YOUR HEADING HERE10.05.2011

CSR- a legal perspective and potential liabilities

Some clients

Corporate Social Responsibility- definitions

• 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 Committee-

declaration and order • Case law examples- Rio Tinto

All’s fair?

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?

www.clt-envirolaw.com