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A paradigm shift is needed by law firms in understanding disability
‘Diversity’ is such a broad-ranging term, so as to be completely unhelpful. Far from promoting individuality, it clumps together people who are gay, black, bisexual, disabled, but draws the line at being male or female. Critically defining diversity has some bearing on whether you wish diversity groups to be safely ringfenced; or whether all ‘diversity individuals’ should be represented at all levels of a corporate. Whether or not a partner, who has a diversity issue, has time to making diversity part of the corporate culture or not is a moot point, or whether she or he gets paid extra and keeps work for this to a minimum to prevent its negative impact on targets and billable earnings, etc.
Lessons can be learned from another area so beloved of corporate legal marketing and recruitment departments. A highly seminal article on the different subject of corporate social responsibility (CSR) emerged from Porter and Kramer in 2006 in the Harvard Business Review. At this time, Porter and Kramer made a limited entrance into the discussion of CSR and corporate strategy, by structuring their discussion around reputation, sustainability / ‘people, planet, profit’, license-to-operate, and a few other associated issues. It is probably the article which has appeared from Harvard in 2011 that makes the most enduring impression of how CSR should be approached. Porter and Kramer introduce the notion of ‘creating shared value’, emphasising that a previous drawback of previous approaches – including their one – is that the corporation has been pitted against society. Of course, if the purpose of the company in English law is to maximise shareholder dividend, the issue of whether shareholders and directors have an alternative belief-set to other stakeholders becomes enormously relevant.
A similar criticism in my view can be made of the way that law firms approach disability. I am deciding not to hide this under the general term ‘diversity’. Michael Porter talks about the competitive advantage of businesses adopting CSR, such that your business is better than the competition. A lazy marketing solution would be to plaster your promotional literature with pictures of lawyers in wheelchairs, and get your firm to sign up to the aspirational but unenforceable Law Society Diversity and Inclusion Charter; and to concentrate on the profitability of your law firm instead. A more imaginative solution, in keeping with Porter and Kramer (2011), would be to acknowledge disabled individuals like myself as valued members of society. Whether or not you believe in multiculturalism, it is easily possible that a law firm, including the Magic Circle, could set up innovative professional legal services solutions regarding disability and employment issues in the corporate work force; they could make money out of this, indeed, and become more profitable in the process. More radical than making up numbers of the number of disabled candidates invited for interview, even.
I allude to this discussion briefly in a podcast I did with Alex Aldridge and Kevin Poulter this evening.
Wednesday's meeting of LegalAware: CSR and competitive advantage
This Wednesday’s meeting is on corporate social responsibility (CSR) and competitive advantage.
I will be giving a short presentation based on the famous paper by Porter and Kramer (2006) in the Harvard Business Review on the subject. We will then discuss the actual paper.
Competition and competitive advantage: introduction
“Corporations are not responsible for all the world’s problems, nor do they have the resources to solve them all. Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit.” (Porter and Kramer, 2006)
Overview
In 2005, 360 different CSR-related shareholder resolutions were filed on issues ranging from labour conditions to global warming.
Government regulation increasingly mandates CSR reporting.
Pending legislation in the UK, for example, requires every publicly listed company to disclose ethical, social, and environmental risks in its annual report.
These pressures highlight the potentially large financial risks for any firm whose conduct is deemed unacceptable.
The case for CSR
Broadly speaking, proponents of CSR have used four arguments to make their case: moral obligation, sustainability, license to operate, and reputation.
The principle of sustainability appeals to enlightened self-interest, often invoking the so-called triple bottom line of ‘people, planet, profit’.
The principle works best for issues that coincide with a company’s economic or regulatory interests.
Examples
DuPont, for example, has saved over $2 billion from reductions in energy use since 1990.
Changes to the materials McDonald’s uses to wrap its food have reduced its solid waste by 30%.
These were smart business decisions entirely apart from their environmental benefits.
“In other areas, however, the notion of sustainability can become so vague as to be meaningless.”
License-to-operate
The license-to-operate approach, by contrast, is far more pragmatic.
It offers a concrete way for a business to identify social issues that matter to its stakeholders and make decisions about them.
This approach also fosters constructive dialogue with regulators, the local citizens, and activists – one reason, perhaps, that it is especially prevalent among companies that depend on government consent, such as those in mining and other highly regulated and extractive industries.
Corporations and society
Safe products and working conditions not only attract customers but lower the internal costs of accidents.
Efficient utilization of land, water, energy, and other natural resources makes business more productive.
Good government, the rule of law, and property rights are essential for efficiency and innovation.
Strong regulatory standards protect both consumers and competitive companies from exploitation.
Ultimately, a healthy society creates expanding demand for business, as more human needs are met and aspirations grow.
At the same time, a healthy society needs successful companies. No social program can rival the business sector when it comes to creating the jobs, wealth, and innovation that improve standards of living and social conditions over time.
Porter’s notion of ‘competitive advantage’
The competitive advantage and CSR
Value chain social impacts are those that are significantly affected by the company’s activities in the ordinary course of business.
Social dimensions of competitive context are factors in the external environment that significantly affect the underlying drivers of competitiveness in those places where the company operates.
Within an industry, a given social issue may cut differently for different companies, owing to differences in competitive positioning.
The car industry
“In the auto industry, for example, Volvo has chosen to make safety a central element of its competitive positioning, while Toyota has built a competitive advantage from the environmental benefits of its hybrid technology.
For an individual company, some issues will prove to be important for many of its business units and locations, offering opportunities for strategic corporate-wide CSR initiatives.”
Strategic CSR
For any company, Porter and Kramer (2006) argue that strategy must go beyond best practices. It is about choosing a unique position. They say, however, that their effect is inherently limited, however.
“No matter how beneficial the program is, it remains incidental to the company’s business.”
Mitigating the harm arising from a firm’s value chain activities–is essentially an operational challenge.
The Global Reporting Initiative, which is rapidly becoming a standard for CSR reporting, has enumerated a list of 141 CSR issues, supplemented by auxiliary lists for different industries assessing their ‘value chains’.
Competition and competitive advantage: conclusion
“Corporations are not responsible for all the world’s problems, nor do they have the resources to solve them all. Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit.” (Porter and Kramer, 2006)
