Director, Center for International and Comparative Law Project - - PowerPoint PPT Presentation

• 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

• pportunities

 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

• ther 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

• nly the good things and steer clear of any bad things

 3) Lack of Accountability and Effective Complaints-

and 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?

• > femmert@iupui.edu

Websites:

• > http://mckinneylaw.iu.edu/faculty-

staff/profile.cfm?Id=166

• > http://www.epsilen.com/femmert
• > http://www.cilpnet.org
• > http://ssrn.com/author=622007
• > http://www.TheIMAC.co