Legal Studies Of The External Mechanism For The Promotion Of Corporate Social Responsibility

Corporate social responsibility (CSR) refers to the corporate is responsible for society. In more detailed words, corporate has responsibility (obligation) to increase the overall interests of the society. However, CSR is not a distinct concept. What should it include? And what should it exclude? There are still disputes. Nevertheless, the integrity of CSR has been admitted by the corporate laws of China and some western countries.In recent years, scholars of our country have attempted to promote CSR through internal arrangement of corporate by investigation of the corporate law reform. However, more and more scholars in China and western countries regard that, the reform is not effective and the further effort may be worthless. The ineffectiveness mainly has two causes.First, the nature of CSR refuses the nature of traditional law. Tradition law always falls behind, but CSR is prospective. Industrialization and globalization cause rapid development of technology. Internet and magnetic cards are innovation just found since past few decades. On one hand, innovation gives us convenience, but on the other hand, it gives us many new problems. In the past, majority of corporate communicated through fax and long-distance calls. However, after internet become popular, E-mails and Skype (Online chatting software) have gradually replaced these two measures, that does not only reduce the operation cost but also solve the deficiencies of fax. Meanwhile, internet, however, creates many social problems, for example, juveniles addicted to online game and personal information was improperly transferred. Law always cannot deal with these new problems. In contrast, CSR requires corporate to be prospective in dealing with such kinds of problems. When there are new technologies, corporate should be able to find the underlying problems and solve them proactively. It reflects that CSR is prospective that is, however, contradictory to the nature of law. Moreover, passivity is also one of the features of law. In contrast, CSR is proactive. CSR requires corporate takes obligation actively. Even no one requires the corporate to take the obligation, corporate should actively take it. This kind of initiative should come from the "Inside" of the corporate instead of external pressure from public.Second, corporate is dominated by shareholder primacy doctrine. Many systems in corporate law were in accordance with the shareholder primacy doctrine, so the major aim of corporate law is to protect and promote the interests of shareholders, that is different from the doctrine of CSR. The major aim of CSR is to protect and promote the interests of the whole society. Thus, it is in doubt that CSR can be promoted through the corporate law reform. Meanwhile, shareholder primacy doctrine is still dominative in academia, educational world and practice. It strongly affects the young scholars and the future practitioners.As a result, another way may be tried to promote the CSR so that the deficiency of internal corporate mechanism can be made up.This dissertation hypothesizes, that the external promotion mechanism of CSR can effectively pushes and encourages corporate to take social responsibility. External promotion mechanism of CSR refers to the mechanism that promotes CSR through arrangement of the corporate circumstances and through adjustment of the relationships between corporate and other subjects in society. From the view of market surveillance law, this mechanism can be created through market initiative and control, government interruption and regulation control.A scholar has applied the hypothesis of corporate external governance to the promotion of CSR, but he neglected the market independence and interest conflicts among stakeholders. With this negligence, CSR may not be effectively promoted through external mechanism. Thus, the nexus of corporate external governance and CSR should be identified for the construction of the external CSR promotion mechanism including market mechanism, government mechanism and non-governmental organization (NGO) mechanism.In external CSR promotion mechanism, stakeholders can use direct or indirect measures to penalize incompetent corporate management so that corporate management is encouraged and pushed to more consider the stakeholder interests during decision making. Penalty includes but is not limited to dumping of corporate shares, lay-off of corporate management, refuse of market entry of incompetent corporate management. However, every external CSR promotion mechanism is probably deficient. For example, As CSR market mechanism works in markets, it has featured by the efficiency and deficiency of markets. Even when stakeholders strive to promote CSR in their own markets, it is still probably that the CSR market mechanism cannot work efficiently because of market deficiency such as information asymmetry, monopoly. Therefore, it needs legislation and interaction among external mechanisms to ensure the remedy of the deficiency.With the classification of different kinds of stakeholders, external CSR promotion mechanism can be divided into external promotion mechanism of buyers and subcontractors, external promotion mechanism of government, external promotion mechanism of consumers, external promotion mechanism of competitors, external promotion mechanism of investors and external