Boards & CSR

For many companies worldwide, Corporate Social Responsibility (CSR) has been a regular feature on many a boardroom agenda. An important point to note is the role of the board and the problem of defining what CSR actually is. There are several trains of thought on this. Some tend to view it as a fairly marginal activity, one that has little relevance to the board’s leadership; others, as fundamental to the way in which companies interact with stakeholders of all sorts. Basically, CSR sets the terms of an implicit contract between companies and society.

Society grants companies a number of important rights & freedoms, among them the privilege of limited liability, and in return expects them to fulfill certain obligations in the nature of duties to be honest, keep promises, to take due care of interests of others, to treat people fairly, to be accountable, responsible and act ethically to ensure good governance.

Effective governance from the board is essential if companies are to reap long-term benefits for responsible behavior. Boards are in a unique position because they sit at the apex of the incentive structure for companies, and through their decisions about strategy, the drive companies’ responses to the external inducements provided by the market & regulatory environment, and – through the design & implementation of remuneration and internal control systems – they shape their internal inducements. CSR should be taken in its right spirit across all levels in an organization inorder to create a culture of integrity & ethical practise, thereby setting the right values & standards for everyone to comply with.