2. INTERNATIONAL SOFT LAW ON CORPORATE SOCIAL RESPONSIBILITIES

Dany Channraksmeychhoukroth, Radu Mares

Introduction

Soft law instruments, or authoritative policy pronouncements from international organizations, are particularly important in the CSR area. The UN has tried to develop an international code for transnational corporations since the 1970s, and then attempted again in the early 2000s to develop human rights norms for transnational corporations; however none of these documents has ever been adopted, even as soft law. In contrast, the OECD and the ILO managed to develop such CSR instruments in the 1970s and have updated them periodically. It was only in 2011 that the UN managed to adopt its first soft law instrument, the Guiding Principles on business and human rights (UNGPs). The UNGPs were produced in a participatory manner, based on extensive evidence and research over a period of six years. The UNGPs marked a significant moment of convergence of numerous policy instruments – issued by states or private actors – around the ideas put forward by the UNGPs. The UNGPs are supported by states, businesses and a part of civil society, and suggest a feasible and somehow moderate view on the social responsibilities of companies. Although somehow general, the UNGPs have now become the reference point that is used by UN bodies, other international organizations such as the OECD and World Bank that have their own CSR instruments, national policymakers, trade unions and advocacy groups that measure corporate performance and promote human rights due diligence, various business sectors that further specify the UNGPs to the particularities of their own context, and several professions such as accountants and lawyers. The big question is whether the UNGPs have succeeded in facilitating hard law at the international level (see chapter 1) and national level (see chapter 4), new collaborations and partnerships as promoted by the Agenda 2030 (see chapter 5), better management systems within companies (see chapters 8-14), and more specific corporate guidance on various human rights (see chapters 15-29). Debate continues about the value of soft law: on the plus side, we now have more clarity on the roles and responsibilities of business regarding human rights; on the minus side, it is not clear how much soft law can shape corporate conduct given the imperatives of profit-making and market pressures. There continues to be a lack of remedies for victims of corporate abuse (see chapters 6-7). What new laws should be adopted to complement soft law and hold transnational businesses accountable remains a contested issue.

The responsibility to protect, respect and fulfil human rights has long been understood as a state’s duty. It was only in the recent years that that the discussion on human right responsibilities of businesses began. Indeed, references to human rights obligations of businesses are almost unheard of in Cambodian legal instruments. However, other actors including NGOs, media, and consumers have encouraged or pressured businesses to become more accountable for the adverse human rights impacts of their operations. CSR remains poorly understood as a concept among relevant stakeholders in Cambodia. Practicing CSR helps companies to conduct their business in an ethical way[1], which is a new strategy to attract business partners and consumers. Importantly, involvement of other social actors pointing corporate human rights violations makes it more difficult for the state to ignore its obligations under human rights law. Overall, soft law instruments help the state identify principles and standards that businesses should meet and ways to achieve compliance with those standards.

Main Aspects

Corporate responsibility to respect human rights
Private sector’s contribution to development
State obligation to protect human rights
Protectionism and competitive advantage in international trade
Relation between soft law and hard law
Social dialogue and mature industrial relations
‘Decent work’ in a globalized economy
Complicity in human rights abuses
Relation of CSR with trade and development cooperation
Ethics and a fair globalization
Relation of CSR and compliance with law
Definition of multinational enterprises
ASEAN’s CSR instruments

Background

UN High Commissioner of Human Rights, An Interpretive Guide [2]

Q 3. How are human rights relevant to businesses?

International human rights treaties generally do not impose direct legal obligations on business enterprises. Legal liability and enforcement for the infringement by businesses of international human rights standards are therefore defined largely by national law. However, the actions of business enterprises, just like the actions of other non-State actors, can affect the enjoyment of human rights by others, either positively or negatively. Enterprises can affect the human rights of their employees, their customers, workers in their supply chains or communities around their operations. Indeed, experience shows that enterprises can and do infringe human rights where they are not paying sufficient attention to this risk and how to reduce it.

Q7. Is the responsibility to respect human rights optional for business enterprises?

No. In many cases the responsibility of enterprises to respect human rights is reflected at least in part in domestic law or regulations corresponding to international human rights standards. For instance, laws that protect people against contaminated food or polluted water, or that mandate workplace standards in line with the ILO conventions and safeguards against discrimination, or that require individuals’ informed consent before they take part in drug trials, are all different ways in which domestic laws can regulate the behaviour of enterprises to help ensure that they respect human rights. The responsibility to respect human rights is not, however, limited to compliance with such domestic law provisions. It exists over and above legal compliance, constituting a global standard of expected conduct applicable to all businesses in all situations. It therefore also exists independently of an enterprise’s own commitment to human rights. It is reflected in soft law instruments such as the Guidelines for Multinational Enterprises of the Organisation for Economic Co-operation and Development (OECD). There can be legal, financial and reputational consequences if enterprises fail to meet the responsibility to respect. Such failure may also hamper an enterprise’s ability to recruit and retain staff, to gain permits, investment, new project opportunities or similar benefits essential to a successful, sustainable business. As a result, where business poses a risk to human rights, it increasingly also poses a risk to its own long-term interests.

Do enterprises have any additional human rights responsibilities?

