CSR Must Be a Balancing Act

Date: Aug 01, 2004

In June the European Multi-Stakeholder Forum (EMS) adopted a final report on Corporate Social Responsibility (CSR). EMS was an outgrowth of the 2000 Lisbon Summit, where the European Council first pushed for adoption of CSR principles by business. The Summit also resulted in the Green Paper on CSR in 2001 and the Commission Communication on CSR in 2002.

The Technical Management Board of the International Standards Organization (ISO), shortly before the EMS report was issued, agreed ISO should develop a "guidance document" on "social responsibility." The ISO decision followed recommendations of an Advisory Group on CSR. While the ISO decision states specifically that the desired end product is a "guidance document," written in plain language, and not a specification document intended for conformity assessments, the possible inevitable move to standardize CSR poses many issues for converters, their suppliers, and customers.

At the outset, it is important to understand there are various definitions of CSR. The EMS used as its starting point the definition provided by the European Commission as follows: CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis. While the core purpose of any business is to create value for shareholders and opportunities for employment, there is little disagreement companies must act responsibly relative to the world around them.

They must comply with relevant legal requirements in their operations, respecting the rights of their employees and the citizens in the communities in which they operate, observing environmental laws, and accurately reporting financial results.

Companies that adopt CSR usually do so by establishing a code of conduct or participating in one of many CSR initiatives. This usually results in issuance of a formal CSR report, although many companies embrace the philosophy of doing good rather than talking about doing good. Some non-governmental organizations have criticized the CSR movement, suggesting businesses are promoting CSRs to eliminate government functions and oversight. On the contrary, some businesses are concerned CSR advocates are attempting to transfer public responsibilities to companies.

It is essential governments provide the public services and appropriate legal framework in which societal rights, including human and civil rights, environmental legal protections, and the infrastructure to sustain and protect those rights, can flourish.

There are two significant issues for businesses related to CSR. Perhaps at the heart of the current CSR debate is whether CSR should be mandatory and CSR reporting standardized. Some in the investment community favor this approach to allow for greater comparability by investors seeking to invest in firms that share their societal goals. In general, however, many businesses oppose any type of mandatory CSR programs or standardized reporting, since one-size-fits-all approaches are likely to undermine the very values that CSR policies are designed to advance.The second issue relates to supply-chain responsibility. In a global economy with diverse players, including many small and medium-sized enterprises (SMEs), no company can be expected to be able to control all of its vendors and suppliers, yet some in the CSR movement advocate precisely that.

For members of the converting industry, understanding the CSR movement takes on added importance. Commitments to specifying packages and packaging systems to minimize impacts on the environment and waste streams often are part of CSR pledges by companies or industry sectors. This will result in potentially using less or alternative materials, a possible advantage for the converting industry.

At the same time, growing pressure to promote recycling and reuse poses new potential issues for converters, while concerns about bioterrorism and security mandate packaging solutions to protect products, those who handle products during distribution, and the ultimate user or consumer.

The challenge- for all industries- is to maintain and expand the vibrancy and usefulness of the many valuable CSR initiatives companies have embraced so successfully to date, while avoiding stifling their benefits through unnecessary regulation or proscriptive standardization. Thus, keeping an eye on ISO and EU developments is essential.

Reproduced with the permission of Paper, Film & Foil CONVERTER magazine (312.726.2802). Copyright © 2004 by Intertec Publishing. All rights reserved.

Sheila A. Millar, a partner with Keller and Heckman LLP, counsels both corporate and association clients. Contact her at 202/434-4143; millar@khlaw.com.