The article starts with the jurisprudence behind the law of corporate social responsibility. It then tries to confirm it with the different schools of whether it is a correlative duty or absolute duty or it is a fair law or not. It further tries to check the validity and looks into the matter of moral and legal validity. Then it focuses on the aspect of Corporate Social Responsibility and the concept of sustainability and explains the relation between both. Further, it talks about the Human Rights and the social responsibility where the stakeholder theory is focused and discussed upon. Lastly it talks about the corporation and a personality and further discusses about the Constitution of India, from where the law gains validity. It is from the perspective that whether the law is with nexus to the constitution or somewhere it contravenes the same. At the end the paper concludes with the agreement that the law is a fair and just law. When the state gives such powers to the private sector, then it is a duty of the state to keep a check on sustainability and exploitation of resources etc. Thus, the paper is mainly a summary of arguments on the concept of Corporate Social responsibility.
Page Contents
Reason Behind Corporate Social Responsibility
In the early ages, after the Industrial revolution, the Corporations used to donate a part of their profit to the society as a respect of the society supporting the business in terms of getting the resources from the society, selling their products and the sustainability of the resources after the harm they do to the environment and also from the trusteeship principle or out of moral obligation. But the obligation has been made compulsory by the Government for the companies of more than 500 crores have to make a CSR Committee and accordingly they have to undertake CSR activities as listed in schedule VII .1 The Companies used to have these as upon their morals and ethics and they undertook such activities to guide their moral and ethical conduct. But do these ethics or moral behavior have to be guided by a legal obligation or not, the legal duty is it the way to abide by ethics and moral.2 Thus as per Salmond, the Moral Duty of the Corporations have been made Legal Duty with may also be called Legal Burdern.3 In contrast to this, he also said that for a right, there is always a correlative duty and the Corporate Social Responsibility is just a correlative duty they have to perform in exchange of the resources, labour etc. used by them.4 The Corporate then gets the personality of a person through legal fiction as propounded by Savigny that Corporations are treated as person so they rights and duties as conferred by law.5 Thus as the Corporation is a person, they have the rights as well as the duties conferred by the State and so they have to abide by the obligations or the laws made by the sovereign. It would be irrelevant to reason out whether the law is moral or immoral because, the law has been made on two major basis one is for guiding the companies ethical conduct and the other is the social good of the society.
Corporate Social Responsibility and Validity
The concept of Corporate Social Responsibility has the legal validity as it has been imposed the state. But the Corporates who have a legal personality whether they accept it or the have to simply abide by the same only for the reason that it has a legal validity backed by a sanction. The main premise to the answer is of social good. Such a law is made for the majority. The greatest good is taken into consideration as given by Jeremy Bentham. But the individual validity as emphasized by Ronald Dworkin, individual element is disregarded. There is another argument that as the corporation uses the resources that belong to society as well as they make the labourers work, they should be liable for that and it is just in exchange of what they use from the society, and so it is valid. In contrast of this view is the stakeholder theory, by Wood who challenges the ethics with the law that is enforced of the Corporate Social Responsibility. The concept started with a voluntary return to the sustainability to the society but after this it took a form of law but the Corporations actually return to the society for whatever they use from the society. The labourers are paid their salaries and the society is provided with the products in which the corporations work.6 Thus the law formed is just a legal compulsion or just a legal duty without any rights for the same or it is an absolute duty conferred by the State as per Austin, Allen and Hibbert who support this concept.7 But this concept of Absolute Duty is forfeited by Salmond and he believes that there is first a right given and corresponding to that right there should be correlative duty and thus if we look from this perspective, it is an unjust law.8 The next argument is from the Human Rights perspective, where Henkin tries to establish a relationship between the obligation and Human Rights where he brings in social expectations and the laws that embides such social expectations.9 According to Social Contract Theory as thesis by John Locke, everything that is for the good of the society as per the social good for the people living with each other. In oppose to this, again Ronald Dworkin critic is used which is that where a pragmatic approach is used, that is not proper means the law lacks validity as it is based on the pragmatic approach for achieving the highest good for the society and neglecting the individual interest.10 In contrast to this, the libertarian approach of Nozick is used where the individual liberty and property rights are based on market allocations regardless of the inequality it creates.11 As per Karl Olivecrona, law exists only as per factual sense means it is only what the people think to be law and nothing else .12 Thus, as the law is for the greater good of the people, then some individual liberty can be compromised and also a law that compromises with the individual right also creates inequality or dissatisfaction in the society.
