American Bar Association
Section of International Law
Miami, 10 November 2006
Corporate Social Responsibility: New Trends
Ramon Mullerat1
1.
Corporate Social Responsibility
A group o six blind men watched an elephant. Someone asked the first blind man: “What
does an elephant look like? “Like a pillar” said the one who has been grabbing the
elephant by one of its legs”; “like a snake” said the one who had grabbed the tail; “like a
fan” the one who had touched the ear; “like a hose” the one who had grabbed the trunk,
and so on and so forth.
With CSR something similar happens. Each one of us has a different concept or at least
prioritizes some of its aspects according to our particular background and views: an
economic theory, an ethical aspiration, a legal regulation, a market tool, a management
risk instrument, and so on and so forth.
CSR is an offspring of business ethics. However business ethics is concerned particularly
with moral values, while CSR focuses more on the social, environmental and
sustainability issues than on morality.
***
2.
Definition
But little by little, CSR is ceasing to be that vague, imprecise and somehow misty
concept that has been for so many years2. Today it is every time more clear that it is an
1
Ramon Mullerat O.B.E. is a lawyer in Barcelona and Madrid, Spain; Avocat à la Cour de Paris, France;
Honorary Member of the Bar of England and Wales; Honorary Member of the Law Society of England and
Wales; Professor at the Faculty of Law of the Barcelona University; Adjunct Professor of the John
Marshall Law School, Chicago; Former President of the Council of the Bars and Law Societies of the
European Union (CCBE); Member of the American Law Institute (ALI); Member of the American Bar
Foundation (ABF); Member of the Board Northamerican Studies Institute; Former Co-Chairman of the
Human Rights Institute (HRI) of the International Bar Association (IBA); Member of the London Court of
International Arbitration (LCIA); Former Chairman of the Editorial Board of the European Lawyer;
Member of the Board of the Iberian Lawyer.
2
Corporate Social Responsibility. A (UK) government update, May 2004: “Although debate about CSR
has continued to grow, we remain a long way from consensus on what it means and its value. Some suggest
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entrepreneurial activity, which, in addition to making profits, looks to promote with the
interests of the stakeholders and the community, thus showing that corporations have a
soul and acting as a good citizen.
As the ICC says: CSR is a voluntary commitment by business to manage their roles in
society in a responsible way”
***
3.
New trends
In addition to be more precisely defined, the CSR movement is evolving following some
trends that I intend to describe briefly, in ten bullet points this morning:
First, there are no more a few companies, which have consecrated themselves to this new
doctrine, but the majority of large enterprises have introduced it in their agenda. Philip
Kotler and Nancy Lee in their book “Corporate Social Responsibility”3 indicate that
charitable giving has risen from $9.6 b in 1999 to $12, 19 b. In spite of some opponents
like the survey in The Economist last year which maintains that CSR is eroding the basis
of the free enterprise system, every time more this new doctrine is catching the attention
of business people4.
Second, since the term “triple bottom line” (people, planet and profit) was carried in
1994, an accelerating progression from early concerns about safety, health and
environment to a growing range of social concerns have been seen, among them human
rights and diversity. Recently other concerns like fair trade pricing and fair wages as well
as socially increasingly have increasingly made headlines 5. There is an increasing
conviction that there is not a conflict but a positive correlation between CSR and
profitability and that profits can go hand-in-hand with social and environmental
responsibility6.
that it is just about glossy reports and public relations. Some see it as a source of business opportunity and
improved competitiveness. Some see it as no more than sound business practice. Others see it as a
distraction or threat. Is it a framework for across the board regulative of all of the relationships between the
business and the rest of society, nationally and globally? Is it just about the activities of North American
and European multinationals in developing countries? Is it relevant and useful to companies of all sages no
matter where they are based and operate? Lively debate will continue on these and many other questions.
3
Philip Kotler and Nancy Lee, Corporate Social Responsibility, Wiley, 2005.
4
In addition, governments have made many new commitments after the World Summit on Sustainable
Development in Johannesburg in 2002, like the Millenium Development Goals, the World summit on the
Information Society (2003), the Extractive Industries Transparency, the Equator Principles, the SIGMA
project, the EU Commission White Paper 2004, the Multistakeholder Forum, the European Alliance on
CSR.
5
John Elkington and Mark Lee, “It’s Economics, Stupid” Grist, Environmental News and Commentary, 9
May 2006.
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According to recent global surveys by PwC, nearly 70% of CEOs of companies relieve that sustainability
is vital for their profitability and 2/3 say it will remain a high priority. Financial Times, 26 October 2006.
