While not a new concept, Corporate Social Responsibility (CSR) has become a driving force in today’s marketplace, influencing the way business is conducted in virtually every industry. Modern businesses are encouraged, by both laws and industry, to engage in practices that extend beyond the bottom line and promote social and environmental benefits. Today’s consumers demand certain ethical commitments from powerful economic actors, requiring businesses of all types to consider their social and environmental impacts in order to remain competitive.
What is CSR?
CSR describes the voluntary actions that businesses undertake in an effort to promote the interests of different stakeholders. Many large businesses now take into account the “triple bottom line” – people, planet, profit. This approach to business recognizes obligations beyond generating revenue for shareholders. CSR arises from a recognition that businesses do not operate in a political, social or environmental vacuum and that their actions have material consequences extending well beyond the scope of primary business activity. Companies who commit to CSR recognize that while such initiatives may not result in immediate financial gain, they promote long-term benefits such as brand-building, consumer loyalty, goodwill, employee efficiency, and reduced risks of liability and costs for regulatory compliance.
How do the Courts view CSR?
Canadian environmental laws encourage CSR in an effort to promote social, economic and environmental sustainability. For instance, the Ontario Environmental Protection Act contains fines ranging from $25,000 to $10,000,000 for corporate non-compliance with the Act. In the context of environmental prosecutions, the Canadian courts have emphasized the importance of corporations adopting environmental management “systems” to prevent regulatory non-compliance.
According to the Court in R v Sault Ste Marie, courts must consider “whether the accused exercised all reasonable care by establishing a proper system to prevent commission of the offence and by taking reasonable steps to ensure the effective operation of the system”. Where a corporation’s non-compliance does result in a verdict of guilty, the courts have held that genuine efforts to achieve compliance will constitute a mitigating factor in sentencing. In R v. United Keno Hill Mines the court held:
“The diligence of a corporation can be measured by the duration of non-compliant operation, the cost of compliance contrasted with corporate profits, the general co-operative and frank nature of communication with responsible government agencies, and the actual investment of resources, time, and money in seeking to achieve compliance”
Moreover, not only can environmental non-compliance result in hefty fines, it can also expose businesses to civil liability. Environmental contamination and spills can result in countless expensive lawsuits that drain business resources.
Preventative efforts to achieve environmental responsibility and sustainability will reduce the long-term cost of regulatory compliance and diminish the risk of civil liability for environmental matters. CSR is an important approach to business in today’s environmentally conscious market-place, and, when practiced prudently, will promote corporate longevity and success.
This article was written by environmental lawyer Paula Lombardi. If you have any questions about the information contained within this article, do not hesitate to contact Paula by calling 519.660.7878 or emailing [email protected].