Legal news and trends for Canadian in-house counsel and c-suite executives
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GLOBAL UPDATE CSR A •Identify the key business goals and priorities of the company; •Determine the legal framework in which the Company operates, including unexpected •Assess legal compliance both national and internationally; international influences; ••Establish obtainable codes, policies and procedures; ••Actively communicate and engage with stakeholders; Ensure there is credible verification, reporting and monitoring; Regularly audit for compliance. 22 F E B R U A R Y 2008 C ANADIAN Lawyer INHOUSE Essential to your Corporate Risk Analysis few years ago, a global apparel com- pany faced a most unusual lawsuit. It followed action by some non-gov- ernment organization of consumer groups who boycotted the company over alleged unfair labour practices, including child labour, among its offshore suppliers. The U.S.-based company responded with an advertising campaign, including letters to the editor of major newspapers, denying any wrongdoing and setting out its aspira- tional goals and practices. A professional litigator and self-professed social activist sued in California, claiming that the cor- porate counterattack consisted of false advertising under State laws by misrepresenting the facts. The company denied the allegation and argued that it was exercising its right to free speech under the First Amendment. But the California Supreme Court rejected that view based on the State law and upheld the right to pursue his action. Ultimately, the apparel maker paid US$1.5 million to a "fair labour" group as part of a settlement. The merits of the case were never decided. Like it or not, the story demonstrates why ligning CSR and Business Practices is critical. Local experience with a global outlook provides key essential tools for such a task. Kevin Coon, located in Toronto, is one of over 400 labour and employment lawyers within Baker & McKenzie 70 offices globally, recommends the following: Compliance Tips A •Ensure there is internal convergence on CSR from both an organizational and operational perspective; Canadian companies today need to be sensi- tive to the growing worldwide Corporate Social Responsibility (CSR) movement. "It's an issue that has to be factored into any risk analysis," says Kevin Coon, who advises corporations as a Toronto-based Principal with Baker & McKenzie LLP. "It's got to be part of your business plan." Coon defines CSR as a "set of voluntary, but essential, initiatives principally concerned with environmental, human and labour rights issues in response to the demands and expectations of consumers, investors, regulators and politicians." He adds: "It's a powerful movement, driven by trade unions and non-governmental organizations and social activists." To those who argue that a company's sole raison d'être is to maximize profits, Coon counters there does not have to be conflict between CSR and the traditional economist's view of corporate behaviour. Pointing to the frequent negative media about com- panies or their suppliers' practices around the globe, he says: "Businesses need to be aware of the potential impacts a slip-up abroad can have at home whether they are a brand sensitive company, or not. This issue can negatively impact all companies bottom line." According to GlobeScan, a research firm based in Toronto, more than 80 per cent of Canadian shareholders believe that investors should pay more attention to CSR issues. Half of all Canadians surveyed believe that companies are responsible for reducing international human rights abuses. Another significant finding: 80 per cent of the employees of large corporations say that the more socially responsible their employer, the more loyal and motivated they become. "There are many factors creating different expec- tations about corporate behaviour, from changing demographics, enhanced global communication, the proliferation of NGO's and others," says Coon. "The politicians are paying attention. They're now talking about legislation governing business conduct abroad, whether on the environmental, or human and labour rights issues. Companies ignore this trend at their peril. They need to align their business objectives and conduct with these growing trends or risk negatively impacting the business." Wal-Mart Canada is among a growing list of major companies that is responding to the Green