The Lesson Taught by the Weinstein Scandal: a Case for the Implementation of CSR Measures against Sexual Harassment in the Workplace

Introduction

In the mere ten months that have passed since the New York Times broke the story of Harvey Weinstein’s decades-long sexual harassment and assault, the “Weinstein scandal” has prompted an unprecedented public outcry, breathing global force into movements for social change (#metoo and Time’s Up to name a few). Harvey Weinstein has become emblematic of the suffering women can come to bear at the hands of powerful men, both in the workplace and well beyond, with countries around the world (including Italy, France, Israel, Canada) denouncing “their Weinsteins”.

While workplace harassment is nothing new, and harassment scandals in big corporations have dominated headlines in recent years (21st Century Fox, Amazon, Uber), none appear quite to equate to this one in scale and reaction. The reasons for this are many and are varied, but perhaps what struck a chord in this case were the victims themselves, most of whom had always been – in the eyes of the public – untouchable and powerful, begging the question: If they can’t speak up, who can?

The discussion which ensued is fraught with nuances, upsides and pitfalls, some contending that the #metoo movement has gone too far, risks leading to an expedited justice of undeserving individuals and ultimately relegates women to the status of perpetual victim. Yet whatever side of the debate one may fall on, it is a debate which, quite simply, needed to be had.

Using the Weinstein scandal as a case study, the present article focuses on the corporate angle, arguing that the role of companies in workplace harassment is of crucial importance, corporate culture often constituting the determining factor in whether or not workplace harassment thrives within a company.

Yet how companies can be prompted to tackle the phenomenon is less clear. Standard legal regimes are often seen as having “more teeth” and thus a greater deterrent and reactionary power than corporate social responsibility solutions (CSR) that are essentially voluntary and self-regulatory. However, while traditional legal mechanisms of holding a company to account may go some way in terms of prevention, these may prove to be dissatisfactory in dealing with the complexity of the sexual harassment phenomenon, the latter demanding a different, broader, approach to improving workplace culture. This article aims to assess how CSR solutions can play a significant, if not greater, role in the fight to eradicate sexual harassment in the workplace.

The role of the corporation

Although the board of The Weinstein Company (TWC) initially claimed Weinstein’s misconduct was “an utter surprise to the board” and that “any suggestion that the board had knowledge of this conduct is false,” over the course of the months that followed, it became clear, from internal company records and interviews, that Weinstein’s behaviour was “an open secret” in the company and in the industry.

The lawsuit filed on 11 February 2018 by the New York Attorney General, Eric Schneiderman, against inter alia TWC provides for an interesting read, and gives an elucidating account of TWC’s role in the alleged misconduct. The lawsuit refers among others to “a years-long gender-based hostile work environment, a pattern of quid pro quo sexual harassment, and routine misuse of corporate resources for unlawful ends”. Harvey Weinstein and TWC would have “sought to shield these and additional facts from disclosure through routine use of Non-Disclosure Agreements”. TWC’s management and Board of Directors “were repeatedly presented with credible evidence of HW’s sexual harassment of TWC employees and interns, and his use of corporate employees and resources to facilitate sexual activity with third parties”. TWC “enabled HW’s unlawful conduct to continue far beyond the date when, through reasonable diligence, it should have been stopped.

The board of TWC has responded stating that “[m]any of the allegations relating to the Board are inaccurate”.

It will be interesting to see how this lawsuit plays out, especially considering that Schneiderman stepped down on 8 May 2018 as a result of harassment and assault allegations against him and Harvey Weinstein handed himself over to the authorities in May 2018 to face the charges against him.

Traditional legal regimes and their limitations in workplace harassment cases

The role of a company in workplace harassment can be assessed from several legal angles. For instance, one might consider whether corporate liability regimes, be it at civil or criminal level, could find application in a particular case, not only in terms of vicarious corporate liability for actions of executives, but also direct liability for the company’s own actions or omissions, either in facilitating the conduct or in failing to prevent its commission. From a labour law perspective, the question might also arise whether an employer aware of the harassment can be accused of forcing employees to work in a hostile environment, constituting a basis for constructive dismissal.

However, the Weinstein scandal, and the conduct underlying it, presents some unique characteristics that highlight potential limitations of traditional legal regimes, which, in order to hold a company to account, tend to require proof of certain elements that can be difficult to establish in a judicial setting.

One particular contention concerns the relationship between TWC and the alleged victims of Weinstein’s conduct, many of whom were not formal TWC employees but, for instance, aspiring actresses. Indeed, it appears that, rather than inviting the latter for a formal interview or audition, Weinstein often arranged private meetings and engaged in informal discussions with them, luring them in under the pretense of discussing career prospects. The lack of clarity as to how these victims could be formally qualified in relation to TWC (for instance as job applicants) raises questions as to whether and to what extent the company can be held responsible for any misconduct involving them.

