Interdependence Of CSR And Corporate Governance: A Conceptual Analysis





Beenu Ken, Galgotia university


ABSTRACT


Adam Smith said “A society whose members pursue self-interest without a sense of Justice will eventually collapse. A society whose members pursue self-interest checked by their sense of justice alone will survive. A society whose members pursue self-interest and the interest of others will flourish”. This means that if you look after the society you live in and you look after the interest of others that in turn will serve you to enhance your interest. That is why corporate social responsibility is important for corporate governance.1 It is already known that CSR is based on self-regulatory principles linked to internal and external management of the company. On the other hand, the term ‘corporate governance’ indicates to an idea of company’s governance and management issue. So a clear understanding of the concept of corporate governance and its nature is a crucial matter in order to point out the relation between CSR and CG. We need to look how companies first need to shore up their internal governance mechanisms before turning to the outside world to display their social concern. The focus here is that unless companies set their own house in order, social responsibility cannot be achieved. The need for good internal governance first and then practicing CSR as otherwise there would be issues of credibility and trust. Corporate leaders ought to concentrate first on providing sound governance and fair business practices. Then they should look towards practicing CSR. The point here is that companies ought to walk the talk where CSR is concerned and hence, they must first be internally and externally conscionable. This can be actualized by following transparent accounting, regular auditing of the company’s procedures and processes, acting in compliance with various corporate laws and regulations in force and being proactive to avoid oversight over business practices. Point is that organizations must actualize their vision for society by following sound business practices which would go a long way in ensuring reputational benefits. It is apparent that good corporate governance is the first step towards keeping employees, shareholders and other stakeholders happy and hence is the first step towards practicing CSR. When companies behave with integrity and trust they engender confidence among the stakeholders which translates into socially responsible business practices.

Indian Journal of Law and Legal Research

Abbreviation: IJLLR

ISSN: 2582-8878

Website: www.ijllr.com

Accessibility: Open Access

License: Creative Commons 4.0

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