CSR and The Triple Bottom Line
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PRINCIPLES

Principles is normative in content. They are distinguished here from frameworks, which supply a format for a CSR report but do not prescribe how a business manager ought to practice or criteria for a business manager to make decisions.  Also, principles are distinguished from indicators, which are tools for measuring performance.

 

It is common for a business to form its own code of conduct rather than adopt one.  However, for the sake of consistency, comparability, impartiality and credibility, it is better for a business manager to model a code of conduct after a set of principles. Moreover, principles are inherently based on ethical principles.  In the grids below are some of the principles available today. For York University's compendium of principles and codes of conduct, click here.

 

 

Global Compact OECD Guidelines for Multinational Enterprises The United Nations Human Rights Principles and Responsibilities for Transnational Corporations and Other Business Enterprises
The Global Compact is a set of ten principles for the triple bottom line. Companies that participate  in the global compact are expected to issue CSR reports.The Global Compact is one of the most influential codes of conduct to date. It is the product of the United Nations Secretary General Kofi Annan. This code has the backing of several  United Nation's offices and the GRI. The OECD guidelines are more robust than any other code of conduct in scope, specificity and because help with interpretation of the codes of conduct is available through the National Contact Points.  and Committee on International Investment and Multinational Enterprises (CIME).  This code of conduct has a diverse authorship. In 2001, the GRI supported this OECD code of conduct.

Formed by a working group of the United Nations.  It  places the onus for protecting human rights and the environment on governments. It is based on numerous  international instruments including ILO, the Rome Statute of the International Criminal Court and the Nuremberg Charter.

Business is to operate within the laws of the nation where they do business. It includes auditing by neutral third parties.

 

 

Global Sullivan Principles of Social Responsibility CAUX Principles for Business Rio Declaration on Environment and Development of 1992
The Sullivan Principles was formed in reaction to apartheidism in South Africa by Reverend Sullivan. These eight principles focus on social justice and peace, and do not explicitly include environmental objectives. Companies that endorse the principles are expected to participate by reporting implementation practices The CAUX principles for business were created by business leaders. They are stated as aspirations.  The principles address businesses concerns that many other do not such as liberalization of trade and trade secrets.  They are based on two concepts: Kant's theory that people should not be treated as a means to an end, even if the end were for the  good of all (the Utilitarian perspective).  Kyosei, or living and working together  for the common good.

The Rio Declaration is not a code of conduct for businesses, but for governments. From it a business manager can understand  the objectives of governments and NGOs.

The Rio Declaration is the product of a conference called by the United Nations. The 27 principles were crafted to support long term economic development and environmental protection. In 2002, the United Nations followed up the Rio Declaration with the  2002 Johannesburg Declaration on Sustainable Development and Implementation Plan.

                    

 

In 2001, the OECD and Business for Social Responsibility (BSR) published a comparison of principles and frameworks.  In it, they do not distinguish the tools for CSR (frameworks, principles, codes of conduct and indicators).  The principle compared are Global Compact, the OECD guidelines for multinational enterprises, Global Sullivan Principles, and The CAUX Principles. It also compares the GRI and SA 8000, as well as the Benchmarks.
 

The OECD's comparison is useful because it includes a list of the authors of each tool. It also contains a grid that is useful for comparing the scope for codes of conduct.  The OECD guidelines has the  most diverse authorship. The CAUX principles was created by a single interest group: business leaders. The comparison covers eight topics: accountability, business conduct, community involvement, corporate governance, environment, human rights, marketplace/consumers, and workplace/employees. Within each category are specific issues. The comparison reveals that the Benchmark covers the widest scope but does not include a reference to monitoring, verification or auditing. The OECD guidelines for multinational companies has the second largest scope.  The Global Compact and the Sullivan Principles are the broadest and most general of set of principles.

 

When deciding on a set of principles on which to form a code of conduct, a business manager use the criteria laid out below. Financial Accounting Standards Board (FASB) is one source for criteria. Another is "Cradle to Cradle" by William McDonough and Michael Braungart.  A set of criteria, borrowing from FASB and the concepts in "Cradle to Cradle"  is lain out below:

 

1.      Global perspective:  Measured by whether the principles will inspire a decision maker to incorporate the triple bottom line in decision making and neutrality in information reported. Authorship is also an indicator for objectivity, but not included here as it would be redundant with the OECD's comparison.

