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Corporate Social Responsibility and the Legal Profession
“Pro Bono Publico” is a new column that we are launching in this issue to bring you news on the profession’s pro bono activities, as well as stimulating interviews with law practices and lawyers who have made “giving back to the community” a big part of their professional lives. This column celebrates the spirit of lawyers who put service before gain in aid to the needy. In this inaugural column, we discuss corporate social responsibility and its relevance to lawyers and law practices.
Introduction
Some members of the legal profession ask how Corporate Social Responsibility (“CSR”) can be relevant to the legal profession. Law firms pay their employees well and provide fairly good working conditions. Moreover, those who work in law firms are skilled and well qualified. They have to be well treated. Besides, law firms are not industrial concerns that cause pollution and have sweat shop conditions. Still, the case for law firms to adopt CSR is overwhelming. They face the same conditions in the battle for talent as well as social, economic and environmental issues as other firms.
There is both a business case and a moral imperative for CSR. It is both the right thing to do and the
smart thing to do. This article explains.
Definition of Corporate Social Responsibility
There are many definitions to CSR with a broad agreement that it is essentially about businesses doing well and doing good by working together with stakeholders. CSR is about the way an organisation is managed – strategically and operationally – and involves inculcating a shared responsibility for mutual gains. Above all, CSR pertains to the triple bottom line – measuring economic, environmental and social performance.
The ISO26000 Draft International Standard defines social responsibility as:
Responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that: • contributes to sustainable development, including health and the welfare of society;
• takes into account the expectations of stakeholders;
• is in compliance with applicable law and consistent with international norms of behaviour; and
• is integrated throughout the organization and practised in its relationships.
The multi stakeholder ISO26000 process has also indentified seven principles and seven core subjects for social responsibilities. The seven principles are: 1. Accountability;
2. Transparency;
3. Ethical Behaviour;
4. Respect for Stakeholder Interests;
5. Respect for the Rule of Law;
6. Respect for International Norms of Behaviour; and
7. Respect for Human Rights.
The core subjects identified are: 1. Organisational governance;
2. Human Rights;
3. Labour Practices;
4. The Environment;
5. Fair Operating Practices;
6. Consumer Issues; and
7. Community Involvement and Development.
The range of subjects that are underpinned by principles are values that are wide enough to affect all types of organisations, including law firms.
Trends
Understanding of CSR in Singapore
Many companies in Singapore devote significant time and resources to ”giving back to the community”. Community spirit is one of Singapore’s shared core values, and provides the context in which philanthropyand volunteerism are encouraged and recognised. Broadly speaking, companies in Singapore are likely to view contributing to society as an activity that takes place outside of their core business activities, rather than tap on their specific strengths to more effectively respond to the needs of the community, as well as to broader economic, social and environmental challenges.
Implicit CSR practices in Singapore
It does not mean that Singaporean companies are socially irresponsible. In fact, the Singaporean context – ie, the sum of national legislation, policies and social norms that companies here abide to has obliged companies to be, de facto, good corporate citizens.
Companies in Singapore are expected to meet the codes of practice and legislation concerning issues such as corporate governance, safety standards, pollution control and environmental health requirements.
National CSR survey
Nevertheless, a national survey commissioned by the Ministry of Trade and Industry (2008) revealed a very low level of awareness of Corporate Social Responsibility amongst companies operating in Singapore. Out of the 507 companies surveyed, only 40 per cent were aware of the term “CSR”. This suggests that there is a gap between local companies’ understanding of business responsibility and international definitions of CSR. Awareness of CSR was higher in larger and foreign owned companies, and lower amongst local SMEs. The latter made up 70 per cent of the survey’s respondents.
According to the findings of the survey, CSR is generally understood as paying back to society, by means of corporate philanthropy and volunteerism. The survey showed that companies that abstained from CSR initiatives did so due to the lack of allocated budgets, time and know how, as well as the perception that CSR is neither relevant to their business nor financially worthwhile. Respondents also identified public incentives, as well as awareness-building seminars, as initiatives that would encourage them to pursue CSR initiatives.
Global trends
Globally, CSR is seen as a way to minimise the ill effects of globalisation, enhance trust in society as well as address social and environmental issues.
