A US-China Comparison of Legal Authorization for Corporate Social Responsibility Pt. 1: Intro

The law is the witness and external deposit of our moral life. Its history is the history of the moral development of the race. The practice of it, in spite of popular jests, tends to make good citizens and good men. - Oliver Wendell Holmes, Jr., The Path of the Law

Over the next few days I'm going to write four posts on the legal authorization for corporate social responsibility in a US-China comparative context. This will include examining the case law, federal corporate statutes, state corporate constituency statutes, and tax statutes of the US, and cases (hopefully), corporate statutes, and tax statutes of China. But first, what is this "corporate social responsibility" (CSR) thing? I think the American Chamber of Commerce PRC does a fine job defining the CSR concept:

Examples of CSR include, but are not limited to:

• monetary and in-kind donations
• employee voluntarism
• partnerships with government and civil society
• community engagement
• good corporate governance
• social/environmental impact assessments
• environmental standards
• labor standards
• ethical supply chain management.

Key CSR issues in China include:

• core business challenges such as transparency, environmental impact and supply chain labor conditions, and
• external initiatives such as community investments and partnerships with government and civil society.

These all sound like great things! So, why is there even a debate about CSR? This is jumping the gun a little bit into the discussion about legal authorization for CSR in the US, but there are strong arguments that the only responsibility a corporation has is to secure the best legally possible return for its shareholders. Thus the only points listed above that a US corporation should be bound to are good corporate governance, environmental standards, labor standards, and ethical supply chain management (for fear of tort, or FCPA troubles).

But there are times, and we'll look at some, when the Directors or Officers think that their corporation should be doing more than just getting a nice return for their shareholders. They think that their corporation should be giving back to their community. Should this be legal? Is this legal? To what extent is this legal? Should corporations be forced to give back to their communities (especially in the wake of so many of them acting so naughty)? Should corporations be forced to not just not be evil, but be forced to be good?

And, the big question that I want to sort out for myself is whether the socialist nature of the PRC means that Chinese corporations should be bound tighter to CSR standards and should have greater expectations or even requirements upon them for giving back to their communities than their American counterparts. Caveat: Yeah, I realize China isn't strictly socialist, but we're gonna be looking at some articles in some PRC statutes that would make lawyers in a more litigious country drool and make corporations in the same sort of place quiver in their boots.

Comments are especially welcome, though no more nor less welcome than usual.

Other Posts:
Part 2