Corporate Social Responsibility and Sustainability
The concept of Sustainability emphasis on the effective relation of balancing between social, environmental and economic needs and interests along with the economic advancement.13 Thus while implementing sustainability along with the CSR, aims at three objectives of intergenerational equity, intragenerational equity and precautionary principle.14 The Intergenerational equity principle focuses on the fact that what we have been inherited by nature is also to be passed on to the next generation in the same form without it being degraded.15 Whereas the intragenerational equity principle focuses on the concept of fair and equitable distribution of resources where each and every person is an important being on earth and everyone has the equal right to have a pure form of environment.16 The precautionary principle is about taking calculated risks with the environment and then venturing accordingly and not harming the environment immensely.17 The concept of Sustainable Development is brought in by the UN, which is in contrast with their own idea i.e. of UN and World Bank and that is promoting free trade and capitalistic economic development and even the three main principles are very different and difficult in practical life, where again social justice and fairness is again questioned as compared with the rich and poor countries, where the countries forming such principles easily violate it and the big corporations do not signify their contribution or in other words they do not do for actually sustainability but just for the sake of following the law or maintaining the reputation of the firm. Thus sustainability is just a mask which the corporation boasts about but the reality is they just follow the law for the sake of it. The corporations are just interested in their profits.
Corporate Social Responsibility and Human Rights
Human Rights is an instrument to achieve a social end and same is the concern for the Corporate Social Responsibility. The Article 1 of UDHR lays emphasis on the equal diginity of life of each and every individual irrespective of the nation, caste, creed, ethnic groups, or income disparities.18 On the other end the CSR is for the same purpose where the laborers are working for the corporations and they provide some extra things for the exchange of the means of achieving social good. But, why should the companies strive for such good because they already pay wages, salaries etc. in exchange of the work. The principle of Trusteeship by Gandhiji comes into picture, where our country has been spiritual in nature since time immemorial, the one who has inherited wealth has a dharma towards the poorer section of the society and thus, he must help them with the same.19 Thus, the corporations do have a responsibility or an obligation to uplift their downtrodden workers in as many possible ways. Also in the Caux Round Table Principles for Business, there was endorsement of moral capitalism where the main concern was about the workers and laborers and their safety and maintaining their human dignity and also according to the stakeholder theory, the main stakeholders are the workers and their related concerns. Thus the workers need to be contended as well as happy for a healthy corporate growth.20 Thus, the Corporations are to be made accountable for their human conduct and how they address their employees and their social responsibility for the same.21 Thus the Corporate activities should provide a nexus to the respective and influential spheres to promote the Human values and thus it is an obligation as the corporation uses the resources from the society.22 Thus, the Corporate Social Responsibility should be in relation to the Human Rights as the workers are important stakeholders in the company and it is the duty of the corporation to see that there is full growth of its employees and must help them.
Constitution and Corporate Social Responsibility
The Corporation is a legal personality, so it has rights and duties enforced by the state have to be followed by the corporations. Thus, the Constitution gives the right to freedom of trade. 23 But there due to the legal obligation of giving away a part of it for a social cause and conducting the trade in a specific way with the sustainability of the resources, there is somewhere some contravention of the rights. Also the DPSPs are in contrast to this. There is a provision which states that there should not be concentration of wealth and the economic operations should also take care of distribution of wealth in the society.24 Thus, looking like this, though the corporation is identified as a person and so they have to be given all rights and duties instead of rights, they are not given enough rights or they are given negligible rights and more duties and obligations are given to them. Thus this contradicts the Salmond’s theory of there is only a correlative duty and not an absolute duty. Thus Corporate Social Responsibility in a way is controversial concept.
