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:
July 16, 2018
Sheldon Richman
Trump Turns to Gaza as Middle East Deal of the Century Collapses
Charles Pierson
Kirstjen Nielsen Just Wants to Protect You
Brett Wilkins
The Lydda Death March and the Israeli State of Denial
Patrick Cockburn
Trump Knows That the US Can Exercise More Power in a UK Weakened by Brexit
Robert Fisk
The Fisherman of Sarajevo Told Tales Past Wars and Wars to Come
Gary Leupp
When Did Russia Become an Adversary?
Uri Avnery
“Not Enough!”
Dave Lindorff
Undermining Trump-Putin Summit Means Promoting War
Manuel E. Yepe
World Trade War Has Begun
Binoy Kampmark
Trump Stomps Britain
Wim Laven
The Best Deals are the Deals that Develop Peace
Kary Love
Can We Learn from Heinrich Himmler’s Daughter? Should We?
Jeffrey St. Clair
Franklin Lamb, Requiescat in Pace
Weekend Edition
July 13, 2018
Friday - Sunday
Brian Cloughley
Lessons That Should Have Been Learned From NATO’s Destruction of Libya
Paul Street
Time to Stop Playing “Simon Says” with James Madison and Alexander Hamilton
Jeffrey St. Clair
Roaming Charges: In the Land of Formula and Honey
Aidan O'Brien
Ireland’s Intellectuals Bow to the Queen of Chaos 
Michael Collins
The Affirmative Action Silo
Andrew Levine
Tipping Points
Geoff Dutton
Fair and Balanced Opinion at the New York Times
Ajamu Baraka
Cultural and Ideological Struggle in the US: a Final Comment on Ocasio-Cortez
David Rosen
The New McCarthyism: Is the Electric Chair Next for the Left?
Ken Levy
The McConnell Rule: Nasty, Brutish, and Unconstitutional
George Wuerthner
The Awful Truth About the Hammonds
Robert Fisk
Will Those Killed by NATO 19 Years Ago in Serbia Ever Get Justice?
Robert Hunziker
Three Climatic Monsters with Asteroid Impact
Ramzy Baroud
Europe’s Iron Curtain: The Refugee Crisis is about to Worsen
Nick Pemberton
A Letter For Scarlett JoManDaughter
Marilyn Garson
Netanyahu’s War on Transcendence 
Patrick Cockburn
Is ISIS About to Lose Its Last Stronghold in Syria?
Joseph Grosso
The Invisible Class: Workers in America
Kim Ives
Haiti’s Popular Uprising Calls for President Jovenel Moïse’s Removal
John Carroll Md
Dispatch From Haiti: Trump and Breastfeeding
Alycee Lane
On Heat Waves and Climate Resistance
Ed Meek
Dershowitz the Sophist
Howard Lisnoff
Liberal Massachusetts and Recreational Marijuana
Ike Nahem
Trump, Trade Wars, and the Class Struggle
Olivia Alperstein
Kavanaugh and the Supremes: It’s About Much More Than Abortion
Manuel E. Yepe
Korea After the Handshake
Robert Kosuth
Militarized Nationalism: Pernicious and Pervasive
Binoy Kampmark
Soft Brexits and Hard Realities: The Tory Revolt
Helena Norberg-Hodge
Localization: a Strategic Alternative to Globalized Authoritarianism
Kevin Zeese - Nils McCune
Correcting The Record: What Is Really Happening In Nicaragua?
Chris Wright
The American Oligarchy: A Review
Kweli Nzito
Imperial Gangster Nations: Peddling “Democracy” and Other Goodies to the Untutored
FacebookTwitterGoogle+RedditEmail