The principles and standards of CSR are reflected in the 10 principles of the United Nations Global Compact (“UNGC”) covering human rights, labour standards, environment and anti corruption; the Organisation for Economic Co-operation and Development (“OECD”) guidelines for multinational enterprises (“MNEs”); and many international tools such as the Global Reporting Initiative (“GRI”).
Expected to be ready by 2010, the international guidance standard on Social Responsibility – known as ISO26000 – will act as an impetus for public and private organisations to embrace CSR further.
CSR Outside Singapore at a Glance
ASEAN is spearheading CSR under the ASEAN Foundation and Singapore Compact for CSR (“SC”) will be the Singaporean partner in this drive. The Blueprint for ASEAN Socio-Cultural Community (2008-2015) includes as part of its strategic objectives for CSR to be incorporated in the corporate agenda and contribute to sustainable socio-economic development of ASEAN member states. An ASEAN CSR Network is being formed as part of achieving this objective. The secretariat of this network is expected to be based in Singapore.
China is driving CSR as a national priority as part of its objective of achieving a “harmonious society”. The major Chinese companies with international reach, like China Mobile, PetroChina, COSCO and others are doing CSR reporting under the GRI framework. Chinese factories as part of the global supply chain have SA8000 certification, for CSR compliance.
Japan had been supporting CSR for business competitiveness since the mid 1990s with environmental reports. Japan Business Federation (Nippon Keidanren in Japanese) revised its Charter of Corporate Behaviour in 2002, partly in order to regain public trust in the wake of numerous scandals caused by some of its member companies. Twenty per cent of all the GRI reports globally are made by the Japanese companies. Japan is also active in the development of ISO26000 standard.
Global Indian companies generally and leaders like Tata, Reliance, Infoys are among the world leaders with their CSR programmes and reports. The Ministry of Corporate Affairs (India) is holding consultations to embed CSR in businesses.
Malaysia and Indonesia are actively promoting CSR. Malaysia has mandatory CSR reporting and CSR awards under the Prime Minister’s Office. Indonesia has legislated CSR. All these governments view CSR as a competitive advantage and as a means to address social issues.
The Norwegian government issued a white paper on CSR on 23 Jan 2009. The white paper clarifies the responsibility companies have regarding human rights, decent working conditions, the environment and anti-corruption. The Government will intensify their efforts to promote CSR by enhancing advisory services, co-operation and dialogue with the business sector. They will also require sustainability reporting by companies. The Danish government, in May 2008, introduced a 30-item action plan for corporate social responsibility. The action plan has four key action areas: propagating business-driven social responsibility, promoting social responsibility through state activities, strengthening corporate climate responsibility, and marketing Denmark for responsible growth.
The United Kingdom Government has created a ministerial post to advance its commitment to promote CSR in Britain, as well as internationally. It has promoted and funded the efforts of Business In The Community (“BITC”), sponsored annual Business Awards for Excellence, and promoted the Active Communities Challenge which was launched by the Prime Minister in March 2000 to encourage businesses to allow their employees time off work for community volunteering.
A significant number of companies (13 out of 50) reported opportunities for generating carbon credits fromthe Clean Development Mechanism of the Kyoto Protocol in their sustainability reports, with a particularlyhigh ratio of companies reporting in Korea and India (four out of the five reports from these regions in the survey). – Source: KPMG report 2007
Asian companies are still scoring quite low, with only 140 GRI reports found, and most of them coming from Japanese and South Korean companies.
CSR and the Role of the Legal Profession
“Corporate social responsibility (CSR) governance is an emerging concern of boards,” said Coro Strandberg, a principal with Strandberg Consulting in Vancouver and author of The Role of the Board of Directors in Corporate Social Responsibility.
“There is a strong business case for CSR that is industry specific and even firm specific,” she noted. “Every industry has a set of risks and opportunities in the CSR area. Law firms need to be aware of the risks.”
Among the potential risks are those to reputation, to remaining competitive and to retention and recruitment of employees. “People don’t want to be associated with firms that don’t share their values,” said Strandberg.(1)
Many law firms in the region, in fact, have been involved in pro bono work, community activities and environmental initiatives, often for years. In fact, the core business of the legal sector implies a certain degree of intrinsic social responsibility. However, a concerted CSR strategy which can be implemented in all firms has not been studied in depth.
