By BEN DIPIETRO
(The Below article was originally published by the Wall Street Journal in the Risk & Compliance Journal’s Morning Risk Report on June 26th, 2015.)
The United Nations Global Compact is making a push to get the business community more involved in promoting the rule of law framework and advocating for greater corporate social responsibility, especially in emerging markets, arguing that development of such laws is good for business and will improve profitability while reducing risks. Kevin Coon, a labor rights lawyer and managing partner at law firm Baker & McKenzie, said the Business for the Rule of Law framework advocates for a legal system that is predictable, transparent, provides protections for intellectual property and allows for remedies to resolve disputes and enforce laws regarding labor rights, human rights and environmental protections. The lack of rule of law in some emerging market countries is one of the main concerns that keeps companies from investing in those regions, he said.
Rule of law issues have generally been left to politicians and governments to resolve. A number of companies have stepped forward to work on the framework but more are needed as it is companies that have the most to gain from its implementation globally, said Mr. Coon. “There is increasing evidence for economic sustainability and the need for a stable system of laws where companies are doing business,” he said. “There needs to be a broader recognition among some of those global organizations that they can’t wait for governments to do it, they need to be the catalyst for driving some of this change.”
Ulysses Smith, a senior associate in the international governance and development practices at law firm Linklaters, said there is much research showing the correlation between having rule of law and strong social and economic development. Within their organizations, companies can roll out policies and procedures to deal with corruption issues and institute standards to help support and advocate for environmental regulation, better labor standards and human rights, he said. Lance Croffoot-Suede, head of the international governance and development practices at Linklaters, said the framework is helping to form that critical mass. “Some time within the next five years it will be self-evident to anyone in business that, of course, we have to support rule of law and have to do so strenuously and aggressively,” he said. “Because without strong rule of law we are not able to have a stable and profitable business environment.”