Scribd Logo
Upload

Welcome to Scribd!

  • 28 views

    2008 Sep CC News1

    Uploaded by

    shumon2657
    This newsletter article discusses corporate social responsibility (CSR) and its importance in the global economy. CSR generally refers to corporations voluntarily integrating social and environmental concerns into their business operations. The article outlines some of the key benefits of CSR, including enhancing corporate reputation and competitiveness. While some argue CSR does not fit with a company's primary goal of making profits, most advocates believe CSR can provide real economic benefits such as reduced costs and increased investor attractiveness. Regulators in Malaysia encourage CSR and require listed companies to report their CSR activities annually.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    2008 Sep CC News1

    Uploaded by

    shumon2657
    28 views3 pages
    This newsletter article discusses corporate social responsibility (CSR) and its importance in the global economy. CSR generally refers to corporations voluntarily integrating social and environmental concerns into their business operations. The article outlines some of the key benefits of CSR, including enhancing corporate reputation and competitiveness. While some argue CSR does not fit with a company's primary goal of making profits, most advocates believe CSR can provide real economic benefits such as reduced costs and increased investor attractiveness. Regulators in Malaysia encourage CSR and require listed companies to report their CSR activities annually.

    Original Title

    2008_sep_cc_news1

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This newsletter article discusses corporate social responsibility (CSR) and its importance in the global economy. CSR generally refers to corporations voluntarily integrating social and environmental concerns into their business operations. The article outlines some of the key benefits of CSR, including enhancing corporate reputation and competitiveness. While some argue CSR does not fit with a company's primary goal of making profits, most advocates believe CSR can provide real economic benefits such as reduced costs and increased investor attractiveness. Regulators in Malaysia encourage CSR and require listed companies to report their CSR activities annually.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    28 views3 pages

    2008 Sep CC News1

    Uploaded by

    shumon2657
    This newsletter article discusses corporate social responsibility (CSR) and its importance in the global economy. CSR generally refers to corporations voluntarily integrating social and environmental concerns into their business operations. The article outlines some of the key benefits of CSR, including enhancing corporate reputation and competitiveness. While some argue CSR does not fit with a company's primary goal of making profits, most advocates believe CSR can provide real economic benefits such as reduced costs and increased investor attractiveness. Regulators in Malaysia encourage CSR and require listed companies to report their CSR activities annually.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    NEWSLETTER

    VOL 7 NO 3.0 SEPTEMBER 2008


    KDN NO. PP 12544/10/2008

    CORPORATE LAW

    Corporate Social Responsibility (“CSR”) – A Brief Overview

    IN THIS ARTICLE, AARON GERARD SANKAR AND YONG SHEUE LIH DISCUSS THE IMPORTANCE
    AND BENEFITS OF CSR IN A GLOBALISED ECONOMY.

    CSR programmes and initiatives have clearly been on the rise and these seem to accord with
    increasing public expectation of such activities being undertaken by companies. This article attempts
    to outline the potential benefits and to underscore the importance of CSR in the globalised economy.

    What is CSR?

    There are many different perceptions of what CSR encompasses and likewise, there have been many
    attempts to define this concept. The definitions attributed to CSR generally describe it as a concept
    where corporations voluntarily integrate social and environmental concerns in carrying out their
    business.

    Locally, from the perspective of Bursa Malaysia Securities Berhad (“Bursa”), CSR is viewed as

    “…open and transparent business practices that are based on ethical values and respect for the
    community, employees, the environment, shareholders and other stakeholders… designed to deliver
    sustainable value to the society at large.”

    Thus, under the concept of CSR, it is anticipated that a corporation incorporates socially responsible
    behaviour in the conduct of their business operations, which goes beyond mere compliance with or
    fulfilment of applicable legal and regulatory requirements. This is done by placing a degree of
    emphasis on practices that take into account the interests of its “stakeholders”1. By implementing CSR
    practices, the corporation would balance the larger and general interest of its other stakeholders with
    the financial interest of its shareholders.

    Arguments For and Against CSR


    Compelling arguments against CSR centre largely on the primary aim and responsibility of a business,
    being essentially to make profits for its shareholders. It is said that taking on social issues does not fit
    with this aim. Further, it is argued that businesses may not be equipped, in terms of expertise, to deal
    with societal issues. According to this school of thought, the logical consequence here is that the
    corporation would have to expend significant costs in realizing such activities. This appears to flow
    from the traditionally accepted position that directors of a company owe no duty to persons other
    than the company and its shareholders as a whole. A possible issue that follows from this is whether
    directors may potentially breach their duty to act in the best interests of shareholders if they were to
    exercise social responsibility in a manner that impacts the company’s profitability.
    These criticisms, though valid, appear to have been overshadowed by a majority of those who favour
    CSR and the benefits that it could potentially bring. Advocates of the CSR concept argue that there
    are real economic benefits to a business in pursuing CSR. It has been suggested that companies who
    appear to be responsible to the environment and society in general tend to be more attractive to
    investors. Further, a company that adopts socially responsible measures within its organization may
    see an overall reduction in its operational cost. Such steps could be in the form of responsible
    recruitment practices involving a non-discriminatory policy being adopted and focusing on
    occupational health and safety, which would ultimately result in a higher retention rate of skilled
    employees. In addition, a reduction in the consumption of resources, whilst having obvious benefits
    to the environment, would invariably result in cost savings to the company2. Such actions would also
    solidify and enhance the corporate and brand image of a corporation and increase its
    competitiveness.

