In the still-evolving field of corporate social responsibility, there’s no right way or wrong way to structure a CSR function, experts say. And despite the inherent legal risks associated with CSR programs, considerable disagreement exists as to how much involvement a company’s lawyers should have.
Savitz
Andrew Savitz, a Boston-based consultant who helped found the sustainability practice at PricewaterhouseCoopers, says that in some cases it's “a good idea to keep lawyers at arms length.” That's because the risk mitigation objectives of the legal department could threaten the strategic objectives of CSR before they get off the ground. “They [lawyers] tend to see risks everywhere,” says Savitz. “I’ve seen some lawyers try to quash some positive CSR efforts off the bat.”
Few companies, he says, “get in trouble for trying things and failing as opposed to not doing anything.” As a result, says Savitz, lawyers have not directly been involved in the more successful sustainability efforts he's seen.
“They’re there on an as-needed basis,” says Savitz. “This is about enhancing your operations, which lawyers don’t really know that much about.”
Not surprisingly, lawyers see it differently. Michael Mensik, a partner with the law firm Baker & McKenzie, says CSR functions driven by corporate affairs departments tend to view CSR as a marketing tool, and risk overlooking potential legal pitfalls or obligations. He sees CSR as more a legal function, given the promises CSR policies imply and how they could end up in litigation.
Winslow
“There are two kinds of lawyers,” says Daniel Winslow, a partner at Duane Morris. “Lawyers who tell you everything you can’t do, and lawyers who understand what you want to do and figure out ways legally to get there.”
Structures Vary Widely
Dorothy Bowers, a former Merck executive who now chairs a group of major U.S. companies working to develop an international social responsibility standard, tells Compliance Week that CSR efforts can be structured in any number of ways, “which comes from the differences in how companies have aimed them,” she says. “I think it will continue to be very different from organization to organization.”
Although her group is committed to developing standards, Bowers admits that “standardizing is still a very touchy process; you really can’t standardize a business and say this is the only way a business can operate.” She notes that whether a CSR program is coordinated through the legal or marketing department, or elsewhere, may depend on the nature of the business launching the effort.
Savitz says that making CSR a separate department is not necessarily wise because, like many departments, once created, “CSR finds itself in a silo.” The new unit then spends much of its time trying to reach other functions in the company. Instead, he says, “It’s much better to figure out a way to build sustainability into your basic activities instead of layering it on top or putting it separately.”
Goetz
Richard Goetz, leader of the international practice group at the law firm Dykema Gossett, says, "There's no one-size-fits-all. In some companies—such as retailing or wholesaling businesses—having your purchasing [department] directly responsible may be your best fit. It depends."
CSR “is often housed in the PR function,” notes Adam Turtletaub, corporate relations executive for Los Angeles-based LRN, an ethics and compliance consulting company. That might work for companies where marketing “really drives the business,” he says, but may be less desirable for other sorts of companies.
Then again, Turtletaub adds, placing CSR under the legal department might not be the right answer either. “Ethics issues are born out of legal issues but [with CSR] you’re really dealing with a broad principle that people subscribe to,” he says. “The reality will be, that with many kinds of decisions, looking at the legal implications will never be enough.”
Role Of Legal Department
Although legal risks surely arise from CSR, Turtletaub says the issue hasn’t overshadowed the CSR community to any great extent. “In all the conferences I’ve attended I’ve never heard the liability discussion come up,” he says.
Mensik
But CSR is meant to have a long reach, to multiple audiences inside and outside a company. As such, Mensik at Baker & McKenzie warns that companies must “remember the difference between rolling out [CSR] within the four corners of the company and rolling it out outside the company—to the supply chain, service providers and the like … From an outsourcing/supply side, you ought to think about whether you’re increasing the co-employment risk, which is an issue in every outsourcing. The consultants always talk to you how to make your providers part of the team. That makes sense from that perspective. But you have to be careful, because if you make them feel too much like your employee, you can be sued on the theory that you’re a co-employer.”
Aronowitz
David Aronowitz, who oversees the CSR program as executive vice president and general counsel for The Scotts Co., says the subject of legal oversight “is going to be a little quirky and personality-driven.” Although he is a lawyer, Aronowitz says that CSR “requires passion and commitment—and lawyers as a whole are paid to be dispassionate. I don’t think that lawyers are culturally ideal stewards of the corporate responsibility basket of activities.”
Still, Aronowitz notes that some lawyers do have the appropriate mindset. “I happen to be passionate about it. I know other lawyers who have a passion for it; that’s the first driving need,” he says. “But don’t get me wrong. There are a lot of legal issues that come up. I often put on my lawyer hat to review things. Lawyers need to be involved in the program.”
Miziolek
Aleksandra Miziolek, of Dykema Gossett, says lawyers are “important in terms of being there to provide guidance, informing the program” but admits they “may not be the ones in the best position to monitor or insure company compliance.”
And in addition to considering the liability risks of doing CSR, she says, companies need to consider the dangers of not doing it. “Having something in place that will remind people that they have to comply with various laws is a liability-reducing factor,” Miziolek says.
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