من قبل
Amrut Desai , former Managing Director & Country Manager India & SriLanka , Hohenstein India Pvt Ltd-fully owned by Hohenstein Institute GmbH Germany
Lot of discussions and debates are happening on corporate social responsibility accounting and reporting. Should it be mandatory?
The three words that make up CSR are “Corporate” “Social” and “Responsibility”. The entire meaning can be discerned from these three words. In broad terms CSR covers the responsibilities of the corporations towards the society in which they are based and operate. In more specific terms, CSR involves a business identifying its stake holder groups and incorporating their needs and values within the strategic and day to day decision making process.
The Term Corporate Social Responsibility is imprecise and its application differs. CSR cannot only refer to the compliance of human right standards, labor and social security arrangements, but also to climate change, sustainable management of natural resources and consumer protection. It is basically a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. Corporate social responsibility is represented by the contributions undertaken by companies to society through its business activities and its social investment.
Corporations must behave and function, as responsible members of the society, just like any other individual. Having a ‘social vision’ is integral for the success of ‘business mission’. Companies desiring to build and sustain brand equity will do well to remember that discharging social commitments is essential to generating an image in the minds of the people.
At the end of the day, how well an organization integrates community interests into its core values will be one of the determining factors that will spell its success or failure. A social investment strategy is a must for any progressive organization’s secure future.
However, CSR to this day has largely remained a voluntary activity. Though Corporations / companies are required to adhere to workplace regulations of the country, a full scale adoption and continued practice of Corporate Social Responsibility principles by all business entities is still far from achieved. Presently compliance to social standards is limited to few enlightened corporations/ companies only and these corporations do it because of the market forces and not because of any altruistic motivations. Ethical production practices and humane treatment and respect of worker’s rights as envisaged under various independent certification standards are adopted and implemented for continued practice because a compliant plant is a prerequisite for placing purchase orders.
One of the ways we have a peek into the ethics and values of a corporation is through Corporate Social Responsibility (CSR) reporting. CSR reporting is akin to reporting financials, but rather than focusing on the numbers (i.e. profits), there is an emphasis on the people and planet impacts.
At the moment, such reporting is voluntary. Some corporations do it, some corporations do not. A question was asked, “Should Corporate Social Responsibility reporting be made mandatory by the government?” The logic behind having reporting mandatory is1) that corporations will do it, and2) By being made to do it, their behaviors will change for the better.
The response to this question has to be an emphatic “ NO ” Corporate Social Responsibility (CSR) and its reporting should be voluntary. Legislation would only destroy CSR by establishing a minimum requirement. Organizations that add value and takes responsibility will thrive; while, irresponsible organizations will naturally go out of business. However, legislators should promote requirements that preserve our scarce resources: environment, fiscal responsibility and human capital.
The fear is if CSR reporting becomes mandatory, it will be compliance driven reporting. Corporations would be reporting just to meet the requirements of the report, not truly making any genuine effort towards sustainability or social responsibility.
The goal is to have corporations become more socially responsible, hence the CSR reporting. However, having the government mandate reporting absolves corporations from the responsibility such reporting is intended to instill. Federally mandating reporting now makes social responsibility the governments onus, not the corporations. Responsibility, per se, now transfers from the corporations to the government. Gone is the motivation for a corporation to be responsible, it now just wants to be compliant. Gone is the incentive for a corporation to do it because it wants to, not because it has to. In essence CSR would need to be changed to GSR, Government Social Responsibility.
Furthermore, CSR reporting is just that, reporting. It is far more important for a company to actually be socially responsible rather than talking or writing about being socially responsible. The ones that are will let you know, whether it be through a CSR report, or how it runs its culture. The ones that do not, or are not even interested in CSR, will let you know because those corporations will not bother to fill a CSR report out.
It may seem ideal to mandate all corporations do CSR reporting, but a company’s CSR will show through, more so in their actions, than in their words. Mandating reporting will only promote hiding questionable actions behind words.
Mandatory CSR and its reporting will be seen as just another tax which will be very difficult to monitor , regulate and control without a change in mindset.