CORPORATE SOCIAL

RESPONSIBILITY
IN
GOOD GOVERNANCE

Submitted by:

ROSE-ANN S. MANTUPAR

In the public service, we see ourselves intricately linked to our clients, public servants, politicians, laws,
taxpayers and constitution. This the most basic form of corporate social responsibility. As public servants,
we are directly responsible to those with whom we have entered into a compact most important is the
people. With this, corporate social responsibility is to do not only what is required, but more importantly, to
do what is right. This may be difficult because the costs can be that much higher. However, if responsibility
is about good governance, then the decision must be couched in the following terms:

We do what we must do that is, to be true to the values and principles as contained in the laws of
the land and laws of God;
We do what we should do to raise the standard of living of every families in the nation;
We do what is best to do to eradicate poverty, fight corruption and reform the Philippine
government

When we begin to gauge our corporate social responsibility in such terms, we should go beyond our
immediate publics. The Department/Section Heads in an organization are now much broader. They usually
include the society in which we are a part; the community at large.
Corporate social responsibility is neither simple nor compartmentalized. It requires a great degree of
foresight and vision among all members of the corporation from top management to rank-and-file workers.
And it calls for grounding in reality because ultimately, corporate social responsibility is about action.
According to Alfonso, Jikich and Sharma, Corporate Social Responsibility represents an important
component of a broader commitment to sustainable development and managing the triple bottom line of
social, economic and environmental performance. The essence of Corporate Social Responsibility is
largely personal and highly individualized. In the end, CSR means all things to all people. Some consider
CSR as an act of providing a human face to their operations; others engage in these initiatives because of
their innate and deep-rooted commitment towards their actions. Still, with others, perhaps the sheer threat
of regulation and mandatory standards drives them to practice social responsibility.
Beyond these considerations, there is also a compelling business case for CSR. There is evidence to
indicate that corporations that conduct themselves in a socially responsible manner also benefit in terms of
consumer loyalty, good public image and shareholder approbation. Depending on particular circumstances
and specific business drivers of a corporation, its ability to engage in CSR can may aid them when it comes
to managing risks, as well as identifying and capturing new business opportunities.
However, in the government, basically it is the policy of the state to promote the general welfare and ensure
the delivery of basic services and facilities to the people. That is why obviously, the government is really
engaged in the CSR.
Second, responsibility is a value rooted in fundamentals that is, in the early stage of our upbringing.
Fairness dictated that each individual ought to be responsible for his or her personal actions. On a macro
scale, it is imperative for corporations to realize that their private decisions also have very public effects. In
order to be fair to themselves and to the society, they need to know the scope of their societal footprint.

Responsible behaviour, therefore, is a personal discretion driven by inner conscience and enforced by
outer consciousness.
Another definition comes from the World Business Council for Sustainable Development: Corporate Social
Responsibility is the continuing commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families as well as of the local
community at large.
The concept of Good governance can also be seen as what is called corporate governance as this can be
used in any form. What the corporate governance framework does is to encourage the efficient use of
resources and also to require accountability for the stewardship of those resources. The aim is to align as
nearly as possible the interests of individuals, corporations and the society at large. Good Governance is
concerned with holding the balance between economic and social goals and between individual and
communal goals.
The Principles of Corporate Governance (CG) covers the rights of shareholders, the equitable treatment
of shareholders, the role of stakeholders in corporate governance, disclosure and transparency and the
responsibilities of the board. However, there is no single model of corporate governance with systems
varying by country, sector and even in the same corporation over time.
Corporate social responsibility (CSR) on the other hand is concerned with treating the stakeholders of
the firm ethically or in a socially responsible manner. Stakeholders exist both within and outside a firm.
Consequently, behaving socially responsibly will increase the human development of stakeholders both
within and outside the corporation. CSR is majorly about how companies manage the business process to
produce an overall positive impact on the society.
Today, most companies do not see any relationship between CSR and CG, this is as a result of the fact that
most companies still see CSR as philanthropic act, which is basically to be used in the development of the
community where they operate.
If good governance is about accountability on the use of resources, then we can say that for a company to
be seen as being responsible, the company must be acting responsibly in discharging their duties.
The concepts of good corporate governance and CSR have not been fully understood by business and the
development of the framework needs to be done. Corporate governance also mostly comes into the picture
only after the exposure of a large scam, which puts its practically into doubt.
Recent studies have shown that there is a huge convergence between CSR and Corporate Governance.
CSR is no more only concerned with social issues gut has traversed to Corporate Citizenship, transparency
and accountability.
Though corporate governance are the policies and principles followed by organization in order to maximize
shareholders wealth and to attain the set objectives, its performance largely depends on the managerial

