SR, CSR, and Corporate Sustainability
Traditionally, human rights have been a domain of the government. Increasingly, however, globalization and the mushrooming of multinational companies have made this state-centered view inadequate. Interestingly, since the late 1990s governments, like other stakeholders and working jointly with them, have come to accept a greater role as drivers of CSR by promoting and encouraging businesses to adopt CSR and strategies (Albareda et al. 2008). During the last two decades or so, as a result of companies’ performance coming under increasing scrutiny, it has become widely accepted that companies should do more than simply pursue and maximize their profits. Expectations now include shouldering their responsibility as far as human rights and the environment are concerned as well as pursuing sustainability.
The term social responsibility (see also ISO 26000 in later discussion) for organizations came into widespread use in the early 1970s as the view that powerful transnational corporations must bear some responsibility for the impact of their operations on human rights and bear this responsibility more directly. Business leaders worldwide have come to accept and respond to the view that “business as usual is not the answer to society’s problems” (Smith and Ward 2006). Authors writing about business and society in the late 1970s18 claimed that SR might initially result in short-term costs, but it would pay off in the long run by contributing to higher profits. Generally speaking, however, there was subsequently19 no consensus in the literature regarding this assertion. By the late 1990s, however, many multinational corporations throughout the world were redefining their role in society and their responsibility to human rights and the environment. This phenomenon came to be known as CSR; it has had its staunch supporters but also its severe critics. The term corporate can be misleading because it is often implied that CSR concerns multinational corporations and human rights issues.20 However, the term is generic in nature and applies to organizations irrespective of type and size (Castka, Bamber, and Sharp 2005, iii). As we shall see below, the term CSR has gradually been giving way to corporate social performance (CSP), which has recently itself been largely replaced by corporate sustainability.
Some authors have linked corporate citizenship to human rights obligations for business and have furthermore argued for mandatory human rights standards for corporations (see Wettstein and Waddock 2005). In fact, according to Transparency International (2010, 3), Denmark and France21 have adopted laws that make it compulsory for companies to implement CSR and to include information on their corporate responsibility programs in their annual reports, while trustees of pension funds in the United Kingdom must disclose how they have taken into account corporate responsibility issues in their investment decisions.