"The Case Against Corporate Social Responsibility:" Wall Street Journal Special Report Examines the CSR Concept

The debate about whether companies have a "corporate social responsibility" (CSR) and if so what that means has been going on for at least a decade. To date, there has been no definitive answer. It is more likely to take the form of "it depends on the circumstances and facts."

The CSR concept has been widely adopted in Europe where consumers and governments have been quick to call companies to task for failing to serve broader interests than just those of shareholders. In March 2010 the European Commission, the executive body of the European Union, made a commitment to "renew the EU strategy to promote Corporate Social Responsibility as a key element in ensuring long term employee and consumer trust." Click here to learn more about the Commission's position. However, in the U.S. the rate of acceptance has been somewhat more limited.

In any case, the case for and against CSR continues apace, and anyone involved in representing or working for businesses must be familiar with the concept and what various stakeholders think about it.

The Wall Street Journal has published (Aug. 23, 2010) a special section called "The Case Against Corporate Social Responsibility." The special section, produced in collaboration with the MITSloan Management Review, begins by saying:

"Can companies do well by doing good? Yes--sometimes. But the idea that
companies have a responsibility to act in the public interest and will
profit from doing so is fundamentally flawed."

There are obviously many reports about the value of CSR. But this one, because of its timeliness and the involvement of MITSloan Management Review, deserves a look by anyone interested in CSR.

Katia Castillo Paredes, 2008 LLM Graduate and Senior Attorney for Barrick Gold in Peru, Speaks About Peruvian Environmental and Mining Law

Peruvian environmental and mining law was recently the topic in the "Comparative Environmental Law" course when students heard from Katia Castillo Paredes, una abogada senior (a senior lawyer) from Barrick Gold Corporation's Lima, Peru office.

Ms. Castillo, who spoke to the class (meeting in Denver) from her office in Lima via a speakerphone connection, described for the students her work as an in-house attorney for one of the world's most prominent gold mining companies.

It was a particular pleasure to "host" Ms. Castillo, a 2008 LLM graduate from the University of Denver Sturm College of Law, since she plays a key role in Barrick's legal department and consequently has a "front row seat" in terms of how Barrick operates in Peru as well as the challenges and opportunities the company faces.

As background, Barrick's headquarters is in Toronto, Canada. It has 26 mines and exploration and development projects across the globe. In 2009 the company's production was 38 percent in North America and 25 percent in South America. Its reserves were 40 percent in North America and 35 percent in South America.

At the outset of her remarks Ms. Castillo said, "Barrick is committed to sustainable economic development, environmental stewardship, and a culture of safety." She added that the company is committed internally to pursuing a theme of corporate social responsibility.

In Peru Barrick operates two mines, Lagunas Norte and Pierina, both of which are located north of Lima.

Ms. Castillo explained the life cycle of developing, building, and closing a mine and the important parts of each step in the process. She also described the Peruvian environmental regulatory scheme and the various governmental organizations that deal with mining regulation. Finally, she talked about the changes in mining that have come about in more recent years.

Of particular interest to the students were Ms. Castillo's comments about the need for mining companies to obtain "the social license to operate" in the communities where they work. "This refers to the acceptance of a project by the population that lives around the area," she said. "You can have all the permits required by the government, but if the local people do not want you there Barrick will not develop a project there." Therefore, to undertake a successful mining project, a company must meet all legal requirements as well as obtain the social license to operate.

Because of the wide diversity of backgrounds of students in the course -- Argentina, Japan, Nigeria, Peru, and the U.S. -- Ms. Castillo's remarks about her experience and expertise are likely to inform future projects across many parts of the world. I was especially happy about this since Ms. Castillo was one of the best students to ever have studied at the Sturm College of Law (as a matter of fact, she won a prestigious Rocky Mountain Mineral Law Foundation Scholarship Award while she was studying in Denver), and it is a very great pleasure to see her contributing in such a major way to her company and indeed her home country.

