Beyond the UN Global Compact: Institutions and Regulations: Volume 17

This chapter examines roles and challenges for corporations in addressing Post 2015 world development objectives. Specifically it does review the contributions and opportunities of the principles of the Global Compact and other social responsibility initiatives for embedding corporate contribution to sustainable markets and societal development.

The results presented in this chapter are based on analysis of secondary sources and a literature review to determine conceptual and theoretical frameworks for identifying assumptions and challenges of corporate sustainability in the Post 2015 era.

It was found that although there are neither academic nor activist definitive consensuses regarding positive impacts of adopting the UN Global Compact principles for sustainability, the impacts of committed corporations, organisations and association are multiplying societal understanding of the implications in societies, governments and markets of violating human and labour rights, degrading and not protecting the environment, and having corruption.

This chapter could be used as teaching material for undergraduate and master courses of corporate social responsibility, business ethics, sustainability, operations management and strategy.

This chapter discusses firms’ responsibilities regarding world development objectives in a Post 2015 world.

The UN Global Compact promotes values of precautionary approach to environmental changes and business sustainability, which are eagerly embraced by MNCs; however the recognized emerging country risks pose a challenge for continuous commitment to those principles in the subsidiaries. Especially political and currency risks are considered significant in the subsidiaries located in the emerging markets. Therefore, those risks are often shifted to the local partners as the pursued core principle of the risk management strategies. The objective of MNCs is in fact to limit MNCs responsibility for the liabilities and losses in the emerging markets in case of market downturns, and in effect the advocated risk management practices exacerbate the severity of the emerging market crises.

The chapter explores those corporate practices on the examples of numerous major international market players in case of several historical, but recent examples of the emerging market currency crises.

The concerns addressed in the chapter include: the preference for local financing exposing at risk local banking sectors in the emerging markets, excessive liquidity and minimal capital commitments and investments leading to weaker currency fluctuations and resulting in private capital speculations and capital flight (to safety or to quality). The intensified global competition for international investments in form of FDIs resulted in the erosion of the capital requirements, reduced social and business infrastructure commitments requested, limited currency controls, and other components of the regulatory framework easing in the emerging markets. Other identified in the research key components of the risk management strategies applied by MNCs, destabilizing the emerging markets in financial (both fiscal and currency) crises include: intercompany payments and financing such as: transfer pricing, local sourcing and reimbursements for both tangible and intangible assets transfer.

Demonstrated approach of MNCs appears ethically questionable and reflects the disparity of the bargaining powers. It also undermines the intentions of the Ten Principles of the UN Global Compact. The corporate citizenship is found difficult to dominate over the conflicting self-centered interests of MNCs operating in the emerging markets, especially in times of crises. The consideration of the non-compulsory ethically based initiative, as the alternative to the failing effectiveness of the international market regulations, requires restoration of the public and an individual value of the reputation (image, name) built on social responsibility and accountability, unfortunately so much diluted over the last two decades.

The chapter examines the effect of MNCs risk management of their foreign operations on the crises in the emerging markets with focus on inward FDIs flows and inward FDIs stock fluctuations and debt financing. The results evidence the repetitive nature of the self-interest driven corporate behavior.

This chapter examines the institutional configuration of internal CSR in MNCs operating in Canada and Brazil, as well as headquarters-subsidiary relations within the institutional settings of their home and host countries.

The institutional logics perspective is used as it provides a systematic approach to understanding the institutional orders at play in the development of soft policies.

Whereas the institutional framework of the host country is a key factor in the regulatory and distributive spheres, the spheres of discretionary spending and soft policies are largely influenced and shaped by the MNCs through self-regulation, and may also be guided by intergovernmental institutions and NGOs.

The empirical data is limited to two case studies. It seeks to understand the multiple facets of CSR reality and produce contextual insights. Generalizations might fit better with other context communities – research subjects and the researchers who investigate them, beyond the mining industry – in a non-positivist, non-probabilistic sense, than with other context settings within the same industry.

The chapter concludes that institutional discourses and practices around internal CSR seek to strengthen a firm’s legitimacy. CSR does not necessarily increase the MNC’s performance when viewed in a market logic, but its operational viability can align with the corporation’s global strategy and identity. It also highlights resistance resulting from professional and community institutional logics.

This chapter contributes to the literature on internal CSR and is original in including an MNC from the South with subsidiaries in the North.

