Stakeholders and the Corporate Boardroom: Can Trade Unions help promote Corporate Social Responsibility?

I. Introduction

A meeting
at the UNEP headquarters in Nairobi, Kenya is focusing on the global
trend to include more stakeholders in the corporate governance
structure. The aim of this meeting is to promote links between
environment sustainability, trade unions, and corporations. These
trends are being followed in the U.S. as evidenced by the Securities
and Exchange Commission proposal to allow large shareholders a direct
voice in the nomination of board of directors.

II. Issues

On
January 15-17th 2006, at UNEP Headquarters in Nairobi, the first annual
Trade Union Assembly on Labor and Environment took place.[1] The aims
of the conference were to reinforce the social and labor dimension of
environmental conservation and sustainable development and to
strengthen the relationship between UNEP and the world of labor.[2]
This gathering recognizes that trade unions have a huge role to play in
helping corporations achieve their goals of becoming socially
responsible citizens. It was only a few decades ago that relationships
between trade unions and the environment seemed suspect.[3] Trade
unions considered environmental policies as unduly burdensome on labor
and business and that maintaining such a policy would lead to job
losses. Environmentalists viewed trade unions as keepers of the status
quo especially in industries that were considered environmentally
unfriendly.[4] Over time both groups began to realize there were many
areas of mutual interest and by working together they could built
strong coalitions inside the corporate world. One of the major
resolutions that come out of the conference emphasizes the need to
“enhance the dialogue between labour and management…to use appropriate
tools to increase social and environmental responsibility and
accountability… through both trade union and multi-stakeholder
participation in genuine initiatives and to ensure that corporate
social responsibility involves both compliance with law and voluntary
initiatives.” [5]

The ability of trade unions to promote socially responsible
corporate behavior and good corporate governance has been evidenced in
US corporate boardroom. The evidence is in the growing number of
shareholder proposals relating to the environment, labor, and corporate
governance.[6] Many people have begun to notice the trend. Al Gore has
dedicated his new business venture to sustainable investment and says
that Corporate America must face up to green and ethical challenges to
avoid disaster.[7] Law makers have begun to realize the role of
shareholders in corporate social responsibility and have introduced
reform. The Securities and Exchange Commission is considering director
election reform to increase shareholder confidence in the corporate
governance process.[8] To give shareholders a stronger voice, it has
proposed allowing larger shareholders through a proxy-access initiative
to nominate members to the board of directors.[9] The hope is that by
allowing shareholders a greater role in nominating the board of
directors they will have a greater voice.

III. Conclusion

Shareholders are increasingly concerned about corporate governance
and social responsibility. They have shown their concern by becoming
involved in the proxy process by making proposals on a wide range of
topics. If the SEC proposal is adopted, it will bring to fruition one
of the main goals of the Trade Union Assembly which is to promote a
greater role for stakeholders in the corporate governance structure.

[1] Klaus Toepfer, Laboring for a Greener Planet (Jan. 12, 2006), available at http://news.bbc.co.uk/go/pr/fr/-/2/hi/science/nature/4607070.stm (last visited 2/15/2005).

[2] See Final Resolution of the Trade Union Assembly at its First
Meeting, U.N. Environment Programme, 1st Sess., U.N. Environment
Program/DPDL/TUALE/2 (2006), available at http://www.will2006.org/documents/TUALEfinalresolution-ENG.pdf (last visited 2/15/2005).

[3] Toepfer, supra note 1

[4] Id.

[5] U.N. Environment Program, supra note 2, at 2.

[6] Diane K. Schooley et. al., Corporate Governance Reform: Electing
Directors Through Shareholder Proposal, The CPA Journal Online, October
2005, at http://www.nysscpa.org/cpajournal/2005/1005/essentials/p62.htm.

[7] http://news.bbc.co.uk/2/hi/business/4672932.stm (last visited 2/15/2005).

[8] Schooley, supra note 6.

[9] Id.

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