Alexandra R. Harrington
Doctor of Civil Law Candidate, McGill University
Senior Manager & Associate Fellow, CISDL
 I. Corporate Law Background
 II. What is Corporate Social Responsibility (CSR)?
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How does it relate to environmental concerns?
II. International regimes
III. Regional measures
IV. State measures
V. Industry measures
VI. Examples
VII. Conclusion
 Generally, corporations do not, as a matter of law,
exist as a person for purposes of criminal and civil
law, and thus cannot be held liable for their
actions.
 However, corporate liability is created at law
through the designation of a corporate entity as a
“legal person.”
 This status is very important in CSR instruments
because using it gives CSR instruments a wider
scope of application and jurisdiction.
 Jurisdiction of a state over the conduct of an actor is
very important in CSR.
 Internationally (and domestically) some corporations
engage in contracting for goods or services with states,
regional entities/banks, and international organizations.
 In the contracting system, the term debarment is used
when a contractor is removed from eligibility or otherwise
sanctioned – this can occur for many reasons, including
corruption.
 Debarment can result in a contractor losing an already
awarded contract.
 Debarment usually results in the imposition of a period
during which the contractor is not allowed to bid for or
otherwise seek contracts or sub-contracts with or related to
the debarring institution.
 What is CSR?
 How does CSR relate to environmental matters?
 Rio Declaration
 Overall, the Rio Declaration stresses the need to protect
the environment and health of all peoples, especially
when in relationship to development.
 This was also stressed regarding trade and national
legislation to create and implement liability for
environmental degradation.
 Agenda 21
 Created as a wide-ranging, worldwide policy statement,
addressing the following areas in relationship to the
environment, sustainable development, and economic
growth.
 Kyoto Protocol
 The Kyoto Protocol, which will expire in 2012 unless
extended by State Parties, created the framework for
carbon markets – international, regional or national –
and their functioning.
 Included in the carbon market framework were the
Clean Development Mechanism and Joint
Implementation, which provides ways for developed
countries to fund emissions reducing projects in both
the developing and developed worlds and receive credits
that could be used in the carbon market system.
 The regulations that have been promulgated to govern
CDM & JI projects in part ensure that the projects that
have been contracted for are actually completed in a
sustainable way that meets the asserted emissions
reductions targets.
 This is an important consideration for corporate social
responsibility in that the CDM and JI rules will ensure
that these projects are undertaken in a responsible way
that does actually result in emissions reductions at the
project site.
 It should also be noted that, if there is an act of bribery or
corruption that involves circumventing environmental
laws/regulations, for example the completion of a
meaningful environmental impact assessment, there are
international – and regional – corruption regimes that are
related to CSR.
 UN Convention Against Corruption
 OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions
 Uniform Framework for Preventing and Combating Fraud &
Corruption
 Asian Development Bank, OAS Inter-American Convention
Against Corruption, Council of Europe & EU,
 The European Union has identified corporate social
responsibility as being key to sustainability and
economic growth.
 In Europe, corporate social responsibility has been
extended to small and medium enterprises as well as
the large corporate entities with which it is usually
associated. This has been done through an EU-wide
education campaign, creating awareness and stressing
the importance of good business practices.
 Corporate social responsibility has also been identified
by the EU as important to the development of business
competitiveness.
 Liability & Polluter Pays & Precautionary Principle
 Under EU Directives, corporate entities are required to
make restitution for environmental damages incurred as
a result of their actions/fault.
 Sixth Environment Action Programme, 2010
 States that efforts to ensure corporate compliance with
environmental regulations and voluntary commitments
regarding environmental protection are a key part of the
EU’s strategy to combat environmental problems.
 USEPA – Compliance mechanisms
 The USEPA provides businesses and other regulated
entities assistance in complying with the terms of US
environmental laws and regulations.
 Compliance mechanisms are non-punitive and generally
consist of voluntary EPA inspections, and auditing/selfdisclosure policies.
 USEPA – enforcement mechanisms
 There are several mechanisms through which the USEPA
enforces the compliance of businesses.
