Dr. Alexander Scheuch

Soft Law Requirements with Hard Law Effects? – The Influence of CSR Guidelines on Substantive Corporate Law from a German Perspective

The field of Corporate Social Responsibility is, at present, dominated by “soft law”. Various organisations provide different sets of guidelines. The European Union’s directive on the disclosure of non-financial and diversity information, however, has implemented a “hard law” reporting obligation regarding CSR topics. This raises questions of great importance: Does the fact that corporations must report on these issues at the same time create other obligations regarding CSR? Will guidelines such as the UN Global Compact, the OECD Guidelines or ISO 26000 by being more frequently referred to for reporting purposes slowly become part of the national legal orders? Should they be attributed the same significance as, for example, trade customs and thus eventually become enforceable law? From the view of company directors all of these questions matter greatly as a gradual integration of CSR standards into our legal systems could create, by way of a “detour”, new substantive duties for them. From the vantage point of a legal scholar the issues at hand are equally fundamental. Is there really a need in highly regulated societies to “open the gates” of existing hard law for an influence of soft law CSR guidelines? Even more importantly, is this a legitimate way to operate in democratic systems where laws are supposed to be adopted by parliament? Would we be surrendering legal certainty, as feared by some and as vehemently denied by others? Might “creeping law” – a term coined in the German academic discussion – ultimately be a fitting description of what we are currently experiencing in the realms of CSR? A close look at these issues from a German perspective promises to be useful not only for the current European debate but also for the international analysis of this field of law.