Yet, irrespective of their formal legal qualification, these women were widely exposed to the behavior of a TWC executive and could not invoke the same protections against the company which an employee or job applicant might have. It is within this gap that effective CSR solutions can come into play.

The Corporate Social Responsibility angle

As intimated above, traditional legal regimes are founded on definitions and principles which CSR mechanisms may be based upon but also transcend. According to the ILO, CSR is “a voluntary, enterprise-driven initiative and refers to activities that are considered to exceed compliance with the law”.

As such, CSR mechanisms encourage a company to look not only at its legal obligations and business interests but also at its impact on the social context within which it operates. In particular, Freeman’s stakeholder theory argues that there ought to be a paradigm shift in companies from focusing exclusively on shareholders to integrating the interests of all stakeholders (defined as any group or individual who can affect or is affected by the achievement of the organization’s objectives) in their business strategy and operations.

TWC and other leading production companies have a wide societal impact, shaping community views and perspectives around the world with the films they produce, and thus also have a wide range of stakeholder interests to consider. The wave of sexual harassment claims that have inundated the entertainment industry globally has demonstrated that, although sexual harassment is not a gender issue and can affect women and men alike, women constitute at this stage a unique stakeholder group whose voices must be heard. Indeed, the film industry is still dominated principally by men and focused pervasively on aesthetics and on the “male gaze”, women become particularly vulnerable to producers and directors abusing their power to harass women, belittle them upon refusal and reward them upon consent. It is now essential for leading companies to take a strong stance against such conduct, irrespective of the formal legal relationship that might exist between the victim and the company itself.

Crucially, adopting a CSR approach is not dictated simply by moral imperatives, but also by long-term business sustainability imperatives. Freeman argues that, in incorporating stakeholder concerns into managerial decision-making, the company will actually be more successful. Mark Haefele, global chief investment officer of the wealth management division of UBS, wrote: “there is now strong evidence that thinking about social responsibility as part of the investment decision-making process does not sacrifice returns. Indeed, it can actually help de-risk, diversify, and enhance them.”

The impact of a strong CSR policy on a company’s business performance is notoriously hard to measure. In the case of Harvey Weinstein, the direct correlation between the scandal and the company’s downfall was evident and perhaps one of the most glaring examples of the cost of failing to tackle sexual harassment in the workplace. TWC suffered a tremendous financial loss in the wake of the scandal, as companies sought to distance themselves from its image, leading the company to declare bankruptcy within a few months of the NY Times exposé. Although certain studies appear to show that the share prices of companies have not necessarily fallen as a result of sexual harassment scandals, the TWC case tells a different story. In their article Sexual Harassment and Corporate Law, Hemel and Shapiro conclude that “sexual harassment is itself a threat to investors and an impediment to the efficient allocation of human capital”.

In any event, assessing the impacts of a harassment scandal on a company purely based on stock performance can be misleading, as it fails to consider the other, perhaps harder to measure, long-term implications. According to the EU Commission’s 2001 CSR Green Paper, “[t]he economic impact of corporate social responsibility can be broken down into direct and indirect effects. Positive direct results may for example derive from a better working environment, which leads to a more committed and productive workforce (…). In addition, indirect effects result from the growing attention of consumers and investors, which will increase their opportunities on the markets. Inversely there can sometimes be a negative impact on a company’s reputation due to criticism of business practices.” Indeed, reputation is a particularly powerful CSR tool of which the law can only make limited use, and a scandal of the scale of that provoked by Weinstein may be precisely what was needed to prompt companies into action to protect their image.

In sum, the adoption of a CSR policy against harassment that is strong in its internal impacts and minimizes the risk of sexual harassment in the workplace will enhance the company’s ability to do good business and simultaneously improve its image, positively impacting both the company itself and society at large.

Concluding remarks: companies in the Post-Weinstein Era

It is hard to predict whether the Weinstein scandal, and the global movements that arose in its wake, were enough of a shock to the system to revolutionize corporate culture in the entertainment industry. There are signs, however, that it might be. Forbes ranked “the beginning of the end of workplace harassment and inequality” as one of the eight CSR trends to look out for in 2018. Indicators of harassment problems in companies are putting off investors in M&A transactions, with questions of sexual harassment in the workplace seeping into due diligence assessments. In this, perhaps, the Weinstein scandal may have served a fundamental purpose.

6 thoughts on “The Lesson Taught by the Weinstein Scandal: a Case for the Implementation of CSR Measures against Sexual Harassment in the Workplace

  1. Thanks for this- it’s a really nice comparison of the legal versus voluntary frameworks that we might use to challenge sexual harrassment and gender inequality per se in the workplace. I commented on Twitter that I find the conclusion- around using a policy to deter harrassment, and possibly boost reputation, a bit disappointing. This is for 2 reasons- first, evidence suggests that a policy only goes so far- it might raise an issue momentarily in workers’ eyes, but it does little to change everyday behaviour. So, I think CSR could be used much more innovatively to challenge everyday practice (e.g. behaviour, language, text) that contributes to a culture in which women are treated as second class citizens. Second, tying reputational benefits to a ‘don’t harrass’ policy makes me feel a little sad. We shouldn’t need a business case in order not be maltreated at work. Food for thought!