 One mechanism is through civil sanctions, such as
financial penalties.
 Another mechanism is through the enforcement of
cleanup provisions in the event that there has been a
form of spill.
 Finally, criminal mechanisms are available against
corporate entities, for example in the event of illegal
dumping.
 CERCLA responsibility provisions
 Under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) businesses
which currently are polluting or who have polluted.
 Based on CERCLA’s responsibility provisions, it is
possible for the current owner of a property on which a
toxic substance was spilled to sue up the chain of owners
to get to the owner(s) responsible for the actual
pollution.
 Guidelines for Multinational Enterprises
 General Principles
 Stresses that good corporate governance and corporate profit
are not exclusive;
 Stresses the need for corporate operations to be aware of
environmental and social factors of operations;
 Ch. V – Environment
 OECD Risk Assessment Awareness Tool for
Multinational Enterprises in Weak Government Zones
 Provides corporations in these situations with questions
that they might face and realistic answers, including
questions relating to the application of laws and
environmental standards.
 Uniform Framework for Preventing and
Combating Fraud & Corruption
Signed by the World Bank, African Development Bank, ADB,
EBRD, EIB, IMF, IADB.
 Creates Joint International Financial Institute on Anti-Corruption
Task Force.
 Also provides basic agreement on the actions of these banks
regarding financing and lending
 Strengthens cooperation and coordination between institutions
regarding fraud and corruption.
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 Uniform Framework for Preventing and
Combating Fraud & Corruption
 Requires that member entities ensure that they are
involved in transactions and relationships where laws,
including environmental laws, are followed.
 Lending policies & project design/Environmental
Assessment
 The World Bank now requires that potential funding
projects undergo significant and meaningful
Environmental Impact Assessments for the
communities in which the project would be located
and/or effect.
 The World Bank’s lending policies include requirements
that the environment be included in the consideration
of the project overall.
 Compliance assurance departments within the World
Bank
 In order to self-monitor, as well as to monitor the
outside entities that are involved in the World Bank’s
projects, as well as their internal procurement
departments, there are compliance assurance
departments.
 Among the considerations of these departments is
whether the project/contractor is fulfilling its
environmental requirements.
 Paris Declaration – emphasises the importance of
environmental impact assessments for both donor and
partner countries.
 ADB/OECD Anti-Corruption Initiative for Asia Pacific
 Emphasizes the importance of Corporate Responsibility
and Accountability
 Lending practices/requirements
 Among the ADB’s lending requirements is the
requirement that the project to be funded does not
cause environmental damage.
 Lending principles and guidelines
 Among the IADB’s lending requirements is the
requirement that the project to be funded does not
cause environmental damage.
 Lending practices/requirements
 Among the African Development Bank’s lending
requirements is the requirement that the project to be
funded does not cause environmental damage.
 Environmental Impact Assessments – are required for
projects that are to be undertaken by the European
Development Bank. These must be thorough and
convincing, and examine the impacts on the affected
communities.
 Incorporation of environmental consideration and
protection as part of the internal and lending
considerations of the EIB.
 The UN Global Compact offers businesses a way to
adhere to the MDGs and international principles of
sustainability by pledging to abide by 10 Principles.
 Key among the 10 Principles are:
 Principle 7: “Businesses should support a precautionary
approach to environmental challenges.” Recommended
ways of implementing this at a business level involve the
promulgation of corporate codes of conduct and
standards for business practices related to the
environment.
 Principle 8 – “Undertake initiatives to promote greater
environmental responsibility.” Recommended
methods of implementing this include ensuring
transparency with local suppliers and contractors.
 Principle 9 – “Encourage the development and
diffusion of environmentally friendly technologies.”
Recommended methods of implementing this include
reviewing corporate investment policies in order to
ensure that they promote the development of
environmentally friendly technologies.
 Forestry Stewardship Council
 An independent NGO founded over 15 years ago with the goal of
promoting sustainable and responsible forestry practices within the
industry.
 Uses rules, certification, trademark assurances and accredition
services to ensure the industry and consumers that participating
entities adhere to sustainable and responsible forestry practices and
forestry management.
