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

October 6, 2009 § 3 Comments

[1] The Task Force’s Terms of Reference can be found online

[2] See A. Supiot (ed.), Transformation of Work and the Future of Labour Law in Europe (1999) for a sophisticated analysis of these trends. See also Charles Sabel “Moebius-Strip Organizations and Open Labor Markets: Some Consequences of the Reintegration of Conception and Execution in a Volatile Economy” in Pierre Bourdieu and James S. Coleman (eds), Social Theory for a Changing Society (Boulder: Westview Press, 1991) 23-54.

[3] For insightful theoretical work on the nature of the transnational corporation, see Andrew Jones, “Truly Global Corporations? Theorizing ‘Organizational Globalization’ in Advanced Business-services” (2005) 5(2) Journal of Economic Geography 177-200.

[4] Compare OECD Working Party of the Trade Committee, Codes of Corporate Conduct: An Inventory, available at Codes: Private Governance, the Public Interest, and Innovation (Carleton Research Unit for Innovation, Science, and Environment, Carleton University, 2002) at 11 (voluntary codes of conduct are “commitments not required by legislation or regulation; agreed to by one or more individuals or organizations; intended to influence or control behaviour; and to be applied in a consistent manner or to reach a consistent outcome”).

[5] Janette Diller, “A Social Conscience in the Global Marketplace? Labour Dimensions of Codes of Conduct, Social Labelling and Investor Initiatives” (1999) 138:2 International Labour Review 99 at 103. See also Michael Urminsky (ed), Self-regulation in the workplace: Codes of conduct, social labeling and socially responsible investment (Geneva: International Labour Office, 2002) at 38.

[6] Diller, ibid, at 104. See also Urminsky, ibid, at 38.

[7] Gunther Teubner, “’Global Bukowina’: Legal Pluralism in the World Society,” in Teubner (ed.), Global Law Without a State (Aldershot: Dartmouth, 1997) 3-30, 4.

[8] Online at United Nations,

[9] Hevina S. Dashwood, “Corporate Social Responsibility and the Evolution of International Norms” in J.S. Kirton & M.J. Trebilcock, eds., Hard Choices, Soft Law: Voluntary Standards in Global Trade, Environment and Social Governance (Aldershot, England: Ashgate Publishing Limited, 2004) at 191.

[10] Dashwood, in Kirton & Trebilcock, eds, supra, at 198. See also Rhys Jenkins, Corporate Codes of Conduct: Self-Regulation in a Global Economy (Geneva: United Nations Research Institute for Social Development, 2001).

[11] Jenkins, supra, at iii.

[12] Jenkins, supra, at iii.

[13] Dashwood, supra, at 199.

[14] David Henderson, Misguided Virtue: False Notions of Corporate Social Responsibility (London: The Institute of Economic Affairs, 2001) at 108.

[15] Debra Spar, “The Spotlight and the Bottom Line” (1998) 77:2 Foreign Affairs 7 at 8.

[16] See, e.g., Richard Hyman, ‘Industrial Relations in Europe: Crisis or Reconstruction’ in T. Wilthagen (ed.), Advancing Theory in Labour Law and Industrial Relations in a Global Context (1998) 181-194, at 185-86 (the rise of multinational corporations and ‘the increasingly coercive hand of finance capital’ operate to ‘threaten established institutions of social regulation of labour markets’). Hyman urges students of industrial relations to turn their attention to the possibility of a regional industrial relations system.

[17] Peter Schwartz and Blair Gibb, When Good Companies Do Bad Things: Responsibility and Risk in an Age of Globalization (Wiley, New York: 1999), cited in David Henderson, Misguided Virtue: False Notions of Corporate Social Responsibility (London: The Institute of Economic Affairs, 2001) at 98.

[18] World Business Council for Social Responsibility, Corporate Social Responsibility: Making Good Business Sense (Geneva: World Business Council for Social Responsibility, 2000).

[19] Spar, supra, at 12.

[20] Adam Smith, The Wealth of Nations (New York: The Modern Library Classics, 1776) at Book IV.

[21] “A Survey of Corporate Social Responsibility” (2005) January 22 The Economist 7 at 15.

[22] Some applaud this: for example, Milton Friedman, “The Social Responsibility of Business is to Increase its Profits”, The New York Times Magazine, September 13, 1970. Others decry it: see Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (Toronto: Viking Canada, 2004).

