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?
-> femmert@iupui.edu
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