Tag Archive | "Corporate Social Responsibility"

The Non-Profit Age: Altruistic Values in America

Credit: Forbes

Photo Credit: Forbes

The American nonprofit sector has grown at an exceptional rate and continues to grow each year.  In the 10 years from 2001 to 2011, the number of nonprofits in the United States grew by 25%.  And the sector continues to grow.  In 2010, the U.S. nonprofit sector employed approximately 10% of the country’s workforce and accounted for 9.2% of wages and salaries paid in the U.S.  In 2012, that number had increased to approximately 10.3%, with nonprofits providing 11.4 million jobs to the U.S. workforce.  With as much as the sector has grown in the last 15 years, it’s no surprise that charitable giving has also continued to increase.  In 2014, charitable contributions reached an estimated $358.38 billion.  What’s more, beginning in 2010 there has been an increase in charitable giving for the last five consecutive years (the Urban Institute’s Nonprofit Sector in Brief 2015 compiles and analyzes data through year-end 2014).  In fact, the institute found that private giving has increased 18.2% since 2009.  So, how does the American non-profit sector measure up with the rest of the world? The answer is a lot more convoluted than you’d expect.

Based on giving as a share of GDP, the U.S. comes in first at 1.85% of GDP, followed by Israel (1.34%) and Canada (1.17%).  When you look at volunteerism as a share of GDP, the Netherlands ranks first, followed by Sweden, Tanzania, and Norway.  However, when looking at just the percentage of the adult population participating in volunteerism, Norway comes in first with 52% participation, followed by the United Kingdom with 30% and Sweden at 28%.  The logical question when reviewing this data then becomes, which form is the best?  Are Americans the most charitable because we give the highest percentage of money to charity? Or is Norway truly the more charitable country because more than half of its population participates in volunteerism (compared to just 22% in the U.S.)?  Perhaps, the question is not who gives the highest amount of GDP or who volunteers the most hours per year, but rather, what factors motivate us to give (regardless of form), and how are these motivations shaped by our own unique social circumstances?

In her article “Who Gives the Most,” Elisabeth Eaves suggests that perhaps our charitable activities are a direct response to our culture and political beliefs.  This sentiment also seems to be echoed in Arthur Brooks’ book, Who Really Cares (albeit Brooks’ analysis centers on a national, as opposed to international, perspective).  And in fact, when looking at the philanthropic sector on an international scale, one common theme among developed nations is that those with higher taxes and “bigger social safety nets” tend to have lower rates of giving.  Thus, it’s hypothesized that nations with lower taxes and less extensive social welfare programs tend to feel a sense of duty to step-up where their government lacks, and to privately fund initiatives to fill the needs they see around them.

Information collected through the Comparative Nonprofit Sector Project found that nations with extensive welfare systems put in place by the government were far less likely to engage in charitable giving.  Accordingly, its been argued that lower taxes, and in turn, more disposable income actually encourages greater generosity because people see needs around them and feel that it is their responsibility to do good deeds.  Whereas countries with higher rates of mandatory redistribution, such as France, see less need around them, pay higher taxes, and believe it is the government’s responsibility to appropriately allocate resources and take care of all of the citizens in the community. This in turn allows them to shift the burden from their own shoulders and place it on the government in exchange for paying higher taxes.  Again, this seems to be the case from both a national and international perspective.

Although Americans give the highest percent of GDP to charity each year, this fact alone doesn’t necessarily make the U.S. the most charitable nation. Rather, a more appropriate conclusion might be that Americans see a need in the U.S. that must be filled, and find the best way to fill that need through monetary giving; whereas countries like Norway and the U.K. might see a similar need, but feel that the most appropriate way to effectively fill the need is through volunteering time as opposed to money.  Is one approach better than the other?  It seems that we all feel the same intrinsic impulse to fill the needs we see around us, thus, to draw a distinction between volunteering money, time, or delegating such responsibility to the government is neither necessary nor beneficial, because in the end, charity is charity; regardless of its form.

Demi Arenas is a 3L and Staff Editor on the Denver Journal of International Law and Policy.