And so from Denver I say felicitaciones a Katia y muchas gracias por tu ayuda (congratulations and many thanks for your help)! Ms. Castillo is an impressive role model for our students and inspires all of us to think about how the mining sector can be made more sustainable.

--Don Smith

Graduate Profile: Cindy Jennings, Vice President at Cohn Marketing

In August 2007 I first met Cindy Jennings (MRLS graduate, 2009). She was just starting the graduate program with an eye towards enhancing her understanding of issues related to sustainability.

As Vice President, Marketing and Client Brand Strategy at Cohn Marketing, Cindy was well aware of the challenges and opportunities faced by current and prospective clients. In particular she felt that by encouraging her clients to be more sustainable they could (and would) increase the value of their underlying brand. By attending and graduating from the DU program, and in the process sharpening her understanding of the many different aspects of sustainability, she would effectively become more valuable to her own clients.

From the very beginning Cindy and I hit it off. In the early 2000s, I had been editor-in-chief of "Corporate Environmental Strategy: The Journal of Corporate Sustainability." In that role, I had written about and given a great deal of thought to the intersection of business, environment, and society more broadly. Thus, in many respects, Cindy and I were kindred spirits. However, there was one big difference: Cindy was actually a "practitioner" while I was more of a "writer" when it came to the topic.

During Cindy's time at DU we often talked about these issues both from a theoretical perspective as well as from a practical standpoint. Cindy was a student in one of my courses, "European Union Law & Policy," and as part of the requirements of the course she wrote a very interesting final paper entitled, "How EU Environmental and Climate Change Law and Policy is Causing Innovation and New Avenues of Prosperity in the Business World." In this paper, she considered "Making Europe a Pole of Excellence on Corporate Social Responsibility," which had been published in 2006 by the European Commission. In summary, Cindy took (and effectively presented) the argument that companies can in fact benefit from corporate social responsibility, not least of which in terms of how they are viewed by their markets and stakeholders.

Yesterday afternoon Cindy, her colleague Kate McDaniel, Lucy, and I set down and talked about the highly interrelated nature of brand development, environmental impact, and sustainability. Cindy, who is responsible for Cohn's sustainable and clean tech client initiatives, and her team at Cohn Marketing are leaders in this nascent -- but quickly emerging -- field of encouraging companies to align their business objectives in a manner that is sustainable in the long term. One of her projects involves Lend Lease Communities. Cohn describes the project in this manner:

"Lend Lease is an Australia-based development company with projects worldwide. The company puts a premium on sustainable operations, using a broad definition of sustainability that encompasses a social, economic and environmental focus. In 2006, Lend Lease established Denver as its headquarters for Lend Lease
Communities development business in the United States. With two major projects in Colorado and an eye toward national expansion, Lend Lease Communities turned to Cohn Marketing for PR services and to produce much of its marketing materials."

Leaders are often life-long learners who are always seeking to improve their own skills and expertise. They are also perceptive, often identifying trends and opportunities where others might see only impediments. Cindy clearly is a leader who combines marketing expertise, a passion to "do the right thing," and an understanding of how a firm or company can in fact benefit from doing things right.

Questions and Answers with Cindy Jennings:

How long have you been at Cohn?

Two and a half years.

How has your approach to your job changed, if any, based on what you learned at DU?

I wouldn't say my approach has changed as of now - but has certainly been enhanced. I'm bringing a completely new set of knowledge to the agency that has helped both bring in new clients and expand current client relationships from a sustainability/corporate responsibility perspective. Without my education/credentials, we could not have pursued sustainable projects as effectively. In addition, my education is setting us up to establish a core competency in sustainable brand development with a focus on renewable energy/clean technology, sustainable real estate development and sustainable food and beverage operations.

What is your philosphy about what you try to bring to clients? In other words, what do you think the link is or should be between a brand and sustinability?

