Compliance originally referred to "being in accordance with requirements, laws and regulations, and standards". The concept of CSR is deepening, and the term is being understood to include conformity to not only laws and written rules but also company codes of conduct and corporate ethics reflecting social morality and common sense.
Companies are governed by numerous laws and regulations ranging from civil law and commercial codes to laws concerning antimonopoly, unfair competition, labor conditions, and environmental impact. Companies also must adhere to various orders and guidance issued by empowered authorities. Companies are additionally expected to meet high moral standards in numerous areas, such as being fair in sales activities and market competition, truthful response to consumers, providing appropriate working conditions, and considering environmental issues.
CSR thus requires companies to act with social responsibility that goes beyond simply meeting regulations. Realizing corporate compliance therefore necessitated a system to ensure compliance with the governmental regulations as well as the social ethics and values. Companies have taken steps to meeting this obligation by adopting internal codes of conduct and implementing internal audits and periodic evaluations to assess their compliance to regulations. In addition, as corporate operations become increasingly globalized, the universe of compliance obligation is expanding, and companies are broadening their compliance coverage to include not just the company itself but also its overseas operations and suppliers of its products and raw materials.
Iwao Taka, "Knowledge of Compliance", Nihon Keizai Shimbun, Inc. , 2003