March 22, 2014

Inside Business Law

A Section-wide Response to Emerging Issues 

Businesses increasingly have embraced the goal of merging profitability and social responsibility. In turn, business lawyers have grappled with the resulting questions, including how to enable stakeholders to formally establish social responsibility as a corporate policy, how to balance a company's goals for profit and sustainability, and how to mandate socially responsible business practices in the face of a complex global economy. 

In the last two years, committees within the Business Law Section have held several CLE programs addressing social responsibility for businesses. As ABA policy, the ABA House of Delegates recently adopted model business and supplier principles directed to labor trafficking and child labor. The Corporate Governance Committee has formed two subcommittees addressing issues of social responsibility, and the Section has formed a Section-wide task force on the topic: The Corporate Social Responsibility Task Force. 

Committee Work Product Addressing Corporate Social Responsibility Issues 

In the past few years, several committees within the Section have presented CLE programs on topics related to corporate social responsibility. The materials from those programs, often including a recording, are available to ABA members through the Section’s website. Available programs include: 

Drafting LLC Agreements for Nonprofit and Social Enterprise LLCs 

At the 2012 LLC Institute, presented by the LLCs, Partnerships and Unincorporated Entities Committee, J. William Callison chaired a panel consisting of Carter G. Bishop, Cassady V. Brewer, and J. Haskell Murray, titled “Drafting LLC Agreements for Nonprofit and Social Enterprise LLCs.” The program discussed the various forms that a business with a social as well as a business goal might take, and provided an overview for organizing a social enterprise in the form of an LLC rather than a benefit corporation. 

Shareholder Values, Benefit Corporations, and the Model Business Corporation Act 

At the 2013 Spring Section Meeting, James H. Cheek, III, chaired a panel, moderated by Frederick H. Alexander and including Stephen L. Brown, William H. Clark, Jr., Donna M. Nagy, and then-Chancellor Leo E. Strine, Jr., titled “Shareholder Values, Benefit Corporations, and the Model Business Corporation Act.” The panel, presented by the Corporate Laws Committee, discussed the genesis of benefit corporations and the various forms of benefit corporations established under the Model Benefit Corporation Act, Delaware law, and other state law. 

Governance Meets Sustainability 

At the 2013 Fall Section Meeting, Nancy S. Cleveland and Katayun I. Jaffari co-moderated a panel that included Brad A. Molotsky, Leah Seligmann, and John Walen discussing how “Governance Meets Sustainability,” presented by the Sustainability Initiatives and Related Governance Matters Subcommittee of the Corporate Governance Committee and the Federal Regulation of Securities Committee. The panel addressed the evolving understanding of sustainability, which includes both environmental and economic longevity. The panel went on to discuss the role that a board of directors has in the governance and oversight of a corporation’s efforts with respect to sustainability. 

Section Initiative: ABA Model Business and Supplier Principles on Labor Trafficking and Child Labor 

At the 2014 ABA House of Delegates Midyear Meeting, the Business Law Section obtained approval of Resolution 102B, adoption of the black letter ABA Model Business and Supplier Policies on Labor Trafficking and Child Labor. (Read the Final Resolution.) This “black letter” consists of model business and supplier principles for businesses to adopt and implement in guarding against labor trafficking and child labor and effectively addressing labor trafficking and child labor when they occur. The Resolution was co-sponsored by the ABA Task Force on Human Trafficking, the Section of Individual Rights and Responsibilities, the Section of Criminal Justice, the Section of Environment, Energy and Resources, the Section of Public Contract Law, the Delaware State Bar Association, and the ABA Commission on Youth at Risk. 

The Corporate Social Responsibility Task Force 

The Corporate Social Responsibility Law Task Force, chaired by Ashley Conrad Walter, was formed to advance, support, and facilitate the development of the knowledge, skills, and expertise required to provide informed, insightful, and effective counsel with respect to corporate social responsibility-related legal requirements and business issues. 

Corporate Governance Subcommittees 

In addition to the Section-wide task force addressing the topic, the Corporate Governance Committee has formed the Governance of Social Benefit Entities Subcommittee, led by Kimberly A. Lowe and Allen Sparkman, and the Sustainability Initiatives and Related Governance Matters Subcommittee, led by Nancy S. Cleveland and Katayun Iris Jaffari, to address issues related to benefit corporations and sustainability.