Feasibility and Legal Requirements for CSR

Abstract

Governments are the entities to form laws and regulations. CSR can be the vehicle is to implement these values in corporations. Thus CSR is very much enveloped with the functions in a legal framework. Laws are usually and sensibly long in the drafting. They typically have a long “shelf-life”, regardless of the rapidly changing circumstances that they are designed to address. This may lead them to be blunt instruments some times. They are clearly the best means of establishing coherent, enforce able “ground rules” on which to build civil society. Laws however need to be supplemented by a range of other measures that allow effective responses to specific conditions and changing circumstances in a timely manner. Organizations need to be committed for the welfare of the larger society. They must have right conduct for fulfilling expectations and moral obligations at the level of society. Effective competition, regulation, and standards are vital for improving CSR in producing social welfare. Understanding legal concepts rules and process are essential to the business and CSR. This helps ensure that products, operations and services comply with all applicable laws and regulations. Business firms should move toward a spirit of trust at all times especially in matters that are integral to the existence of the firm such as data privacy. Governments should take the initiative in bringing together all segments in society to create awareness and discuss CSR. Simultaneous competition reform and regulation need to go with improvements in the efficiency of the legal system. The importance of the efficiency of the legal protection depends on the trade-offs related to the delegating part of authority to specific regulatory agencies and relying on a laissez-faire approach backed by the general court system. Law enforcement must be credible for the CSR environment. But one cannot be sure about reliability of the enforcement of Law by the state’s legal institutions. Law per se cannot have any significant impact, without the appropriate political structure and allocation of judicial authority. Further one can always find some loopholes in avoiding law and hence it is never a foolproof system. Self-regulation is seen as an alternative to provide some of the basic civil, social and political rights afforded their citizens. This is mainly due to the real or perceived failure of legislation, regulation and its implementation to control the adverse activities of the corporation on people and the environment. Self-regulations focus primarily on codes of conduct, as central tool by corporations and government. Some question the notion that codes are optional, particularly for internationalized corporations when by definition they are voluntary. Normally codes of conduct will be part of the organization’s culture and the decisions made by senior management will reflect this. These codes or formal rules are complementary. It can increase the effectiveness of informal constraints. The government enforces the law by power. On the contrary, social norms stem from culture, custom and religion. Government may be able to emphasize certain mainstream values in society and educate people. But they cannot enforce those values through power. Organizations need not only to develop, communicate, and publish these codes but also has to review them regularly, and punish rule breakers. Codes of ethics need to be valued by all organizational members, their content needs to be regularly reviewed, and rule breakers need to be punished. The varied regulatory environments add a whole new level of complexity to corporate regulation due to globalization and the internationalization. CSR by definition has a voluntary nature and hence there is a continuous debate on whether CSR should be voluntary or regulatory. All the stakeholders have to play their roles effectively, if we want to change the system. Among them of course, Governments have a major role to play in this regard. We can see that CSR is broadly about fairness and decency. But understanding and interpreting of fairness and decency differs often radically from person to person and from country to country. Therefore there is a need to develop some broad consensus globally upon which governments, workers and employers can operate. ILO may be the right body to develop such an International Consensus. It is equally important to have in place checks and balances that reward the good and punish the bad performers.