Forum
Tuesday, May 21, 2013

Richard Locke concludes that the private regulatory efforts of multinational companies, particularly codes of conduct, have not done much to improve labor standards. But while these codes might not affect overall labor standards in the countries where they have been deployed, we think these efforts should be judged in light of their own narrower objectives and the broader role they play in the public and private politics of transnational labor regulation.

At a minimum, codes of conduct enable multinationals to carry out audits that concretely measure their suppliers’ adherence to international labor standards. This provides a valuable sorting mechanism for global buyers seeking suppliers that can meet such standards. Beyond that, codes of conduct have furnished a discourse of commitment to improved working conditions and a potential source of legal liability that activists have used against companies whose suppliers treat their workers badly. Taken together, these features of codes can support the political action necessary to improve labor conditions around the world.

Multinational companies did not create supplier codes of conduct in order to improve labor conditions in general, but rather to align the workplace conditions of outsourced production facilities with international standards and, in doing so, to protect their own reputations. Multinationals can foster such alignment by using audits to identify poorly conforming suppliers and then demanding better performance, replacing suppliers that fail to improve. Our analysis of code-of-conduct audits at tens of thousands of factories around the world, across a variety of industries and on behalf of thousands of clients, indicates that working conditions are improving in supplier factories subject to audits. On average, the number of violations at these factories declined significantly in successive audits. This finding holds up across regions and within industries such as apparel, and in the more capital-intensive electronics and printing industries. So we are more optimistic than Locke is about this dimension of the benefits of private regulation.

Codes of conduct can support the political action necessary to improve conditions.

We strongly support Locke’s call for governance approaches that combine the different strengths of public and private regulation, but we see codes playing an important role in these regulatory regimes. Our own preliminary findings indicate greater adherence to standards at factories located in countries that have assumed significant obligations under international labor treaties, especially when those countries have enacted more stringent domestic labor law as well. We also find greater adherence among factories in countries where domestic political and legal regimes are mutually reinforced by robust civil society institutions, such as a free press and a large population of international NGOs.

The efficacy of these governmental and private political institutions in promoting adherence to international labor standards likewise suggests how codes might be useful beyond their specific contexts. Multinationals deploy codes of conduct for the limited purpose of monitoring their own suppliers, but the codes create possibilities for political mobilization that can improve labor conditions more broadly. First, by measuring adherence to international labor standards, codes of conduct have brought to light problematic workplace conditions in global supply chains that were long hidden. Second, codes of conduct provide tools that can be used to organize politically and advocate for better labor conditions, or to enhance the efficacy of existing governmental labor regulation. César Rodriguez-Garavito, for instance, has described how labor activists use codes of conduct in cross-border organizing campaigns to pressure multinational companies and governments to work together to resolve labor disputes at factories in Central America. And Matthew Amengual has found that audits conducted under private codes of conduct can complement state-based labor inspections, reinforcing governmental efforts to improve labor conditions.

Finally, workers and other stakeholders have attempted to use codes of conduct as a basis for establishing legal liability when multinationals fail to live up to the commitments the codes embody. Factory workers from China, Bangladesh, and Indonesia sued Walmart for violating obligations they argued were owed them under Walmart’s code of conduct. And the University of Wisconsin has sued Adidas for failing to adhere to the terms of a supplier code of conduct imposed at the university’s request. While such legal claims have thus far been unsuccessful, they are important tools in the political struggle for international labor rights, and they are made possible by multinationals’ embrace of codes.

Governments and international organizations have failed for decades to improve working conditions in global supply chains. Even if private codes of conduct likewise fail to improve labor standards overall, they can promote the kind of political mobilization that may eventually improve labor conditions. And, for now, they can help conscientious companies identify suppliers that meet their standards.