Corporate Social Responsibility - Are CSR Clauses Of Lip Service Or Of Service?

Corporate Social Responsibility ("CSR") is a strategic management concept through which a company achieves a balance of economic, environmental and social imperatives, whilst still addressing the expectations of shareholders and stakeholders. A stakeholder is often generalised as an individual or a group that is affected by the organisation's policies or actions, such as employees, customers, suppliers and the community within which the corporation operates.

The concept of CSR addresses environmental management, ecoefficiency, responsible sourcing, stakeholder engagement, labour standards and working conditions, employee and community relations, social equity, gender balance, human rights, good governance and anticorruption measures.

CSR CLAUSES ARE OF LIP SERVICE

Contract clauses are included in a contract with reference to legal principles; be it the identification of parties and subject matters of the contract, structuring of payment methods and timelines, and other relevant expressions of legal principles, precedents and applicable laws; for example, S40 of the Contracts Act 1950 provides for the effect of a refusal of a party to perform the promise wholly. This would be embodied into a contract by way of breach and termination clauses, which would attract obligations and liabilities for the parties of a contract.

Unlike other clauses in a contract which are derived from legal principles and the law, CSR clauses are derived from frameworks such as those provided by Bursa Malaysia (Malaysian Code on Corporate Governance 2012) or the Companies Commission of Malaysia (Corporate Social Responsibility Agenda 2009) for the implementation of CSR initiatives. Such frameworks provide companies with scorecards and guidelines to measure the effectiveness of their proposed CSR policies and evaluate the CSR ideas propounded. It is opined that a CSR clause does not attract obligations and liabilities in the same manner as other clauses of a contract. It is a clause of lip service because it has no actual legal implications and therefore is not a contract clause in the strictest sense for the reasons stated below.

A CSR clause merely encapsulates the vision or manner in which the party wishes to carry out the strategic management concept of the business as a long term business plan. Whilst clauses that are derived or based on law governs the rights and liabilities of business practices that arise from execution of the business plan, the business plan...