Forum significance

Globalisation of Corporate Social Responsibility and its Impacts on Corporate Governance: The Chinese Approach and International Experiences

Significance of Forum Theme

Corporate Social Responsibility (CSR) has for long time only played a minor role in law whereas it has been widely studied by, for example, management studies and political sciences. One of the main reasons for this was that CSR was traditionally considered to be purely voluntary and to be ‘above and beyond’ what companies are required to do by law. It was therefore characterised by a soft law approach. Voluntary CSR standards were, inter alia, developed by corporations, by NGOs or by international organisations.

However, recurrent reports about human rights violations in global supply chains and the actions of companies in the in the wake of the global financial and economic crisis have questioned the soft law approach to CSR. There is a growing realisation that law has got a role to play to ensure CSR is taken seriously. This is reflected by recent legislative approaches. Some countries have passed legislation that addresses CSR issues through transparency legislation (e.g. California Transparency in Supply Chains Act or the EU Directive on non-financial information disclosure, also referred to as the “CSR Directive”). Other examples are legislation on conflict minerals and, indeed, directors’ duties. The growing trend to regulating CSR issues by law has been recognised in the definitions of CSR which are now more open and also leave room to include binding regulation. For example, in its 2011 Communication on CSR, the European Union abandoned its longstanding definition of CSR as being voluntary and instead referred to CSR as ‘the responsibility of enterprises for their impacts on society’.

The 2011 UN Guiding Principles on Business and Human Rights from Professor John Ruggie have been called ‘a landmark in the CSR debate’. Although they only contain recommendations, they are intended to be implemented by countries and by companies. An important aspect of the Guiding Principles is that they recognise that, in the absence of a binding international human rights framework on corporations, home states of multinational enterprises can also  address CSR issues, both domestically and internationally. For example, the commentary to Principle 3 (b) highlights the importance of corporate laws for enabling business respect for human rights. The link between corporate laws and human rights is said to remain ‘poorly understood’ and there is a ‘lack of clarity in corporate and securities law regarding what companies and their officers are permitted, let alone required, to do regarding human rights’. The shareholder value theory of the corporation which is dominant in the Anglo-American corporate world, but of growing influence in other systems due to globalisation, constitutes particular challenges in this regard.

This forum addresses the increasing overlap between CSR and law with a particular focus on company law and corporate governance. What is the impact of CSR on company law and corporate governance and, vice versa, how do these system impact on CSR? Do they enable, require or prevent the socially responsible conduct of companies, for example, through corporate theory, directors’ duties or disclosure laws? What is the role of shareholders in the promotion of CSR? What are the opportunities and what are the limits of hard law in this regard? And, what is the international perspective on this as CSR is, by its very nature, a truly global issue (which is evidenced for example by the fact that the 2016 International Labour Conference discussed a report about working condition in global supply chains).

The Chinese experience is particularly important because of the unique legal and social systems of China. The Forum theme will ensure a sharing of ideas and experiences globally and internationally for all jurisdictions to consider core legal and social aspects of CSR.