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Amid the usual talk of regulatory developments in mergers and acquisitions or global anti-corruption trends at the International Bar Association (IBA) Annual Conference In October in Dublin, I noticed that corporate social responsibility (CSR) emerged throughout the week as an increasingly hot topic.
Large corporations around the world are eager to be seen as ‘global citizens’ and conduct business in a way that does not have a negative social or environmental effect. This is of particular importance to organisations that work on large energy, resources and infrastructure projects. When these projects have the potential to affect local populations or damage the environment, businesses devote significant resources to limit any negative effects to the greatest extent possible. This is as important for reputational and commercial reasons as for social and environmental.
There are a number of industry initiatives that set universal social and environmental standards. The Ruggie Principles on business and human rights and the Equator Principles focussing on social and environmental risk management are both important guidelines that encourage organisations to raise their standards.
However, these principles and guidelines remain just that – they do not have effective enforcement mechanisms and are largely a voluntary industry standard. There is no consensus approach as to how to balance the need for commercial returns and the concerns around the social and environmental impact of the project.
At a particularly insightful conference session on ‘CSR, the financial industry and project financing,’ a panel of lawyers, banking counsel and government officials from three continents discussed how to build these non-binding principles into the DNA of infrastructure and extractive industry projects to ensure that they are complied with, rather than just acknowledged. This means lawyers need to clearly spell out what social and environmental standards are expected of all parties and what happens if they are not met. Although building consensus to adopt these standards is difficult to do, there was a rallying call to arms from both the panellists and the audience to ensure that all interested parties—government, financial institutions, corporations, and professional advisors—understand the importance of both adopting and implementing these principles and guidelines.
The passion of the people in the room, and the vast array of backgrounds from which they come, fills me with optimism that standards are rising and will continue to do so.
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