    Beyond economic benefits, there are also strong moral arguments for corporations to adopt CSR
    policies. The views that have been advanced in this regard seem to centre around the theme that
    businesses should “give back” to society. This flows from the fact that corporations have greater
    financial and human resources as compared to individuals, non-profit organisations and even
    governmental bodies in some cases. Adopting CSR practices, it is said, is also in the interest of the
    business, which depends on some aspects of a society’s infrastructure3 for its existence. In this
    context, one may also argue that boards of directors of companies would also be acting in the best
    interest4 of the company when social and environmental considerations are embodied into its
    decision making process.

    CSR and Corporate Governance


    Though separate, CSR and corporate governance are closely related in that both these concepts are
    associated with enhancing the reputation of a company. As the concept of corporate governance
    seeks to promote a transparent management system with the aim of ensuring accountability to
    shareholders, the expectations on the modern corporation have resulted in CSR being viewed as a
    subset of corporate governance. As such, corporate accountability appears to have been extended to
    cover a wide range of societal issues which include environmental matters, human rights and anti-
    corruption.

    CSR and the Malaysian Regulators

    In the Malaysian context, a key point to note is that there have been clear indications by regulators
    that the development of CSR is encouraged. It is to be further noted that the Securities Commission
    (“SC”) views CSR as a natural progression of its ongoing work in relation to the development of a
    strong framework for good corporate governance. The SC is also keen to see more Malaysian
    companies incorporate CSR into their corporate governance agenda, not only to develop better
    corporate citizens, but also to enhance the recognition and profile of domestic companies in the eyes
    of international and domestic institutional investors5.

    Additionally, the CSR Framework launched by Bursa in 2006 serves as a guideline to public listed
    companies in the implementation and practice of CSR. The CSR Framework sets out four focal areas
    for corporations intending to implement CSR programmes, namely:-

    (i) the workplace, through the promotion of human capital development, labour and
    human rights and employee health and safety;
    (ii) the marketplace, through the promotion of green products, social branding, vendor
    development and corporate governance;
    (iii) the environment, through the sourcing of renewable energy; and
    (iv) the community, through the sponsorship of charitable organisations.

    Notwithstanding that the practice of CSR is in itself voluntary, Bursa requires listed companies to
    make a statement in their annual reports on the CSR activities undertaken by them during their
    financial year and where no such activities have been undertaken, for a negative statement to be
    inserted6. Whilst such a requirement may somewhat facilitate and encourage more informed

    Corporate Social Responsibility (“CSR”) – A Brief Overview 2


    investments from the perspective of an investor, it is hoped that this will also provide the impetus for
    Malaysian listed companies to initiate CSR activities, given that such disclosure requirement is
    mandatory.

    The Government also appears to be encouraging CSR practices, as can be seen from the launching of
    the Silver Book7, which provides a framework for government-linked companies to contribute
    responsibly to society.

    Conclusion
    The SC and Bursa’s proactive role in encouraging the implementation of CSR is welcomed. Whilst
    much effort will be required in a corporation’s integration of social perspectives with their business
    conduct so that CSR is part of the corporation’s culture, the shifting trends seem to suggest that it
    may be in the best interest of a corporation to adopt CSR practices.

    AARON GERARD SANKAR AND YONG SHEUE LIH


    CORPORATE & COMMERCIAL PRACTICE GROUP

    For further information regarding Corporate matters, please contact

    Grace C.G. Yeoh


    [email protected]

    Michael H.K. Lim


    [email protected]

    1
    The stakeholder concept, in broad terms, characterizes a stakeholder as any individual or group that are affected by the
    organizations policies or actions. These include shareholders, employees, customers, suppliers and community within which
    the corporation operates.
    2
    These examples have been advocated by the European Commission in its Green Paper on Promoting a European Framework
    for Corporate Social Responsibility.
    3
    Its consumer base, for instance.
    4
    The recently amended Section 132(1) of the Companies Act 1965 provides, inter alia, that a director of a company shall at all
    times exercise his powers in the best interest of the company.
    5
    http://www.sc.com.my/eng/html/cg/csr.html
    6
    This is set out in Appendix 9C (Part A) of Bursa’s Listing Requirements.
    7
    The Silver Book is one of the initiatives identified by the Putrajaya Committee on GLC High Performance in the GLC
    Transformation manual launched in 2005.

    Corporate Social Responsibility (“CSR”) – A Brief Overview 3

    You might also like