Corporate Codes as Private Co-Regulatory Instruments in Corporate Governance and Responsibility and Their Enforcement

Abstract

Corporate Social Responsibility (CSR) codes have gained a prominent role as tools in self-regulation for companies to establish their basic values, norms, and rules that condition the conduct of directors, managers, employees, and—increasingly—of suppliers. This development must be seen in the light of two important paradigmatic changes in the concepts both of CSR and corporate governance. The former is no longer purely voluntary and the latter has become inclusive of CSR, each with far-reaching consequences for the raison d'être and the place and function of the codes in the smart regulatory mix governing corporations. While the codes were based originally on voluntary adherence by companies to international soft law instruments such as the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises (dating from 1976) and the International Labour Organization (ILO) Tripartite Declaration (dating from 1977), increasingly, governance and compliance-oriented soft and hard laws, including but not limited to criminal, administrative, and private laws, stimulate or even require companies to adopt codes of conduct, to monitor compliance and to enforce them. In this sense, corporate codes must be characterized increasingly as co-regulation instruments, mandated by soft and hard law as meta-regulation. Thus, the still widely held view, that the codes are merely voluntary instruments must be challenged on two levels: first, adoption of a code as corporate governance and CSR instrument is for many companies no longer voluntary, and, second, the content of the code is no longer optional in many respects.