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Governance
and Corporate Social Responsibility- Codes
(An Introductory Paper)
Nimisha Pandey
Social responsibility is normally
considered as the obligation of decision- makers to take actions
that protect and improve the welfare of society along with their
interest. Every decision he business person takes should have
social implication. Whether the issue is significant of not, the
manager should keep his or her social obligation in mind before
contemplating any action.
One of the most frequently asked
questions with CSR issues “what does "Corporate
Social Responsibility" mean anyway? Is it a stalking
horse for an anti-corporate agenda? Something, which, like
original sin, you can never escape? Or what?”
Different organizations have framed
different definitions - although there is considerable common
ground between them. The most common definition is that CSR is
about how companies manage the business processes to produce an
overall positive impact on society.
Many authors have defined CSR in
different ways. Few of them are included here-
Ø
"Corporate Social Responsibility is the
continuing commitment by business to behave ethically and
contribute to economic
development while improving the quality of life of the workforce
and their
families as well as of the
local community and society at large"
by Lord Holme and Richard Watts, used
the following definition
Ø
"CSR is about capacity building for sustainable
livelihoods. It respects cultural differences and finds the
business opportunities in
building the skills of employees, the community and the
government" from
Ghana,
Ø
"CSR is about business giving back to
society" from the Philippines.
CSR being especially relevant to
the private sector – are key determinants of an organization’s
relationship with the world.
The Conference Board of Canada has
longstanding expertise in governance and CSR. It provides insights
based on research, analysis, and interaction with members, and
delivers those insights through conferences, networks, seminars,
published reports, management tools, roundtables and customized
services.
Recent events have strongly validated the need for The Conference
Board of Canada to focus attention on corporate governance and
CSR. Not since the market crash of 1929 has it been more important
to build leadership capacity in Canada around these two issues
that are so critical to economic and social development.
Organizations typically serve the interests of widely dispersed
stakeholders – investors, customers, governments, community
members, employees, suppliers, citizens. But day-to-day control is
entrusted to a small group of managers who may have little direct
interaction with stakeholders. How then to ensure that managers
serve the interests of stakeholders, rather than their own private
interests?
Governance arrangements are an
important part of the answer. They encompass:
·
The power given to management;
·
Control over management’s use of power (e.g. via
institutions such as boards of directors);
·
Management’s accountability to stakeholders;
·
The formal and informal processes by which stakeholders
influence management decisions.
In the private and quasi-private sectors, the traditional
governance model positions management as accountable solely to
investors (shareholders). But a growing number of corporations
accept that stakeholders other than shareholders have an ownership
interest in the corporation, and that the corporation must
therefore be answerable to them. This powerful idea is the
foundation of corporate social responsibility, and provides the
link between CSR and governance.
CSR follows from a decision by management to expand traditional
governance arrangements to include accountability to the full
range of stakeholders noted above. It is not a new idea, but
corporations still struggle to apply it to their own
circumstances. Increasingly, they see CSR as a business
proposition. Offend or ignore any significant stakeholder group
for too long and you put the health of the corporation at risk –
this is the argument that makes CSR "real" for CEOs.
CSR Codes and Standards
There are a number of international
and national codes and standards in respect of social, ethical and
environmental (SEE) reporting and management. Some of these have
attained a higher degree of recognition and acceptance than
others. It should be understood that these are voluntary
initiatives that can also be defined as multi-sectoral, in that
they can be applied in a wide range of industries.
International.
Accountability 1000 (AA
1000) and AA1000S.
The Institute of Social and Ethical
Accountability (ISEA) launched AA 1000 in 1999. It is an
accountability standard, focused on securing the quality of social
and ethical accounting, auditing and reporting. It provided the
first systematic stakeholder-based approach to organizational
accountability and evolved from the recognition that organizations
need guidance both to develop social and ethical practice and,
crucially, to construct more progressive relationships with an
expanded range of stakeholders.
