The business case for regulation of corporate social responsibility and accountability

Abstract

This paper develops an alternative (or supplementary) theoretical justification for the regulation of corporate social responsibility (CSR) and social and environmental accounting and reporting (SEAR) to the justification contained in the extant academic literature. It does this by demonstrating how, contrary to the dominant business discourse, increased regulation designed to protect the social and environmental interests of a range of stakeholders can also serve to enhance corporate economic performance and shareholder value.

Keywords:

• Business case for CSR
• Shareholder value
• Regulation
• Trust
• Risk
• Reflexive modernity
• Beck
• Giddens

Acknowledgements

We are very grateful to Mark Nolan for helping us develop some of the ideas used in this essay, and to Brendan McSweeney and the anonymous reviewers for Accounting Forum for their insightful observations on earlier drafts of this essay. All errors, however, are a result of our own unassisted work.

Notes

1 We recognise that shareholders are one group of stakeholders in a corporation, but stakeholders are a much broader group than shareholders alone. Our arguments here therefore relate to the rights and interests of non-shareholder stakeholders in comparison to the managerially argued interests of shareholders qua shareholders in terms of the maximisation of shareholder economic value.

2 Clearly the objective risk to humans from Avian Influenza has risen in recent years, but the argument here is that the objective risk immediately before and immediately after the Suffolk outbreak (which was effectively contained) were probably similar. However, the socially constructed perceptions of this risk, from reflexively appropriated knowledge (few people directly came into contact with the infected birds) could have been significantly affected.

3 These events comprised: a major leak leading to the temporary closure of the biggest oil field in the United States, Prudhoe Bay in Alaska, arising from an apparent lack of maintenance, procedures, oversight and training; and accusations that BP’s main trading arm engaged in propane price fixing (The Economist, 2007). In the first instance, more than 200,000 gallons of crude oil were spilled due to a rupture in a corroded pipeline (Time, 2006).