The well-being of society depends on the support from three key sectors, the private sector, the public sector and civic society. A social contract exists among these sectors in order to ensure the public good, where each sector plays a role determined by the sociopolitical and economic situation of each country.
In the United States and many western societies, the social contract looked very different in the past. Society expected business to pay taxes and provide jobs; government to ensure the public good, set laws, collect taxes, and supply social services; and civic society to take care of the social problems. In the last 30 to 40 years, these roles have been changing due to emerging social problems, new stakeholder expectations, globalization, technology and rapidly changing demographics. The role of government has shrunk and the roles of business and civil society have grown.
Much has been written about the changing role of business in society. Stakeholders today expect a lot more from business than in the past. They want companies to treat employees fairly, not harm the environment, ensure their products are safe, have a responsible supply chain and provide quality products. What about the role of government in the changing social contract? What should government be doing?
What is Government’s role in moving the CSR agenda?
Society’s expectations of government today, have not undergone much change over the years. People want government to ensure the public good and act where others cannot. Are governments providing an enabling environment for Corporate Social Responsibility (CSR) to grow? If so, then what are they doing?
A study published by BSR entitled “Public Policy and the Promotion of Corporate Social Responsibility” indicates that in the last decade, governments have become increasingly proactive in promoting CSR through public policies. It is likely that this type of government support will continue in the coming years.
The research was done in seven countries: Brazil, Canada, China, Mexico, Peru, Sweden and the United Kingdom, where several trends in national public policy were observed, ranging from voluntary guidelines, binding regulations, campaigns to raise CSR awareness, and government funds made available for implementation of CSR programs.
All seven countries have voluntary guidelines and binding regulations. Examples include the Swedish government’ reporting policy which obliges state-owned companies to report on social issues. In Peru, the government and mining companies have created a voluntary guideline for the mining industry which consists of a joint community fund to which firms contribute pre-tax dollars.
Most governments in the study engage in some type of campaign to promote CSR within the country’s private sector. Some countries have made raising CSR awareness as a focal point in national campaigns. For example, the Chinese Communist Party has adopted the Harmonious Society doctrine on the federal level to emphasize social equity and responsible business practice.
Governments also have polices for the allocation of funds based on a screening of companies’ CSR programs. The policies are championed by ministries of labor, agencies of international development and national banks. In Brazil, national banks follow the Brazilian National Economic Development ethical code which requires funded entities to comply with national labor codes.
The BSR study shows that governments worldwide are thinking about the responsibilities of companies in a new way. They are promoting CSR practices and good governance policies. Companies now need to look at governments as key stakeholders of their operations and become more aware of the public sector’s efforts to promote CSR. Although it is a challenge to create good private-public partnerships, joining efforts across sectors can lead to more efficient solutions to social problems that are of concern for both companies and governments. Companies that engage in public policy have a new opportunity to become leaders in the countries where they operate and to shape the future of how governments promote CSR.