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Should Corporate Social Responsibility Reporting be Mandatory?

| Friday October 29th, 2010 | 3 Comments

A common vision emerged during the opening keynote panel discussion at the Net Impact Conference 2010. This is a vision of becoming an ethics and values driven society, incorporating it into business, and integrating this vision into business school curriculum. Easy to say, a bit more difficult to do (even more difficult to find a common set of ethics and values amongst people.)

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 is 1) that corporations will do it, and 2) By being made to do it, their behaviors will change for the better.

I was at the edge of my seat, eager as to how the panelists would answer.

To my pleasant surprise, Aron Cramer, President and CEO of sustainability consultancy firm BSR, responded simply:  “no.” His 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.

I tend to agree, but for a different reasons. In the end, 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. This may sound counter-intuitive, so allow me to explain.

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 companies CSR will show through, more so in their actions, than in their words. Mandating reporting will only promote hiding questionable actions behind words.

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  • http://8020vision.com jaykimball

    Regarding the idea above of “incorporating it into business, and integrating this vision into business school curriculum.” – my colleague Belaina Raffy, wrote a good article on the challenge of getting business schools to acknowledge things like climate change and social and environmental issues.

    You may find the story interesting. Read it at :
    http://8020vision.com/2010/07/14/creating-leaders-great-at-performing-in-uncertainty-without-a-clue-as-to-why/

  • http://www.jonathanmariano.com Jonathan mariano

    Thanks for sharing the article!

  • http://www.ethicssage.com Ethics Sage

    Why can’t a corporation want to adopt and follow socially responsible practices and be compliant? I don’t think the two are mutually exclusive. The public has an (ethical) right to know how corporate policies and practices affect society, the environment, and whether corporations adhere to sustainable business practices.