This chapter outlines incorporation of voluntary environmental accounting standards into national law as evidenced by the Scandinavian experience. In illustrating such hardening of soft law approaches it highlights difficulties national authorities face when attempting to regulate globalised commercial entities with extra-territorial activities. Adoption at national level of these standards into legally binding obligations illustrates convergence of global governance standards even where there is no central authority or designed codification.

Doctrinal legal research and literature review. To illustrate the incorporation of voluntary standards at a national level, Scandinavian examples (Denmark, Norway, Sweden and Finland) were chosen – frequently upheld as best practice in requiring the reporting of environmental information financial reports.

The research shows that the most proactive national authorities in this regard are endorsing certain voluntary standards and rewarding their use with reduced regulatory burden. I first outline certain voluntary environmental standards and then illustrate adoption of these standards into legally binding frameworks.

The main limitation was difficulty in finding English language versions of some national regulations.

This chapter seeks to illustrate a normativisation of soft law frameworks into legally binding national obligations. Viewed through the phenomenon of Global Administrative Law it would seem evident that national authorities are willing to adopt various international voluntary standards to regulate the increasingly globalised actions of companies.

Voluntary standards and the various reporting methods of non-financial information is an extremely broad regulatory sphere with decentralised regulation and parallel regulatory frameworks. This chapter, in illustrating the convergence of environmental governance standards through normativisation of previously voluntary standards, will assist the reader in attaining an overview of the extent of this regulatory convergence.

This chapter examines and illustrates the judicial treatment of relevant concepts and norms of corporate sustainability and relevant implications for the implementation of the UN Global Compact.

This is a conceptual examination of relevant legislation, cases and concepts used by judges in giving practical content to the concepts of ‘sustainable development’, ‘sustainability’ and ‘corporate sustainability’.

The judiciary has been fashioning applicable policy, resolving and balancing the clash of interests, setting guidelines and parameters for statutory interpretation in elucidating the concept of corporate sustainability. To that extent ‘corporate sustainability law’ is developing, not only in municipal public law where legislation is the key driver, but as ‘soft’ international law.

This is a general survey of trends in judicial reasoning from different countries and legal traditions and is not applicable exclusively to any jurisdiction. The implication is that there is room for detailed study of applicable rules in each jurisdiction.

The chapter offers guidance for strategic implementation of the Global Compact, compliance to emergent obligatory principles, for shaping policy and corporate political management.

This chapter contributes to an understanding of the role and impact of the judiciary in developing corporate sustainability law and congruent principles of the Global Compact.

This chapter provides a legal and theoretical overview of environmental PPMs articulated in private standards. It seeks to expand the debate about environmental PPMs, elucidating important dimensions to the issue from the perspective of global governance and international trade law. One of the arguments advanced in this chapter is that a comprehensive analysis of environmental PPMs should consider not only their role in what is regarded as trade barriers (governmental and market driven) but also their significance in global objectives such as the transition towards a green economy and sustainable patterns of consumption and production.

This chapter is based on an extensive literature review and doctrinal legal research.

This research shows that environmental PPMs represent a key issue in the context of the trade and environment relationship. For decades such measures have been thought of as being trade distortive and thus incompatible with WTO law. Although it seems clear now that they are not unlawful per se, their legal status remains unsettled. PPMs can be regarded as regulatory choices associated with a wide range of environmental concerns. However, in trade disputes, challenged measures involving policy objectives addressing production issues in the conservation of natural resources tend to focus on fishing/harvesting techniques. On the other hand, an important goal of Global Environmental Governance (GEG) is to incentivise sustainable consumption and production in order to achieve the transition to a green economy. In this sense, it can be argued that what are generally denominated as ‘PPMs’ in the WTO terminology can alternatively be regarded ‘SCPs’ in the language of environmental governance. Environmental PPMs are not only limited to state-based measures, such as import bans, tariff preferences, and governmental labelling schemes. Environmental PPMs may also amount to good corporate practices towards environmental protection and provide the rationale for numerous private environmental standards.

Most academic attention afforded to environmental-PPMs has focused on their impacts on trade or their legality under WTO law. Although legal scholars have already referred to the significance of such measures in the context of environmental governance, this issue has remained almost entirely unexplored. This chapter seeks to fill the gap in the literature in this regard. In particular, it addresses the relevance of environmental PPMs in the context of decentralised governance initiatives such as the UN Global Compact and private environmental standards.

