Business initiatives in the field of corporate responsibility are particularly evident in relation to drawing up codes of conduct or specific policy statements on environmental and social aspects. As indicated above, an increasing number of companies and business and industry associations have developed codes of conduct and guiding principles.

Despite the current wave of global enthusiasm for codes, the proportion of companies adopting them is still relatively small in most countries. Even taking the case of developing countries where we might expect more progress, the situation is not particularly inspiring. For example, in Costa Rica - a country that has gained international recognition for initiatives associated with environmental protection - only one third of large companies have an environmental policy (Pratt and Fintel, 1999). Another problem concerns the limited scope of many codes. A study of Canadian corporations, for example, found that “the majority of large … businesses operating or sourcing abroad do not contain references to even the most basic human rights standards.” (Forcese, 1996). The issues prioritized in codes are often those to which consumers are sensitive - such as child labour, discrimination and environmental protection, and not others identified by international organizations, such as the ILO. Hence “freedom of association and the right to bargain collectively hardly feature at all” (Wild, 1998:32).

If the adoption of codes still has a long way to go, their implementation leaves even more to be desired. Codes very often remain at the level of lofty principles and well-intentioned policy statements that are not effectively implemented (Kolk et al., 1999). An UNCTAD review of the guidelines set by 26 world industry associations for their member firms found that “most … do not ask the signatories to commit to the principles or activities they recommend... [and] only a handful require any kind of compliance by members” (UNCTAD, 1996:7). Employees and consumers are often unaware of the existence of company codes, and firms frequently fail to specify the nature of sanctions for non-compliance. Of particular concern is the fact that effective company self-assessment or independent verification of compliance with codes is rarely practised (Dommen, 1999; ILO, 1999; UNCTAD, 1996). According to the Canadian study mentioned above:

... most codes lack the independent monitoring requirements... companies appear reluctant to share their codes with the public, even when they report having codes with human rights language. This recalcitrance runs counter to the call for transparency in code development, implementation and administration promoted by code analysts (Forcese, 1996).

Another area where progress has been evident but weak relates to environmental and social reporting. A 1994 study by UNEP of 100 “pioneering companies” found that the reports of two thirds of the firms (64 per cent) ranged from “green glossies” to annual reports that were more text than figures. Only 5 per cent contained meaningful performance data, while none amounted to “sustainable development reporting”.¹³ “Whatever companies may call their reports, and however many times they mention sustainable development in the text, very little work is being done in this area as yet” (UNEP, 1994:67). Where environmental and social reporting is catching on, it is often very selective. As Zadek observes, only a few companies - such as the Body Shop and Traidcraft in the United Kingdom, and Ben & Jerry’s in the United States - have moved towards “more systematic, comprehensive, rigorous and externally verified methodologies for exploring, disclosing, and improving corporate social performance” (quoted in Nelson, 1996:86).

¹³ Sustainable development reporting is “based on the extensive use of quantitative methods (such as life-cycle analysis and mass balances) and on strong links with industry - wide and national sustainable development reporting against pre-agreed targets” (UNEP, 1994:8).

The incipient character of corporate management reform is also evident in relation to environmental certification. Two of the most important initiatives in this field involve the ISO 14000 and the Forest Stewardship Council (FSC) certification systems. By the end of 1998 only 7,887 certificates had been awarded worldwide under the former scheme, of which 36 per cent were in developing countries, primarily in Asia. While the number of ISO certificates awarded annually is increasing, and these currently exist in 72 countries, only 3,454 were issued in 1998. This compares poorly with the approximately 50,000-60,000 certificates awarded annually under the ISO 9000 series related to quality management systems (ISO, 1999).

When IIED published an extensive report on the world’s pulp and paper industry in 1996, it noted that nearly 6 million hectares of forests had been certified but that this accounted for just 0.5 per cent of global trade (IIED, 1996:62). By early 1999 the area certified by FSC-accredited bodies had risen to 15 million hectares (one quarter of which were in developing countries), but this still represented less than 1 per cent of the world’s forests outside of protected areas.¹⁴ Even in Costa Rica, where the logging industry has supported the principle of promoting sustainable forestry through certification, only 25,000 hectares, managed by seven entities, have been certified (FSC, 1999). This represents 5 per cent of the approximately half a million hectares of forest outside of protected areas.¹⁵

¹⁴ Based on data from FSC, 1999 and 1996 estimates of forest area and protected areas in World Bank, 1999.

 

¹⁵ Based on 1996 estimates of forest area and protected areas in World Bank, 1999.