“It will no longer do for a company to go quietly about its business, telling no lies and breaking no laws, selling things that people want, and making money. That is passé. Today all companies, especially big ones, are enjoined from every side to worry less about profits and be socially responsible instead.” So said the UK-based Economist newspaper in its January 2005 leader entitled ‘The Good Company – a Sceptical Look at Corporate Social Responsibility’. We do not intend in this book to engage in a similar polemic. The goal of the lawyers and editors is simply to examine the extent to which current and pending black letter laws and legal trends that broadly embrace corporate social responsibility (CSR) have been enacted in the jurisdictions we cover, and to review the manner in which global corporations have influenced this. The result is a snapshot which portrays a patchwork of differing regulations, rules and standards reflecting the diverse cultures, political and social imperatives, competitive and commercial drivers, corporate ethics and populist thinking.
The following caveat is nevertheless applicable: CSR is a continually evolving concept embracing a range of topics. There are innumerable inconsistencies in legislative subject matter and a diversity of standards and approaches from country to country, not to mention surprising gaps, even where there is some measure of CSR-related law. Given this, combined with the differing speeds at which CSR legislation is being enacted around the world, it is hardly surprising that big corporations – as will be seen in their contributions to this book – have led the way in framing best practices, albeit without consensus due to the lack of a commonly-accepted definition of CSR. Depending on one’s viewpoint, CSR might constitute a laundry list of well-meaning aspirations, a ragbag collection of contradictory, counter-intuitive and confusing laws, or a roadmap for the improvement of the condition of mankind. For companies, the absence of a solid definition means that apart from the need to comply with applicable laws wherever they do business, nothing is specifically ruled in and nothing is specifically ruled out.
Over the past several years corporations have been free to generate whatever policies best suit their philosophy, agenda or response to competitive pressure. In most cases, their thinking has reflected a combination of rules-based and values-related thinking. Some companies regard the expression of their CSR goals as a statement of their core values or a written moral compass for their entire corporate community. Others grasp the opportunity to publish their CSR goals as a platform for proclaiming their values for the world to see, or to appease stakeholder groups and underpin brands. In this latter context, the manner in which a company uses its CSR achievements may attract external criticism about the authenticity of its ‘altruistic’ motives, versus its desire to promote its commercial agenda in an increasingly global marketplace.
From a rules-based context and in the absence of clear and consistent legal standards, global corporations generally, therefore, have adopted a pragmatic approach towards CSR issues. The best among them have established a minimum requirement for their global workforce based on the highest applicable standard (often, but not exclusively, a US standard) from among the multiplicity of mandatory legal regimes worldwide. This has often been achieved when the local compliance level was lower or even non existent, since as a matter of principle, the majority of companies avoid picking and choosing among which principles they mean to uphold from country to country. This tends not to play well in a values-based environment. Arguably, this raising of the bar as regards the introduction of minimum standards of mandatory behaviour, where previously there had been none, is believed to have materially contributed to the improvement of a number of conditions having CSR implications in the countries concerned. Examples include environmental, disability, child labour and anti-corruption issues. To date, it has been virtually impossible to drive the adoption of universal best practice standards in the absence of legislation. Nevertheless, some best practices on CSR-related issues have emerged de facto by virtue of the fact that several successful and respected corporations widely publish their CSR policies. More often than not these have been emulated by other companies which have not been minded to develop a CSR policy from scratch for themselves. On the values-related side, again given the lack of any clear definition of CSR or other common standards, companies have tended to promulgate policy, or develop value statements to suit commercial needs, changing stakeholders’ demands, industry trends and operating circumstances. Indeed, surveys are now consistently showing that senior executives worldwide believe good corporate governance and CSR is good for business.
