The ABC’s of Corporate Social Responsibility for Lawyers

1
The ABCs of Corporate Social Responsibility for
Lawyers

• By Mary Cornish
• Cavalluzzo Hayes Shilton McIntyre Cornish
• Co-Chair, CBA ILS Rights of Persons and
  Communities Committee
• mcornish_at_cavalluzzo.com 416-964-5524

2
CSR CLE Sessions

• This overview presentation is the first of three
  CLE sessions
• March 26, 2009 Heenan Blaikie, Toronto, 1200
  noon. Expert panel on CSR in labour and human
  rights context.
• May, 2009, Vancouver. Expert panel on
  environmental context. Details to be announced.

3
ILS Rights of Persons and Communities Committee

• This Committees mandate is to further
  understanding, practical knowledge and commitment
  to the wide range of international instruments
  and mechanisms which protect the rights of
  persons and communities.
• These include human rights, labour and
  environmental protections and political, civil,
  social and economic rights.
• Committee welcomes new members to plan activities
  including monitoring developments preparing
  briefs working on CLEs and providing material
  for the Committee's webpage and Section's
  electronic newsletter.
• If you are interested in participating or being
  part of the list serve, please contact the
  Co-Chairs, Mary Cornish or Monique
  Pongracic-Speier, monique_at_schroeder.bc.ca

4
Outline of this Presentation

• Provides basic overview of what lawyers should
  know about Corporate Social Responsibility
• What is CSR? Why did it develop?
• Relationship to international/domestic
  obligations
• Review of different CSR mechanisms
• International and domestic use.
• Monitoring and Role of NGOs
• Practice areas affected by CSR

5
What is Corporate Social Responsibility

• Generally soft law or voluntary mechanisms
  which operate to define the acceptable standards
  of business practices in a socio-economic area,
  (eg. Business, labour and environment) and create
  monitoring and remedial steps to implement the
  standards.
• Jurisdiction may be global, regional, national,
  entreprise, sectoral or industry-wide.
• Oversight may be internal or external.
• Sometimes referred to as decentred regulation.
• Mechanisms range from purely voluntary to
  sectoral, multi-stakeholder and regulatory
  mechanisms

6
CSR Now Commonplace

• Most major companies have adopted some kind of
  statement, policy or management system concerning
  what could loosely be called their corporate
  social responsibility (CSR).
• 1999 study showed more than 85 of big US
  corporations already adhere to such codes. A
  survey by KPMG (2000) among the biggest 1000
  national firms showed a similar portrait on the
  Canadian scene. Figures likely higher now.

7
CSR Response to Governance Challenges

• Emerged with globalization transforming the
  global political economy and challenging the
  ability of states to regulate effectively
  business practices, particularly for
  Transnational Corporations (TNCs).

8
Dynamics Leading to CSR Initiatives

• Globalization of production, information and
  capital
• Domestic labour, human rights and environmental
  practices significantly affected by international
  and regional trade arrangements and investment
  and TNC businesses practices
• Tax cuts, privatization of public services and
  weakening of state regulation (eg. Collective
  bargaining, human rights and environmental laws)
  and ability to control extra territorial conduct
• persistence of inequitable and harmful labour
  market, human rights and environmental practices,
  eg. Child labour, environmental destruction,
  climate change, gender discrimination.

9
Relationship to International and Domestic
Obligations

• Recognition that more traditional local, national
  and international governance mechanisms not
  working to deliver the necessary justice outcomes
  guaranteed by international and domestic labour,
  human rights and environmental instruments.
• International standards, while not binding law in
  Canada, play an important role in CSR mechanisms.
  
• Eg. Agree to abide by ILO Core Labour Standards.

10
June, 2008 UN Ruggie Report

• Protect, Respect and Remedy Framework for
  Business and Human Rights submitted by John
  Ruggie to UN Human Rights Council.
• Report seeks to close the gaps that exist
  "between the scope and impact of economic forces
  and actors, and the capacity of societies to
  manage their adverse consequences".
• In calling for a new framework of rules,
  practices and institutions to address the
  intersection of business and human rights, the
  Report points to markets as posing "the greatest
  risks-to society and business itself-when their
  scope and power far exceed the reach of the
  institutional underpinnings that allow them to
  function smoothly."

