Republika ng Pilipinas

Komisyon sa Lalong Mataas na Edukasyon

DON HONORIO VENTURA STATE UNIVERSITY
APALIT CAMPUS
Apalit, Pampanga

Group 1
Written Report

Members: Manalo, Jean Dylan D.

Serrano, Khate Ashly G.
Manalo, Cassandra S.
Adona, Franchisca V.
Basilio, Carmelo D.
Santiago John Patrick B.
Maglalang, Jedd G.
Cudia, Gian Sofia T.
Lacap, Franzchelle Anne A.
Villarico, Ivan Jester C
Simon, Edmonson
Agustin, Missy Angela G.
Pingol, Mark H.
Cipriano, Jastin Nicholas

BSBA 2C

Submitted to:
Ruth Buna Cruz
Teacher
V. Sustainable Development and Governance

● CONNECTION BETWEEN GOVERNANCE AND SUSTAINABLE DEVELOPMENT

Importance of Social Responsibility and Sustainable Development. Introducing

Corporate Social Responsibility in Corporate Governance

Social responsibility and sustainable development

Attracting a great deal of attention from all sectors of society, with active implementation of
social responsibility becoming an inevitable choice for companies seeking sustainable
development. Furthermore, corporate social responsibility is no longer about "if" but about
"how".How to fulfill Corporate Social Responsibility to promote sustainable development is a
question that needs to be answered by every company. Therefore, Corporate Social
Responsibility (CSR) is crucial for achieving sustainable development. It implies the need for
companies to protect and enhance the present and future welfare of society and organizations
through various business and social actions, and to guarantee just and sustainable benefits to
multiple stakeholders.

Corporate governance, introducing Corporate Social Responsibility (CSR)

Significantly enhances the integrity and effectiveness of internal controls. Internal control, as an
essential part of corporate governance, creates a favorable environment and provides the
necessary safeguards for the implementation of Corporate Social Responsibility (CSR)
Simultaneously, by actively fulfilling their CSR, enterprises can gain the trust and support and
enhance the resources of their stakeholders, as well as improve their reputation and social
influence and contribute to sustainable development

1. This empirically verifies the impact of CSR on corporate sustainable development and
broadens the research area of CSR.
2. This examines the moderating effects that internal control, management capabilities, and
accounting information quality have on the relationship between CSR and corporate sustainable
development, providing a theoretical basis for promoting corporate governance.
3. This explores the impact mechanism and realization path of corporate sustainable
development, providing a theoretical basis for promoting the sustainable development of listed
companies.

DIFFERENCES BETWEEN SUSTAINABLE DEVELOPMENT AND GOVERNANCE IN CSR

Corporate Social Responsibility and Sustainable Development

Corporate social responsibility is tightly related with the concept of sustainable development.
Every organization, be that a large multinational company, a small business, a government
agency or an NGO, impacts the surrounding natural or social environments. Thus, it is important
that, along with trying to achieve their direct goals, all organizations take into consideration their
impacts on environmental and social-economic systems.
Because sustainable development embraces economic, social and environmental objectives
recognized by humanity, its concept reflects the public’s expectation and demand that
responsible companies should take into account. Thus, the ultimate objective of corporate social
responsibility is to promote and make contribution to achieving the goals of sustainable
development.
Corporate Social Responsibility and Governance
Corporate governance is often closely tied to legal and regulatory compliance. Companies must
follow laws and regulations that dictate certain governance standards. In contrast, CSR often
goes beyond compliance, reflecting voluntary actions by companies to contribute positively to
society.

VI. Legal and Regulatory Frameworks

● OVERVIEW OF RELEVANT LAWS AND REGULATIONS

1. UN Guiding Principles on Business and Human Rights (UNGPs)
UNGPs sets international expectations for governments and enterprises that have a
responsibility to prevent and respond to human rights issues arising as a result of their own
operations or through their involvement with other businesses. It affirms that businesses have a
responsibility to respect human rights, among them, responsibility to avoid infringing on human
rights by the exercise of due diligence within their own activities, businesses and down their
supply chain.

2. OECD Guidelines for Multinational Enterprises

In these guidelines, the company expresses human rights, labor rights, environmental
protection, and anti-bribery issues. The guidelines are not binding but are encouraged by the
government, and the multinational companies are advised to maintain this strategic act .

3. EU Non-Financial Reporting Directive (NFRD)

The NFRD requires large European Union firms to provide information on non-financial topics
that impact social and environmental concerns, human rights, anti-corruption, and diversity. This
directive basically provides transparency in how companies relate to sustainability issues.

