Corporate Social Responsibility and Compliance: How Compliance Can Strengthen CSR

This is the fourth in a series of posts reflecting excerpts from a chapter that I authored on corporate social responsibility (“CSR”) for the Corporate Legal Compliance Handbook.

In weighing the costs and benefits of considering the integration of a company’s CSR commitments into existing compliance programs, it is important to recognize that this integration may strengthen the company’s capacity in both areas. One way in which compliance can strengthen CSR is through the development of personnel capacity to meet the relevant performance standards.

Efforts to integrate CSR into a company’s core management systems often suffer from internal perceptions that CSR is the responsibility of a limited number of people within the company. Trainings on CSR may be seen as non-essential and a company’s commitments may be viewed, even by internal personnel, as public relations efforts. A company’s environment, social, and governance standards may not be translated into people’s understandings of their individual roles and responsibilities.

These perceptions reflect a fundamental misunderstanding about the nature of CSR and the ways in which a wide range of personnel play an integral role in ensuring that the company’s operations are conducted in a responsible way. For example, human resources personnel have a central role in protecting individual’s rights to be free from discriminatory practices and to ensure that they have the training they need to perform their responsibilities in a manner consistent with the company’s environmental, social, and governance standards. EHS personnel play an integral role in protecting the physical security of employees and members of the local communities, as well as the health of the ecosystems impacted by company activities. Executive-level management and the board of directors play a critical role in ensuring that the company has the management and oversight systems necessary to manage the company’s operations in a manner that is financially and socially responsible.

An effort, therefore, to translate a company’s CSR commitments into key performance indicators that people already see as within the scope of their responsibilities can be a powerful exercise. Holding people accountable for performance of specific tasks through the oversight mechanisms of a corporate compliance program can strengthen the degree to which people believe that they already play a role in ensuring that their company is operating not only in compliance with the law, but in a manner that is responsible and responsive to societal concerns. Ultimately, employees may better understand the importance of the company’s CSR commitments when those commitments are enforced through traditional compliance systems.

Excerpt reproduced with the permission of Wolters Kluwer from Theodore Banks & Frederick Banks (eds.), “Corporate Social Responsibility,” Corporate Legal Compliance Handbook, Chapter 15 (2016).  A copy of the full handbook can be purchased here.

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