ISO Consumer Policy Committee consideration of international standard on CSR

1. ISO Consumer Policy Committee consideration of international standard on CSR Bill Dee, Chair, COPOLCO working Group on Global market standards Auckland, 20 February 2002

2. Background • May 2001 meeting of ISO Council passed a resolution underlining the importance of emerging issues in relation to social accountability and asked (COPOLCO) to consider the viability of International Standards in this area, taking into account the draft Israel Standard (SI) 1000

3. Background • COPOLCO, at its May 2001 meeting in Oslo, acknowledged the Council resolution and agreed to explore the feasibility and desirability of developing ISO standards COPOLCO’s working group, Consumer protection in the global market, was charged with the responsibility of studying the matter and will be delivering its recommendations at the June, 2002 COPOLCO plenary meeting

4. What is CSR? • There is no single authoritative definition • The World Business Council on Sustainable Development (WBSCD) defines CSR as “the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.”

5. What is CSR? Business for Social Responsibility (BSR) states that, “[w]hile there is no single, commonly accepted definition of ....CSR, it generally refers to business decision-making linked to ethical values, compliance with legal instruments, and respect for people, communities and the environment.

6. What is CSR? • The Corporate Social Responsibility Newswire defines CSR as “the integration of business operations and values whereby the interests of all stakeholders including customers, employees, investors, and the environment are reflected in the company’s policies and actions.”

7. Common Points •  (1) the process of production is as important as the products themselves • (2) CSR involves substantive obligations to all of a firm’s affected societal stakeholders, from investors and shareholders, to customers, workers and their families, suppliers, and the greater community

8. Common Points • (3) CSR goes beyond legal compliance :simple compliance with legal requirements may not be sufficient, if the legal requirements do not encompass all the aspects of CSR. • (4) transparency, public disclosure and meaningful stakeholder involvement are important

9. Common Points •  (5) CSR requires an integrated, consistent and comprehensive approach

10. Drivers of CSR • Consumers are a major driver of corporate social responsibility. In late 1999, Environics International conducted a poll of 25,000 consumers in 23 countries which indicated the increasing importance consumers are putting on the social responsibility leadership of companies.

11. Drivers of CSR • Investors are increasingly scrutinizing the environmental and social performances of businesses, in addition to their traditional concern with economic performance, and are being aided in this regard by the development of instruments such as the Dow Jones Sustainability Indexeswhich measures the performance of companies across the "triple bottom line" of environmental, social and economic factors

12. Drivers of CSR • Institutional investors such as pension funds (particularly Employee Funds) are also increasingly turning their attention to the socially responsible aspects of corporate activities. • Increasingly, workers and communities in one jurisdiction (e.g., South Africa, Burma, Nigeria) are bringing lawsuits against multinational corporations in another jurisdiction (e.g., the United States, the United Kingdom) over issues of alleged environmental or health and safety harm.

13. Existing CSR Initiatives • Inter-Governmental • OECD Multinational Enterprise Guidelines • United Nations Global Compact • United Nations Human Rights Instruments • The International Labour Organization Instruments

14. Existing CSR Initiatives • European Union Governmental (Domestic Legislation) Initiatives • Investor Disclosure laws • Legislated Codes of Conduct

15. Existing CSR Initiatives • Investor-Driven Initiatives • The Global Reporting Initiative • Dow Jones Sustainability Indexes • Private Initiatives • Standards Initiatives

16. Why Have International Standards? • standards provide an internationally agreed set of criteria for businesses, enhancing clarity and certainty about globally acceptable consumer practices, regardless of location; • in a global market, consumers may have increased confidence that their interests will be protected when businesses adhere to the requirements of an international standard;

17. Why Have International Standards? • in the context of corporate social responsibility, international standards facilitate the development of common approaches across jurisdictions where currently divergent approaches may exist between countries;

18. Why Have International Standards? in keeping with WTO commitments which stipulate that national/regional standards are to be based on international standards, international standards help to promote equal opportunities in cross-border trade; • while directed primarily at global, cross-jurisdictional corporate activity, international CSR standards are also of value within countries as an adjunct to regulatory approaches, especially where protection is less than comprehensive;

19. Why Have International Standards? • international standards bodies such as ISO are built on an infrastructure encompassing both national standards systems and international components, facilitating the evolution of the development of national standards into international standards, and the adoption and implementation of international standards as national standards . This is particularly relevant in the case of CSR standards, since there already exist domestic certain standards pertaining to aspects of CSR which can be drawn on in the development of international standards.

20. Why ISO? • ISO has a proven track record at producing market-based and market-accepted standards, including the 9000 (quality) and 14000 (environmental) series. In particular, the 14020 series of standards covering environmental marketing claims indicates that ISO has already developed standards setting benchmarks for market behaviour by industry; • ISO standards are voluntary, baseline norms, which can be adopted by governments, businesses, and others;

21. Why ISO? • the ISO standards development process is a rules-based (i.e., non-arbitrary) system, in which participants (representing consumer, business, and other interests) reach decisions on the basis of the principle of consensus, and through which the draft standards are subject to consultation. Meaningful and balanced participation of all stakeholders will be essential to the standards being perceived as credible in the marketplace;

22. Why ISO? • WTO has recognized the important role of international standards in contributing to equal opportunities in cross-border trade; • ISO is one of the only truly international, non-governmental, rule-making organizations which offers participation to a range of stakeholders. ISO is at the apex of an infrastructure for norm development and implementation which extends throughout the world;

23. Why ISO? • ISO has a high profile in the market • ISO standards can be adopted as national standards

24. Business Benefits of ISO CSR Standards • reduce compliance costs associated with the need to adhere to a range of divergent national initiatives; • enhance ability for a company to compete in the global marketplace • provide companies operating in the global market with objective, measurable standards which have had demand and supply side and government input;

25. Business Benefits of ISO CSR Standards • assist industry participants to become or remain responsible corporate citizens by providing them with a means of determining whether they conform to accepted norms of good behaviour • provide some assurance to industry participants who adopt these standards that they will have a base of consumer support; and • provide an effective corporate compliance measurement approach.

26. What Might a Suite of ISO CSR Standards Look Like? • Early days yet • Some corporate governance issues • How the company’s operations effect the environment • sustainability • Employee & host community health • Safety of products produced

27. What Might a Suite of ISO CSR Standards Look Like? • Basic working conditions of outsourced employees • Compliance • Business ethics