Holding Corporations Accountable: Corporate Conduct, International Codes and Citizen Action available in Paperback
Holding Corporations Accountable: Corporate Conduct, International Codes and Citizen Action
- ISBN-10:
- 1856499847
- ISBN-13:
- 9781856499842
- Pub. Date:
- 08/01/2001
- Publisher:
- Bloomsbury Academic
- ISBN-10:
- 1856499847
- ISBN-13:
- 9781856499842
- Pub. Date:
- 08/01/2001
- Publisher:
- Bloomsbury Academic
Holding Corporations Accountable: Corporate Conduct, International Codes and Citizen Action
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Overview
Before widening her focus to the general issues, the author examines the now famous case of the infant food industry. Almost two decades after the introduction of the WHO/Unicef Code seeking to regulate the marketing of formula milk substitutes, an estimated one and a half million babies die unnecessarily every year as a result of formula feeding. How effective, therefore, has the Code been in changing industry behaviour?
The author argues that a key question today is how to foster a political climate favourable to practical institutional arrangements for the better regulation of TNCs. Recognizing the tension between global governance on the one hand and the globalized free market on the other, she urges that close attention be given to corporate conduct and TNC compliance with what regulatory codes exist. A range of relevant questions is explored, including the roles of citizen action, national governments and international agencies.
A host of public concerns - for example, job losses when industries migrate or the introduction of GM crops without public consultation - point to corporate regulation as a looming political issue. This book contributes to the debate about how powerful corporations can pay regard not only to the bottom line, but also take more seriously their social responsibilities.
Product Details
| ISBN-13: | 9781856499842 |
|---|---|
| Publisher: | Bloomsbury Academic |
| Publication date: | 08/01/2001 |
| Edition description: | New Edition |
| Pages: | 256 |
| Sales rank: | 734,512 |
| Product dimensions: | 5.50(w) x 8.50(h) x 0.59(d) |
About the Author
She is also actively involved in various social movements, including Health Action International (HAI) and the Women's Global Network for Reproductive Rights (WGNRR).
Her previous book was Vaccination Against Pregnancy: Miracle or Menace? (Zed 1996).
Judith Richter was born in Germany. She is a sociologist specialising in international development and has also qualified as a pharmacist. She has lived and worked in a number of countries. Since 1991 she has worked as a freelance researcher, writer and lecturer, and more recently as a consultant for UN agencies such as UNICEF and WHO. Much of her work over the last fifteen years has centred on the social, political and ethical aspects of communication and democratic decisionmaking, infant feeding, pharmaceutical policies, and contraceptive research.
She is also actively involved in various social movements, including Health Action International (HAI) and the Women's Global Network for Reproductive Rights (WGNRR).
Her previous book was Vaccination Against Pregnancy: Miracle or Menace? (Zed 1996).
Read an Excerpt
Holding Corporations Accountable
Corporate Conduct, International Codes and Citizen Action
By Judith Richter
Zed Books Ltd
Copyright © 2001 UNICEFAll rights reserved.
ISBN: 978-1-85649-984-2
CHAPTER 1
Regulation of Transnational Corporations: A Historical Perspective
Historically, progress associated with corporate social and environmental responsibility has been driven, to a large extent, by state regulation, collective bargaining and civil society activism. Increasing reliance on voluntary initiatives may be undermining these drivers of corporate responsibility. Such initiatives are often presented as effective alternatives to state regulation, when in fact their success in industrialized countries has often involved an important regulatory component. (Peter Utting, coordinator of UNRISD Project on Business Responsibility for Sustainable Development, 2000)
National Regulation of Corporations
Regulation — the establishment and implementation of rules-based regimes — has long been used to ensure that corporations are accountable to society at large. A historical overview of such regulation provides a useful background to this analysis of the regulation of the infant food industry. It illustrates the changing fortunes of, on the one hand, the strategy of influencing the commercial sector by means of external, binding regulation and, on the other, that of allowing the sector to regulate itself.
The notion that corporations should be subject to democratic control is not new. Early industrial enterprises in the USA, for example, were kept under close citizen and state control by means of corporate charters. These charters set out not only the privileges accorded to the corporations but also certain obligations. Charters often included revocation clauses giving state legislators the right to withdraw a charter if a corporation did not serve the public interest.
