Corporate Social Responsibility (“CSR”) has been referred to as a form of “self-regulation in the shadow of the law”. While CSR strategies for corporate governance may be often “voluntarily” adopted, a CSR mandate can and should be seen to serve as an extension of sound legal management, aimed at mitigating legal and other social risks for the business organization.
The inter-linkage between CSR and legal compliance is becoming most evident in the area of human rights. Unlike in traditional “command and control” approaches to regulation, Canadian human rights regulators have increasingly begun to expect human rights compliance to be met through processes of self-regulation, backed by potential sanctions for poor performance. Such regulatory approaches are commonly referred to as “enforced self-regulation”, and are a trend that is beginning to bring CSR concepts into the mainstream of legal compliance management.
Ontario’s Accessibility for Ontarians with Disabilities Act
On June 13, 2005, the Ontario government introduced the Accessibility for Ontarians with Disabilities Act (the “AODA”). The stated objective of the AODA is to improve access to goods, services, facilities, accommodation, employment, buildings, structures, and premises in Ontario by 2025. A unique feature of the AODA is its provision for the establishment of “accessibility standards” which will set the parameters of what is meant by “accessibility”. The accessibility standards are being developed by committees composed of various interested stakeholders.
The standards provide guidance to businesses on how to develop policies, practices, and training programs to encourage enhanced accessibility. The standards are mandatory and their requirements are backed by sanctions for non-compliance. The AODA and its standards are not prescriptive of the substance of accessibility policies, practices and procedures, however. Instead, they create obligations on the businesses to which the standards apply to develop and implement "self-regulation" in respect of accessibility that will operate “in the shadow” of the inspection and sanctioning provisions of the AODA.
Canadian Human Rights Commission “Maturity Model” Initiative
The Canadian Human Rights Commission (“CHRC”) is developing an apparently voluntary program to promote human rights management within business practices, consistent with the objective of CSR. The initiative, which is in its very early stages, is being developed by the CHRC in association with its “Employer Advisory Council”.
According to speeches delivered by the CHRC’s Chief Commissioner, the initiative will result in the creation of a CHRC “Maturity Model” that will serve as a “roadmap” and “measurement tool” to guide businesses on the implementation of internalized dispute resolution mechanisms to deal with human rights disputes within the organization. The strategy moves away from the traditional “back end” focus on compliance enforcement, and instead promotes effective internal management of human rights conflicts.
While it appears as though the “Maturity Model” will be voluntary, meaning that it will be over and above regulatory obligations, those companies that adopt the approach will need to consider how such a system can assist in legal compliance with federal human rights legislation. Moreover, from a legal perspective, effective “front end” management of human rights issues will undoubtedly assist businesses in demonstrating compliance with legal obligations, if their practices are challenged by regulatory authorities.
As these examples illustrate, human rights regulatory approaches in Canada may include the promotion of self-regulation amongst businesses. Companies that have adopted a CSR mandate should view such approaches to regulation as a potential for competitive advantage. With a well developed CSR program, integrated into legal compliance management, businesses can get ahead of regulatory enforcement, and develop goodwill with regulatory agencies through effective self-regulation. Accomplishing these goals necessitates a CSR strategy that gives consideration to legal compliance, and a legal compliance strategy that takes into account CSR.