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Ian Roper, Sepideh Parsa and Michael Muller-Camen

Ian Roper, Sepideh Parsa and Michael Muller-Camen The social audit of labour standards: what can it tell us about employer motivation to disclose? Special thanks for the contribution by Bettina Hausner, Iris Ersoy and Renate Kratochvil for assistance with data collection.

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Ian Roper, Sepideh Parsa and Michael Muller-Camen

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  1. Ian Roper, Sepideh Parsa and Michael Muller-Camen The social audit of labour standards: what can it tell us about employer motivation to disclose? Special thanks for the contribution by Bettina Hausner, Iris Ersoy and Renate Kratochvil for assistance with data collection

  2. Social audit of labour standards • Background • Labour standards and voluntary codes • Corporate governance, ethics and motivation • Global Reporting Initiative (GRI) • Methodology • Findings • Labour categories reported (and not reported) • Categories ‘over-claimed’ • Motives?

  3. Background (1): labour standards • (Royle 2010) Downgrading of ILO Compliance to voluntary codes: • ‘spotlight of brand activism’ is ‘roving and random’ • Deflects from activities further down value chain • Codes ‘only as good as those that wrote it’

  4. Background (2): corporate governance, ethics and motivation • Motivation to comply • Shareholder-value = utilitarian = cost • maximising potential of IDL – vs – • financial cost of reputation damage • ‘Stakeholder’ orientation may be influenced by internal (e.g. labour) pressures

  5. Background (2): corporate governance, ethics and motivation • Motivation to disclose • Deontological – to report good practice • Utilitarian – to level the field • Utilitarian – to mislead and pacify critics

  6. Background (3): the Global Reporting Initiative (GRI) • Robust standards () • Also covers supply chain () • Principle of transparency and visibility () • Voluntary ()

  7. Background (3): the Global Reporting Initiative (GRI) Zero adherence to any labour standard Disclosing data to company-defined CSR Total compliance to all labour standards Labour Standard Continuum GRI: disclosing data to externally-defined criteria

  8. Global Reporting Initiative (GRI) Categories • Economic (EC) • Environmental (EN) • Product Responsibility (PR) • Society (SO) • Labour (LA) • Human Rights (HR)

  9. Global Reporting Initiative (GRI) Categories • Economic (EC) • Environmental (EN) • Product Responsibility (PR) • Society (SO) • Labour (LA) • Human Rights (HR)

  10. Labour Practices (LA)

  11. Human Rights (HR)

  12. Methodology • Sustainability Reports of Forbes 250 for reporting year 2010 • Only those that report to GRI G3 • Only those that provide direct cross-reference matrix • 94 companies selected

  13. Methodology • Core GRI categories selected • Audit the claim made against each category in index to details cross referenced within report • (re)Categorise as: • Full disclosure • Partial disclosure • Non-disclosure

  14. Example (from LA4) • Full disclosure if: • % covered by collective bargaining, by region • Partial disclosure if: • Total number of employees covered • Proportion, not broken down by region • Non-disclosure if: • Statement of principle – unsupported by data • Reference to works council, staff forum etc • Report number of agreements – but not coverage

  15. Findings: self declared disclosure (LA)

  16. Findings: self declared disclosure (LA)

  17. Findings: self declared disclosure (HR)

  18. Findings: LA Categories over-claimed

  19. Findings: LA Categories over-claimed

  20. Findings: LA Categories over-claimed

  21. Findings: Categories over-claimed

  22. Findings: Categories over-claimed

  23. Findings: Categories over-claimed (HR)

  24. Findings: Categories over-claimed (HR)

  25. Findings: Categories over-claimed (HR)

  26. Findings: Categories over-claimed (HR)

  27. Findings: Categories over-claimed (HR)

  28. What does this say about motivation to disclose? • Over-claiming (1): inaccurate or incomplete (those downgraded to ‘partial disclosure’ status) • Out of 15 GRI categories, the highest rate of full disclosure was 19.1% (LA4) • Over-claiming (2): misrepresentation (those not disclosing any relevant information)

  29. What does this say about motivation to disclose? • Over-claiming (2): misrepresentation (those not disclosing any relevant information) • Out of 15 GRI categories, only in 3 did a majority of companies genuinely disclose (LA7, LA8, LA13)

  30. What does this say about motivation to disclose? • Only a minority could be attributed to utilitarian aim of ‘levelling the field’ • What of GRI? • An overly optimistic venture? • A sound mechanism to measure CSR claims against

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