While reading Lawrence Lessig’s Code: And Other Laws of Cyberspace, Version 2.0 (2006), I was intrigued by this line, which read:
“«Limited liability» for corporations is a man-made law. It means that the directors of a corporation (usually) cannot be held personally liable for the sins of the company.” (Lessig, 2006: 11)
Later, after finishing Lessig’s book, I proceeded to read Joel Bakan’s The Corporation (2004) which also said:
“The law forbids any motivation for their actions, whether to assist workers, improve the environment, or help consumers save money. They can do these things with their own money, as private citizens. As corporate officials, however, stewards of other people’s money, they have no legal authority to pursue such goals as ends in themselves — only as means to serve the corporation’s own interests, which generally means to maximise the wealth of its shareholders. Corporate social responsibility is thus illegal — at least when it is genuine.” [Emphasis added.] (Bakan, 2004: 37)
Bakan’s take on corporate social responsibility elucidates Lessig’s limited liability.
In the Report of the APO Top Management Forum on Corporate Social Responsibility (2006), APO Secretary-General Shigeo Takenaka writing the Foreword states:
“Today, businesses are expected to extend their attention beyond stockholders, customers, and employees to include other stakeholders such as the community and environment. The concept of corporate social responsibility [CSR] emerged from such expectations and now consists of transparent organizational management; careful consideration of the global environment, human rights, and employment; and, in particular, compliance with ordinances, regulations, and laws.”
Moreover, Takuki Murayama, Director of APO Research & Planning Department, writes:
“It is not easy to define CSR. A main reason for this is the presence of various stakeholders. With the globalization of the economy, such issues as environmental degradation and violations of human rights are adding new meanings to the concept of CSR. As a result, despite the mounting interest in CSR worldwide, it appears the concept still lacks a clear-cut definition. Overall, however, it may be inferred CSR contains both negative and positive connotations. The negative one relates to legal compliance, which is associated with compulsory or regulatory features. The positive connotation is associated with social contributions to local, regional, national, or even global society. It is suggested that CSR can resolve the contradictory desires of employers, investors, and other stakeholders which stem from the unequal aspects of information exchange among them.” (APO, 2006: 3).
Accordingly, CSR covers three core issues: legal compliance, ethical practices, and social contributions:
“Legal compliance means corporate acts that comply with the letter of laws and regulations, including those that are related to human rights, environment, labor, or consumer protection. Ethical practices denote corporate acts that comply with not only the letter but also the spirit of laws and regulations. Social contributions are how companies act to help others and bring about positive impacts and influences in the community, environment, and for future generations.” (Taka, 2006: 7).
The report also highlighted the UN Global Compact. At the World Economic Forum, Davos, on 31 January 1999, UN Secretary-General Kofi A. Annan challenged world business leaders to embrace, support and enact, within their sphere of influence, both in their individual corporate practices and by supporting appropriate public policies, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption.
The Global Compact, launched at UN Headquarters in New York on 26 July 2000, was drawn from nine principles based upon international agreements, such as the UN Declaration of Human Rights, the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, and the Rio Declaration on Environment and Development. A tenth principle based on the UN Convention Against Corruption was added during the first Global Compact Leaders Summit, held on 24 June 2004 at UN Headquarters in New York. The Global Compact is a voluntary international corporate citizenship network initiated to support the participation of both the private sector and other social actors to advance responsible corporate citizenship and universal social and environmental principles to meet the challenges of globalization. Unfortunately, Taka (2006: 10) states that the UN Global Compact voluntary participants do not have any specific obligations.
Obligation is synonymous to responsibility. Most constitutions of various nations provide that persons are afforded certain rights and obligations. Persons, in this sense, include both natural and juridical persons. Marvin T. Brown (2006) wrote, corporations are seen as members of civil society, corporate members are seen as citizens, and corporate decisions are guided by civic norms. Thus, if natural persons are asked to uphold their obligations as mandated by their respective constitutions, ever wonder why juridical persons, i.e., corporations, are only asked to voluntarily participate or required limited liability for their responsibility?
Notes:
Asian Productivity Organization [APO] (2006). Report of the APO Top Management Forum on Corporate Social Responsibility. Tokyo: Asian Productivity Organization, May 2006. back to text.
Bakan, Joel (2004). The Corporation: The Pathological Pursuit of Profit and Power. Constable, 2004. p. 37. back to text.
Brown, Marvin T. (2009). Corporate Integrity and Public Interest: A Relational Approach to Business Ethics and Leadership, Journal of Business Ethics. (2006) 66. Dordrecht, The Netherlands: Springer, 2006. pp. 11-18. back to text.
Lessig, Lawrence (2006). Code: And Other Laws of Cyberspace, Version 2.0. New York: Basic Books, Perseus, 2006. pp. 11. back to text.
Taka, Iwao (2006). Corporate Social Responsibility: Current Context and Future Directions, Report of the APO Top Management Forum on Corporate Social Responsibility. Tokyo: Asian Productivity Organization, May 2006. pp. 7—15. back to text.
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