Berger-Walliser (2018) discloses that the growth of the conglomerates and globalization together with the increasing demand from the corporates to be responsible for their social and environmental effects and for organizations transparency and disclosures in respect to non-financial challenges, otherwise known as CSR. He further clarifies that the government is now legalizing mandatory obligation for CSR, which was initially voluntary, a trend he refers to as legalization of CSR. Through analysis of the corporate regulations, trends, and case laws around the world in countries like India, China, the USA, and the EU, the process of redefinition and legalization of CSR through the view of shareholder primacy, in the first places undermines the very purpose of corporate responsibility.
In this respect, Berger-Walliser redefines CSR as pursued by state or corporation, to include the activities internalizing costs for externalities resulting from company actions. It is also actions and procedures to be considered and provide solutions to the effects of the corporate action on the impacted stakeholders that are pursued at least partially due to a recognized ethical or moral duty to stakeholders and society beyond the corporation stakeholders/owners. The new definition ensures that the companies shift their focus to the areas that will see the company more profitable and give value back to stakeholders.
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While the governments are imposing obligations and legalizing CSR, I believe corporations' first intention to do ethical and moral business emerged from the need to have a sustainable business and relate well with businesses. Some organizations go beyond the legally imposed restrictions to ensure they are doing sustainable and ethical business and that they are protecting the environment and ensuring good relations with the immediate community. Therefore, organizations need to go beyond these legal obligations to ensure they have good relations with the employees, the environment, and the communities. And this is because studies reveal a positive correlation between CSR and company performance.
Reference
Berger-Walliser, G. & Scott, I. (2018). Redefining corporate social responsibility in an era of globalization and regulatory hardening. (Links to an external site.)American Business Law Journal, 55(1), pp. 167-218, https://sci-hub.do/10.1111/ablj.12119
