Mandatory CSR has many positives consequences – LBS and HBS study

1 June 2011

Mandatory CSR has all sorts of INTENDED consequences, say Ioannou and Serafiem, professors at London Business School and Harvard, respectively.

Using data for 58 countries, they show that after the adoption of mandatory sustainability reporting laws and regulations, the social responsibility of business leaders increases. They also document that both sustainable development and employee training become a higher priority for companies, and that corporate governance improves. Plus, companies implement more ethical practices, reduce bribery and corruption, and managerial credibility increases. These effects are larger for countries with stronger law enforcement and more widespread assurance of sustainability reports.

For us at Fronesys, driving a strong link between CSR and management behaviour is key for a modern organisation, unlike the window dressing that is much more common. Policy-makers should consider the postive impact they can have on management behaviour and practice by regulatory action in the area of mandatory CSR.

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