A new report from the International Bar Association Global Employment Institute (IBA GEI) details the findings of a survey aimed at understanding the prevalence, purpose, application, jurisdiction, legal effect, enforceability and efficacy of multinational companies’ codes of conduct. The Code of Conduct Report can be downloaded without charge here.
Carried out during 2016, the survey of 36 multinationals found that 90 per cent attested to having a code of conduct in place, with the majority in effect for more than ten years and four in existence, in various forms, for more than 25 years. Of the surveyed companies – from a broad range of industries including automotive, legal, mining, financial and insurance – almost 50 per cent had adopted the practice of incorporating the code as part of the employment contract, with 96 per cent citing a ‘desire to foster a culture of integrity and ethical corporate behaviour across their organisations’. On the question of whether codes of conduct influence the behaviour of employees, respondents were unanimous in their belief that they do.
Dirk Jan Rutgers, IBA GEI Council Vice-Chair for Knowledge Management, commented: ‘The survey demonstrates that multinational companies are exporting norms of behaviour through the implementation of codes of conduct. They are effecting societal change and shaping business practice on a global scale. Although the reasons given for creating codes of conduct vary, they generally revolve around creating a company-wide ethos of excellence, regardless of jurisdiction, including core tenets such as prevention of harassment and respect for human rights. Such soft law is a powerful option in a toolbox of solutions when issues may arise in different jurisdictions.’
Other findings of the 32-page Code of Conduct Report on the surveyed companies include:
92 per cent of codes are applicable in all of the countries of operation.
71 per cent require employees to consent individually to the code of conduct, with the majority requiring written consent. In some cases, annual re-certification of employees’ understanding and adherence to the code is a requirement.
55 per cent intend the code to be legally binding on employees.
38 per cent have relied on their code of conduct in litigation. Examples given include behavioural breaches and disputes relating to intellectual property.
68 per cent of the codes include social responsibility items – demonstrating an awareness of the paradigm shift towards organisations contributing back to the community and being responsible corporate citizens.
52 per cent of the codes include social media issues – suggesting the potentially significant impact of these activities on companies’ corporate image in the digital age.
Graeme Kirk, Co-Chair of the IBA GEI, commented: ‘Undoubtedly, codes of conduct are increasing in both relevance and importance. Where they were once narrow in scope, having developed through classical topics such as how to deal with safeguarding confidential company information, the proper use of company assets and avoiding conflicts of interest, they are now broadening. New areas include human trafficking, poverty, climate change and social media. This demonstrates that codes are not being created in isolation, but rather in alignment with a society’s evolving demands and an increased sense of responsibility – ultimately, this is a good thing.’
Asked about support for the provision of an IBA GEI model code of conduct template incorporating best practices, 85 per cent of the multinationals surveyed welcomed the initiative.
Mr Rutgers concludes: ‘Codes of conduct are a necessity for businesses today because a company’s reputation can be put at risk or destroyed swiftly with the rise of social media. Corporations need to maintain high ethical standards, and ensure that employees understand their ambassadorial standing and respect the codes. Also, in order to be relevant, codes require mindful tweaking. For example, climate change featured in only 32 per cent of respondents’ codes but, as the issue of climate change justice moves up the global geopolitical agenda, I suspect that this will alter. Our intention in drafting a template for codes of conduct will be to pool our global expertise to provide businesses with an effective tool in a constantly shifting landscape.’
Notes to the Editor
The full Code of Conduct Report can be downloaded without charge from the IBA website here: tinyurl.com/yaxzvm3b.
The members of the IBA GEI code of conduct Working Group:
Dirk Jan Rutgers (Coordinator)
Anne M Harten
The International Bar Association Global Employment Institute (IBA GEI) was formed in early 2010 for the purpose of developing a global and strategic approach to the main legal issues in the human resources and human capital fields for multinationals and worldwide institutions. For more information, click here or paste the following link into your browser: tinyurl.com/3bnkjl4
The International Bar Association (IBA), established in 1947, is the world's leading organisation of international legal practitioners, bar associations and law societies. Through its global membership of individual lawyers, law firms, bar associations and law societies it influences the development of international law reform and shapes the future of the legal profession throughout the world.
The IBA's administrative office is in London, United Kingdom. Regional offices are located in: São Paulo, Brazil; Seoul, South Korea; and Washington DC, United States, while the International Bar Association's International Criminal Court and International Criminal Law Programme (ICC & ICL) is managed from an office in The Hague, the Netherlands.
The International Bar Association's Human Rights Institute (IBAHRI), an autonomous and financially independent entity, works to promote, protect and enforce human rights under a just rule of law, and to preserve the independence of the judiciary and the legal profession worldwide.
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