Corporate responsibility – should it be mandatory or voluntary?

According to environmental campaigners, climate change, pollution and poverty are still huge problems faced globally – international mandatory regulations are the best way to curtail these issues by holding corporations to ransom for their contributing action to these world problems.

However many governments and corporations favour the voluntary approach, claiming it allows for a flexible method of implementing social and environmental action into their business, whilst maintaining prosperity in the market.

Last week, Friend’s of the Earth (FoE) launched a ‘day of action’, highlighting their campaign for compulsory corporate responsibility (see related story) and have this week criticised the UK government for their stance on the issue at the Earth Summit.

The UK and US governments are reportedly committed to the voluntary approach and are campaigning for any decision at this year’s Summit to reflect the global need for business to function innovatively and profitably in a free trade market. They say corporate accountability laws will stifle these conditions. There is also concern over the amount of government time and resources that such regulations would take to draft and implement.

Early this week a committee of High Court and Supreme Court judges presented a ‘programme of work’ to the delegates in Johannesburg which they claim is key to adopting and implementing environment-related laws. Whilst laws and treaties exist on these issues within and between nations, some say a global compulsory framework must exist in order to enact them.

FoE has compiled a critique on the voluntary approach saying that it is ineffective in implementing change. Without government legislation or threat of punishment companies will fail to participate; that voluntary schemes generally place power in corporate hands and do not allow for transparency and that these schemes are often short sighted with poorly defined goals.

The World Business Council for Sustainable Development – a group of companies such as Cargill, BP and DaimlerChrysler – told edie that whilst they felt companies should be allowed to implement social responsibility which suited their business voluntarily, they welcomed government frameworks regulating environmental responsibility. However they stressed that any government laws should not be detrimental to the market.

Recently several groups including Amnesty International and FoE backed a Corporate Responsibility Bill in the UK (see related story). However, although there is support for the bill it was thought unlikely to become law.

Large companies are insistent that voluntary accountability is the way forward. “Voluntary business principles have the advantage of bridging cultural diversity within companies and offering the flexibility to tailor solutions to particular conditions,” a spokesperson for Shell told edie. Shell feels the ‘growing spirit of partnership and engagement between business, UN agencies and NGOs’ would be a casualty of mandatory regulations.