2
Third, the social responsible enterprises every time more publish their activities for their
shareholders and the public in general, either in their general annual report or in CSR
specific reports. According to a survey of KPMG in 2002, 45% of co portions issued
environmental, social or sustainability reports compared with 35% in their 1999 survey.
Greater transparency is a means to improve accountability and trust.
Fourth, CSR has ceased to be a form of philanthropy so that it is no more the case to sign
a check at the end of each financial year, after a positive result - and CSR enters into the
normal activities of the corporation before declaring its profits and becoming a all year
around responsibility. It is a shift to making long-term commitments to especial social
issues providing more than cash contributions, sourcing funds from business units as well
as philanthropic budgets, forming strategic alliances, etc. CSR is becoming as much as
anything a way of thinking about and doing business. Corporate investment decisions
driven by quarterly profit earnings are short-sighted and sacrifice long-term wealth
creation.
Fifth, it is no longer the owner or the CEO the one which decides to write the check, but
it is the collective commitment of all the corporation from the CEO until the last
employee; it is precisely the employees’ satisfaction one of the objectives of CSR. There
is an increasing awareness of CSR among the workforce.
Sixth, before a social activity generally dissociated from the cooperation, the trend is that
the activity be totally related with the core business of the cooperation, its products or
services (for instance when an electronic corporation decides to train the students of a
school on the use of computers).
Seventh, the establishment of a social norm to do good. As William Clay Ford Ford
Motor Company CEO “there is a difference between a good company and a great
company. A good company offers excellent products ands services. A great company also
offers excellent products and services but also thrives to make the world a better place”.
From the philosophy of “doing good to look good”, to the conviction of “doing well and
doing good”.
Eighth, it is clear today that CSR’s success requires the decisive cooperation of the
government and business in a strong symbiosis. This is particularly clear in developing
countries. As the World Summit on Sustainable Development (Johannesburg 2000)
recognized, partnership between business, government and civil society is the key to the
progress we need on sustainable development.
Ninth, every time sectoral projects on CSR are materializing like in the mining industry,
the energy industry or the apparel industry, for example, the Multi-fibre Arrangement
Forum, or like the Equator Principles where a group of large financial institution decided
to impose conditions particularly environmental conditions to their clients’ projects.
Ten. Up to now CSR has been something voluntary (voluntary to adopt and voluntary to
comply with). Today there is a big debate where CSR should remain voluntary or should
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become compulsory. Many believe for example that the limitation off the CO2 in the
atmosphere emissions will not stop voluntary unless it becomes a legal duty.
***
4.
The UN Norms
One of the ignition factors for this debate is the project of the UN to adopt Norms on the
Responsibility of Transnational Corporations and other enterprises with regard to Human
Rights. This project is being road-tested at present. If the Norms were to adopted, they
would become the first legally compulsory text, which would impose human rights
legally binding obligations, not only to states, it is clear from the Human rights
instruments, but also to corporations, so that any victim from the violations of such right
should sue the violating corporation in the courts of justice and receive economic
compensation.
But in my view it is a false dilemma. In CSR voluntary and compulsory activities can
cohabitate and intertwine themselves. The fact that humans rights respect would become
a hard law obligation for corporations does not mean that corporation could continue
benefiting the stakeholders and the community with their voluntary social actions.
Mandatory and voluntary approaches are compatible and the main focus on CSR should
continue to be a voluntary one7.
***
5.
Conclusion
Finally, I would like to enhance the importance of the role of the legal profession in CSR,
as a service for the public good as “the higher calling of the profession” namely the
obligation of lawyers to become involved in the overriding concerns of society
***
CSR is here to stay and perfectly complements the modern corporate governance
doctrine.
Today’s enterprises are perfectly conscious of their power and influence and therefore of
there responsibility to make the world better.
***
Peter Sutherland, “Explaining responsibility and complicity”, the 2005 Business and Human Rights
Seminar Report 2005: “[Mandatory and voluntary approaches] this is not an either-or situation. The world
has mandatory laws and regulations, and also voluntary codes and standards. They co-exist, but they
perform different roles. Mandatory approaches focus on setting minimum standards, while voluntary codes
focus on raising the bar. Progressive business fully support mandatory approaches provided that they are
reasonable and anti-competitive, because they create a level playing field and prevent abuses”
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7.
A story
Let me finish with a story
The Earth Summit in Rio de Janeiro in 1992 invited Severn Suzuki, a 12-year old who
started the Environment Children Organization in 1989, to address a full plenary session,
which was full of high-ranking and powerful businessmen. She said to them: “you teach
us how to behave in the world. You teach us not to fight with others; to work things out;
to respect others; to clean up our mess; not to hurt other creatures; to share and not to be
greedy. Then why you go out and do the things you tell us not to do?
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