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Corporate Social Responsibility and Its Regulation Research Paper


Introduction

The private sector plays a prominent role in assisting communities through their Corporate Social Responsibility (CSR) programs. Corporations should have the commitment to assist communities. All corporations should appreciate the people and communities that consume or use their products. Furthermore, they should participate in programs that seek to improve the environmental conditions in areas where they operate.

Particularly, corporations whose business activities cause massive environmental pollution and natural resource depletion should implement sustainability programs. However, corporations’ implementation of CSR and sustainability programs is largely unregulated. Therefore, corporations opt to implement different CSR and sustainability programs, which they deem appropriate. Conversely, other corporations continue to generate massive profits without assisting communities or conserving their environment.

Most importantly, the question is not a bout, which corporation is implementing what CSR programs but, whether or not such programs contribute positively to human development, human well – being, promotion of human dignity, and meaningful support to environmental conservation and ecological rejuvenation. Many corporations implement CSR programs that are detrimental to people, communities, and the environment. Therefore, it is crucial that appropriate policies are used to regulate corporations CSR activities.

Therefore, this paper declares that private sector CSR and sustainability activities must be regulated by public policies to ensure that they uphold ethical standards and the internationally recognized human rights and sustainability principles. This paper discusses the development of appropriate public policy, which is applicable in the regulation of private sector CSR activities. The also discusses diverse aspects of public policy life cycle of the new regulation. Quantitative paradigm, literature review, personal knowledge, theoretical experience, sampling techniques, and records will be applicable in sourcing information for the creation of CSR policy.

The Theory of Corporate Social Responsibility

The International Labor Organization (ILO) Commission views CSR as voluntary initiatives corporations undertake beyond their legal obligations (Hopkins, 2012). The International Organization of Employers (IOE) also views CSR as a set of social and environmental programs voluntarily integrated into corporations operations and into their interaction with stakeholders (Hopkins, 2012). Indeed, the IOE considers CSR as a fundamental element of corporations’ activities and operations and recognizes it as a strategy required by corporations to honestly engage with stakeholders.

CSR may also be known as societal accountability and environmental sustainability. It also entails social accountability and non-economic reporting. It can be defined as a strategy for reporting corporations’ activities. Thus, it emphasizes the need for documentation of publicly applicable actions and the determination of persons benefiting from corporations social responsibility. The creation of suitable processes and reporting procedures also constitute CSR (Micah, Adebayo & Esq, 2012).

CSR predominantly describes the planning, demonstration, and communication of news related to corporation’s contact with the society and natural surroundings. It also includes accountability concepts particularly regarding corporations impacts on environment and mitigation measures for potential aspects that affect societies (Micah, Adebayo & Esq, 2012).

CSR as Corporate Irresponsibility

There are ongoing debates about CSR programs that are socially irresponsible. The arguments are championed by scholars who view profit making as the social responsibility of corporations. Indeed, such scholars argue that social responsibility does not mean anything to corporations. Evidently, the notion that CSR corporation directors “tax” and commit shareholders money elsewhere is in itself an unethical commercial practice (Zile, 2012).

The arguments that business establishments are a connection of contracts strengthen corporate immorality. Indicatively, corporations’ managers take responsibility to maximize profits from such contracts on behalf of shareholders. The suggestions that societies sometimes employ diverse tactics to demand that corporations operating in their areas take responsibility for their business impacts indicates that corporations lack social responsibility (Zile, 2012).

The Significance of Public Policy to Regulate CSR Activities

The achievement of harmonious growth between society and corporations in commercial activities remain a crucial issue in governments. In some countries, the government owns larger corporations than private players. Therefore, the regime plays an essential role in corporations’ disclosure of their CSR information (European Commission, 2011). Different governments have also instituted policies with varying guidelines stringency to regulate CSR activities.

Therefore, the level of helpfulness of regulatory regimes renders them successful or unsuccessful. The model of CSR together with its correlated human rights and sustainability aspects is presently being conducted as a global authority.

Laws associated with CSR are aggressively emerging to support the functions of corporations pursuing viable growth. The importance of law, corporate governance, individual corporation regulation, legitimate principles, moral standards, and creativities in controlling business impacts cannot be underestimated (European Commission, 2011). Indeed, legal aspects are necessary for rebalancing societal values and corporations’ interests. Indicatively, different corporations have significant influence in fascinating appropriate ways of addressing emerging global predicaments that affect human rights and ecological sustainability.

