BUSS4 CSR Research Bullet 6

These notes address the sixth and last research bullet on CSR.

The second research bullet asks students to consider the: extent to which governments should influence CSR

Definitions
Government: the body with the power to make and enforce laws
Laissez-faire: “leave alone” - doctrine that Govt should not interfere with actions of business and markets
Legislation: laws enacted by Parliament
Regulation: a kind of legislation; sets out rules
NGO: Non-governmental organisation (e.g. WWF, Greenpeace)

Key Theory
Role of legislation: CSR is beyond what the law requires: CSR is voluntary, not a legal requirement
Light-touch regulation: an approach of govt to managing business behaviour - prefers to “influence” rather than “legislate/regulate” Carrot or stick?
Relationship between UK government and European Union: increasing amount of business legislation coming from Brussels rather than London (e.g. carbon emissions)

Arguments for greater Govt influence
Govt can do much to encourage greater CSR behaviour: e.g. incentives for corporate giving; tax breaks for environmental investment and innovation
The bargaining power or larger firms (multinationals) is increasing, making it harder for weaker stakeholder groups (households, small suppliers, local communities) to be heard
Govt has a positive role in encouraging firms to give back to the societies in which they operate (the “Big Society”)
Where they can, big business will always find ways of ignoring or bypassing key CSR obligations (e.g. “fat cat” executive pay)
important for govt to set minimum standards of behaviour

Arguments for less Govt influence
Too much govt influence potentially stifles innovation and efficiency - laws and regulations are effective alone
NGOs and the media already exert powerful influence and are much more effective at changing business behavior & attitudes
Many business responsibilities already covered by laws (e.g. consumer & employment protection, product safety, environmental regulations, competition law)
Firms increasingly operate across borders (multinationals) and are therefore less easy for individual govts to influence
Consumers (as a key stakeholder) are increasingly exertising their own influence over CSR (through demand

Examples / Evidence
2011: “The Big Society” - govt encouraging rather than requring firms to act responsibly
Examples of Govt influence over UK industries:
Banking reform & regulation
Increasing range of environmental-related taxes (e.g. air passenger duty);
Tougher C02 emission reduction targets (Copenhagen)
European cap & trade scheme
Feed-in energy tariffs
Food industry: call upon food manufacturers to address obesity - but no additional regulation

“Depends on” Factors
Which govts are we referring to? National govts? The EU?
Governments around the world have different attitudes to CSR, ranging from free-market attitudes (e.g. USA) to social welfare approach to business in Northern Europe
The political position of the Govt in question

Possible Evaluation Arguments
Governments seek to influence business behaviour in a variety of ways; they resort to legislation and regulation to “require” firms to behave in a certain way
Govt’s influence over business is diminishing as the forces of globalisation limit their authority
Ultimately, it is the role of business to understand and meet its CSR obligations and for stakeholders to hold them to account
The increasingly strategic approach taken by many firms to CSR reduceds the need for more extensive Govt action