The Guiding Principles set the baseline responsibility of all enterprises as respect for human rights wherever they operate. Beyond that, enterprises may voluntarily undertake additional human rights commitments—such as the promotion of certain human rights—for philanthropic reasons, to protect and enhance their reputation, or to develop new business opportunities. National laws and regulations may require additional activities by enterprises regarding human rights in some situations, as may contracts with public authorities for particular projects. For example, a contract with a State for the provision of water services may require a business enterprise to help fulfil the human right to water. Operational conditions may also lead enterprises to take on additional responsibilities in specific circumstances. For example, enterprises may identify a need to make social investments, such as in local health care or education, in order to achieve or maintain support for its operations from surrounding communities (a so-called social licence to operate). Supporting human rights also forms part of the commitment undertaken by signatories to the United National Global Compact.

Debate continues over whether there may be a responsibility for some enterprises in some situations to go beyond respect for human rights and also to seek to promote them. This falls beyond the scope of the Guiding Principles, which constitute a global standard of responsibility for all businesses in all situations and therefore focus on the responsibility to respect human rights. Respect for human rights is about an enterprise’s core operations—how it goes about its daily business. It is not about voluntary activities outside its core operations, however welcome these may be.

Instruments

UN, Guiding Principles on Business and Human Rights [3]

These Guiding Principles are grounded in recognition of:

(a) States’ existing obligations to respect, protect and fulfil human rights and fundamental freedoms;

(b) The role of business enterprises as specialized organs of society performing specialized functions, required to comply with all applicable laws and to respect human rights;

I. The State duty to protect human rights

1. States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises. This requires taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication.

2. States should set out clearly the expectation that all business enterprises domiciled in their territory and/or jurisdiction respect human rights throughout their operations.

II. The corporate responsibility to respect human rights

11. Business enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.

12. The responsibility of business enterprises to respect human rights refers to internationally recognized human rights – understood, at a minimum, as those expressed in the International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work.

15. In order to meet their responsibility to respect human rights, business enterprises should have in place policies and processes appropriate to their size and circumstances, including:

(a) A policy commitment to meet their responsibility to respect human rights;

(b) A human rights due-diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights;

III. Access to remedy

25. As part of their duty to protect against business-related human rights abuse, States must take appropriate steps to ensure, through judicial, administrative, legislative or other appropriate means, that when such abuses occur within their territory and/or jurisdiction those affected have access to effective remedy.

OECD, Guidelines for Multinational Enterprises [4]

I. Concepts and principles

2. Obeying domestic laws is the first obligation of enterprises. The Guidelines are not a substitute for nor should they be considered to override domestic law and regulation. While the Guidelines extend beyond the law in many cases, they should not and are not intended to place an enterprise in situations where it faces conflicting requirements. However, in countries where domestic laws and regulations conflict with the principles and standards of the Guidelines, enterprises should seek ways to honor such principles and standards to the fullest extent which does not place them in violation of domestic law. (…)

4. A precise definition of multinational enterprises is not required for the purposes of the Guidelines. These enterprises operate in all sectors of the economy. They usually comprise companies or other entities established in more than one country and so linked that they may coordinate their operations in various ways. While one or more of these entities may be able to exercise a significant influence over the activities of others, their degree of autonomy within the enterprise may vary widely from one multinational enterprise to another. Ownership may be private, State or mixed. The Guidelines are addressed to all the entities within the multinational enterprise (parent companies and/or local entities). According to the actual distribution of responsibilities among them, the different entities are expected to co-operate and to assist one another to facilitate observance of the Guidelines.

II. General policies

27. It is important to note that self-regulation and other initiatives in a similar vein, including the Guidelines, should not unlawfully restrict competition, nor should they be considered a substitute for effective law and regulation by governments. It is understood that MNEs should avoid potential trade or investment distorting effects of codes and self-regulatory practices when they are being developed.

III. Disclosure

32. Disclosure is addressed in two areas. The first set of disclosures recommendations calls for timely and accurate disclosure on all material matters regarding the corporation, including the financial situation, performance, ownership and governance of the company.

33. The guidelines also encourage a second set of disclosure or communication practices in areas where reporting standards are still evolving such as, for example, social, environmental and risk reporting.

IV. Human rights

40. Enterprises can have an impact on virtually the entire spectrum of internationally recognized human rights. In practice, some human rights may be at greater risk than others in particular industries or contexts, and therefore will be the focus of heightened attention. However, situations may change, so all rights should be the subject of periodic review. Depending on circumstances, enterprises may need to consider additional standards. For instance, enterprises should respect the human rights of individuals belonging to specific groups or populations that require particular attention, where they may have adverse human rights impacts on them. In this connection, United Nations instruments have elaborated further on the rights of indigenous peoples; persons belonging to national or ethnic, religious and linguistic minorities; women; children; persons with disabilities; and migrant workers and their families. Moreover, in situations of armed conflict enterprises should respect the standards of international humanitarian law, which can help enterprises avoid the risks of causing or contributing to adverse impacts when operating in such difficult environments.

V. Employment and industrial relations

51. Paragraph 1 of this chapter is design to echo all four fundamental principles and rights at work which are contained in the ILO’s 1998 Declaration, namely the freedom of association and right to collective bargaining, the effective abolition of child labor, the elimination of all forms of forced or compulsory labor, and non-discrimination in employment and occupation. These principles and rights have been developed in the form of specific rights and obligations in ILO Conventions recognized as fundamental.

