Corporate Social Responsibility: Kind-Hearted PR or Mandatory Laws?

Lawyers Thomas Skjelbred and Jannicke Eilertsen asked this significant question in an article published in Dagens Næringsliv this spring. There are many good reasons why this development will continue. Sustainability is no longer a matter of kind-hearted PR measures; increasingly there are legal obligations with which corporations must and should comply.

In February, DN wrote about the clothing brand Patagonia, which since the mid-80s has donated one percent of its sales revenues to various environmental protection organisations. Last week, the coffeehouse chain Starbucks responded to Trump's new executive order banning entry by announcing a plan to hire 10,000 refugees at their coffeehouses over the next five years. The shoe brand Toms donates one pair of shoes and distributes water to the poor and needy for each article you buy. The company had a turnover of over 500 million dollars in 2016, and has donated over 70 million pairs of shoes. Several coffee brands sell coffee carrying the Fairtrade seal, which means that the product meets international standards for fair trade. Purchase of Fairtrade products leads to better working conditions and safer social conditions for farmers in the poorer parts of the world. All these corporate initiatives have one thing in common: these are corporate actors who take responsibility for the society in which they operate, and contribute to sustainable development.

Many Norwegians made their first acquaintance with this term through the report "Our Common Future", presented by the UN World Commission on Environment and Development (the Brundtland Commission) in 1987. What is central to the term is that the international community must adapt and do what is necessary to meet contemporary needs, without destroying future generations' potential to meet their needs. A sustainable solution includes work opportunities for refugees, labour and human rights, as well as environmental protection and the fight against corruption.

The term is still relevant. Consumers increasingly demand environmentally sound choices and a more equitable distribution of goods, while several Norwegian and international corporations have now incorporated social responsibility and sustainability as parts of their core activity.

Is sustainable development only an ethical goal for social development and good PR for corporations, or does it also have mandatory legal content?

Over the last few years we have seen an increasing number of legal rules making demands for exactly this: sustainable business operation. In the proposal for a new Accounting Act (NOU 2015:10) there is a suggestion that larger enterprises should account for what the enterprise does to integrate considerations of human rights, labour rights and social conditions, the outer environment, and fighting corruption in their business strategies, in their daily operation, and in relation to their partners.

Section 5 of the Procurement Act has been given a new provision where it is made clear that the principal can put forward reasonable requirements and criteria associated with various steps in the procurement process, so that public contracts are implemented in a manner that promotes considerations of the environment, innovation, labour conditions, and social conditions, provided that the requirements and criteria are linked to the delivery.

Criminal justice rules are increasingly harmonised through adoption of international standards for illegal activities. Fundamental international labour standards, for instance regarding forced labour, child labour, etc., are affected by this, in the same way as economic crimes like money laundering and corruption.

In the autumn of 2016, a civil suit was for the first time initiated against the state for breach of Section 112 of the Constitution, regarding the state's responsibility to preserve the environment.

Corporate responsibility to secure sustainable development is also expressed through OECD's recommendations on responsible business conduct. National Contact Point Norway is a non-judicial complaints body that can assess whether corporations have failed to comply with the recommendations, for instance in cases of human rights abuse. All those who wish to submit a complaint about a corporation are free to do so. Human rights are therefore not exclusively obligations between states and their citizens, but also a responsibility resting on the private sector. Even if a confirmed breach of the recommendations does not lead to legal consequences, the assessment and the complaint will normally be made public. This is virtually synonymous with deprecation of the corporation's reputation and value. National Contact Point Norway's practice will also potentially contribute to further evolution of social norms and sustainability requirements. This will in turn have significance for the interpretation of existing legal standards, or create the basis for new legal norms.

There are many good reasons why this development will continue. Sustainability is no longer a matter of kind-hearted PR measures; increasingly there are legal obligations with which corporations must and should comply.