Master thesis International and European Labour Law
The protection of workers involved in the Olympic supply chain
“
What measures should the IOC take to prevent and/or solve future violations of workersthroughout its supply chain?”
E.F. van der Grinten July 31st, 2015
Master thesis International and European Labour Law
The protection of the workers involved in the preparation of the
Olympic Games
“
What legal measures should the IOC take to effectively prevent and/or solve future violations of workers throughout its supply chain?”Name: E.F. van der Grinten Supervisor: Prof. dr. M.J. Keune
Abbreviations
CSR Corporate social responsibility
ETI Ethical Trading Initiative
FWF Fair Wear Foundation
FLA Fair Labor Association
GO Governmental Organisation
HRW Human Rights Watch
IFA International Framework Agreement
ILO International Labour Organisation
IO International Organisation
IOC International Olympic Committee
LBL Labour Behind the Label
LOCOG London Organising Committee of the Olympic Games and Paralympic Games
MNC Multinational Corporation
NGO Non-Governmental Organisation
NOC National Olympic Committee
OCOG Organising Committee of the Olympic Games and Paralympic Games
OM Olympic Movement
Table of contents
1. Introduction ... 5
1.1 Background... 5
1.2 Aim and research question... 6
1.3 Scope and method of research ... 9
1.3.1 Scope ... 9
1.3.2 Method of research ... 10
1.4 Structure of this research ... 10
2. To what extent can CSR effectively prevent and/or solve worker violations... 11
2.1 What is CSR?... 11
2.2 CSR’s potential to make a change ... 12
2.3 CSR’s potential to make a change from a legal perspective... 14
2.3.1 Legal status ... 14
2.3.2 Legitimacy ... 16
2.3.3 Implementation and Compliance mechanisms ... 17
2.4 Conclusion ... 18
3. IOC’s current approach towards the protection of its workers... Fout!Bladwijzer niet gedefinieerd. 3.1 The protection of workers in IOC’s fundamental principles of Olympism...Fout!Bladwijzer niet gedefinieerd. 3.2 The protection of workers as responsibility of the IOC ...Fout!Bladwijzer niet gedefinieerd. 3.3 The protection of workers as part of the bid process...Fout!Bladwijzer niet gedefinieerd. 3.4 Conclusion ...Fout!Bladwijzer niet gedefinieerd. 4. The approach the IOC should take towards the protection of workers in their supply chain... 27 4.1 Using an IFA to optimise legitimacy...Fout!Bladwijzer niet gedefinieerd. 4.1.1 Using existing standards ...Fout!Bladwijzer niet gedefinieerd. 4.1.2 Using IOCs’ a-symmetrical hierarchal structure ...Fout!Bladwijzer niet gedefinieerd. 4.1.3 Involving multiple stakeholders...Fout!Bladwijzer niet gedefinieerd. 4.2 Using the bid process for the implementation mechanism ...Fout!Bladwijzer niet gedefinieerd. 4.3 The compliance mechanism...Fout!Bladwijzer niet gedefinieerd. 4.4 Conclusion ...Fout!Bladwijzer niet gedefinieerd. 5. Conclusion ... Fout!Bladwijzer niet gedefinieerd.
6. Appendix overview... Fout!Bladwijzer niet gedefinieerd. Appendix I: ETI Base Code ...Fout!Bladwijzer niet gedefinieerd. Appendix II: Compliance mechanism ...Fout!Bladwijzer niet gedefinieerd.
1.
Introduction
This master thesis argues that the International Olympic Committee (IOC) should implement corporate social responsibility (CSR) policies to prevent worker violations in their supply chain. Firstly, this introduction elaborates on the problems that international organisations such as multinational corporations (MNCs) experience with worker violations in their supply chain, and on the IOC specifically. Secondly, it describes the research questions and explains why and how this thesis aims to contribute to the fierce soft law debate. Furthermore the scope (1.2), method (1.3) and the structure of this research (1.4) will be discussed.
1.1 Background
Multinational corporations (MNCs) regularly receive negative publicity due to unfair treatment of their workers. For example, Nike was discredited in the media for exploitation of workers in their Chinese factories.1 Failing to make sufficient amends resulted in more negative publicity such as the report ‘Still waiting for Nike to do it’.2 This example shows that once you are in the
spotlights, it’s hard to escape the public eye. Another MNC that is regularly criticised by the public for working conditions in their supply chain is Apple. The investigation that followed the suicide of seven workers producing iPads in a Foxconn factory showed that workers were underpaid and worked extreme hours.3 Other examples of MNCs who were discredited for
misbehaviour are Ikea, The body shop and Texaco.4
Criticism on labour practices is not limited to for-profit corporations. Various multinational non-profit organisations that execute labour-intensive projects face similar issues, with FIFA and the IOC as key examples. This thesis focuses on the IOC, which has been subject to similar criticism.5 In 2014, non-profit organisation ‘Human Rights Watch’ (HRW)
published a report, ‘Race to the bottom; exploitation of migrant workers ahead of Russia’s 2014 Winter Olympic Games in Sochi’, based on 66 in-depth interviews with migrant workers.6 The workers indicated that they did not receive full wages, were paid with delay or
not at all. Some workers declared that their identity documentation was withheld, they were not
1 http://www.theguardian.com/world/2001/may/20/burhanwazir.theobserver
2 T. Connor, Still waiting for Nike to do it; Nike’s labor practices in the three years since CEO Phil Knight’s speech to the National Press Club, Global Exchange, May 2001
3 http://www.theguardian.com/technology/2011/apr/30/apple-chinese-factory-workers-suicides-humiliation
4 Vanhamme and Grobben, ‘‘Too Good to be True!’’. The Effectiveness of CSR History in Countering Negative Publicity, Journal of Business Ethics 85, (2009): 273–283. and Amnesty International, The dark side of immigration; spotlight on Qatar’s construction sector ahead of the world cup, 2013
5 For example: https://www.amnesty.nl/sotsji-eduard-nazarski-1822014, consulted on July 21st, 2014
6 Human Rights Watch, Race to the bottom; exploitation of migrant workers ahead of Russia’s 2014 winter Olympic Games in Sochi, 2013, p.8
provided with employment contracts, terms and conditions were not met and they had to work excessive hours with very limited breaks.7
The misbehaviour towards workers in the IOC supply chain shows a recurring pattern. For example, the HRW report ‘One year of my blood; exploitation of construction workers in Beijing’ about the Games in 2008 mentions similar violations.8 Similarly, workers involved in
the constructions of the Games in Brazil 2016 took industrial action, demanding full pay of worked overtime and better health and safety conditions.9
Worker violations in the IOC supply chain are not limited to the construction sector. Labour behind the Label (LBL), an English non-profit organisation that aims to improve conditions and empower workers in the global garment industry10 investigated the production
of merchandise for the 2012 Olympics in London. They stated that the London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) did not live up to the standards they set for the Games in their model code of conduct. The LOCOG code promises workers throughout the whole supply chain a living wage but the paid wages are insufficient to enable a decent living. Furthermore, most of the workers do not receive any social security benefits and workers complain about the amount of (overtime) working hours.11
The labour violations described above are in stark contrast with the IOC’s fundamental principles as a non-profit organisation promoting values such as fairness, the preservation of human dignity and cooperation through sports. This discrepancy is even more poignant given the significant public scrutiny the IOC has faced over these issues, and the lack of action it appears to have taken today. This is why this thesis focuses on the IOC solving and preventing worker violations as described above.