promotion mechanism of NGO. In this paper, external promotion mechanism of buyer and subcontractor, of government, of consumers and of competitors will be studied.External promotion mechanism of buyers and subcontractors is an external mechanism that buyers and subcontractors push and encourage corporate to take responsibility. Recently, there is a trend that corporate legal personality is not only abused by shareholders but also by non-shareholders. The absence of corporate obligation to protect the interests of stakeholders of other corporate (Indirect social responsibilities of corporate) has become more and more apparent. In practice, large corporate at the upper supply chain abuses the legal personality of other corporate at the lower supply chain and indirectly shifts its operation costs to stakeholders at the lowest supply chain through the unlawful acts of other corporate. This practice is contrary to the principle of fairness. In China, the present legislation does not stipulate the "indirect social responsibility of corporate", but similar approach has been reflected in some labor relevant legislation and its judicial interpretation. However, The regulated subject, the regulated scope and the relief approach in our legislation still have rooms for further improvement. Therefore, it is recommended to make amendment to boot that the corporate at the upper supply chain monitor the CSR performance of other corporate at the lower supply chain, in reference to the relevant US legislation and the circumstances of China.External promotion mechanism of government is an external mechanism that government directly and indirectly pushes and encourages corporate to take responsibility by mandatory, facilitating, partnership, endorsing and demonstrating measures. Organization for Economic Co-operation and Development and the World Bank have investigated the roles of government in the promotion of CSR and issued some recommendations that are worth for reference. At the same time, public responsible procurement is a common measure to promote CSR. In consideration of the actual situation of China, when constructing the public responsible procurement legal system, China can consider the below 3 specific measures:(1) Requires suppliers to meet some social responsibility standards; (2) Require suppliers to announce social responsibility reports; (3) Offer procurement privileges to supplies that are granted with social responsibility awards.Consumers have a long history in promotion of CSR. Through making decision of whether or not to buy a product, consumers influence corporate operation behaviors. Following to the recent global CSR activities, consumers put more and more concern about the corporate and even its social responsibility. Because of such consumption behavior, corporate societal marketing arises. Corporate attempts to promote its social responsibility performance through the use of corporate societal marketing, so that its reputation will be improved and more consumers will be attracted. However, much advertising sentences in corporate societal marketing is not related to its commodities or services, so consumers in China cannot be legally protected. It causes the external CSR promotion mechanism of consumers cannot work efficient because consumers fail to distinguish which corporate has social responsibility and to participate in responsible consumption. Thus, this kind of advertising sentences shall be considered as commercial speech regulated by laws. It does not only protect the rights of corporate responsibility consumers but also ensure the activation and efficiency of the external CSR promotion mechanism of consumers.Regarding external promotion mechanism of competitors, Chapter 2 of the Anti-unjust Competition Law of China stipulates 11 kinds of unjust competition acts which are taken in markets. It allows corporate to remedy unjust market-competition acts of its competitors by bring lawsuits and sending complains to the administrative department. However, its effectiveness in promotion of CSR is restricted, because unjust competition acts regulated by the Anti-unjust Competition Law do not include some irresponsible non-market competition acts such as delay salary, excessive working hours and excessive waste emission. With this regulation, it is difficult for corporate to monitor and remedy such kind of acts and to push its competitors to take CSR. Thus, it is suggested to accept the "statute regulating non-market unjust competition acts which violate other laws and regulations" into the Anti-Unjust Competition Law to ensure the protection of legitimated interests of competitors and the establishment of an efficient external mechanism that promotes the social responsibility of corporate by competitors. Even the acceptance cannot be made at last, it is recommended to apply the Paragraph 1 Article 2 of Anti-Unjust Competition Law to require the corporate, which has non-market unjust competition acts, to take civil responsibility.Finally, from macroscopic views, there are mainly three legal system reform plan for the promotion of CSR. They respectively emphasize the reform on company law, non-company law and judicial system. Each plan has its own advantages and disadvantages in the promotion of CSR. In conclusion, the plan emphasizes non-company law reform with support of reform on company law and judicial system appears to be the best plan for the promotion of CSR in China.