Global trade compliance and corporate social responsibility

Corporate social responsibility (CSR) is a response to the imbalances resulting from globalisation: imbalance between the rapid process of liberalisation and the time necessary to elaborate the international regulatory framework for these exchanges; imbalance between the advanced governance systems in industrialised countries and the lack of such governance and rule of law in developing countries as well as at an international level.

It must not be detrimental to public authorities' task of establishing binding rules, at a domestic and/or international level, for the respect of certain minimum standards, particularly for manufacturing businesses in the international trade process and supply chain.

Companies are aware that they can contribute to sustainable development by managing their operations in such a way as to enhance economic growth, increase competitiveness and ensuring at the same time environmental protection and promoting social rights in interaction with their stakeholders on a voluntary and regulatory basis.

In today's global economy, outsourcing business operations does not mean outsourcing responsibilities or risks. Leading companies understand that sustainable supply chain management is key to the integrity of their brand and seamlessness of their supply chain.

The coming Obama administration in the US will increase the significance of issues related to international labour and corporate social responsibility, as it emphasises labour rights, environment protection and fair and free trade. Such issues have become an even more important business priority for many companies in the international trade and supply chain process.

A successful CSR programme in international trade and supply chain which couples economic effectiveness and which has international development objectives needs to contain the following elements:

• Understanding impact: CSR initiatives will be judged on their social and environmental outcomes.

• Stakeholder engagement: Stakeholder dialogue is critical to ensure a company's future operations are developed in recognition of its impacts and reflect the concerns of its stakeholders.

• Balancing commercial and social considerations in supply chain and trade compliance management: For CSR initiatives to be taken seriously, social issues need to be considered at the heart of the company's corporate governance and management approach.

• Managing global supply chain relationships: All businesses are dependent on their supply chains to deliver products and services. Businesses in the international trade and supply chain need to establish transparent and long-term trading relations with their suppliers and consider social factors that lie beyond the normal visible process.

Businesses in the international trade and supply chain also need to be prepared, with service providers, for:

• Country and sector risk assessments: Assessing labour, environment laws and regulations, as well as actual practices, in order to assist clients with sourcing decisions.

• Codes of conduct and compliance: Developing effective strategies and implementation of codes of conduct and compliance programmes, taking into account issues such as international standards on basic labour rights; local labour laws and regulations; compliance with compensation and overtime requirements; and appropriate health and safety standards.

• Association and accreditation programmes: Participating in voluntary initiatives and labelling programmes to address labour and CSR concerns.

• Information and training: Obtaining timely information, analyses and late-breaking updates on international labour and CSR issues that affect international trade and business decisions.

• Problem-solving strategies: Understanding the interests and concerns of advocates raising labour and CSR issues to the public and solving such problems in order to minimise further risk to a firm's consumer brand image and reputation in the investment community.

• Government developments: Monitoring information on labour and trade developments in governments worldwide that may influence a firm's business strategy.

A CSR programme has the potential to improve international and trade and supply chain management and bring benefits to the business, but a lack of understanding and initiative will cause problems, break the supply chain and lead to a loss of reputation and ability to make profit for the global businesses.