[23] The “triple bottom line” refers to the extension of the traditional accounting ‘bottom line’, which shows overall net profitability as a money figure, to encompass an obligation to meet specified ‘economic’, ‘environmental’, and ‘social’ goals, identifying actual commitments or targets to be met, and instituting reporting procedures to monitor results.

[24] Henderson, supra, at 116.

[25] A Survey of Corporate Social Responsibility” supra, at 16.

[26] In January 2003, the Global Compact Office introduced a new policy on Communication on Progress. This policy asks participants to communicate with their stakeholders on an annual basis about progress in implementing the Global Compact principles through their annual financial reports, sustainability reports, other prominent public reports, websites and other communication channels.

[27] John J. Kirton & Michael J. Trebilcock, “Introduction: Hard Choices and Soft Law in Sustainable Global Governance,” in Kirton & Trebilcock (eds), supra, 3-29, at 9.

[28] See US Department of Labor, Bureau of International Labor Affairs, “By the Sweat and Toil of Children (Volume IV) Consumer Labels and Child Labor (1997), online. A forerunner of the NCL, the New York City League, was established in 1889 and developed a ‘White List’ that informed shoppers about working conditions in retail stores. The ‘White Label’ was subsequently developed in 1898 and was adopted by the NCL in 1899.

[29] Information obtained from International Chamber of Commerce, ICC International Code of Advertising Practice, Commission on Marketing, Advertising and Distribution, April 1997, online

[30] Regional institutions also began to engage these concerns. See EU Standards for European Enterprises Operating in Developing Countries: Towards a European Code of Conduct, A4-0508/98 (17 December 1998), adopted 15 January 1999.

[31] Adopted 21 June 1976. Last review 2000. See: the OECD Declaration and Decisions on International Investment and Multinational Enterprises: Basic Texts, I. Declaration on International Investment and Multinational Enterprises, Annex I. The OECD Guidelines for Multinational Enterprises, OECD DAFFE/IME (2000) 20.

[32] Declaration adopted by the Governing Body of the International Labour Office at its 204th Session (Geneva, November, 1997). Online at: For discussion, see George Tsogas, Corporate Codes of Conduct and Labour Standards: Developing the “Human Rights” Function in HRM (The Hague: Institute of Social Studies, 1998) at 7.

[33] Tsogas, supra, at 7. For the text of the Levi Strauss Code, see “Memorandum from Levi Strauss & Co. Regarding Business Partner Terms of Engagement and Guidelines for Country Selection” (1993), cited in Barbara A. Frey, “The Legal and Ethical Responsibilities of Transnational Corporations in the Protection of International Human Rights” (1997) 6 Minnesota Journal of Global Trade 153, at 179 n. 141.

[34] See generally, Maria Gillen “The Apparel Industry’s Partnership’s Free Labor Association: A Solution to the Overseas Sweatshop Problem or the Emperor’s New Clothes?” (2000) 32 New York University Journal International Law and Policy 1059.

[35] For discussion see Kearney, supra at 218-19.

[36] U.N. Code of Conduct on Transnational Corporations, 23 I.L.M. 626 (1984). For discussion, see Lisa Baltazar, “Government Sanctions and Private Initiatives: Striking a Balance for US Enforcement of Internationally-Recognized Workers’ Rights” (1998) 29 687 at 699.

[37] For an earlier articulation, see OECD, Trade, Employment and Labour Standards: A Study of Core Workers’ Rights and International Trade (1996) (articulating five core labour standards, separating freedom of association from the right to organize and bargain collectively).

[38] For a spirited debate on the merits of the 1998 Declaration, see Philip Alston, “’Core Labour Standards’ and the Transformation of the International Labour Rights Regime” 15 EJIL 457 (2004); and Brian Langille, “Core Labour Rights – The True Story (Reply to Alston)” 16 EJIL 409 (2005).

[39] For critique, see Tsogas, supra, at 7.

[40] Commission on Human Rights, Sub-Commission on the Promotion and Protection of Human Rights, Fifty-fifth session, Agenda item 4 available online

[41] Andrew Wilson & Chris Gribben, Business Responses to Human Rights (Ashridge: Ashridge Centre for Human Rights, 2000), at 9.

[42] This description is adapted from Bob Hepple, “A Race to the Top? International Investment Guidelines and Corporate Codes of Conduct” (1999) 20 Comparative Labour Law & Policy Journal 347, at 357-58.

[43] “Reebok Code of Conduct,” in Diane Orentlicher and Timothy Gelatt “Public Law, Private Actors: The Impact of Human Rights on Business Investors in China” 14 Northwestern Journal of International Law & Business 66 at108.

