Corporate Social Responsibility and Compliance: Commitment at the Top

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

Integrating CSR into the framework of a company’s overall compliance program may help engage executive-level managers and the board of directors as allies in ensuring that CSR commitments are supported through the allocation of sufficient resources and management attention. In response to heightened levels of regulatory attention, many companies have focused on the development of enterprise risk and compliance programs that include reporting channels to senior executives. CSR plays an important risk mitigation function for many companies and executive leaders and board members should ensure that they have the information necessary to evaluate the effectiveness of a company’s management systems in evaluating and responding to key social and environmental risks and concerns.

Moments of crisis are not the time for corporate leaders to realize that a company’s commitments, often prominently displayed on websites and in glossy reports, have not been effectively implemented. On an ongoing basis, top-level management and the board are in a position to raise questions regarding the processes and criteria by which the company is evaluating the social and environmental risks that may be associated with particular operating environments, product lines, or business relationships. The evaluative and reporting processes that provide structure for a company’s compliance efforts may serve as a useful platform for engagement with senior corporate leaders regarding the comprehensiveness and suitability of a company’s CSR objectives and performance targets.

Engagement by senior leadership in evaluating a company’s efforts to comply with its voluntary commitments will also communicate to internal and external stakeholders that a company’s efforts are both sincere and backed by appropriate resources. If a company’s most senior executives can speak knowledgeably to external stakeholders regarding the company’s social and environmental performance, including both successes and areas for improvement, this conveys the message that the company is serious in its efforts to be responsive to societal expectations and concerns.

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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