Transcript Corporate Social Responsibility – Quo Vadis? About Global

Prof. Dr. Frank Emmert, LL.M.
John S. Grimes Professor of Law
Director, Center for International and Comparative Law
Project Director Egypt
Robert H. McKinney School of Law - Indianapolis
Overview
 What is CSR and What Does it Do?
 Definitions of CSR
 Incentives for Corporations to Adhere to CSR
 Issues Addressed by CSR
 Examples of Important International CSR Initiatives
 Problems with CSR
 What the Future of CSR Could and Should Bring
What is CSR and What Does it Do?
 The Palm Oil Story:
 Greenpeace and others uncover illegal destruction of
protected forests in Indonesia and Malaysia by palm oil
producers
 Cargill, the world’s largest trader of agricultural
commodities, as well as Nestlé and Unilever, cancel or
suspend contracts worth tens of millions of US$ with the
Indonesian and Malaysian producers
 See Financial Times, 25 March 2010, page 1
Definitions of CSR
 No universally accepted definition
 Common elements of different definitions:
 Voluntary adherence by corporations (self-regulation)
 To standards that go above and beyond legal and/or
contractual obligations to include respect for ethical and
cultural norms and the avoidance of negative impact on
human rights, the environment, consumer, employees,
communities, and other stakeholders (Google: “Do No
Harm”)
 And possibly further, to the active promotion of public
interest (sustainable growth, development, etc.) and
support for the economic policy choices of the host
country/community
Incentives for Corporations
 Public Relations
 Avoid bad publicity
 Get good publicity (brand differentiation)
 Risk Management via pro-active corporate culture
 Avoid legal trouble (corruption, human rights violations re
workers and communities, environmental issues like Palm Oil…)
 Pre-empting of mandatory/legislative measures with stricter
and enforceable standards
 Human Resource Benefits
 Contractual Benefits
 Access to Public Tenders
=> CSR can make good business sense
So, again, WHY should a
corporation, large or small, adhere
to CSR, defined as
- going above and beyond the law
- with the effect of reducing
shareholder profits? (at least
short term)
Issues Addressed by CSR
1) Labor Relations
 Clear and fair terms of employment
 No forced employment or employment of children
 Clean, healthy and safe working environment
 Fair remuneration levels and policies at all locations
 Policies and mechanisms preventing any forms of
discrimination or harassment at all levels of staff
 Human resource development with skills and other training
opportunities
 Freedom of association and right to collective bargaining
 Cooperation with trade unions and other labor
representations
 Mechanisms to address grievances and labor disputes
Issues contd….
2) Human Rights beyond labor relations
 Policies and mechanisms to promote human rights in all
countries and communities where commercial activities
are taking place
 Active investment in countries with good HR records,
divestment from worst offending countries
 HR policies for selection of contractors and suppliers
 Policies and mechanisms to address and prevent HR
violations by contractors and suppliers, such as forced
and child labor, human trafficking, etc
Issues contd….
3) Environmental Protection
 Environmental impact awareness
 Policies and mechanisms to ensure compliance with
environmental regulations and industry best-practice
standards
 Active promotion of environmentally responsible conduct
by all staff, contractors, suppliers, and customers
 Systematic efforts to reduce negative environmental
impacts
Issues contd….
4) Community Relations beyond environmental protection
 Respect for cultural, social and economic needs
 Active contributions to community development
 Policies and mechanisms against unethical lobbying
 Policies and mechanisms against bribery of local bodies
and officials
 Policies and mechanisms for communication with local
communities, including mechanisms with clear time lines
for dealing with complaints
Issues contd….
5) Contractual Relations with Customers and Suppliers
 Fair and honest dealings with contractual partners
 Adherence to agreed upon contractual terms, in
particular payment terms
 Policies and mechanisms preventing bribery and
corruption
 Policies and mechanisms to ensure ethical behavior by
suppliers and contractors
Issues contd….
6) Shareholder Relations
 Clearly communicated and appropriate standards and
policies of corporate governance
 Adherence to locally required and internationally
recognized standards of financial accounting
 Appropriate risk assessment policies
 Policies and mechanisms preventing insider trading and
other misuse of information
 Policies and mechanisms for dealing with inquiries,
complaints and disputes
Examples of Important
International CSR Initiatives
OECD Guidelines for Multinational Enterprises (1976, as last
amended in 2000)
 The first major international initiative of its kind
 Applicable across industries and sectors
 Recommendations by the OECD governments to MNEs
 At first rather vague, later amendments brought
increasing levels of specificity, for example about bribery
 However, no assessment or review procedures, let alone
effective mechanisms to ensure compliance and address
complaints
 International Labor Organization (ILO) Tripartite
Declaration of Principles Concerning Multinational
Enterprises and Social Policy (1977, as amended in 2000)
 One of the first initiatives of its kind
 Applicable across industries to all MNEs
 Non-binding (“should”)
 Relatively vague language (MNEs “should take fully into
account established general policy objectives of the
countries in which they operate.”)
 Contains dispute settlement procedure, but only for the
interpretation of the Declaration itself and only providing
standing to governments, employers associations, and
trade unions but not to individuals and/or companies
Examples of Industry Specific
Codes and Standards
 Fair Labor Association (FLA) Workplace Code of Conduct
for the apparel and footwear factories
 Rainforest Alliance Certification for businesses involved in
agriculture, forestry or tourism with impact on land-use
and biodiversity
 The Extractive Industries Transparency Initiative and the
International Council on Mining & Metals (ICMM) have
standards for oil, gas, and mining industries
 The Equator Principles offer guidance for the financial
industry on social and environmental issues in project
financing
Examples of For-profit Companies and/or
NGOs Offering/Conducting Assessments
 Good Corporation (UK), together with the Institute of
Business Ethics, has developed a standard and offers
assessment against this standard or against a
corporations own CSR standards for fee paying clients
 Social Accountability International (SAI) developed
SA8000, a global standard for human rights at work, and
has accredited over 2,000 companies and factories
around the world, employing over 1 mio workers
Problems with CSR Today
 1) Proliferation of Codes (already several hundreds!)
 2) Industry Specific Codes can be tailored to show
only the good things and steer clear of any bad things
 3) Lack of Accountability and Effective Complaintsand Review Mechanisms
Example: Enron published an Annual Report on CSR
and was considered a model by the CSR movement
we have finally accomplished the
alchemist’s dream,
Our PR departments are using CSR
language to turn dirt into gold
What the Future of CSR Could or
Should Be – Some Discussion Points
The most (?) interesting initiatives:
 UN Global Compact and John Ruggie’s Framework for
Business and Human Rights: Protect, Respect and Remedy
 ISO Guidance Standard 26000 on Social Responsibility
Will they address and fix the concerns?
Where Do We Go From Here?
ACTION PLAN
 Book Project Corporate Social Responsibility in
Comparative Perspective Q
 Data gathering (more studies like Prof.
Mattar’s research on CSR in Lebanon…)
 Development of a MENA Code on CSR – Why?
 Including a system for certification like ISO
Thank you!
Comments or questions?
-> [email protected]
Websites:
-> http://mckinneylaw.iu.edu/facultystaff/profile.cfm?Id=166
-> http://www.epsilen.com/femmert
-> http://www.cilpnet.org
-> http://ssrn.com/author=622007
-> http://www.TheIMAC.co