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The Hidden Cost of Shrimp: Forced Labor in Thailand’s Fishing Industry

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A Thai fishing boat along Koh Samet, an island in the country’s eastern seaboard. Source: Mongabay, Lies, Deceit And Abduction Staff Thailand’s Fishing Industry. Photographer: Philippe Gabriel.

Imagine a pirate boat, surrounded by miles of unending water. Exhausted, scared people trapped aboard that floating prison, forced to work up to twenty-four hours nonstop for little or often no pay. They are living in inhumane conditions only on rice, parts of fish that no one else would touch, and unclean, unhealthy water. They are held in a cages, regularly beaten, forced to take methamphetamines to keep them working long hours, and sometimes killed for working not fast enough or for trying to escape. These execution-style killings are done in a variety of horrifying ways including electrocuting or tying the slave “by his limbs to the bows of four vessels, so that the ocean waves [will] tear the worker’s body apart.” Having no glimpse of hope to be ever free, they are desperate because even risky escapes are rarely successful: corrupt law enforcement officials often return fleeing slaves back to the ships for a fee. Imagine the dark and chilling refrigeration area on this pirate ship where caught fish are stored along with the corpses of killed slaves. Now imagine a shrimp farm in Thailand, where the farmers raise shrimp feeding them slave-caught fish that pirate ship supplied. Once the shrimp grow, they are exported to food manufacturers and retailers around the world, including the United States’ major food chain distributors such as Santa Monica Seafood, Stavis Seafoods, Thai Union and end up in supermarkets such as Costco, Wal-Mart, Kroger, Safeway, and Albertsons. Did you buy shrimp lately? The price for that “plate of seafood” on your table costs more than the dollar value you paid for it. The price is horror, the desperation of forced laborers, the tears of their mothers and children. As Hlaing Min, a runaway slave, one of a few who have successfully fled from a pirate boat, expressed: when Americans are eating seafood, “they should remember” the slaves, the slaves whose bones could easily form a mountain – “an island, it’s that many” – of bones of forced laborers that are under the sea.

It is not a fictional horror story. It is a reality, the reality of modern-form slavery in Thailand. Thailand, one of the world’s major seafood exporters and a key seafood supplier of United States, is remarkable in its forced labor practices. Human rights abuses in the Thai fishing sector are not a new phenomenon; deeply embedded in a commercial global supply chain, these abuses did not receive required attention up until recently. Unsurprisingly, Thailand is the only country in the world that voted against a U.N. international treaty intended to stop forced labor. Thailand’s current fishery laws, including the Fisheries Act, B.E. 2490 (1947); the Act Governing the Right to Fish in Thai Waters, B.E. 2482 (1939); and the Thai Vessel Act, B.E. 2481 (1938) are all woefully outdated.

Despite the Thai government’s numerous assurances to the international community to clean up its fishing industry from human rights abuses and its boosted legislative efforts in regards to protection of workers employed within the fishing industry (including Thai Anti-Trafficking in Persons Act, B.E. 2551 (2008); Labor Protection Act, B.E. 2541 (1998); the Recruitment and Job-Seekers Protection Act, B.E. 2528 (1985); the establishment of more strict labor regulations on fishing vessels; the requirement of national registry for illegal migrant workers; and the establishment of shelter facilities for victims of human trafficking), uninterrupted exploitation of forced laborers is still present in the fishing sector. “The reality is [that] the Thai government’s high-sounding rhetoric to stop human trafficking and clean up the fishing fleets still largely stops at the water’s edge,” Phil Robertson, deputy director of Human Rights Watch’s Asia division explained.

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Former slaves on Thai-run ships wait processing after being rescued. Source: Mongabay. Photo courtesy of the Labour Rights Promotion Network.

Corruption that remains among government and law enforcement officials creates an environment of impunity, especially around human rights abuses of migrant laborers, discouraging the rare surviving victims from pursuing charges against their abusers. Due to virtually inexistent legal protection for undocumented workers and fear of arrest or deportation, most migrant fishers choose to be abused rather than seek out protection from the Thai authorities. Making human rights abuse even worse, there is a history of political and cultural conflict between Thailand and its neighboring countries and, as a result, people in Thailand have little or no concern for the lives of migrants; some of them even “see the abuse as justified.” The exploitation of laborers in the Thailand fishing industry already is “one of the worst examples of human rights abuse in the world today.” Yet the International Labor Organization stressed in its 2015 Report that countless cases of human trafficking and forced labor that were already uncovered are only “the tip of the iceberg in terms of the real prevalence of such abuses” in Thailand.

