Corporate social responsibility

Abstract

The move by companies to adopt a philosophy of ‘corporate social responsibility’ (CSR) is partly driven by the extreme difficulty which has been experienced in imposing such a concept on corporations by legally binding regulations. This difficulty is particularly acute when the corporation in question is operating in different jurisdictions using branches, subsidiaries, franchising or exclusive delivery agreements. As we have seen, because companies are creatures of individual legal systems, controlling operations in different jurisdictions is an exceptionally complex legal problem, compounded by the ‘race to the bottom’ which occurs when poor countries seek to attract foreign direct investment and are therefore unwilling to subject incoming companies to strict regulation. Korten quotes a Philippine government advertisement (1995): ‘To attract companies like yours … we have felled mountains, razed jungles, filled swamps, moved rivers, relocated towns … all to make it easier for you and your business here.’ Having moved the landscape, complete with its inhabitants, it seems unlikely that strict labour or environmental regulation will follow. Can companies become responsible, thus obviating the need for regulation? This chapter seeks to show that there needs to be a more fundamental approach to the problems of controlling companies than by asking for commitments to human rights or social responsibility. In effect, both of these cut across the structure of companies and their ethos as explained in chapters 1 and 2. There needs to be a complete rethink about corporate structures before social responsibility becomes an embedded reality within companies.

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