Corporate Social Responsibility & Corporate Governance.

Abstract

The sixties and early seventies were turbulent times. Opposition to the Vietnam War, the environmental and civil rights movements, and radicalism generally roiled the corporate world, as much as the world at large. These disparate strands coalesced into the "corporate social responsibility movement," culminating in strident advocacy of federal chartering of large corporations, mandatory public interest directors, and required social accounting and disclosure. A principal feature of that movement is that, unlike in the early 1970s, the social responsibility is seen as converging with, rather than diverging from, broader trends in corporate governance, most specifically the "good governance" movement, which has been underfoot in many countries around the globe for well over a decade now. In the 1990s and the twenty-first century, the pendulum has centred. The generally accepted governance model envisions a board of directors made up by a super majority of truly independent directors. Independent directors supply the monitoring and fill the void dispersed shareholdings produce and the separation of ownership from control highlights. Instead of attempting to manage the corporation's business and affairs, in the "good governance" movement, directors take on a more focused mission. With its independence preserved by a board nominating committee- itself comprised of independent directors—and the integrity of information upon which to base evaluations aided by an audit committee, the board's role is to hire, monitor, and, if necessary, replace the senior executive officers, most particularly the chief executive officer. With this article, the author shall attempt to understand the scope of corporate social responsibility and its relationship with corporate governance. The balancing act carried out by corporation between profit motives and at the same time maintaining the ethical/moral responsibility that they owe towards the society at large.