Abusive practices of overfishing have ravaged the marine ecosystems of Thailand, depleting fish stocks, and pushing fishing boats to move farther offshore, traveling as far as Eastern Indonesia and East Africa in search of a profitable fish catch. They often stay at sea for months or even years at a time. Not many Thai residents want to take these low-paid, dangerous jobs as fishermen; legal labor migration is limited through Thailand’s government policies, and it is not even economically viable for fishing companies to use a paid workforce. Yet Thailand seafood exports generate near $7 billion in annual earnings and to meet this demand a network of human traffickers and brokers has emerged. These brokers regularly recruit men and sometimes even children from poor neighboring countries, coercing, tricking and often drugging and kidnapping people to work in the fishing-related industry. When forced laborers become unable to work, die, or escape from sea slavery, the brokers can easily replace them with new recruits. Each slave, who is bought and sold like an animal, costs around $1,000, in some cases even less than $400 and is often subjected to forms of debt bondage, told to work off the “debt.”

As the U.S. State Department noted in its annual Trafficking in Persons Report (TIP), there are approximately three to four million migrant laborers in Thailand, most of them from Burma, Cambodia, Laos, Vietnam, India, China, and Uzbekistan. According to the Environmental Justice Foundation, more than ninety percent of people working in Thai fishing industry are migrant workers. Yet the total population of fishermen is unknown because most migrants do not go through a registration system. In its 2014 report, the U.S. Bureau of International Labor Affairs has reported that shrimp in Thailand is produced by both child and forced labor. TIP puts Thailand at Tier 3, the lowest level of its report, meaning that Thailand does not comply with the Trafficking Victims Protection Act’s minimum standards and is not making substantial efforts to comply.

Even though U.S. companies have become increasingly aware of slavery and human trafficking in the Thailand supply chain, as of 2015, United States shrimp demand has increased its production in Thailand by twenty percent from the last year, expecting to import at least 250,000 metric tons of shrimp. Though the United States has a large domestic shrimp industry in the Gulf of Mexico, U.S. shrimp are more expensive than the shrimp from Thailand. Thus, driven by the goal of keeping their prices for shrimp low and so to obtain more profits, U.S. retailers import shrimp. In fact, ninety four percent of the shrimp consumed in U.S. is imported farmed shrimp.

Some advocates of ending human rights abuses suggest that retailers should simply boycott suppliers who engage in slavery practices. Yet corporations have pointed out that this would not solve the problem because less-ethical buyers would line up to take their place or pointed to a lack of alternative sustainable seafood. Furthermore, because of the complicated nature of the global seafood chain, the use of trafficked labor is easily hidden in the process. As Huw Thomas, head of seafood procurement at Wm Morrison Supermarkets explains, tracking the source of seafood products is very difficult because the seafood industry is incredibly complicated and it may sometimes require tracing more than ten steps that separate the corporation, which bought the farmed seafood products, from the origins of fishmeal that go into the shrimp. Still some human rights organizations have already simplified that tracking for corporations: “[i]f you buy prawns or shrimp from Thailand, you will be buying the produce of slave labour,” Aidan McQuade, director of Anti-Slavery International, explains.

Only a few resources and programs currently exist that help to identify links in the seafood supply chain where slavery occurs. Humanity United (HU), a San Francisco-based foundation, recently designed a campaign to combat slavery and human trafficking. The campaign includes four aspects: (1) focusing on targeting a single industry in a single country (HU chose Thailand fishing industry as a target); (2) chartering a coordinated strategy by cultivating a network of partners (HU encourages its partners to engage in work and not just simply sign checks to the organization); (3) interacting with the corporate business interests (HU confronts human rights abuses and helps companies to improve labor conditions of Thai workers); and (4) monitoring and confirming whether labor conditions in the seafood industry are actually improving (HU plans to pursue certification platforms and incorporate its assessments of work conditions into the certification process).