In Europe, the Council of Bars and Law Societies of the European Union (“CCBE”) has issued this guidance to European lawyers advising corporations on Corporate Social Responsibility. As CSR becomes more important not just in the eyes of consumers, but shareholders, employees and media, more firms are embarking on their CSR journeys in the community in which they operate. According to CCBE guidelines, some of the risks for companies in addressing or failing to address CSR include increased civil and criminallitigation against companies and management, loss of top talents, decline in stock value, loss of public contracts and public procurement procedures, eg, World Bank, European Union, European Bank for Reconstruction and Development, exposure to naming and shaming campaigns and blacklisting campaigns and loss of brand value.(2)
An important aspect to consider is the fact that companies involved in CSR impose CSR requirements on suppliers, and as law firms are also considered suppliers of services, they are being asked to comply with the client’s code of conduct. This raises a number of questions, in particular as law firms may be asked by numerous clients to sign their code of conduct. By way of signature the compliance with the client’s code of conduct becomes part of the contractual relationship with binding effect and enforceability. Therefore, law firms increasingly start to develop their own code of conduct.(3)
Good corporate citizenship reflected by ethical labour, environmental and social practices cannot be ignored by firms looking to differentiate themselves in a competitive market, according to a new survey conducted by TNS Canadian Facts. The TNS survey also found that among the factors that go into building trust, a company’s reputation is almost as important as other, more tangible characteristics, such as price, value and customer service.(4)
More law schools internationally are incorporating CSR elements in their curriculum. Many adopted a broad definition of sustainability that encompassed environmental and social concerns. Issues of social justice, human rights, professional ethics, cultural diversity, climate change and conservation are increasingly being considered. In Singapore, the School of Law at the Singapore Management University has two core modules directly related to CSR: Business, Government & Society and Ethics & Social Responsibility.
Implementing CSR
Law firms have two roles – an internal role as a firm and a business role in providing legal advice and services. Before you can give the right advice, you have to set the example within the firm with its values and principles accepted by all. Just because something is not illegal it does not mean it is right. Even something legal may not be morally right. CSR goes beyond legal compliance. It involves ethics and the moral imperative.
Within the firm, ask how you can contribute to human rights, labour standards, the environment and anti-corruption (Global Compact principles). Show open commitment by signing on to these principles and brief staff and partners about them. This will in turn be reflected in your operations, such as providing high quality service to clients, cutting waste, conserving resources and upholding ethical values.
Lawyers as suppliers of service can highlight the impact of CSR to clients. As respected advisors, you have influence over mindsets and behaviour. Non-compliance with CSR principles could cause legal and reputational damage.
Another area which lawyers can contribute is to ensure that all have access to justice. Is anyone denied justice due to his or her ability to pay? If that happens, then justice will only be for those who can afford it. This will undermine basic social values and cohesion. So it is important that firms develop criteria for pro bono services for those who cannot afford to pay for legal services and to civil society organisations.
We invite lawyers in Singapore to join us and participate in our activities. New guidelines on business and human rights, labour standards for migrant workers, and climate change issues will affect everyone. Be ahead and be part of the positive change the world needs. Conclusion
The challenge is to build CSR on local precepts across the diverse industry sectors. Singapore has all the right ingredients to be a leading CSR nation. However, we do need the will to carry this forward. Singapore Compact for CSR is working to create a national platform to carry the CSR efforts to the next level, which ismainstreaming according to international norms.
Moving forward, continuous efforts to promote the shared vision of all stakeholders in Singapore should beencouraged and embraced. It is in this way that we are able to achieve sustainable economic and social progress while protecting and enhancing our people and environment.
Thomas Thomas
Singapore Compact for CSR
E-mail: thomas@csrsingapore.org
Notes
1 Donalee Moulton, “Law firms commit to corporate social responsibility”, October 10 2008 issue, The Lawyers Weekly.2 http://www.ccbe.org/fileadmin/user_upload/NTCdocument/EN_CSR_guidelinespd1_1221057092.pdf .
3 Ibid.
4 Donalee Moulton, “Law firms commit to corporate social responsibility”, October 10 2008 issue, The Lawyers Weekly.