Overall, this chapter assists in the understanding of the significance of environmental PPMs in the context of private environmental standards and other governance initiatives involving goals related to sustainable consumption and production. This chapter adds to the existing body of literature on the subject of PPMs in international trade and environmental governance.

The chapter examines and describes the impact of the Central American Free Trade Agreement (CAFTA-DR) environmental provisions and the UN Global Compact initiatives on environmental sustainability of member countries at a national level and at a firm level.

Composite indexes (Human Development Index, Ecological Footprint Index, and Biocapacity) are used to determine CAFTA-DR country level sustainability. Firm level sustainability is based on a qualitative survey of companies using the Global Reporting Initiative framework and UN Global Compact participation.

Based on the methodology used CAFTA-DR member countries cannot be considered environmentally sustainable. Despite the lack of integration between initiatives proposed by different institutions, firm level sustainability trends are positive and encouraging.

Free access to Ecological Footprint and Biocapacity scores is limited. The research focused on surveying CAFTA-DR and UN Global Compact sustainability initiatives. However, there are many other entities and institutions not included in this research that also encourage sustainability.

The need of a concerted effort to align different organizations and institutions regarding sustainability initiatives in the CAFTA-DR region is apparent.

CAFTA-DR includes environmental provisions that are complementary to the UN Global Compact environmental principle. The synergies between these initiatives should be actively explored.

This study aims at establishing a linkage between IFRS adoption and environmental pollution in Africa. More so, the role of institution was emphasized as a possible ameliorator of environmental pollution in the face of IFRS adoption.

The empirical model builds on the traditional EKC hypothesis, by including IFRS adoption variable and an interaction term (which captures the multiplicative between IFRS adoption and institutions). Data was gathered for 47 African countries for the period 2001–2013. The SGMM technique was used in the estimation process.

The robust estimation reveals that a positive and significant linkage exist between IFRS adoption and environmental pollution. The interactive variable also shows that the effect of IFRS on the environment will reduce when institutions quality (in the form of bureaucratic corruption) is addressed.

The linkage between IFRS and the environment has not received empirical attention. This is partly due to the fact that accounting phenomenon is rarely linked to macroeconomic outcomes. However, there is a rising interest in the role of accounting institutions on economic outcomes and this study contributes sufficiently to this budding body of knowledge.

The objective of this chapter is to explain how an innovation-driven economic development model can help to mitigate corruption and facilitate competitiveness in Nigeria.

With the use of descriptive narratives, Nigeria was examined in comparison with other countries such as South Korea. The chapter argues that Nigeria has not experienced development as much as South Korea because of her primary dependence on crude oil for economic sustenance.

Evidence from the statistics showed that innovation-driven economies are more competitive and less corrupt compared to natural resource-driven economies such as Nigeria. Nigeria has performed poorly in terms of competitiveness, transparency, and governance owing to her dependence on natural resources as a major means for economic sustenance.

Helps to explain why an innovation-driven economic development model is the solution to mitigating corruption and facilitating competitiveness in Nigeria.

This chapter presents a discussion and an analysis of the literature on nationalization of international business. National governments have justified the expropriation and nationalization of the operations of foreign multinational in their jurisdiction based on the social responsibilities as welfare providers, and safeguarding the short- and long-term interest of their citizens.

There are multiple studies that show the processes and impacts of nationalizations and privatizations (also called denationalizations) worldwide. This chapter analyses specific cases to the light of existing international business literature and proposes prepositions for future studies.

This chapter presents an analysis where theories of internationalization could be used to analyze specific advantages of States and domestic investors when assuming ownership of operations of international business in their national territory.

The context, processes, and consequences of nationalization of foreign firms historically, economically, and politically have generally a correlation either with political changes, and macroeconomic scenarios related to scarcity and uncertainty in the international market of extractive industries, or with nationalistic political views in national governments.

The aim of this chapter is to promote a reflection on how the smart mobs are established, despite the 2014 FIFA World Cup in Brazil, that took place in Brazil from June 12 to July 13, 2014, in comparison with the organizational model of the contemporary Brazilian public management, emphasizing that, in spite of “major reforms” carried out and of the progressive speeches, the focus continues to be the way to control the resources and the people, including the construction of Infrastructure for 2014 FIFA World Cup in Brazil, especially based on Principle 10 (Anti-Corruption) of UN Global Compact initiative.