    Like

    1. Lauren – Thank you so much for taking the time to comment and provide some critical insights into a complex topic. I agree that policies in and of themselves are insufficient and that change will only materialize if everyday practices are improved. For this reason, I mention the importance that a policy be strong “in its internal impacts”. As to your second point, I share the same sadness that the risk of reputational damage might function as an incentive to tackle workplace harassment. Ideally, companies would do so of their own accord, with the impacts on their image being a positive spin-off at most. But the reality may be such that the scandal (and companies’ subsequent fear that they may face the same fate) provided an impetus for society to express unequivocally what it finds acceptable and what it does not, and for companies to act accordingly. I’d like to tackle these issues in greater detail in a subsequent post and would love to hear your views, considering your expertise on the topic, on the concrete innovative ways CSR can challenge the status quo.

      Like

  2. Thank you for your post. Very interesting read!

    I found it particularly interesting where you pointed out that TWC could possibly escape a great deal of liability in regards to prospective talent not yet employed by the company. They could have been mere victims of opportunity or a premeditated strategy to separate the company from the alleged misconduct. Either way, if the firm was aware of the misconduct of an member that effected the business’ activities, and failed to take appropriate action, they are at fault.

    The implementation and enforcement of CSR measures becomes very difficult when an organization is owned and overseen by rich and powerful industry leaders. They come under the assumption that they are “untouchable” and find comfort in knowing the people around them will protect them as they also have a vested interest in the corporation. This case has shattered these assumptions and has ignited a movement/community that lets us know that misconduct cannot and will no longer be swept under the rug.

    This movement also pushes the idea that in order for a business to be successful and remain successful, it must operate not only under legal measures, but also under socially responsible behavior. CSR, although a suggested protocol, truly has the ability to strengthen a company’s reputation as well as build sustainability for future success.

    Like

    1. Many thanks Kellisha for adding some interesting perspectives to the discussion! I’m also very interested to see which defensive arguments TWC will raise before the NY courts and whether its awareness of the misconduct (or lack thereof) will feature among them. Though I didn’t manage to include it in this post, the lawsuit points among others to a clause in Weinstein’s work contract, stating in essence that Weinstein be responsible personally for any claims of misconduct, to demonstrate that the company was indeed aware of a pattern of misconduct. It should be said that the issue of the company’s relationship with the victims is quite complex and merits further analysis, as companies do have certain obligations both towards employees as towards job applicants.
      Let’s hope that, beyond any legal questions, the Weinstein case has, as you mention, shot through the idea that top leaders in the industry are immune from scrutiny and constituted a turning point in workplace culture.

      Like

  3. Hi Liemertje, thank you for an interesting post. I understand you are arguing that the role of companies in workplace harassment is of crucial importance and that corporate culture often constitutes the determining factor in whether or not workplace harassment thrives within a company, I would like to know what your thoughts are on individual responsibility within the workplace. If the scandal was an ‘open secret’, what happened to HR? What about one single individual in the entire organisation standing up for what is right? For instance, Google was forced to reassess the limits it puts on military applications of its artificial intelligence technology, after staff expressed unease (some resigned) over the Pentagon using its service to identify images taken by drones. Therefore would you say this is more about ‘unethical staff’ as well as a complete corporate governance failure? And then overall, is this more of a societal problem than a corporate one- because maybe until each individual in society has their own values (whether by reason of their upbringing, faith or other value system) and abides by it, no amount of corporate governance teachings will get through to them and they will readily go along with the ‘whatever goes’ culture. Lola.

    Like

    1. Hello Lola, I’m glad you brought this key point to the fore concerning the role of individuals’ shortcomings in the scandal, beyond corporate culture and corporate governance failures. HR is a good example: in the Weinstein case, HR appears to have received numerous complaints upon which it did not act (see the NY lawsuit in this respect). While that may indeed be cast as an individual failure, in my view, it remains representative of a broader failure at corporate governance level. HR appears not to have acted because it did not think it imperative (or perhaps even possible), within that workplace environment, to do so: management had thus failed to make clear that HR was required to follow-up meaningfully on such complaints. While each person’s behaviour, including that of HR officers, may ultimately be dictated by his or her own belief systems, and thus as you mention it is at the broader societal level that attitudes must change, having a strict no-tolerance policy to harassment – and encouraging HR to address complaints in the correct manner – can at least be a start in impacting individual behaviour within a company.

      Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.