CSR serves to strengthen a company’s capacity to listen to, and communicate with, a range of stakeholders, including employees, customers, investors, legislators, and the communities impacted by corporate activities.
These stakeholders, in their dialogues with companies, often push companies to go “beyond compliance” with existing legal and regulatory standards, especially with regard to efforts to manage the social and environmental impacts of their operations. Even as these requests seek voluntary commitments, they are often predictive of trends in the law and future compliance requirements.
In this context, CSR complements traditional corporate compliance systems. Too often, corporate personnel in charge of overseeing a company’s efforts to comply with applicable social and environmental requirements have few opportunities to engage with colleagues with more direct CSR responsibilities.
This is a missed opportunity, as a company solely focused on ensuring compliance with current requirements may fail to recognize emerging trends and to plan for future compliance needs. While CSR is often reflected in a company’s voluntary commitments to stakeholders, a strategic approach to CSR is one that provides significant opportunity to predict mandatory requirements.
Few compliance or CSR personnel are sitting around with time on their hands and, therefore, finding time to foster meaningful cross-functional dialogue about stakeholder expectations, and the policy trends that are reflected in stakeholder demands, is a challenge. It is a challenge that companies should confront, however, especially at the executive level.
Understanding what colleagues are learning about stakeholder concerns and discussing the likelihood that those concerns will lead to external policy shifts, can only improve medium- and long-term strategic planning. It will also improve the company’s capacity to operate consistently with external expectations, and this will help manage both legal and reputational risks.