Abstract
Over the last few decades, a variety of global initiatives for governing both financial and non-financial performance of transnational corporations (TNCs) have been proposed. The objectives of these initiatives share a similar purpose: to minimise conflicts towards developing a sustainable trade environment. However, most of these initiatives have been partially successful. Some of these attempts failed to reach completion, some are obsolete, and one was abandoned. The initiatives that are currently in operation have never been accepted by all stakeholders. A poignant reason for their poor performance is their lack of capacity to include the dynamics of governance beyond government, regulation beyond law, and responsiveness beyond responsibility. This chapter explores the main global initiatives, focusing on the interplay between the core of these initiatives and TNCs’ social responsibility and accountability governance.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The term ‘Transnational Corporation’ is used here in conformity with its definition provided the Intergovernmental Working Group. This group defines a TNC as ‘an enterprise (a) comprising entities in two or more countries, regardless of the legal form and fields of activities in those entities; (b) which operates under a system of decision-making, permitting coherent policies and a common strategy through one or more decision-making centres; (c) in which the entities are so linked, by ownership or otherwise, that one or more of them may be able to exercise a significant influence over the activities of others and, in particular, to share knowledge, resources and responsibilities with the others’ Report of the Secretariat on the Outstanding Issues in the Draft Code of Conduct on Transnational Corporations, U.N. Doc E/C. 10/1984/S/5. No distinction is intended from the term multinational enterprise' in this article. However, TNC and MNE are sometimes distinguished. For the purpose of this research the terms are used interchangeably.
- 2.
Group of Eminent Persons, The Impact of Transnational Corporations on Development and on International Relations, UN Doc E/5500 Add.1. 1974.
- 3.
Res 3201 (S-VI) of 9 May 1974 of the UN General Assembly, Resolution on the New International Economic Order; Res 3202 (S-VI) of 16 May 1974 of the UN General Assembly, The Program of Action on the Establishment of a New International Economic Order. The Resolution on NIEO, however, did not achieve support from a number of countries, including Belgium, Denmark, Norway, United States, and the Federal Republic of Germany. Nine of the Western developed countries abstained from voting on this resolution.
- 4.
Article 4(e) of the Declaration on the Establishment of a New International Economic Order, Res 3201 (S-VI) of 1May 1974 of the UN General Assembly.
- 5.
Economic and Social Council Resolution 1721(LIII). For details, see UN Doc. E/5500/Rev. 1, ST/ESA/6 (New York: UN, 1974).
- 6.
On request of the Economic and Social Council through its 1982/68 of 27 October 1982 number resolution, the Inter Governmental Working Group prepared the draft code of conduct. This draft also considers a variety of resolutions adopted by the General Assembly and Economic and Social Council. It applies the ILO Tripartite Declaration of Principles concerning Multinational Enterprises.
- 7.
Official record of the Economic and Social Council, 1983, Supplement No.-7. Annex-II.
- 8.
For a detailed account of debate regarding these issues, see Report of the Secretariat on the Outstanding Issues in the Draft Code of Conduct on Transnational Corporations, U.N. Doc E/C.10/1984/S/5.
- 9.
Article 2(1) of the United Nations Charter of Economic Rights and Duties of States confirms this sovereignty; it reads: ‘every state has and shall freely exercise full permanent sovereignty, including possession, use and disposal, over all its wealth, natural resources and economic activities.’
- 10.
Para 47 of the Code. E/C.101982/6.
- 11.
The Declaration invites ‘governments of state members of the ILO, the employers’ and workers’ organisations concerned and the multinational enterprises operating in their territories to observe the principles embodied therein’ p. 423.
- 12.
Paragraph 10 of the Declaration notes: ‘Multinational enterprises should take fully into account established general policy objectives of the countries in which they operate. Their activities should be in harmony with the development priorities and social aims and structure of the country in which they operate. To this effect, consultation should be held between multinational enterprises, the government and, wherever appropriate, the national employers’ and workers’ organisations concerned’ p. 190.
- 13.
Paragraph 33 of the Declaration reads: ‘Wages, benefits and conditions of work offered by multinational enterprises should not be less favourable to the workers than those offered by comparable employers in the country concerned’ p. 192.
- 14.
The current text was enriched with the entirety of social responsibilities after a revision. The revision added a number of issues to the main text including an extension of labour rights, a direct referral to human rights assigning the multinational responsibilities, and a reference to their responsibility to the supply chain (i.e., business partners, suppliers and sub-contractors). More importantly, the applicability guidelines cover extraterritorial activities of TNCs.
- 15.
Chapter 1.4 of the OECD Guidelines states: “the Guidelines are not aimed at introducing differences of treatment between multinational and domestic enterprises; they reflect good practice for all. Accordingly, multinational and domestic enterprises are subject to same expectations in respect to their conduct wherever the Guidelines are relevant to both.”
- 16.