1.2 Aim and research question
Worker violations in the IOC supply chain appear to happen on a structural base. Apparently, the current approach to workers’ rights of the IOC is not effective. Traditional legal approaches are failing due to limitations imposed by the international nature of the IOC’s activities, as further detailed in paragraph 2.3.1. This leads to the following research question of this master thesis:
7 Ibid., p.8
8 Human Rights Watch, One year of my blood; exploitation of migrant construction workers in Beijing, March 2008, p.1 9 http://thinkprogress.org/sports/2014/04/15/3426624/2500-brazilian-workers-vote-to-strike-at-rio-olympic-site/, consulted on
July 21st, 2014
10 http://www.labourbehindthelabel.org, consulted on July 15th , 2014
To what extent should the IOC implement CSR measures to effectively prevent and/or solve the violations of workers in its supply chain?
This research question is supported by three sub questions:
i) to what extent can CSR effectively prevent and/or solve worker violations;
ii) what is the current approach of the IOC towards the protection of workers in their supply chain; and
iii) how could the IOC implement CSR to improve the protection of workers in their supply chain?
This thesis aims to contribute to the literature on CSR effectiveness in protecting worker rights from a legal perspective by applying a soft law approach based on CSR experiences by MNCs to multinational non-profit organisations through a case study of the IOC.
The considerable amount of existing research regarding CSR indicates the relevance and high level of interest in this subject. However, to date this research mostly concerns MNCs. A fair question to ask is to what extent can the IOC be compared to an MNC and to what extent can CSR literature be (directly) applied to an organisation such as the IOC.
Firstly, the IOC differs from MNCs because it is a not-for-profit organisation. An MNC is a private (as opposed to public) legal entity that explores activities for profit on a multinational level. The IOC is an international non-governmental not-for-profit organisation, of unlimited duration, in the form of an association with the status of a legal person.12 Both entities share that they are private legal persons that operate on a multinational level but unlike MNC’s; the IOC does not have the objective of generating profit. In terms of CSR literature being applicable, this difference does not cause an obstacle. The objective of CSR policies is to incorporate broader social objectives into the goals of private organisations, and is not necessarily only applicable to for-profit organisations. Being a non-profit organisation actually makes CSR more relevant, because the IOC cannot legitimate its behaviour stating that they have the obligation to solely serve the shareholders interests.
Secondly, the IOC’s supply chain and actors in the bodies of its organisation are continuously changing, which raises the question whether applying a single set of CSR policies is even possible. The Olympic Games change location every other two years. Via a tender, the IOC delegates the organisation of the event to the national organising committees that are
called OCOGs (Organising Committee of the Olympic Games and Paralympic Games).13 When
granted the tender, the OCOG is in charge of the organisation of the event. They are the ones that seek out the suppliers but the IOC still keeps the final authority and supervises the OCOG. Within the procedural borders of the IOC and keeping themselves to the bid-contract, the OCOG has significant ownership of the organisation. Here again, the question can be asked whether this does affect the applicability of CSR literature that is usually based on MNC’s.
It is easy to see that the IOC’s supply chain changes often but, although being less obvious, the supply chain of MNCs does so too. Not all MNCs own the factories in which their products are made but just like in the case of the IOC, they do belong to their supply chain. Just like the IOC, they often work with suppliers and sub-contractors and is continuously optimised to minimise costs and maximise process efficiency.
In some ways, the IOC supply chain could even be seen as more stable than those of MNCs. Because it is less relevant for the IOC whether their merchandise or stadiums are being made in the cheapest way, the need for continuous optimisation is reduced, which can provide a degree of stability in the supply chain compared to MNCs.
Hence, the argument that CSR literature would not apply to the IOC due to its supply chain changing with every edition of the Games does not last. By focusing on the IOC as a multinational not-for-profit organisation, this thesis shows how CSR policies can be successfully applied beyond the corporate world that currently dominates the existing CSR research.14
Furthermore, this thesis contributes to the growing debate about the effectiveness of soft law. CSR schemes can largely be categorized as Transnational Private Regulation (TPR). Cafaggi defines TPRs as “regimes where private actors, ranging from trade associations, to NGOs from professional groups to technical standardization bodies are involved in setting standards, monitoring compliance, and enforcing rules”.15
TPRs lack legal competence due to the fact that they are not part of a legal order and effectuated by an authorized public organ.16 This turns them into soft law and hence non-binding as opposed to hard law (traditional national laws and treaties). Although TPRs are binding from a contractual perspective once the MNC has joined the regime, enlisting happens on voluntary bases. There is no higher public authority in charge of the enforcement but it is
13 However, it are actually the cities that take part in the tender but they are represented by the OCOG, specially put in place for the tender procedure of their country
14 Such as the FIFA for example
15 Cafaggi, Transnational Private Regulation and the Production of Global Public Goods and Private ‘Bads’, The European Journal of International Law Vol. 23 no. 3 (2012): p. 697
solely funded on the agreement between (equal) private parties. There are authors, such as Cafaggi, that support a different meaning of soft law. Cafaggi even argues that TPRs should not be categorized as soft law, since they are binding for their participants.17
This thesis adheres itself to the side that only states enjoy formal competence to adopt binding laws and regulations. The fact that an MNC is free to choose whether it wants to join a TPR regime is crucial for the categorization of soft law. Furthermore, this thesis argues that soft law solutions, such as TPRs and more specifically CSR schemes, do have the potential to be effective in international, for hard law impassable, areas.
Finally, this thesis builds on various case studies that take a legal perspective on corporate socially responsible behaviour and CSR policies concerning the protection of workers.18 By explicitly focusing on the international labour law aspects of CSR policies, this thesis contributes to a better understanding of the legal requirements that are necessary for effective implementation of these policies.