CONCLUSION
Corporate Social Responsibility has been made a legal obligation to the corporations by the government. This law mainly lays emphasis on the responsibility of the corporation towards sustainability, human values and obligations towards society as a stakeholder. It is though in contravention to the theory of Salmond about the rights and duties, but it is a law and gains a legal validity.25 It is law that holds social good and also libertarian approach. Thus, this is a good law which takes into account various perspectives. The argument that for sustainability, they do only for the sake of it, but if there was no law -regarding the same they would not even care to sustain even till that extent. The other argument is the corporation pays taxes, salaries, wages, etc. then why such a law is enacted. The law is on the utilitarian theory which states that anything that would be in the majority interest will be accepted as law and thus in a similar way as it favors the majority it is a fair law which would be in the interest of many. The constitutionality of the law has been checked where the corporation has been treated as a person and the rights and duties given. But also as per the constitution, the rights can be curtailed as a part when there is some law enacted by the Parliament in the Constitution. Thus, the law of corporate Social Responsibility is a type of limitation on the powers exercised by the private sector as they have more powers and there is a threat that the social good that is to be promoted by the state for the welfare of its citizens might be finished due to the lust of capitalism by the corporations and so such legal obligation is a check on the corporations and to keep them reminding that they owe everything to the society and they cannot be sovereign and exercise their own will.
Notes:-
1. The Companies (Amendment) Act, 2013, The Act of Parliament 1956 (India).
2. SUZANNE BENN & DIANNE BOLTON, KEY CONCEPTS IN CORPORATE SOCIAL RESPONSIBILITY 14-16 (SAGE 2011).
3. D. MAHAJAN, JURISPRUDENCE & LEGAL THEORY 250 (5ed. 1987) (2016).
4. D. MAHAJAN, JURISPRUDENCE & LEGAL THEORY 252 (5ed. 1987) (2016).
5. D. MAHAJAN, JURISPRUDENCE & LEGAL THEORY 341 (5ed. 1987) (2016).
6. SUZANNE BENN & DIANNE BOLTON, KEY CONCEPTS IN CORPORATE SOCIAL RESPONSIBILITY 203 (SAGE 2011).
7. D. MAHAJAN, JURISPRUDENCE & LEGAL THEORY 251-252 (5ed. EBC 1987) (2016).
8. Ibid.
9. MARKOS KARAVIS, CORPORATE OBLIGATIONS UNDER INTERNATIONAL LAW 88-89 (1ed. Oxford 2013).
10. RAYMOND WACKS, UNDERSTANDING JURISPRUDENCE 131-132 (3ed. Oxford).
11. SUZANNE BENN & DIANNE BOLTON, KEY CONCEPTS IN CORPORATE SOCIAL RESPONSIBILITY 129 (SAGE 2011).
12. RAYMOND WACKS, UNDERSTANDING JURISPRUDENCE 157 (3ed. Oxford).
13. SUZANNE BENN & DIANNE BOLTON, KEY CONCEPTS IN CORPORATE SOCIAL RESPONSIBILITY 210-211 (SAGE 2011).
14. Ibid.
15. International Integrity, BUSINESSDICTIONARY.COM (Nov. 08, 2018, 10.05 AM), http://www.businessdictionary.com/definition/intergenerational-equity.html.
16. Environmental Context, UNIVERSITY OF WOLLONGONG (Nov. 08 2018, 10.05 AM), https://www.uow.edu.au/~sharonb/STS300/equity/meaning/intragen.html.
17. COMET, The Precautionary Principle, UNESCO (Nov. 09, 2018), http://unesdoc.unesco.org/images/0013/001395/139578e.pdf.
18. UDHR, Art.1.
19. Trusteeship- Its Ethical Basis, SHODHGANGA (NOV. 10, 2018),
http://shodhganga.inflibnet.ac.in/bitstream/10603/136141/9/09_chapter%204.pdf.
20. SUZANNE BENN & DIANNE BOLTON, KEY CONCEPTS IN CORPORATE SOCIAL RESPONSIBILITY 119-122 (SAGE 2011).
21. Dr. Clarance J. Dias, Corporate Human Rights Accountability and The Human Right to Development: The Relevance and Role of Corporate Social Responsibility, SCC ONLINE ( NOV. 11, 2018), http://www.scconline.com.elibrary.nirmauni.ac.in/Members/SearchResult2014.aspx.
22. MARKOS KARAVIS, CORPORATE OBLIGATIONS UNDER INTERNATIONAL LAW 165 (1ed. Oxford 2013).
23. INDIA CONST. art. 19, cl.1(g).
24. INDIA CONST. art. 39, (b)(c).
25. W. PATON, A TEXTBOOK OF JURISPRUDENCE 284-290 (4 ed. Oxford 2005).
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