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The Growing Field of CSR Helps Companies to be Socially Conscientious and Manage their Business Risks Around the Globe
By Katie Vloet
Say you're an attorney working on corporate social responsibility (CSR) for a company that wants to drill for oil in the developing world. The government of the country says: Don't worry; we'll provide the security for your company while you're here. But the government decides that security means, say, shooting a villager who gets near the pipeline. The rest of the village blockades the road to the pipeline in response to the killing. What do you do?
Or you're an attorney doing CSR for a clothing manufacturer. You know that the immediate source of the clothing doesn't use child labor or pay unfair wages, but what about the people working in other parts of the supply chain? Do you go out to the cotton fields to make sure no children are working there?
These are the kinds of questions that Gare Smith, '83, grapples with every day. The chair of the corporate responsibility practice at Foley Hoag, LLP, Smith provides counsel on compliance programs to address labor conditions, community relations, security, indigenous rights, environmental stewardship, and the rule of law. His clients include companies in the manufacturing, extractive, banking, nuclear, private equity, and high-tech sectors as well as governments and indigenous peoples.
The field of CSR is a growing one, and one that Smith sees as a potential growth area for attorneys—especially those with an interest in working around the world. It's also an area of the law in its infancy, so when Smith makes decisions about the questions posed at the start of this article, he is helping to establish precedents and best practices for others in the industry.
Smith, who has written three books on codes of conduct and international human rights standards, defines CSR as "a concept developed by businesses to address social and environmental challenges through sustainable practices and respect for international normative standards." He believes that CSR is increasingly recognized as a mainstream business practice that helps to mitigate legal, reputational, and operational risks and to promote company brands.
CSR is indeed a broadening field that is bound to attract more people in coming years, says Tom Lyon, Dow Professor of Sustainable Science, Technology, and Commerce at U-M's Ross School of Business. He defines CSR as going beyond what is required by law to deal with social or environmental issues. "For example, many companies are cutting carbon emissions domestically or abroad or are taking responsibility for offering health care in developing countries," he says.
From Lyon's point of view, though, it's a field that makes more sense for graduates from business or environmental schools than for law school alumni. "When I think of CSR, I think of something that is extra-legal, not something that is the work of the legal profession," says Lyon, also a professor in the School of Natural Resources and Environment.
David Uhlmann, on the other hand, sees a natural fit for lawyers interested in the field. "CSR reflects the enormous role that corporations have in all aspects of our economy and the moral imperative to exercise that influence in a way that involves doing well and doing good," says Uhlmann, the Jeffrey F. Liss Professor from Practice and director of the Environmental Law and Policy Program at Michigan Law, who has spoken about CSR as it relates to resource exploitation and renewable energy.
"A significant component of that moral imperative is promoting a sustainable future, which means complying with environmental, health, and safety laws and conducting business activities in ways that limit the use of natural resources and minimize adverse ecological impacts—all of which requires legal expertise, innovative thinking, and strategic planning."
For Smith's part, his route to his path-breaking role took him through the public and private sectors: He served as principal deputy assistant secretary in the State Department's Bureau of Democracy, Human Rights and Labor during the Clinton presidency, where he helped launch the president's Model Business Principles and served as the U.S. representative to the UN Human Rights Commission; he was vice president for CSR at Levi Strauss & Co.; and earlier he was senior foreign policy adviser and counsel to Senator Edward M. Kennedy, where he created the first voluntary code of conduct for U.S. multinationals.
He also is vice chairman of the International Campaign for Tibet and works with His Holiness the Dalai Lama, whom he reveres—so much that Smith humbly asks that this article not focus too much on the work he does for the Dalai Lama.
Most of his clients are companies that want his help to engage in responsible practices. When he took his position at Levi Strauss in 1999, the field was so new that "I held one of only three corporate responsibility jobs in the United States," Smith says. His focus was making sure the company didn't inadvertently benefit from sweatshop conditions, much earlier than many others in the industry actively sought to address working conditions in sourcing facilities. He continues to work with other clothing manufacturers.
The extractive sector provides different challenges, such as the security example noted earlier. "In addition to obtaining a legal license to operate, I help clients secure a social license to operate," he says. "This entails engaging with stakeholders who are impacted by a company's operations to seek their buy-in. Part of that comes from ensuring that affected communities benefit from large-scale operations, and part comes from ensuring that if a project has negative impacts villagers have access to a transparent grievance process." Smith believes that securing consent is particularly important with indigenous communities, as historically they have had little or no voice with respect to development projects impacting their traditional lands.
When Smith was a student at Michigan Law, the job he has now didn't exist. Still, he was preparing for this work even then, developing his interest in international law under professors such as Eric Stein, '42, William W. Bishop, '31, and John Jackson, '59.
In recent years, the line of work that Smith helped to forge has grown dramatically, and he predicts many more attorneys will choose the same path.
"The genie is out of the bottle with respect to corporate social responsibility," he says. "It's not as though consumers are likely to suddenly conclude that 'it's OK for children to make my shirts,' and my corporate clients are as eager to avoid unnecessary risks as they are to ensure that their business decisions reflect well on their brands."
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