Corporate Accountability - Voluntary Compliance or Legal Enforcement

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UNIVERSITY OF PUNE
DEPARTMENT OF LAW
Golden Jubilee CELEBRATION
NATIONAL SEMINAR
ON
‘EXPANDING HORIZONS OF BUSINESS LAW-
FUTURE CHALLENGES’
FEBRUARY 20 & 21, 2010

CORPORATE ACCOUNTABILITY - VOLUNTARY COMPLIANCE

OR LEGAL ENFORCEMENT

SUBMITTED BY: ANUSHREE ADHAU

LL.M. 1ST YEAR

NALSAR UNIVERSITY OF LAW,

HYDERABAD

CORPORATE ACCOUNTABILITY- VOLUNTARY COMPLIANCE OR LEGAL ENFORCEMENT

Introduction:

Corporate social responsibility is not a new concept in India. However, what is new is the shift in focus from making profits to meeting societal challenges. The concept of CSR is based on the idea that besides public authorities, companies also should take on responsibilities of social issues.

Objective of the Research:
This paper examines the growth of corporate social responsibility in the world of corporate governance and analyses the approaches viz. voluntary compliance and legal enforcement, to make the corporations accountable for their behaviour.

Research Scheme:
The research paper has been written in the form of article starting with introduction to corporate social responsibility followed by corporate accountability. Further the two aspects of voluntary compliance or legal enforcement of corporate accountability are analyzed and summary of the conclusion and suggestions will follow after entire discussion.

Corporate Social Responsibility:

Giving a universal definition of Corporate Social Responsibility is bit difficult as there is no common definition as such. However, there are few common threads that connect all the perspectives of CSR with each other; the dedication to serve the society being most important of them. Most ideal definition of Corporate Social Responsibility (CSR) has been given by World Business Council for Sustained Development which says, “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.[1] Corporate Social Responsibility (CSR) is the continuing commitment by business to behave ethically, contribute to economic development, improving quality of life of workforce, their family, local community and society, build a meaningful relationship between the corporate sector and the rest of the society. It must be the integrated part of day to day business engaging all stakeholders, strategies to support individual managers to make socially responsible decisions conforming ethical behaviour and law. It would be interesting to derive a meaning of the concept with the dissection of each of the words. CSR is not a difficult concept and can be explained as: • Corporate – means organised business;

• Social – means everything dealing with people, the society at large; • Responsibility – means accountability between the two[2]. From the above, CSR could be defined as the process of business operations carried out while ensuring compliance with legal requirements, as also linked to ethical values, to an extent. ‘CSR means open and transparent business practices that are based on ethical values and respect for employees, communities and the environment. It is designed to deliver sustainable value to the society at large as well as to the shareholders’[3]. Now, there is no single, commonly accepted definition of CSR, even across global corporate bodies. It refers to business decision making linked to ethical values, compliance with legal requirements, and respect for people, communities and their environments[4]. CSR is seen as more than a collection of discrete practices and occasional gestures or initiatives motivated by marketing, public relations or other business benefits. Rather, it is viewed as a comprehensive set of policies, practices and programmes that are integrated throughout business operations and...
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