1.3 Scope and method of research
To ensure that the research question is sufficiently specified, a demarcation will be given in 1.3.1. The research method also requires some further explanation, which can be found in 1.3.2.
1.3.1 Scope
Some elements of the main research question require further clarification. Firstly, it is necessary to define IOC’s supply chain to determine which workers fall within the scope of this master thesis. IOC’s supply chain is somewhat peculiar due to the fact the IOC is not making products and the Games shift location every other two years.
As the final authority of the Games, the IOC is situated at the top of the supply chain. The OCOG is situated at the second level of the supply chain, followed by the contractors and subcontractors and the workers in the factories producing merchandise or the people working at the construction sites. Hence, this thesis includes all workers hired by (sub)contractor regardless of the nature of their jobs.
This thesis solely focuses on the responsibility towards the workers of the IOC. A valid argument can be made about state liability in cases they have joined treaties about protection
17 Cafaggi, New foundations of Transnational Private Regulation, Journal of Law and society Vol. 38, No. 1, (2011): p. 40-41 18 For example the following research of Keune and ter Haar: One step forward or more window-dressing? A legal analysis of
recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.23 - 25
and minimum standards for workers in international cases but this situation differs per country. By focussing on the IOC, these differences can be aligned by the CSR solution suggested in this thesis.
Secondly, the research question mentions preventive as well as remedial measures. This thesis makes a division between preventive measures, for example codes that identify minimum labour standards, and secondly implementation and compliance mechanisms that serve to settle disputes between workers and their contractors19 about how to act when violations occurs.20
Both these type of measures fall within the scope of the research question.
1.3.2 Method of research
As discussed under 1.2, this thesis aims to contribute to the literature on CSR effectiveness in protecting worker rights from a legal perspective. As a research method, a qualitative, legal and practical case study supports this aim very well, as it allows for in-depth analysis of qualitative data.21
The case study is based on qualitative data since the information is gathered from literature, documents and websites instead of using a database and figures.22 Furthermore it is a legal case study because it explores to what extent “soft law” measures such as CSR policies can complement formal legal frameworks for worker rights protection. Lastly, the research is practical, as opposed to theoretical because it focuses on the existing problems of an actual international organisation.23
1.4 Structure of this research
The main question of this thesis is supported by several sub questions, which will each be discussed in their own chapters. Chapter two examines to what extent CSR measures can effectively prevent and/or solve worker violations. The third chapter analyses the IOC’s current approach towards the protection of workers, and chapter four explains what CSR measures the IOC should take towards the protection of the workers in their supply chain. Chapter five presents the conclusion(s).
19 This may be a subcontractor, the hosting state or maybe even the IOC itself.
20 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.23 – 25
21 Verschuren & Doorewaard, Het ontwerpen van een onderzoek, Den Haag: Lemma 2007, p.184. 22 Ibid.
2.
To what extent can CSR effectively prevent and/or solve
worker violations
This chapter discusses the reasons why MNCs implement CSR schemes since traditional legal approaches such as national laws and international treaties fail to adequately address the worker violations in the IOC supply chain. Questions that will be answered are: what is CSR (2.1), what is the effect of CSR schemes on the social problems of MNCs (2.2) and lastly is it an effective tool seen from a legal point of view (2.3). The wider debate in current literature about the effectiveness of soft law will be addressed in section 2.3.1.
2.1 What is CSR?
CSR sprouted from the idea that corporations should not only serve the interests of their shareholder but should also pay some respect to their other stakeholders.24 Over the years (the
understanding of) CSR has changed which led to a wide variety of CSR definitions.25
According to the European Commission, CSR is “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with stakeholders on a voluntary basis”. In the EC’s definition, being socially responsible is not limited to merely complying with legal expectations, but also includes socially beneficial actions such as investing ‘more’ into human capital, protecting the environment and maintaining good relations with other stakeholders.26 The International Labour Organisation
(ILO) also adopted a CSR definition, stating that it is “a voluntary, enterprise-driven initiative [that] refers to activities that are considered to exceed compliance with the law".27
By bringing these two definitions together, four characteristics can be distinguished.28
Firstly, CSR has a voluntary nature. This implies that CSR schemes reach beyond the legal obligations of corporations. In the social area this entails for example vocational training or striving for better working conditions.29 Furthermore, CSR is seen an integral part of company
24 I. Bantekas, Corporate social responsibility in international law, Boston University International Law Journal, Fall, 2004, Vol.22(2), p.311 & Murphy & Schlegelmilch, Corporate social responsibility and corporate social irresponsibility: introduction to a special topic section, Journal of Business Research, nr 66 (2013) p. 1807 - 1813
25 Ibid., p.1808
26 European Commission, The Green paper: Creating an European framework for corporate social responsibility, 2001, p.4 27 In Focus Initiative on Corporate Social Responsibility: Strategic Orientations (GB.295/MNE/2/1). See:
http://www.ilo.org/public/english/standards/relm/gb/docs/gb295/pdf/mne-2-1.pdf.
28 Sustainable development through the global compact, International instruments and corporate social responsibility, 2007 p.1 29 European Commission, The Green paper: Creating an European framework for corporate social responsibility, 2001, p.6
management, CSR actions should be systematic and have a clear link with the concept of sustainable development (for example to improve fair-trading within the supply chain).
Different kind of policy structures can be used for the CSR schemes. This can either be a unilateral code of conduct adopted by the management or an agreement base between MNCs and international trade union federations that defines labour standards for the workers of the company (International Framework Agreement; IFA).30Another option would be to join forces
with other MNCs and set up a certification scheme or external auditing by an NGO specialised in worker protection.31 Except for the unilateral code form, CSR can be categorized as a TPR.
A CSR scheme can be focused on just one or on multiple objectives. LOCOG’s sustainability program is a case in point for serving a wide variety of objectives. LOCOG demanded that for every product used, five key questions should be answered first. The raised questions were i) where does it come from, ii) who made it iii) what is it made of iv) what is it wrapped in v) what will happen to it after the Games. This approach led to a spread focus on sustainability, pollution, ethical trading and working conditions.32 An example of a CSR
scheme that only focuses on one topic is the accord on fire and building safety in Bangladesh that was adopted three weeks after the collapse of the Rana Plaza, a garment-factory.33
The aforementioned examples of CSR have clear objectives and aims. The next section discusses whether CSR actually has the potential to meet the stated goals change the (outcome of) corporate behaviour.
