CSR overview in Europe and at International level

A new role for the Multinational Enterprises in the global supply chain

FLA - The Fair labor AssociationIn recent years, socially responsible Multinational Enterprises (MNEs) have increasingly assumed public functions, particularly in regions in which state actors are either unwilling or unable to provide basic rights.

Driven by Corporate Social Responsibility (CSR), MNEs have filled gaps in labour market regulation through the implementation of Codes of Conduct (CoC) or the provision of voluntary welfare benefits.

In its article, the Fair Labor Association (FLA) supports the principle that MNEs should engage in the enforcement of labour laws, but they are ill-equipped to deliver public goods and can only assume that role in partnership with key stakeholders.

The FLA also argues that “compliance audits”– the most widely used tool to implement labour standards in global supply chains – are an inadequate means to enforce labour standards in a sustainable way because the audit methodology falls short of the principles of partnership  and dialogue. Compliance auditing also fails the test of legitimacy required by private actors who attempt to deliver public goods.

The FLA concludes that MNEs need to partner with local institutions and engage in capacity building in order to ensure the legitimacy and sustainability of their CSR programmes. The FLA further argues that labour relations processes such as collective bargaining are essential in this regard.

Multi-stakeholder initiatives (MSIs), like the FLA, provide a vehicle for socially responsible companies to partner with NGOs, Universities and even national and international governmental organizations. The FLA adds more transparency and accountability requirements, thus enhancing the legitimizing nature of the multi-stakeholder partnership.


Source: part of an article published in "Management et Avenir", special issue on HERMES-OSR findings and results, by Auret VAN HEERDEN et Sabrina BOSSON from the Fair Labor Association (FLA).