In focus“Defluff sustainability issues”

Anti-corruption and freedom of speech in focus at annual human rights seminar with Raoul Wallenberg Institute.

"Sustainability issues must be defluffed. Sustainability is not about being good, but about managing risk, long-term survival and profitability. If a company lacks clear policies in areas such as anti-corruption or fails to ensure compliance with its policies, it risks being in breach of both local legislation and UN guidelines." So says Parul Sharma, human rights lawyer and the Dean of The Academy for Human Rights in Business/CSR Sweden.

"A corrupt system with corrupt public representatives leads to an unsafe and lawless society without clear rules for citizens and businesses and puts a check on all development," said Sharma.

Anti-corruption is the single most important and most fundamental aspect of human rights and sustainability alike. This statement was made by Parul Sharma in her address to a group of colleagues from countries around the world in connection with this year's course in human rights, a course arranged regularly by Mannheimer Swartling in cooperation with the Raoul Wallenberg institute.

As an illuminating example, she mentioned a company that established operations in China and bribed the government in order to ignore environmental regulations. The company was not only guilty of pollution and ethically dubious conduct – it also broke the law.

CSR – a misused term
According to Sharma, CSR – Corporate Social Responsibility – is one of the most misused terms of our time.

"CSR is not about donating money to charity – it concerns weighty areas such as anti-corruption, employment law, environmental issues and human rights," she explained. " In other words, it concerns some of the foremost risks that a company needs to manage in its operations, both at home and in other markets where it is represented. These matters are closely connected with the law.

A company's actions are not only governed by local legislation; the UN also sets boundaries. In June 2014, the United Nations Human Rights Council instructed a working group to prepare a binding international framework for issues concerning human rights violations.

Ethical actions are key to a company's reputation
According to Amanda Wassén of Mannheimer Swartling, who also spoke at the conference, a revolutionary change has occurred in the last decade regarding the perception and the substance of sustainability issues.

"Ten years ago, it was sufficient to communicate that a company had policies in place – even if these were inconsistent with the company's actual actions," said Wassén. "Today, this is no longer enough. If the substance of these policies is not implemented and monitored, the company is subject to considerable risks."

In 2006, surveys made in the US by the Edelman Trust Barometer ranked sustainability as the seventh most common response to the query: What creates trust in a company? At the time, the list was topped by quality and service. Four years later, in 2010, transparent and honest practices were top-ranked, while quality and service fell to third place in response to which factors are most important to corporate reputation.

"Legislators are not the only ones who have woken up," continued Wassén. "These issues are increasingly important to potential business partners and prospective employees."

Prevent-detect-correct
The message was clear that sustainability issues must be driven by a company's management, based on honest commitment, where the management makes the effort to "walk the talk" – i.e., where they integrate a sustainability perspective throughout their entire operations. Accordingly, the analysis of sustainability risks must be carried out by the management and the board of directors, based on all detailed knowledge that can be requested from local organisations. The internal instructions must build on the insight that there is an internal risk when risk scenarios are described in too flattering terms, not least based on a local/regional budget perspective.

The advice from both speakers was to work according to the "prevent-detect-correct" method.

"It is fundamental to adopt and implement adequate procedures. These make it easier to detect and correct deviations," explained Wassen.

It is not worth giving in to corruption
Several of the attendees at the seminar live in countries that top the Corruption Perception Index. They explained that they were subjected to pressure to pay bribes on a daily basis; not only to receive new assignments, but also to make their daily lives work. But even if the challenges in these countries are significant, it is still possible to contribute to a positive development, according to Geneviev Achieng Wasonga, a lawyer from Kenya. Her country was ranked 136th of 176 in the 2013 Corruption Perceptions Index (Sweden was ranked third). An urban resident in Kenya pays an average of 16 bribes per month.

Five years ago, Geneviev Achieng's firm participated in a procurement arranged by one of the country's banks. The firm met all requirements, but to receive the assignment, they were expected to pay a bribe. They refused – and lost the assignment.

"A new management team was recently appointed in the bank, and all old contracts were reviewed," recounted Wasonga. "It was discovered that my firm had not been engaged for the assignment, even though we met the requirements, because we had not given in to the pressure. The old agreements were terminated – and we were awarded the assignment."

According to Parul Sharma, this is an example that shows that it is not worth it in the long run to give in to a system based on corruption.

"CSR is like Pandora's box. When you open the lid, anything may come out. But it is clear that it is happening, it is growing, and it concerns risks – nothing else," she states.

Footnote: The Raoul Wallenberg Institute works to strengthen the protection of human rights around the world. Mannheimer Swartling and the Institute have developed a weeklong course in human rights, aimed at lawyers from all over the world. The annual course was held for the sixth time in 2014. The firm's participation is led by Michael Karlsson and Ebba Lanner. www.rwi.lu.se. Michael Karlsson is also a board member of CSR Sweden, a national partner of CSR Europe, the leading European business network for CSR with 70 multinational corporate members and 36 sister organisations in 29 countries, encompassing a total of 5,000 companies, one of which is Mannheimer Swartling.

Read more..
Developing a human rights toolbox - The Mannheimer Swartling and Raoul Wallenberg Institute collaboration supports lawyers from around the world (pdf)
Published in "Dispute Resolution Online", 10 December 2014

 

Further reading

IKEA and Mannheimer Swartling exemplify benefit of knowledge sharing

A corporate culture pervaded by open doors and generous knowledge sharing leads not only to satisfaction among employees – it is also an important reason why some companies are more successful than others. Read more...

 

You cannot free yourself from responsibility by delegating it

Bribes, the use of chemicals or the abuse of workers. The responsibility for how a company’s local organisations manage the business always rests with the group management – as the effects ultimately affect not only the brand, but also the earnings. Read more...

 

Research highlights out-dated legislation

The Swedish legislation governing real estate-backed fi nancing is outdated and does not meet the needs of a globalized real estate market. Also, knowledge of Swedish real estate law is being eroded. Read more...