In the nineteenth century, however, corporations managed through various legal means to curtail or abolish the right of individual US states to amend or revoke their charters. The Supreme Court ruled in 1886 that corporations were 'natural persons' under the US Constitution and thereby 'entitled to the protections of the Bill of Rights, including the right to free speech and other constitutional protections extended to individuals'. This ruling overturned the concept that corporations were simply legal entities whose right to make profit was granted only on condition that they served the public interest. Instead 'corporations finally claimed full rights enjoyed by citizens while being exempted from many of the responsibilities and liabilities of citizenship' (Korten 1995: 59).
Other countries preferred the notion of an 'artificial person' to that of an anthropomorphized corporate citizen. In being accorded the status of 'legal personality', 'corporations are legally deemed to be single entities, distinct and separate from all the individuals who compose them. Legal personality means that corporations can sue and be sued, hold property and transact, and incur criminal liability in their own name and on their own account' (Wells 1998: 653).
Whatever their legal status, the question of how to ensure that corporations benefit society to the maximum — or at least that they do little or no harm — remains a key one all over the world. In most democratic countries today, a web of government regulations has evolved over the years to protect workers, consumers and society more generally and to guarantee their rights in law: for example, legislation on minimum wages and occupational health; on equal pay for women and on maternity leave; on product safety and advertising; and on environmental protection. More often than not, however, state authorities have been pressed into action by citizens:
It should ... be noted that in none of these domains was national regulatory protection easily or completely achieved. The worker struggle was a century in the making in the developed world and continues in the less developed world. Women's rights and consumer rights, also the focus of decades-long struggle, are not yet secure. Environmental regulation, the newest 'global' social issue, has required decades of efforts by environmental organizations and activists. (Gleckman and Knit 1994: 20)
The actual content and coverage of regulations, as well as measures to ensure that they are implemented effectively, may vary from country to country. But while national regulatory regimes are often anything but perfect, there is at least in most industrial countries a set of 'minimum standards which cannot be infringed upon without invoking substantial judicial response and public reaction' (Gleckman and Krut 1994: 20).
International Regulation of Transnational Corporations
As more and more corporations have expanded their operations over the past 30 years beyond national borders, the ability of an individual state to hold corporations accountable for their activities and to safeguard public interests through national regulation alone has substantially diminished. Recognizing this, developing countries and civil action groups have demanded a strong international regulatory regime to hold transnational corporations (TNCs) accountable to citizens wherever they operate in the world. But no effective and consistent web of binding laws and standards at the international level has emerged as yet, largely because of several changes over the past three decades in international economic and political spheres.
These changes took place in several phases. During the 1970s, there were intense debates within various UN fora on the need to regulate corporations. Forceful opposition to binding industry regulation emerged in the 1980s as neoliberal economic theory and policies began to take hold. In the early 1990s, the impetus for industry regulation shifted from the UN to the business and NGO community. And finally, coming full circle, there was a resurgence at the end of the 1990s of calls from within the UN for universal standards governing corporate conduct — opinions differ, however, as to how these standards might best be implemented.
Moreover, a new global actor entered the regulatory stage in the 1990s: the World Trade Organization, whose activities may result in the de-regulation and down-regulation of existing internationally agreed standards in the name of 'free' trade.
The 1970s: Calls for a New International Economic Order
The current debate on the international regulation of transnational corporations dates back to the late 1960s and early 1970s, an era marked by calls from within the United Nations not only for comprehensive international regulatory regimes, but also for a radical restructuring of what was perceived as an unjust world economic order.
At this time, many former colonies had recently achieved independence and were deliberating how best to promote national economic development. The Group of 77 — a coalition of 77 developing countries — was formed at the 1964 United Nations Conference on Trade and Development (UNCTAD) to promote an international agenda and structure more responsive to their needs. Nationalization of TNC subsidiaries and plantations was part of this agenda.
A key year was 1972. In that year, Chile's President Salvador Allende alerted the General Assembly of the United Nations to plans of the International Telegraph and Telephone Company (ITT) and the Kenneth Copper Corporation to overthrow his government with the help of the US government. In the same year, the first calls for international codes of conduct for TNCs were made at the UNCTAD Conference in Santiago (Hoogvelt with Puxty 1987: 42).