setup as well as consideration of the socio-cultural-environment of business which focuses on the legal and
ethical practices of its stakeholders.
The concept of moving beyond the shareholders wealth, maximization concept in Corporate Governance
gives the interrelationship between CSR and Corporate Governance which in turn gives birth to
sustainability.
Social Responsibility and Good Governance are used interchangeably worldwide by individuals and
corporations to show their associations with the activities carried out for the betterment of the society.
Although the two terminologies appear to have a lot of similarity but there are huge differences between
them when their basics are studied in detail; with the passage of time, the UK government has undertaken
numerous legal decisions to support the concept of sustainability, good governance and social
responsibility (Hurlbut & Robert, 2012).
According to Robinson and Dowson (2011), the social responsibility is described as an ethical or ideological
theory in which an entity that can be an individual or an organisation has a responsibility of acting on behalf
of the society. The social responsibility is considered as an obligation that every organisation or individual
has to perform for keeping a balance between the ecosystem and the economy. The main purpose of the
social responsibility is to ensure equilibrium between the environment and society; the government has to
impose certain restrictions by developing the code of business ethics that will allow every company and
individual to fulfil the respective social responsibilities.
On the other hand, good governance is defined as the complete set of principles or rules that have to be
developed with the passage of time for meeting new challenges in various areas such as quality,
commerce, reputation, risk, probity, accountability and finance (Charity Commission, 2010). When the
organisation's management started to get separated from its ownership, the concept of good governance
began gaining entrance in the field of the corporate world.
After the economic crisis hit the countries across the globe, the governments realised the need of
developing corporate governance policies which are stricter than the existing ones and the businesses are
mandated to ensure compliance with all of them. In the last few years, there has been growth in the need of
fulfilment of social responsibilities which incorporated satisfying every stakeholder i.e. customers, suppliers,
community, government, distributors, employees and others. All of these tasks have to be accomplished at
both the individual and the corporate level (Aras & Crowther, 2010).
In order to ensure that the social responsibility and good governance work together, there is a wide range
of legal perspectives that have to be studied to understand in detail the effectiveness of these policies. The
UK government has designed Code of Governance for various enterprises such as voluntary, commercial,
community and social that is developed on six basic principles. Hence, the social responsibility and good
governance are inter-linked that aim to give protection to the interests of the stakeholders so that they can
get benefited from the decision making processes of existing entities especially corporations.