Changes in a corporation’s circumstances frequently provide the motivation for issuing new policies. Substantial credence is given to the theory that the most effective way to change a corporate culture and prevailing attitudes is to modify key behaviour patterns. The preferred approach to changing behaviour is to embed new values and behaviour across the entire corporate community. For example, the announcement of a new values policy often follows hot on the heels of the appointment of a new chief executive officer, a corporate scandal, or major corporate re-organisation. In addition, the content of a company’s CSR policy usually is a reliable indicator of the lengths to which it will go to achieve its desired goals. Typically, any corporate policy of such importance as its CSR policy or statement of values will reflect the thinking of its chief executive officer at least, if not the board of directors. The active ownership of such policy statements by the company’s leaders in ‘walking the talk’ is regarded as fundamental to acceptance. This necessarily implies that an effective process must be deployed to ensure buy-in by all concerned. One example of this is illustrated by Dutch chemical and pharmaceutical manufacturer, Akzo Nobel NV, featured in the chapter of the same name.
In the post Sarbanes-Oxley period, US listed public companies’ policies have been refreshed and revisited and, in many cases, become longer and more comprehensive. Increasingly, generating policies has become a very lengthy, involved and complex exercise in logistics. Many companies have realised that it is more effective to impose an all embracing, multi-faceted policy comprising a wide range of behaviour demands within a single framework than to maintain a variety of different rules which may overlap at best and present a logistical nightmare to police. What kinds of topics are addressed in such ‘all in’ policies? In some instances, such policies comprise an exhaustive catalogue of mandatory standards, values and aspirations – part ethics, part corporate governance, part compliance, part good citizenship and part code of conduct. Even corporations that have embraced what might be loosely described as a ‘CSR policy’ often call it something different, possibly a values statement or statement of business principles.
A trend has already emerged for dropping the word ‘social’ from the CSR label and indeed, whether by chance or by design, the importance of expressly identifying the ‘social’ aspect of CSR has diminished, if not been lost altogether in the sheer breadth and volume of matters addressed in an all inclusive approach. Since relatively little subject matter in this type of policy has ‘social’ implications, and the emphasis these days is on governance and compliance, such policies tend to be more generic and anodyne in name, even if much more prescriptive in approach. Just about everything is covered, from how to be a good corporate citizen in the community and a good co-worker in the workplace at one end of the scale, to how to avoid reputational damage to the company’s brand and specific rules on governance and corporate reporting at the other.
There is no better, or more fascinating, illustration of the contrasting styles and approaches adopted by different companies than the contributions provided in this book by the top in-house counsel of three very different global corporations. The two European companies, namely British communications provider, BT, and coatings, sheet chemical and pharmaceutical manufacturer Akzo Nobel NV of the Netherlands and the world renowned US corporation McDonald’s, are all respected leaders in the field of corporate social responsibility. Nevertheless, they all address the topic in very different ways and their contributions reflect not only the legal, commercial and social environment in which each operates but also the marked individuality of the entity concerned. Just as lawmakers and regulators use legislation and regulation to govern specific conduct, companies use policy to set the standards for acceptable behaviour from their employees and others within their sphere of influence. There is, for example, no more effective a tool to drive change through a corporate community than a set of rules which can be incorporated into employees’ terms or contracts of employment.
In summary, whether a corporation’s motivation for embracing CSR-type thinking in its policies and codes of conduct is based on laws and regulations, or genuine altruistic sentiment, repercussions are to be expected within the global corporate community if and when corporate social responsibilities are finally defined and legislated for. A social agenda issue which wears well in a member state of the European Union tomorrow may not be as readily acceptable to the shareholders of a major US corporation doing business in that country – thereby incurring extra cost and responsibility – unless there are identifiable and measurable collateral benefits to be gained. At the very least, the setting of standards of corporate behaviour at the level of the highest common denominator may be a casualty of the enactment of CSR related laws, with the result that a new approach to corporate codes of conduct is adopted and the convention of setting a single high standard of corporate behaviour worldwide is abandoned. It will be interesting to watch this space. My sincere thanks for their respective generous contributions to this book are owed to:
Jan Eijsbouts, General Counsel of Akzo Nobel NV, Anne Fletcher, General Counsel of BT Group plc and Gloria Santona Esq, Executive Vice-President, General Counsel and Secretary, McDonald’s Corporation.
Elizabeth Wall
LLB President
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