CSR and Corporate Governance

Running Head: CSR AND CORPORATE GOVERNANCE
CSR and Corporate Governance
Name of the Student
Name of the University
Author Note

1CSR and Corporate Governance
Topic – CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE
GOVERNANCE
Introduction
The corporate governance and corporate social responsibility are the practices which
have been tremendously developed in the last decade by the Western countries. In recent
years, the idea has been exported to other parts of the world through the activities of the
business enterprises. It has to be noted that the corporate governance and the CSR are the two
connected business concepts embedded in the business practices deep down. This essay aims
to discuss what is meant by corporate social responsibility, corporate responsibility, and the
environmental, social governance concerning corporate law and corporate governance.
The concept of CSR
The idea of CSR began as a philanthropic gesture years ago by a few wealthy
businessmen. Since the last few decades, the phenomenon of CSR has become a buzz word
in the corporate sector. The business contexts are changing, and the companies are expected
to operate in an environment-friendly manner. Due to the globalization, the role of the
business has been affected and perceived in a particular way. It should be noted that there is
no universally accepted definition of CSR and the meaning CSR depends on two factors such
as the context and the stakeholder1. This is the reason why defining CSR in a particular
manner is difficult. It has a clear emphasis on social improvements or the strategic
improvement concerning the long term goals. Also, CSR has broader definitions and closely
1David Crowther and Shahla Seifi eds., 2018. Redefining Corporate Social Responsibility.
Emerald Group Publishing.

2CSR and Corporate Governance
connected with environmental issues and sustainable development. There are various
definitions of CSR, and in this essay, those different definitions will be critically assessed and
related to corporate governance. According to Bowen ( 1953), CSR is the obligations of the
businessmen to pursue the politics, make the decisions and follow the lines of action which
are most desirable in terms of the value of the society and the objectives.
The usage of CSR in business
According to the views of Friedman ( 1970), CSR is about using the resources and
engaging in the activities which are designed to increase the profits and stay within the game
rules. In short, it is about participating in an open and free competition without being
fraudulent and deceptive in any way. As per the reports of the European Commission (2011),
CSR is the responsibility of the enterprises to understand their impacts on society. They must
have respect for the applicable legislation and for meeting the corporate social responsibility,
the enterprises should have the process to integrate the social, the ethical, the human rights
and consumer concerns in their operations2. The world business council for Sustainable
Development ( 1999 ) suggests that CSR is the commitment of the business to contribute to
the sustainable economic development, the local community and the society for improving
their ways of life.
On the other hand, corporate governance ensures that a particular organization is
running in a responsible manner, having provided accountability, the compliance, and
2 Idoya. Ferrero‐Ferrero,, Maria Fernández‐Izquierdo and Maria Muñoz‐Torres, 2015.
Integrating sustainability into corporate governance: an empirical study on board
diversity. Corporate Social Responsibility and Environmental Management, 22(4), pp.193-
207.

3CSR and Corporate Governance
transparency with the key stakeholders. It is a set of legal, institutional, and cultural
arrangements which determine the publicly traded corporations and controls them. The
corporate governance balances the interest of the many stakeholders of a particular company
such as the shareholders, the customers, the suppliers, the financiers, the management
executives, and the community. Corporate governance also provides a proper framework for
the attainment of the company's objectives. It practically encompasses every sphere of
management, starting with the action plans to the performance measurement and corporate
disclosure.
The legal affairs related to CSR
In Australia, the Corporations Act 2001 is the primary legislation which regulates the
companies in Australia. This legislative Act of the Parliament of the Commonwealth of
Australia designs the laws which deal with the business entities in entire Australia. The
Australian Securities and Investments Commission (ASIC ) is the primary regulatory agency
and an independent commonwealth government body. The functions of the collection include
the receiving, registering the companies, making information about the companies which are
available in public. Notably, the ASX Listing Rules have been supported by the ASX
Governance Council, which has produced a guideline with the title " Corporate Governance
Principles and Recommendations." There is a strict regulation on the companies to follow
them, and if they do not follow the rules, there have to be valid reasons for that. There are
other Australian government regulators, such as the Competition and Consumer Commission
( ACCC ) along with the Foreign Investment Review ( FIRB)3. The primary responsibility of
3 Legislation.gov.au (2019). Corporations Act 2001. [online] Legislation.gov.au. Available
at: https://www.legislation.gov.au/Details/C2018C00424 [Accessed 29 May 2019].