Companies sign international agreements as a new form of regulation

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In the absence of international governance, transnational enterprises are developing their own regulation tools, such as international framework agreements which are negotiated on a voluntary basis. These agreements may be one way of making CSR policy more credible, and of developing a framework for labour relations in countries where it is traditionally limited.

International Framework Agreements (IFA), negotiated between international trade union federations and businesses, have been developed over the last few years by companies who wish to regulate the globalization of their activities.

At the moment, few agreements – 55 in total – have been signed, nearly all by European companies. According to a study by French CSR research institute, ORSE (Observatoire sur les responsabilités sociétales des entreprises), some companies negotiate agreements primarily because they need to. (…). For others, they are the next step in a pre-existent initiative, and a way to showcase the human dimension of the company.

As Lafarge CEO Bertrand Collomb explains, the company agreement is part of Lafarge’s evolving CSR policy: “The group has changed over the last five years, and accepts that it be held accountable by its stakeholders. Signing a framework agreement formally established the company’s societal policy, as does our partnership with WWF (World Wide Fund for Nature). Personally, I prefer to use the term partnership over contractualisation. Excessive legal formalities kill labour relations. Furthermore, these should be adapted according to local contexts. Conditions vary widely between countries like the U.S., where certain trade unions hold companies at gunpoint in a manner of speaking, and China, where unions do not exist”.

Credibility

The adoption of international agreements by subsidiaries at country level was a key motivating factor for French car manufacturer Peugeot, known as PSA (Peugeot Société Anonyme). Peugeot signed such an agreement in March 2006 following 7 months of negotiations. The company’s four major commitments in the countries where it operates –human rights, developing best workplace practices, encouraging the involvement of subcontractors and moving social and economic development forward – were approved by 50 trade unions around the world with the support of the International Metalworkers’ Federation (IMF), which has 25 million members worldwide. “We had the agreement ratified in every country where we have more than 500 full-time employees. Validating the agreement was essential to securing the success of the project”, points out Jean-Luc Vergnes, PSA’s Human Resources Director. “In some countries, ratifying the agreement was the first time management and organised labour had come together”. Furthermore, international agreements contribute to the improvement of CSR policy says Mr. Vergnes: “These agreements are a source of credibility because they go much further than charters or codes of conduct. They oblige companies to carry out commitments; if they fail to meet them, unions are quick to remind them of it”, he added.

In fact, the multiplication of codes of conduct and voluntary charters, which are often of a purely declatory nature, has lead trade unions as well as international institutions to “question their relevance”, says ORSE. As a result, international agreements seem more credible, even if monitoring is still required.

Globalization: perfecting the imperfect

Businesses who have signed such agreements see this as positive progress in their societal policy, but what about unions? It is above all the contractual aspect of the agreements that interests them. “Contractualisation makes CSR credible. CSR currently tends to get lost along increasingly long production chains”, says Walter Cerfada of the European Trade Union Confederation. “We want to be able to trace products across the whole chain and to achieve this transparency, this type of agreement is essential”, he adds. But can international agreements really fill in the gaps that come with globalization? For Guy Rider, General Secretary of the International Trade Union Confederation, this theory has yet to be proven. “This type of collective agreement is no doubt a partial solution to the lack of an international legal framework, but we would prefer to see a regulatory framework rather than leave the companies to decide for themselves. The problem with CSR is that companies can define their responsibilities unilaterally”. Unions are also wary of the involvement of NGOs, which would draw attention away from labour issues. “By shifting collective bargaining to other issues, CSR may replace union advocacy in favour of other stakeholders”, notes Mr. Rider. The ability of trade unions to acquire an international status and come together as a real force of opposition is also remains uncertain. One of France’s biggest trade unions, the Confédération française démocratique du travail, is more confident. For the organisation’s Secretary General François Chérèque, “CSR marks a fundamental line in the development of businesses. It focuses not only on the issue of wealth distribution, but also on how this wealth is produced and its consequences”.

Les accords mondiaux d’entreprise : une nouvelle forme de régulation

Véronique SMÉE

Novethic Social Economy Newsletter – March 2007

Article reprinted with the kind permission of Novethic.

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