2.      Stakeholder relevance: Stakeholder is defined by the GRI as one who is substantially influenced by or can influence a business. Stakeholder relevance can be ascertained through diversity of interests represented by the authors of the principles, as well as through forward looking means.

3.      Expected benefits exceed the perceived costs.

4.      Efficient change agent: brings about needed changes in ways that minimize disruption. Disruption to a business practices, culture and brand equity should be considered.  

5.      Informed by the past: includes a means for reviewing the effects of a code of conduct on a business, the environment and society,  addressing the interpretation issues that arise an amend or replacing clauses in a timely fashion when needed.

6.  Continual Improvement: encourages enhancing current systems, re-engineering operations, re-designing systems so business practices enhance  the environment, society and economy.

7.   Fit to Organization: adaptable to practices and culture, likeliness CEO and Board of Directors will adopt, understandable to employees and managers.

 

Below is an analysis of five of the six principles listed above. The Rio Principles are not included because they are created for governments, and some of the principles are not applicable  to businesses.

 

  Global Compact OECD Guidelines Sullivan Principles CAUX Principles UN Principles
Global Perspective Covers social, environmental and economic principles in board terms. Includes social, environmental and economic principles with broad goals and the most detail of all the codes of conduct. Does not include environmental principles.  Strongly based on economic principles and consideration. Provides links to other codes

 

 Cover social, environmental and environmental issues in reference to national laws for the country of operation and international bodies. It is not clear which to follow if the two bodies conflict. 
Stakeholder Relevance Partnering with stakeholder  is encouraged for deciding on initiatives. Interaction with governments and non-governmental agencies for interpretation. Focus on social justice. Emphasis on employees. Some interaction with other CSR organizations. Stakeholder interests are  to be included in a monitoring process. Clauses are vague.
Benefits exceed costs Follows precautionary principle. Can use the Global Compact name or logo as long as communications issued at least once every two years. Incorporates  scientific and technology knowledge for decision making,  consideration of risks to stakeholders. Based on notion that business benefits from the well being of employees and community.   Prosperity as a means to realize  its goals of human dignity  and Kyosei.

 

 

 Not considered.
Efficient change agent Uses "should" language, setting aspirations rather than commands. Provides means for learning best practices from other business. Provides for incremental implementation of programs and initiatives. Provides help with interpretation from the  national contact points. Intent for flexibility..  annual meeting provides information on best practices  

Works with stakeholder groups  (Global compact, SA 8000 etc.).

Uses "shall" language, which can be interpreted as "must." includes a provision that business adopt rules and promptly implement changes.
Informed by the past Meetings and information sharing opportunities provided for implementation. Code is occasionally revised. Code is revised by OECD Council that interacts with CIME committee  and  National Contact Points. Input from business, governments and non-governmental entities part of revision and interpretation process. Provides means for input from businesses stakeholders. Updates with occasional newsletters Issues statements on current issues. Code does not change. No changes to code nor interpretation facilities.
Continual Improvement Encourage initiatives and use of  new technology. Encourages goal setting and improvements over time. Indirectly considered. Provides best practices. Supports activities normally already practiced as well as CSR. Not considered.
Fit to Organization Short (half a page). Simple language. Written with a business context in mind. Lengthy document (67 pages,  12 of which are the code of conduct). Occasionally complex language, but considers the business context. Simple, short, to the point.

Only social issues covered.

 Most amenable of the codes. Clauses heavy reference law and international instruments in official tones.

 

 

Conclusion of analysis:

 

The OECD's Guidelines for Multinational Enterprises is the clearest, most comprehensive and meaningful set of principles available. It is the only set of principles that offers resources for interpretation. However, it is lengthy to the point of being cumbersome, especially were it to be included in a triple bottom line report. The Global Compact has the support of many stakeholder organizations and is brief and to the point. However, its brevity leads to vagueness. 

 

The UN human rights principles and responsibilities for transnational corporations and other business enterprises uses language that borders on legalese. It defers to the national laws where a business operates and international instruments, but does not resolve the situation where national laws allow a practice discouraged by by the international instruments. The CAUX  treats social and environmental issues lightly both in content the number of provisions. The Sullivan principles are focus only social issues, so that a manager would need to supplement it with a set of principles for environmental and economic issues for a triple bottom line report.

 

Sources (this list excludes linked sources):
Allen White, Building Bridges: GRI and the OECD's Guidelines for MNCs,  Global Reporting Initiative, Paris,

(June, 2001).

copyright Laura Musikanski laura.musikanski@gmail.com