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Executive Interviews: Interview with Michael Hopkins on Corporate Social Responsibility
September 2007
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By Dr. Nagendra V Chowdary
Dr. Michael Hopkins CEO and Chairman of MHC International Ltd. (London & Geneva). He is a part-time Professor of Corporate Responsibilty Business Performance (VRBP) at Middlesex University Business School Visitng Professor at Brunel and Geneva Universities. 
What is the role of regulation in
ensuring high standards in
Corporate Social Responsibility?
Should they be made mandatory? For
instance, mandating the companies
to devote a certain percentage of
their revenue to CSR initiatives?
The issue of regulation for CSR was,
at one time, one of the hottest topics
on the CSR agenda. However, the
flight from the US for some
companies who feared the heavy
costs from Sarbanes Oxley has
weakened enthusiasm for any new
legislation.Yet another argument
cited as a common reason given for
why new legislation would set CSR
back is the lowest common
denominator argument.
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This suggests
that if there were legislation on CSR,
then companies would deliver what
the law requires, but never more. There are, clearly, both pluses
and minuses for CSR regulation: Some pluses from legislation:
- Would help companies avoid the
excessive exploitation of labor,
bribery, and corruption
- Enable companies to know
what is expected of them
thereby promoting a level
playing field
- Since many aspects of CSR
behavior are good for business
(reputation, human resources,
branding, easier to locate in new
communities etc.), legislation
could help to improve
profitability, growth and
sustainability
- Rogue companies would find it
more difficult to compete through
lower standards.
Some minuses: - Additional bureaucracy, with
rising costs of observance
- Costs of operation could rise above
those required for continued
profitability and sustainability
- Critics already argue that the CSR
of companies is simply to make a
profit, and legislation would
increase the vocalization of these
concerns
- Reporting criteria vary so much
by company, sector, country and
they are in constant evolution.
More and more companies are
already focusing voluntarily on CSR
issues, but it is clear in the light of
the poor corporate governance that
resulted in both the Enron and World
Com debacles, that some further
form of legislation is necessary. I
now believe that no regulation is out
of the question as is full
regulation there is ground
somewhere between the two. But, the key question remains,
who will be the regulator? Government? In the USA the
Security and Exchange Commission
is to play an enhanced role at least
as far as something called "corporate
responsibility" is concerned. In
Europe the EU has already stated its
position as being on the side of
voluntary which will relieve many
anti-EU lobbyists. Only a few nations
will in all probability embed CSR
principles into national legislation. The UN? In emerging economies,
we would normally look toward the
UN but we know that the UN is not a
regulatory body and can only
suggest changes to national
legislation. The Corporate Sector? Like it or
not voluntary will be the status quo
for the foreseeable future with only a
few companies interested in
legislation to create a level playing
field. Which means that CSR
advocates/consultancies, such as our
own (MHCi) will more and more
become the "unacknowledged
legislators of mankind" (with
apologies to Coleridge who was
referring to poets) in helping
companies and governments find
their way. And, as The Economist
once noted: If the market comes to admire
honesty, transparency and good
corporate governance, executives
will rush to acquire those
characteristics. Even in morality, the
market rules in the end. What is the role of leadership in
ensuring high standards in Corporate
Social Responsibility? Should he
lead from the front? How should a
CEO balance shareholders interests
and stakeholders interests?
Over 70% of CEOs surveyed by the
World Economic Forum in January
2004 believed that mainstream
investors would have an increased
interest in corporate citizenship
issues (a related, although unclear,
concept to CSR). Clearly, if the CEO
of a company is not behind CSR,
then it will not go very far nor,
perhaps, will the CEO! A key component of any CEO's
contract is, of course, the
responsibility that his/her company
must perform well on profits. To
promote CSR it would be very useful
to include in their contract a clear
commitment to social and
environmental objectives. Given
that most CEOs have, on average,
four years in their job, such a
suggestion will not be popular. The
first year is normally spent learning
the ropes, the second and third years
are when something can actually be
done and the fourth year is spent
working out a compensation package
for his/her untimely removal!
1.
Corporate Social Responsibility Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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