Monitoring Trans-National Corporation´s performance - The Voluntary Approach

We can more and more often hear in the media about multinational corporations conducting human rights abuses. This is due to the fact that this discussion, surrounding corporations and human rights, is a hot item on the agenda today. Higher demands are put on the companies to follow human rights and to take more responsibilities in the promotion and protection of human rights. One of the reasons for this is that the boarder lines, which previously were so clear, surrounding States are starting to loose their importance and the role of States are decreasing. At the same time there is a new form of ''State'' emerging, i.e. Multi-National Corporations. An increase in globalisation is believed to be the cause of this shift in power. Due to the rising demand on corporations, there has been a fast growing arena of voluntary initiatives that corporations can join. This arena has been growing so fast that the research has not been able to keep up. Corporations are joining these initiatives mainly to satisfy the public and their other stakeholders (interested parties). The importance and impact of this arena is not yet totally explored. The overall purpose of this thesis is to evaluate the voluntary approach of monitoring corporate behaviour. It will also evaluate whether this approach is enough to force corporations into compliance with human rights norms or if there is a need for something stronger, like legal regulation. The thesis includes a descriptive overview of the different types of voluntary initiatives that there are today. It then analyses whether these voluntary initiatives are enough to influence and monitor the behaviour of the corporations. It also identifies some key actors when discussing monitoring. Three main features will be examined that are needed in order for a sustainability report, produced by a corporation, to be seen as truthful and useful: credibility, consistency and comparability. The thesis identifies the first feature to be the most important. Without the credibility the report is useless. This is where monitoring comes in. The credibility of a report is highly dependent on whether it is monitored by an independent third party rather than an expert within the corporation. If there is no monitoring then there is no sure way of knowing if the company's statements and reports are based on the truth or if they are merely public relations exercises with the purpose to mislead the consumers. Nonetheless, with the voluntary approach corporations cannot be forced to comply, but can only be recommended to do so. The only real force we, as consumers, have on companies is the ''shame-factor''. The thesis is concluded with the assessment that the voluntary initiatives are a sufficient temporary solution to monitoring human rights, but as seen recently by violations of human rights by trans national corporations, it is not a long term solution. The voluntary initiatives do however open up the world to discussion between corporations and their stakeholders, (in the past, many of these actors have not even been aware of the others existence). These discussions are very important in raising the awareness among businesses of their social and ethical responsibilities. It has also been a means to learn more about the other part and then better be able to assess the needs and interests of this part. However, to really get the companies to comply with their new responsibility it will take a lot more then simply the companies promising that they will change. There will also be a need for legal regulation in the future. This thesis has recommended an adoption, by States, of a binding convention with an established monitoring mechanism under it. However, since the world presently does not seem ready for this step, then in the mean time the voluntary approach is the next-best alternative. It is at least a new way in which different stakeholders can influence the actions by non-state actors, i.e. including corporations