The Code of Conduct for Business Sector: when ethical means CSR

Nepal Business Initiative together with all major business federations could have not chosen a better time to launch the new Code of Conduct on Responsible Business.

The headlines of major newspapers clearly explained the reason by highlighting the determination of business representatives to refrain from any unscrupulous dealings with political parties that could cause payment of bribes and by stressing their uncompromising rejection to any forms of donation.

Although these issues are central to the Code of Conduct, it would be totally unfair to simplify and minimize the potential of the document.

Indeed the document could well represent a watershed moment on how the private sector portrays itself toward the nation, unfolding a new powerful dynamic that might lead to a paradigm change on relationships between corporate sector, government and customers/citizens.

In this scenario, how would we position the concept of Corporate Social Responsibilities, CSR? Reading the document you won’t find any specific reference to it. Are you surprised? You should not.

Although I would have personally preferred mentioning the CSR concept, I offer two explanations for the omission: first there is still no clarity on the concept itself and second in partial contradiction of the former, by being ethical, a company turns automatically into CSR centered entity. BINGO.

Let’s start with the first point. There are so many terminologies that till today defining CSR remain contentious. It is a broader and “flexible” and evolving terminology. Now globally it is in vogue the concept of corporate citizenship instead of CSR. Hard to say if there is any real difference.

The new definition introduced in 2011 by the European Commission defines CSR simply as “the responsibility of enterprises for their impacts on society” against the old definition “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”.

Simplifying the concept does not imply a reduction or limitation of its domains but rather an effort to maximize the role that private companies have towards their stakeholders, their employees and society at large. The new EU Strategy on CSR emphasizes shared values and integration of social, environmental, ethical, human rights and consumer concerns.

Here we touch  the second point. CSR is about everything ethical and legal including human rights, better labor standards ( including minimum salary levels as per law), less environmental impact and importantly partnerships where private, not for profit and public sector can come together to achieve common goals.

By focusing on external but as well internal practices and procedures, it assures the best chances to maximize profits for the shareholders while also taking into consideration other dimensions of the value chain supply.

If human rights are keys, partnerships are also paramount. Look at the Healthcare Innovation Award, a joint initiative between GSK, a pharma giant and SAVE THE CHILDREN, a giant itself in development aid sector coming together to reward innovations in healthcare that prove to be successful in lowering child deaths in developing countries.

In Nepal CSR is basically synonymous of philanthropic action, something that only partially reflects the real meanings of the concept although undeniably charity plays a relevant role in the concept of CSR (South Africa defines this kind of CSR as Corporate Social Investment by paying a lot of attention on outcomes and metrics).

Here the Code of Conduct offers a real opportunity to extend the debate on corporate responsibility beyond charity.

At global level, different frameworks have been adopted like the UN Global Compact, the ISO 26000 Guidance Standard on Social Responsibility, the OECD Guidelines on Multinational Enterprises and the UN Guiding Principles on Business and Human Rights: Protect, Respect and Remedy” , the latter known also as the Ruggie Framework.

In terms of human rights,  the Code is a bit weaker with a more limited approach on “consumer rights” rather than a more holistic focus on ‘human rights” that is the foundation of Ruggie Framework.

In this important aspect, the State has the primarily responsibility to protect from any human rights abuse while the private sector must enforce compliance mechanisms to respect and to offer remedy to any forms of abuse.

The challenge ahead will remain on implementation. It will be important to conceptualize and prototype innovative forms of compliance mechanisms to monitor the performances of the signatories. NBI offers a platform of impartial referee to broker consensus with the different business federations, real owners of the Code of Conduct in order to monitor and supervise its implementation.

Incentives are equally important. The State should formally acknowledge the positive contributions played by the private sector through business friendly policies that offer also value for the employees, implying that trade unions, despite their high level of politicization, must also be engaged

Through the Code the message is clear: CSR means first and foremost ethical business. And of course stakeholders, including strategic development partners like GIZ should incentivize the creation of best practices.

And the winners of the National CSR Award 2014 are…