Should the governments instill regulations that prescriptively require organizations to have CSR programs?

In light of recent high-profile corporate abuse there is strong public pressure for governments to intervene to protect public interests. This response includes; holding corporate leaders accountable for the organization’s affairs, providing protection for the environment, preserving resources, and encouraging sustainable industries. Governments need to assess their options to facilitate the necessary mitigation strategy. One of these initiatives is to instill regulations that prescriptively require organizations to have Corporate Social Responsibility (CSR) programs.

In the 2002 throne speech 1, the Governor General of Canada announced high-level government initiatives requiring: smart regulations, and policy development emphasizing the protection the environment and long-term sustainability of resources. This framework entrenched fundamental core values for future generations of Canadians. Although the government has developed new agencies, such the Environment Protection Agency (EPA), the government is still confronted on how to best influence its philosophy on organizations.

Traditionally, when governments are faced with a dilemma they prescriptively respond with regulations that directly respond to the threat. The advantage of this reactive approach is two fold. First, regulators are perceived as being responsive to the public needs. Second, organizations are provided with benchmarks for due diligence.

In his book, Organizational Human Factors, 2 Dr. James Reason argues that prescriptive regulatory measures tend to be ineffective in cultural reform. He indicates organizations are better off if they develop their own programs to respond to their operations. This is also consistent with the government’s smart regulations policy, where regulatory reform has to “make sense” and be “doable”. Additionally, government regulations are perceived as being:
1) Slow and cumbersome
2) Corrupt, and
3) Fragmented

Finally, Professor David Henderson indicated that governments can “distort market forces and increase firms cost”. 3

I feel that governments should avoid prescriptive legislation and seek softer, consultative solutions. Governments should be responsible for a global map and leave it up to organization to decide the path they will take.

1) 2002 Throne speech, @ here
2) Organizational Human Factors, Dr. James Reason, 2002
3) Sustainable Development and Competitive Advantage, Course notes, Professor Jeremy Williams, Course SP4B, Reims France, 2006

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Posted in government policy, sustainable development
2 comments on “Should the governments instill regulations that prescriptively require organizations to have CSR programs?
  1. Jean-Francois Goubet says:

    I think that government should enforce the development of CSR plan for corporation and companies. It is proven that companies seek the profit of their shareholders unless a specific company has the well-being of its employees, customers ans suppliers into its status. Therefore, enforcing companies to take into consideration their CSR could benefit the entire society by organizing, for example, a strategic CSR plan for a country at large that could allow a country to plan and assess the effectiveness of the CSR.

  2. Ron says:

    Richard, good article.
    I agree with you. Imposing regulations on business may not be the solution. Companies are clever at circumventing regulations and thus rendered this strategy ineffective. Business must perceive CSR as a source of competitive advantage. I may be an optimist, but I do believe the business community have begun the journey.

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