New Labour Standards Compliance Strategies: Corporate Codes of Conduct and Social Labeling Programs

October 6, 2009 § Leave a comment

This Report examines new labour standards compliance strategies available to the
Federal Labour Standards Review in light of its mandate to make recommendations for
legislative changes to Part III of the Canada Labour Code to improve the relevance and
effectiveness of federal labour standards.1 While there may be controversy over their
source, nature, scope and applicability, this Report is premised on the assumption that
labour standards are necessary to protect workers from exploitation, insecurity and
exclusion when they enter, participate in, and exit from labour markets. Compliance with
labour standards not only protects workers. It ensures that law-abiding employers are not
undercut by others who seek to ignore them. It also makes for efficient use of scarce
administrative resources, and promotes public respect for the law and the values it conditions surrounding the production of a product or rendering of a service.5 Like codes of conduct, social labels are considered to be voluntary responses to market demands.

Social labels are aimed at consumers and potential business and institutional partners.
They may be affixed to products or their packaging, displayed at the retail site, or
assigned to specific enterprises.6

Corporate codes of conduct and social labelling programs share features of what
Gunther Teubner has identified as “global law,” which Teubner argues constitutes a “new
body of law that emerges from various globalization processes in multiple sectors of civil
society.”7 Because they are the products of non-state actors and possess transnational
reach, these instruments are flexible and potentially efficient ways of offsetting
deficiencies associated with traditional forms of labour market regulation. Yet, while
Teubner describes this broader body of law as emerging “independently of the laws of the
nation-states,” codes of conduct and social labelling programs demonstrate that the truth
is far more complex. They share innumerable points of contact and intersection with state
power. There exists a wide range of regulatory opportunities to shape the nature and
scope of protection that codes of conduct and social labelling programs offer to workers.
Supplementary public regulation is not only possible but necessary to realize their
regulatory potential. Empirical evidence to date demonstrates that exclusive reliance on
non-state actors to produce, monitor, and enforce labour standards severely compromises
the capacity of codes of conduct to promote labour standards compliance. We identify

Labour standards compliance has become especially significant in light of recent
trends in the production and delivery of goods and services both in Canada and abroad.
Many industries and sectors are experimenting with flexible forms of production,
including teamwork, participatory production, and atypical forms of employment.2
Flexible forms of production are emerging simultaneously with a dramatic strengthening
of international economic interdependence associated with enhanced technological,
commercial and financial integration of national economies. Processes of economic
globalization are redefining traditional geographical and political barriers to the production, placement and sale of goods and services. States are gradually dismantling trade barriers and actively seeking new forms of direct foreign investment. Corporations are simultaneously enjoying an unparalleled degree of capital mobility and confronting unparalleled international economic competition. They are seeking to maximize
efficiency gains by participating in spatially concentrated clusters organized around
principles of flexible production, often referred to as transnational production chains.3 In
light of these developments, traditional forms of labour market regulation, whose origins
lie in an earlier era of mass production and nationally-bounded economies, risk becoming
obsolete instruments of worker protection.

This Report assesses the merits of two alternative labour standards compliance
strategies, corporate codes of conduct and social labelling programs, in terms of their
potential to supplement and perhaps even replace traditional forms of labour market
regulation. A corporate code of conduct is a written set of standards, principles, and
norms that a firm voluntarily assumes in its relations with its workers, customers,
suppliers, and other persons, enterprises, and institutions in the course of doing business.4
A social labeling program operates as a verification system for a firm’s social
performance by authorizing the use of a physical label to communicate the social
three ways in which the state can bolster the transnational regulatory potential of codes of
conduct and social labeling programs by promoting their use by domestic corporations
abroad and by foreign corporations seeking domestic market access. We first situate our
recommendations in the context of a broader debate over the nature and merits of what
has become known as “corporate social responsibility.”


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