2.2 CSR’s potential to make a change
There is an on-going discussion about CSR’s true potential to contribute to sustainability. Examples can be found of both successful and unsuccessful CSR schemes. A successful CSR program does not only show the right manifest figures but should also include an improved social awareness of the organisation beneath the surface. Futile adjustments of companies, such as initiatives with limited scope or time frame might seem to work as a decent marketing tool but mean less to the well-being of its workers.34 Such schemes are not examples of improved
awareness of social responsibility.
30Sobczak, A. (2007) Legal dimensions of international framework agreements in the field of corporate responsibility, Industrial relations, p 466.
31 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.8 32 LOCOG. LOCOG sustainability sourcing code, third edition, July 2011, p.3-4
33 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.23 - 25
34 Ibid., p.23-25
Auteur 31-7-15 22:11
An example of such a CSR initiative is the scheme adopted by tobacco producer Philip Morris. It was discovered that Philip Morris used CSR to keep legislators from adopting binding measures concerning the tobacco industry, which turned the CSR scheme into a bargaining tool.35 This example is quite extreme compared to the most frequent criticism that
companies are not living up to their CSR promises by implementing no or ineffective schemes, as happened with the sustainability program of the LOCOG.36
There are also success stories. Like Nike and Apple, Unilever was criticised on a recurring basis for irresponsible and unsocial corporate behaviour.37 To end the negative
publicity and increase competitiveness and growth, Unilever adopted an extensive CSR scheme called ‘The sustainable living plan’.38 The plan had three goals: i) help one billion people
improve their health and well-being, ii) source 100 per cent of its products’ raw materials sustainably and iii) enhance the livelihoods of people across the value chain.39 News reports
show that the Unilever’s CSR initiative was quite successful. Results vary from sourcing over 1/3 of its raw materials sustainably, reducing waste and CO2 emission to encouraging economic
prosperity in developing countries/markets.40
Another example of a far-reaching CSR scheme is Coca Cola’s program. After receiving negative publicity about caused damage in India due to their water management, they implemented a plan with a strong accent on making reparations and prevention of further damage.41 Coca Cola reported in 2011 that they managed to significantly reduce water
consumption as well as energy consumption. Furthermore, they paid attention to vocational training and improved the safety conditions on their work sites in Turkey and Jordan.42
The cases of Unilever and Coca Cola show that, if implemented correctly, CSR is able to live up to its expectations. However, the examples mentioned in this section only show that CSR has the potential to be successful – it can also work out the other way around and function solely as a marketing tool. Therefore, the next section will explain which legal factors can make a difference in the success rate of a CSR program.
35 Fooks, Gilmore, Collin, Holden and Lee, The Limits of Corporate Social Responsibility: Techniques of Neutralization, Stakeholder Management and Political CSR, Journal Of Business Ethics, Vol.112(2), (2013): p.284
36 Labour behind the Label, Toying with workers’ rights, January 2012, p.5 (www.play-fair.org)
37 http://www.corporatewatch.org.uk/company-profiles/unilever-corporate-crimes, consulted on June 27th, 2105 38 http://www.unilever.com/sustainable-living/, consulted on June 27th, 2015
39 http://www.triplepundit.com/2013/09/sustainability-growing-unilevers-brand-equity-profits/, consulted on March 23th, 2015 40 http://www.csrwire.com/members/16348-Unilever, consulted on March 23th, 2015
41 Four case studies on corporate social responsibility: Do conflicts affect a company’s corporate social responsibility policy? p.23
42 http://assets.coca-colacompany.com/51/be/fa1c9a664de5bb38e0304d6ce2af/CCI_CSR_2011.pdf, consulted on June 27th, 2015
2.3 CSR’s potential to make a change from a legal perspective
This thesis shall analyse the effectiveness of CSR policies along the four legal dimensions set by Keune & Ter Haar.43 The dimensions will be discussed here one by one, starting at the legal
status dimension, moving on to legitimacy and lastly implementation and compliance mechanisms.
2.3.1 Legal status
The main characteristic of soft law is that it is not generally binding and actors are not obliged to follow this regime. Hence it seems that the effectiveness of a soft law tool would be very low. CSR finds itself in the spectrum of TPR.44 Since joining a TPR regime occurs on a
voluntary base, they are regarded as soft law.45 This means that formal legal status for CSR is
out of reach. This section discusses the differences of hard and soft law and builds forth on the growing debate about its effectiveness and credibility.
The success of any law or regulation is influenced by its legal status/formal competence. Formal competence enhances the ability to adopt legally binding regulations and laws.46 Only states have formal competence. When a state adopts a formal law, the inhabitants of the country are automatically obliged to respect that law. It is not necessary, as opposed to international laws, for every civilian to ratify the law.47 Hence, regarding legal status, national
laws are the most powerful legal norms.
Besides ‘bindingness’, enforceability also determines the effectiveness of law. For example, international treaties do have formal competence but due to sovereignty of states enforceability can be problem. Even when an obvious breach of international law occurs, it might be hard to effectively sanction that behaviour because international intervention would cause a breach of the sovereignty of that state.48
Opposed to national laws and international treaties, which are categorized as hard law, there is soft law. Because CSR is adopted by private actors, instead of a legislator with formal competence it should be categorized as a soft law measure. It only binds those actors who have voluntary committed to the regime. Hence it is non-binding.
43 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.23 - 25
44 Ibid., p.9
45 Section 1.2 already touched upon the discussion about the bindingness of TPRs 46 Ibid., p.10-11
47 In a certain, civilians have given their consent by voting for the parliament or the president for example. 48 E.g. the large-scale human rights abuses committed by Assad in Syria (http://www.genocidewatch.org/syria.html)
However, the success stories of CSR initiatives show that soft law measures can be very effective. This means that the division between hard and soft law regarding the legal status is not always a critical determinant of effectiveness of regulations.
For example, the ability to overcome legal gaps between jurisdictions, which is of crucial importance in the supply chain of MNCs, is a unique benefit to soft law as state borders or sovereignty do not hamper soft law. As such, soft law can fill legal gaps that are impassable for hard law.49 Transnational supply chains lack legal uniformity because they are inherently
governed by multiple national legal systems. Often, this means that the poorer people living in countries with high unemployment are forced to choose between either accepting those jobs that do not offer a living wage or decent working conditions, or be unemployed and earn nothing. These people in their precarious situations are in need of legal protection but have become a victim of this regulatory gap, since national laws lack transnational scope and international laws with strong enforcement mechanisms are nearly impossible to adopt due to lack of consent of the sovereign states.
