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Writer's pictureAshwani Agarwal

Corporate Accountability: The Basics


What is corporate accountability?

There has been an ever-increasing movement toward organizations that pressure companies into behaving responsibly and respectfully. Prior to these organizations, it was assumed that the government would set the example for business behaviors. When that failed, outside organizations took over, leading the way for appropriate corporate behaviors by holding them accountable for their actions.

What is the difference between corporate social responsibility (CSR) and corporate accountability?

There are major differences between these two concepts, even though many people think they are the same thing. Corporate responsibility essentially refers to the wide-held belief that corporations have a much larger duty than simply making profits for their shareholders. These responsibilities are just as important as profits and affect more people than those associated with the company.

Corporate accountability generally refers to the enforceable terms of appropriate corporate behavior. It usually accompanies a body or set of laws that force corporations to behave a certain way. While corporate responsibility often refers to voluntary actions, corporate accountability refers to enforceable standards that many companies may not always follow.

High level framework

Corporate accountability actions generally follow a stringent framework that clearly lays out expectations. They are usually internationally agreed upon and set standards for companies across the world in such areas as labor laws, environmental protection, and human rights.

These mandates are required and are often enforceable by legal actions. These sectors can’t be voluntary — issues like these must be required. These mandates are effective through a third party that can efficiently enforce regulations. Without a neutral body to enforce them, these mandates would never work.

Another aspect of the process that also ensures the success of implementation is high levels of transparency throughout the company. This means clear, consistent reports on activity that can be reviewed and changed if necessary.


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