HOT ISSUE: Should CSR standards be set and enforced by legislation?

A campaign by 40 organisations known as the Corporate Responsibility (Core) Coalition succeeded last week in getting a private member's bill tabled that would force companies to report on their social and environmental impacts with the aim of improving their corporate social responsibility standards.

CLARE THOMAS, director, Bridge House Trust


The danger with setting legal standards is that companies may go for minimum compliance. It is hard to define CSR as a single activity. A standard format will be hard to achieve, and legislation is a blunt instrument.

The business case for triple bottom-line reporting, taking account of economic, social and environmental impact, is well made. Any company that ignores it does so at its peril.

But legislation doesn't change hearts and minds. Just as you can't force people to be good citizens, good corporate citizenship is about process, development and ownership.

More could be done to communicate the benefits of CSR and ensure that it is an essential corporate quality standard.

But what about the voluntary sector? Nearly two-thirds of the UK's largest charities have no written ethical or socially responsible investment policy. Few do environmental audits or have green housekeeping policies. The equivalent of the CSR debate is barely on our radar.

BRIAN SHAAD, co-ordinator of the Core campaign, Friends of the Earth UK


Core is calling for legislation to make reporting on environmental and social impacts mandatory because this is the only way to make it a reality.

Andy King's private member's bill also requires government departments to report on the impacts of their policies.

Legislation is necessary because the voluntary approach to company reporting has failed to deliver. Three-quarters of the top 350 companies in the UK ignored a challenge set by Tony Blair to file reports by the end of 2001.

The Government has already recognised the need for a legal requirement for companies to report on more than financial performance. Mandatory reporting on social and environmental impacts will allow companies to compete on a level playing field.

Under a voluntary system, there is no real incentive for companies to improve their social and environmental performance. Indeed, they are more likely to indulge in "greenwash", promoting an image of good behaviour, but leaving the real problems unresolved.

JULIAN ORAM, senior researcher, New Economics Foundation


The continuing series of corporate scandals - of which Italian giant Parmalat is merely the latest example- reminds us that legislation enforcing CSR standards remains a priority for protecting investors, consumers, workers, suppliers and other stakeholders against the misconduct of reckless company executives.

While the proliferation of voluntary CSR standards has placed ethical issues higher up the business agenda, many of our most influential companies continue to flout such principles in search of higher returns. Against this backdrop, a number of companies, large and small, are seeking to adopt new business models that value a triple bottom-line outcome - financial profitability, social objectives and environmental sustainability. But the barriers are considerable, and many struggle to compete in markets that often fail to reward them for valuing anything other than quarterly profits. Raising the ethical bar across industries through regulation is a powerful and necessary step.

MALLEN BAKER, development director, Business in the Community


The posing of the question shows a lack of understanding on what the movement for CSR is about. The role of legislation is to establish minimum standards. There is already a lot of legislation that seeks to do this, and there will always be a debate around where the bar should be set.

CSR is about best practice. Responsibility is inherently voluntary, so it has to be about the choices that the company makes within its set business environment. Simply complying with the law is not CSR.

The real question is whether any proposed piece of legislation is needed, if it would be effective in achieving its aim and would avoid undesired consequences. On these counts, unlike the proposals for an operating and financial review, the Core proposal is badly conceived.

More and more companies are voluntarily reporting. There remains, however, no consensus on what should be reported and how it can be measured.

It doesn't seem a good idea to mandate it until that is resolved.

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