This is the sixth in a series of posts reflecting excerpts from a chapter that I authored on corporate social responsibility (“CSR”) for the Corporate Legal Compliance Handbook.

Just as integrating CSR and compliance can strengthen a company’s capacity to improve its environmental, social, and governance performance, so can CSR strengthen a company’s overall compliance efforts.

In the context of CSR, stakeholders often ask companies to go “beyond compliance” with existing legal and regulatory standards. At the same time, stakeholder demands are often predictive of the future content of legal and regulatory requirements. A traditional compliance-based approach to social and environmental performance may be focused on meeting current legal requirements: an approach to environmental, social, and governance compliance that is more aligned with a company’s CSR strategy may be more attuned to policy trends, shifting stakeholder demands, and other developments that companies need to understand in order to support effective long-term strategy development.

A recent article on corporate compliance observed that, “the pace in which our world runs is not slowing.…Organizations that seek to manage their operational fraud and compliance risks by solely imposing rule after rule will never keep pace with change[.]”  Failure to anticipate where the law is going, or what key stakeholders may expect in terms of corporate performance, will leave a company without the capacity to address future requirements.

A responsible approach to CSR is one that is naturally attuned to trends in law and policy. CSR has evolved and broadened in scope over time along with normative understandings and expectations with regard to companies’ roles in society. If CSR is defined as voluntary commitments to stakeholders, as opposed to legally required compliance efforts, it can also certainly be seen as predictive of the direction in which laws and regulations may be trending. Integrating CSR into corporate compliance efforts may focus executive and board attention on how best to build corporate capacity to address both current and future expectations for corporate performance.

Excerpt reproduced with the permission of Wolters Kluwer from Theodore Banks & Frederick Banks (eds.), “Corporate Social Responsibility,” Corporate Legal Compliance Handbook, Chapter 15 (2016).  A copy of the full handbook can be purchased here.