Statements of philosophy, policy, and principle found in nonbinding international conventions that, over time, gain legitimacy as guidelines for interpreting the hard law in legally binding agreements
A standard that arises over time and is enforced by social sanction or law
A rule, natural law, or truth used as a standard to guide conduct.
Codes of Conduct
Formal statements of aspirations, principles, guidelines, and rules for corporate behavior
Multi Stakeholder Initiative
A code-based form of civil regulation created by some combination of corporate, government, NGO, or international organization actors
The practice of corporation publishing information about its economic, social, and environmental performance
The idea that ethical consumers will pay premium for commodities from producers in developing nations who use sustainable methods
A model of the methods an organization can use to achieve certain goals
The debasement of integrity for money, position, privilege, or other self-benefit
Small amounts of money demanded by minor officials to perform their regular duties
Anything of value improperly requested or given in exchange for a corrupt action
The act of accompanying the request for a bribe with a specific or implied threat of lost business
An entity headquartered in one country that does business in one or more foreign countries.
The economic policy of lowering tariffs and other barriers to encourage trade and investment
As defined by the United Nations, a parent firm that controls the assets of affiliated entities in foreign countries
Business entities in foreign countries controlled by parent transnational corporations
Trans nationality Index (TNI)
The average of three ratios: foreign assets to total assets, foreign sales to total sales, and foreign employment to total employment.
Foreign Direct Investment
Funds invested by a parent MNC for starting, acquiring, or expanding an affiliate in a foreign nation
The limited, speculative purchase of stocks and bonds in a foreign company y individuals or equity funds.
Sovereign Wealth Fund
A government entity that invests the savings of a nation. Since it is state-owned, its investment goals may be different from those of private equity funds.
International Code of Conduct
Voluntary, aspirational statements by MNCs that set forth standards for foreign operations
A 1977 code of conduct that required multinational corporations in South Africa to do business in a nondiscriminatory way
Convention on Biological Diversity
A treaty that requires nations to preserve biological diversity by promoting sustainable economic activity. It emerged from the UN sponsored Earth Summit in 1992 and has been signed by 163 nations.
A set of27 principles for sustainable development that emerged from the 1992 Earth Summit, a UN conference of 172 nations and 2400 NGOs held in Rio de Janeiro
Communication on Progress
The required annual report of a company participating in the Global Compact. It explains how the company is implementing the 10 principles
The act of a corporation cloaking its lack of social responsibility by insincere membership in the UN Global Compact
Alien Tort Claims Act
A 1789 law permitting foreign citizens to litigate, in a federal court, wrongful actions occurring anywhere in the world that violate international law of U.S treaties.
What is Europe’s view on CSR and why?
Welfare state systems have nurtured some of the most powerful social justice NGOs and consumers are more inclined to purchase goods from companies seen as responsible staring in 1990. (1) Pressure to engage in more voluntary CSR (2) stronger social welfare
What are 3 other countries besides Europe and US that have strong CSR roots?
Japan, Australia, India
What country has little foundation for CSR, but why do they comply?
China corporations respond to social interests as directed by gov’t and adopt voluntary codes and standards to ease access into Western export markets.
Why did cross-border trade and investment begin to rise in the 1980s?
What are the four observations why transnational corporations elude proper controls?
(1) International laws is weak in addressing social impact on of business (2) transnational corporations are subject to uneven regulation in developing nations (3) corporations that use JV, outsourcing and supply chain efficiencies distance themselves from direct accountability (4) significantly more government regulation of firms is unlikely.
What were the conferences sponsored by the UN?
(1) Environmental Sustainability – Rio de Janeiro, 1992 (2) Population – Cairo, 1993 (3) human rights – Vienna, 1994 (4) Social Development – Copenhagen, 1995, and Gender – Beijing, 1995
What are the 8 components of a global system of CSR activity?
