Corporate social responsibility will work only under government leadership -- Akahata editorial, July 13

Having corporations fulfill their social responsibility is more important today than ever before, not only for shareholders but also for their employees, customers, consumers, and for environmental protection. The government ministries such as the Health, Labor, and Welfare Ministry and the Economy, Trade, and Industry Ministry have discussed this question, resulting in an interim report published by the HL&W Ministry.

The question is what role the government is to play on this issue. The report maintains that corporations should decide what to do on this matter.

Widespread corporate crimes

Corporate crime is rampant nowadays. It ranges from illegal dismissals in the name of restructuring, frequent work-related accidents and deaths at major steel companies, overtime work without pay, to the cover-ups of car defects by Mitsubishi Motors. These irresponsible actions by large corporations have exposed a serious social problem.

Their "After us, the deluge" axiom suggesting that profit justifies everything must not be left unchallenged. Even last year's G-8 summit declaration placed importance on corporate social responsibility, implying that "corporate social responsibility" is a matter of world concern.

The interim report focusing on labor affairs reasonably pointed out the need for a work environment free of karoshi (death from overwork) and other work-related health hazards, along with the need for more women to be promoted to managerial positions (as they are in many other major countries) and for discrimination to be banned and for human rights to be respected.

Corporate social responsibility needs to be fulfilled in specific terms through providing stable jobs, more employment and job training for young people, and equal treatment of part-time and other contingent workers who are discriminated against, while eliminating unpaid overtime work and giving considerations to subcontracting businesses and regional economies.

The question is what positive role the government is to take to force large corporations to fulfill their responsibility. Without this, corporate social responsibility will not exist.

The report states that corporate social responsibility will operate on the initiative of corporations and that corporations will decide on what they opt to do, with the government to only "assist" them.

The government is thus complying with the requests from business circles. While acknowledging major corporations' social responsibility, the Japan Business Federation (Nippon Keidanren) in its Charter of Corporate Action firmly opposes any government policy that will standardize or legislate corporate social responsibility. Instead, it calls for tackling this issue under non-government leadership.

Business circles' dislike of government intervention is derived from a deep-seated anxiety that compliance with social responsibility will be costly.

The matter cannot be solved so long as it is handled by the business sector, the hunter of maximum profits as made clear from the defects cover-up by Mitsubishi Motors which was afraid that "car recalls cost too much."

In European countries, regulation of corporate social responsibility has been established under government initiatives.

Both Britain and France have a minister in charge of corporate social responsibility. In France, listed companies are required to release their books on their financial, environmental, and social aspects. In Britain and Germany, they are obliged to report to the government if they are taking good care of social, environmental, and ethical conditions in making investments using pension funds. The Danish Social Affairs Ministry is measuring indexes as indicating their degree of social contribution. In Belgium and other countries, some goods are labeled to indicate whether the manufacturer is fulfilling their social responsibility.

Government must play a key role

If Japan's major corporations continue to behave "irresponsibly" in disregard of their social responsibility by just seeking quick profits, they will be isolated throughout the world.

Giving higher priority to social responsibility does not mean a cost hike but will help increase social trust in corporations and eventually increase corporate profits in the long run. This is essential for sustained economic growth.

Major corporations must drastically increase their efforts to achieve this end. At the same time, the government must take initiatives in forcing corporations to fulfill their social responsibilities. (end)