[44] “Memorandum from Levi Strauss & Co. Regarding Business Partner Terms of Engagement and Guidelines for Country Selection,” cited in Frey, supra, at 179 n 141.

[45] See Spar, supra, at 7.

[46] Diller, supra at 103. See also Urminsky, supra, at 20 (referring to the Government of Canada’s Voluntary Codes Guide which, along with various other information resources, includes an “Eight-step model for developing codes”, reportedly prepared by a multi-stakeholder working group).

[47] Urminsky, supra, at 20.

[48] Urminsky outlines four types of operational codes of conduct: company (or enterprise) codes: codes adopted unilaterally by companies relating to their own productive and market activities and sometimes also to those of their suppliers; enterprise association codes: codes negotiated and adopted by business associations, industry groups or employers’ organizations; multi-stakeholder codes: codes adopted as a result of negotiations between several stakeholders, including firms or their industry representatives, NGOs, or trade unions; and inter-government codes: codes negotiated at an international level and agreed to by national governments, e.g., the OECD’s Guidelines for Multinational Enterprises and the ILO’s Tripartite Declaration of Principles Concerning Multinational Enterprises. See Urminsky, supra, at 16.

[49] Diller, supra, at 107.

[50] Diller, supra, at 104.

[51] Kathryn Gordon, Rules for the Global Economy: Synergies Between Voluntary and Binding Approaches (Paris: Prepared for the Organisation for Economic Co-Operation and Development, 2000), at 8-9.

[52] For a discussion of the potential complementarity of corporate codes and traditional forms of labour market regulation, see Webb, supra, at 385.

[53] Compare Elliot J. Schrage, Promoting International Worker Rights Through Private Voluntary Initiatives: Public Relations or Public Policy? (The University of Iowa Center for Human Rights, 2004). (corporate codes demonstrate the importance of the rule of law, promote respect for labour standards and labour rights by workers, factory managers, and local government officials, strengthen civil society by reaching out to local partners, including [NGOs], universities, and private companies dedicated to social monitoring, and, by providing a forum for the resolution of disputes, create a climate for political activity without violence).

[54] Charles Sabel, Dara O’Rourke & Archon Fung, Ratcheting Labor Standards: Regulation for Continuous Improvement in the Global Workplace (2000) at 15.3.

[55] Michael J. Trebilcock & Robert Howse, “Trade Policy and Labour Standards” (2005) 14:2 Minn. J. Global Trade 261 at 274. Freeman argues that a market failure exists if western consumers have a private disutility for consuming goods produced under poor or dangerous working conditions. Such a market failure can be remedied if consumers are offered the opportunity to pay a premium for goods produced in a safer and more tolerable work environment. Richard B. Freeman, “A Hard-Headed Look at Labour Standards” in W. Sengenberger & D. Campbell, eds., International Labour Standards and Economic Interdependence (1994). See also Drusilla K. Brown, Can Consumer Product Labels Deter Foreign Child Labor Exploitation? (Melbourne: Department of Economics, Tufts University, 1999) at 2. The same explanation is true for social labeling.

[56] Robert J. Liubicic, “Corporate Codes of Conduct and Private Labelling Schemes: The Limits and Possibilities of Promoting International Labor Rights Through Private Initiatives” (1998) 30 Law & Pol’y Int’l Bus 111 at 117. Liubicic cites Daniel Pink, “The Valdez Principles: Is What’s Good for America Good for General Motors?” (1990) 8 Yale Law and Policy Review 180.

[57] Liubicic, supra, at 118.

[58] Freeman, in Sengenberger & Campbell, eds., supra.

[59] Jenkins, supra, at 28.

[60] This is not to suggest that codes are never the product of negotiation. Negotiations often produce enterprise association codes, multi-stakeholder codes, and framework agreements. But, because of its voluntary nature, there is no legal obligation on a firm to negotiate with its employees before introducing a code of conduct. See Urminsky, supra, at 17-20.

[61] The ILO has noted that most corporate codes remain conspicuously silent on the role of trade unions and collective action, such as rights to bargain collectively and strike. Working Group on the Social Dimensions of the Liberalization of International Trade, Overview of Global Developments and Office Activities Concerning Codes of Conduct, Social Labeling and Other Private sector Initiatives Addressing Labour Issues (ILO, 1998). See also OECD, Codes of Corporate Conduct: An inventory, TD/TC/WP(98)74/Final (29 April 1999).