VI. Environment

1. In particular, enterprises should… Establish and maintain a system of environmental management appropriate to the enterprise, including:

a) Collection and evaluation of adequate and timely information regarding the environmental, health, and safety impacts of their activities;

b) establishment of measurable objectives and, where appropriate, targets for improved environmental performance and resource utilization, including periodically reviewing the continuing relevance of these objectives; where appropriate, targets should be consistent with relevant national policies and international environmental commitments; and

c) Regular monitoring and verification of progress toward environmental, health, and safety objectives or targets.

VII. Combating bribery, bribe solicitation and extortion

Enterprises should not, directly or indirectly, offer, promise, give, or demand a bribe or other undue advantage to obtain or retain business or other improper advantage. Enterprises should also resist the solicitation of bribes and extortion. In particular, enterprises should: (…)

2. Develop and adopt adequate internal controls, ethics and compliance programmes or measures for preventing and detecting bribery, developed on the basis of a risk assessment addressing the individual circumstances of an enterprise, in particular the bribery risks facing the enterprise (such as its geographical and industrial sector of operation). These internal controls, ethics and compliance programmes or measures should include a system of financial and accounting procedures, including a system of internal controls, reasonably designed to ensure the maintenance of fair and accurate books, records, and accounts, to ensure that they cannot be used for the purpose of bribing or hiding bribery. (…)

VIII. Consumer interests

When dealing with consumers, enterprises should act in accordance with fair business, marketing and advertising practices and should take all reasonable steps to ensure the quality and reliability of the goods and services that they provide. In particular, they should: (…)

2. Provide accurate, verifiable and clear information that is sufficient to enable consumers to make informed decisions, including information on the prices and, where appropriate, content, safe use, environmental attributes, maintenance, storage and disposal of goods and services. Where feasible this information should be provided in a manner that facilitates consumers’ ability to compare products.

3. Provide consumers with access to fair, easy to use, timely and effective non-judicial dispute resolution and redress mechanisms, without unnecessary cost or burden.

4. Not make representations or omissions, nor engage in any other practices, that are deceptive, misleading, fraudulent or unfair.

XI. Taxation

1. It is important that enterprises contribute to the public finances of host countries by making timely payment of their tax liabilities. In particular, enterprises should comply with both the letter and spirit of the tax laws and regulations of the countries in which they operate. Complying with the spirit of the law means discerning and following the intention of the legislature. It does not require an enterprise to make payment in excess of the amount legally required pursuant to such an interpretation. Tax compliance includes such measures as providing to the relevant authorities timely information that is relevant or required by law for purposes of the correct determination of taxes to be assessed in connection with their operations and conforming transfer pricing practices to the arm’s length principle.

ISO 26000 – Guidance on Social Responsibility [5]

6.3.1.2 Human rights and social responsibility

An organization’s opportunity to support human rights will often be greatest among its own operations and employees. Additionally, an organization will have opportunities to work with its suppliers, peers or other organizations and the broader society. In some cases, Organizations may wish to increase their influence through collaboration with other organizations and individuals. Assessment of the opportunities for action and for greater influence will depend on the particular circumstances, some specific to the organization and some specific to the context in which is operating. However, organizations should always consider the potential for negative or unintended consequences when seeking to influence other organizations.

6.4.5 Labour practices issue 3: Social dialogue

Effective social dialogue provides a mechanism for developing policy and finding solutions that take into account the priorities and needs of both employers and workers, and thus results in outcomes that are meaningful and long lasting for both the organization and society. Social dialogue can contribute to establishing participation and democratic principles in the workplace, to better understanding between the organization and those who perform its work and to healthy labour-management relations, thus minimizing resort to costly industrial disputes. Social dialogue is a powerful means for managing change. It can be used to design skills development programmes contributing to human development and enhancing productivity, or to minimize the adverse social impacts of change in the operations of organizations. Social dialogue could also include transparency on social conditions of subcontractors.

6.5.1.2 The environment and social responsibility

Environmental responsibility is a precondition for the survival and prosperity of human beings. It is therefore an important aspect of social responsibility. Environmental matters are closely linked to other social responsibility core subjects and issues. Environmental education and capacity building is fundamental in promoting the development of sustainable societies and lifestyles.

6.7.1.2. Consumer issues and social responsibility

Consumer issues regarding social responsibility are related to, among other matters, fair marketing practices, protection of health and safety, sustainable consumption, dispute resolution and redress, data and privacy protection, access to essential products and services, addressing the needs of vulnerable and disadvantaged consumers, and education. The UN Guidelines for Consumer Protection provide fundamental information on consumer issues and sustainable consumption. (…)

Consumer issue 3: Sustainable consumption

Current rates of consumption are clearly unsustainable, contributing to environmental damage and resource depletion. Consumers play an important role in sustainable development by taking ethical, social, economic and environmental factors into account based on accurate information in making their choices and purchasing decisions.

7.4.3. Building social responsibility into an organization’s governance, systems and procedures

It is also important to recognize that the process of integrating social responsibility throughout an organization does not occur all at once or the same pace for all core subjects and issues. It may be helpful to develop a plan for addressing some social responsibility issues in the short term and some over a longer period of time. Such a plan should be realistic and should take into account the capabilities of the organization, the resources available and the priority of the issues and related actions.

