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CSR	
  Challenges	
  –	
  	
  
	
  a	
  legal/corporate	
  governance	
  
perspec4ve	
  
Chizu	
  Nakajima,	
  	
  
Co-­‐D...
Corporate	
  governance	
  under	
  scru0ny	
  
•  Post	
  financial	
  crisis,	
  many	
  pointed	
  to	
  the	
  failure	...
Dominant	
  research	
  &	
  policy	
  direc0on	
  
in	
  Corporate	
  Governance	
  thus	
  far	
  
Good	
  corporate	
  ...
Challenges	
  for	
  business	
  in	
  21st	
  
Century:	
  Paradigm	
  Shi@	
  
•  Increasing	
  expecta4ons	
  on	
  bus...
But	
  do	
  investors	
  take	
  sufficient	
  no0ce?	
  
• “Nearly	
  70%	
  of	
  fund	
  managers	
  s4ll	
  do	
  not	
...
So@	
  law	
  to	
  hard	
  law?	
  
In	
  the	
  mean4me,	
  
•  Areas	
  of	
  social	
  concern	
  are	
  increasingly	...
 Global	
  Standard	
  SeFng	
  using	
  ‘So@	
  Law’	
  and	
  
Implementa0on	
  via	
  Mutual	
  Evalua0on:	
  	
  
Exam...
What’s	
  next?	
  
•  “Bridging	
  the	
  great	
  divide	
  between	
  CG	
  and	
  corporate	
  social	
  
and	
  envir...
We	
  need	
  to	
  work	
  together!	
  
To	
  find	
  ways	
  to	
  enable	
  corpora4ons	
  (to	
  quote	
  the	
  Europ...
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CSR & HR - Presentation Pr. Chizu Nakajima

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CSR & HR - Presentation Pr. Chizu Nakajima

  1. 1. CSR  Challenges  –      a  legal/corporate  governance   perspec4ve   Chizu  Nakajima,     Co-­‐Director,  Centre  for  Research  on  Corporate  Governance,   Cass  Business  School,    City  University  &   Chair,  Bri4sh  Japanese  Law  Associa4on,  London   c.nakajima@bjla.org.uk    
  2. 2. Corporate  governance  under  scru0ny   •  Post  financial  crisis,  many  pointed  to  the  failure  of   corporate  governance  (CG)  in  banks,  but  could  CG   have  helped,  par4cularly  in  curbing  the  “excesses”   that  were  highlighted  as  one  of  the  main  causes  that   led  to  the  crisis?   •  Indeed,  aWer  every  major  corporate  failure  and   scandal,  there  are  calls  for  beXer  corporate   governance  &  more  regula4on!     2  
  3. 3. Dominant  research  &  policy  direc0on   in  Corporate  Governance  thus  far   Good  corporate  governance   ↓   Thriving  financial  markets   ↓   Economic  growth     •  Advocated  by  leading  economics/finance  scholars  and   endorsed  by  interna4onal  organisa4ons.   •  Therefore,  much  of  CG  research,  thus  far,  has  focused  on  the   link  between  good  CG  and  firms’  financial  performance,  i.e.   maximizing  shareholder  value.  
  4. 4. Challenges  for  business  in  21st   Century:  Paradigm  Shi@   •  Increasing  expecta4ons  on  business  –  expanding   focus  from  economic  concerns  to  include  social   concern   •  Despite  this,  CG’s  main  focus  on  financial   performance  –  oWen  jus4fied  on  the  basis  of  ageing   popula4on  pu^ng  pressures  on  pension  funds’   relying  on  stock  performance.    
  5. 5. But  do  investors  take  sufficient  no0ce?   • “Nearly  70%  of  fund  managers  s4ll  do  not  regards  it   as  standard  prac4ce  to  factor  environmental,  social   and  corporate  governance  ini4a4ves  into  their   investment  decisions.”     (‘Investors  s4ll  don’t  get  accountability’,  Business  Week,  26  February  2008)   • And    who  are  “ins4tu4onal  shareholders”  nowadays?  –   foreign  sovereign  wealth  funds,  hedge  funds  etc  –    
  6. 6. So@  law  to  hard  law?   In  the  mean4me,   •  Areas  of  social  concern  are  increasingly   subject  to  interna4onal  standards,  many  of   which  are  being  implemented  through   na4onal  legisla4on  –  e.g.  environment,  labour   condi4ons,  human  rights,  an4-­‐corrup4on  etc.  
  7. 7.  Global  Standard  SeFng  using  ‘So@  Law’  and   Implementa0on  via  Mutual  Evalua0on:     Example  -­‐  AML   Global  Standard  se^ng  through:   –   Financial  Ac4on  Task  on  Money  Laundering  (FATF)’s  40   Recommenda4ons  on  money  laundering  and  9  Special   Recommenda4ons  on  Terrorist  Financing   Compliance  through:   –  Mutual  Evalua4on  =  self-­‐assessment  +  peer  review   –  ‘Blacklis4ng’  =  ‘naming  and  shaming’   Implementa4on  through:   –  Each  state  introducing  AML  legisla4on   –  Resul4ng  in  global  standardisa4on  of  AML  regula4on    
  8. 8. What’s  next?   •  “Bridging  the  great  divide  between  CG  and  corporate  social   and  environmental  responsibility  is  the  next  great  challenge   for  business.”   •  “…only  a  fundamental  redesign  of  corporate  forms,  objec4ves   and  value  measures  can  fully  meet  the  reali4es  of   responsibility.”  (T.  Clarke,  2007,  p.  267.)   •  In  the  mean4me,  mul4-­‐na4onal  corpora4ons’  (MNCs)   “impacts  on  society”  are  growing  and  are  felt  in  increasingly   wider  spheres.   •  States  have  aXempted  to  “control”  and  “regulate”  MNCs  –   but  MNCs  engage  in  cross-­‐border  ac4vi4es  so  who  can  have   jurisdic4on  over  them?  
  9. 9. We  need  to  work  together!   To  find  ways  to  enable  corpora4ons  (to  quote  the  European  Commission)   •  To  maximise  the  crea4on  of  shared  value  for  their  owners/shareholders   and  for  their  other  stakeholders  and  society  at  large;   •  To    iden4fy,  prevent  and  mi4gate  their  possible  adverse  impacts.     We  need  to  facilitate  more  collabora4on  between  private  and  public  sectors   and  academia     Please  contact  us  with  ideas,  requests,  sugges4ons  for  research  and   collabora4on!     Chizu  Nakajima:  Co-­‐Director,  Centre  for  Research  on  Corporate  Governance,   Cass  Business  School,  City  University  London,  and  Chair,  Bri4sh  Japanese   Law  Associa4on,  London.   Email:  c.nakajima@bjla.org.uk        

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