A company code of conduct is a document written up voluntarily by a company in which it sets out a set of principles that it commits itself to follow, or requires its employees to follow. In some cases, codes of conduct reach suppliers, subcontractors, and third parties. It is a type of

code of conduct A code of conduct is a set of rules outlining the social norm, norms, rules, and responsibilities or proper practices of an individual party or an organization. Companies' codes of conduct A company code of conduct is a set of rules which is comm ...

The content of a company code of conduct varies and depends in a measure of the company's culture and on the country in which they reside. In general terms, it can be said that the codes of conduct are related to anti-corruption issues,

labor law Labour laws (also spelled as labor laws), labour code or employment laws are those that mediate the relationship between workers, employing entities, trade unions, and the government. Collective labour law relates to the tripartite relationship be ...

, environmental and basic legal issues, such as the rejection of

slavery Slavery is the ownership of a person as property, especially in regards to their labour. Slavery typically involves compulsory work, with the slave's location of work and residence dictated by the party that holds them in bondage. Enslavemen ...

child labor Child labour is the exploitation of children through any form of work that interferes with their ability to attend regular school, or is mentally, physically, socially and morally harmful. Such exploitation is prohibited by legislation w ...

, compliance with the environmental standards of each country, and in general, respect for national laws.

Cases

Nike

Nike's company code of conduct is one of the best known examples. In the early 1990s, Nike was reported by the press in the United States for using contractors in

Southeast Asia Southeast Asia is the geographical United Nations geoscheme for Asia#South-eastern Asia, southeastern region of Asia, consisting of the regions that are situated south of China, east of the Indian subcontinent, and northwest of the Mainland Au ...

who employed

slave labor Slavery is the ownership of a person as property, especially in regards to their labour. Slavery typically involves compulsory work, with the slave's location of work and residence dictated by the party that holds them in bondage. Enslavemen ...

and

. This complaint damaged Nike's image and was reflected in a significant drop in sales. As part of a strategy to recover their image, Nike announced a company code of conduct, in which it stated its commitment to adjust the company's actions around the world to adhere to its rules, as well as to require all subcontractors to do the same, in 1992 (Nike directly employs 22,000 employees and indirectly 450,000 workers through subcontractors around the world.) Shortly afterward, a series of criticisms was received from the unions about the content of its code of conduct, and so Nike created a new text which is the one that is currently presented.

Faithless servant

In '' Morgan Stanley v. Skowron'', 989 F. Supp. 2d 356 (S.D.N.Y. 2013), applying New York's

faithless servant The faithless servant Legal doctrine, doctrine pursuant to which employees who act unfaithfully towards their employers must forfeit to their employers all compensation received during the period of disloyalty. It is under the laws of a number of ...

doctrine, the court held that a hedge fund's employee engaging in insider trading in violation of his company's code of conduct, which also required him to report his misconduct, must repay his employer the full $31 million his employer paid him as compensation during his period of faithlessness.

Monitoring

One of the first issues that was raised by the company code of conduct was monitoring compliance. It has been considered that it is not reliable that the monitoring is conducted by the company itself. Some companies reach out to external companies to conduct monitoring. In other cases, companies have accepted that certain

NGOs A non-governmental organization (NGO) is an independent, typically nonprofit organization that operates outside government control, though it may get a significant percentage of its funding from government or corporate sources. NGOs often focus ...

proceed with monitoring, but unions have complained that this activity of NGOs has been used repeatedly as an alternative to trade union action and to replace the union in front of the workers.

Issues

Codes of conduct are related to

corporate social responsibility Corporate social responsibility (CSR) or corporate social impact is a form of international private business industry self-regulation, self-regulation which aims to contribute to societal goals of a philanthropy, philanthropic, activist, or chari ...

. A couple of investigations have pointed out that codes of conduct carry the risk of displacing the importance of mandatory national and international standards. The

United Nations The United Nations (UN) is the Earth, global intergovernmental organization established by the signing of the Charter of the United Nations, UN Charter on 26 June 1945 with the stated purpose of maintaining international peace and internationa ...

Research Institute for Social Development (UNRISD) estimated a few hundred existing company code of conduct. The

UNCTAD UN Trade and Development (UNCTAD) is an intergovernmental organization within the United Nations Secretariat that promotes the interests of developing countries in world trade. It was established in 1964 by the United Nations General Assembl ...

estimated 65,000 parent companies which own about 850,000

subsidiary A subsidiary, subsidiary company, or daughter company is a company (law), company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidia ...

are foreigners in all countries around the world, and employ the majority of their workers through

outsourcing Outsourcing is a business practice in which companies use external providers to carry out business processes that would otherwise be handled internally. Outsourcing sometimes involves transferring employees and assets from one firm to another ...

Trade unions A trade union (British English) or labor union (American English), often simply referred to as a union, is an organization of workers whose purpose is to maintain or improve the conditions of their employment, such as attaining better wages ...

and some NGOs have criticized the unilateral nature of codes of conduct and have emphasized that they are often only aimed to improve the public image of businesses. The non-inclusion of suppliers, subcontractors and outsourced companies in codes of conduct has also been pointed out by trade unions and NGOs as a serious disadvantage, as it is precisely where the majority of workers work and where they produce the majority of violations. The legal validity of the same and the ways to enforce compliance is also being discussed.

References

External links

Codes of Business Conduct, OIE
{Dead link, date=July 2019 , bot=InternetArchiveBot , fix-attempted=yes * For general information about the legal value of the codes of conduct, see the website developed by the University Project R & D SEJ 2006-07116, based in the Faculty of Law of the

Complutense University of Madrid The Complutense University of Madrid (, UCM; ) is a public research university located in Madrid. Founded in Alcalá in 1293 (before relocating to Madrid in 1836), it is one of the oldest operating universities in the world, and one of Spain's ...

and financed by the Ministry Of Science and Innovation Spanish
Web Portal Codes of Conduct

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