Social Responsibility
Social responsibility is a term that is used to explain the contract, either written or verbal, that a corporation
is required to accomplish in its business environment. Every company has to ensure compliance with
specific standards that are set by the customers, society and investors. While, majority of these
compliances are available in the form of regulations, some others are practised in good faith of the citizens
(Lockwood, 2010).
From an organisation's point of view, it is an obligation of the firm's management to make decisions and
implement actions that will improvise the interest and welfare of the society. There are various levels of
social responsibilities that have to be supported by the organisations such as ethical, legal, discretionary
and economic. The six key areas comprise of employees, customers, shareholders, government,
community/environment and other groups or associations (Aguilera, & Cuervo-Cazurra, 2009). The pyramid
of the social responsibility is shown in the following figure:
Legal Perspective of Social Responsibility
It has been stated by Macnamara (2010) that there is a huge range of inequality in the roles of various
entities in UK as they tend to fulfil their own claimed responsibilities. Although different corporations have
varying roles but they have to ensure compliance with the rules that are set by the UK government such as
civil rights of the citizens, provide human rights to the employees, offer authentic and genuine products and
services to the customers, make available their financial statements to the investors for ensuring
transparency, protecting the environment by carrying out activities in an environmental-friendly way and
making valuable contribution in the country's economy (Thomson, Panwar & Hansen, 2010).
According to Golob, Podnar and Lah (2009), social responsibility is voluntary but there are certain
restrictions that are imposed by the UK government in the form of laws and those areas fall in the category
of legal responsibilities. One of the crucial legal requirements of the country is that the corporation should
develop its Statement or Code of Ethics and ensure that the business practices are conducted in
accordance to the ethical practices outlined by the government body.
Similarly, an organisation has to ensure that it does not exploit the rights of its employees by promoting the
idea of equal employment opportunities, offering them minimum wages as implemented by the laws,
developing healthy and safe working conditions, assisting them in turbulent times, presenting worthwhile
solutions for health care and other facilities and avoiding any kind of discrimination within the business
operations (Szimigan et al., 2011). All of these aspects are available in the form of governance laws of the
businesses and society.
Since a company operating in UK is liable to present the investors with information about the business
activities with complete integrity, it has to fulfil its commitment of being accountable to every decision made
by the management team. Similarly, it has to abide by the trust that the customers have in its offerings; the
customers have the right to demand any explanation for the course of action undertaken by the company.
The customers are willing to purchase those products more whose companies are involved in numerous

corporate social responsibility activities especially the protection of nature and environment (Hurlbut &
Robert, 2012).
One of the most important things that need to be given utmost attention is the compliance with the
government regulations so that the official authorities do not intervene in the business activities too
frequently. The UK government has set laws related to industrial relations, protection of employees,
protection of customers, tax compliance, quality standards maintenance, competition policy, transparency
principle and others so that every firm can ensure that it meets the social responsibility obligations
effectively.
However, social responsibility has to be imposed by the government in the form of good governance so that
the individuals and corporations are compelled to make significant contributions in the society.
Good Governance
The term 'good governance' has been used in the literature of international development for providing a
framework to the public institutions about conducting the public affairs and simultaneously managing and
effectively utilising the resources of the public. In simple words, governance is defined as the process of
strategic decision making in which careful analysis of available options is carried out and ensured that the
decision is implemented appropriately (Kaufmann, Kray & Mastruzzi, 2010). It is further implied that the
term 'governance' can be applied to local, national, corporate and corporate governance or even to the
interactions that take place between various sectors of the society.
It is stated by Charity Commission (2012) that the concept of 'corporate governance' emerges as the model
to do comparison among the unsuccessful economies or political bodies with those ones that have
workable political bodies and economies. This concept mandates the government need of realising their
obligations to the society and the governing bodies have to meet the needs of the masses as compared to
the selected groups of society.
Generally, good governance in UK is perceived to be a normative principle in administrative law in which
the State is obliged to perform its roles in ways that will foster the values of responsiveness, decreased
corruption and high efficiency for the civil society. This principle is largely defined in terms of its association
with the statecraft. According to Bullivant et al. (2012), although the government is not held responsible for
delivering of the goods but it has to ensure that the complete processes involved in the identification and
delivery of these goods are tangible in terms of:
Developed in response to the demands of public.
Resources allocated in the production are entirely transparent
Goods will be distributed evenly throughout the country.
Moreover, the good governance concept has been implied to a large extent in the operations of both private
and public sector organisations in UK. In such a well-integrated manner, the decision making strategies in

