Friday, August 21, 2009

ISO 26000: Working on a Common Global Language of Corporate Social Responsibility

A new governance environment requires a common language. The entity that controls the construction of that common language will, effectively, also control the underlying parameters and normative framework which that language describes. The power of concepts are encapsulated in the words and standards chisen to describe them. Words and words that describe also tend to force the eye, and the mind, in particular directions. Even description includes in its essence, decisions about what is important, what serves as the essence of the thing described.

Corporate social responsibility has been the object of such a search for a common language for the last generation. While states continue to ignore the issues--tending toward self absorption in the intricacies of their narrow minded legal constructs of corporate governance--other governance communities are quickly moving to supply (and thus control) the language by which we describe (and understand) the subject.

There is an important player in the contests for control of the descriptive realities (and normative understanding) of corporate social responsibility, a player whose work is well worth following. That player is the International Organization for Standardization. According to it, ISO "is the world's largest developer and publisher of International Standards. ISO is a network of the national standards institutes of 162 countries, one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system." ISO, About ISO. ISO represents a body for inmformal consensus among the most important elelemt of glopbal elites in the public and private sectors. "On the one hand, many of its member institutes are part of the governmental structure of their countries, or are mandated by their government. On the other hand, other members have their roots uniquely in the private sector, having been set up by national partnerships of industry associations." Id. ISO has been a critically important player in the harmonization of standards in a number of areas. Its Strategic Plan for 2005-2010 are meant to support global trade, corporate social responsibility and global disseminaiton of technology in aid of development. Id., at 2. To that end it has embraced seven key objectives: (developing a consistent and multi-sector collection of globally relevant international standards; (2) ensuring the involvement of stakeholders; (3) raising the awareness and capacity of developing countries; (4) being open to partnerships for the efficient development of international standards; (5) promoting the use of voluntary standards as an alternative or as a support to technical regulations; (6) being the recognized provider of international standards and guides relating to conformity assessment (and importantly, "their use and referencing by regulators in sector initiatives when conformity assessment is involved" Id., at 5); and (7) providing efficient procedures and tools for the development of a coherent and complete range of deliverables. Id., 3-6.

A key area for development of these strategic objectives is penetration of the market for a language of corporate social responsibility. "The need for organizations in both public and private sectors to behave in a socially responsible way is becoming a generalized requirement of society. It is shared by the stakeholder groups that are participating in the WG SR to develop ISO 26000: industry, government, labour, consumers, nongovernmental organizations and others, in addition to geographical and gender-based balance." ISO, Social Responsibility." It is no wonder, then, that "ISO . . . has decided to launch the development of an International Standard providing guidelines for social responsibility (SR). The guidance standard will be published in 2010 as ISO 26000 and be voluntary to use. It will not include requirements and will thus not be a certification standard." ISO, Social Responsibility.

This is an effort in which the United States has not taken the lead. Instead, "ISO has chosen SIS, Swedish Standards Institute and ABNT, Brazilian Association of Technical Standards to provide the joint leadership of the ISO Working Group on Social Responsibility (WG SR). The WG SR has been given the task of drafting an International Standard for social responsibility that will be published in 2010 as ISO 26000. " ISO, Social Responsibility. According to the ISO, the object of this new standard includes the following:
  • assist organizations in addressing their social responsibilities while respecting cultural, societal, environmental and legal differences and economic development conditions;
  • provide practical guidance related to operationalizing social responsibility, identifying and engaging with stakeholders, and enhancing credibility of reports and claims made about social responsibility;
  • emphasise performance results and improvement;
  • increase confidence and satisfaction in organizations among their customers and other stakeholders;
  • be consistent with and not in conflict with existing documents, international treaties and conventions and existing ISO standards;
  • not be intended to reduce government's authority to address the social responsibility of organizations;
  • promote common terminology in the social responsibility field; and
  • broaden awareness of social responsibility.
ISO, Social Responsibility, About the Standard. While the overall object is to create a common language for corporate social responsibility--"Our work will aim to encourage voluntary commitment to social responsibility and will lead to common guidance on concepts, definitions and methods of evaluation" ( ISO, Social Responsibility)--the standard has a broader reach. Most interesting, of course, is the object to operationalize social responsibility. In this context, at least, ISO will be working in parallel with John Ruggie and the U.N.'s work on operationalizing a normative framework for multinational corporaitons and human rights. John Ruggie, Towards Operationalizing the Protect, Respect and Remedy Framework: A Progress Report, A/HRC/11/13, 22 April 2009.

In its 2008 annual report, ISO explained: "Refined to its essence, the objective of ISO standards is to provide confidence," the report states. "When a product or service meets the specifications or requirements of an ISO standard, this provides confidence that they incorporate essential features. These features can include quality, ecology, safety, reliability, interoperability efficiency and effectiveness. ISO standards also help to ensure such benefits at an economical cost." ISO Annual Report, 2008, at 2. It will be a small step from control of language to control of the framework through which governance will be effected.

The ISO is movingcloser to publishing a final version. "Consensus was achieved among the multi-stakeholder participants in the ISO Working Group on Social Responsibility (ISO/WG SR) at its latest meeting on the way forward for the future ISO 26000 standard. The group's 7th plenary meeting, held in Québec City, Québec, Canada, on 18-22 May 2009, addressed issues stemming from the more than 3 000 comments submitted in a successful vote on the Committee Draft of the standard taken before the meeting. ISO 26000 is now moving to the status of a Draft International Standard by October 2009." ISO, Extensive debate improves consensus on future ISO 26000 standard on social responsibility, Ref. 1229, June 4, 2009. It was also reported that "The Québec meeting stakeholder dialogue resulted in moving ISO 26000 closer to completion on complex issues such as barriers to trade, human rights and user friendliness." Id.

The current committee draft, ISO/CD 26000, Guidance on Social Responsibility, 2 ISO/TMB WG SR N 157 (2008-12-12), is now available and related documents may be accessed at "This International Standard provides guidance on the underlying principles of social responsibility, the core subjects and issues pertaining to social responsibility (see Table 2) and on ways to integrate socially responsible behaviour into existing organizational strategies, systems, practices and processes (see Figure 1). This International Standard emphasizes the importance of results and improvements in performance." ISO/CD 26000, Guidance on Social Responsibility, 2 ISO/TMB WG SR N 157 (2008-12-12), at page 6, lines 109-112. I will review the committee draft in a later post. I will note three things. First, the conceptual basis of ISO 26000 moves away from the bedrock concept of economic organization as centered on the maximization of the welfare of shareholders. Second, it deepens what is now a clear movement away from a monopoly of corporate governance regulation grounded in the state (whether the state of incorporation or the state in which the entity operates). Third, lawyers and policy makers in developed states, and especially the United States, will continue to ignore these governance frameworks at their peril. Corporate gopvernance is no longer focused on an eternal tension between the governance rights of shareholders, directors and officers. Nor is corporate governance merely the object of state law or even national policy. Governance of 21st century economic entities will not be grounded in the nostrums and basic assumptions that serve as the introduction to what passes for the study of the law of economic entities as taught in most American law schools. The development of a common language of corporate social responsibility, and the framework for corporate behavior, will loom large as the focus of business behavior, and lawyers' work in the decades to come. The content of that framework is what is today at issue.

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