Response to request for input on forthcoming book on ethical business in the U.K

In response to questions from Kelly Corrigan on csr-chicks mailing list:

ETHICAL: "Relating to moral principles or the branch of knowledge concerned with
these-morally correct." Concise Oxford Dictionary.

1. Should all business be required by law to have an ethical, social and environmental policy and should such policies be independently audited and accredited?

No, but countries should continue to make their environmental, health, safety and labour laws (EHSS) clear, relevant, known and enforced, and all business should know, and put compliance with local law first in all business processes.

Business should be taxed sufficiently, and those taxes allocated, to ensure corrupt free local government enforces strong EHSS management laws. Most western countries are pretty good at this, although could still fine large businesses a lot more for noncompliance, but those countries with high levels of corruption are pretty bad at this (to speak very generally). Independant auditing and accrediting is not needed if government is consistently and effectively enforcing laws which are developed in open consultation with business, NGOs and communities through an open media, and enforced by skilled, committed and noncorrupt (well enough paid, trained and managed) local officials and judiciary.
Also, it is crucial that local governments are held to account for the environmental and social performance of business as well as economic. The problem in China until now has been local governments measured on their economic performance and FDI increase only, which, in a short term uninformed perspective is seen to conflict with the enforcement of environment, health, safety and labour laws.

Independant trade unions should be allowed to operate, and can play a powerful role in the enforcement of EHSS laws, as the represent workers who have to deal with operational EHSS conditions and the effect on their health and wellbeing.

2. Who should be involved in formulating such policies i.e. all stakeholders etc?
Small and large, and local and international businesses, independant trade unions, academia, NGOs, local community groups as relevant and different government departments to ensure laws do not put different departments objectives in conflict with each other. Other governments can also encourage a country to enforce their environment, health, safety and social laws, just as they encourage the enforcement of Intellectual Property laws, access to markets through the WTO, changes in laws on visas and immigration, how a country pressures another country (e.g. US-China-North Korea) etc. Unfortunately there is not enough of this.

3. What examples are there of any companies treading a fine line in their claims?
Almost all existing business. As long as any firm outsources to or even produces themselves in developing countries such as China and Bangladesh that at present does not have strong enforcement of EHSS laws, these companies have a very difficult job in ensuring full compliance in their supply chain or operations. On the other hand, very few firms can be said to be in 100% legal compliance in their western operations all the time anyway. This is the point of continuous improvement, a key part of general business strategy. With regards to EHSS compliance, in a perfect world, business learns why and how to improve, at the same time as laws regularly improve to be more relevant to changing business and societal needs. For example technically Europeans shouldn't work more than 40 hours per week, but it could be said a large percentage of European white collar professionals (at least) do. Maybe enforcement should improve, maybe the law should be more flexible.

4. Are there companies that organizations should refuse to trade with and why?
Those that, after repeated attempts at engagement by a buyer, at showing the business case for EHSS compliance and supported in knowing how to comply, still make little or none of the EHSS improvements requested. Also, those that are caught to be cheating to a large extent more than once (i.e. showing fake books, faked timecards, training workers to lie to auditors, making payoffs). These businesses are a risk to the buyer in many ways, as trade should be built on reliability, honesty and trustworthiness for quality and business partnership.