Ramon Mullerat (ed), Corporate Social Responsibility: The Corporate Governance of the 21st Century

Kluwer Law International and International Bar Association, 2005

ISBN - 90-411-2324-5,

Reviewed by Dr. Daren Kemp

Chartered Company Secretary

Copyright © Daren Kemp 2006. First published in Web Journal of Current Legal Issues.

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Corporate Social Responsibility (CSR) is a buzzword oft-heard on the lips of management consultants in the first decade of the 21st century, just as corporate governance was a hot topic in the late 20th century.  Yet, whereas there are now well-established definitions of corporate governance, its methods and aims, consensus is still lacking as to the nature, procedures and goals of CSR.  An anthology of papers co-published by the International Bar Association is thus to be welcomed insofar as it provides legal clarity and demythologises the consultants' jargon.

In this respect, the chapters in the "General Overview", with one exception, perpetuate the vague and ill-defined jargon of the consultants.  The opening brief chapter on "Business Ethics" by Rosamund Thomas is one of the most disappointing of the collection, making a forced and unnecessary distinction between business "ethics" and business "morals", referenced only to another publication by the author of the chapter.  A chapter by Gerald Milward-Oliver in the same Part of the anthology, unpromisingly entitled, "The soul of the corporation", sermonises with aphorisms from such illuminaries as "the nephew of Sigmund Freud", the Apollo 13 astronaut Jim Lovell, and the populariser of astronomy, Carl Sagan. 

The exception to this disappointing trend of mediocrity in the “General Overview” section is a detailed summary by Mark Walsh and John Lowry of legal requirements for corporate governance in the US and the UK, with limited reference to the EU.  Whilst admirable in its concise statement of the current position under the Sarbanes-Oxley Act 2002, the Combined Code, et al, the chapter is mis-titled "CSR and corporate governance", since it deals solely with the latter, albeit under the brief (and understated) disclaimer that "corporate governance is an increasingly important aspect of CSR".

But it is worth persevering past disappointment with this introductory Part of the anthology to resume the anticipated format of an appraisal of a work edited by a respected authority (here, Ramon Mullerat, Professor of Law at Barcelona University, etc) and co-published by an esteemed professional association (the IBA): general praise followed by minor quibbles over balance and selection.  As a whole, the book does indeed provide a very comprehensive guide to the debates, history, legal position, current business practice and possible future developments of CSR. 

Such comprehensivity is inevitably achieved with a certain degree of repetition, which perhaps could have been lessened by the editor.  For example, the history of the Caux Round Table, which was first convened in 1986 by the head of The Philips Company and published its Principles for Business in 1994, is recounted several times over by different contributors in remarkably similar fashion.  Similarly, common-place trite apologies by lawyers about pro bono work and charitable donations are made throughout Part VII. 

Boldly entitled "Lawyers and Corporate Social Responsibility", Part VII arguably should have been the core of the work.  Apart from a detailed coal-face report from the Company Secretary of The Shell Petroleum Development Company of Nigeria Limited, however, the lawyerly authors in this section completely fail to engage with the revolutionary spirit of CSR and are stuck in traditional ways of thinking about gentlemanly benevolence.  I received similar responses in a straw poll survey of city law firms' approach to CSR conducted at the College of Law in London in 2000 (unpublished).  Surely the whole point of an anthology such as this is to go beyond the knee-jerk invocation of age-old excuses for philanthropy to show how legal professionals can be a driving force in the real movement for CSR.  Such tinkering within the existing system by well-meaning lawyers will not enable the structural changes in the world that are the driving force behind CSR.

The chapter that really grapples with the relationship between lawyers and CSR is in fact located in Part V, "Regional Perspectives", giving a US view.  This chapter by Phillip Rudolph clearly lists and gives examples of the ways in which "the American legal system has produced an endless litigation maelstrom" (p313), and then asks:

Why is this relevant to CSR?  Quite simply, in contrast to most other parts of the world, because the US system fosters the use of litigation as an almost populist tool for the achievement of social and economic ends, many of the key CSR issues facing companies and their stakeholders are beginning to be played out in the courtrooms of the United States. (ibid)

Several other chapters also acknowledge the distinctive nature of the US approach to CSR, which both tends to focus on corporate governance more than the social and environmental aspects of the movement; and also prefers a rules-based solution to the European preference for general principles.  Yet in a globalising world, it must be asked how long such a distinction will continue.  For example, the drive towards global acceptance of International Financial Reporting Standards, and the SEC dialogue with the EU over a principles-based approach to accounting, may be pointers to the future direction of the trend for more general, universal principles of transparency and responsibility rather than detailed country-specific rules for each and every situtation.  But from a practical point of view, the majority of businesses may be unlikely to adopt CSR principles unless legally compelled to do so.  Perhaps the most likely scenario is an increasingly rich and fruitful mix of legal obligations and moral initiative. 

A chapter on "Some legal dimensions of corporate codes of conduct" by Claes Lundblad well illustrates how the CSR movement can snowball as moral initiative can unwittingly create legal liabilities that become enforceable.  The same chapter also tellingly suggests that, just as recent legislative measures on corporate governance were made in response to scandals of corporate governance abuses, so legislative measures on CSR may be made in response to the inevitable forthcoming scandals of CSR abuses.

It is noted (p.365, citing Smith & Feldman [2003] - though this is surely an under-estimate) that over 1,000 CSR Codes of Conduct have been issued by individual companies, not counting those produced by industry organisations, NGOs, trade unions and intergovernmental organisations.  By the end of nearly 600 pages of text in this anthology, a reader is able to distinguish the main differences between the likes of the UN Norms on Responsibilities of Transnational Corporations and other Business Enterprises with regard to Human Rights, the Global Sullivan Principles and the Global Reporting Initiative Guidelines, to name but three of the more important CSR documents.  The last Part of the anthology usefully annexes extracts from these and eight other such documents, with the all-important links to the full documents on the internet.  What would have been even more useful is a more comprehensive list of the remaining 9,989+ Codes of Conduct - such a list would provide at least a starting point for further research.  Equally, a further reading list would have been helpful, although many citations can be gleaned from the footnotes.  To continue on this note, a glossary of acronyms and other jargon would have been a useful addition to the volume; but a daunting task, since there are so many TLAs (three-letter acronyms) in CSR, from the more familiar, such as NGOs (non-governmental organisations), to the less familiar, such SRI (socially responsible investment) and the downright arcane, such as APRM (African Peer Review Mechanism).  Perhaps the fairly detailed index with which the anthology is endowed is an acceptable compromise.

The real nub of the CSR debate for me is not resolved in this anthology, though admittedly it is a point of moral principle rather than legal jurisprudence.  Tony Hoskins, a well-known CSR management consultant, sums up the attitude: “No matter what a company does in CSR, if it doesn’t communicate this to its public, then it is to no avail.” (Hoskins 2005:181).  Many business managers who implement CSR programmes, and many critics of CSR, view it simply as a public relations exercise.  Such a superficial approach betrays the heart of the movement, which has at its core the fundamental moral principle that business should only be conducted in a socially responsible manner.  CSR, in my view, should not be implemented solely as a means to a more profitable public reputation, or even as a means to more secure profits in the long term – though these are incidental and welcome side effects.  CSR should be an end in itself.

In this reviewer's opinion the book is quite expensively priced at €190.

References

Hoskins, T (2005) The ICSA Corporate Social Responsibility Handbook: Making CSR Work for Business, London: ICSA Publishing.

Smith, G & D Feldman (2003) Company Codes of Conduct and International Standards: An Analytical Comparison, Part I of II, World Bank, USA.