Comparing the:

Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights
with the
Draft United Nations Code of Conduct on Transnational Corporations [1]




Draft U.N. Code of Conduct


-> Provide soft law norms for transnational corporations (TNCs)[2] and other business enterprises[3] to promote and protect human rights on an international scale. These Norms may be viewed as a basis for the potential development of a treaty, establishing and confirming the rudimentary obligation of States, individuals and corporations to respect, ensure respect for, prevent abuses of, and promote human rights.

-> Never adopted, but attempted to provide either mandatory requirements or voluntary guidelines[4] for transnational corporations (TNCs)[5] to follow, by encouraging contribution to the development goals and objectives of the countries in which they operated. The Code also attempted to facilitate co-operation with and among States on issues relating to TNCs; and to alleviate difficulties derived from the international character of such corporations and the resulting diversity of laws and cultures.




Who: TNCs, all other business enterprises, and their officers.



-> Both documents address national sovereignty, respect for social and cultural objectives and policies, human rights, non-discrimination, corruption, consumer protection, and environmental issues.


->The Norms additionally address child labor, working environments, adequate wages, worker's rights, and the right to security of persons.

The Norms are broad statements within specific areas, which enable the almost universal application to TNCs and business enterprises of any size or reach.

Who: TNCs, participating governments, and the U.N.



-> Both documents address national sovereignty, respect for social and cultural objectives and policies, human rights, non-discrimination, corruption, consumer protection, and environmental issues.


->The Code additionally addressed contract negotiation and implementation, non-collaboration with racist regimes, non-interference with political affairs and intergovernmental relations, training facilitation, financial transactions and investments, transfer pricing, taxation, competition, technology, and information disclosure.



Document Status:

-> The Norms are to be viewed as soft law norms, beginning as recommendations, and later building as the basis of a possible treaty; differing from a company code of conduct that might be changed or altered easily. Intended to establish soft law, the Norms interpret human rights obligations. The Norms also set forth basic implementation approaches.



Specific Methods/Techniques:

-> TNCs and business enterprises: are to adopt, disseminate and implement internal rules of operation in compliance with the Norms. They must also perform self-evaluations, record claims of Norm violations, incorporate the principles into their contracts with business partners, and provide reparations to those negatively affected.


-> Governments: should implement the Norms by using them as a model for legislation or administrative provisions for enterprises acting in their country, perform monitoring including labor inspections, and utilize their national courts for determining responsibility for violations.


-> U.N.: should monitor implementation of the Norms by creating State reporting requirements and additional implementation techniques, by receiving complaints and giving businesses the opportunity to reply, by possibly engaging a group of experts to take action for failure to comply, and by raising concerns about continued human rights abuse by TNCs and business enterprises. In addition, the U.N. may use the Norms to develop procurement standards.


-> NGOs: perform monitoring and reporting on the efforts and potential violations of the Norms.


-> The Sub-Commission’s Working Group on the Working Methods and Activities of Transnational Corporations: receive information concerning the possible negative impact of the activities of TNCs and other business enterprises on human rights, and particularly affecting the implementation of the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights. The Working Group will invite any TNCs or other business enterprises concerned, to provide whatever comments they may wish to provide within a reasonable time. In addition, the Working Group shall study submitted information and transmit comments and recommendations to the appropriate parties. Finally, the Working Group will also consider other methods to encourage full implementation of the Norms.

Document Status:

-> The Code was never officially adopted, and its legal nature was never established. There were proponents of both a universally applicable, legally binding Code and a voluntary Code. If binding, it would have served as a Convention with both national and international mechanisms for implementation. If voluntary, it would have merely served as a set of broad guidelines to be observed by participating parties.


Specific Methods/Techniques:

-> TNCs: were to cooperate with the governments of the countries in which they operated with a view to contributing to the development process and were to be responsive to requests for consultation in this respect.


-> Governments: were to publicize, disseminate, and implement the Code within their territories. They were to report to the United Nations Commission on Transnational Corporations as to national action taken to promote the Code, and the effect of such promotion. In addition, they were to take the Code into account when implementing, reviewing, and creating legislation and administrative practices.


-> U.N. Commission on Transnational Corporations: was to serve as the international mechanism for implementation of the Code. It was to establish and maintain contacts with other U.N. organizations and agencies dealing with Code related matters. It was to hold annual sessions to discuss Code matters, facilitate intergovernmental consultations and agreements, periodically assess Code implementation based on reports submitted by governments, and clarify provisions as to applicability and implications of the Code.

The Commission was to also report annually to the General Assembly [through the Economic and Social Council] on its activities regarding the implementation of the Code.




-> Drafting:

In 1999, the Working Group on the Working Methods and Activities of TNCs started developing the Norms based on human rights standards. The Working Group prepared a preliminary draft, and with each new draft thereafter, they sought and incorporated comments from businesses, NGOs, unions, and others. Throughout the entire drafting process, the Working Group has continually sought and accepted outside perspectives and comments, including posting the drafts on the internet to ensure full accessibility and comments from all interested parties. The Working Group currently seeks additional comments, as it expects to submit a draft to the Sub-Commission in July/August 2003.


-> Originating Documents:

The Norms rely heavily upon the Universal Declaration of Human Rights; the International Covenant on Civil and Political Rights; and the International Covenant on Economic, Social and Cultural Rights. It also takes into account the International Labor Organization (ILO) Tripartite Declaration of Principles Concerning MNEs and Social Policy, the ILO Declaration on Fundamental Principles and the Rights at Work, the OECD Guidelines, and the U.N. Global Compact in addition to many other influential international legal documents.[6]


The Norms reflect the binding norms within these documents, but incorporate the most commonly used provisions in the less binding documents as well.

-> Drafting:

The Intergovernmental Working Group on a Code of Conduct created a draft code of conduct as was requested by the Economic and Social Council in its resolution 1982/68 of 27 October 1982. The Commission on TNCs held a special session, open to all States, to complete work on the draft code of conduct. They were unable to resolve all outstanding issues, so a report was filed for further action. The report was later presented to the General Assembly, and then reconvened to address other issues and to further include State participation. At present, the Commission on TNCs no longer exists and the Draft Code was indefinitely abandoned, and was never adopted or otherwise put into effect.





-> Originating Documents:

The Code considers a variety of resolutions adopted by the General Assembly and Economic Social Council, and it applies the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy in the field of employment, training, conditions of work and life and industrial relations.




[1]U.N. Code of Conduct on Transnational Corporations, 23 I.L.M. 626 (1984).

[2] Transnational Corporations: an entity operating in more than one country or a cluster of economic entities operating in two or more countries whatever their legal form. (Norms, § I, 19.)

[3] Business Enterprise: any business entity, regardless of the international or domestic nature of activities or legal form used to establish the entity. (Norms §I, 20.)

[4] See "Document Status" section below for explanation regarding voluntary versus binding application of the Code.

[5] Transnational Corporations (according to the Code): an enterprise comprising entities in two or more countries, regardless of the legal form and fields of activity of those entities; which operates under a system of decision-making, permitting coherent policies and a common strategy through one or more decision-making centers; in which the entities are so linked, by ownership or otherwise, that one or more of them may be able to exercise a significant influence over the activities of others and, in particular, to share knowledge, resources and responsibilities with the others. (Code of Conduct, ¶ 9.)

[6]See preambular paragraph 4 of the Responsibilities for additional documents.