(1) Development of Norms and Principles (2) Codes of Conduct (3) Reporting and Verification Standards (4) Certification and Labeling Schemes (5) Management Standards (6) Social Investment and Lending (7) Government Actions (8) Civil Society Vigilance
What is an example of Universal Declaration of Human Rights adopted by the UN?
Equal rights for men and women
What are the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy?
It sets forth guidelines on “worker’s rights” for example fair wages
What is the Norms on the Responsibilities of Transnational Corporations
The most aggressive document put in place in 2004 that would obligate multinational corporations to protect a lengthy list of “universal: rights of peoples, consumers, workers, and environment. For now it is not passed.
What are two problems with sustainability reporting?
(1) Defining and measuring social performance is difficult (2) reports are not comparable from company to company
What is the Global Reporting Initiative (GRI) and what & of top 250 global companies participate?
A model reporting framework that lists specific performance indicators and methods for doing reports. 77%
What is the Kimberley Process Certification Scheme?
A device to stop flow of so called “blood” diamonds. Blood Diamonds dropped from 15% to .1percent
What is the Forest Stewardship Council?
Set standards to certify that forests are managed sustainability. They only certify 5% of world’s timber harvest.
What is the EcoManagement and Audit Scheme?
A standards that rises above legal requirements for environmental performance in EU nations that already have some of the world’s strictest regulations
What is the International Organization for Standardization?
They issued the ISO 9000 (quality), ISO 14000 (environment), ISO 2600 (integrating social performance in the plans, systems, and processes of organization
What is Principles for Responsible Investment?
Lenders must consider a company’s environmental, social, and governance performance when they evaluate investments.
What is the FTSE4Good Global Index?
Intends to set the world standard for wanting to invest in companies following “good standards of corporate responsibility.
What are the Equator Principles?
The principles divide projects into high, medium, and low social and environmental risk and compel borrowers to meet standards for econological protection and to consult with native peoples.
How much of corrupt expenditures are of the global GDP?
5% or more than 2 trillion.
How much of corrupt expenditures in developing coutries?
Equivalent to 10% tax and adds 25% to cost of government contracts. Defraud 40 billion/year
What parts of the world still accept facilitating payments?
Africa, Middle East, South America, and South Asia
What is the Foreign Corrupt Practices Act?
It makes it both a civil and a criminal offense to bribe an official of a foreign gov’t or ministry or a member of a foreign political party or candidate for office.
What is the fine for violating the Foreign Corrupt Practices Act?
Up to 2million and up to twice the pecuniary gain they derived. Individuals can receive a $100,000 fine and 5 years in prison
What are the 5 tiers of Internationalization?
(1) Export Sales (2) Licensing (3) Foreign Sales Office (4) Direct Investment (5) Global Production
As of 2008, how many transnational corporations are there?
82,000 which is double 37000 in 1991 and 7 times the 10,700 estimate in 1969.
What is the single measure that best captures the cross-border activity and power of MNCs?
How much capital they inject into foreign economies or Foreign Direct Investment?
How is an FDI defined as a long-term presence?
An investment of 10% or more in a foreign enterprise
Why do corporations make foreign direct investments?
(1) They seek access to new markets (2) Companies in nations with small domestic markets enter foreign markets to grow. (3) Some companies create efficiencies and lower their costs by moving production across borders
Where does FDI flow?
51% Developed Economies 43% Developing Economies 4% transitional economies and 2% less developed economies.
What is the OECD
The Organisation for Economic Co-operation and Development is a group of 33 nations that works to further economic growth by expanding trade. Voluntary guidelines
What is the Global Compact?
The single most conspicuous effort to promote MNC social responsibility and to harness FDI for economic development is not a code of conduct rather it advances them as an “aspirational” set of “shared values”
What three elements do communications on progress reports must have?
(1) top executive of company must endorse the Global Compact (2) company describes its actions (3) must measure results using appropriate yardsticks
What percent of CEOs believed that participation in the Global Compact helped their companies advance CSR performance?