Taking Multinational Corporate Codes of Conduct to the Next Level

Analysis of Essay in honor of Oscar Schachter: Taking Multinational Corporate Codes of Conduct to the Next Level” By: Sean D. Murphy The article Essay in honor of Oscar Schachter: Taking Multinational Corporate Codes of Conduct to the Next Level by Sean

Murphy begins with an intricate analogy of the successes and influences of Oscar Schachter in the evolution of transnational law and how his expertise and prescience in Space Law, captures many issues that are at stake in our evolving international society. The author contrasts Schachter’s prescience of “the decline of the nation-state and the continuing emergence of new structures and norms to regulate transnational activities” in the field of space law, with the emerging legal concept of Multi-national Corporations (MNC) and their place within our international society. The article sheds light more specifically to codes of conducts that aim to constrain socially undesirable behaviour of MNC’s and how their role needs dire help from governments in the development and implementation of these codes from a humanistic perspective, whereby the focus would remain solely on helping corporation empower their autonomy with certain bounds of justice, fairness and equity. To understand this better Sean Murphy starts by first acquainting the reader with the various codes of conduct that have developed over the past 30 years and demonstrates how their voluntary basis of adoption and implementation has started to give signs of long-term failure. He then continues by suggesting new approaches of thinking about these codes and how these methods might aid in rending these codes more effective.
As the realist conception of the nation state as an absolute sovereign entity declines, the author admits that codes of conduct relating to labour, the environment and human rights issues, thus codes of public welfare, are needed to prevent harm that might result in MNC’s operations. He believes that MNC’s are governed by economical goals and are mostly concerned with profit maximization and may not take into their profit maximizing equation the welfare of the environment nor individuals, which might even sometimes stand in the way to this goal. Corporations are thus more attracted to codes of socially desirable behaviour that are self-applied and have minimum government interference so as to be able to navigate freely in their operations with almost no restrictions. The codes that are normally called upon by MNC’s are usually very general in scope and have almost no legal repercussions if they are not adhered to.
Sean Murphy does acknowledge that MNC’s do create benefits such as enhanced wealth in certain countries and job creations, but he quickly gets back to his main argument, that he so diplomatically pursues, that MNC’s are rather opportunistic in their functioning and that they seek the best interest of the almighty dollar first and foremost and do sometimes take advantage of weak legal structures and low environmental and labour standards; “while MNC’s have emerged and thrived from the establishment of strong developed-state economies that are based on democracy, the rule of law, and independent judiciaries, some MNC’s take advantage of the absences of such conditions in developing countries”.
Selected codes of conducts and their criticism:
The author defines codes of conduct objectives as “to prevent harm or mistreatment of persons or things caused by MNC operations”. They are created to implement social progress that could have a symbiotic relationship with the economical goals of corporations. He names various attempts to create guidelines for MNC’s to obey by (see below) and details the objectives of each of them, but concludes after explaining their goals and functions that none the principles and drafts were able to work in a successful fashion. Although they do serve as a positive stepping stone to a better social behaviour on the part of MNC’s there is still a huge lack of implementation and legal repercussions that remains to be addressed and without them the effectiveness of such efforts is bound to fail. As a result, Murphy suggest that what is needed to work must be met in between strict state law regulations and voluntary based codes of conduct in order to have functional MNC codes of conduct.
UN Draft Code of Conduct for Transnational Corporations: Developed in 1972, by the UN Economic and Social Council (ECOSOC) it compromised 4 parts: 1) activities of MNC’s 2) Treatment of MNC’s 3) Intergovernmental corporations 4) implementations of the codes. The code never had the chance to see light, as there was a strong resistance from developing countries as to it being a form of ‘economic neo-colonization’ and thus only served as a blueprint for the codes to come.
1977 ILO Tripartite Declaration of Principles: Developed by the International Labour Organization to promote codes of conduct that would “promote equal opportunity, security, and collective bargaining in employment, and policies that preclude arbitrary dismissal, strike-breaking, and other unfair practices”. Its efficiency is rather debated because of its lack of institutional support.
2003 UN Sub-Commission on Human Rights Code on TNC’s: Its main goal is to provide Corporations with codes of conduct that would provide a socially responsible behaviour. This code of conduct tries to be more strict by projecting codes as more of an obligation upon MNC’s but as the previous one’s fails to do so because of its lack of legal repercussions.
OECD Guidelines for MNE’s: Developed for a smaller number of countries (OECD countries) and serves as guidelines for MNE’s socially responsible conduct, including taxation, financing and information disclosure. The OECD guidelines are considered one of the more successful codes of conduct up to date, and such success is often attributed to the similarity of values and of historic and traditional affinity of all the OECD countries.
The 1999 UN Global Compact: Draw upon previous drafts of codes of conduct to “stimulate change and to promote good corporate citizenship and encourage innovative solutions and partnerships”. It is voluntary based and is criticized for its lack of legal repercussions and as such corporations may use it simply as to glorify their tainted image in the eyes of civil society.
Codes developed within private sector: The author gives the Environmental management system (EMS) and International Organisation for standardisation (ISO) as non-governmental based institutions that help in promoting more socially responsible behaviour. It does not have specific standards that must be met by MNC’s but rather postulates weak guidelines that would be beneficial for MNC’s to follow to be more environmentally friendly.
Codes focused on certain industries: Companies that have huge impacts on societies in which they operate, such as the oil industry, have developed a set of codes to obey by. Having the power to influence the well-being around them, oil companies are constantly under the scrutnious eye of civil society and must thus be extremely careful of their actions in pursuing their goals. In December 2000, the Voluntary Principles on Security and Human Rights were created by governments and certain extractive and energy sectors.
New Approaches:

Sean Murphy suggests in his article a series of broad guidelines that should be implemented by governments as to help attain a more positive goal in socially responsible behaviour by MNC’s. Instead of giving recommendations to MNC’s directly he calls upon the governments to give MNC’s more incentive to apply and adhere to codes of conducts that already exist. Murphy explains that a strict ‘big brother’ model of implementing rules would not work thus a more subtle way, still voluntary on the MNC’s part, must come into play. The scheme he suggest to governments is to give incentives to MNC’s to first and foremost join the various codes of conducts. Suggestions to do so entails: getting stakeholders together to have more say in particular problems, Setting a code for codes to provide a quality control template that would reduce the likelihood of sham MNC codes, leniency form regulators and favourable treatment to MNC’s that do join and adhere to codes, Leniency in Criminal Prosecution and to civil claims that tries to give lesser punishment to MNC’s that join socially responsible codes of conduct even if violation occurs and government procurement and financing to MNC’s that join and adhere to codes of conduct. The author also suggest subtle changes, that would need to be strictly promoted by governments, to the MNC’s functioning to facilitate the adherence to the codes of conduct: 1) to promote transparency as to inform shareholders and help them make more socially responsible decisions 2) Promote truth in advertising , thus once again making it easier for civil society and shareholders to make more socially responsible choices 3) promoting oversight processes such as internal or external monitoring, verification, audits, or certification.

The author addresses issues that are of pressing matter in our present society. We can see that there is more and more concern for the unethical behaviour of corporation through street protests and even the rise of infrastructures that pertain solely to promote corporate social responsibility. Murphy’s article was very clear in explaining as to why governments must take a greater role in promoting socially responsible codes of conduct. His explanation and suggestions on how one might go about to create change to better the present condition of MNC behaviour were on the other hand a bit more generalist in scope but it seems like it might just be inevitable to have broad guidelines as the next stepping stone towards a more socially responsible MNC.

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