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On Costco shelves as of August 18, 2015. Source: Case3:15-cv-03783.

Everyone in Thailand and every corporation doing business with Thailand is keenly aware of slavery and human trafficking issues in the seafood industry supply chain. Indeed, all leading retailers “have factored these issues into their social responsibility approaches.” For example, in 2014, several corporations, including Costco and Tesco, announced publicly that they do not tolerate human trafficking and slavery and promised to scrutinize their supply chains, avoiding suppliers that engage in human rights abuses. Yet, violating its own public statements and its Supply Chain Disclosure, Costco continued to sell slavery-tainted shrimp to consumers until fall of 2015. Frozen shrimp and shrimp in wonton soup that Costco was selling were supplied to Costco by Thailand company Charoen Pokphand Foods Public Company Limited (Charoen Pokphand Foods) or C.P. Food Products, Inc. (C.P. Foods). Those Thailand-based companies, as Guardian reported in June, 2014 after its six-month investigation, bought processed fish from suppliers that operated or, in turn, bought from pirate fishing vessels manned with slaves; C.P. Foods fed that processed fish to the shrimp it farmed prior to selling it to Costco. Furthermore, in 2014, Bob Miller, C.P. Foods’ UK managing director, already admitted that the company knew “there’s issues with regard to the [raw] material that comes in [to port].” However, Costco’s corporate practice of dealing with bad actors remained intact.

While activists alone cannot eradicate human rights abuses in the seafood industry, when the local Thai authorities fail to rein them in and U.S. corporations remain passive in cleaning up or monitoring their supply chains, U.S. consumers, who are unwilling to support slave labor practices, can help. On August 19, 2015, Monica Sud, one of Costco’s customers, commenced a California consumers’ class action against Costco and its Thai shrimp suppliers. Sud filed three claims for relief. The first claim is against Costco, Charoen Pokphand Foods, and C.P. Foods for unlawful business acts and practices. In regards to Costco, the lawsuit alleges that Costco for several years knowingly sold shrimp from Thai suppliers that farmed those shrimp on fish obtained from slave laborers and Costco was aware that the shrimp were directly derived from a supply chain that depended upon human trafficking and slavery. The second claim is against Costco for misleading and deceptive advertising practices, such as despite Costco’s knowledge of human rights abuses in its supply chain, Costco did not advise its customers that its farmed shrimp was tainted by the use of forced labor. The third claim is against Costco for violation of the Consumer Legal Remedies Act, seeking an injunction to bar Costco from selling forced labor produced products, requiring Costco to disclose products in its supply chain that have been tainted by slave labor, and alleging that Costco’s use of forced labor is inconsistent with its California Transparency in Supply Chains Act disclosure. The lawsuit also seeks to compensate shrimp products’ purchasers. The complaint does not allege Costco’s corporate liability for complicity in human rights violations, yet it does so against C.P. Foods, stating that the corporation is directly complicit in the use of forced labor practices and has profited from those practices.

After the commencement of Sud lawsuit, Richard Galanti, a spokesman for Costco, responded that Costco is doing all it can “to address the issues that have surfaced,” working with the Thai retailers, the fishing industry, and the Thai government. Acknowledging the existence of slave labor in Thailand’s fishing industry, Galanti noted that unsatisfied customers “can return [Costco]’s item for a full refund.” As of November 15, 2015, Costco removed all seafood products made in Thailand from its Colorado stores and its website. Anne Marie Murphy of Cotchett, Pitre & McCarthy, LLP, one of the attorneys representing Sud, stated that the lawsuit pursues goals of corporate reform and publicity; it is aimed to raise consumers’ awareness as to the issue of slavery; and hopefully will influence U.S. corporations’ practices, bringing long needed “change through the marketplace.”