The link is business - doing good business responsibly and with the long-term in mind. In a culture that focuses on the next quarter's profits, I try to help clients understand the long-term benefits of incorporating sustainable business practices into their organizations. Many are good at the cost-cutting/energy-saving measures, but are not as familiar with the health and well-being of workers or their communities to help them be even more prosperous through increased productivity, a higher level of engagement at work. Additionally, statistics are starting to show that consumers trust NGO endorsements of companies/products at a higher rate than most other resources, so being an authentically good corporate citizen can lead to benefits in this regard as well. Finally, we stress that the pressures and demands are coming. For example, we work with a small supplier trying to land business at a Fortune 100 company. We incorporated their new sustainability plan into their sales pitch and it gave them "extra credit". Our client will still have to produce a quality product, on-time and on-budget, but the fact that their competitors are not paying attention to sustainability - even a little - is playing some role in the decision.

Where did you earn your bachelor's degree?

I have a B.S. in Hotel Administration from the University of Nevada Las Vegas. Cornell University in New York and UNLV are largely known as the top schools for Hotel Restaurant Management - although perhaps DU would object to that...:)

Rethinking The "Mining Model"

BUENOS AIRES -- As day two of the Rocky Mountain Mineral Law Foundation International Institute in Buenos Aires got underway it was even clearer that the issue of how the business of mining is conducted with respect to the local communities where it takes place is a huge challenge for the sector.

One of the highlights was a panel entitled, "Resource Development: The Key Role of Law and Institutions."  Adriano Trinidade of Pinheiro Neto Advogados of Brasilia, Brazil, presented a paper written by Elizabeth Bastida of the University of Dundee, describing the traditional assumption in this manner: "Mining per se contributes to development.  The overall development of mining is positive."

  

However, he pointed out that more recent developments -- including community opposition to some mining projects -- has caused many to rethink this assumption.  "Private markets require well-functioning legal systems that provide for stability and predictability.  In addition, the law should support institutions of well-functioning markets," he said.  But this has become more difficult to achieve as private investors have watched several mining projects encounter huge opposition, thus putting investors' money at risk.

Luis Carlos Rodrigo, an internationally recognized mining lawyer from the Lima firm of Estudio Rodrigo, Elias & Medrano, talked about Peru's experience with mining in general and the challenges the industry currently faces.  He began by noting that, "As of 1993 almost all state owned operations have been privitized with great success in terms of production." On the other hand, the success of how companies operate within communities is a more nuanced matter.

Many companies operating in Peru have become leaders in corporate social responsibility, one method of trying to address community relations challenges.  However, he identified some key problems to the long-term well-being of the mining industry in Peru:

• Mining companies are not doing enough to call attention to their community relations efforts; this is a result of many years of maintaining a "low profile" in terms of talking about the mining sector.
• The terrible past of the mining sector; "environmental legacies" in the form of badly polluted and managed sites continue to be "concrete evidence of previous contamination."
• The government has failed to regulate "informal miners," who operate without respect to environmental obligations or standards.  "The government has failed to act because it is a social problem," he said.
• NGOs and "political radicals" have taken advantage of the government's lack of action to oppose mining generally.
• There is an enormous amount of money (collected from the mining companies) waiting to be spent for projects to help the communities in which the mines operate, but the funds have not been spent; the government seems very reluctant to allocate these funds for fear of making one group or another unhappy, he said.

In order to deal with these challenges, the government needs to deal with informal miners while major mining companies need to understand that the media helps set local perceptions and expectations.  There also needs to be a commitment to making sure the benefits of mining are shared with society as a whole.

Finally, he spoke of a crucial element in mining companies' addressing the challenges ahead of them: "Today companies are structured to favor short term decisions and results.  This needs to be changed and bonuses and benefits cannot be based on short term results."  In this regard, companies must understand that it is in the long-term interest of the mining industry to avoid short-term decisions that only result in longer-term problems with the communities in which they operate.