Essay Guide to Corporate Social Responsibility (Leiden University)
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Course
Corporate Social Responsibility
Institution
Universiteit Leiden (UL)
This is an overview guide of all of the materials relevant to the final exam (essay) of the course 'Corporate Social Responsibility. It consists of the parts of the lectures, literature and legal documents discussed during the course, which are relevant to the final essay.
It is NOT a summary o...
,Introduction
The neo-classical view of Businesses today holds that the only social responsibility a law-abiding
business has is to maximize profits for the shareholders and that it should not be hindered by social
conscience (Friedman et al.,2005). The Friedman ‘greed is good’ doctrine professes that corporate greed
is good as long as it conforms to the basic rules of society, both those embodied in law and those
embodied in ethical custom. What hope do we have when our lawmakers respond primarily to
corporate donors, but ignore science and basic environmental and social ethics – especially when these
policies conflict with corporate financial objectives?
Unfortunately, quite a few current C.E.O.s still embrace Friedman’s ‘greed is good’ doctrine and enforce
this myopic view. They believe they merely have a duty to shareholders, and little to none to society nor
the communities in which they operate 1. However, the notion that this doctrine is opposed to a business
operating profitably while practicing CSR-principles is fundamentally flawed. There is no basic conflict
between serving your stakeholders and serving your shareholders, who of course are also stakeholders.
We’re borrowing from our future, without regarding the possible consequences it might have on our
future.
‘CSR starts to be relevant where the laf offers no answers.’ 2
Possible corporate dilemma’s pertaining to CSR
1. The dilemma of profit vs. stakeholder satisfaction – Milton Friedman vs. contemporary economists.
2. Obeying the wishes of their [contractual stakeholder / client / government], while still complying
with [human rights / environmental policies / [other CSR issues].
3. Revenue loss, but no legal consequences vs. revenue increase, but also possible legal consequences.
4. Shareholder interest vs. stakeholder interest (related to dilemma 1).
Role of…
Lawyer
How does a business lawyer involve CSR?
1. Content of work
a. Advice or defense e.g. compliance with hard and soft law. 3
b. Contracting e.g. code of conduct, sustainability clause.
c. Motivate CSR awareness client.
2. Law firm itself subject to CSR standards
a. Internally: employment, health and safety etc.
b. Externally
i. When to (not) take a ‘bad’ client? (see cases and questions).
1
P. 61 CSR for young business lawyers
2
P. 180 CSR for young business lawyers
3
P. 171 CSR for young business lawyers.
2
, ii. N.B. mind the lawyer’s independence!
3. Accepting clients’ CSR commitments
a. Agreeing to client’s code of conduct.
b. N.B. beware of conflicts of interests!
1. Holistic approach protecting company, legally and reputationally (manage compliance with ABC
legislation (Anti-Bribery & Corruption), internal policy).
a. Inappropriate hospitality;
b. Conflict of interest between government interests and tax persons – business and personal
relationships intertwine.
2. Understand personal traits, incentives executives in developed countries (often perpetrators).
3. Analytical tools: prevent, react, ensure adequate procedures.
A lawyer can function as an in-house (internal) counsel to a company, where they are involved in
drafting policies concerning human resources and sustainability, statutory non-financial disclosure
reports which could include statements regarding e.g. modern compulsive labor.
A lawyer as an external counsel is expected to respect their client’s CSR commitment while still
remaining independent from them and avoiding complicity in potential wrongdoing.
With regards to the advisory role of lawyers, they are expected to cautiously review potential decisions
(such as incorporating a new subsidiary in an emerging economy) to determine no anti-CSR practices are
being performed.4
Being mindful of these different roles requires a lot of balancing of soft and hard law skills.
Lawyers/attorneys can inform clients of the opportunities and challenges of CSR. To ensure compliance
with CSR policies, they can apply the CSR framework to the particular business environment of a
company by drafting contractual clauses and codes of business conduct.
When dealing with a supply chain or other contractual parties, an attorney/lawyer could incorporate
clauses in which the contractual party will be obliged to follow the parent companies/your client
companies’ code of conduct. These clauses could also include visiting rights for the parent company,
which entails that the parent company will be able to do random checks at the site of the daughter
company to see if they are adhering to the CSR-policies. Another mechanism is adding a termination
clause in which the parent company/your clients’ company will be able to terminate the contract with
the contractual party/daughter company in case of a failure to comply with the required CSR-policies. 5
A way in which a lawyer could suggest its client deals with a breach of CSR-policies is by issuing a formal
apology to the public, by making a formal statement which promises future adherence to CSR-policies
and creates public goodwill, by owning up to its mistakes. 6
Lawyers should not push their own agenda on their clients, due to their contractual relationship.
However, they should always stimulate CSR. 7
Shareholders
4
P. 171 CSR for young business lawyers
5
P. 176,177 CSR for young business lawyers
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P. 178 CSR for young business lawyers
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P. 173 CSR for young business lawyers
3
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