Sud is the first consumer class action alleging inadequate disclosures and it set an example, started a new wave of class action litigation against other corporate defendants that have similar issues with forced labor produced products. Class actions already have been filed against Hershey, Iams, Mars, and Nestle. It is also expected that the attorney general, who has authority to enforce the California’s Transparency in Supply Chains Act, will begin filing civil suits against corporations, forcing them to fix their disclosures in compliance with the Act. Furthermore, keeping up with this movement, the Business Supply Chain Transparency on Trafficking and Slavery Act of 2015 was recently introduced into the U.S. House of Representatives and the Senate. The new law will require large corporations nationwide to report any measures they have taken to identify and address human rights abuses within their supply chains.

While according to Satasap Viriyanantawani, general manager for the Thai business of Siam Canadian Foods, shrimp buyers in United States can even dictate the price they want to pay to suppliers, giant purchasers, such as Costco, can challenge the system of human rights abuses, forcing change by dictating terms to its suppliers and ensuring the products they buy are not derived from or otherwise created through the use of slavery or human trafficking. However, instead of using its market power to stop slavery in its supply chain, Costco had facilitated it, fueling the cycle of human trafficking and slavery through its purchases of tainted shrimp. If Costco, a corporation with total revenues of $116,199,000 for 2015, does not have the resources to monitor and control its suppliers, then who does?

Eliminating human trafficking and slavery from the global seafood supply chain is not an easy task. Yet it is well possible if everyone – including international and national communities, the private sector, and consumers – gets involved and presses for change. As a long-term solution for making a real impact, getting corporations to change their policies and combatting slavery in their supply chains, the international community should create an enforcement mechanism of one model standard to monitor, audit, and certify the integrity of global supply chains. All information regarding each individual country should be required to be shared with the international community. Given the fact that U.S. corporations have “dominant market share” in the world, the corporations should use their position to influence and pressure their suppliers to join an “accountability revolution,” meaning to uphold standards of the international community, enforcing norm-conforming conduct, performing audits of their supply chains, and preventing the cycle of human trafficking and forced labor. It is in the best interest of everyone in the international and national communities to ensure that the price for a “plate of seafood” is the monetary amount and not its current real cost of the desperation and horror of people who were lured into a life of slavery until they meet their watery grave.

Ilona Starchak is a 3L law student at the University of Denver Sturm College of Law and the Staff Editor on the Denver Journal of International Law & Policy and the Denver Criminal Law Review.

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VW Under Fire: Legal fallout of the emissions sensor deception

Volkswagen (VW) has faced hurdles in the company’s almost 78-year history. As a company formed under infamous Nazi leader Adolph Hitler’s vision and direction, reformation was in order for the car to ultimately live up to its name as the “people’s car.” However, after World War II ended, the company did succeed in creating well-built, affordable cars.

Now, VW is facing another hurdle that may be worse than previous ones. VW was recently exposed for using software to “rig” diesel emissions tests in the United States and across Europe. The software was used to cover-up emission outputs in order to meet the emission regulations of countries in which their cars and products were sold. Over 482,0000 vehicles in the U.S. are thought to be affected by this scandal and estimates of up to 11 million cars effected worldwide. In the U.S., alone, the carmaker could face penalties from the Environmental Protection Agency of up to $18 billion, and, again, that is only from the less than 500,000 cars affected within the U.S.

Potential Fall-Out

Germany is currently considered the most economically sound country within the European Union, has often been looked to for bailouts for other countries, i.e. Greece, and has been at the forefront of most recent EU stimulus and growth plans. The Country may now be in for a massive storm.

One in seven workers in Germany are dependent on the car industry, 274,000 of those workers are employed directly by VW, and 18% of Germany’s exports are VW cars and parts. VW has already admitted to “rigging” emissions tests on 2.8 million vehicles in Germany. Results from European Road Tests showed a 40% higher nitrogen oxides emission than standard allow and was advertised by the company. Due to these revelations, VW stock has dropped over 34% as of September 25th, 2015 and the threat of astronomical fines and consumer lawsuits that are very likely to arise or have already been filed, looms large over Germany and her citizens. If VW is not able to pull through this scandal or has to sell-off additional assets or subsidiaries, there is no telling what the damage might be to Germany’s economy, and, in turn, the EU as a whole. Additionally, in regards to the current migrant crisis and Germany at the helm of plans to relocate and assimilate such people, the depression of the German economy may thwart governmental plans and avenues for which support and jobs may have been provided.