President Allende s violent death in a CIA-supported military coup a year later is rarely mentioned in histories of corporate regulation, yet it contributed significantly to the success of the lobby for UN codes of conduct as part of a programme for a New International Economic Order (NIEO) (Kline 2000: 43, 45).
The UN Economic and Social Council (ECOSOC) set up the UN Commission on Transnational Corporations, with the UN Centre on Transnational Corporations (UNCTC) as its special research and administrative body. This centre was entrusted with three basic tasks:
1. to monitor and provide reports on the activities of TNCs;
2. to strengthen the capacity of developing countries in dealing with TNCs; and
3. to draft proposals for normative frameworks for the activities of TNCs.
In 1976, the UN Commission on Transnational Corporations made the formulation, adoption and implementation of a draft UN Code of Conduct on Transnational Corporations one of its top priorities. UNCTAD, meanwhile, began the coordination of negotiations for an International Code of Conduct on the Transfer of Technology. Discussions on both codes progressed slowly, however, partly because of the magnitude of the task and partly because of the widely diverging views of the different actors involved.
The 1980s: Opposition to Regulation
By the early 1980s, the tide had started to turn against the regulation of TNCs. The election of influential conservative political leaders, particularly Ronald Reagan in the USA and Margaret Thatcher in the United Kingdom, introduced an era of international economic policymaking based on a neoliberal economic framework that continues today:
As the world's largest source of Foreign Direct Investment, the United States became the leading opponent of efforts to control TNCs. In accordance with neoliberal textbook economic reasoning, the US position contended that outcomes of international trade and investment generally need to be market driven in order to maximise welfare and that interventionist policies in trade and investment would reduce global welfare. Consequently the very merit of an international code of conduct for TNCs was questioned. (Hansen 1999: 5)
The neoliberal credo of 'liberalization', de regulation and privatization — in development circles known as the Washington Consensus — spread all over the world. Proponents of the New International Economic Order, including various UN agencies, were sidelined. By the mid-1980s, efforts to draw up a UN Code of Conduct for TNCs had been more or less abandoned. The Code's official demise came in 1992, when the president of the UN General Assembly reported that 'no consensus was possible ... at present' and that 'delegations felt that the changed international environment and the importance attached to encouraging foreign investment required a fresh approach' (Samir Shihabi, quoted in Transnationals 1992: l). Negotiations on the International Code on Transfer of Technology had already been abandoned in 1985.
Indeed, few of the 30 or so international codes and guidelines envisioned during the 1970s were actually adopted. They include the 1981 International Code of Marketing of Breast-milk Substitutes; the 1985 UN Guidelines for Consumer Protection; the 1985 FAO International Code of Conduct on the Distribution and Use of Pesticides; and the 1988 WHO Ethical Criteria for Medicinal Drug Promotion. Even these frameworks would have been abandoned had it not been for continuous pressure from international citizen networks.
The Early 1990s: Corporate Self-regulation and Co-regulation
One of the last attempts to introduce international corporate regulation via the UN was made at the 1992 UN Conference on Environment and Development (UNCED) — the 'Earth Summit' — held in Rio de Janeiro.
The UN Centre on Transnational Corporations drafted recommendations for environmental regulation of TNCs in the expectation that they would be included in UNCED's policy recommendations, or Agenda 21, as its global plan of action became known. But a coalition of Western industrial states and an organized industry lobby managed to get the UNCTC recommendations removed from the draft: agenda. Instead, the UNCED secretary-general, Canadian businessman Maurice Strong, invited the newly formed Business Council for Sustainable Development to write the recommendations on industry and sustainable development. What remained of the coherent and comprehensive framework for TNC environmental regulation were a few ambiguous, non-binding recommendations scattered throughout the final 500-page document. The fact that the elimination of the UNCTC's draff chapter on the environmental responsibility of TNCs more or less coincided with the dismantling of the Centre by the United Nations secretary-general caused an uproar in the environmental NGO community, which regarded both as evidence of the capture of the UN by business interests (Greer and Bruno 1996: 24; Hansen 1999: 6, 7).
