After each horrifying factory disaster, financial scandal and tax avoidance exposé, the question on everyone’s lips is: how do we make corporations act more responsibly? While there have been numerous institutional, governance and regulatory responses to this question, at the level of personnel and culture, the emphasis has largely been on tempering the actions and behaviour of management. While these ex post strategies are necessary, a more fundamental shift requires inculcating an appreciation for the responsibility of enterprises for their impacts on society among the students, who will govern, advise and act on behalf of these enterprises in the near future. To that effect, the Institute of Private Law of Leiden University has recently published a book, CSR for young business lawyers, where the focus is shifted onto business lawyers, who are involved in defining a company’s social responsibility.
In certain respects, the role of the business lawyer is self-evident. As in-house counsel, they are involved in drafting policies concerning human resources and sustainability, as well as statutory non-financial disclosure reports which, in the UK, will also include a statement regarding modern slavery. An external counsel is expected to respect their client’s Corporate Social Responsibility (CSR) commitment while exercising independence from them and avoiding complicity in potential wrongdoing. In an advisory capacity, business lawyers are expected to cautiously review potential decisions, such as incorporating a subsidiary in an emerging economy. Delivering such services, while being mindful of a corporation’s wider responsibilities to society, requires a balancing exercise and a distinct set of soft and hard skills that may not be immediately apparent to a law student.
For instance, if a prospectus is being prepared for a company’s initial public offering, risk factors need to be specified for investors to consider. Being able to distinguish between the interests of varieties of stakeholders in a complex, real-world setting, so as to identify those who have pressing, legitimate concerns (‘salient stakeholders’), may help reveal hidden risks of business operations. While shielding an employer or corporate client from risk may be at the core of a business lawyer’s responsibilities, they also have to ensure that the values that these organisations are trying to project are conveyed. These values are shaped by growing consumer and shareholder pressure and they entail their own set of potential risks and responsibilities. If an organisation claims to be producing an environmentally-friendly product (a ‘green claim’) and insists they voluntarily comply with an international CSR instrument, their in-house legal team will have to assess whether it is misleading. The organisation may wish to ensure that their suppliers meet certain environmental standards and could ask their lawyers to draft sustainability clauses to make such commitments binding. Alternatively, a business lawyer may have to furnish advice on whether an organisation should seek certification as a B Corp. A business’ corporate social responsibility may also be a factor when evaluating a merger offer, with there being recent empirical evidence that suggests firms with similar CSR practices ‘experience fewer post-merger integration issues’.
As ‘corporate culture’ has become a distinguishing feature of business, this facet of business lawyering has commensurately grown in prominence. Needless to say, considerations also differ according to sector, whether the client organisation is a food-product multinational or a bank. But all sectors have in common that international guidelines, best practices and, increasingly, covenants, lend support and structure to the choices and efforts of corporations.
This book, a product of five years of teaching Corporate Social Responsibility to International Business Law students at Leiden University, seeks to prepare aspiring business lawyers for grappling with these challenges. Along with familiarising students with the panoply of soft-law standards, instruments and voluntary corporate codes of conduct, the book seeks to equip students to evaluate challenges to CSR commitments and strategise compliance with said commitments as well as cultivate a deeper understanding of the perspectives that scaffold the international CSR framework. Benefiting from a phalanx of guest authors from academia, the legal sector and industry, the book highlights the roles and interests of actors who shape CSR, including shareholders, lawyers, law firms, governments, and public interest law organisations, before presenting key sectoral debates on direct parent company liability, corruption and bribery, tax avoidance, integrity in the financial sector and global supply chains.
Alex Geert Castermans is Professor of Civil Law and Director of the Institute for Private Law, University of Leiden.
Morshed Mannan is a PhD candidate at the Institute for Private Law, University of Leiden.
Dr Caspar van Woensel is an Assistant Professor at the Institute for Private Law, University of Leiden.