The fall-out is likely to reach other countries as well, and, in fact, has already affected some industries in China and Japan. Some stocks in the Japanese markets fell as much as 16% and carmakers across the board saw dips in their shares. The most affected stocks were manufacturers of car parts and specifically parts used in diesel engines.

Another aspect of the fall-out of this massive scandal will be trust in corporate social responsibility programs. In Volkswagen’s 2014 Sustainability Report, environmental issues are named as a top priority. The quote leading the Environmental section of the report is as follows: “We have set ourselves ambitious targets with regard to environmental protection, because we’re aiming to be the leading player in ecological terms.”

The company touts its accomplishments of being the first automobile manufacturer to commit to the EU’s emission standards, with an achievement of this goal by the year 2020. While the company still has time to reach such a goal, however unlikely, one has to wonder if they committed to such high expectations with the thought of mind to cheat the system and will likely be skeptical of all future goals and sustainability reports.

Not only did Volkswagen damage the image of their own Corporate Social Responsibility programs, but investors and consumers across the globe may now question the motives, intentions, and sincerity of good deeds committed by all corporations and wonder whether the company is contributing as they say. With a growing distrust of corporations due to greed and massively disproportionate wealth and power, many consumers now a day are researching what they buy, from whom they buy, and many are deciding to “buy local” so as to avoid just this type of deception. This type of scandal reinforces the need for consumers to spot check corporations and holds them to higher standards. Volkswagen has severely damaged their image as the “people’s car” and has likely destroyed their ability to meet any of their goals, including becoming the most “successful, fascinating, and sustainable automobile manufacturer in the world.”

Current Investigations and Potential Liability

At this point in time, it is unclear how far up the ladder the deception at VW went. It is not known whether the CEO, Winterkorn, who has since resigned, directed the use of the rigging devices or if he knew the devices were in use. There are clues that he was or should have been aware, as evidence has surfaced that the company was previously warned against their usage. If there was deliberate fraud or malfeasance, Winterkorn and other directors and officers of the company may become personally liable for damages.

An investigation regarding the company’s liability for Securities fraud is also underway. Investigators are attempting to determine whether VW provided intentionally false information to investors and the public as a whole. A lawsuit has already been commenced claiming such fraud; however, there does not seem to be enough information, as mentioned before, to determine the intentionality of the misleading and deceptive information or who within the company was aware of the use of the “rigging” devices.

Additionally, any product liability or product recall insurance VW may have held will likely not pay out on any or most of the claims against the company. Because of the deliberate nature of the act, the company will most definitely pay fines and legal fees out of their own reserves and future profits.

Criminal charges are likely also pending against all involved in the scandal, both officer and director level and engineers or other workers involved in implementing the illegal devices. The U.S. may have trouble prosecuting those involved, however, because most of the activity involved, occurred overseas and European countries will likely have first “dibs” on prosecutions.

VW has hired Kirkland & Ellis LLP to defend against all charges. The firm defended BP after the oil spill disaster in the Gulf Coast in 2010. It is yet to be determined if any defenses will be put forth or if a settlement will be forthcoming. One quote from Volkswagen’s Corporate Social Responsibility Report sticks out as a great way to end this blog: “One-time certainties are being consigned to the past; uncertainty is becoming our constant companion.” Hans Dieter Potsch, Member of the Group Board of Management responsible for Finance and Controlling.

It will be interesting to see how or if Volkswagen may recover from the greedy and deceitful actions of the company’s leadership and how Europe will react to the scandal over the long term. Uncertainty will definitely remain a  “constant companion” to VW, Europe (specifically Germany), VW consumers, environmentalists and corporate- watchdogs, alike, well into the future.

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UN Global Compact

Human Security, International Law, and Corporate Social Responsibility

On March 2nd, Douglas Scrivner, adjunct professor of law at the University of Denver Sturm College of Law and former General Counsel of Accenture, spoke at the 2013 Western Regional Conference of the American Branch of the International Law Association. Mr. Scrivner’s talk, entitled “Human Security, International Law, and Corporate Social Responsibility,” focused on various tools that companies can use to align their business strategies to minimize adverse human impacts related to a company’s operations. Mr. Scrivner focused on one such tool, the UN Global Compact, which many companies currently utilize to achieve goals in the area of corporate social responsibility.

