Government Regulation of Corporate Social Responsibility (CSR) : Implications for Corporate Governance

Governments increasingly require that firms address a wide range of corporate social responsibility (CSR) stakeholder demands rather than narrow shareholder needs. This chapter explores implications for corporate governance of mandatory CSR reporting requirements focusing in particular on non-financial disclosure and tax transparency in extractives. Non-financial disclosure requirements are overwhelmingly soft while tax transparency reporting requirements are hard. Firms typically manage CSR programs in non-core support functions such as communications or health, safety and environment. Soft CSR reporting criteria have limited impact on the internal governance of firms and top-level management decisions. In contrast, hard CSR reporting criteria constitute a key element of corporate governance. Firms manage tax transparency in core corporate functions such as the audit committee and it is the responsibility of the Chief Financial Officer who usually sits on the executive board. Top-level management is more likely to take CSR programs seriously that impose mandatory hard requirements