Feb/March 2011 / Cover Story
Making Corporate Social Responsibility Systemic
Companies are now subject to demands from a wide range of stakeholders, including employees, shareholders and the public, and they face a variety of related risks that include lawsuits, negative publicity, boycotts, as well as targeted legislation and regulation. Consequently, many companies have adopted what they call a corporate social responsibility (CSR) program. However, many of these programs miss the point, according to the authors, and as a result they fail both in terms of social responsibility and managing legal and “reputational” risk.
Companies, especially those that operate internationally, need to adopt CSR programs that are integral to their operations, not overlays or add-ons that take the form of “sustainability officers” or occasional philanthropy. CSR, the authors write, “is about the core business functions of a company, and about being responsive to the ever-increasing demands of company stakeholders that companies be held accountable for the social and environmental impacts of their operations.”
Some stake holder demands have taken the form of legal requirements and the expectation of a relatively new kind of due diligence. The U.N.’s Special Representative has urged companies to carry out “human rights due diligence,” and The European Parliament has recently adopted a resolution calling for a CSR clause in all European Union trade agreements. It would require companies to identify and prevent “violations of human and environmental rights, corruption or tax evasion, including in their subsidiaries and supply chains.”
