CO5121 LAW OF BUSINESS

ORGANISATIONS
PRESENTATION:

CORPORATE SOCIAL
Xinyu Chen
Shannon Frick
GLOBAL FINANCIAL CRISIS (GFC)
 Caused by global imbalances and shadow banking:

 Global Imbalances : countries with high savings rates

(Middle East, Asia) pouring money into countries with low
savings rates (US).
 caused low interest rates and high availability of loans

 created a non-sustainable credit boom and housing boom

 Shadow Banking: financial institutions selling loans as

middlemen to customers on commission
 Shadow banks investigated lenders’ financial history

poorly
 Created high systemic risk and interdependence – when

one institution failed to receive loan repayments, they all

failed.

GFC was caused by financial institutions ignoring

CORPORATE SOCIAL RESPONSIBILITY
(CSR)

 The Corporations and Markets Advisory

Committee (CAMAC) defines a company as
being socially responsible if it:

“… operates in an open and accountable

manner, uses its resources for productive ends,
complies with relevant regulatory requirements
and acknowledges and takes responsibility for
the consequences of its actions.” (Wilson, 2008) 
CSR IN CORPORATE LAW
 Currently no international laws that enforce
CSR
 Attempts to draft treaties involving CSR have
failed.

 CSR is seen as being a ‘soft law’:

 It is seen as a set of guidelines followed on a
voluntarybasis.
 This perception of CSR as being “voluntary” has made
progress slow and ineffective.
 Lack of progress is worsening environmental problems
such as global warming

 Is this a lack of duty of care and diligence on a

widespread scale?
CSR: MAKING IT HAPPEN
 Corporate Social Responsibility involves
companies engaging appropriatestakeholders
and taking them into account when making
business decisions.

 Instigating CSR, however, is a huge task:

 action must be taken by all people and institutions at
local, national and international levels

 There are two key words that are commonly in

discussions regarding corporate social
responsibility:

 Sustainability
SUSTAINABILITY AND RESPONSIBILITY
 Sustainable development is at the heart of corporate
social responsibility.

 Sustainabilityis the focus on both the internal and

external environment with regards to resources that
are both tangible and intangible. Under CSR:

 Tangible assets should be cared for explicitly, and recycled

or replaced with more viable alternatives whenever
necessary.
 Intangible assets should be researched and maintained.

 The focus on responsibility involves the balance

between People, Planet and Profit:
 People, referring to social well-being of the community;
 Planet, referring ecological quality; and
 Profit, referring to economic prosperity.
CSR MODEL: PEOPLE, PLANET, PROFIT
CSR MEANS GOING BEYOND PROFIT
 The real challenge for corporations in implementing
CSR is going beyond the predominant economic
view of profitand take a wider context.

 Irrefutable scientific evidence is pointing to a

dramatic decline in natural resources around the
world, which has lead to the demand in CSR.

 Society is pressuring businesses to incorporate

environmental and social values in their business
operations.

 Sustainability aims to halt this decline by promoting

environmental management and eco-efficiency in
the workplace.
CSR IS HAPPENING RIGHT NOW
 The good news is that most large listed
companies are accepting the concept of CSR

Such companies are including references to CSR in

their media releases and annual reports.

Many require consumer approval for successful

operations

 Under CSR, mainstream financial institutions

should acknowledge that community members
are also stakeholders of their companies,
regardless of whether or not they own shares in
the company.
HOW TO ACHIEVE CSR
 Several remedies have been suggested by our group:

 Change the laws to make companies liable for breaches of

CSR eg. CA s.180(2): the duty of care and diligence to include
the best interests of the corporation AND community
approval

 Government incentives for CSR adoptees eg. Tax breaks,

carbon credit schemes…

 Involve the public more in whistle-blowingby providing

more public access to information about corporate social
and legal responsibility.

 Governments to intervene only when market failure

occurs  

 Enforcing CSR could be very expensive, but

CSR AND ORGANISATIONAL THEORY (OT)
 OT is the foundation of modern management and CSR

 OT involves understanding the social phenomenonthat occurs

within each corporation/organisation.

 Under OT, Corporations are just organisations of people

 Michael Jensen on Organisational Theory :

 To make new rules of corporate governance, understand how an
organisation and its people work.
 Organisational theory focuses on both the internal structure of the
organisation, and the relationships between the organisation and
its external environment.
 Organisational theory focuses on the motivation and goals of members
 The external world affects the organisation’s survival

 By ignoring CSR, a corporation is ignoring the very

foundation of its own existence.
 REFERENCES
 Horn, L. (2008) Multinational Enterprises and Sustainable
Development. Australian Journal of Corporate Law, Vol 21.

 Smith, B. (2008) No the Baby and the Bathwater: Regulatory Reform

for Equality Laws to Address Work-Family Conflict. The Sydney
Law Review, 689.

 Wilson, T. (2008) Values Driven Innovation or Inadequate Self-

Regulation? The Effective Regulation of Australian Banks as Service
Providers to Low Income Consumers. Australian Journal of
Corporate Law, Vol 21.

 Jonker J., de Witte M. & de Witte M. (2006) Management Models

for Corporate Social Responsibility. Springer.

 The Business Insider: Two ersions of What Caused Our Crisis

(2009). Retrieved on July 21st from the Business Insider website
at:
http://www.businessinsider.com/two-versions-of-what-caused-our-crisis-20
.

 Image taken from Google Image search on July 23rd from the


 Court Dismissed!