Working Paper

Corporate Codes of Conduct: Is CommonEnvironmental Content Feasible?

Mar 21, 2005 | Carolyn Fischer, Ian W.H. Parry, Francisco Aguilar, Puja Jawahar


In a developing country context, a policy to promote adoption of common environmental content forcorporate codes of conduct (COCs) aspires to meaningful results on two fronts. First, adherence to COCprovisions should offer economic benefits that exceed the costs of compliance; i.e., companies mustreceive a price premium, market expansion, efficiency gains, subsidized technical assistance, or somecombination of these benefits in return for meeting the requirements. Second, compliance should producesignificant improvements in environmental outcomes; i.e., the code must impose real requirements, andmonitoring and enforcement must offer sufficient incentives to prevent evasion. With those goals in mind,we explore options for establishing common environmental content in voluntary COCs. Because thebenefits of a COC rest on its ability to signal information, we ground our analysis in a review ofexperiences with a broad range of voluntary (and involuntary) information-based programs: not onlyexisting corporate COCs, but also the International Organization for Standardization (ISO) family ofstandards, ecolabels, and information disclosure programs. We find some important tradeoffs betweenharmonization, applicability, feasibility, and efficacy.