9.3.5 Corporate practice to adopt voluntary codes of conduct

There is a trend for western companies to adopt voluntary codes of conduct as part of their CSR policies, which habitually embrace the protection of human rights. Generally, these codes of conduct set minimum standards for the company's own behaviour, as well as standards for the types of countries the company will be willing to invest in, and standards for the behaviour of business partners, including suppliers and contractors.1 At first glance, multinational companies appear to reject a role which would be seen as "purely non-social" through the adoption of such instruments.2 Furthermore, their creation can have some value in terms of creating 'soft law' that could gel into ' hard law' regulating the activity of companies and the States in which they operate.3 Some suggest that the increasing use of these codes of conduct could be seen as a new form of 'privatisation' of human rights, "as an allusion to the increased self-regulation instead of State regulation".4 Corporate self-regulation may then be used to fill the regulatory gap left by national legislators.5

Nevertheless, the adoption and implementation of codes of conduct does not receive only positive commentary. A frequent initial remark is that their provisions do not generally impose legally binding obligations on companies. Some argue that their effectiveness necessitates an independent supervisory and enforcement mechanism, which is in most cases lacking. Moreover, the limited space occupied by human rights among the CSR scheme is sometimes deplored. According to the research of Kamminga and Zia-Zarifi on the liability of multinational companies under international law, the real impact on the problematic situation is often modest; voluntary codes of conduct are seldom useful in ameliorating the problems caused by companies.6 These authors give the example of the adoption of Shell's internal Code of Conduct in response to the massive public disapproval in the wake of the oil crisis in the Niger Delta where the company reduced its activities. The result of the actions taken decreased the vulnerability of the company to public pressure, but did not improve the situation of the local population.7 In contrast, one might reply that Shell has since started a sustainable community development programme in Nigeria (see section 9.4.3) and has explicitly declared its commitment to several external codes of conduct and principles.8

Most of the global codes of conduct adopted today were not yet developed when the events in the Niger Delta took place in 1994. In that case, what are the potential impacts of these emerging codes of conduct with regard to regulating corporate conduct of petroleum industries in such a socio-political context? Such questions could hypothetically be answered by analysing the main voluntary initiatives and external codes of conduct supported by Shell:9 the OECD MNE Guidelines,10 the International Labour Organisation Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy,11 the GRI,12 the Global Compact,13 and the Voluntary Principles on Security and Human Rights (VPSHR).14 Generally speaking, a review of these key international corporate initiatives reveals that the recommended standards encourage companies to take an active role toward human rights fulfilment by stimulating development and improving social conditions. The adoption of such instruments by Shell certainly indicates an increased awareness of the impact of its activities on the society and the environment, including in the Niger Delta. Although, a comprehensive analysis of each of these mentioned instruments goes beyond the scope of the present chapter, the last two instruments will be further discussed considering the particular relevance of their content to the present matter.

It should be noted here that the VPSHR were created in 2000 especially to assist extractive and energy companies in maintaining the safety and security of their operations while at the same time respecting human rights. The VPSHR addresses three important core areas: risk assessment, interactions between companies and public security, and interactions between companies and private security. In particular, the VPSHR state that companies should consider risk assessment when transferring equipment (including lethal equipment) to public or private security forces in order to mitigate foreseeable negative consequences, including human rights abuses. It also involves considering the available human rights records of public security forces, paramilitaries, law enforcement, as well as the reputation of private security agencies that are to be hired. From an internal report published after the first five years of existence of the VPSHR, it has been reported that they provide "guidance on managing security and human rights, especially for companies that operate in challenging environments where expectations regarding human rights and security may be inconsistent". 15 Nevertheless, it has been mentioned that the VPSHR suffer from a lack of clarity and vague language, which often results in confusion among operations-level staff. Furthermore, they are difficult to monitor and audit and thus, may foster the perception that they lack transparency. Shell could give these points some attention in its reporting on sustainability.

The same comments are generally applicable to the Global Compact which merely relies on public accountability, transparency and the self-interest of its stakeholders to promote and to implement its principles; it has not been developed as a regulatory instrument as such. Companies are simply invited to produce an annual Voluntary Communication on Progress on the implementation of the UN Global Compact Principles, which reports are subsequently posted on the website of the Global Compact.16 Since the Global Compact consists of ten principles rather than detailed rules, it could be described more as a network opportunity than as a practical tool for companies. However, since Shell is among the corporate founders of the Netherlands Network (GCNL),17 and the national Global Compact network, public pressure could be counted as an element promoting its implementation.

Such voluntary codes of conduct and corporate initiatives can play a positive role with regard to the accountability of companies for human rights violations. When code provisions coincide with mandatory local law, companies surely have to comply. When such provisions are incorporated into a contract to which a company is a party to (e.g. loan agreement or supply agreement), they will be enforceable before the Court. Codes of conduct can also be used by Courts to apply higher standards. Furthermore, public reference to these instruments can lead to certain expectations; violations of these codes may give rise to claims. In addition, codes of conduct can encourage the adoption of higher standards in national regulation, the so-called "bottom-up pressure" in legislation. Considering that the private sector usually moves faster than the government, adoption of corporate voluntary codes of conduct can be considered as a major step forward. The credibility and effectiveness of such codes of conduct could nevertheless be greatly improved if companies that have adopted them were to commit themselves to the establishment of clear, common and verifiable performance obligations.18

The following will conclude on certain significant aspects of the operations of Shell in the Niger Delta mainly at the political and economical level following the trial of Saro-Wiwa.