ILO, Tripartite Declaration of Principles Concerning Multinational Enterprises [6]

1. (…) Through international direct investment, trade and other means, such enterprises can bring substantial benefits to home and host countries by contributing to the more efficient utilization of capital, technology and labour. Within the framework of sustainable development policies established by governments, they can also make an important contribution to the promotion of economic and social welfare; to the improvement of living standards and the satisfaction of basic needs; to the creation of employment opportunities, both directly and indirectly; and to the enjoyment of human rights, including freedom of association, throughout the world. On the other hand, the advances made by multinational enterprises in organizing their operations beyond the national framework may lead to abuse of concentrations of economic power and to conflicts with national policy objectives and with the interest of the workers. In addition, the complexity of multinational enterprises and the difficulty of clearly perceiving their diverse structures, operations and policies sometimes give rise to concern either in the home or in the host countries, or in both.

Security of employment

32. Governments should carefully study the impact of multinational enterprises on employment in different industrial sectors. Governments, as well as multinational enterprises themselves, in all countries should take suitable measures to deal with the employment and labour market impacts of the operations of multinational enterprises.

33. Multinational enterprises as well as national enterprises, through active employment planning, should endeavour to provide stable employment for workers employed by each enterprise and should observe freely negotiated obligations concerning employment stability and social security. In view of the flexibility which multinational enterprises may have, they should strive to assume a leading role in promoting security of employment, particularly in countries where the discontinuation of operations is likely to accentuate long-term unemployment.

34. In considering changes in operations (including those resulting from mergers, takeovers or transfers of production) which would have major employment effects, multinational enterprises should provide reasonable notice of such changes to the appropriate government authorities and representatives of the workers in their employment and their organizations so that the implications may be examined jointly in order to mitigate adverse effects to the greatest possible extent. This is particularly important in the case of the closure of an entity involving collective lay-offs or dismissals.

35. Arbitrary dismissal procedures should be avoided.

36. Governments, in cooperation with multinational as well as national enterprises, should provide some form of income protection for workers whose employment has been terminated.

ILO, Declaration on Fundamental Principles and Rights at Work [7]

The International Labour Conference

2. Declares that all Members, even if they have not ratified the Conventions in question, have an obligation arising from the very fact of membership in the Organization to respect, to promote and to realize, in good faith and in accordance with the Constitution, the principles concerning the fundamental rights which are the subject of those Conventions, namely:

(a) Freedom of association and the effective recognition of the right to collective bargaining;

(b) The elimination of all forms of forced or compulsory labour;

(c) The effective abolition of child labour; and

(d) The elimination of discrimination in respect of employment and occupation.

5. Stresses that labour standards should not be used for protectionist trade purposes, and that nothing in this Declaration and its follow-up shall be invoked or otherwise used for such purposes; in addition, the comparative advantage of any country should in no way be called into question by this Declaration and its follow up.

International Finance Corporation (World Bank Group)

Policy on environmental and social sustainability[8]

12. IFC recognizes the responsibility of business to respect human rights, independently of the state duties to respect, protect, and fulfill human rights. This responsibility means to avoid infringing on the human rights of others and to address adverse human rights impacts business may cause or contribute to. Meeting this responsibility also means creating access to an effective grievance mechanism that can facilitate early indication of, and prompt remediation of various project-related grievances. IFC’s Performance Standards support this responsibility of the private sector. Each of the Performance Standards has elements related to human rights dimensions that businesses may face in the course of their operations. Consistent with this responsibility, IFC undertakes due diligence of the level and quality of the risks and impacts identification process carried out by its clients against the requirements of the Performance Standards, informed by country, sector, and sponsor knowledge.

13. IFC believes that women have a crucial role in achieving sound economic growth and poverty reduction. They are an essential part of private sector development. IFC expects its clients to minimize gender-related risks from business activities and unintended gender differentiated impacts. Recognizing that women are often prevented from realizing their economic potential because of gender inequity, IFC is committed to creating opportunities for women through its investment and advisory activities.

Performance standards [9]

3. Business should respect human rights, which means to avoid infringing on the human rights of others and address adverse human rights impacts business may cause or contribute to. Each of the Performance Standards has elements related to human rights dimensions that a project may face in the course of its operations. Due diligence against these Performance Standards will enable the client to address many relevant human rights issues in its project. (…)

In limited high risk circumstances, it may be appropriate for the client to complement its environmental and social risks and impacts identification process with specific human rights due diligence as relevant to the particular business.

UN, Global Compact [10]

Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and

Principle 2: Make sure that they are not complicit in human rights abuses.

Labour

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment and occupation.

Environment

Principle 7: Businesses should support a precautionary approach to environmental challenges;

Principle 8: undertake initiatives to promote greater environmental responsibility; and

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Global Compact, Complicity[11]

Accusations of complicity can arise in a number of contexts:

Direct complicity — when a company provides goods or services that it knows will be used to carry out the abuse
Beneficial complicity — when a company benefits from human rights abuses even if it did not positively assist or cause them
Silent complicity — when the company is silent or inactive in the face of systematic or continuous human rights abuse. (This is the most controversial type of complicity and is least likely to result in legal liability)

Complicity is generally made up of 2 elements:

An act or omission (failure to act) by a company, or individual representing a company, that “helps” (facilitates, legitimizes, assists, encourages, etc.) another, in some way, to carry out a human rights abuse, and
The knowledge by the company that its act or omission could provide such help

EU, White Paper on CSR [12]

Corporate social responsibility concerns actions by companies over and above their legal obligations towards society and the environment. Certain regulatory measures create an environment more conducive to enterprises voluntarily meeting their social responsibility. (…)

By addressing their social responsibility enterprises can build long-term employee, consumer and citizen trust as a basis for sustainable business models. Higher levels of trust in turn help to create an environment in which enterprises can innovate and grow. (…)

The Commission puts forward a new definition of CSR as “the responsibility of enterprises for their impacts on society”. Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility. To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of:

maximizing the creation of shared value for their owners/shareholders and for their other stakeholders and society at large;
Identifying, preventing and mitigating their possible adverse impacts.

