Published on March 6, 2014
CSR- a legal YOUR HEADING perspective and HERE potential liabilities 10.05.2011
Corporate Social Responsibilitydefinitions • What do we mean by CSR? • Are there legally accepted definitions? • Why does that matter?
A word on sustainability • Is ‘sustainability’ the same as CSR ? • Which one is better to use?
Is CSR legal? • New laws are emerging to incorporate CSR and sustainable development principles • Existing laws and legal principles can and will be extended to cover CSR and sustainable development
What are CSR practices? • • • • Anti discrimination Employee health and safety Stakeholder engagement Development of environmental, ethical, social and/ CSR codes of conduct or policies • CSR reporting
What laws are appearing? • Non financial reporting (UK and elsewhere) • Directors duties • Investment in financial and managed funds and insurance products • Company law disclosure- UK and SEC • Pension Fund disclosure
The 2% clause • New CSR requirements for companies in India • Boards need to understand how to apply the legislation • Liability for directors for failing to explain
CSR through law • Law playing an increasing role in ‘voluntary’ CSR policies • Use of contract in suppliers codes of conduct • Contract law giving CSR standards weight of legal obligations • Legal doctrines being used by NGOs-e.g FOI Act
Increasing litigation and activism • • • • Company case law- Kasky case Investor law suits – BP Civil society action Shareholder activism
‘Beyond compliance’? • Commitment without compliance is not enough • Steady escalation of demands on business – moving from ‘tell me’ to ‘show me’
Potential liabilities: Companies • Strategic Report and Directors Reporting Regulations 2013 – human rights and sustainability • Penalties for non- compliance • FRC- Financial Reporting Committeedeclaration and order • Case law examples- Rio Tinto
Potential liabilities: Directors • Companies Act- directors • Sect 172 Companies Act 2006 • Duty to promote the success of the company and social and environmental impacts • Failure to consider these elements risks personal liability • Apply to ALL directors of all companies • Failure to produce a strategic report is a personal offence
Business issues • Growing environmental and sustainability legislation • Existing laws and legal principles extending to cover CSR • More litigation • Reduce costs • Resource challenges • Attracting capital investment • Retaining and attracting talent
Concluding observations • • • • CSR becoming increasingly a legal issue Significant value in its original conceptualization Ultimately about business ethics Legal and social accountability have a role to play • Complex interaction emerging • What’s on your boardroom agenda?
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