Corporate social responsibility in the EU’s Acquis : regulation V. voluntary conduct

Abstract

Corporate Social Responsibility (CSR) is a function that transcends, but includes, making profits, creating jobs, and producing goods and services. The effectiveness with which corporations perform this function determines their contribution (aor lack of contribution) to social cohesion. In his essay 'The Social Responsibility of Business Is to Increase Profits', Nobel laureate and University of Chicago professor of economics Milton Friedman (1970) said that the one and only social responsibility of a business entity such as a corporation was "to use its resources and engage in activities designed to increase profits so long as it stays within the rule of the game" (p. 5). To put clarity to this statement, he went on to say that doing so would require businesses to engage in open and free competition devoid of deception and fraud. Today, many would not be comfortable with such a seemingly profit oriented statement. At the very least, there is a growing view that business is part of the larger society and, therefore, it has responsibilities other than simply maximising profits. Economic organisations such as corporations are responsible to their shareholders, employees, and stakeholders. Companies that ignore this responsibility will not be profitable in the long run. In the case of companies owned by the public, arguments in support of social responsibility carry even greater weight as the owners are already committed to acting in the public interest.