1. Borko Mihajlović, LL.M. (Loyola University New Orleans), Junior Faculty Member at University of Kragujevac Faculty of Law CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT

2. A broad mapp of the class
- Company and the company purpose
- Concept of CSR
- Concept of sustainable development
- Relationship between CSR and sustainable development
- Conclusions for further development
- Discussion
A broad mapp of the class

3. What is a company? legal personality
conducting of certain business activity
aiming to make profits (only profits or something more than that?)
What is a company?

4. Company purpose Law does not define the company purpose.
Three different approaches:
- shareholder value approach
- stakeholder value approach
- enlightened shareholder value approach (UK Companies Act 2006, an intermediary approach or not?)
Company purpose

5. A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
(a)the likely consequences of any decision in the long term,
(b)the interests of the company's employees,
(c)the need to foster the company's business relationships with suppliers, customers and others,
(d)the impact of the company's operations on the community and the environment,
(e)the desirability of the company maintaining a reputation for high standards of business conduct, and
(f)the need to act fairly as between members of the company.
Section 172 of UK CA 2006

6. Why do we bother ourselves about CSR?
CSR is at the center of the stage after large economic and financial crisis, some recent well known corporate scandals, and the beginning of the decline of trust in the liberalization and globalization model.
The public concern about irresponsible corporate behavior and the impact of businesses on , for instance, the environment or their employees has increased.
Why do we bother ourselves about CSR?

7. What is CSR? Do we know what is CSR?
There are many different definitions, which are grounded in many different standpoints.
There is no generally accepted definition.
EU before 2011: “a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis “
EU today: “responsibility of enterprises for their impact on society“
What is the relation between law and CSR?
Are law and CSR separate concepts?
What is CSR?

8. What does the EU say about CSR?
CSR should be company led. Public authorities can play a supporting role through a smart mix of voluntary policy measures and, where necessary, complementary regulation.
Companies can become socially responsible by:
- following the law;
- integrating social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations.
What does the EU say about CSR?

9. UN Guiding Principles on Business and Human Rigths
UN Global Compact
EU Communication on CSR
OECD Guidelines for Multinational Enterprises
ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy
Regulatory framework

10. UN Guiding Principles on Business and Human Rights
Landmark in CSR debate
Three pillars:
State duty to protect human rights
Corporate duty to respect human rights
Access to effective remedy mechanism
UN Guiding Principles on Business and Human Rights

11. In the interest of enterprises - CSR provides important benefits to companies in risk management, cost savings, access to capital, customer relationships, HR management, and their ability to innovate.
In the interest of the global economy - CSR makes companies more sustainable and innovative, which contributes to a more sustainable economy.
In the interests of society - CSR offers a set of values on which we can build a more cohesive society and base the transition to a sustainable economic system.
Why is CSR important?

12. What is sustainable development?
Social justice today and in the future is a crucial component of sustainable development.
Classic definition of sustainable development: “development which meets the needs of the present without compromising the ability of future generations to meet their own needs“ (Brundtland report, Our Common Future, 1987).
Three pillars of sustainable development:
Economic development
Social equity (between nations, indivuduals, generations)
Environmental protection
What is sustainable development?

13. Principles of sustainable development
Commitment to equity and fairness: priority should be given to the improving the conditions of the world’s poorest and decisions should account for the rights of future generation.
Precautionary principle
Integration of three different pillars.
Principles of sustainable development

14. Principles of sustainable development
Futurity – intergenerational equity
Social justice – intra-generational equity
Transfrontier responsibility – geographical equity
Procedural equity – people treated openly and fairly
Interspecies equity – importance of biodiversity. (Haughton, 1999)
Principles of sustainable development

15. Problems Definition is broad and unclear. The concept is flexible.
The concept of SD is considered as being elusive.
Gap between theory and practice.
The implementation of the concept is difficult.
Focus on economic growth (more money for improving environmental standards).
Problems

16. Bringing together CSR and SD
Sustainable development has gained currency in the private sector – often in the form of CSR agenda.
CSR is contribution of companies to the concept of sustainable development.
Bringing together CSR and SD

17. Two contradictory trends in the area of companies and SD
Growth in awareness of society on adverse impact of companies on public good
Strengthening of the primacy of shareholders in the system of capitalism based on companies as means for creation of social welfare through maximization of shareholder value
Two contradictory trends in the area of companies and SD

18. What should companies do in the future?
The needed systematic change will require a revolution in the way the worlds does business.
We need fundamental change from “business as usual“ to “environmentally sustainable business“.
Incremental change is not enough.
This will have an impact on lifestyles and consumption patterns, especially so in developed countries, but also for the growing middle class in developing countries.
What should companies do in the future?

19. What should companies do in the future?
CSR must comprehend doing business in accordance with law, but it also must contain actions beyond minimal legal standards.
Businesses must go beyond humanitarian actions.
The change should concern the essence of the business, the way of its functioning, social and environmental influences of the business.
What should companies do in the future?

20. Alternative business models (social enterprises)?
Law? Debate on corporate purpose and adoption of stakeholder model?
Market itself? Consumer patterns of behavior?
Do we have a solution?

21. Thank you for your attention. Borko Mihajlović, LL. M
Thank you for your attention! Borko Mihajlović, LL.M.