4. UK Modern Slavery Act

It mandates reporting in the business and its supply chain if its turnover meets certain
thresholds of efforts made to combat slavery and human trafficking. The bill promotes corporate
responsibility in ensuring ethical labor practices and human rights protections.

5. Dodd-Frank Wall Street Reform and Consumer Protection Act (U.S.)

Under these provisions, the United States' Dodd-Frank Act demands corporations disclose the
use of conflict minerals, demands firms implement executive compensation transparency, and
maintains a suitable anti-corruption measure. This approach brings corporate practices into
ethical sourcing and good governance principles.

6. India's Companies Act 2013

Under this law, large companies have to allocate 2% of their average net profits toward CSR
activities in education, eradication of poverty, health care, and environmental sustainability.
CSR obligations were formalized in a normative sense and were ultimately integrated into the
very fabric of the corporate structure.

7. France's "Devoir de Vigilance" Law

Corporate duty of vigilance law in France obliges large companies to put in due process
procedures that do not infringe on human rights and cause environmental damage in supplying
the global chain of things. This law, in turn holds the companies accountable for ethical
operations.

8. Securities and Exchange Commission (SEC) Regulations (U.S.)

The companies public are compelled by the directive of the SEC to disclose all the risks which
are material to the business, including ESG factors. Although it is not a specific law on CSR it is
instrumental in increasing the transparency into the methods by which companies manage them
through other financial reports.

9. Task Force on Climate-related Financial Disclosures (TCFD)

The TCFD provides a framework on disclosure by companies of climate-related risks and
opportunities. This incites businesses to pay attention to how the financial performance and
governance of these businesses are affected by climate change to have quality information for
investors.

10. Paris Agreement and National Climate Commitments

This has led to the introduction of laws by countries in line with the Paris Agreement, which now
requires companies to adopt a more sustainable practice, reduce more CO2 emissions, and
follow environmental regulations, hence the wave of action against climate change and
sustainability observed at the corporate level.

● COMPLIANCE AND GOVERNANCE

Governance
Governance is a term to describe a framework of procedures and guidelines to steer an
organization to achieve its goals. It can relate to a company's overall objectives and other
targets at each organization's level, including a department or a project. Governance ensures
that corporate strategy is implemented while the company's internal policies are effectively
carried out.
Compliance
Compliance is another set of processes designed to ensure that the company's activities and
practices meet the requirements of law. Through compliance activities, companies make sure
that all employees and entities fulfill the requirements of external regulating authorities.

Compliance and governance are essential aspects of any organization, ensuring that operations
align with legal, ethical, and regulatory requirements.

Compliance refers to the process of adhering to rules, regulations, and standards set by
external authorities or internal policies. This involves:

- Identifying and understanding relevant laws, regulations, and industry standards. Different
sectors and industries have specific compliance requirements, and organizations must stay
informed about these changes.

- Developing and implementing policies, procedures, and controls to ensure compliance.

Organizations need to create clear guidelines and processes to guide their activities and
prevent violations.

- Monitoring and auditing compliance activities. Regular evaluations help identify potential
compliance gaps and ensure ongoing adherence to regulations.

- Responding to non-compliance issues. Organizations must have mechanisms in place to

address violations, including corrective actions, investigations, and reporting.

Governance encompasses the processes, structures, and principles that guide an

organization's operations, including compliance. It focuses on:
- Setting strategic direction and objectives. Governance involves establishing clear goals and
priorities that align with the organization's mission and values.

- Ensuring accountability and transparency. Governance structures hold individuals responsible

for their actions and ensure that decisions are made transparently.

- Managing risk and compliance. Governance frameworks incorporate risk management

practices and ensure that compliance is integrated into all aspects of the organization.

- Promoting ethical behavior. Governance emphasizes ethical conduct and fosters a culture of
integrity within the organization.

Key benefits of strong compliance and governance:

- Reduced risk of legal and regulatory penalties. Adherence to laws and regulations minimizes
the risk of fines, lawsuits, and other sanctions.

- Enhanced reputation and trust. Compliance and ethical conduct build public trust and
strengthen the organization's brand image.

- Improved operational efficiency. Clear policies and procedures streamline operations and
reduce the likelihood of costly errors.

- Increased stakeholder confidence. Strong governance and compliance demonstrate

transparency and accountability to investors, customers, and other stakeholders.

