FacebookTwitterGoogle+RedditEmail

Who Really Benefits From Voluntary Codes of Corporate Conduct?

A recent investigation by BBC Television showed British American Tobacco (BAT) violating its own voluntary marketing and advertising codes in Malawi, Mauritius and Nigeria. Contrary to BAT’s public pronouncements that it doesn’t want children to smoke, the company was caught using marketing tactics in these countries that are known to appeal to young people, like advertising and selling single cigarettes, and sponsoring non-age-restricted, product branded musical entertainment.

As trading has become more global and corporations have become more multinational, countries started discovering that they have little recourse to rein in the harmful behavior of corporations. As public clamor to regulate multinationals has grown, companies have increasingly responded by adopting “voluntary codes of conduct.” But what are the real purposes for these codes? Are they just window dressing, or worse?

Purposes of Voluntary Codes of Conduct

The BAT incident demonstrates how deceptive, and even fraudulent, self-imposed corporate “voluntary codes” of conduct can be. Corporations, and even entire industries, publicly claim that they adopt such codes out of caring and concern for the health and welfare of people and the environment. In reality, these codes confer far greater benefits upon the companies than they do upon the public. Corporations use these codes as a crisis management strategy to stave off government regulation, improve their image, boost their credibility with legislators and regulators, and thus preserve their seat at the table in any regulatory discussions. Voluntary codes also give political cover to legislators who favor industry by giving the legislators something they can point to to calm public demands to rein in harmful corporate behavior.


Tobacco Industry Documents Explain the Real Purpose of Voluntary Codes

An undated, eight-page strategy document from BAT states BAT’s intent to enact a voluntary code of conduct to “demonstrate responsibility” to policymakers and “enable government to claim that they ‘have done something’ to address a negative corporate behavior … which is what they need in answer to pressure groups.”

A 1991 Philip Morris Corporate Affairs Europe (PM) document proposes enacting a voluntary code of conduct to avoid regulation, stating, “A first step [to fighting proposed advertising restrictions in Poland] was a meeting between PM management and the [Polish] Minister of Agriculture, after which the latter became an active supporter of a voluntary code of conduct as a viable alternative to stringent restrictions … “

Many tobacco industry documents indicate the real intent behind such codes. Voluntary codes have been highly effective at keeping tobacco companies from being marginalized in the world of commerce. The more mainstream these companies are, the more influence they will maintain over government efforts to regulate them.

Additional Problems With Voluntary Codes

Voluntary codes pose additional burdens on society in many other ways. 

Typically, voluntary codes are enforced only through complaints; there is no proactive enforcement. Companies can get away with violating their own codes until the misbehavior is discovered and reported by someone outside the company. Thus public must take on the burden of observing and evaluating corporate behavior, and reporting violations to the company’s headquarters. Few members of the public are familiar enough with the codes to pull this off, and most people don’t have the time to police corporate behavior while also working to feed their families or just surviving, especially in third world countries. Also, information about complaints made to the company is not transparent; companies need not publicly reveal any data about the number of complaints it receives, the locations, products involved or other information. fines are attached to breaches, they are rarely commensurate with the profits derived from the breaches. Another feature of voluntary codes is that those investigating complaints rarely have the power to discover documents as would be the case if a public regulator were launching legal proceedings.

Moreover, corporate codes address only the issues the company wants to address. Typically these codes focus only on specific issues companies regard as potentially highly damaging, so only those issues with a high profile are likely to be addressed by conduct codes. They also allow companies to ignore larger, more complicated problems or problems caused by entities “downstream” from the company, like suppliers and distributors.

Voluntary Code Strategy Has Spread to Other Industries

The tobacco industry’s success in the strategic application of voluntary codes to their advantage has demonstrated the value of the strategy to the larger corporate world. As a result, other industries are rushing to adopt such codes: the beer industry, the hard liquor industry (which, until the 1990s had a voluntary code in place not to advertise on television), the pharmaceutical industry, the cellular phone industry, and the gambling industry, to name a few.

Conclusion

The public is right to be skeptical of voluntary corporate codes. Tobacco documents give historical insight into the real reasons companies devised such codes and why they continue to implement them. The more harmful the product and the greater the wrongdoing by an industry, the greater the public clamor for regulation and the greater the proliferation of voluntary codes of conduct. These codes are typically little more than a component of a larger strategic public relations program designed to delay effective government intervention. The public would be well served to understand the strategic applications of these codes, and keep the pressure on for effective government intervention when corporate behavior clearly merits it.