UN Global Compact

UN Global Compact – Popular With Companies the Whole World Over?

The UN Global Compact (Compact) encourages companies to commit to ten principles within their “sphere of influence . . . in the areas of human rights, labor, the environment and anti-corruption.” Companies that choose to participate in the Compact are required to incorporate the Compact’s principles into their business strategies and to communicate their progress in implementing those principles to company stakeholders on an annual basis.

While the Compact ultimately aims to benefit societies at large, it also provides a variety of benefits for participating companies. For example, the Compact offers participants a wide variety of resources to help solve common challenges in the areas of sustainability and human rights. Participation in the Compact also enhances a company’s reputation by demonstrating a commitment to the Compact’s principles. Mr. Scrivner noted that companies are more apt to realize the value of company participation in the Compact when shareholders and stakeholders provide the impetus for a company to participate in the Compact.

Mr. Scrivner stated that the Compact is not without its opponents. Some companies have voiced concerns that participation in the Compact could have negative impacts on a company’s bottom line. Opponents specifically cite that the Compact’s requirements could change in the future, foisting additional responsibilities onto participants of the initiative. In fact, the Compact originally consisted of only nine principles, and in 2004, added a tenth principle, to combat corruption.

Mr. Scrivner countered such criticism by stating that the Compact allows flexibility for each participating company to decide how it will implement the Compact’s principles. Additionally, since the Compact is completely voluntary, participants can withdraw from the Compact altogether if they feel compelled to do so. However, Mr. Scrivner stated that with the growing importance of the Compact, it is prudent for companies to become actively engaged in the Compact to help drive and shape it.

With over 10,000 participants in 130 countries, the Compact is the world’s largest voluntary corporate responsibility initiative, and the Compact’s popularity seems to be growing. In 2011, 1,861 companies joined the initiative, a 54% increase of the Compact’s 2010 growth figures. As more companies realize the value of participating in the Compact, the Compact’s ultimate goal of establishing “a set of core values in the areas of human rights, labor standards, the environment and anti-corruption” does not seem too far off.

Lincoln Puffer is a second year law student at the University of Denver and a Staff Editor on the Denver Journal of International Law & Policy.

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Denver Journal of International Law and Policy

Preview: Towards a More Realistic Vision of Corporate Social Responsibility Through the Lens of the Lex Mercatoria

As Volume 40, Issue 4 of the Denver Journal of International Law and Policy is off to the printers, we are previewing the articles contained within.  Here is a brief overview of Towards a More Realistic Vision of Corporate Social Responsibility Through the Lens of the Lex Mercatoria, by Jon Bellish.

Globalization has led to a shift in power away from states and towards the private sector, which has resulted in multinational corporations becoming among the most powerful international actors. This phenomenon has had many positive consequences, but it has also resulted in human rights, labor, and environmental abuses in developing nations. Such abuses are inconsistent with the way these multinationals behave at home and have led to a subsequent call for increased corporate social responsibility (“CSR”). Though there is substantial agreement as to the contents of CSR norms, there is little such accord where enforcement is concerned. Some have suggested that binding CSR norms will ultimately emerge from multinational corporations themselves along the lines of the lex mercatoria. This article seeks to counter that argument by suggesting that, even if the traditional narrative of the lex mercatoria is true — an assertion upon which considerable doubt has been cast — modern multinational corporations are not likely to take the lead in developing such norms. This is because, while lex mercatoria norms tend to increase profits and reduce liability, CSR norms tend to shrink margins and expose corporations to an additional form of liability. From this assertion, the article concludes that political and macroeconomic developments are likely to overtake legal and normative developments, particularly those emanating from the corporate suite, in leading to corporate responsiveness to a broader community of stakeholders.