This dilemma has led to the current situation, in which private actors try to regulate themselves and the transnational corporate environment. Passing laws with a transnational reach is impossible for national legislators without the consent of all sovereign actors involved, but in the shape of soft law, this kind of situations can be detained. Although CSR measures may at first sight seem to lack effectiveness and credibility due to their soft law status, literature and practice have shown that this nature can also be perceived to be at its advantage.50
Soft law, and more specifically CSR measures can be seen as a mirror image of international hard law. Whereas international law is often binding in nature but lacks enforceability, soft law is not generally binding but is enforceable through contractual arrangements between parties. When MNCs commit themselves to CSR programs on a contractual base with a third party, the door for effective enforcement mechanisms has opened. In international law, this consent is also required but collecting damages still requires the cooperation of the actor-in-breach. If that actor refuses to cooperate, there is not much to be done about it. Just like Cafaggi stated in his article; soft law may seem week due to the lack of binding power, but the signatories are bound once signed up so repercussions can be made when violations occur even without the cooperation of that actor.51
49 Cafaggi, New foundations of Transnational Private Regulation, Journal of Law and society Vol. 38, No. 1, (2011): p.23 50 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment
industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.11 51 Cafaggi, New foundations of Transnational Private Regulation, Journal of Law and society Vol. 38, No. 1, (2011): p. 40-41
Furthermore, an advantage of CSR is that the fact that actors join voluntary makes them vulnerable for reputation damage if they do not live up to their own promises so it enforces the lock-in.
2.3.2 Legitimacy
Legitimacy, which indicates the level of acceptance by those affected by the instrument/policy can be established in three ways.52 The first way is to build on existing norms and standards instead of single-handedly choosing norms for a CSR scheme. Existing norms can be deducted from treaties of intergovernmental organisations (IGO’s such as ILO OECD or the UN) or from non-governmental organisation (NGO) guidelines or individual codes of conduct.53 There are
many examples of MNC’s manifesting legitimacy this way. For example, the LOCOG created (part of its) legitimacy this way by using the Ethical Trading Initiative (ETI) Base Code when ‘sourcing services which involve labour’ which is based on ILO key conventions.54
The argumentation about gaining legitimacy by using existing standards could, in theory, also be applicable to existing external control mechanisms. Opponents believe that these external regulation mechanisms often only lead to a seemingly false feeling of control and safety due to implementation challenges. O’Rourke argues that this criticism could be overcome but it is key to increase transparency, improve technical capacities, and renew mechanisms of accountability for them to be effective.55 Challenges to implementation, which
will have repercussions on legitimacy, will be discussed in 2.3.3.
Secondly, legitimacy can be established by using the leverage gained from the a-symmetrical hierarchical structure of the organisation.56 The underlying assumption is that such
structures imply centralized decision making as opposed to de-centralized decision making in non-hierarchical networks. Decisions made by a central power have a top-down character instead of a ‘working together as equals’ and therefor establish legitimacy because they come from a ‘higher’ power.57
Finally, when adopting a CSR instrument, it is advisable to include multiple stakeholders. This creates ‘an inclusive governance structure’.58 Here, the lack of hierarchy is the key element because equality and voluntarism imply that voices from all different sorts of stakeholders are heard and weighed in the same manner. An example that shows that this way
52 Ibid., p.11-14 53 Ibid.
54 LOCOG sustainable sourcing code p.4 and 15
55 O’Rourke, Outsourcing Regulation: Analyzing Nongovernmental Systems of Labor Standards and Monitoring, The Policy Studies Journal, Vol. 31, No. 1, (2003): p.1
56 Ibid 39., p.12 57 Ibid 39., p.12 58 Ibid 39., p.13
of establishing legitimacy actually occurs in practice is (again) the ETI used by the LOCOG has been set up by a very broad and mixed collaboration of IGO’s and NGO’s and trade unions networks.59
In theory, combining the second and third way of establishing legitimacy may seem to contradict each other since the second way suggest using authority of central decision making while the third way proposes to cooperate with as many stakeholders as possible. This contradiction, however, is merely paradoxical because the fact that negotiating and designing the CSR scheme with multiple stakeholders, does not rule out a strong confirmative attitude of the management towards the adoption of such a measure, once implemented. While the scheme is developed by multiple actors, it is the management who finally decides to adopt the scheme and enforces implementation.
2.3.3 Implementation and compliance mechanisms
In order to enforce their CSR policy MNCs need to include an implementation and compliance mechanism. The effectiveness of such implementation and compliance mechanisms depends on multiple factors such as capability and suitability.60 Capability concerns the extent to which MNCs have the means to enforce their CSR policy. This can be related to financial means but also to characteristics of the supply chain such as have an indifferent of a hybrid supply chain.61
Suitability refers to how well the monitoring strategy fits the organisation. The past learns that inflexible mechanisms (often) lead to non-compliance because (sub)contractors are unable to meet the fixed standards.62 This is why current mechanisms are characterized by ‘hybrid
structures’ containing both flexible and fixed elements.63
Using LOCOG again as example, this seems to be the critical dimension where they went wrong. Although they adopted what seemed to be a decent implementation and coordination mechanism, the workers did not raise their voices when being (officially) audited about their working conditions. Later, when LBL paid a visit to the Chinese factories, the workers spoke up and reality did match the easing results from the official audit.64 Taking in regard all the efforts that the LOCOG took to assure sustainable sourcing, this is very unfortunate.
59 LOCOG sustainable sourcing code p.15
60 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.14 61 See section 1.3.2 of this thesis for additional explanation on indifferent/hybrid supply chains.
62 Ibid., p.14 63 Ibid., p.15
Compliance mechanisms usually not only focus on auditing but also on improving conditions throughout the supply chain and dispute settlement in case of any violations. Non-compliance should not immediately be regarded as disobedience because research shows that there is a strong link with the capability of (sub)contractors to comply with the CSR regime.65
This is why Locke is a strong proponent of the so-called labor-friendly supply chain practises that are focussed on collaboration instead of punishment by vines or exclusion from the supply chain.66
2.4 Conclusion
This chapter started by explaining what CSR is. Secondly this chapter discussed the on-going discussion that is questioning CSR’s potential to contribute to better working conditions. It was shown that although there exist cases that prove that CSR is used as window-dressing and solely as a marketing tool, there are also examples proving the opposite. Furthermore this chapter showed that the chances on success of a CSR-scheme depend on their legal status, the legitimacy and the quality of their coordination and implementation systems, using LOCOG’s sustainable sourcing code as a leading example. The next chapter dives into the current approach that the IOC takes towards the protection of workers. The main question that will be answered is whether there already exists an obligation for the IOC to take action on the mistreatment of workers in their supply chain.
