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Volkswagen Scandal Reveals the Necessity to Strengthen CSR Legislation

source:China WTO Tribune    date:2015-10-30 11:27:41


The most far-reaching impact that Volkswagenscandal brought to America may accelerate to create a new rule for all enterprises―CSR legislation. This is not alarmist.

The decision of “governing the country according to law” at the 4th plenary session of the 18th National Central Committee of the Communist Party of China brought up the idea of “strengthening CSR legislation” in key legislation areas, which has provoked different opinions from multiple parties:

According to the first opinion, the biggest problem China faces is that enterprises do not abide by laws and executive bodies do not enforce laws strictly. That is to say, the biggest problem is not the so-called legal problem of CSR.

According to the second opinion, CSR focuses more on enterprises’business ethics.It seems that ethical legislation does not make any sense, and we should define the boundary of CSR in the first place.

The third opinion believes that CSR requires the promotion of relevant legal system. Therefore, we should make CSR promotion laws and encourage enterprises to perform social responsibility.

I used to have doubts about these opinions. I supported“CSR legislation”. However, I did not have a clear mind of what kind of law to make.I am shocked at the Volkswagen scandal and have felt doubtful about social responsibility for a while. But today, this scandal makes me more confident about “CSR legislation”. Besides, I am determined to believe that the Volkswagen scandal will accelerate the CSR legislation process!

People are angry and disappointed that such scandal happened to Faw-Volkswagen which used to deliver excellent performance and win recognition from various parties. How could Volkswagen make every possible means for its interests? However, the Volkswagen scandal indicates that this could happen to any enterprise if we center on our own economic benefits. If we follow the thinking of “the biggest responsibility of an enterprise is to make profits for its shareholders”, this kind of scandal could happen a thousand times!

Therefore, to completely avoid such scandals, we need to change theenterprise operating philosophyof “maximum economic benefits for enterprises themselves” at the rules and regulations level.In this way, we believe it is necessary and pressing to strengthen CSR legislation.

As far as I am concerned, to strengthen CSR legislation, we have to solve the three potential problems for enterprises:

First, enterprises have to change their operating philosophy.They should get rid of “maximum benefits for shareholders” and develop appropriate relationship between themselves and the society.

Second, enterprises must change their operational behavior. In the decision making and business operation processes, enterprises must pay attention to the appeals of stakeholders and strike a balance on the interests between enterprises and stakeholders.

Third, enterprises must change the closed operation.That is to say, they should strengthen the information disclosure on social responsibility, including financial information, take initiative to make public theimpact that operating activities may exert on enterprises, increase the transparency and receive supervision from the society.