AA 1000 is a foundation and process standard and, as such, it
seeks to define what constitutes best practice in social auditing,
accounting and reporting, with particular reference to
understanding and communicating with stakeholders. it also
provides a framework for companies by suggesting a set of steps
that they can take to become more socially responsible over time.
In March 2002 Accountability
announced the revision of AA1000, AA1000S to include a revised
framework strengthened by five stand-alone modules.
Module 0ne, Quality Assurance and
External Verification was published in March 2003. The AA1000
Assurance Standard is primarily intended for use by Assurance
Providers in guiding the manner in which their Assurance
assignments are implemented. It assumes particular importance in
relation to the proposed operating and financial review, proposed
by government. The working group, which
is producing guidelines for directors on what they should cover in
OFRs says directors may find it useful to refer to the
AA1000Assurance Standard when drawing up their OFRs.
The Ethical Trading Initiative
The ETI is an alliance
of companies, non-governmental organizations (NGOs) and trade
union organizations to promote the ethical sourcing of products
through a code of conduct, "The ETI Base Code", commits
them to work together to identify and promote ethical trade –
good practice in the implementation of a code of conduct for good
labour standards, including the monitoring and independent
verification of the observance of ethics code provisions, as
standards of ethical sourcing. Its provisions include the
promotion of workers rights, human rights, the ending of child
labour, forced labour and sweatshops and health, safety and labour
conditions.
The ETI base code is
based on the Conventions of the International Labour Organisation
and is aligned to the Universal Declaration of Human Rights and on
the UN Convention on the Rights of the Child.
The Global Sullivan
Principles.
The Global Sullivan
Principles are intended to promote corporate social
responsibility. Companies sign up to the principles and then
report annually on their progress. They are a set of principles
rather than auditable standards with management systems. The
principles do not include the right to freedom of association, and
as such do not have the full support of labour organizations.
ILO Conventions on Core
Labour standards.
The International
Labour Organization is the oldest UN agency.
The ILO has defined
core labour standards, which include:
• Freedom of
association.
• Right to collective
bargaining.
• Prohibition on
forced labour.
• Minimum wage.
• Freedom from
discrimination.
• Right to equal pay
to equal work.
In addition, there is a
wide range of ILO Conventions covering health and safety,
employment of disabled people, child labour and home working.
In 1998, the ILO issued
the Declaration of Fundamental Principles and Rights at Work. The
declaration seeks to address the challenges of globalization and
promote the consideration of the social side of business. The
Declaration is not binding.
ISO 14000 Series.
The International
Standards Organization has developed an extensive range of
standards. Among those directly related to corporate social
responsibility and reputational risk are those that refer to
quality, health and safety and the environment through ISO 9000
and ISO 14000 series.
Of all the principle
codes and standards, the ISO Standards have attained the greatest
dissemination and adoption by companies.
The 14000 series, to
which ISO 14001 belongs, provides a framework for the private
sector and others to manage their environmental issues. The
standard focuses on, not necessarily their products or
environmental impacts.
Specifically, the
standard describes how an organisation might manage and control
its organisational system so that it measures, controls and
continually improves the environmental aspects of its operations.
The OECD Guidelines for
Multinational Enterprises.
The Organization for
Economic Co-operation and Development guidelines (Revised June
2000) are based on 11 principles incorporating elements from the
Universal Declaration of Human Rights, the ILO's Fundamental
Principles and Rights at Work, the Rio Declaration on Environment
and Development, Agenda 21 and the Copenhagen Declaration for
Social Development. They set out recommendations for responsible
business conduct in employment and industrial relations, human
rights, the environment, disclosure of information, consumer
issues, the environment science and technology, competition,
taxation and bribery and corruption.
Social Accountability
8000.
SA 8000 is a standard
for companies seeking to make the workplace more humane. Unlike
other codes, SA8000 is a global code that can be implemented in
any country and in any sector. It is the first auditable standard
on working conditions.