The complexity of that process will depend on factors such as the size of the enterprise and the nature of its operations. For most small and medium-sized enterprises, especially micro-enterprises, the CSR process is likely to remain informal and intuitive.

To identify, prevent and mitigate their possible adverse impacts, large enterprises, and enterprises at particular risk of having such impacts, are encouraged to carry out risk-based due diligence, including through their supply chains. (…)

The role of public authorities and other stakeholders

The development of CSR should be led by enterprises themselves. Public authorities should play a supporting role through a smart mix of voluntary policy measures and, where necessary, complementary regulation, for example to promote transparency, create market incentives for responsible business conduct, and ensure corporate accountability.

Enterprises must be given the flexibility to innovate and to develop an approach to CSR that is appropriate to their circumstances. Many enterprises nevertheless value the existence of principles and guidelines that are supported by public authorities, to benchmark their own policies and performance, and to promote a more level playing field.

Trade unions and civil society organisations identify problems, bring pressure for improvement and can work constructively with enterprises to co-build solutions. Consumers and investors are in a position to enhance market reward for socially responsible companies through the consumption and investment decisions they take. The media can raise awareness of both the positive and negative impacts of enterprises. Public authorities and these other stakeholders should demonstrate social responsibility, including in their relations with enterprises.

Emphasising CSR in relations with other countries and regions in the world

Internationally recognised CSR guidelines and principles represent values which should be embraced by the countries wishing to join the European Union, and the Commission will therefore continue to address this in the accession process.

The Commission promotes CSR through its external policies. It will continue, through a mix of global advocacy and complementary legislation, to aim at disseminating internationally recognised CSR guidelines and principles more widely and enabling EU businesses to ensure that they have a positive impact in foreign economies and societies. The Commission will make relevant proposals in the field of trade-and-development. Furthermore where appropriate, it will propose to address CSR in established dialogues with partner countries and regions.

EU development policy recognises the need to support CSR. By promoting respect for social and environmental standards, EU enterprises can foster better governance and inclusive growth in developing countries. Business models that target the poor as consumers, producers, and distributors help to maximise development impact. The search for synergies with the private sector will become an increasingly important consideration in EU development cooperation and in EU responses to natural and man-made disasters. (…)

UN, Sustainable Development Goals [13]

67. Private business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creation. We acknowledge the diversity of the private sector, ranging from micro-enterprises to cooperatives to multinationals. We call upon all businesses to apply their creativity and innovation to solving sustainable development challenges. We will foster a dynamic and well-functioning business sector, while protecting labour rights and environmental and health standards in accordance with relevant international standards and agreements and other ongoing initiatives in this regard, such as the Guiding Principles on Business and Human Rights and the labour standards of the International Labour Organization, the Convention on the Rights of the Child and key multilateral environmental agreements, for parties to those agreements.

68. International trade is an engine for inclusive economic growth and poverty reduction, and contributes to the promotion of sustainable development. We will continue to promote a universal, rules-based, open, transparent, predictable, inclusive, non-discriminatory and equitable multilateral trading system under the World Trade Organization, as well as meaningful trade liberalization. We call upon all members of the World Trade Organization to redouble their efforts to promptly conclude the negotiations on the Doha Development Agenda. We attach great importance to providing trade-related capacity-building for developing countries, including African countries, least developed countries, landlocked developing countries, small island developing States and middle-income countries, including for the promotion of regional economic integration and interconnectivity.

OECD, Principles of Corporate Governance [14]

The responsibilities of the board

A. Board members should act on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and the shareholders. (…)

C. The board should apply high ethical standards. It should take into account the interests of stakeholders. The board has a key role in setting the ethical tone of a company, not only by its own actions, but also in appointing and overseeing key executives and consequently the management in general. High ethical standards are in the long term interests of the company as a means to make it credible and trustworthy, not only in day-to-day operations but also with respect to longer term commitments. To make the objectives of the board clear and operational, many companies have found it useful to develop company codes of conduct based on, inter alia, professional standards and sometimes broader codes of behaviour, and to communicate them throughout the organisation. The latter might include a voluntary commitment by the company (including its subsidiaries) to comply with the OECD Guidelines for Multinational Enterprises which reflect all four principles contained in the ILO Declaration on Fundamental Principles and Rights at Work.

