Corporate Codes of Conduct

A Wider Corporate Agenda

Strictly speaking, there is no fixed consensus on what CCC should cover. Stated objectives generally relate to the particular concerns of the corporation, and authors are likely internal managers and serving consultants (although sometimes in consultation with nongovernmental organizations (NGOs) and the UN's Global Compact). Accordingly, the codes are produced in numerous formats, ranging from detailed best-practice guidelines on social and environmental issues to broad proclamations by the corporation to uphold a range of values (such as the recognition of human rights). A familiar theme is corporate social responsibility (CSR), introduced to promote the idea that corporate activities should, at the very least, avoid disruption to the wider society and preferably generate positive effects. Examples of CSR practices include the preservation of the environment through low pollution and energy-efficient measures, the production of merchandise that is recyclable and biodegradable, and the promotion of uniform treatment of employees across labor markets, thus ensuring acceptable working conditions irrespective of local market standards (such as the refusal of child labor).

Given the formidable power of corporations and the profit motives that shape their priorities, questions remain as to the degree to which they will genuinely prioritize socially responsible behavior and facilitate stakeholder input in corporate governance. The corporate sector's most prominent response to these issues is CCC.

Advocates of CCC argue that it is in the interest not only of society to harness at least some of the inordinate wealth and power that corporations wield and reorient it toward societal benefit, but that it also makes good business sense. Motivated by the primary corporate objectives of minimizing risk and enhancing returns, the corporation seeks to project an attractive [Page 164]public image and increase shareholder investment. Codes of conduct that prescribe ethical behavior are deemed to positively influence purchasing decisions and thus boost shareholder profit and secure new investors. They are seen as a way to mainstream ethical concerns into the core of business procedures. However, the efficacy of such codes depends upon their reliability as a gauge for actual corporate behavior and whether stakeholders (such as consumers, governments, advocacy groups, and unions), as well as investing shareholders, can rely on their accuracy. Central to the credibility of CCC then is comprehensive monitoring, enforcement, and transparency of corporate conduct. The corporate sector has long resisted the call for tighter centralized regulation of its activities, claiming that this would unacceptably reduce competitive capacity and depress financial growth. Instead, there is an increasing trend to produce publicly available CCC and related CSR reports for the inspection of the public and shareholders alike. Certainly the last few years have seen a number of major corporations adopt this strategy, including McDonalds, GAP, Mattel, Hewlett Packard, Dell, and IBM.

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