Global Codes of Conduct

A global code of conduct may be defined as a set of guidelines or principles for business practice that establish ethical standards for business and employee conduct, especially for those firms operating in the international business environment. Global codes of conduct have grown in importance as we have witnessed the rise of global business as a critical element in the world economy. This rise is one of the most significant developments in business during the past 50 years. This period has been characterized by the rapid growth of direct investment in foreign lands by the United States, Western Europe, Japan, and increasingly other Asian countries. Global business has grown by leaps and bounds as technology, communications, and competitive forces have pressured firms to seek new markets.

In recent years, there has been evidence of a backlash against global capitalism. One reason for this is the complexity of the transnational economy and the opportunity for ethical issues to arise as companies increasingly do business across cultures. It is inevitable that as the clash of cultures and ethics increases, the need for business to take more affirmative action to head off these problems also occurs.

Protests in recent years have been led by environmentalists, who are concerned about the degradation of natural resources, and by human rights activists, who are concerned about treatment of human rights and fair treatment of the world's workers. Many protestors are today being referred to as antiglobalists because they believe global capitalism has gone too far and has been creating more disadvantages than advantages. These antiglobalists argue that multinational corporations have created ethical problems with respect to consumers, employees, human rights, developing nations, and the natural environment.

It is against this backdrop that the issue of global codes of conduct have arisen and become more important in recent years. It should also be observed that global codes of conduct are just an extension of traditional codes of conduct that have been used by companies for decades before international business and global competition became a widespread and integral part of the business world.

As global ethical issues have become more of a serious concern, there has been a growing need for effective responses on the part of business to these issues. Companies have taken many different steps to help restore confidence and trust in business. Consequently, global extensions of corporate social responsibility, corporate citizenship, and business ethics initiatives have become commonplace in the past two decades. Thus, global codes of conduct have typically been embedded in broader programs aimed at improving corporate conduct around the world, especially in developing countries. In this context, global codes of conduct may be seen as just one element in business's overall global corporate social responsibility initiatives.