Question

• Google the terms Corporate Social Responsibility, mandatory, and voluntary. What is your reaction to how this debate is unfolding in the business world? Where do you think most firms would like the balance between coercion and incentives to fall?

Answer 1

New definitions of CSR start to recognize the relevance of the mandatory and voluntary aspects of CSR regulation. As an example, Sheehy defines it as a “socio-political movement which generates private selfregulatory initiatives, incorporating public and private international law norms seeking to ameliorate and mitigate the social harms of and to promote public good by industrial organisations.” Furthermore, it is inaccurate to believe that mandatory and voluntary CSR cannot co-exist. CSR regulation can include self-regulation, private regulation, and public regulation. Another solution can be provided through meta-regulation, which requires organizations to implement practices that are aimed at making sure they internalize their externalities, being the corporations, the most qualified to determine the adequate processes to reach that goal. Meta-regulation acknowledges the fact that legislators might not know the best practices that are to be performed by the specific business. Meta-regulation also recognizes that other aspects such as consumer activism, voluntary industry codes, protection of business reputation and so on are also relevant tools to motivate and even enforce CSR. Governments have been fostering CSR indirectly through tort law or contract law, using old tools on creative ways to make CSR enforceable. The Government of the UK encourages CSR practices, and it is no surprise that corporations in the UK have higher rates of CSR reporting and stakeholder engagement than companies in the rest of the European countries except Norway. The European situation shows that labor relationships and environmental issues are incorporated into the regulatory framework, whereas social and environmental information, responsibility for subsidiaries’ behavior or supply chain are still gaps to be filled with voluntary CSR. The aforementioned shows that some aspects covered by CSR have already been crystallized into positive regulation and this does not work in detriment of voluntary practices.