In the last two decades, many corporations in the United States and Europe have adopted codes of conduct that publicly spell out general rules of corporate behavior on social and environmental issues (Jenkins 2002:1; SustainAbility and UNEP 2002:5). These codes vary widely, depending on whether the company itself designs the code, or whether it is crafted by an outside entity such as a trade association or a group of NGOs, investors, or other stakeholders.
Company-generated codes are developed primarily by corporate management. They are often broad statements of business ethics and commitments to responsible labor, environmental, and safety practices. An early and influential example is the “Global Sourcing and Operating Guideline” that Levi Strauss & Company adopted in 1991 to manage the labor practices of its global chain of apparel suppliers (Jenkins 2002:12). The code commits Levi Strauss to work only with suppliers who do not use child or prison labor, who maintain reasonable work hours and benefits, who permit union organizing, and who maintain adequate health and safety standards (Levi Strauss & Co. 2003). Levi Strauss consulted with NGOs and based its code on principles elaborated by the International Labour Organization and United States labor law (Butler 2003).
Another common approach is for a trade association to develop a code, which is then adopted by a group of firms. The idea here is to commit a whole business sector to a certain minimum standard of practice, with peer pressure helping to enforce compliance. For example, the Kenya Flower Council, representing a group of Kenyan growers and exporters of cut flowers, crafted a “Code of Practice” that commits members to minimize pesticide use, dispose of chemicals safely, and be audited on their commitments twice a year (Kenya Flower Council 2003).
Some codes are crafted through negotiations among diverse stakeholders, including non-governmental organizations, and these tend to be more exacting and insistent on accountability measures. One example is the Forest Stewardship Council’s (FSC) code for forestry operations—a set of standards for sustainable management of timber-producing lands that harvesters must prove they meet in order to market their wood as “certified” and to use the FSC trademark logo (FSC 2003). Some NGOs also propose model codes of conduct that they’d like to see industries follow. Amnesty International, for instance, offers a set of human rights principles that companies can use in building their own code of conduct (Amnesty International 1998). Finally, a few codes have been drafted by intergovernmental bodies, such as the Organisation for Economic Co-operation and Development (OECD). The OECD’s “Guidelines for Multinational Enterprises” is a set of voluntary principles and standards for good business conduct in a range of areas such as product safety, environment, labor management, and public disclosure. Governments who accept the Guidelines agree to promote these principles to the multinational companies in their countries. However, the code and its principles remain advisory only, with no method for tracking or ensuring compliance (OECD 2000:6, 15, 17–24, 41).