The principles of the Compact are: (i) businesses should support and respect the protection of internationally proclaimed human rights; (ii) make sure that they are not complicit in human rights abuses; (iii) businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; (iv) the elimination of all forms of forced and compulsory labour; (v) the effective abolition of child labour; (vi) the elimination of discrimination in respect of employment and occupation; (vii) businesses should support a precautionary approach to environmental challenges; (viii) undertake initiatives to promote greater environmental responsibility; (ix) encourage the development and diffusion of environmentally friendly technologies; and (x) businesses should work against corruption in all its forms, including extortion and bribery. For a detailed description of each of these principles, visit the Global Compact at https://www.unglobalcompact.org/what-is-gc/mission/principles, accessed on 23 July 2018.
References
Baxi, U. (2005). Market fundamentalisms: Business ethics at the Altar of human rights. Human Rights Law Review, 5(1), 1–26.
Berger, A. (2015). Developing countries and the future of the international investment regime. Retrieved from https://www.die-gdi.de/uploads/media/giz2015-en-Study_Developing_countries_and_the_future_of_the_international_investment_regime.pdf.
Berliner, D., & Prakash, A. (2015). “Bluewashing” the firm? Voluntary regulations, program design and member compliance with the United Nations Global Compact. Policy Studies Journal, 43, 115–138.
Blaikie, H. (2004). Corporate social responsibility and codes of conduct: The privatisation of international labour law. Paper presented at the Canadian Council on International Law Conference.
Bondzi-Simpson, P. E. (1990). Legal relationships between transnational corporations and host states. Praeger Pub Text.
Carim, X. (2015). International investment agreements and Africa’s structural transformation: A perspective from South Africa. Retrieved from https://www.southcentre.int/wp-content/uploads/2015/08/IPB4_IIAs-and-Africa%E2%80%99s-Structural-Transformation-Perspective-from-South-Africa_EN.pdf.
Commission on Human Rights. (2005). Report of the United Nations high commissioner on human rights on the responsibilities of transnational corporations and related business enterprises with regard to human rights, UN doc. e/CN.4/2005/91. February 15, 2005.
Deva, S. (2006). The UN global compact for responsible corporate citizenship: Is it still too compact to be global. Corporate Governance Law Review, 2, 145.
Deva, S. (2012). Regulating corporate human rights violations: Humanizing business. Abingdon: Routledge.
Deva, S., & Bilchitz, D. (2013). The human rights obligations of business: A critical framework for the future. In S. Deva & D. Bilchitz (Eds.), Human rights obligations of business: Beyond the corporate responsibility to respect? Cambridge: Cambridge University Press.
Feaver, D., & Sheehy, B. (2015). A positive theory of effective regulation. UNSW Law Journal, 35(3), 961–994.
Friedman, M., & Verhoosel, G. (2003). Global litigation-arbitrating over BIT claims. National Law Journal, 15(78).
Gilpin, R. (2018). The challenge of global capitalism: The world economy in the 21st century. Princeton: Princeton University Press.
Hamilton, G. (1984). The control of multinationals: What future for international codes of conduct in the 1980s? Institute for Research and Information on Multinationals.
Hanakova, L. (2005). Accountability of transnational corporations under international standards. (LLM), University of Georgia. Retrieved from http://digitalcommons.law.uga.edu/stu_llm/17.
Hemphill, T. A. (2005). The United Nations global compact: The business implementation and accountability challenge. International Journal of Business Governance and Ethics, 1, 303–316.
Hillemanns, C. (2003). UN Norms on the responsibilities of transnational corporations and other business enterprises with regard to human rights. German Law Journal, 4(10).
Hopkins, M. (2004). Corporate social responsibility: An issues paper. Retrieved from https://www.ilo.org/legacy/english/integration/download/publicat/4_3_285_wcsdg-wp-27.pdf.
Inman, P. (2016, September 13). Study: Big corporations dominate list of world’s top economic entities. The Guardian. Retrieved from https://www.theguardian.com/business/2016/sep/12/global-justice-now-study-multinational-businesses-walmart-apple-shell.
Jailani, A. (2015). Indonesia’s perspective on review of international investment agreements. Retrieved from http://igj.or.id/indonesias-perspective-on-investment-agreement-review/.
Kollamparambil, U. (2016). Bilateral investment treaties and investor state disputes. ERSA working paper 589.
Korten, D. (1995). When corporations rule the world. San Francisco, CA: Berrett-Koehler Publishers.
Knudsen, J. (2011). Company delisting from the UN Global Compact: Limited business demand or domestic governance failure? Journal of Business Ethics, 103, 331–349.
Maon, F., Lindgreen, A., & Swaen, V. (2010). Organizational stages and cultural phases: A critical review and a consolidative model of corporate social responsibility development. International Journal of Management Reviews, 12(1), 20–38.
Muchlinski, P. (2007). Multinational enterprises and the law. Oxford: Oxford University Press.