Examples of compliance and governance practices:

- Data privacy regulations: Organizations must comply with regulations such as GDPR (General
Data Protection Regulation) and CCPA (California Consumer Privacy Act) to protect personal
information.

- Financial reporting standards: Organizations must adhere to accounting standards such as

GAAP (Generally Accepted Accounting Principles) to ensure accurate financial reporting.

- Environmental regulations: Companies must comply with environmental laws and regulations
to minimize pollution and protect natural resources.

- Corporate governance principles: Organizations should follow best practices in corporate

governance, such as board independence, transparency, and accountability.

Conclusion:

Compliance and governance are interconnected and essential for any organization's long-term
success. They provide a framework for ethical and responsible operations while mitigating risks
and enhancing stakeholder confidence. By prioritizing these practices, organizations can build a
sustainable and reputable business.
 ● ROLE OF REGULATORY BODIES

Regulatory Bodies: These are organizations created by the government or other authorities to
oversee and enforce laws and regulations within specific industries or areas of governance.

REGULATORY BODIES IN CSR

Corporate Social Responsibility (CSR) is when businesses make an effort to benefit society, the
environment, and their stakeholders. Regulatory bodies are important in supporting CSR by
making sure companies follow laws, ethical standards, and sustainability practices. These
organizations set guidelines that promote openness, accountability, and responsible business
practices. By checking that companies comply with environmental rules, labor laws, and ethical
standards, regulatory bodies help businesses include social responsibility in their daily
operations, which benefits both society and the economy.

IMPORTANCE OF REGULATORY BODIES IN CORPORATE SOCIAL RESPONSIBILITY

1. Facilitating Transparency and Accountability: Regulatory agencies promote transparency

by requiring companies to publicly share information and conduct ethical audits, which supports
the CSR values of responsible business practices.

2. Promoting Ethical Business Practices: Regulatory bodies can create guidelines or plans to
help businesses act responsibly. For example, they can encourage companies to follow
sustainable development goals or support community welfare projects.

3. Monitoring and Reporting: Many regulatory bodies require companies to provide regular
reports on environmental impact, labor conditions, and corporate ethics. These reports hold
companies accountable to CSR standards.

4. Ensuring Legal Compliance: Regulatory bodies ensure that companies comply with laws
related to labor, environmental protection, and ethical practices, which are key components of
CSR.

EXAMPLES OF REGULATORY BODIES AND CSR

Securities and Exchange Commission: The SEC in the Philippines requires publicly listed
companies to submit sustainability reports, which include environmental, social, and governance
factors. This ensures companies practice CSR by being transparent about their social and
environmental impacts. The SEC’s 'Sustainability Reporting Guidelines' help align corporate
actions with CSR principles.

Environmental Management Bureau: The EMB enforces environmental laws, requiring

companies to follow regulations that promote sustainable practices, such as controlling
pollution, which directly supports CSR efforts.

Department of Labor and Employment: DOLE enforces labor laws that support CSR by
promoting fair working conditions, workplace safety, and protecting workers' rights. A key
program is the Labor Laws Compliance System, where DOLE inspects businesses to ensure
they follow labor standards, such as minimum wage, benefits, and safety rules. Companies that
break these rules face penalties, encouraging them to maintain responsible labor practices as
part of their CSR efforts.
REFERENCES:
https://www.researchgate.net/publication/
365653546_Corporate_Social_Responsibility_and_Sustainability_From_a_Corporate_
Governance_Perspective
https://csrgeorgia.com/en/overview/csr-and-Sustainable-development
https://link.springer.com/article/10.1007/s10997-019-09472-2
https://www.ohchr.org/sites/default/files/Documents/Publications/
GuidingPrinciplesBusinessHR_EN.pdf
https://www.oecd-ilibrary.org/governance/oecd-guidelines-for-multinational-enterprises-
on-responsible-business-conduct_9789264115410-en
https://www.europarl.europa.eu/
https://www.legislation.gov.uk/ukpga/2015/30/contents/enacted
https://www.sec.gov/spotlight/dodd-frank.shtml
https://www.mca.gov.in/content/mca/global/en/home.html
https://www.legifrance.gouv.fr/
https://www.sec.gov/
https://www.fsb-tcfd.org/
https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement
https://www.athennian.com/post/corporate-governance-vs-compliance
https://www.tookitaki.com/glossary/compliance-governance
https://www.sec.gov.ph/
https://emb.gov.ph/
https://www.dole.gov.ph