The concept of corporate responsibility and how does it works?

Concept of corporate responsibility

Corporate responsibility (CR), also known as corporate social responsibility (CSR) or

business sustainability, is about the ethics which drive an organization’s activities and
how it operates so that it’s viable over the long term. These two factors are intrinsically
linked because a business that damages the systems on which it depends will ultimately
be unsustainable.

CR starts with recognizing that organizations’ activities impact on society, the

environment and the economy, as well as on their own workforce. Value creation is not
just a matter of finances. Indeed, the traditional shareholder value approach to
business, and the short-termism that often goes with this, are central reasons for the
global economic crisis and numerous environmental and other ethical corporate
disasters - we look briefly at social value creation below. An organization committed to
maximizes the positive impacts of its operations for all its stakeholders.

How does it works

So now that compulsory CSR has been around in some countries for a few
years, do they actually work? I have been researching whether CSR actually
advances corporate social transparency and accountability as expected.

First, myself and colleagues investigated the CTSCA. This mandated CSR

disclosure requires US firms based in California to disclose, at minimum level,
efforts to eradicate slavery and human trafficking from their supply chains on
an annual basis.

Based on a sample of 105 US retail companies subject to the CTSCA, we found

that in CTSCA’s first year, 83% of firms disclosed their efforts to eradicate
slavery and human trafficking, but disclosures in general were not detailed.
Extensive disclosure for any of the specific categories was quite limited, with
only 4% firms including extensive information disclosure across all five
required items investigated. As such, to ensure greater corporate transparency
and accountability, it is important that regulators enforce extensive disclosure
requirements.

Then, in another international collaboration, we looked at how the US Conflict

Mineral Rule (Section 1502) affects corporate disclosure pertaining to the
elimination of human trafficking and slavery in global mineral supply chains.
Like the CTSCA, Section 1502 requires minimum disclosure by relevant firms.
This means that at a minimum level they have to disclose what they are doing
or not doing to prevent human trafficking in their supply chains.
Focusing on a sample of global companies that deal with electronics from 20
countries, we found that companies’ conflict mineral disclosures tended not to
be extensive, but that social movements (via NGO collaborations or activist
protests) lead to more comprehensive, and more transparent, disclosures.

This has practical and policy implications: improved corporate transparency is

the result of social movement actions via NGOs. This means that regulation on
its own may not result in comprehensive and quality CSR disclosures.

While social movements have led regulators to enact new CSR regulation,
regulation on its own may not create much improvement of CSR. This means
that continuous monitoring of corporate compliance with CSR legislation by
social activists is necessary to achieve the regulatory objective of CSR.