*This paper synthesizes the expanding corporate social responsibility (CSR) literature. We define CSR from an economic perspective and develop a CSR taxonomy that connects disparate approaches to the subject. We explore whether CSR should exist and investigate conditions when CSR may produce higher welfare than other public good provision channels. We also explore why CSR does exist. Here, we integrate theoretical predictions with empirical findings from economic and noneconomic sources. We find limited systematic empirical evidence in favor of CSR mechanisms related to induced innovation, moral hazard, shareholder preferences, or labor markets. In contrast, we uncover consistent empirical evidence in favor of CSR mechanisms related to consumer markets, private politics, and public politics. (JEL D21, L21, M14)

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Economic Perspectives on Corporate Social Responsibility

Business codes are an oft-cited management instrument. But how common are codes among multinationals? And what is their content? In an unprecedented study, the codes of the largest corporations in the world have been collected and thoroughly analyzed. This paper presents the results of that study. Of the two hundred largest companies in the world, 52.5% have a code. More than half of these codes describe company responsibilities regarding quality of products and services (67%), adherence to local laws and regulations (57%) and the protection of the natural environment (56%). Many codes make reference to principles governing stakeholder relations (e.g. transparency (55%), honesty (50%) and fairness (45%)), corporate core values (e.g. teamwork (43%)), appropriate conduct among employees (e.g. discrimination (44%) and intimidation (43%)) and treatment of company property by employees (e.g. conflict of interests (52%), corruption (46%) and fraud (45%)). Monitoring compliance with the code is addressed in 52% of the codes. Based on this content study, three types of codes are distinguished: the stakeholder statute (72%), the values statement (49%) and the code of conduct (46%). The results of this inquiry present a benchmark for the evaluation and development of both individual and international business codes.

Business codes of multinational firms: What do they say?

This report categorizes and discusses the range of roles that public sector agencies have played in providing an enabling environment for corporate social responsibility (CSR). The starting point is a broad definition of CSR that goes well beyond a more limited understanding of CSR as being about business activities that go beyond compliance. A broader definition that considers the overall potential commitment of business to sustainable development is better suited to understanding public sector roles in CSR. The report assesses some important overall drivers for public sector engagement in pro-CSR activities in developing countries, as well as constraints to engagement.

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Public sector roles in strengthening corporate social responsibility: a baseline study

Despite increased academic and practitioner interest in codes of conduct, there has been little research into the actual compliance of suppliers in developing countries with the codes of conduct of multinational corporations (MNCs). This paper addresses this lack by analysing Chinese suppliers’ level of compliance with Swedish toy retailers’ codes of conduct. Based on unannounced and unofficial interviews with employees of Chinese suppliers, the study shows that all of the nine studied suppliers breached some of the standards in the toy retailers’ codes, with over two-thirds of the suppliers not complying with the majority of the studied standards. While there are different explanations of this lack of compliance, the main explanation seems to be that Chinese suppliers successfully deceive toy retailers’ monitoring organisations by decoupling the formal monitored part of their organisation from the actual operational part of their organisation. The paper concludes with a discussion of how to increase compliance with MNCs’ codes of conduct.

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Suppliers’ Compliance with MNCs’ Codes of Conduct: Behind the Scenes at Chinese Toy Suppliers

Corruption in international business

The question of what firms do internally in the fight against bribery is probably as important to the successful outcome of that fight as formal anti-bribery law and enforcement This paper looks at corporate approaches to anti-bribery commitment and compliance management using an inventory of 246 codes of conduct It suggests that, while bribery is often mentioned in the codes of conduct, there is considerable diversity in the language and concepts adopted in anti-bribery commitments This diversity is a feature of the language used in describing parties to bribery and in defining which activities are prohibited (eg promising bribes versus actually giving them, gifts and entertainment, and solicitation This diversity of language and concepts suggests that it might be useful to extend and deepen efforts in business associations and international organisations to build consensus on the meaning of bribery and corruption In contrast, the bribery codes show evidence of an emerging consensus on managerial approaches to combating bribery This involves the deployment of a distinctive mix of management tools, including financial record keeping, statements by executive officers, internal monitoring, whistle-blowing facilities, creation of compliance offices and threats of disciplinary action

