Corporate social responsibility (CSR) is closely related to business compliance. Both CSR and business compliance share the objective to integrate requirements from legal, regulatory, and social expectations with organizational strategy. Business compliance has the broadest mandate of creating both rules-based and values-based structures and systems to support corporate and employee integrity and adherence to laws, regulations, and norms. In contrast, CSR has these same goals but focuses on engaging in corporate actions that contribute to social good, generate positive public relations attention, and promote ethics and accountability.
While compliance is often focused on defining internal standards for conduct and strategy in order to follow or improve upon outside requirements, CSR has a much more public posture. CSR is focused on defining the company’s positions on the environment, reform, justice, philanthropy, community relations, and other outwards-facing social initiatives. After these objectives are defined, the company then presents and promotes its positions to consumers and society. CSR and compliance both contribute to a company’s mission statement and values, but CSR has a heavier hand in guiding the corporate image that is presented to consumers, industry partners, and society as a whole.
Given that CSR and compliance both share objectives of instilling corporate value and setting standards for organizational behavior and identity, compliance professionals can take tips from CSR principles to position the overall compliance risk management program. In addition, compliance strategies can also align with CSR initiatives in order to build momentum and support for both programs in parallel.
- Raise the bar: Like compliance, the CSR perspective indicates that companies should consider opportunities to deviate from the basic legal guidelines in order to have positive impact and set higher standards for corporate conduct and character. Also like compliance, CSR is frequently an aspirational approach to business strategy and corporate governance. Both compliance and CSR contemplate what could be in society and attempt to translate this to what can be in organizations. Where the law or another higher authority falls short or silent, CSR, like compliance, can step up in an organization to set standards.
- Demonstrate value-creation: CSR and compliance both must strike a difficult balance between corporate values and financial performance. Corporations must position these goals as at worst neutral to financial outcomes, and at best a positive influence which can increase performance over the long-run due to sustainability and shareholder/stakeholder trust. CSR and compliance cannot be seen as detractions or digressions from commercial strategy. Instead, they are both important partners to the economic interests, guiding business choices not away from all growth opportunities but rather into risk-managed, responsible avenues.
- Operationalize compliance: Both CSR and overall business compliance can be seen as concrete risk management mechanisms. CSR manages operational risks for an organization by setting values and standards for external engagement that support relationships and address outside risks. Together CSR and compliance can have a high impact on operations and strategy for corporations. Aligning business strategy with social responsibility strategy requires operational collaboration in order to integrate these in relationship management and allocation of resources.
- Plan carefully: Compliance often collaborates with other functions such as HR, Legal, and Risk. Likewise the function has an important dependency with Audit and a responsibility toward its business for consultative support and advice. It is crucial for the compliance function to assert its independence as well as cement its interdependence with these partners and counterparties. CSR has similar positioning within the organization and likewise must plan engagement carefully. From both perspectives, planning the goals and objectives of both the program as well as the organization at large demonstrates commitment and credibility.
- Engage everyone: Engagement is a critical way to establish and demonstrate that credibility. CSR and compliance cannot just live with the four corners of a page of a policy, or in a document on an intranet site. Professionals working in these programs must include engagement in the above-discussed planning. Employee engagement leads to broad imbedding of the corporate social values and a genuine culture of compliance. Once this is established, the organizational identity is ideally postured to be telegraphed to the world at large, to give life to these values for consumers, partners, and the public to observe.
For more posts on CSR from a compliance and ethics perspective, check out this post on the political engagement of Patagonia or this post on the CSR Roadmap of Tony’s Chocolonely. And check back for posts in the future on the CSR values of companies such as Ben & Jerry’s and TOMS.