 Kimberley Process
 In response to growing public concerns and NGO
campaigns regarding “conflict” or “blood” diamonds, the
diamond industry, together with interested states, came
together and adopted the Kimberley Process, which is a
certification scheme for diamonds that involves all levels
of public and private involvement in the diamond
mining and trading process.
 This involves not only the conflict but, necessarily, the
environment in which mining practices are carried out,
especially in times of conflict.
 GIA draft standards
 The Gemological Institute of America is examining the
enactment of standards for gold and other mining
practices, which would allow the customer to be assured
that they have purchased an item that was not made in
harmful labour practice situations.
 Like the Kimberley Process, this necessarily implicates
the environmental practices of the mine.
 Extractive Industries Transparency Initiative (EITI)
 An initiative that uses principles to certify the
transparency of oil, gas and mining operations.
 EITI Principles
 We share a belief that the prudent use of natural resource
wealth should be an important engine for sustainable
economic growth that contributes to sustainable
development and poverty reduction, but if not managed
properly, can create negative economic and social impacts.
 We affirm that management of natural resource wealth for
the benefit of a country’s citizens is in the domain of
sovereign governments to be exercised in the interests of their
national development.
 We recognise that the benefits of resource extraction occur as
revenue streams over many years and can be highly price
dependent.
 EITI Principles
 We recognise that a public understanding of government
revenues and expenditure over time could help public debate
and inform choice of appropriate and realistic options for
sustainable development.
 We underline the importance of transparency by
governments and companies in the extractive industries and
the need to enhance public financial management and
accountability.
 We recognise that achievement of greater transparency must
be set in the context of respect for contracts and laws.
 We recognise the enhanced environment for domestic and
foreign direct investment that financial transparency may
bring.
 EITI Principles
 We believe in the principle and practice of
accountability by government to all citizens for the
stewardship of revenue streams and public expenditure.
 We are committed to encouraging high standards of
transparency and accountability in public life,
government operations and in business,
 We believe that a broadly consistent and workable
approach to the disclosure of payments and revenues is
required, which is simple to undertake and to use.
 EITI Principles
 We believe that payments’ disclosure in a given country
should involve all extractive industry companies
operating in that country.
 In seeking solutions, we believe that all stakeholders
have important and relevant contributions to make –
including governments and their agencies, extractive
industry companies, service companies, multilateral
organisations, financial organisations, investors, and
non-governmental organisations.
 EITI Criteria
 Regular publication of all material oil, gas and mining
payments by companies to governments (“payments”) and all
material revenues received by governments from oil, gas and
mining companies (“revenues”) to a wide audience in a
publicly accessible, comprehensive and comprehensible
manner.
 Where such audits do not already exist, payments and
revenues are the subject of a credible, independent audit,
applying international auditing standards.
 Payments and revenues are reconciled by a credible,
independent administrator, applying international auditing
standards and with publication of the administrator’s opinion
regarding that reconciliation including discrepancies, should
any be identified.
 EITI Criteria
 This approach is extended to all companies including
state-owned enterprises.
 Civil society is actively engaged as a participant in the
design, monitoring and evaluation of this process and
contributes towards public debate.
 A public, financially sustainable work plan for all the
above is developed by the host government, with
assistance from the international financial institutions
where required, including measurable targets, a
timetable for implementation, and an assessment of
potential capacity constraints.
 International Council on Mining & Metals
 10 Principles for Sustainable Development
 implement and maintain ethical business practices and
sound systems of corporate governance.
 Integrate sustainable development considerations within the
corporate decision-making process.
 Uphold fundamental human rights and respect cultures,
customs and values in dealings with employees and others
who are affected by our activities.
 Implement risk management strategies based on valid data
and sound science.
 Seek continual improvement of our health and safety
performance
 10 Principles for Sustainable Development
 Seek continual improvement of our environmental performance
 Contribute to conservation of biodiversity and integrated
approaches to land use planning
 Facilitate and encourage responsible product design, use, re-use,
recycling and disposal of our products
 Contribute to the social, economic and institutional
development of the communities in which we operate
 Implement effective and transparent engagement,
communication and independently verified reporting
arrangements with our stakeholders
 Promotion of environmental protection as part of
members’ operations and business practices.
