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What Drives CSR?

According to Rowe (2006), the growth of CSR has been driven by (a) the phenomenal growth of the public sector and the influence and power of corporations; (b) the impact on confidence and trust in business because of a few well-known cases of ethical scandals; and (c) CG (especially in the United States), which has contributed both to increasing corporate scrutiny by stakeholders (nongovernmental organizations [NGOs], the media, trading partners, employees, etc.) and to greater self-evaluation by the corporation themselves in the wake of legislation such as the SOX Act of 2002 and the Federal Sentencing Guidelines for Organizations 2004 in the United States. Additional factors that have driven CSR are the increasing importance of intangible assets (brands, reputation and good will, intellectual property, knowledge bases, working methods, etc.) as a function of corporate value (p. 446). The increasing importance of intangible assets has also contributed to a significant rise in CSR reporting; growing activism and influence of institutional investors; increasing popularity and influence of the socially responsible investing movement; vast growth in the number, influence, and sophistication of NGOs worldwide; and finally, the emergence of what Kofi Annan, the former UN Secretary-General, termed “problems without passports,” such as global climate change and HIV/AIDS. Rowe (2006) summarized these developments into “the three R’s”; namely, risk, relationship, and reputation. It should be noted in this context that the increased attention that corporations have been paying to CSR has not been completely voluntarily. For example, in the early 1990s Nike faced a public outcry and boycott concerning practices in factories operated by some of its suppliers in Indonesia, an issue Nike had not considered its own responsibility but could not afford to ignore in the hope it would go away.

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