Advertisement

Transnational Corporations’ Social License to Operate—The Third Facet of Corporate Governance

  • Indrajit DubeEmail author
Chapter
Part of the CSR, Sustainability, Ethics & Governance book series (CSEG)

Abstract

The seamless integration of national economies within the global order has increased the transnational movement of TNCs from all economic blocks. To date, it is widely accepted that no economy can prosper in isolation. Therefore, the regulatory focus has shifted towards ‘Social Licence to Operate’ (SLO). The majority of countries, utilising either soft or hard laws, ensure that the community’s preferences are considered in corporate policy—and decision-making. To achieve this, some countries impose positive responsibility on company directors, and others mandate spending of a percentage of corporate profit on the development of social infrastructure. This mandatory spending may be imposed on classes of corporations with specific net worth or financial turnover. The SLO has developed as the third facet of governance for TNCs by means of this formal arrangement. This governance arrangement empowers society to determine the extent, and types of social benefit TNCs need to extend to the community.

References

  1. Anderson, S. (2006, December). International Regulation of Transnational Corporations. Retrieved 1 August 2016, from: http://www.policyinnovations.org/ideas/policy_library/data/01311/_res/id=sa_File1/
  2. Broad, R., & Cavanagh, J. (1999). Corporate accountability movement: Lessons & opportunities. The Fletcher Forum of World Affairs, 23, 151.Google Scholar
  3. Companies Act 2013. (n.d.). Retrieved 14 January 2016, from http://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
  4. Coonrod, S. (1977). United Nations code of conduct for transnational corporations. Harvard International Law Journal, 18, 273.Google Scholar
  5. Diller, J. M. (2000). Social conduct in transnational enterprise operations: the role of the International Labour Organization. Multinational enterprises and the social challenges of the XXIst century, Roger Blanpain, Ed., Kluwer Law International.Google Scholar
  6. Dube, I. (2010). Environmental governance–Future directions. Chartered Secretary, Special Edition, 1381–1384.Google Scholar
  7. Dube, I. (2011). Is corporate governance the answer to corporate structural failure. US-China Law Review, 8, 413.Google Scholar
  8. Dube, I. (2016). Statutory corporate social responsibility—A philosophical shift in decolonized company law. Chartered Secretary, 46(12), 28–32.Google Scholar
  9. Ghemawat, Pa. (n.d.). The forgotten strategy. Harvard Business Review, 81(November), 76–84.Google Scholar
  10. Hägg, C. (1984). The OECD guidelines for multinational enterprises. Journal of Business Ethics, 3(1), 71–76.CrossRefGoogle Scholar
  11. Hiller, J. S. (2013). The benefit corporation and corporate social responsibility. Journal of Business Ethics, 118(2), 287–301.  https://doi.org/10.1007/s10551-012-1580-3.CrossRefGoogle Scholar
  12. Human Rights Council, United Nations. (2011). Report of the Special Representative of Secretary-General on the issue of human rights and transnational corporations and other business enterprises, John Ruggie (No. 17th Session, Agenda item 3) (p. 1 to 27). Retrieved from http://www.ohchr.org/documents/issues/business/A.HRC.17.31.pdf
  13. Leipziger, D. (2015). The corporate responsibility code book. Viva Books Publishing.Google Scholar
  14. Lin, L.-W. (2010). Corporate social responsibility in China: Window dressing or structural change? Berkeley Journal of International Law, 28(1), 64–100.Google Scholar
  15. Matten, D., Crane, A., & Chapple, W. (2003). Behind the mask: Revealing the true face of corporate citizenship. Journal of Business Ethics, 45(1), 109–120.  https://doi.org/10.1023/A:1024128730308.CrossRefGoogle Scholar
  16. Maucourant, J., & Plociniczak, S. (2013). The institution, the economy and the market: Karl Polanyi’s institutional thought for economists. Review of Political Economy, 25(3), 512–531.CrossRefGoogle Scholar
  17. Melgar, B. H., Nowror, K., & Yung, W. (2011). The 2011 update of the OECD guidelines for multinational enterprises: Balanced outcome or an opportunity missed? Institute of Economic Law Transnational Economic Law research Centre, School of Law, Martin Luther University Halle Wittenberg. Retrieved from http://telc.jura.uni-halle.de/sites/default/files/BeitraegeTWR/Heft112_0.pdf
  18. Mickels, A. (2009). Beyond corporate social responsibility: Reconciling the ideals of a for-benefit corporation with director fiduciary duties in the US and Europe. Hastings International & Comparative Law Review, 32, 271.Google Scholar
  19. Prno, J., & Slocombe, D. S. (2014). A systems-based conceptual framework for assessing the determinants of a social license to operate in the mining industry. Environmental Management, 53(3), 672–689.  https://doi.org/10.1007/s00267-013-0221-7.CrossRefGoogle Scholar
  20. Rojot, J. (1985). The 1984 revision of the OECD guidelines for multinational enterprises. British Journal of Industrial Relations, 23(3), 379–397.CrossRefGoogle Scholar
  21. Sauvant, K. P. (2015). The negotiations of the United Nations code of conduct on transnational corporations: Experience and lessons learned. The Journal of World Investment & Trade, 16(1), 11–87.CrossRefGoogle Scholar
  22. Scherer, A. G., Palazzo, G., & Baumann, D. (2006). Global rules and private actors: Toward a new role of the transnational corporation in global governance. Business Ethics Quarterly, 16(04), 505–532.  https://doi.org/10.5840/beq200616446.CrossRefGoogle Scholar
  23. Social Licence to Operate. (n.d.). Retrieved 14 September 2016, from https://www.sbc.org.nz/__data/assets/pdf_file/0005/99437/Social-Licence-to-Operate-Paper.pdf
  24. Summary Report on Geneva Consultations, Geneva, Switzerland, December 4–5, 2007, Corporate Responsibility to Respect Human Rights. (n.d.). Retrieved from https://business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-Geneva-4-5-Dec-2007.pdf
  25. UN Intellectual History Project. (2009, July). Retrieved 18 December 2016, from http://www.unhistory.org/briefing/17TNCs.pdf
  26. United Nations Global Compact. (n.d.). The UN Global Compact Ten Principles and Sustainable Development Goals: Connecting, Crucially. Retrieved from https://www.unglobalcompact.org/docs/about_the_gc/White_Paper_Principles_SDGs.pdf
  27. Waagstein, P. R. (2011). The mandatory corporate social responsibility in Indonesia: Problems and implications. Journal of Business Ethics, 98(3), 455–466.  https://doi.org/10.1007/s10551-010-0587-x.CrossRefGoogle Scholar
  28. World Investment Report 2011: Non-Equity Modes of International Production and Development. (2011). Retrieved 17 December 2016, from http://unctad.org/en/PublicationsLibrary/wir2011_en.pdf
  29. Zinkin, J. (2004). Maximising the’licence to operate’: CSR from an Asian perspective. The Journal of Corporate Citizenship, 14, 67.CrossRefGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Rajiv Gandhi School of Intellectual Property LawIndian Institute of TechnologyKharagpurIndia

Personalised recommendations