Corporate Social Responsibility: Governance Gain or Laissez-Faire Figleaf?

Source: Alan C. Neal, Comparative Labor Law & Policy Journal v. 29 no. 4, Summer 2008

In his primer on “corporate social responsibility” (CSR) in Europe, Neal questions whether the popular slogan CSR is more than simply an “incantation” of corporate governance rhetoric. Neal defines CSR as voluntary behavior by corporations beyond existing legal requirements that is associated with notions of economically, socially, and environmentally sustainable corporate operations. CSR is promoted in Europe by the European Commission, the Organisation for Economic Cooperation, and other international and quasi-governmental organizations on the grounds that it embodies the idea that corporations can profit while being responsive to stakeholders apart from their shareholders. The author argues to the contrary, that voluntary compliance by corporations is fraught, leading to the proliferation of reports by management consultants and auditors, but little in the way of meaningful benchmarks that can be used to measure changes in corporate activity. Furthermore, he cautions that licensing self-regulation in the absence of independent standards may in fact undermine existing international standards, such as those established by the ILO, by allowing companies more room to proclaim their business practices “accountable” or “responsible” without the sanction of traditional oversight or “hard” regulation. In sum, he argues for the development of regulatory approaches that preserve a distinction between the “economic” and “social” realms of society that CSR blurs.

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