Nolan, J. (2005a). With power comes responsibility: Human rights and corporate accountability. UNSW Law Journal, 28, 581.
Nolan, J. (2005b). United Nations’ Compact with business: Hindering or helping the protection of human rights. University of Queensland Law Journal, 24(2), 445.
Nolan, J. (2013). The corporate responsibility to respect human rights: Soft law or not law. In S. Deva & D. Bilchitz (Eds.), Human rights obligations of business: Beyond the corporate responsibility to respect? Cambridge: Cambridge University Press.
North, D., Wallis, J. J., Webb, S. B., & Weingast., B. R. (2009). Violence and social orders. A conceptual framework for interpreting recorded human history. Cambridge: Cambridge University Press.
North, D., Wallis, J. J., Webb, S. B., & Weingast., B. R. (2013). In the shadow of violence: Politics, economics and the problem of violence. Cambridge: Cambridge University Press.
Ocran, T. (1986). Interregional codes of conduct for transnational corporations. Connecticut Journal of International Law, 2, 121.
OECD. (1994). The OECD guidelines for multinational enterprises. Paris: OECD.
Oldenziel, J., Wilde-Ramsing, J., & Feeney, P. (2010). 10 years on: Assessing the contribution of the OECD guidelines for multinational enterprises to responsible business conduct. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1641036.
Rahman, M. (1989). United Nations Code of conduct on transnational corporation (TNCs) in the aspect of private international law. Dhaka University Studies Part F, 1(1), 101–116.
Rahim, M. (2010). Who’s who: Transnational corporations and nation states interface over the theoretical shift into their relationship.
Rangwaldh, J., & Konopik, P. (2010). The UN Norms on the responsibilities of transnational corporations and other business enterprises with regard to human rights. In R. Mulleart (Ed.), Corporate social responsibility: The corporate governance of the 21st century. Chapman: Kluwer Law International.
Rasche, A. (2009). “A necessary supplement”: What the United Nations global compact is and is not. Business and Society, 48, 511–537.
Rasche, A., Waddock, S., & McIntosh, M. (2013). The united nations global compact: Retrospect and prospect. Business & Society, 52(1), 6–30.
Robinson, P. (1986). The question of a reference to international law in the United Nations code of conduct on transnational corporations.
Rodriguez, M. M. (1982). The negotiations on the United Nations’ code of conduct on transnational corporations: Some issues. The CTC Reporter, 12.
Rudloph, P. H. (2010). The tripartite declaration of principles concerning multinational enterprises. In R. Mullerat (Ed.), Corporate social responsibility: The corporate governance of the 21st century: Kluwer Publisher.
Ruggie, J. (2003). Trade sustainability and global governance: Keynote address. Colombia Journal of Environmental Law, 27, 297.
Sagafi-Nejad, T., & Dunning, J. H. (2008). The UN and transnational corporations: From code of conduct to global compact. Bloomington: Indiana University Press.
Sahlin-Andersson, K. (2006). Corporate social responsibility: A trend and a movement, but of what and for what? Corporate Governance, 6(5), 595–608.
Schembera, S. (2018). Implementing corporate social responsibility: Empirical insights on the impact of the UN Global compact on its business participants. Business & Society, 57(5), 783–825.
Schutter O. D. (2013). Forward: Beyond the guiding principles. In S. Deva & D. Bilchitz (Eds.), Human rights obligations of business: Beyond the corporate responsibility to respect? Cambridge: Cambridge University Press.
Sethi, S. P. & Schepers, D. H. (2014). United Nations global compact: The promise -performance gap. Journal of Business Ethics, 122, 193–208.
Sheehy, B., & Feaver, D. (2015). A normative theory of effective regulation. UNSW Law Journal, 35(1), 392–425.
UNCTAD. (2015). IIA Monitor. Retrieved from Geneva: http://unctad.org/en/Pages/DIAE/International%20Investment%20Agreements%20(IIA)/IIA-Monitor.aspx.
US Department of State. (1989). Multinational Corporations’ GIST: A quick reference aid on U.S Foreign Relations. In B. o. P. Affairs (Ed.). Washington D.C: U.S Department of State.
Vernon, R., & Vernon, H. (1977). Storm over the multinationals: The real issues. Harvard University Press.
Zerk, J. A. (2006). Multinationals and corporate social responsibility: Limitations and opportunities in international law (Vol. 48). Cambridge: Cambridge University Press.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2019 Springer Nature Switzerland AG
About this chapter
Cite this chapter
Rahim, M.M. (2019). Quest for a Global Code of Conduct for TNCs—A Grim Tale. In: Rahim, M. (eds) Code of Conduct on Transnational Corporations. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-10816-8_1
Download citation
DOI: https://doi.org/10.1007/978-3-030-10816-8_1
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-10815-1
Online ISBN: 978-3-030-10816-8
eBook Packages: Business and ManagementBusiness and Management (R0)