In recent years, Corporate Social Responsibility ("CSR") has increasingly become an important issue around the world. However in Japan, corporate law does not include an article related to social responsibility but only defines the basic framework of corporate governance. This leaves most Japanese companies to fulfill such responsibility by setting up individual compliance programs based on their business ethics. But because each management has framed different definitions on business ethics, corporate scandals are still on the increase. Although corporate law does not cover the social responsibility issue, Article 644 of the Civil Code in Japan (the "Zenkanchui-gimu") requires directors and executive officers to perform their duty of care. So when a company misconducts their business by overlooking CSR, its directors and executive officers may receive legal sanctions for the violation of Zenkanchui-gimu. To avoid such a case, auditors should closely check the process of directors' business judgments even though the corporate law does not require it. The current trend of CSR, combined with corporate governance, will support management in carrying out their business based on business philosophy and eventually help their business to survive. In other word, CSR reinforces the defect of the corporatelaw.
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