Corporate Social Responsibility (CSR) is becoming an integral part of many companies’ policies. Understanding the four levels of CSR shows that the practise offers benefits, not only to workers and the community, but also the company itself, and the country in which it operates. This is why it is often in the government’s interest to encourage these programs.
A few countries around the world have enacted CSR laws encouraging positive corporate citizenship.
CSR is taken very seriously in India. In fact, it is the first country to have a mandatory CSR spending law in the world. According to Companies Act 2013, companies with an annual turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit of five crore INR and more are required to spend at least 2% of their average net profit in the previous three years on CSR activities.
The CSR team in the Bureau of Economic and Business Affairs (EB) leads the Department’s engagement with U.S. businesses in the promotion of responsible and ethical business practices. The State Department sees business as an additional diplomatic and development resource. The EB serves as a source of guidance and support for American companies looking to develop positive CSR policies. It helps partner businesses with NGO’s and other members of civil society looking to have a positive impact. EB also helps businesses adhere to multinational business conduct guidelines like the Organization for Economic Cooperation and Development’s Guidelines for Multinational Enterprises. To recognize outstanding global citizens, the EB is in charge of determining the Secretary of State’s Award for Corporate Excellence.
CSR is a part of Corporate Governance. The Companies Act 2006 has now added to those pressures by requiring directors to have regard to community and environmental issues when considering their duty to promote the success of their company and by the disclosures to be included in the Business Review.
The European Commission’s CSR agenda for action is:
1. Enhancing the visibility of CSR and disseminating good practices.
2. Improving and tracking levels of trust in business.
3. Improving self and co-regulation processes.
4. Enhancing market reward for CSR
5. Improving company disclosure of social and environmental information.
6. Further integrating CSR into education, training and research.
7. Emphasising the importance of national and sub-national CSR policies.
8. Better aligning European and global approaches to CSR.
The CSR strategy is built upon guidelines and principles laid down by the United Global Compact, United Nations Guiding Principles on Business and Human Rights, ISO 26000 Guidance Standard on Social Responsibility and OECD Guidelines for Multinational Enterprises.
The Danish Financial Statement Act (Accounting for CSR in Large Businesses) mandates that companies of a certain size must disclose their CSR practices in an annual report or disclose that they do not have a CSR policy. Specifically, companies are required to report on three topics: their CSR policies, including standards, guidelines, and principles; their plan of action to translate CSR policies into results, including all planned procedures and systems; and their evaluation of CSR achievements in the current financial year, as well as expected results of future plans.
The Danish government has added provisions to the law that encourage companies to account for human rights policy and their climate impact. The law has also been applied to institutional investors, mutual funds, and financial businesses. The government believes these CSR laws help Danish businesses compete better internationally and encourages them to make positive contributions to the world.
France, South Africa and China also have similar mandatory reporting obligation on the amount spent on CSR activities.