In 1995, one more attempt to advocate a coherent model of regulation for TNCs was made at the World Summit for Social Development held in Copenhagen. But just as at the Earth Summit, the idea of introducing binding externally defined norms for TNC conduct was abandoned in the face of industry pressure and assertions that business would behave in a more socially responsible manner in future and would regulate itself by means of guidelines, standards for good corporate practice and other so-called voluntary initiatives.
In hindsight, the 1992 Earth Summit can be seen as the beginning of what US consumer policy researcher Michael Hansen terms a 'regulatory vacuum' at the UN level. It marked a turning point in the emergence of other regulatory models. Industry bodies have repeatedly opposed external international regulation and have increasingly advocated industry self-regulation (or certification by private bodies), arguing that this is as effective as external regulation and significantly cheaper for society.
Nevertheless, some civil society organizations (CSOs) have continued to demand regulation that is independent of industry. Others have accepted and cooperated in industry self-regulation, or have initiated co-regulation between themselves and corporations in a variety of fields. Those who support co-regulatory models tend to believe that corporations will keep their promises to behave in a more socially responsible manner, or that co-regulation is the most pragmatic approach at present.
Many governments, meanwhile, particularly those of poorer countries, have for various reasons given up their demands for international regulation. Numerous developing countries are deeply in debt and feel the need to attract foreign investment from transnational corporations, while others have developed sizeable industry sectors of their own that they do not want to be subject to international regulation.
The Mid-1990s: Enter the World Trade Organization
The establishment of the World Trade Organization (WTO) in 1995 to implement international rules on trade such as the General Agreement on Tariffs and Trade (GATT) introduced a new dimension to the international regulation of transnational corporations. One of the WTO's tasks is to 'harmonize' standards for products that are traded internationally; another is to resolve trade disputes between countries. The measuring-stick in this streamlining process is that national and international standards should present minimum barriers to trade. The WTO mechanisms intended to achieve these goals have elicited widespread concern about 'down-regulation' and 'deregulation', not least the fear that accepted minimum standards in the fields of labour, health and environmental protection will be turned into maximum standards or be abolished altogether.
Moreover, both GATT and the WTO have been criticized for their undemocratic nature and for the excessive involvement and influence of transnational corporations in their decision-making processes. Unlike UN agencies responsible for other international agreements, the WTO can enforce its standards and decisions by means of trade or other sanctions (see e.g. Koivusalo 1999; UNDP 1999).
[The WTO has] at its disposal trade sanctions — among the most effective international weapons short of missiles. This means that the WTO, which is not even a UN organization, is probably the most powerful institution after the UN Security Council — and yet makes its rulings essentially in private and with limited participation of the poorest countries. (UNRISD 2000b: 109)
The Floundering of the Multilateral Agreement on Investment
In the late 1990s, all these concerns prevented another trade agreement from being approved. The Organisation for Economic Cooperation and Development (OECD) started to negotiate an agreement on investment from one country to another in relative secrecy. When details of the proposed agreement were leaked, however, widespread fears that this Multilateral Agreement on Investment (MAI) would give transnational corporations the right to file complaints against any state they believed was hindering their ability to trade in that country — effectively granting multinationals rights that had hitherto been regarded as the prerogatives of nation-states only — led to broad public mobilization against the agreement. This public opposition and concerns from some OECD states themselves led to the abandonment of the MAI in 1998 (UNRISD 2000b: 107–8). Critics were not opposed to bringing some order and coherence to the plethora of bilateral and multilateral trade and investment agreements. What they did object to were the profound shifts in the institutional arrangements for global economic decision-making that the MAI would have brought about.
(Continues...)
Excerpted from Holding Corporations Accountable by Judith Richter. Copyright © 2001 UNICEF. Excerpted by permission of Zed Books Ltd.
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Table of Contents
Introduction 1. Regulation of transnational corporations: A historical perspective 2. Democratic global governance: Regulation of the corporate sector 3. 'Commerciogenic malnutrition': The 'Bottle Baby Disease' 4. Formulation and adoption of the International Code of Marketing of Breastmilk Substitutes 5. Implementing the Code 6. Corporate conduct: Socially-responsible marketing? 7. Corporate conduct: Acceptance of outside regulation? 8. Corporate conduct: Managing international issues - Engineering of consent 9. Civil society and the Code 10. International regulation of TNCs: Issues raised by the infant food debate