Business Corporate social responsibility

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Corporate social responsibility (CSR) is a term for the responsibility that a company should have towards society and the environment in which it operates.

CSR has been defined in various ways:

 It is ‘a concept whereby companies integrate social and environmental concerns in their business operations and their interaction with their stakeholders on a voluntary basis.’

 ‘While there is no single, commonly-accepted definition of corporate social responsibility … it generally refers to business decision-making linked to ethical values, compliance with legal requirements, and respect for people, communities and the environment’ (Business for Social Responsibility). An important element of CSR is that it goes beyond compliance with legal and regulatory obligations, and involves voluntary initiatives and investment in people and the environment, and better relations with all stakeholders, not just shareholders and other investors.

The practice of CSR increases the transparency and accountability of an organisation. Transparency is important as stakeholders want to know about an organisation’s activities. (They want to ‘see into’ an entity, to understand what it is doing and which strategic directions it is taking.)


For example, if a local community believe that a company is dumping waste in the local area, then it will be important to understand what is actually happening. Likewise, the company needs to accept that it is accountable for its actions. Stakeholders believe that they have a right to know whether a company is acting in the best interests of society and the environment and wish to understand what the company is doing to remedy any faults.

 

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Voluntary guidelines for the content of social and environmental reports

The information provided does not have to be audited, but most organisations will request some kind of audit on the information before it is published to enhance its credibility.

Even so, since the content of these voluntary reports is not regulated and not audited, companies can include whatever they choose (the ‘good news’) and omit whatever they do not want in the report (the bad news).

For this reason, voluntary environmental reports have been treated with some caution by readers.

Although there are no international standards on CSR reporting, there is a strong trend towards the provision of more information, on a statutory or a voluntary basis, and this trend in Corporate Reporting can be expected to continue in the future

 

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UN Global Compact There has been a significant increase in the demand by major institutional investors for companies in which they invest to pursue social and environmental policies.

One such initiative was launched by the United Nations, with the support of 32 major international institutional investors.

The UN Global Compact issued the Principles for Responsible Investment.

The ten principles are intended to encourage institutional investors to give attention to environmental, social and corporate governance issues when making their investment decisions.

The UN Global Compact states that companies should be encouraged by their shareholders to provide disclosures on environmental, social and corporate governance issues – in other words, to report on these issues.

The ten principles are that businesses should:  support and respect the protection of international proclaimed human rights within their sphere of influence;