ON CORPORATE ACCOUNTABILITY
IMPLEMENTING #1 PRINCIPLE OF
CORPORATE SOCIAL RESPONSIBILITY
Jalal
Lingkar Studi CSR/A+ CSR Indonesia
www.csrindonesia.com
IESR Forum Dialogue: Developing a Regional
Platform in Natural Resource Governance
Jakarta, 29 October 2012
• (Corporate) Social Responsibility
• Literature on Corporate Accountability
• Concluding Remarks
AGENDA
ISO 26000:2010
Guidance on Social
Responsibility
Definition of Social Responsibility
“Responsibility of an organization for the
impacts of its decisions and activities on
society and the environment, through
transparent and ethical behaviour that
contributes to sustainable development,
health and the welfare of society; takes into
account the expectations of stakeholders; is
in compliance with applicable law and
consistent with international norms of
behaviour; and is integrated throughout the
organization and practiced in its
relationships.”
(ISO 26000: 2010 Guidance on
Social Responsibility)
Schematic Overview of IS 26000:2010
Priciples of Social responsibility
1.
2.
3.
4.
Accountability
Transparency
Ethical behaviour
Respect for Stakeholder’s
interest
5. Respect for rule of law
6. Respect for international
norms of behaviour
7. Respect for human rights
Accountability:
“state of being
answerable for decisions
and activities to the
organization's governing
bodies, legal authorities
and, more broadly, its
stakeholders.”
Principle #1: Accountability
• The principle is: “an organization should be
accountable for its impacts on society, the
economy and the environment.” This principle
suggests that an organization should accept
appropriate scrutiny and also accept a duty to
respond to this scrutiny.
• Accountability involves an obligation on
management to be answerable to the
controlling interests of the organization; to
legal authorities with regard to laws and
regulations; and to those affected by its
decisions and activities, as well as to society in
general, varies according to the nature of the
impact and the circumstances.
Principle #1 (cont.)
• The degree of accountability may vary,
but should always correspond to the
amount or extent of authority. Those
organizations with ultimate authority
are likely to take greater care for the
quality of their decisions and oversight.
• Accountability also encompasses
accepting responsibility where
wrongdoing has occurred, taking the
appropriate measures to remedy the
wrongdoing and taking action to
prevent it from being repeated.
Keith (2010). Evolution of Corporate
Accountability: From Moral Panic to CSR
Business Law International Vo. 11/3
“Given the important and complex role that corporations play
in modern society, there is a strong argument that corporate
accountability requires a new approach. The prosecution and
sentencing of corporations ought to encourage the principles
of CSR through appropriate legislation and a mandatory ADR
process.”
“One of the first steps towards establishing legal recognition
of the principles of CSR ... making it mandatory for the largest
companies ... to include information on CSR in their financial
reports.”
Morgera (2009). Corporate Accountability
in International Environmental Law
Oxford University Press
“...‘accountability’ refers in general to the way in which
public and private actors are considered answerable for their
decisions and operations, and are expected to explain them
when they are asked by stakeholders. They are required to be
open in their decision-making processes to be examined and
judged by other interested parties.”
“Consequently, corporate accountability implies ... widening
the scope of stakeholders within a company beyond
shareholders, so as to include all interest groups affected by
the company’s activities, such as: governments, employees,
boards of directors, investors, consumers, suppliers, local
communities situated where the company operates, civil
society, and the public at large.”
Newell (2005). Citizenship, Accountability,
and Community: the Limits of CSR Agenda
International Affairs, Vol. 81/3
“Most CSR initiatives are not intended to tackle
questions of poverty and social exclusion. They aim at
less ambitious goals of performance enhancement and
image management,...”
“Voluntarism and self-regulation suggest dangerous
precedents where state regulation remains unenforced
or actively subverted, where compliance needs to be
established before ‘beyond compliance’ initiatives can
sensibly be contemplated.”
“... the role of a strong state ..., an active and wellmobilized civil society and a private sector willing and
able to respond to CSR priorities emerge as prerequisites
for the success of CSR initiatives.”
Valor (2005). CSR and Corporate Citizenship:
Towards Corporate Accountability
Business and Society Review, Vol. 110/2
“There are two conditions for the advancement of the social
control of companies. First is the stakeholders’ pressure through
their economic decisions. Companies will only incorporate social
and environmental objectives in their agenda when economic
agents show that they also seek these values by incorporating
them into their economic decisions.”
“... a second condition to ensure corporate accountability: a
system change. To put it in a nutshell, this change implies
accepting that the common good is more important than the
right to receive a dividend, and that social and environmental
performance must be balanced with economic performance. This
paradigm of the firm should be adopted by economic agents
(especially shareholders), by managers, and by regulators.”
Bendell (2004). Barricades and
Boardrooms: A Contemporary History of
Corporate Accountability Movement.
UNRISD Technology, Business and Society
“Previous efforts at corporate accountability had failed
because of corporate power, and by the turn of the
millennium that corporate power was greater than ever
before. If civil groups chose to continue boxing with
corporate power, they might win a few rounds, but
past form suggested that they would lose the fight. “
“Progress therefore relied on people in civil groups and
companies transcending the real and metaphorical
barricades that separated them, and identifying with a
collective movement for reshaping the relationship of
corporations with society.”
Schrege (2003). Judging Corporate
Accountability in the Global Economy
Columbia Journal of Transnational Law, Vol. 42/1
“... three pillars on which a strategy to promote
accountability should be based. First, ... encourage
local accountability and promote resolution of
disputes in the jurisdictions where alleges abuses
have occurred. Second, ... create soft law “safe
harbors” to shield companies that take effective
action to prevent abuses or correct them when
they are discovered. Finally, ... support the
development of multilateral efforts to create
accountability, ...”
Concluding Remarks
1. Accountability is now understood as principle of social
responsibility. Corporate accountability is #1 principle of CSR.
2. CSR is responsibility of a company for its impacts on society
and the environment, both within and beyond regulations.
3. Companies are considered answerable for their decisions and
operations, and are expected to explain them when they are
asked by stakeholders. They are required to be open in their
decision-making processes to be examined and judged by
other interested parties
4. Accountability also encompasses accepting responsibility
where wrongdoing has occurred, taking the appropriate
measures to remedy the wrongdoing and taking action to
prevent it from being repeated.
Concluding ... (cont.)
5. Corporate accountability implies widening the scope of
stakeholders within a company beyond shareholders,
so as to include all interest groups affected by the
company’s activities.
6. Partnership among government bodies, civil society
groups and progressive companies is considered as key
to promote corporate accountability.
7. Law enforcement, mandatory CSR (sustainability)
reporting, alternative dispute resolution, and
multilateral efforts are chief among ways suggested by
corporate accountability experts.
Thank you very much!
Jalal
Lingkar Studi CSR/A+ CSR Indonesia
Jalan Danau Sentani Nomor 9
Bogor 16144
www.csrindonesia.com
office@csrindonesia.com
jalal.csri@yahoo.com
+62-815-13803616