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Panel: Corporate Social Responsibility, Sustainability and Human Rights

On April 14th the Denver Journal of International Law and Policy, in conjunction with the Ved Nanda Center hosted a Symposium, Emerging Issues in International Law, as part of a celebration commemorating DJILP’s 40th Anniversary and honoring Professor Ved Nanda.  The first afternoon panel featured a mix of professors, business people and practitioners that spoke on issues surrounding notions of corporate social responsibility (CSR) and sustainable development.

The first panelist, Professor Edward Zeigler, is a Professor at the University of Denver, Sturm College of Law, and is a noted scholar on zoning and urban planning. His comments focused on sustainable development, specifically the development of regional transportation planning.  Professor Zeigler stressed that regional transportation systems must be developed in conjunction with higher density urban planning.  He pointed to regions in Europe and Shanghai, China as templates that U.S. cities should follow to strive to create communities where people can live, work and play.  With populations in urban areas and the number of private passenger cars ever increasing, this type of development is essential to curb the resulting environmental impacts and to avoid transportation crises.

DU Sturm College of Law

From there, gears shifted to CSR as, Bart Alexander, the Chief Corporate Responsibility Officer at Molson Coors Brewing Company (Coors) discussed the company’s CSR practices and goals.  Mr. Alexander declared that Coors’ goal is to “raise the ceiling and the floor,” or in other words, raise the standard of best CSR practices.  He noted that there are many different indexes that measure CSR around the world, but recognized that a standard measuring tool does not exist.  Mr. Alexander suggested that the key to “raising the ceiling” is to figure out what makes business sense by learning what is important to stakeholders.  For example, Coors learned through internal surveys that employees place a high value on working for a socially responsible company and consider this a driving force in their employment decisions.  Additionally, Coors is concerned with environmental sustainability in communities where their manufacturers work and live.  Moving forward, corporations must be aware of their effect on all stakeholders, including those affected throughout a corporation’s line of production.

Professor John Cerone, a Professor of Law and Director of the Center for International Law and Policy at New England Law in Boston, focused on corporation’s legal responsibility to conform to CSR accepted standards.  Today corporations, generally, are not the bearers of rights or duties under international human rights law, in the technical sense, Professor Cerone stated.  States remain the principle subjects of international law.  While this does not preclude a State’s responsibility to prevent its corporations from committing human rights violations, the responsibility of a corporation as an individual in the international arena is elusive.

Mark Wielga, the Director of Nomogaia, a non-profit think tank focused on business and human rights, piggy-backed off Professor Cerone’s comments to focus on the reality and real-world implications of CSR.  He noted that multi-national corporations are a reality of our time and that, in fact, more power around the world is concentrated in corporate action than in government action.  Mr. Wielga recognized that CSR is difficult to define, as the basis for action or inaction is not based on the law, as discussed by Professor Cerone.  The CSR standard is one that corporations apply to themselves.  Mr. Wielga pondered however, whether CSR is truly voluntary.  When considering the possibility that social responsibility committees of corporate boards and shareholders would take action if a corporation acted outside of CSR accepted principles, it is likely in a corporation’s best interest to take CSR into account when business planning.

Throughout this panel one reigning theme shone through.  CSR is not an obligation.  Corporations are not forced, through any hard law, to abide by a hard and fast CSR standard.  Instruments, such as the United Nations Guiding Principles for Corporate Social Responsibility, merely lay out a limited enunciation for a corporate duty towards human rights.  Numerous indexes also exist that measure a corporation’s CSR.  However, submitting information to these organizations is purely voluntary.  This begs the question; should CSR be obligatory?  If corporations were to be held responsible for human rights violations in the same way that States are held responsible, how would applicable standards be implemented?  Is this a realistic goal or necessary goal given the current state of the world economy, corporate power and existing domestic law?  These are not questions that can be answered here, but regardless of the fact that CSR is not obligatory one thing is clear; corporations seem to be straying from the single-bottom-line model.  Corporations such as Nike and Wal Mart have experienced serious crises related to poor CSR practices, and have since changed the way they do business.  While these examples are certainly not the norm, CSR is increasingly at the forefront of corporation’s concerns, and is a principle that corporations must take into account if they hope to gain or keep any competitive edge.

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University of Denver Sturm College of Law

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