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Business Approaches to Combating Bribery: A Study of Codes of Conduct

Governments are facing an increasing number of arbitration claims by foreign investors relating to important public policies or seeking substantial damages, and many governments are taking a greater joint interest in how such cases are resolved in investor-state dispute settlement (ISDS). This scoping paper has supported inter-governmental dialogue about ISDS at several OECD-hosted investment Roundtable meetings.Part I compares ISDS with other international and domestic processes for resolving disputes including the WTO and European Court of Human Rights, and considers how ISDS may affect domestic policy making processes.Part II examines eight current and emerging issues in ISDS: (i) investors’ access to justice; (ii) the costs of ISDS cases; (iii) remedies for foreign investors under investment treaties and their possible impact on a level playing field for domestic and foreign investors; (iv) the enforcement and execution of ISDS awards; (v) third party financing of ISDS; (vi) the characteristics, selection and regulation of arbitrators in ISDS; (vii) forum shopping and treaty shopping by investors; and (viii) the question of the consistency of decision-making in ISDS. Part III outlines key findings from a statistical survey of ISDS provisions in 1,660 bilateral investment treaties.Public comment on this paper, including 46 investment policy questions (as outlined in the paper), was obtained in May-July 2012 and is available on the OECD website.

Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community

The OECD Guidelines are recommendations by governments to multinational enterprises (MNEs) operating in or from the 33 countries that adhere to the Guidelines. The Guidelines help ensure that MNEs act in harmony with the policies of countries in which they operate and with societal expectations. They are the only comprehensive, multilaterally endorsed code of conduct for MNEs. They establish non-binding principles and standards covering a broad range of issues in business ethics. The basic premise of the Guidelines is that internationally agreed principles can help to prevent misunderstandings and build an atmosphere of confidence and predictability among business, labour, governments and society as a whole.
The recent review of the Guidelines, concluded in June 2000, brought significant change to the contents of the Guidelines’ recommendations and sought to enhance their distinctive implementation procedures. At the time of the review, many participants noted the intense ...

The OECD Guidelines and Other Corporate Responsibility Instruments

Governments are facing an increasing number of arbitration claims by foreign investors relating to important public policies or seeking substantial damages, and many governments are taking a greater joint interest in how such cases are resolved in investor-state dispute settlement (ISDS). This scoping paper has supported inter-governmental dialogue about ISDS at several OECD-hosted investment Roundtable meetings.
Part I compares ISDS with other international and domestic processes for resolving disputes including the WTO and European Court of Human Rights, and considers how ISDS may affect domestic policy making processes.
Part II examines eight current and emerging issues in ISDS: (i) investors’ access to justice; (ii) the costs of ISDS cases; (iii) remedies for foreign investors under investment treaties and their possible impact on a level playing field for domestic and foreign investors; (iv) the enforcement and execution of ISDS awards; (v) third party financing of ISDS; (vi) the characteristics, selection and regulation of arbitrators in ISDS; (vii) forum shopping and treaty shopping by investors; and (viii) the question of the consistency of decision-making in ISDS. Part III outlines key findings from a statistical survey of ISDS provisions in 1,660 bilateral investment treaties.
Public comment on this paper, including 46 investment policy questions (as outlined in the paper), was obtained in May-July 2012 and is available on the OECD website.

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International investment agreements define commitments on investment protection, but also shed light on how these commitments are to be integrated with other public policy objectives. Investment protection in the context of environmental regulation has been a frequent source of controversy and investor-state disputes. In order to enhance the factual basis for debate in this policy area, the present survey establishes a statistical portrait of governments’ investment treaty writing practices in relation to environmental concerns in a sample of 1,623 IIAs, roughly half of the global investment treaty population. The survey provides a statistical portrait of the extent, kind and frequency of treaty language referring to environmental concerns and the evolution of the use of such language over time. It shows that: i) over time, more treaties contain such language; ii) only about 8% of the sample treaties include references to environmental concerns; and iii) there are wide variations in the content of such language, both across countries and across time.

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Kathryn Gordon

Papers

Business Approaches to Combating Bribery: A Study of Codes of Conduct

Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community

The OECD Guidelines and Other Corporate Responsibility Instruments

Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community

Environmental Concerns in International Investment Agreements: A Survey