ANNE LANDMAN writes for PRWatch.

 

 

 

 

 

 

More articles by:

December 10, 2018
Jacques R. Pauwels
Foreign Interventions in Revolutionary Russia
Richard Klin
The Disasters of War
Katie Fite
Rebranding Bundy
Gary Olson
A Few Thoughts on Politics and Personal Identity
Patrick Cockburn
Brexit Britain’s Crisis of Self-Confidence Will Only End in Tears and Rising Nationalism
Andrew Moss
Undocumented Citizen
Dean Baker
Trump and China: Going With Patent Holders Against Workers
Lawrence Wittner
Reviving the Nuclear Disarmament Movement: a Practical Proposal
Dan Siegel
Thoughts on the 2018 Elections and Beyond
Thomas Knapp
Election 2020: I Can Smell the Dumpster Fires Already
Weekend Edition
December 07, 2018
Friday - Sunday
Steve Hendricks
What If We Just Buy Off Big Fossil Fuel? A Novel Plan to Mitigate the Climate Calamity
Jeffrey St. Clair
Cancer as Weapon: Poppy Bush’s Radioactive War on Iraq
Paul Street
The McCain and Bush Death Tours: Establishment Rituals in How to be a Proper Ruler
Jason Hirthler
Laws of the Jungle: The Free Market and the Continuity of Change
Ajamu Baraka
The Universal Declaration of Human Rights at 70: Time to De-Colonize Human Rights!
Andrew Levine
Thoughts on Strategy for a Left Opposition
Jennifer Matsui
Dead of Night Redux: A Zombie Rises, A Spook Falls
Rob Urie
Degrowth: Toward a Green Revolution
Binoy Kampmark
The Bomb that Did Not Detonate: Julian Assange, Manafort and The Guardian
Robert Hunziker
The Deathly Insect Dilemma
Robert Fisk
Spare Me the American Tears for the Murder of Jamal Khashoggi
Joseph Natoli
Tribal Justice
Ron Jacobs
Getting Pushed Off the Capitalist Cliff
Macdonald Stainsby
Unist’ot’en Camp is Under Threat in Northern Canada
Senator Tom Harkin
Questions for Vice-President Bush on Posada Carriles
W. T. Whitney
Two Years and Colombia’s Peace Agreement is in Shreds
Ron Jacobs
Getting Pushed Off the Capitalist Cliff
Ramzy Baroud
The Conspiracy Against Refugees
David Rosen
The Swamp Stinks: Trump & Washington’s Rot
Raouf Halaby
Wall-to-Wall Whitewashing
Daniel Falcone
Noam Chomsky Turns 90
Dean Baker
An Inverted Bond Yield Curve: Is a Recession Coming?
Nick Pemberton
The Case For Chuck Mertz (Not Noam Chomsky) as America’s Leading Intellectual
Ralph Nader
New Book about Ethics and Whistleblowing for Engineers Affects Us All!
Dan Kovalik
The Return of the Nicaraguan Contras, and the Rise of the Pro-Contra Left
Jeremy Kuzmarov
Exposing the Crimes of the CIAs Fair-Haired Boy, Paul Kagame, and the Rwandan Patriotic Front
Jasmine Aguilera
Lessons From South of the Border
Manuel García, Jr.
A Formula for U.S. Election Outcomes
Sam Pizzigati
Drug Company Execs Make Millions Misleading Cancer Patients. Here’s One Way to Stop Them
Kollibri terre Sonnenblume
Agriculture as Wrong Turn
James McEnteer
And That’s The Way It Is: Essential Journalism Books of 2018
Chris Gilbert
Biplav’s Communist Party of Nepal on the Move: Dispatch by a Far-Flung Bolivarian
Judith Deutsch
Siloed Thinking, Climate, and Disposable People: COP 24 and Our Discontent
Jill Richardson
Republicans Don’t Want Your Vote to Count
John Feffer
‘Get Me Outta Here’: Trump Turns the G20 into the G19
FacebookTwitterGoogle+RedditEmail