With the massive, unprecedented growth of multinational corporations all over the world within the past century, the concept of corporate social responsibility (CSR) came forward very quickly, after a number of environmental, social, and ethical abuses large and mighty entities engage in for the sake of profit (Amao, 2011). Many corporations used to come to undeveloped countries with weak, fragile systems of protection and control, to contaminate land and water, to exhaust local resources, and to remain unpunished because of corruption and bribery.
Such abuses paved the way to CSR as a major guardian of human rights and a limitation for corporations; nevertheless, the very concept of CSR remains a conceptual and practical challenge, with few empirical mechanisms for its enforcement (You, 2015). Hence, the issue arises whether CSR violations may serve as a substantial basis for a legal investigation. This has to be clarified to determine the boundaries of responsibility and to identify possible actions to be taken in cases of open neglect and disregard to the company’s CSR principles and values.
There is an extant body of research on the propriety and effectiveness of CSR as a form of regulation for large companies, but there is still no basis for transferring it into hard law. Compliance on the CSR standards is largely the matter of political, social, and economic pressure from the side of various NGOs, environmentalists, action groups, and the public (Boeger, Murray, & Villiers, 2008). This makes CSR compliance a mostly voluntary action, meaning that the company voluntarily imposes the responsibility for observing CSR limitations and standards in its functioning to preserve its reputation and image.
On the one hand, this approach works well because in the market-based economy of the 21st century characterized by intense competition and high risks of losing a competitive advantage, reputation means much for any business entity. As a result of growing publicity and accessibility of information about corporate actions, no company can involve in unethical or criminal actions and hope to remain clean in the public eyes. Once the incompliance with CSR standards is revealed, a company’s value dwindles and it loses investors, customers, and the reputation it has been fostering for years or decades. That is too much of a risk to involve in, so even the voluntarist approach to CSR works well, urging companies to refrain from activities that may potentially harm their reputation. There is no need for a legal intervention, since the public pressure and condemnation of unlawful, anti-social actions is a powerful mechanism causing a quick fall of the market value and a potential further bankruptcy (Schwartz, 2011).
At the same time, some companies still take risks and involve in unlawful activities and interactions with local governments and officials in a pursuit of tremendous but unfair profits. In such cases, even the public condemnation upon revelation of such misdemeanour may not be enough to hold the company’s senior management liable for their misconduct, and legal mechanisms are necessary for compensation of losses and damages. In such cases, it is highly appropriate to involve the legal system as a support infrastructure for assisting corporations in self-regulation and enforcing CSR compliance via legal means in case some deviations from CSR standards are noted (Crane, 2008).
As the presented evidence suggests, public regulation is an effective, self-reliant means for CSR controls, but corporations seeing illicit profit and hasting for maximizing their returns are sometimes unable to stop. For such cases, there is a need to enforce CSR standards with the help of legal enforcement means to ensure that the companies operate on equal socially responsible terms in their states and abroad. Such measures are certain to improve public and environmental protection from the mighty powers of wealthy corporations, thus keeping to the principles of CSR and guaranteeing the protection of universal human rights worldwide.
Amao, O. (2011). Corporate social responsibility, human rights and the law: multinational corporations in developing countries. New York, NY: Taylor & Francis.
Boeger, N., Murray, R., & Villiers, C. (2008). Perspectives on corporate social responsibility. Cheltenham, the UK: Edward Elgar Publishing.
Crane, A. (2008). The Oxford handbook of corporate social responsibility. New York, NY: OUP Oxford.
Schwartz, M. S. (2011). Corporate social responsibility: an ethical approach. Buffalo, NY: Broadview Press.
You, J. (2015). Legal perspectives on corporate social responsibility: lessons from the United States and Korea. New York, NY: Springer.