Voluntary vs. Mandatory Models of CSR / Volunteering

[Former Member]

What is the difference between a voluntary and mandatory model of CSR and what are the benefits and drawbacks to each?

What are typical measures of success?

[Former Member]

Introduction

I would like to anchor my response with the definition of CSR in the draft guide for CSR by ISO and also base it on my experience in a mining industry as a management representative for voluntarily implemented management systems for quality, environment and OH&S.

Definition

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.

NOTE 1 Activities include products, services and processes

NOTE 2 Relationships refer to an organizationu2019s activities within its sphere of influence

-ISO/1 TMB WG SR N 143 Date: 2008-06-02 DRAFT ISO 26000 WD4.2

The coverage under Draft Guide for CSR

The core subjects covered in the guide are:

- Organizational governance

- Human rights

- Labour practices

- The environment

- Fair operating practices

- Consumer issues

- Community involvement and development

The above topics are as per the draft guideline on CSR. There could be different coverage under some other model of CSR.

Voluntary and mandatory u2013 their benefits and drawbacks

As an example, I will refer to environment management by a company to high light the difference between a voluntary and mandatory model of CSR covering environmental issues.

A company has to obtain Air Consent, Water Consent, Hazardous Waste Consent prior to commencing their operations. These consents will have several specifications to which compliance has to be evidenced by the company. This is mandatory.

A company may on their own accord implement a management system as per a national or international standard to assure all stake holders that their operations have least detrimental impact and that they are inclined to increase beneficial impacts as well. This is voluntary.

Complying with mandatory requirements is very clear, because they are specific.

Some times they are archaic.

Non compliance would attract penalty and adverse image.

Facing inspection by the regulatory agency is most of the time a hassle.

Complying with voluntary systemu2019s requirements is focused on improvement. Of course compliance to regulatory requirements is part of it.

Non compliance, when pointed out, serves as a source for improvement effort.

The effort is systematic and continued irrespective of individuals changing.

Employees must be constantly educated, encouraged to participate.

The voluntary system helps preventive steps.

Of course, it is up to the company to work the system and derive benefits.

Typical measures of success of CSR

Under mandatory compliance the number of u2018noticesu2019 received by the company, penalty paid or lack of them may be the typical measures of performance.

In the voluntary system compliance it may be number of improvement projects completed, improvements gained, number of Non-conformity issued by a third party inspection or lack of them, appreciation received etc.

Labour practice

In the same way if we take up labour practices, every company without exemption would come under certain regulatory requirements.

Whereas implementing SA8000 would be purely a voluntary effort, mainly to be very systematic and to improve the processes continually.

Other subjects

I am sure if we take up other subjects in the same way for detailed study we may be able to find and list the benefits and drawbacks with each model.

To conclude

In the final analysis, one may be sure that implementing a voluntary model of CSR would make a company to comfortably operate a notch above the regulatory requirements and improvements may be considered the hallmark of voluntary systems.

I made an attempt to answer the question. Hope it is on the mark and would be of some help.

Sam Anbazhagan

[marilyn_pratt]

Glad to see this conversation finally expanding. I know many organizations are dealing with these very questions including the one I work for (SAP). James Farrar has pointed me to the Global Reporting Inititative and their indicators.

If you haven't already done so, you might want to look at some of the links and content that are on the [CSR wiki space|https://wiki.sdn.sap.com/wiki/display/CSR/Home].

Jim Spath posed a very similar question in the past and rekindling this conversation is quite timely.

Thanks Amanda and Sam for kicking this off.

[Former Member]

Some times voluntary compliance may also be for an upcoming regulation.

For instance there are examples of companies complying with measures to be taken with respect to used batteries, usage of plastic, ODS substances, CFC, CTC, though there were, no regulatory requirements at an earlier point of time.

Regulation making takes time.

It may be said to involve four stages.

1. Education to improve knowledge and bring about awareness

2. Incentives for initiating actions on oneu2019s own volition

3. Differentiation of the better from the good and the good from the bad

4. Punishment for non-compliance

In Indian terms we call it u2018Sama-Dhana-Bedha-Dhandau2019 stages!

External control measures are costly. In the final analysis it may only be the tax payersu2019 money for implementing the controls.

But self regulation by individuals and companies may be less costly and effective too.

Regulations has long term and broader geographical reach, no doubt; whereas self regulation is appropriate to short term and in oneu2019s zone of influence. If done well, it may have ripple effect too as best practice and serve as an example for others in the sector.

By the time the mandatory requirements come to be known, one is ready for compliance.

Such an approach would enable the regulator and the regulated work together for the common good without friction.

Sam Anbazhagan

[marilyn_pratt]

One of the finest thought leaders on this topic is someone who has graced our community with contents and comments. I'm a big admirer of [Donna Glans-Kennedy.|] and have just sent her a link to this thread which I hope she is able to see. She wrote a fascinating book about Corporate Intergrity which I highly recommend.

[Former Member]

Your clear question has stimulated a lot of useful dialogue - brilliant use of a blog. Sam has, again, done a great job of explaining the difference between voluntary models of CSR and "compliance". Let me add a bit too.

In a nutshell, managing to compliance means that a company/organization/government chooses to manage its decisions and strategies by complying with laws. There is a debate about whether this compliance is with the strict letter of the law...or with the real intention of the law (I'm starting to sound like a lawyer...sorry!). Managing beyond compliance means that a company/organization/government voluntarily decides to do something that is not required by laws that govern that entity. For example, a decision to support a community cause (to invest in the community) is a voluntary act, beyond compliance. A decision to comply with environmental standards the same, across the entire USA, instead of having a different (lower) standard for each individual State...is a voluntary choice.

As Marilyn has noted, I've written a book titled: Corporate Integrity; A Toolkit for Managing BEYOND COMPLIANCE...so I have an opinion on what is the most effective strategy! In the preface to this book, which is on my website at http://www.integritybridges.com/pdf/Books/Book%20Excerpt.pdf, I explain this question in a bit of detail, and address the question of why companies manage to compliance or beyond compliance. This may help a bit.

As well, i can offer you a tool, an Integrity Ladder, also downloadable from www.integritybridges.com, that helps you to think about why you manage to compliance or beyond compliance. The motivation is different, and the indicators are different. Managing to compliance can be reactive to risk; managing beyond compliance (voluntarily choosing to assume social and environmental responsibliities) is usually proactive. There isn't a right or a wrong here...jsut different options for corporate managers that may influence your business.

Hope this helps a bit...ask more questions if you like!

[Former Member]

Don't know why the link to the article isn't working...go to www.integritybridges.com and then Resources - and Recommended Reading - which takes you to Corporate Integrity. The Integrity Ladder is under the heading Tools.