ILO, Declaration on Social Justice for a Fair Globalization [15]

The Conference recognizes and declares that:

A. In the context of accelerating change, the commitments and efforts of Members and the Organization to implement the ILO’s constitutional mandate, including through international labour standards, and to place full and productive employment and decent work at the centre of economic and social policies, should be based on the four equally important strategic objectives of the ILO, through which the Decent Work Agenda is expressed and which can be summarized as follows:

(i) promoting employment by creating a sustainable institutional and economic environment in which:

– individuals can develop and update the necessary capacities and skills they need to enable them to be productively occupied for their personal fulfillment and the common well-being;

– all enterprises, public or private, are sustainable to enable growth and the generation of greater employment and income opportunities and prospects for all; and

– societies can achieve their goals of economic development, good living standards and social progress;

(ii) developing and enhancing measures of social protection – social security and labour protection – which are sustainable and adapted to national circumstances, including:

– the extension of social security to all, including measures to provide basic income to all in need of such protection, and adapting its scope and coverage to meet the new needs and uncertainties generated by the rapidity of technological, societal, demographic and economic changes;

– healthy and safe working conditions; and

– policies in regard to wages and earnings, hours and other conditions of work, designed to ensure a just share of the fruits of progress to all and a minimum living wage to all employed and in need of such protection;

(iii) promoting social dialogue and tripartism as the most appropriate methods for:

– adapting the implementation of the strategic objectives to the needs and circumstances of each country;

– translating economic development into social progress, and social progress into economic development;

– facilitating consensus building on relevant national and international policies that impact on employment and decent work strategies and programmes; and

– making labour law and institutions effective, including in respect of the recognition of the employment relationship, the promotion of good industrial relations and the building of effective labour inspection systems; and

(iv) respecting, promoting and realizing the fundamental principles and rights at work, which are of particular significance, as both rights and enabling conditions that are necessary for the full realization of all of the strategic objectives, noting:

– that freedom of association and the effective recognition of the right to collective bargaining are particularly important to enable the attainment of the four strategic objectives; and

– that the violation of fundamental principles and rights at work cannot be invoked or otherwise used as a legitimate comparative advantage and that labour standards should not be used for protectionist trade purposes.

B. The four strategic objectives are inseparable, interrelated and mutually supportive. The failure to promote any one of them would harm progress towards the others. To optimize their impact, efforts to promote them should be part of an ILO global and integrated strategy for decent work. Gender equality and non-discrimination must be considered to be cross-cutting issues in the abovementioned strategic objectives.

World Commission on the Social Dimension of Globalization, A Fair Globalization [16]

A stronger ethical framework

37. The governance of globalization must be based on universally shared values and respect for human rights. Globalization has developed in an ethical vacuum, where market success and failure have tended to become the ultimate standard of behaviour, and where the attitude of “the winner takes all” weakens the fabric of communities and societies.

38. There is today a deep-seated desire by people to reaffirm basic ethical values in public life, as seen, for example, in calls for a more “ethical globalization”. Values are also the driving force behind the many public campaigns for universal causes, ranging from the abolition of child labour to the banning of landmines.

39. Cohesive societies are built around shared values, which create a moral and ethical framework for private and public action. Globalization has not yet created a global society, but the increased interaction between people and countries throws into sharp relief the urgent need for a common ethical frame of reference.

40. To a large extent, such a framework can already be found in the declarations and treaties of the multilateral system of the United Nations. They are enshrined, for example, in the Charter of the United Nations, the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and, more recently, in the United Nations Millennium Declaration. These universal values and principles represent the common ground of the world’s spiritual and secular beliefs. They must provide the foundation for the process of globalization. They should be reflected in the rules of the global economy, and international organizations should apply their mandates in accordance with them.

Mares, Business and Human Rights after Ruggie [17]

The SRSG work, with the ‘Protect, Respect and Remedy’ Framework (2008) and Guiding Principles (2011) as its peak, is multilayered and comprehensive. Instead of a dry, tedious description this introductory chapter will give the floor often to the SRSG: readers will find numerous quotations and references that will allow him or her to follow Ruggie’s reasoning. Ruggie should be commended for the way he explained many of his choices through accessibly-written reports, working papers, academic journal articles, speeches, interviews and private exchanges with countless individuals. (…)

Although Ruggie has refused to call for an encompassing treaty on business and human rights and he concluded that businesses currently do not have legal obligations under international human rights law (IHRL), it would be a grave mistake to overlook his work as of marginal relevance to legal academics and professionals, to presume that his thinking was not informed by law. Instead there is a wealth of materials, analyses and entry points for lawyers interested in international law, human rights law, criminal law, company law, securities law, investment law, transparency laws and law of contracts. Also the broader issue of what role the law could and should play in international governance and in complex regulatory regimes is at the core of Ruggie’s work.

Background (Cambodia)

Chhabara, Increasing Cambodia’s Competitiveness through CSR [18]

Benefits of promoting CSR

The main advantages of corporate social responsibility can be summarised as:

Increased market access: Fairtrade, sustainable tourism, eco-tourism, organic products, toys, sports goods, sustainable timber etc.
Foreign investment: Socially Responsible Investing, investment in ethical production, sustainable tourism, social enterprises, microfinancing institutions, high quality foreign investment.
Integration with international markets: Corporate governance, intellectual property rights, ethical business practices, financial institutions and stock markets.
Robust development of private sector: New business opportunities, more enabling environment, increased access to markets and investment, human resources, competitive advantage.
Socio-economic development: Private sector’s enhanced role in alleviating rural poverty, human resources development, inclusive business or pro-poor business development, social enterprises.
Rural development: Organic farming, fair trade, sustainable tourism, microfinance institutions, access to alternative energy (solar power, bio-gas).
Climate change mitigation: Environmental initiatives, emission reduction programs, renewable energy, forest conservation, organic farming.
Enhanced reputation and brand image: For both the country and the enterprises. Improved ranking on international indices such as World Bank’s Doing Business Index, World Economic Forum’s Global Competitiveness Index, Transparency International’s Corruption Perception Index.
Risk management: CSR is an excellent tool for managing risks which can potentially arise from negative media coverage of poor working conditions, and industrial action, workplace accidents, legal-action for non-compliance, environmental disasters, product safety and quality and community disputes.