11
Ruggie Core Principles

• Three core principles with each supporting the
  other in achieving sustainable progress.
• 1. the State duty to protect against human
  rights abuses by third parties, including
  business
• 2. the corporate responsibility to respect
  human rights and
• 3. the need for more effective access to
  remedies.
• Report calls on states to fulfill their duty by
  making it a urgent policy priority to "foster a
  corporate culture respectful of human rights".
  This could be done by requiring sustainability
  reporting and making a companies policies and
  practices relevant to legal accountability
  standards.

12
Early CSR Initiatives

• Early mechanisms developed as a result of
  consumer or lobbying campaigns highlighting
  inequitable labour practices. Eg. Nike, the Gap.
  See nike.com
• With the production, distribution and consumption
  of products globally interconnected through TNC
  supply chains, the conditions of workers in those
  chains (situated in Canada or abroad) or the
  human and environmental rights of neighbouring
  commmunities is often driven by the production
  imperatives of upstream firms.
• Codes were developed by upstream firms to control
  their corporate behaviour and that of downstream
  contractors.

13
Voluntary Codes

• Voluntary codes created where employer/business
  was both the author and administrator and the
  entity regulated.
• Workers were not usually involved with design
• As codes developed, NGO groups lobbied to get
  stronger codes and independent monitoring
  mechanisms. Eg. Ethical Trading Initiative.

14
Many Different CSR Mechanisms

• Unilateral Mechanisms
• Corporate, Sectoral or Trade Association Codes of
  Conduct - eg. Nike, Gap, Walmart, Exxon.
• External Multi-Stakeholder Codes (MSIs)
• eg. Fair Labor Association, Ethical Trading
  Initiative, ETI - social labelling - Rugmark .
  Social labelling authorizes the use of a physical
  label to communicate the conditions surrounding
  the production of a product or rendering of a
  service

15
Global CSR Mechanisms

• Global and Regional Mechanisms,
• eg UN Global Compact, ILO Multinational
  Enterprises Declaration, OECD Tripartite
  Declaration of Principles concerning
  Multinational Enterprises and Social Policy.
• Global Framework Agreements between Employers and
  Unions
• Agreements between Unions and Employers to
  control practices of employers supply chain
  contractors.

16
State Regulatory CSR

• Eg. Use of corporate disclosure regulations
• Australian Industrial Relations (Ethical Clothing
  Trades) Act 2001 establishes an Ethical Clothing
  Trades Extended Responsibility Scheme.
• requires reporting practices and other measures
  throughout the supply chain to prevent practices
  or commercial arrangements designed to avoid
  payment of workers' lawful entitlements.
• extends fair labor practices protections to the
  "outworkers" in the trades domestic and
  international supply chains.

17
Domestic CSR Use

• While Canadian work has focussed on more on the
  use of CSR to address international issues,
  increasing use of these approaches to control
  domestic corporate conduct.

18
Labour and HR Mechanisms

• Set out working conditions and HR standards.
• often cover not only the activities of direct
  corporation but also its subcontractors.
• Some codes focussed on one area.eg.The Calvert
  Women's Principles developed in partnership with
  UNIFEM was the first gender-focused global code
  of conduct.

19
Labour and HR Mechanisms

• Corporate codes of conduct, consumer campaigns,
  social labelling and other sectoral or global
  mechanisms often target the discrimination, low
  wages and poor working conditions faced by
  workers in precarious employment.
• Focused on those who fall outside the enforceable
  scope of traditional hard laws.

20
Financial CSR Mechanisms

• Institutions such as the World Bank have also
  included labor, human rights and and
  environmental protections in their lending
  practices.
• The Bank's International Finance Corporation
  requires all private sector borrowers to agree to
  Performance Standard 2 which requires compliance
  with the ILO's Core Labour Standards (CLS).
• The World Bank itself has recently incorporated
  the CLS in standard bidding documents for public
  works projects.
• World Bank also has environmental standard which
  must be met for project to be financed. See
  www.worldbank.org and www. Ifc.org.