65 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.14 66 Locke, R., The promise and limits of private power promoting labor standards in a global economy, Cambridge U. Press,
3.
IOC’s current approach towards the protection of its workers
This chapter describes the IOC’s current approach towards the protection of its workers. It analyses to what extent the protection of workers’ rights is represented in (i) the IOC’s fundamental principles, (ii) the IOC’s roles and responsibilities in ensuring the regular organisation of the Olympic games as defined by the Olympic Charter, and (iii) the protection of workers as an element in the bid process. This chapter pays attention to the bid process, because this is IOC’s most powerful tool to impose a variety of regulatory and organisational demands on hosting cities, including requirements to safeguard employment standards and working conditions.
3.1 The protection of workers in IOC’s fundamental principles of Olympism
The regulatory base of the IOC is codified in the Olympic Charter (the Charter). The Charter outlines seven fundamental principles of Olympism (the Principles). The Principles contain (inter alia) a definition of Olympism and a description of the Olympic Movement (the OM). Olympism is “a philosophy of life [red], seeking to create a way of life based on the joy of effort, the educational value of good example, social responsibility and respect for universal fundamental ethical principles. The goal of Olympism is to place sport at the service of the harmonious development of humankind, with a view to promoting a peaceful society concerned with the preservation of human dignity”.67 Furthermore the principles obligate all member of
the OM to comply with the Charter and recognize the IOC”.68
The protection of workers is not explicitly included in the Principles. Whether this also means that the protection of workers is not subject to the Principles, remains unclear due to the vagueness of the principles. The scope of the Principles is undefined, for example there is no further explanation of what the IOC considers to be social responsibility or human dignity. Furthermore the participants of the OM to whom the principles are directed are, save the IOC, unspecified. Besides the IOC, the Charter mentions that the OM includes ‘all individuals and entities who are inspired by the values of Olympism also belong to the Olympic movement’.69
Taking in regard that these principles are fundamental in nature the only fair assumptions seems that the scope of the principles is broad and workers can be conceived as being part of the OM.
67 IOC, Olympic Charter 2013, fundamental principles nr.2 68 Ibid., nr.7
The fundamental principles are further specified in the Code of Ethics. This document mainly focuses on sports. Topics that can be found in the Code concern dignity (e.g. the prohibition of discrimination of participants), integrity (no-gift policy), governance and resources, candidatures, relations with states, confidentiality and implementation.70
Unfortunately the code does not seem to offer the workers anything in their defence when violations occur.
This paragraph showed that workers are part of the OM and are entitled to protection. The fundamental principles of the Charter do not contain any regulations/provisions regarding the protection of workers. Due to the broad and general scope and definitions of the principles, it can be argued that workers form a part of the OM. Exclusion of workers would go against the spirit reflected in the principles. By not acting (adequately) against the worker violations, the IOC does not set a good example of social responsibility neither does it contribute to the preservation of human dignity. The next section discusses the role and responsibilities of the IOC itself and analysed whether the protection of workers can be deemed to come under their responsibility.
3.2 The protection of workers as responsibility of the IOC
The IOC is the final authority of the OM and one of the main actors responsible for organising the Games.71 This also enshrines in its mission: ‘promoting [red] Olympism throughout the
world and leading [red] the Olympic Movement’.72 The website of the IOC provides a detailed list of the roles of the IOC. What stands out is that almost all roles are solely focused on sports.73 Only three roles show a sign of a broader perspective and a thin connection to the
broader virtues of Olympism:74
• To cooperate with the competent public or private organisations and authorities in the endeavour to place sport at the service of humanity and thereby to promote peace;
• To encourage and support a responsible concern for environmental issues, to promote sustainable development in sport and to require that the Olympic Games are held accordingly;
• To promote a positive legacy from the Olympic Games to the host cities and host countries;
The second bullet mentions ‘sustainable development’. This term aims at the current CSR scheme of the IOC, the ‘Sustainability through sport’ program. The project started in 1992 and
70 IOC, Code of Ethics 2013, article A-G, p.12-16
71 The other important player is the OCOG, http://www.olympic.org/about-ioc-institution, consulted on December 8th, 2014 72 IOC, Olympic Charter 2013, article 2,
73 http://www.olympic.org/about-ioc-institution, consulted on July 31th, 2015 74 Ibid.
covers almost every CSR topic one can think of, including the United Nations Millenium Development Goals. Hosting cities are also obliged to adopt a sustainability program to serve the goals set out in the program. To provide an idea of the scope of the IOC’s CSR activities, the ‘eight sustainable millennium goals’ are listed below:
• Eradicate extreme hunger and poverty • Achieve universal primary education • Promote gender equality and empower women • Reduce child mortality
• Improve maternal health
• Combat HIV/Aids, malaria and other diseases
• Achieve environmental sustainability (e.g. safe drinking water and basic sanitation) • Develop a global partnership for development75
It would be unfair to accuse the IOC of corporate social misbehaviour but when it concerns workers well-being in their supply chain, the IOC shows a different face. The attitude of the IOC towards the protection of workers’ rights became clear during the Olympic Congress in Copenhagen in 2009.76 It was the first time that public was allowed to add
contributions. During this Congress, HRW drew attention to the lack of implementation and enforcement measures regarding IOCs’ obligation to preserve human dignity as follows from the second fundamental principles.77 Regarding labour rights, they submitted the following proposal:
• “Establishment of an independent commission to investigate and report on labour-related abuses relating to Olympics venues;
• Full disclosure of all labour disputes, workplace injuries and deaths on construction sites for Olympic venues”.78
On their website, HRW further explains that the independent committee should have expertise to monitor host countries' human rights before, during and after the Olympics.79
In 2011, the IOC did send a follow-up letter as a reaction on all the submitted recommendations. Regarding the HRW proposal, they stated that ‘the IOC will intervene at the OCOG level in the occurrence of serious [red] abuse of migrant workers at Olympic construction sites and child labour. Official sources will be given the possibility to bring a
75 IOC, Sustainability through sport report: Implementing the Olympic Movement’s agenda 21, 2012 p.51
76 Olympic Charter 2013, art. 4. N.b. The Olympic Congress is not a regular event. E.g. previous editions of the Congress were held in 1994 and 1981.