Instruments (Cambodia)

ASEAN, Economic Community Blueprint [19]

B.2. Consumer protection

28. Consumer protection is an integral part of a modern, efficient, effective and fair market place. Consumers will demand the right of access to: adequate information to enable them to make informed choices, effective redress, and products and services that meet standard and safety requirements. Increased cross-border trade, use of e-Commerce and other new trading methods resulting from globalisation and technological advancement require governments to find innovative ways of protecting and promoting the interests of consumers. This will require comprehensive and well functioning national and regional consumer protection systems enforced through effective legislation, redress mechanisms and public awareness. (…)

B.6. Good governance

36. ASEAN recognises the need to continue engaging the various stakeholders to build a more dynamic AEC 2025. Strategic measures include the following:

i. Promote a more responsive ASEAN by strengthening governance through greater transparency in the public sector and in engaging with the private sector; and

ii. Enhance engagement with the private sector as well as other stakeholders to improve the transparency and synergies of government policies and business actions across industries and sectors in the ASEAN region. (…)

C.8. Minerals

63. Strategic measures include the following:

i. Facilitate and enhance trade and investment in minerals;

ii. Promote environmentally and socially sustainable mineral development;

iii. Strengthen institutional and human capacities in the ASEAN minerals sector; (…)

D.5. Contribution of stakeholders on regional integration efforts

77. Enhanced engagement could be undertaken to provide for better transparency of ASEAN activities and progress in ASEAN integration. The stakeholders, including civil society organisations, can contribute to the integration efforts by communicating the initiatives undertaken by the governments on economic integration initiatives to the general public. These stakeholders could also contribute by providing feedback on the impact of the integration efforts on ASEAN peoples.

78. Strategic measures include the following:

i. Continue to enhance engagement with stakeholders on economic issues to promote a better understanding of ASEAN economic integration initiatives;

ii. Work closely with stakeholders towards promoting corporate social responsibility (CSR) activities; and

iii. Enhance consultations with stakeholders on new initiatives.

ASEAN, Socio-Cultural Community Blueprint [20]

II. Characteristics and elements of the ASEAN socio-cultural community blueprint 2025

Engages and benefits the people

6. The ASEAN Community shall be characterised as one that engages and benefits its peoples, upheld by the principles of good governance.

7. It focuses on multi-sectoral and multi-stakeholder engagements, including Dialogue and Development Partners, sub-regional organisations, academia, local governments in provinces, townships, municipalities and cities, private-public partnerships, community engagement, tripartite engagement with the labour sector, social enterprises, government organisation, non-governmental organisation, civil society organisation (GO-NGO/CSO) engagement, corporate social responsibility (CSR), inter-faith and inter-cultural dialogue, with emphasis on raising and sustaining awareness and caring societies of ASEAN, as well as deepening the sense of ASEAN identity.

C.4. Sustainable consumption and production strategic measures

i. Strengthen public-private partnerships to promote the adoption of environmentally-sound technologies for maximising resource efficiency;

ii. Promote environmental education (including eco-school practice), awareness, and capacity to adopt sustainable consumption and green lifestyle at all levels;

iii. Enhance capacity of relevant stakeholders to implement sound waste management and energy efficiency; and

iv. Promote the integration of Sustainable Consumption and Production strategy and best practices into national and regional policies or as part of CSR activities. (…)

III. Implementation and review

A.2. Implementation strategies

27. The implementation of the ASCC Blueprint 2025 shall employ strategies and approaches that will maximise the role of ASEAN Organs and Bodies, encourage stakeholder engagement and enhance capacity building mechanisms in disseminating relevant knowledge to the peoples of ASEAN. It shall promote the provision of platforms for relevant stakeholders and groups to fully participate in programmes, meetings and other initiatives of ASEAN Organs and Bodies,

as well as the opportunities for partnerships and collaborations. It shall also promote public private partnerships (PPP), social entrepreneurship and CSR for inclusive and sustainable socio-cultural development. It will likewise develop capacity building mechanisms for relevant stakeholders in the ASCC who are able to cascade the relevant knowledge to the peoples of ASEAN. Furthermore, the ASCC will intensify strategies, work programmes and initiatives of sectoral bodies under the ASCC Pillar to narrow the development gap.

ASEAN, Political-Security Community Blueprint [21]

A.2. Strengthen democracy, good governance, the rule of law, promotion and protection of human rights and fundamental freedoms as well as combat corruption

A.2.2. Instil the culture of good governance and mainstream the principles thereof into the policies and practices of the ASEAN Community

v. Support the ASEAN Foundation to strengthen its collaboration with the private sector and other relevant stakeholders to instil corporate social responsibility; and

vi. Promote the sharing of experiences and best practices through workshops and seminars on leadership concepts and principles of good governance, aimed at setting baselines, benchmarks and norms.