According to the European Commission (2011), corporations should have in place a process to integrate social, environmental, and ethical and human rights concerns into their business operations and core strategy in close collaboration with their stakeholders” in order to fully attain social responsibility. The aim of CSR regulation policies is to augment positive impacts. This is tenable through innovative programs and services, which are valuable to society and corporations themselves. The policies also aim at preventing or minimizing negative impacts.

A CSR regulation policy promotes the visibility of social responsibility together with sharing best practices among firms and the government. Notably, this may entail the establishment of a reward strategy for corporations implementing CSR programs (European Commission, 2011). It may also entail the creation of sector based benchmarks for corporations and private sector players to make commitments and together monitor progress.

Regulations are also fundamental in improving and tracing level of confidence in commercial activities. This can be attained through launching a public discussion regarding the potential functions of corporations and arrange surveys on public confidence in particular businesses. CSR policies escalate self and co – regulation strategies for corporations (European Commission, 2011). This includes the creation of a short procedure to direct the establishment of future regulation resources.

CSR policies provide for strategies for enhancing marketplace compensation for social responsibilities. This might include specifications on how the government will leverage other relevant policies including tax exemption (European Commission, 2011).

CSR regulations are also aimed at improving corporations’ revelation of social responsibility and sustainability information. Indeed, the regulation specifies standard guidelines for presenting and reporting social responsibility information. CSR regulations also specify the notable strategies that corporations will use to integrate learning, teaching, and research aimed at unearthing innovative and applicable social responsibility activities (European Commission, 2011).

The creation of CSR policies also ensures that corporations’ social responsibility projects are aligned to relevant global approaches (Utting & Marques, 2009). These might include “the 10 principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, the ILO Tri-partite Declaration of Principles on Multinational Enterprises and Social Policy, and the International Standards Organization of Operations (ISO) 26000 Guidance Standard on Social Responsibility” (European Commission, 2011).

Public Policy and the Development Process

A policy connotes a declaration of values, goals, and intentions that a working government wishes to recognize, together with tactics and methods for achieving them. Conversely, public policy connotes the amalgamation of basic decisions, regulatory measures, legislations, obligations, and courses of action, and financing priorities implemented, in the society’s name, by individuals who hold power in government positions (Peters & Pierre, 2007). Notably, public policy developed is a major role played by governments. Policy development is very crucial in countries because of their functions in controlling and streamlining operations in different sectors.

Policy development engagements essentially entail research, analysis, stakeholder and public consultation, and amalgamating information to generate recommendations. The policy development activities also entail evaluation of alternative options set aside while generating the recommendations (Peters & Pierre, 2007). The process of developing a policy requires intelligent leadership to manage difference activities.

The policy development process begins by outlining the notable things that a government or its agency hopes to attain by creating the new legal guideline. It is also significant that policy development outlines applicable methods and values (Peters & Pierre, 2007). Most importantly, policies are less superior to general laws. Essentially, policies highlight goals, activities, program standards that government agencies seek to achieve.

It is noteworthy that policies require appropriate institutional and legislations to enforce them. In this scenario, the government seeks to develop a policy to regulate the behavior of the corporations in designing and implementing CSR programs (Peters & Pierre, 2007). It is recognizable that several corporations implement social responsibility initiatives that instead of improving the condition of people and societies, endangers their well-being. Therefore, in order to develop a public policy to regulate the sector, some activities are crucial. Policy making is a constant process that entails categorizing problems and developing governmental interventions (Brammer, Jackson & Matten, 2012).

The initial stage of policy making entails recognizing the societal and environmental predicaments associated with unregulated corporations CSR efforts. This first stage of policy making ensures that the problems that unregulated CSR activities generate are well defined and documented. Furthermore, the identification of different predicaments enables policy developers to set the agenda for the guidelines development (Wouters & Chanet, 2008). Notably, public policy developers must map out, categorize, and involve all the appropriate stakeholders. Indeed, leadership of the corporations that are already implementing CSR initiatives.

