Most multinational companies automatically oppose calls for enforceable standards of corporate social responsibility. Under growing public scrutiny of their behaviour, many western companies have adopted voluntary codes of business conduct. But for most, the notion of enforceable standards remains anathema. Recently, however, some western companies have privately questioned this posture. They have begun to recognise it might be in their interest to operate under enforceable standards that apply to all their competitors, rather than under voluntary ones that, for all practical purposes, apply only to prominent companies.
Public pressure, whether from activists or the press, has largely driven interest in corporate social responsibility. But public pressure tends to focus on highly visible companies, which is fine if a company's competitors are all large public companies. But if competition comes from less prominent businesses that can operate under the radar screen of public attention - the competitive playing field tilts. Well-known companies, worried about the harm that misconduct could cause their reputation, must assume the costs of meeting broadly recognised standards of corporate conduct. For example, a big company might have to accept paying higher wages associated with employing adults rather than children, or permitting trades unions to operate freely in its factories.
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