and safety conditions pertaining to all work carried out at his enterprise. The Labour Inspectorate will examine the plan and, when found adequate, approve it. It is up to the employer to implement it and account for it before the Works Council.3 This hybrid constructionis a combination of public legislation (adopted without the direct participation of private actors) andpure self-regulation.

Another term that is frequently used in the context of private regulation is 'soft law'. This term refers to those instruments of international law that do not have the status of an international treaty, ratified by States. Examples of soft law instruments are declarations, recommendations, and resolutions.4 The OECD MNE Guidelines may also fall into this category; they were primarily drafted by OECD Member States' representatives, but with contributions from the business community and NGOs.5 They nonetheless qualify as private regulation, since they have not been implemented in formal legislation by the public legislative authorities.

As demonstrated in a 2008 joint report entitled 'Overview of Selected Initiatives and Instruments Relevant to Corporate Social Responsibility' by the OECD and the ILO, CSR related private regulations differ in their objectives, origins, areas covered and implementation mechanisms.6 Some address a wide range of issues, such as human rights and labour rights, community development, the use of security forces, bribery and corruption and environmental standards.7 Others focus on one or a few issues, usually more in depth.8 The 2008 report provides a useful classification, including definitions and illustrative examples of existing private regulation in the field of CSR. It distinguishes between the following categories:9

1.

Corporate codes of conduct, described as directive statements which provide guidance and prohibit certain kinds of conduct, eg internal codes of conduct drafted and adopted by multinational or national companies;

2.

Multi-stakeholder initiatives, which involve the cooperation of various social partners, including companies, workers' and employers' organisations, NGOs and governments to address a specific issue or a whole range of issues related to CSR, generally resulting in some form of guidelines, sometimes by region or by sector;

3.

Certifications and labeling (including reporting) that provide purchasers, ie consumers, investors and businesses, with reliable information in order to make purchasing decisions;10

4.

Model codes, which are codes of conduct laid down by a multi-stakeholder initiative, an NGO, a trade union, an international organisation or other actors - including governments - which companies can use as a basis to develop their own codes. These codes establish a list of minimum standards that all corporate codes of conduct covering certain issues should consider. They address different issues such as whether multinational companies bear responsibility with respect to human rights violations, environmental protection or bribery and corruption in business;11

5.

Sectoral initiatives, depicted as initiatives that address common challenges in a specific sector and that provide a common approach in direct operations or at the supply chain management level, ie a certain level of uniformity across the industry, and set standards for companies vis-à-vis suppliers;

6.

International frameworks, including agreements negotiated between national and global trade union federations with major multinational enterprises in order to ensure uniformity in labour standards in all countries and throughout the supply chain; and

7.

Socially responsible financial investments, ie initiatives developed in the financial sector, focusing on the operations of financial institutions but also on social responsibility concerning investment decisions by investors.12

From this classification, it should be noted that certain private regulations can fall within more than one category. For instance, the Fair Wear Foundation is an initiative concerning the textile industry, but it has resulted in a code of conduct that can also be included under the category 'certification and labeling'. Annex 6.1, in fine, shows a few concrete examples for each category. From this categorisation, it can be further noted that the various CSR private regulatory regimes embrace different goals and ambitions, such as offering a concrete certification system to facilitate the purchase of sustainable products, or - less concretely - formulating general universal minimum standards for corporate behavior. It should also be added that, although the initiatives mentioned mainly originated from the US and Europe, other initiatives are springing up around the globe, reflecting different cultures and concerns. Among them, Madrasati has recently been launched by Queen Rania Al Abdullah of Jordan to focus on CSR in the field of education across the Arab world.13 The Ethos Instituto in Brazil promotes CSR in Brazil; in India, Tata Steel has been recognised for its initiatives in the areas of AIDS awareness and its commitment to provide better standards of living for the communities in which it operates.14

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