The public developers must also involve other corporations that are not implementing any form of social responsibility or sustainability initiatives. Furthermore, the general populations that reside in areas where major corporations implement programs must participate in the process (Peters & Pierre, 2007). The involvement of relevant government agencies in this significant process must be emphasized. Central to stakeholders’ involvement is educating them on the significance of regulating CSR programs using policies as well as their participation in the development of guidelines to achieve such objectives.

The second stage in the policy development process is the consultation and involvement of appropriate players in the sector. The public policy development being a government’s initiative must also ensure meaningful involvement and consultation with different stakeholders. In this process, public policy development personnel require to involve corporations’ leadership, the general population, government technocrats, and CSR experts. This stage is very crucial in the process because different aspects of CSR activities will emerge (Peters & Pierre, 2007).

Most importantly, the corporations’ leadership shall present their present approaches to CSR activities focusing on their choice of programs, planning, implementation, beneficiaries’ selection and involvement, programs, and reporting and information sharing. The general population shall also share information regarding their thoughts on corporations CSR activities (Peters & Pierre, 2007). CSR experts’ involvement entails providing input in the process by suggesting absolute and most appropriate CSR legislations.

The third stage of the public policy creation process entails formulation and appraisal of alternatives. The public policy team shall formulate the draft document after exhaustively assessing alternative options. The assessment of policy options is crucial because it helps the policy development team to justify their actions leading to creating the draft. The fourth stage of a public policy creation entails subjecting the draft document to public vetting. It is noteworthy that public hearings provide stakeholders and non-stakeholders alike with an opportunity to critique the CSR regulation draft policy. Public hearing is also crucial it provides an opportunity for public participation in the process of developing CSR regulation.

Public Policy Development Cycle.
Figure 1: Public Policy Development Cycle.

At the fifth stage, the public policy developers must incorporate information obtained during public hearing sessions. The team must also decide the contents of the final policy. In addition, the team must employ appropriate communication strategies for sharing the policy (Dye, 2010). The team shall decide how to involve and inform major policy stakeholders including the corporations. Applicable communication strategies must be used to escalate awareness of corporations, government agencies, and other stakeholders about the new policy.

The next strategic stage of the policy development process is policy implementation. This is a role that appropriate and relevant government agencies shall perform. The legislature and relevant government agency oversee the process of policy implementation (Considine, 2005). The implementers also conduct regular assessments on the effectiveness of key policy provisions in responding to the identified predicaments. The implementers also consider and provide intelligent opinion on whether or not the CSR policy contributes to escalated appropriateness of corporations’ initiatives (Considine, 2005). Implementers also suggest whether or not the policies aimed at regulating CSR activities may require reformulation according to their effectiveness in addressing intended issues.

The next crucial stage entails monitoring and evaluation processes of the policy development process. It is noteworthy to recognize that monitoring public policy creation process is an ongoing activity. Monitoring starts from the initial to the final stage of the process (Dye, 2010). Indeed, the role of public policy creation monitoring must be overemphasized. This is because as policy makers undertake different activities, the might unearth certain issues that potentially derails the process thus, addressing them within appropriate times (Considine, 2005). Conversely, evaluation of the CSR regulation policy occurs towards the end of the policy development process.

Policy redesigning is the final stage of public policy development cycle. Redesigning a policy is dependent on the notable limitations in addressing the original predicaments while meaningfully contributing to the attainment of its goals (Considine, 2005). In this scenario, the CSR regulation policy might be subjected to redesigning when it emerge that corporations continue to undertake their CSR activities as if regulations were lacking. Furthermore, emerging evidence that corporations face massive challenges business challenges might necessitate policy redesigning.

Applicable Methodology in the Process of Developing CSR Regulation Policy

The development of the public policy employed diverse methodologies and strategies. Most importantly, a qualitative paradigm was applicable in conducting the research (Johnson & Christensen, 2011). This approach comprised of the policy developers ontology including their insights regarding the nature of corporations CSR initiatives. The approach also entailed the policy developer’s epistemology, which relates to the opinion of the policy makers on different aspects of corporations CSR activities. The approach also comprised of the policy makers methodology relating to their perception on applicable strategies for generating factual information about CSR activities being implemented by firms (Corbetta, 2003).

