• Codes of conduct

Codes of conduct

The number of initiatives and standards relevant to corporate responsibility have increased rapidly over the last 15 years. Companies no longer wonder whether to use such tools; they wonder about which ones to use, and in what combination.

This document aims to provide a user-friendly, balanced and impartial guide to help businesses to navigate their way through this maze. It seeks to articulate clearly the key aspects of three cross-industry initiatives:

• The OECD Guidelines for Multinational Enterprises;
• The United Nations Global Compact Principles; and
• The IFC Performance Standards on Social and Environmental Sustainability

All three of these initiatives aim to shape the behaviour of companies operating in developing and emerging markets.

The OECD Guidelines are comprehensive and address several issues that are broadly accepted but not covered in other texts. Because they are not framed as regulations, they are able to promote responsible business conduct that is expected, but may not be mandatory under domestic or international law. Feedback from business suggests that the guidelines are not widely used by companies to inform their business practices. This may because:

• there is no process for companies to sign up to the guidelines
• many governments have been less energetic than had been hoped in promoting the guidelines
• focus has been more on using the Guidelines as a complaints mechanism to deal with companies that have not lived up to them.

By comparison, the Global Compact Principles have wide recognition, with over 3000 companies of all sizes and from all regions of the world having signed up to them. The Global Compact has a particularly strong uptake in developing countries. Over half of the participants are from non-OECD countries. However, the principles are brief and general. They serve as a statement of good intent by companies, rather than as a tool for companies.

The IFC Performance Standards are, in effect, mandatory for companies seeking IFC support. Their content is therefore not always as far-reaching as those initiatives that are, in essence, voluntary. The standards go some way in compensating for this by a strong focus on the processes that companies are expected to follow to achieve an acceptable level of conduct. The core of this is the Social and Environmental Assessment and Management System that all IFC clients are required to establish.

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