Corporate social responsibility: codes, compliance and ESG ratings

Starting in the 1990s, large brands and retailers in North America and Europe developed codes of conduct and ethical sourcing policies for their global supply chains. These statements soon evolved into an array of industry-led and multi-stakeholder initiatives for factory auditing, certification, capacity-building and the amplification of "worker voice," especially in the apparel, footwear, toy and electronics industries. This chapter examines the consequences of these codes and points toward new questions that should be asked about corporate social responsibility (CSR) for supply chain labor conditions. There is ample evidence that private codes are frequently evaded or undermined, though some recent evidence highlights conditions under which compliance is more likely. Two issues deserve closer attention as both research and practice evolve. First, scholars should examine the construction of compliance on the ground, rather than adopting private regulators' designations of compliance as their own. Second, researchers should ask how supply chain labor standards are being incorporated into a rapidly growing set of Environmental, Social, and Governance (ESG) indicators for responsible investment.