Policy developers also mapped and sampled appropriate stakeholders to participate in the process of creating the guideline. The policy developers employed both qualitative and quantitative sampling techniques to identify stakeholders to participate in the process (Corbetta, 2003). Notably, qualitative sampling was applicable in identifying corporations’ leadership, CSR experts, and government technocrats. Conversely, a quantitative sampling design was also employed by policy developers in identifying the general population to participate in the process particularly at the public hearing stages.

Reviewing of diverse policies and documents was also applicable in data collection. The policy developers generated massive information through reviewing relevant policy documents such as “the 10 principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, the ILO Tri-partite Declaration of Principles on Multinational Enterprises and Social Policy, and the International Standards Organization of Operations (ISO) 26000 Guidance Standard on Social Responsibility” (European Commission, 2011).

In addition, the policy developers reviewed CSR and sustainability reports from corporations whose leaders were sampled to participate in the process. These reports also enabled the policy developers to obtain factual information regarding the current CSR initiatives implemented by diverse corporations (Corbetta, 2003). The team also reviewed appropriate literature including books, journals, and articles to obtain scholarly suggestions about different aspects of CSR.

The policy developers also conducted in-depth interviews with selected leaders from major corporations. The interviews entailed developing extensive comprehension of the nature of CSR activities that selected corporations were implementing in the absence of regulations (Johnson & Christensen, 2011). Furthermore, the heads of corporations were interviewed on their readiness to adhere to standardized systems and structures for planning and executing CSR projects. Additional interviews were conducted with CSR experts and technocrats.

Self-administered questionnaires were also applicable in gathering evidence about varying aspects of CSR. The policy developers obtained consent from diverse corporations to be provided with relevant information regarding their CSR projects. Therefore, the team sent online and email based questionnaires that were completed by corporations’ workforce (Johnson & Christensen, 2011). The self-administered questionnaires were then sent back to the policy makers.

The policy makers also conducted public hearings to obtain additional information regarding CSR activities of corporations that were operating in their areas. Public participation was highly crucial in the process of developing a public guideline to regulate CSR initiatives. Therefore, obtaining the views of the general public was significant in integrating their desires, expectations, and participation in formulating CSR initiatives.

Conclusion

CSR initiatives implemented by a number of corporations are aimed at assisting communities. However, the absence of a regulatory mechanism has enabled corporations to implement the projects they like in different communities. In this scenario, several corporations execute different SCR initiatives, which eventually harm communities. Therefore, this paper declares that public policies are required to control corporations’ CSR initiatives with the aim of ensuring that such projects meet the globally recognized ethical standards, human rights, and principles. The paper extensively discusses the process of creating a public policy aimed at regulating the CSR initiatives within the private sector.

References

Brammer, S., Jackson, G. & Matten, D. (2012). Corporate Social Responsibility and institutional theory: new perspectives on private governance. Socio-Economic Review, Vol. 10, 3–28.

Considine, M. (2005). Making public policy: Institutions, actors, strategies. Cambridge: Polity.

Corbetta, P. (2003). Social research: Theory, methods and techniques. London: SAGE.

Dye, T.R. (2010). Understanding public policy (13th ed.). Longman: Pearson Prentice Hall.

European Commission. (2011). . Web.

Hopkins, M. (2012). Corporate Social Responsibility and International Development: Is Business the Solution? Virginia, VA: Routledge.

Johnson, B. & Christensen, L. B. (2011). Educational research: Quantitative, qualitative, and mixed approaches. California, CA: SAGE Publications.

Micah, L., Adebayo, O. and Esq, U. (2012). Corporate Social Responsibility and Compliance with Regulations in Nigeria. Research Journal of Finance and Accounting. Vol. 3, No. 2, 35 – 41.

Peters, B. G. & Pierre, J. (2007). Handbook of public administration. Los Angeles, LA: SAGE.

Utting, P., Marques, J. & United Nations Research Institute for Social Development. (2010). corporate social responsibility and regulatory governance: Towards inclusive development? Hampshire: Palgrave Macmillan.

Wouters, J. & Chanet, L. (2008). Corporate Human Rights Responsibility: A European Perspective. Northwestern University Journal of International Human Rights, Vol. 6, No. 2.

Zile,C. (2012). India’s Mandatory Corporate Social Responsibility Proposal: Creative Capitalism Meets Creative Regulation in the Global Market. Asian-Pacific Law & Policy Journal, Vol. 13, No. 2, 270 – 303.

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