the corporate world are assimilated with the core principle of good governance and ensure that interests of
all stakeholders are taken into account effectively (Law & Ang, 2013).
Legal Perspectives of Good Governance
In UK, the importance of good governance is deemed important in all sectors of the country i.e. private,
public and voluntary. All the corporations especially voluntary and community organisations are driven by
the altruistic values and they are working for the public benefit, they need to be governed by appropriate
code of ethics that will ensure that they conduct their operations appropriately and are held accountable as
well (Bullivant et al., 2012).
Over the past decades, some sectors have developed their codes of Good Governance such as Cooperatives UK, National Housing Federation and HEFCE. In 2004, the Good Governance Standard for
Public Services was developed and introduced especially for the public sector. Similarly, the UK Corporate
Governance Code was launched in the private sector; the work was undertaken by Greenbury, Higgs and
Cadbury in response to the governance failures that were encountered by the business organisations as a
result of recession in 2008 (Aras & Crowther, 2010).
Similarly, the Code for the Voluntary and Community sector was introduced in 2005 with the aim of
providing guidance to the philanthropic organisations about carrying out their business activities in support
of the community needs.
Principles of Good Governance
The importance of good governance lies in the fact that the government and other stakeholders have to
collectively increase the efforts of improving the lives of citizens. According to the United Kingdom
Department for International Development, cited by Ridley, D'Silva and Szombathelyi (2011), "good
governance is not solely about the government; it comprises of the political parties, the media, civil society
and the judiciary. The main areas that are addressed by this governance are the ways in which leaders,
citizens and public institutions work together to bring changes within the community."
The three basic requirements of the good governance are as follows:
Capability of the state - The degree to which the government and leaders have the ability of getting the
things done.
Accountability - The aptitude of the civil society, private sector and citizens to analyse the decisions of the
government and public institutions and holding them accountable for their implemented steps. It provides
the opportunity of changing leader by means of democracy.
Responsiveness - The extent to which the public institutions and policies respond to the citizens' needs and
even endorse their rights (BIOA, 2009).

The primary eight characteristics of the good governance are shown in the following figure which is being
effectively followed by the UK government to ensure that its governance methods are in compliance with
the requirements of today's market:
In order to provide enhanced protection to each and every stakeholder, the UK Government has provided
complete details about the governance rules that can be exercised by the companies, customer,
employees, community, suppliers and many more. Following are some of the examples that demonstrate
the government's initiatives to reinforce the implication of the concept of 'good governance':
Employees - Laws related to Health and safety at work, payroll, dismissing staff and redundancies,
Statutory leave and time off, contracts of employment and working hours, recruiting and hiring and staff
pensions.
Education and learning - Governance related to apprenticeships, admission to the schools and transport
facility, school life and students finance, loans and universities.
Living in UK - Obligations related to British citizenship and moving to UK, Rights to vote, Living in the UK
(government and democracy) and Coasts, country sides and creatures.
The UK government has developed various bodies such as government agencies and boards that ensure
that the corporate governance in every sector is effectively followed. There are differed departments within
the UK government body that ensures that the laws and regulations are effectively implemented
(Lockwood, 2010).
Linkage between SR and GG
As the countries worldwide are becoming aware of their responsibility towards their community and society,
they are promoting the idea of strengthening the governance bodies so that they develop the policies that
are favourable for everyone within the convergence. According to Thompson, Panwer and Hanser (2010),
"there is strong link between Social Responsibility and Good Governance because only with the help of
authoritative bodies, the individuals and corporations can be forced to work for the benefits of the society
and country as a whole".
Since the corporate governance was not strong in 2008 in UK, the government decided to reform its Code
of Governance for various organisations by developing separate policies for the diverse range of types of
businesses. It has been stated by Low and Ang (2012) that "a good governance is vital in every phase of
the social responsibility whether it is for the corporation environment or society in general or even the
political setting". With the help of good governance, the public faith will increase and people will be more
confident about the stability of the country's political situation.
Bullivant et al. (2012) stated that "when there is limited number of resources available for meeting the
minimum expectations of the people, good and effective governance can assist in flourishing the idea of
social responsibility so that society's welfare can be promoted". Moreover, the corporate world will be able

