Corporate Social Responsibility and the Law
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Corporate Social Responsibility and the Law
Corporate Social Responsibility (CSR) has become an integral part of today's business
practice and reflects an increasing expectation that a business is to provide some positive benefit
to society beyond mere profitability. The role of CSR in business law mirrors the changing
relationship between the corporation and its greater social responsibilities.
CSR legal framework has been developing over the years in many countries, including
several socially responsible practices through legislation. For instance, the Companies Act 2006
states that the directors of companies in the UK have to consider the proper effects of the
company's operation on the community and the environment. Recognition of CSR principles by
legislation is another step that goes further in establishing social and environmental issues within
corporate governance. A 2020 KPMG study concluded that 80% of the world's biggest
corporations now report on their CSR activities, partially due to the evolving nature of legal and
regulatory pressures (KPMG, 2020).
Though some CSR issues remain voluntary, there is also the possibility of legal
ramifications for the violation of already settled CSR principles. Businesses can be sued on the
grounds of law if they misrepresent their social or environmental practices through advertising.
The Nike v. Kasky case in 2003 showed the potential for the company Nike to be sued over false
advertising about its employment practices (Parker, 2024). It is the legal examination of CSR
claims that makes all the more the case for authenticity and transparency in corporate social
initiatives, eroding further the line separating ethical obligation from legal requirement.
In summary, the changing relationship between Corporate Social Responsibility and
business law reflects a broader societal change in the expectations of corporate behavior. The
legal frameworks of today are increasingly taking on board CSR, within which companies have
to be placed at the intersection of ethical considerations and the law. The tendency toward legally
binding social responsibility will be sustained in the future, which will reshape corporate
governance and business practice.
References
KPMG. (2020). The KPMG Survey of Sustainability Reporting 2020.
https://assets.kpmg.com/content/dam/kpmg/pl/pdf/2020/12/pl-the-time-has-come-the-
kpmg-%20survey-of-sustainability-reporting-2020.pdf
Parker, R. (2024, July 5). Nike v. Kasky (2003). The Free Speech Center.
https://firstamendment.mtsu.edu/article/nike-v-kasky/
