Leiden Law Blog

The International Labour Organization and Corporate Social Responsibility

Posted on by Ruben Zandvliet in Public Law
The International Labour Organization and Corporate Social Responsibility

According to The Body Shop founder Anita Roddick, “The business of business should not just be about money, it should be about responsibility. It should be about public good, not private greed.” One of the central questions in the debate about corporate social responsibility (CSR) is whether the ‘public good’ is defined by private or public actors and processes. Most definitions of CSR appear to support the former position. According to the International Labour Organization (ILO), “CSR is a voluntary, enterprise-driven initiative and refers to activities that are considered to exceed compliance with the law.” The norms contained in CSR codes are directly inspired by public (international) law. Typically they refer to labour standards, human rights, environmental standards, corruption, competition, taxation etc. This does not mean, however, that companies are bound by the same obligations as states.

The convenience hypothesis holds that companies appropriate public norms in their CSR policies, but are subsequently free to define and interpret them as they please. These self-definitions can even contradict international standards. The 'International Operating Principles' of Sara Lee Knit Products (SLKP), for instance, provided that: “SLKP believes in a union-free environment, except where laws and cultures require us to do otherwise." But even with less hostile references to freedom of association it is often unclear what the normative commitments of the company are. What does it mean when The Carlsberg Group states that it “shall respect employees’ rights to form, join or not join a labour union or other organisation of their choice, and to bargain collectively in support of their mutual interests […] ” without a reference to the ILO? To what extent is this different from SABMiller, which states that the company “is committed to conducting its business with due observation of the principles of […] the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and ILO Core Conventions on Labour Standards.” Should labour rights activists (who are of course not influenced by taste, price, marketing or other superficial concerns) order a Carlsberg or a Peroni Nastro Azzurro?

Over the last decade we witnessed a move from voluntarism and self-definition to the appropriation of public norms. This was inspired by two main developments. First, the ILO adopted a hierarchy in its body of law with the adoption of the 1998 Declaration on Fundamental Principles and Rights at Work. This document elevates freedom of association, non-discrimination and the prohibition of child labour and forced labour to the status of 'core' labour standards. This public political consensus had a major impact on the content of private CSR codes. References to freedom of association, the most contested issue of the four, rose from 15% in 1998 to 87% in 2006. Secondly, there has been a move towards standardisation of CSR codes and, perhaps more importantly, CSR reporting. In the past each company decided for itself (1) whether or not to have a CSR code, (2) what the content of that code would be and (3) how to report on the results of CSR. Together this epitomised the voluntary nature of the concept. Today, when a company decides to adopt a CSR policy, it increasingly adheres to the ISO26000 or SA8000 standards, the OECD Guidelines or some multi-stakeholder initiative. Companies also began to negotiate International Framework Agreements with (global) trade union federations instead of unilaterally drafting policies. With regard to transparency, the GRI provides for standardised templates that companies rely on to report on their CSR performance. Reliance on, or cooperation with third parties in the drafting and reporting process leads to more complete and more specific references to international labour law.

In addition, CSR may be voluntary in the sense that no legal impetus exists that requires the company to adhere to a code of conduct, but once the decision has been made to do so, there may be legal consequences when the policy is not observed.  Consequently, the 'judicialisation' of CSR also leads to more reliance on public international labour standards. This started with the case of Kasky v. Nike before the California Supreme Court, which held that CSR commitments are not protected as commercial speech. In other words: if SABMiller promises to respect the principles of the ILO regarding trade union rights but in practice pursues an active anti-union policy, the company is vulnerable to legal action by consumers or shareholders under false advertising or accounting laws. Logically, (voluntarily made) references to the ILO would lead the judge to look at ILO Conventions in order to assess whether there is a discrepancy between promise and practice. The reliance on ILO references in CSR commitments thus leads to a benign form of "privatisation" of international labour law, which diminished the risk that CSR is solely guided by public relations and economic efficacy.

This blog post is a summary of a longer paper that I co-authored with Paul van der Heijden. It is freely available on SSRN.

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