to conduct its business activities at minimal level of risk as it will be aware of the methods that have to be
implemented to avoid any business related pitfalls.
Points of separation between SR and GG
The main point of separation between the two terminologies is that good governance can be easily
measured by using the right tools and techniques which ensure that any modifications are quickly made.
Whereas, the extent of social responsibility effectiveness cannot be assessed by utilising the measurement
tools; hence, it becomes mandatory for the official bodies to ensure alignment between the good
governance and social responsibility so that both of them can work along.
In some cases, the organisations are provided to support and to promote the profit making objective but
they have to make sure that they don't compromise on the quality of products or deny employees their
rights. Sometimes, maintaining a balance between the two concepts becomes unmanageable. In addition
to these aspects, the UK government is concerned about developing a global governance system so that it
can provide effective guidelines for the corporations that are working in the international market. For
instance, the government aims to provide employment opportunities to its citizens but it also needs to
provide support to the organisations to make contribution in the country's economy.
Therefore, it can be said that the corporate governance and social responsibility have various separation
points but they need to be inter-linked in an effective manner so that there are no problems for any
stakeholders and everyone gets benefited with the government's good governance policy (Szmigin et al.,
2011).
Critical review and analysis
As UK is also operating in the free market system, it will have to ensure that it creates a sustainable
environment for the citizens, corporations and every stakeholder by making effective use of good
governance tools. The legal bodies have started working on developing the relationship between good
governance, social responsibility and sustainability so that the country can sustain for a long period despite
negativity within the corporate world.
If the free market democracy has to be ensured, the system of sustainability has to be strengthened by
developing a deep sense of responsibility towards the society. Similarly, the leaders of these free market
democracies are developing their own beneficiary goals without considering the basic requirements of the
citizens. These leaders have to ensure that they define the goals that are realistic and attainable goals and
then gain support from the voters (Bullivant et al., 2012). When everyone will share the same responsibility
about the whole society, then the laws developed will be effective and the country will prosper at an
accelerating pace.
The issues in the application of good governance and social responsibility
As social responsibility and good governance have various similarities, the UK government has to address
few challenges that are impacting the effectiveness of the code of governance. The two most important

areas of concern are that the people lack sense of responsibility towards the society and laid back attitude
of the politicians (Low & Ang, 2013). The citizens have to be made aware about their role in helping the
government in fulfilling its social responsibilities along with providing appropriate and positive policies to the
business players.
In order to embed the social responsibility wisdom, the voters have to reassert the control over unchecked
bureaucracies and lenient politicians who are not working too hard to develop an effective governance
framework. Other common issue is that the laws and regulations have become obsolete. The legal
framework needs to be updated frequently so that it takes into account the changing patterns of
globalisation and industrial trends that are happening worldwide.
Since corporations and government authorities can exploit the customer's right of freedom, the citizens
have to become alert and protective about their freedom that has given them the prosperity and right of
making decisions about their own lives. Similarly, the society has to be prepared to make any sacrifices that
are required for promotion of the well-being for the society along with supporting the welfare of the
associate citizens and continue to enhance the economy's competitiveness on global level.
Hence, social responsibility and corporate governance are same concepts in various aspects. Every
stakeholder in the country is equally responsible for the protection of their rights and has to ensure that they
work together like a team.
Conclusion
The main issues that are of utmost importance by the UK government regarding the fulfilment of social
responsibility are keeping a balance between the good governance, environmental protection and
enhancing the standard of living, creating awareness about individual's responsibility towards contribution
to the society and remaining competent with the ever changing business environment.
In the last few years, the social responsibility and good governance have become crucial aspects of the
countries as they are the backbone for assisting it in effectively flourishing on the global level. Although the
UK government and its legal bodies have ensured that they promote the social responsibility among
citizens and corporations but they need to revitalise their political setting. It has become mandatory for the
governance to be implemented properly because social responsibility can be encouraged only with
appropriate rules and regulations.