77 XII Olympic congress – Contributions, p.612-614,
(http://www.olympic.org/Documents/Congress_2009/XIII%20OLYMPIC%20CONGRESS%20%20CONTRIBUTIONS.pdf) 78 Ibid., p.613
79 http://www.hrw.org/en/news/2009/02/23/human-rights-watch-submission-2009-olympic-congress, consulted on December 8th, 2014
legitimate complaint through a system that has yet to be established’. Furthermore, the IOC writes that it shall not intervene in non-sport human rights issues.80
IOC’s response is disappointing for multiple reasons. Firstly, the IOC speaks about a(n) complaint/enforcement system but does not clarify whether an independent commission will deal with the complaints. Furthermore they state that only ‘legitimate’ complaints are eligible to be run through the system. The definition of what is to be regarded as a legitimate complaint remains unclear. A third remark can be made about the group that is entitled to raise such a legitimate complaint. According to the follow-up, this can only be done by an official source but the follow-up does not clarify if migrant workers are official sources. Lastly, the commitment to intervene does not include the entire supply chain but only encompasses migrant workers and not throughout the entire supply chain. This means that, for example workers in factories in China producing merchandise are left out.
The preparations of the Sochi Games, held in 2012, were rife with allegations of worker violations. The interviews with workers held by HRW do not show a change of attitude and approach of the IOC when being confronted with these kinds of problems. This leaves room to question the value of IOCs proclaimed commitment to intervene in cases of serious abuse. The current approach of the IOC towards worker violations is questionable. The IOC has not (yet) managed to develop a system or policy that is adequate in preventing en resolving the violations of workers’ rights. This paragraph pointed out that there are not many legal leads when it comes to the protection of workers besides the social responsibility and the preservation of human dignity. The next paragraph takes a look at the bid process to see whether social responsibility can be found on the menu in the bid process.
3.3 The protection of workers as part of the bid process
Seven years before the Games, the IOC selects the host city. In short, the bid process works as follows. The bid process consist of three phases.81 During the invitation phase (the first phase),
the IOC invites the national Olympic commissions to express their interest in organising the Olympic Games. The ‘applicant city phase’, starts when a city is allowed in the bid process. All applicants are required to submit their ‘applicant city file’ based on IOC’s questionnaire. Out of the applicants, the IOC selects the candidates for the third phase, which is called the candidate city phase. Here, the candidates must submit their candidate city file; a file that informs the
80 IOC, Copenhagen Follow-up Recommendations, p.33 81 IOC, Olympic Charter 2013, article 33
IOC of the overall vision and plan of the candidate. During the there upon following briefing session, there is interaction between the IOC and the candidates where the IOC is allowed to pose questions about the candidate city files. The final selection of host city is being announced during the IOC session.
Figure 1 The IOC bid process
The questionnaires submitted by the host city are the bases for the hosting contract between the IOC and the final host city.82 This is the reason why HRW recommended that the
IOC should use the bid process/questionnaires to demand compliance for a minimum level of worker rights and protection. IOC’s reaction on this recommendation shows that they also see the possibilities of such an approach:
The leverage that the IOC has towards the OCOGs should be determined. This might lead to amendments to the Host City Contract and documentation for Bid Cities.83
The candidate questionnaire covers a broad range of different topics such as environment and meteorology, accommodation, safety and security, technology and energy and sustainability.84
However, ensuring decent working conditions was not included in any of these topics.
82 http://www.olympic.org/content/the-ioc/bidding-for-the-games/all-about-the-bid-process/, consulted on December 12th, 2014 83 ibid.
3.4 Why the IOC should change its current approach
Before a CSR solution can be discussed, attention must be paid to the willingness of the IOC to cooperate to such a scheme. One should realise that when things go wrong in the supply chain of the MNC of the IOC, this does not necessarily mean that they have bad intentions. The conclusion to be drawn in such situations is that the current approach of all actors and regulations involved is ineffective. For-profit organisations shall always be looking for cost redemptions and therefore prefer to roll out their supply chain where labour standards and minimum wages are low.85 It happens that national laws offer insufficient protection but another possibility is that national laws are not effectively enforced.86 Naming and shaming should only occur when actors involved are ignorant and not trying to mend the situation.
In the case of the IOC, the problems in its supply chain appear to be multi-faceted. Firstly, host countries often have insufficient effective worker protections embedded in their national legal systems. The worker violations during the preparation for the 2014 Games in Sochi, the 2022 World Cup in Qatar show that local authorities fail to address observed violations of workers rights, either due to lack of sufficient local regulations (e.g. immigrants excluded from labour regulation in Qatar) or lack of enforcement.
Secondly, the IOC seems to have a hesitant attitude towards granting the workers in their supply chain adequate conditions and protection. Seeking adequate protection for the workers organising the IOC’s events is not a priority for the organisation, which is why the criticism keeps on going. They probably ask themselves ‘what’s in it for us’, other than spending money and efforts on a problem we might as well ignore.
Despite the multidimensional character of the issues in the IOC’s supply chain, the IOC should be leading the efforts to improve conditions. Firstly, it is in their self-interest. As the past has shown, MNCs are put under pressure when they accept suppliers that do not advocate decent working conditions in their supply chain. Reputational damage can be very costly for MNCs who are largely depending on their brand because consumers have the option to vote with their feet and buy their products from the competition.
A similar pattern occurs with the IOC, which is suffering harsh critique already, damaging its reputation and organisational standing.87 In 1998 the ILO and the IOC have
agreed to set up a joint commission to ‘develop a program of mutual cooperation’ to ‘promote
85 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.6 86 Ibid.
87 E.g. HRW wrote multiple reports on the mistreatment of workers in the IOC supply chain but so has the labour behind the label association and many others.
[red] social justice and human dignity worldwide through their respective fields of activity’.88
All this scrutiny regarding worker mistreatment leads to reputational damage. While the IOC has a monopolized position with respect to the organization of the Games, there is still danger in this damage.
As a specific example, during the Games in Sochi there was a fuss about Russia prohibiting gays to be open about their sexual orientation.89 This caused such outrage that some
countries threatened to boycott the Games.90 The consequences of a boycott by a certain
country or even a group of high regarded athletes are very serious for the Games because the whole event concerns a competition between the globes athletic finest. Not to mention that the IOC also relies on the incomes of the ticket sales by spectators.
By effectively improving working conditions, the IOC would improve its reputation. Following the results of a study about the upsides of a working CSR scheme, IOC should expect (inter alia) increased productivity and quality along their supply chain, improved risk management, improved accessibility to credits and increased customer loyalty.91 Furthermore,
they would be less criticised by human rights whistle-blowers, which means less negative publicity.