 Seeks to improve the environmental and social conditions
in which cotton is grown and cotton products are
produced.
 The long term objectives of the Better Cotton Initiative are:
 To demonstrate the inherent benefits of Better Cotton
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production, particularly the financial profitability for farmers
To reduce the impact of water and pesticide use on human
and environmental health
To improve soil health and biodiversity
To promote Decent Work for farming communities and
cotton farm workers
To facilitate global knowledge exchange on more sustainable
cotton production
To increase the traceability along the cotton supply chain
 Production Principles:
 Better Cotton is produced by farmers who minimise the
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harmful impact of crop protection practices
Better Cotton is produced by farmers who use water
efficiently and care for the availability of water
Better Cotton is produced by farmers who care for the health
of the soil
Better Cotton is produced by farmers who conserve natural
habitats
Better Cotton is produced by farmers who care for and
preserve the quality of the fibre
Better Cotton is produced by farmers who promote decent
work
 Emphasis on the use of environmental standards
throughout the communications industry supply chain
(which is very broadly defined).
 EICC Code, which stresses environmental
responsibility as a key platform for the industry and its
members.
 A key platform of the association is to encourage
sustainability throughout the cycle of the tin industry,
especially at the mining stages.
 Has issued recommendations for corporate
incorporation of environmental standards into
business practices, especially in terms of supply
chains.
 Currently working to create a standard for social
responsibility that will include environmental
concerns and practices.
 Starbucks has started working very closely with the
coffee farmers from whom it purchases its coffee beans
in order to minimize their carbon use and allow them
to enter into the carbon markets as a result of this
carbon reduction.
 As a corporation, Starbucks has taken measures to use
more recycled products in their packaging, ensure that
the designs of their stores utilize sustainable products
and are energy efficient, reduce the amount of water
used in stores and in the process of making coffee and
other retail items, and reduce the emissions of its
retail entities.
 Starbucks has also partnered with other
environmental groups to educate its coffee farmers in
sustainable practices and encourage their use.
 Previously, IKEA was dogged with allegations
regarding child labour and unsustainable business
practices.
 In order to combat these allegations and to create a
responsible corporate policy, IKEA engaged with
international groups, such as the WWF, UNICEF, and
the Save the Children, to understand the responsibility
and sustainability issues that the corporation would
need to consider.
 IKEA now uses a series of factors to evaluate whether
to enter into a business relationship with an entity;
environmental considerations are among these factors.
 IKEA’s suppliers are required to implement plans that
reduce the impact of their activities on the
environment.
 IKEA has implemented a code of conduct for its
subsidiaries, suppliers, and employees that seeks to
assure environmental protection. This has been
particularly important to IKEA’s business practices in
Asia.
 In addition, IKEA has taken measures to ensure that
its catalogues are produced with materials that are
recycled or otherwise friendly to the environment.
 In conjunction with various European retailers, IKEA
has begun programs to track and reduce the
environmental impact of source of transportation for
its products.
 Also has enacted a policy to make its products
environmentally friendly themselves, such as designs
for energy efficient light bulbs.
 Patagonia is an outdoor clothing and equipment store
that was founded in the US.
 Patagonia is involved in many environmental
conservation efforts, from assisting conservation
groups in their missions to providing grants to smaller
environmental projects that often don’t qualify for
larger corporate grants to creating a national park in
Argentina.
 Patagonia also funds the “Freedom to Roam” project,
aimed at protecting migratory species and their
habitats.
 Patagonia’s “Workplace Code of Conduct” states the
corporate belief that their products should be made
causing as little harm to the environment as possible.
 The Code of Conduct also requires that factories used
for their products have reduced emissions, fulfill all
local and other environmental requirements, have
statements of environmental policy, and minimize
their impact on the environment generally.
 Patagonia used, and continues to use, third party
auditors to investigate and evaluate the compliance
levels of the factories it uses.