Voluntary Corporate Codes of Conduct Are a Hoax

*** 13-Jun-0* ***

Title: ENVIRONMENT-FINANCE: Corporate Codes of Conduct
Deemed Insufficient

By Danielle Knight

WASHINGTON, Jun 13 (IPS) - Companies worldwide have
signed on to voluntary codes of conduct in a bid to mitigate
globalisation's harmful aspects. Activists and executives agree
the firms are falling short but disagree on the reasons and remedies.

No scheme that relies solely on corporations themselves will
successfully rein in corporate power, human rights and
environmental groups say. Rather, governments must step in and
enforce legally binding regulations on labour, environmental, and
other protections.

''A new approach is needed,'' says Pieter van der Gaag,
executive director of the Northern Alliance for Sustainability, a
Netherlands-based coalition of European and US groups. ''The gap
between words and actions still seems to be large."

US environmentalists, for example, are lobbying to have
domestic environmental regulations extended to cover US firms'
overseas operations. They also want legislation that would hold
companies' feet to the fire and punish them for violations. Rep.
Cynthia McKinney, a Democrat from Georgia, is promoting a
Corporate Code of Conduct Act that would withhold government
incentives from companies found in violation of the voluntary
standards to which they subscribe.

The International Chamber of Commerce counts more than forty
codes of conduct designed to govern the activities of global
corporations. These include the Global Sullivan Principles, the UN
Global Compact, the Global Reporting Initiative, and the
Organisation for Economic Cooperation and Development (OECD)
guidelines on Multinational Enterprises.

Virtually none of these efforts include mechanisms to hold
companies accountable when they fail to comply, critics say. Even
some corporations complain the codes can be vague and confusing.

Thomas Delfgaauw, vice president of Shell International Ltd's
sustainable development programme, says the oil company supports
many codes but wonders if it is time to stop developing even more
voluntary mechanisms. ''How does business deal with this plethora
of codes?'' he asks.

Compounding the problem, ''all these codes are mainly words
when the government spends money on projects that directly
contradict the guidelines,'' says van der Gaag.

The wealthy nations' Organisation for Economic Cooperation and
Development, for example, in 1976 became one of the first official
bodies to pass voluntary corporate guidelines on labour, the
environment, corruption and human rights. The guidelines have been
periodically updated and stand apart from most others because they
include arrangements to investigate and punish violators.

Nevertheless, some OECD governments themselves have
underwritten projects targeted by critics as environmentally and
politically damaging - China's Three Gorges Dam, for example -
through state export credit and investment insurance agencies.

In January 1999, UN Secretary-General Kofi Annan challenged
business leaders to enact nine core principles enshrined in the UN
Global Compact, including labor and environmental protections.

Many large companies responded, among them Procter & Gamble and
DaimlerChrysler. Critics, however, say there is no assurance that
the companies uphold the compact's principles. Indeed, some go so
far as to suggest the effort mainly benefits the companies, whose
reputations gain sparkle from association with the UN logo.

''The list of corporations involved in the Global Compact reads
like a who's who of environmental culprits,'' says Joshua
Karliner, executive director of the Transnational Resource and
Action Centre, a California-based non-governmental organisation.

Global Compact partners include Shell, which stands accused of
reckless pollution and collusion with military dictators in
Nigeria, and BP Amoco, assailed for drilling for oil in the
Arctic.

Activists say imposing national laws on the companies'
operations overseas could prevent such conduct by US firms. Polls
conducted in recent years show growing public support for the
idea. But for executives, the prospect amounts to a legal and
regulatory can of worms being opened - with costly consequences
and the risk that companies will be held liable for the misdeeds
of outside suppliers and contractors.

''God help us if individual governments take different
regulatory action regarding global corporate responsibility,''
says Shell International's Delfgaauw. ''That is the worst possible
nightmare that can happen to a multinational company.''
(END/IPS/NA/EN/dk/aa/01)