This chapter draws both on primary and secondary qualitative data, especially the literature of smart mobs, as well as public management models in Brazil, mainly based on Guerreiro Ramos, which constitutes the theoretical framework for the analysis, as well as “deep interviews” with citizens, which was protesting against the FIFA World Cup, that was analyzed through an interpretative approach, the phenomenography, based mainly on “International business, corruption and bribery” topic to develop a cross line framework.

The chapter provides an analytical framework to reinforce the growing practice of social control that can improve the public management model in Brazil through the development of the societal administration (substantive rationality); presenting that to the extent that the Brazilian government organizational model was not intended to “interact” with society, it has contributed to generate an unsatisfied demand for democracy in Brazilian citizens, whom support the United Nations Global Compact initiative and do not support the current model of the Executive Branch.

Given the recent smart mobs in Brazil and the lack of clear analytical axes for the orientation of research in organizational studies regarding the Brazilian public administration, as well as fragmentation in their respective academic production, it is hoped that these theoretical reflections and empirical results can contribute to promote academic progress for the Public Management in Brazil, as well as for the Corporate Citizenship all over the world.

The chapter introduces a general reflection on the relations between these study objects, in order to foster new research. It is expected that this work will help to increase the debate about the importance of the Brazilian public management, in particular, but the international public administration too (mainly the United Nations [UN] members states), to include substantive rationality for managers, so they can better understand and respond more effectively to the needs of citizens, companies, and organizations.

This chapter investigates the long-run relationship between trade, financial openness, economic growth, and carbon dioxide emissions across 167 countries over the period 1970–2007.

We employ both standard panel least squares and dynamic Generalized Method of Moments approaches to overcome problems of mis-specification inherent in the prior literature.

We find a strong link between economic growth, trade, financial openness, and environment. For the entire sample and industrial countries, our results support the environmental Kuznets curve (EKC). Our results also suggest that while economic growth, trade financial, and openness reduce CO₂ emissions for all countries, the countries from the North appear to benefit more from trade and financial openness than the countries from the South in terms of reduction in CO₂ emissions.

The results imply that policy makers should not seek to limit efforts to link trade openness and financial liberalization to environmental quality but to set trade policy-making, economic growth, and financial liberalization in a broader context to take into account environmental concerns as these issues are inextricably linked.

This chapter extends the existing literature by comparing the extent to which trade openness and financial liberalization influence the carbon emissions in the North and South.

There are ten universal principles of United Nations Global Compact in four areas namely human rights, labour, environmental and anti-corruption, and this chapter will explore the sixth principle of labour standard on elimination of discrimination in employment and occupation, in particular the doctrine of constructive dismissal in Malaysian labour relations. Constructive dismissal is creating a new challenge in labour relation in Malaysia.

This chapter specifically analyses some of the constructive dismissal awards and its implication to labour relations in Malaysia. The methodology employed in this chapter is the analysis of case laws using criterion-based sampling from the Industrial and Superior Court awards on constructive dismissal.

There has been an increasing number of awards on constructive dismissal made by the Malaysian Industrial Court over the last nine years. From the year 2009–2013, the Industrial Court has made 663 awards on constructive dismissal, mostly against employers. With compensation awarded to each employee amounted to as much as 24 months of back-pay salary plus a month’s pay for every year of service, employers can no longer neglect this pressing issue.

The concept of constructive dismissal falls within the purview of section 20 of the Industrial Relations Act 1967 in Malaysia. Constructive dismissal is a ‘deemed dismissal’ if an employer is guilty of a breach of the employment contract which goes to the root of the contract. It arises when a workman terminates his/her contract of employment and considers himself/herself discharged from further obligations because of the employer’s conduct.

With a good understanding of the constructive dismissal awards, it is expected that organizations will manage and treat their human resources as their greatest assets and prevent constructive dismissal claims from taking place. This will eventually help to improve and maintain harmonious labour relations. This chapter is likely to provide insights into the Malaysian labour relations environment for international business operations.

In the context of Malaysian labour relations, studies on constructive dismissal are limited as it is considered as a new area and a specific area of study. This chapter therefore hopes to fill the existing gap in the literature, to highlight some of the recent awards and lessons to prevent constructive dismissal claims from taking place and generally to contribute to the constructive dismissal literature.