ASEAN, Guidelines for Corporate Social Responsibility (CSR) on Labour [22]

Introduction

3. The promotion of CSR is called for in the ASEAN Political-Security Community (APSC) Blueprint 2025, ASEAN Economic Community (AEC) Blueprint 2025, and ASEAN Socio-Cultural Community (ASCC) Blueprint 2025, notably:

Support the ASEAN Foundation to strengthen its collaboration with the private sector and other relevant stakeholders to instill CSR (…);
Work closely with stakeholders towards promoting CSR activities (…);

5. The promotion of CSR will contribute to the achievement of the Sustainable Development Goals (SDGs) particularly Goal 8 to “Promote sustained inclusive and sustainable economic growth, full and productive employment and decent work for all”.

II. Purposes of the ASEAN CSR Model on Labour

6. This ASEAN Guidelines for CSR on Labour aims to serve as guidelines for the governments, enterprises/ establishments, employers’ organisations and workers’ organisations in ASEAN Member States, in line with national circumstances, to:

6.1. Raise awareness of CSR among enterprises/ establishments in ASEAN Member States for the benefit of the peoples;

6.2. Continuously and proactively encourage enterprises/establishments to incorporate CSR initiatives, human rights and decent work in their business practices;

6.3. Promote compliance of core labour standards set forth in the national labour laws, ILO Conventions and other relevant international instruments; and

6.4. Promote social dialogue among governments, employers’ organisations and workers’ organisations at all levels, and strengthen industrial relations. (…)

V. Definitions

9. This ASEAN Guidelines for CSR on Labour adopts the definition of CSR according to the ILO Governing Body (2006), which is a way in which enterprises give consideration to the impact of their operations on society and affirm their principles and values both in their own internal methods and processes and in their interaction with other actors. CSR is a voluntary, enterprise-driven initiative and refers to activities that are considered to exceed compliance with the law.

VI. Application

10. This ASEAN Guidelines for CSR on Labour is applied to enterprises/establishments, private or public, whose decisions and activities may have economic, social and environmental impacts, respecting national circumstances.

VIII. Guidance in implementing CSR

18. Implementing CSR for labour supports the fulfillment of international labour standards and human rights.

19. At national level, tripartism provides the framework to address this matter through social dialogue.

20. At enterprise/establishment level, commitments must be made and priority or action plan should be arrived at through social dialogue and stakeholder engagement.

21. Enterprises/establishments should plan their CSR initiative, report regularly on progress, and continue the process of improvement through social dialogue and stakeholder engagement.

22. Enterprises/establishments are encouraged to be part of CSR networks to further promote and embed CSR. They should promote continuity of CSR initiative. (…)

Government of Cambodia, Rectangular Strategy Phase III [23]

97. To address these challenges the Royal Government of the Fifth Legislature has set out two objectives: (1) to continue promoting the role of the private sector to be more active and dynamic as an engine for economic growth; and (2) to transform Cambodia to be an attractive and competitive destination for investment in the region, especially within the framework of ASEAN Economic Community.

98. To meet these objectives the Royal Government will focus on the following priorities: (…)

7. Further strengthening corporate governance to promote the health and growth of private sector and corporate social responsibility.

8. Strengthening the effectiveness of “Government-Private Sector Forum” to address the challenges faced by the private sector, while upgrading it to a platform for dialogue for recommending policy options and advice that will further promote the role of private sector as a stakeholder in development.

Government of Cambodia, Rectangular Strategy Phase IV[24]

4) Strengthening of private sector governance

In the sixth Legislature of the National Assembly, the Royal Government will focus on:

1. Carrying out studies and development of policy framework to enhance corporate governance to ensure proper management and good practice in the private sector.

2. Carrying out studies and preparation of the policy framework to augment Corporate Social and Environmental Responsibility to step up private sector’s participation in addressing social issues and enhancing environmental protection, value of the social morality and national culture, together with enhanced protection of consumer rights and safety by pushing for the development and enactment of Consumer Protection Law.

3. Continued implementation of the public-private dialogue mechanism at both policy and technical levels, national and sub-national levels, to promote policy dialogues and jointly address challenges by enhancing the role of Chamber of Commerce.

4. Pushing for and encouraging private sector’s reinvestment to enhance human capital development and innovation.

Government of Cambodia, National Strategic Development Plan[25]

Stock market and others

Continue to develop the stock market through promotion of national listing and issuance of public stock.
Develop a new law on corporate affairs, governance and responsibility. (…)

1.4 Strengthening of private sector governance

4.27 In the sixth Legislature of the National Assembly, the RGC will focus on (…) (2) Undertaking studies aimed at supporting the preparation of a policy framework to promote the Corporate Social and Environmental Responsibility of the private sector in terms of addressing social and environmental protection issues, inculcating social morality in national culture, enhancing consumer rights protection and consumer safety with the enactment of a Law on Consumer Protection, (…)

Questions

What are the functions of soft law?
Is soft law capable to influence business conduct? If so, in what ways?
What would the benefits be for the company that has aligned their CSR policy with soft law?
Do stakeholder in Cambodia take notice and use international soft law instruments?
What is the relation between soft law and hard law? Are they complementary? Are they a substitute for each other?