New England Biz Law Update
“Doing Well By Doing Good” is not the mantra that one is accustomed to hearing in corporate America.
However, in the wake of a seemingly unending stream of corporate fraud and scandals, an increasing number of wisely managed national and international companies are beginning to understand that one concept can definitely enhance the other.
The debate surrounding the place of social conscience in the pursuit of profit has been, for many years, variously discussed in hushed tones at the back of boardrooms, as well as forcefully vocalized by professors at America’s business schools. However, the clarion call for social responsibility in business is becoming hard to ignore.
A strategic, top-to-bottom commitment to being socially responsible and ethical in the manufacture, distribution, marketing and sales of products, popularly referred to as “Corporate Social Responsibility” or “CSR,” is fast becoming an inescapable fact in the global corporate environment.
Many companies retain highly paid executives whose sole function is to ensure that the company can withstand reasonable scrutiny through the prism of social responsibility. The most successful companies know that it’s in their best business interest to take the ethical high ground. Their customers expect it and so does the investor community.
Ultimately, these companies are recognizing that modeling their business performance with a constant view towards social responsibility has a very significant positive effect on their bottom line, whether from the fact that such a corporate focus makes their products more attractive to an increasingly conscientious public, or because it minimizes governmental and regulatory reaction to perceived acts or operations that are socially unacceptable. That is why for many companies, CSR has become a strategic imperative.
CSR is not solely an American phenomenon. It has been moved to a prominent place in Europe on both the business and policy agenda. The European Union has put CSR at the heart of its competition strategy for the continent. Asia and the Far East are following suit.
Governmental expectations have coincided with better corporate understanding of the importance of CSR in creating very favorable business climates for companies, resulting in positive benefits to the bottom line.
Employment lawyers have been spending more and more time in this area. CSR includes everything from Equal Employment Opportunity compliance, to sexual harassment training, to accounting practices and False Claims Act cases, to the payment of minimum wages, as well as sensitivity to employee working conditions here and abroad. Compliance with discrimination and employment laws is also a key aspect.
There may be a public relations problem looming on the horizon based on accusations of socially disruptive or insensitive acts by a company. CSR is as much an art as a science requiring business, environmental and governmental expertise, as well as a healthy dose of common sense and sensitivity.
CSR is meant to focus on what is legal, what is good business sense, and what is right from both a moral and market-oriented viewpoint. It has been shown conclusively that the act of “doing good” by companies will result in them “doing well,” while helping to create a more stable living and economic global environment.
Companies with great reputations have been engaged in CSR for a long time. They pay attention to doing the right thing for their employees and then extending what has worked well in the workplace to the larger community. CSR is the right thing to do, and it connects to the bottom line, as more and more companies are discovering.
James C. Hood is a partner in Nixon Peabody’s bank finance, financial services, mergers & acquisitions and securitization & structured finance practices. Not only an advocate of corporate social responsibility in the local business community, Mr. Hood advises clients on the topic and promotes the importance of it firm-wide. Nixon Peabody is one of the largest law firms in the United States with more than 600 attorneys working in 15 major practice areas and in15 offices across the country.
