There is an ongoing debate in the academic and government circles about relation of the voluntary approach and mandatory requirements in the context of CSR.

CSR and Law

Corporate responsibility is a voluntary commitment of the company; however, accomplishment of legislative requirements is the basis it stands on.

The company’s corporate responsibility first of all implies to its full compliance with the existing social, economic and environmental legislation. Assuming additional voluntary commitments comes on the top of that.

At the same time, introduction of various initiatives to support voluntary actions of the companies requires certain legislative regulations (for example, inclusion of social and environmental criteria in the public procurement requirements, Tax incentives, etc.).

Regulatory approach to promote CSR comprises:

1. Establishing minimal regulated social and environmental standards for business operations and ensuring their enforcement 

Establishing and effective enforcement of minimal mandatory standards by the State for business operations is beneficial for CSR development. This ensures level playing field  for the companies, enabling them to achieve additional competitive advantage by voluntary adoption of CSR standards. 

2. Mandating separate CSR voluntary standards in certain cases, and as determined by the law

For example, introducing mandatory sustainability reporting for large companies or pension funds; mandatory requirement on the adoption of environment management systems or publication of environmental reports by certain types of enterprises with especially high risk to cause environment pollution; obligation to comply with certain social and environmental standards within State contracts, etc.

Over the past few years, especially within the EU, there has been a noticeable increase of legislative regulations regarding certain areas of social and environmental issues which, until lately, were only a voluntary choice of businesses (for example, sustainability reporting). In the  Renewed EU strategy 2011-14 for Corporate Social Responsibility, the European Commission addresses a “smart mix” of voluntary policy measures and binding rules.

“Public authorities play a supporting role through voluntary policy measures and, where necessary, complementary regulation” Renewed EU strategy 2011-14 on CSR

This approach implies to using following information tools by the State:

• Awareness raising campaigns for various sectors on CSR issues
• Provision of knowledge and building the companies’ capacity by means of trainings, consultations, seminars and conferences
• Initiation and funding of CSR related research
• Development of guidelines on various aspects of CSR
• Ensuring information accessibility through different websites, data-bases and resource centers
• Provision of technical and expert assistance to companies to help them meet CSR related international standards and adopt social and environmental management schemes.
  
  

Facilitation approach also implies to providing support to organizations that are working on the development of CSR (such as, civil society organizations, consulting organizations, international organizations, etc.).

In general, Partnership is a key concept for CSR. Strategic partnership directs the State, private and civil sector resources and their potential towards tackling complex social and environmental problems. 

Partnership approach entails such activities, as:

• Joint projects of the State and private sectors;
• Organizing stakeholder round table meetings, debates and forums in order to promote dialogue;
• Creation of CSR networks and platforms;
• Government actions to include businesses into local or international political events, public forums and joint consultative boards, etc.

This approach could have multiple forms, such as:

• Development of the CSR promoting State policy;
• Inclusion of CSR issues into State policy documents;
• Creation of Government agencies and committees to promote CSR;
• Adoption of soft legislative (non-compulsory) instruments, such as directives, resolutions;
• Demonstrating positive attitudes towards responsible companies, and expressing official acknowledgment, appreciation and encouragement of voluntary responsible initiatives of specific companies; addressing CSR issues in public speeches;
• Support to CSR related inter-Governmental and international initiatives;
• Joining to CSR memorandums and joint CSR initiatives of various Governments, etc.

Showing appreciation of specific sustainability initiatives and responsible enterprises through various contests and  prestigious awards is one form of a non-financial stimulation.

Another method to stimulate CSR is the Government being exemplary for the private sector (Government as a role model). This approach could involve introduction of social and environmental standards, management and audit processes in the Governmental agencies, implementation of family-friendly work principles, publication of sustainability reports etc. 

Fiscal / economic  incentives comprise:

• Tax relieves, subsidies, grants (usually regulated by the legislation)
• Inclusion of CSR related topics in the export policy
• Inclusion of CSR standards in the public procurement policies – sustainable/responsible procurements (referring to the consideration of environmental and social issues in the public procurement decision making processes and prioritizing goods and services that meet sustainable development principles).