A second reason why the IOC should lead efforts to improve worker conditions in host countries is the IOC’s unique position to exercise influence. Host countries often see organising major international sports events such as the Olympics as an opportunity to promote their country globally. Given the prestigious nature of the Games, host countries are willing to make compromises in order to win the bid. Examples include alterations of national law to accommodate commercial interests, favourable tax treatment of tournament revenues and large-scale infrastructure investments that are often of limited economic use after the event. By making sustainable working conditions a key selection criteria for host countries, the IOC can likely make a large difference in the wider labour conditions of a host country, while simultaneously protecting workers in their own supply chain.
88 http://www.ilo.org/public/english/bureau/leg/agreements/ioc.htm, consulted on July 30th, 2015 89 http://www.bbc.com/news/world-europe-26043872, consulted on July 31th, 2015
90 http://www.theguardian.com/world/2013/dec/08/german-president-boycotts-sochi-winter-olympics, consulted on July 31th, 2015
91 Long working hours lead to stress which makes workers more susceptible for illness and making mistaken (Spurgeon, Malcolm Harrington and Cooper, Health and safety problems associated with long working hours: a review of the current position, Occupational and Environmental Medicine, no. 54 (1997): p.368-372) & Multi, International instruments and corporate social responsibility: A booklet to accompany training the labour dimension of CSR: from principles to practice, 2007
3.5 Conclusion
This chapter described the approach of the Olympic Movement towards the violations of workers’ rights. Central questions were whether the Fundamental principles of Olympism included workers as part of the OM and secondly, if they are entitled to protection based on these principles. The first question could be answered affirmative because the unspecified definition of participants of the OM. The second question was also answered affirmative due to the noble intentions of social responsibility and preservation of human dignity that the principles reflect.
The second section of this chapter showed that the protection of workers could be deemed to be a responsibility of the IOC. However, until now the IOC did not take actions, moreover, they showed a reluctant attitude towards taking positive action in the matter. The third section showed that, although the bid process would be the appropriate tool and occasion, it does not require hosting cities to include a workers policy/strategy in their bid proposal.
Hence the conclusion of this chapter is that the IOC fails to fulfil its obligation to prevent worker violations due to the complete absence of a workers/CSR policy. The next chapter rolls out a CSR scheme, fit for the IOC by bringing together this analysis of IOC’s currently lacking approach and the (theoretical) suggestions for solving this type of problems as described in chapter two.
4.
The approach the IOC should take towards the protection of
workers in their supply chain
To solve and prevent future violations of IOC workers, the IOC needs to change its current approach. The traditional legal approach consists largely hard law instruments but judging the recent violations, they turn out to lack effectiveness. This chapter argues that the best way to do this is by implementing a soft law measures; a CSR scheme in the shape of an IFA.92
IFAs are the outcome of negotiations between multinational companies and international trade union federations to define labour standards for the workers of the company, its subsidiaries and in many cases of its subcontractors.93 Using the dimensions of Ter Haar &
Keune, this chapter explains that IFA’s are capable of serving these dimensions. This makes IFA’s effective CSR tools.
This chapter shall first touch upon the legitimacy dimension, then moving on to the implementation system and lastly the compliance mechanism. The legal status dimension is left out, because there is nothing the IOC can do to influence this since it lacks formal competence. The fact that the CSR policy has no formal legal status has to be taken as a given weakness of CSR. But, as previously explained, this does not (necessarily) mean that the CSR policy has a low or diminishable success rate.94
4.1 Using an IFA to optimise legitimacy
The success rate of any CSR scheme depends for a significant share on the level of acceptance by those who are affected by it (legitimacy). There are three ways to strengthen legitimacy.95 Adopting an IFA would gain he IOC optimal legitimacy because i) existing norms can be implemented, ii) the a-symmetrical hierarchical structure can be used to its benefit and iii) it allows multiple stakeholders in its adopting process. Hence, all three ways to gain legitimacy are served. This will be further explained below.
92 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.8 93Sobczak, A. (2007) Legal dimensions of international framework agreements in the field of corporate responsibility,
Industrial relations, p.466 94 See section 2.2 and 2.3 of this thesis
95 Keune and ter Haar, One step forward or more window-dressing? A legal analysis of recent CSR initiatives in the garment industry in Bangladesh, The international journal of comparative labour law and industrial relations 30, no. 1 (2014): p.11-14
4.1.1 Using existing standards
There are a few TPR regimes in the area of labour law that provide existing code with minimum labour standards such as the Fair Wear Foundation (FWF), the Fair Labour Association (FLA) and the ETI.96
The FWF provides a set of labour standards and uses labour-friendly supply chain practices such as social dialogue and sharing expertise rather than hard sanctions such as expelling from supply chain to increase their effectiveness.97 They are solely open for MNCs
that are active in the garment industry and whose main activity is focussed on sewing.98 This
requirement would rules out the IOC supply chain.
The FLA also has a set of minimum labour standards. At the start they were only open to the footwear industry but nowadays they accept a broader range.99 Furthermore, joining the
FLO comes with hard obligations, which also entails external auditing. But in the past, there has been severe critique suggesting that the auditing system was corrupt because firms could decide themselves which factories were being audited and the reports did not contain extensive information.100 However, the external audits might be a bridge too far for the IOC since they would lose significant authority about their supply chain.
The ETI is a leading alliance of companies, trade unions and NGOs, that promotes respect for workers' rights around the globe”.101 Although their member list also contains only
retail MNCs, the LOCOG was also allowed membership without limitations to certain activities in their supply chain. By joining the ETI, the IOC would be able to use the ETI Base Codes’ ‘existing minimum standard norms’ as a starting point in the IFA-negotiations.102 Joining the
ETI, instead of just lending its base code, creates an obligation for the IOC instead of a mere show of good behaviour that has no consequences when negotiations get tough.
The ETI Base Code is in particular a good choice for several reasons. Firstly, the code offers protection on the most occurring worker violations in the IOC supply chain such as failing to pay (full) wages, excessive working hours and poor health and safety conditions.103
96 This numeration is not exhaustive
97 Locke, R., The promise and limits of private power promoting labor standards in a global economy, Cambridge U. Press, (2013): p.180
98 http://www.fairwear.org/22/about/ consulted on July 30th, 2015
99 O’Rourke, Outsourcing Regulation: Analyzing Nongovernmental Systems of Labor Standards and Monitoring, The Policy Studies Journal, Vol. 31, No. 1, (2003): p.11
100 Ibid.
101 http://www.ethicaltrade.org/about-eti, consulted on June 27th, 2015 102 Appendix I
103 Ibid., art 5 (living wages are paid), art 6 (working hours are not excessive) and art 3 (working conditions are safe and hygienic)
