What Are the Legal Aspects of Corporate Social Responsibility in a Business?


The legal aspect of corporate social responsibility is the expectation that corporations and their employee, in the course of doing business, conduct these practices in a manner that does not violate any laws. These laws include financial, criminal, environmental and labor laws. Unlike other aspects of corporate social responsibility, that are largely self-regulating, the legal aspects are often regulated by government entities.

Legal Financial Aspects

Various major financial crises in the United States has lead to increase in demand for financial reporting accountability and transparency from lawmakers such as the Securities and Exchange Commission (SEC) as well as the federal government and investors. Corporations must legally adhere to financial reporting standards and their financial must contain truthful and accurate information or they risk a legal investigation from the SEC or other government agency. These investigations can lead to a forced shutdown by the government, the corporation failing on its own due to investors cashing in their stocks and bonds and the SEC bringing criminal charges against those involved in false and misleading financial reporting.

Legal Criminal Aspects

Corporate social responsibility calls for corporations and its employees carry out their business related activities in a manner that does not violate any criminal laws. Corporations must also not participate in any illegal activities in the course of doing business. Common criminal laws as they pertain to businesses include mail, wire and securities fraud as well as extortion, forgery and theft. Unlike civil laws, when a corporation or its representatives violate criminal laws, they face possible imprisonment.

Legal Environmental Aspects

Businesses must not violate any environmental codes and regulations while conducting their business activities. For example, a factory cannot knowingly discharge its toxic waste into a local river because it would be violating various environmental laws in the U.S. If a corporation violates these laws, they could face heavy fines and a possible shut down by the Environmental Protection Agency (EPA) or other government agency. Socially responsible corporations respect the communities and environments in which they are located as well as the global environment as a whole.

Labor Laws

Businesses cannot violate any labor laws or labor practices regulated by the Occupational Safety and Health Administration (OSHA). This means that corporations are expected to provide a safe and healthy working environment to all of its employees. Violating OSHA laws and regulations can lead to fines and eventually, if there are enough violations, OSHA may decide to shut down the business entirely. Employees working in unsafe environments can also bring lawsuits against their employers for work related health issues and injuries caused by an unsafe working environment.

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