21
Environmental CSR Standards

• There are many CSR schemes adopted by businesses
  for regulating environmental management
  practices.
• Codes are developed in context of ensuring
  sustainable development.
• should carry out its activities in a waythat
  promotes sustainable development and provides for
  social and environmental justice for stakeholders
  communities
• See Corporate Social Responsibility and
  Environmental Management Journal

22
Issues to Consider

• What are the limits of self-regulation?
• Will there be resurgence of state regulation?
• Will there be emergence of supranational public
  regulation?
• Will there be hybrid model of regulation in which
  state, market and civil society share regulatory
  responsibilities?

23
Issues to Consider CSR Effectiveness

• Codes are becoming most significant feature of
  fragile system of transnational business
  regulation, particularly in labour area, but also
  increasingly in environmental area.
• Yet the public interest and worker interest
  if often missing with no state public regulation
  process.

24
Issues to Consider Need for Soft and Hard Laws

• While effective enforcement and resourcing of
  hard laws is still critical to securing labour,
  human rights and environmental protections,
  supplementary forms of regulation have also
  become necessary.
• Research has shown that voluntary measures will
  not be effective without strong enforcement of
  hard laws and government oversight of these new
  enforcement forms.

25
Issues to Consider Monitoring

• Monitoring increasingly uses independent
  compliance inspections of production or business
  sites.
• Nike went a step further recently and posted on
  its website the addresses of all its
  subcontractors around the world in order to meet
  the consumer and union demand for transparency in
  its operations.

26
Issues to Consider -Role of NGOs

• Unlike state regulation, NGOs often play key role
  in CSR mechanisms.
• Some do independent monitoring.
• Others participate in multi-stakeholder CSR
  mechanisms, eg. Canadas Maquila Solidarity
  Network

27
Issues to ConsiderEngendering CSR

• Mechanisms need to explicitly address the
  situations, experiences and wishes of women, and
  the gendered nature of economic, trade and
  environmental policies.
• Gender discrimination forms an integral part of
  the market economy.
• Measures that fail to challenge the underlying
  causes of gender discrimination which risk
  upholding gender divisions and oppression and
  spreading the perception among policymakers that
  gender issues are being adequately addressed

28
References

• Corporate Social and Environmental Responsibility
  Selected Sources of Information, accessed at
  http//www.un-ngls.org/documents/publications.en/d
  evelop.dossier/dd.0720(csr)/Section20III.pdf
• UN Business and Human Rights Resource Centre,
  http//www.business-humanrights.org/Gettingstarted
  /UNSpecialRepresentative - great resource.
• Ruggie, John "Protect, Respect and Remedy a
  Framework for Business and Human Rights, April 7,
  2008 access at above website.
• Human Rights and Socially Responsible Investment
  in North America An Overview, Elizabeth Umlas,
  January 2009, access at above website.
• WIDE, Key Feminist Concerns Regarding Core
  Labour Standards, Decent Work and Corporate
  Social Responsibility, accessed at
  http//www.wide-network.org/index.jsp?id228.
• Cornish, Mary, New Governance Approaches to
  Ending Canadian Labour Market Discrimination The
  Use of International Norms and Soft Law
  Approaches. http//www.cba.org/cbastore/search.asp
  x?pubid2subjectInternational20Law.
• Winston, Morton, NGO Strategies for Promoting
  Corporate Social Responsibility, Ethics
  International Affairs, Vol. 16, 2002

29
References

• Arthurs, Harry, Private Ordering and Workers
  Rights in the Global Economy Corporate Codes of
  Conduct as a Regime of Labour Market Regulation,
  in Labour Law in an Era of Globalization,
  Transformative Practices and Possibilities, ed.
  by Joanne Conaghan, Richard Michael Fischl, Karl
  Klare, Oxford University Press, 2005.
• Atleson, James, Lance Compa, Kerry Rittich,
  Calvin William Sharpe and Marley S. Weiss,
  International Labour Law, Cases and Materials on
  Workers Rights in the Global Economy Chapt. 5
  Corporate Codes of Conduct.
• Lapointe, Alivn and Corinne Gendron Corporate
  Codes of ConductThe Counter-Intuitive Effects of
  Self-Regulation, Université du Québec à Montréal,
  Canada, http//www.crsdd.uqam.ca/Pages/docs/pdfArt
  icles/LapointeGendroncodes.HTM.
• Corporate Social Responsibility and Environmental
  Management Journal