[62] Jill Murray, Corporate Codes of Conduct and Labour Standards (London: International Labour Organization, 1998). (The unilateral nature of a corporate code creates the risk that it will be “just a piece of paper issued by head office, with no real impact on actual company operations, policies or people”). See also Jenkins, supra at 26. See also Adelle Blackett, “Global Governance, Legal Pluralism and the Decentered State: A Labor Law Critique of Codes of Corporate Conduct” (2000) 8 Ind. J. Global Legal Stud. 401 at 412.

[63] Liubicic, supra at 131, citing Denise Cowie, “Label Would Assure Rugs Weren’t Made by Children”, San Diego Uniontrib., October 6, 1996, H25.

[64] See Kirkton and Trebilcock, supra note 9, Introduction at 14.

[65] See Kirkton and Trebilcock, supra note 9, chaps. 2, 3, and 4.

[66]See generally David P. Forsythe, Human Rights in International Relations (Cambridge: Cambridge University Press, 2000) at 198-99.

[67] Compare Sabel, et al., “Ratcheting Labor Standards,” supra at 3 (‘public pressure may move only the most conscientious or publicly exposed corporations’). See also Baltazar, supra, at 693.

[68] Liubicic, supra, at 140.

[69] Urminsky, supra, at 16.

[70] Robert Boyer, “The Changing Status of Industrial Relations in a More Interdependent World” in Tom Wilthagen (ed.), Advancing Theory in Labour Law and Industrial Relations in a Global Context (North-Holland: Royal Netherlands Academy of Arts and Science, 1998) 35-65 at 52.

[71] Jenkins, supra, at 29.

[72] Jenkins, at 29.

[73] Liubicic, at 149.

[74] International Labour Organization, Overview of global developments and Office activities concerning codes of conduct, social labelling and other private sector initiatives addressing labour issues. (Geneva: GB.273/WP/SDL/1, Working Party on the Social Dimensions of the Liberalization of International Trade, International Labour Office, 1998). We rely here on Urminsky’s review of the updated survey: see Urminsky, op. cit.

[75] EndNote>Urminsky, at 15.

[76] Urminsky, supra.

[77] OECD, Codes of Corporate Conduct: Expanded Review of their Contents (Paris: OECD, 2001) at 26.

[78] OECD, supra.

[79] OECD, Codes of Corporate Conduct: Expanded Review of their Contents (Paris: OECD, 2001) at 3.

[80] Sabel, et al., “Ratcheting Labor Standards,” supra at 3.

[81] Liubicic, at 147.

[82] Urminsky, supra, at 37.

[83] See César A. Rodríguez-Garavito, “Global Governance and Labor Rights: Codes of Conduct and Anti-Sweatshop Struggles in Global Apparel Factories in Mexico and Guatemala” (2005) 33 Politics & Society 203, at 215.

[84] Blackett, supra, at 420.

[85] Urminsky notes that as principles for code implementation are sometimes contained within accompanying documentation (which may not always be distributed with the code itself), the numbers of implementation provisions observed may not be representative of the true levels of commitment to implementation and monitoring. As a result, although he draws conclusions he entreats the reader to exercise caution in making generalizations on the basis of this data.

[86] OECD, Codes of Corporate Conduct, supra, at 26.

[87] A notable exception lies in the work of Dara O’Rourke, “Outsourcing Regulations: Analyzing Non-Governmental Systems of Labor Standards Monitoring” (2003) 31 Policy Studies Journal 1. See also Rodríguez-Garavito, “Global Governance and Labor Rights,” supra, at 215.

[88] Trebilcock & Howse, supra, at 276.

[89] Trebilcock & Howse, at 277.

[90] Trebilcock & Howse, supra, at 277.

[91] World Bank, “Strengthening Implementations of Corporate Social Responsibility in Global Supply Chains” (October, 2003).

[92] Supra, at 21-22.

[93] Nationality Decrees in Tunis and Morocco, PCIJ Ser. B, No. 4 (1923) (ICJ).

[94] For more detail on such measures and their WTO-consistency, see Patrick Macklem, “Labour Law Beyond Borders” (2002) 5 JIEL 605; Sarah Cleveland, “Human Rights and International Trade: A Theory of Compatiability,” (2002) 5 Journal of International Law 133; .Trebilcock and Howse, supra note 55; Trebilcock & Howse, The Regulation of International Trade (London: Routledge, 2005, 3rd ed.), chap. 17, pp. 571-574.


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