The New York-based
Social Accountability International (formerly known as the Council
on Economic Priorities Accreditation Agency) developed SA 8000
with the support of non-governmental organizations, trade unions
and companies. The majority of companies adopting SA 8000 are in
the retail sector or manufacturing clothing, toys and shoes.
Interest is greatest in the sectors where there are well known
brands, which need protecting.
SA 8000 draws on the
Conventions of the International Labour Organization and other UN
documents.
The question that SA
8000 asks is: how can I ensure that my company and/or supply chain
are respecting workers rights?
The Sustainability
Reporting Guidelines (GRI 2000)
The Guidelines were
developed by the Global Reporting Initiative (GRI), which
originated out of the Coalition for Environmentally Responsible
Economies (CERES) in partnership with the United Nations
Environment Programme (UNEP).
They are a framework
for reporting on an organization’s economic, environmental and
social performance and aim to provide a universal structure for
'triple bottom line reporting'
The UN Global Compact
The Global Compact is a
UN-sponsored platform for encouraging and promoting good corporate
practices and learning experiences in the areas of human rights,
labour and the environment. It is an entry point for the business
community to work in partnership with UN organizations in support
of the principles and broader goals of the United Nations, and
provides a basis for structured dialogue between the UN, business,
labour and civil society on improving corporate practices in the
social arena.
The Global Compact is
rooted in the Universal Declaration of Human Rights; the
Fundamental Principles and Rights at Work, of the International
Labour Organisation; and the Earth summit – Agenda 21 principles
on the Environment. No other initiative on corporate social
responsibility has such universal and legitimate underpinning.
UK CODES AND STANDARDS
There are currently two
UK codes and standards:
The Good
Corporation
The Good Corporation is a standard of corporate social
responsibility that has been designed to address the needs of all
types and sizes of organisations. It is based on a charter devised
by the Institute of Business Ethics. It covers fairness to
employees, suppliers, customers and providers of finance;
contributions to the community; and protection of the environment.
An independent verifier assesses organizational performance
annually.
The SIGMA
Project
The SIGMA Project –
Sustainability – Integrated Guidelines for Management – was
launched in 1999 by the British Standards Institution, Forum for
the Future and Accountability, and is primarily funded by the
Department of Trade and Industry (DTI).
At the heart of the
SIGMA project is the development of a set of Guidelines, based on
a series of inter-linking and supporting components. These are:
• A set of principles
that help an organization to understand and navigate the
parameters of sustainability.
• A series of tools
and approaches which organizations can use to implement effective
strategies, initiate culture change, promote learning, set
objectives and then achieve goals.
The NEW SIGMA
GUIDELINES were published in May 2003, and it is anticipated that
the final version will be published in September 2003.
There are a number of
other standards published by various organizations on specific CSR
and sectoral issues.
At last we can say that CSR and Social
responsibility both are voluntary in nature and this is the most
commonly stressed aspect of CSR is its voluntary nature, and the
case for maintaining
this voluntary characteristic is very strong. The real benefits of
CSR come from companies looking to go beyond their requirements under law.
Activities and initiatives to promote
CSR are unique to each company. They are not uniform.
References-
Zadek, S, Pruzan, P & Evans,R(1997) ,”Building
Corporate accountability. Emerging practices in social and ethical
Accounting, auditing and Reporting”. London, Earthscan
Zalka,
Downes and Paul(1997) “Measuring Consumer Sensitivity to
Corporate Social Performance Across Cultures: Which Consumers Care
Most?” Journal of Global
Marketing, (11)
1: 29-48.
www.accountability.org.uk
www.ethicaltrade.org.
www.globalsullivanprinciples.org
www.ilo.org
www.iso.org
www.oecd.org/daf/investment/guidelines
www.cepaa.org
www.globalreporting.org
www.unglobalcompact.org
www.goodcorporation.com
www.projectsigma.com
Nimisha Pandey
Rai Business School
Rai University (Delhi Campus)
Mobile:- 9818548180
Email:- nimisha.pandey@raiuniversity.edu
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