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Wednesday, August 25, 2010

The New Corporate Accountability - CSR and the Law

The New Corporate Accountability:
Corporate Social Responsibility and the Law 

Edited by Doreen McBarnet, Aurora Voiculescu and Tom Campbell

Published by Cambridge, 2009 (paperback) ISBN 978-0-521-14209-0

This review first appeared on on 25th August 2010.


The adoption by companies of Corporate Social Responsibility (CSR) policies is routinely characterized as voluntary. But if CSR is self-governance by business, it is self-governance that has received a firm push from external social and market forces, from forces of social accountability. Law is also playing a more significant role than the image of CSR suggests, and this legal accountability - the focus of the book - is set to increase. Legal intervention should not, however, be seen as making social accountability redundant. Wider ethical standards and social and market forces are also necessary to make legal regulation effective. Law is being brought into play in innovative and indirect ways. The initiative lies as much with private organizations as with the state. At the same time governments are using social and market forces to foster CSR. In the context of corporate social responsibility, a new, multi-faceted, corporate accountability is emerging. The book is unique in making the relationship between law and CSR its chief focus.


Yes, it's true that we think of CSR as something which is "beyond compliance" and totally at the discretion of enlightened business leaders who may choose, or not, to drive forward on the CSR path. Almost all common definitions of CSR squarely place this business approach in the voluntary camp. With contributions from 23 accomplished scholars, including the three editing contributors, this exceptional book of over 550 very full pages, opens our eyes to the delicate interplay of business, social accountability and the law, and makes the point that it's just a little more complex than a free choice by business leaders to make the world better. Moreover, it sets the scene for even greater regulation and legal convergence with CSR-type issues, and should serve to convince business leaders that it's better to be ahead of the game, rather than wait until the game is nearly over.

The book makes the distinction between four core concepts: CSR beyond the law, the familiar new corporate accountability of both observing the law and doing more than is required by law; CSR against the law, as in the old Friedmanite arguments of CSR being counter to meeting primary responsibilities towards shareholders; CSR through law, and the role the law can play in supporting the enforcement of apparently voluntary CSR policies, and the way CSR can influence broader legislative structure through dialogue, lobbying and negotiation, and CSR for law, and the way a CSR approach might lead corporations to support implementing relevant legislation as it exists in a more effective way and, rather than simply accepting compliance as a minimum, embracing the spirit as well as the letter of the law, enhancing the effectiveness of legal frameworks. The conclusion: "What is emerging in the arena of CSR is a complex interaction between government, business and civil society, private law, state regulation and self-regulation, at national and international levels, with social, legal, ethical and market pressure all being brought to bear in ways that cut across traditional pigeon holes...and which interrelate with and foster each other."

This last sentence should indicate to you that this book is not for the faint-hearted. The concepts are cleverly presented, superbly articulated, fascinating in scope, and well worth the investing the effort to study. But study you will. And it will take you some time, too. This is an intensive book, presenting complex arguments with just a strong enough hint of legalese to deter those who prefer an easier ride. But if you have the interest, staying power and desire to learn, this book is a masterpiece. And it's certainly not only for lawyers. Any curious and interested business person would benefit from the insights presented in this book which is immensely readable, even for those who know little of legal and regulatory affairs.

When most of us non-lawyers think of the law, we tend to picture one amorphous mass of legal provisions, lawyers, courts, judges and regulations. This book shows the law in all its dimensions and how these different dimensions have diverse implications for CSR. Take for instance, private law, or the imposition of CSR standards on one business entity by another, through mechanisms such as contract. In a chapter by Doreen McBarnet and Marina Kurkchiyan exploring the supply chain as an area of reputational (and insurance) risk, we can understand that the "risk-based approach to supplier engagement that has dictated that much of the CSR 'law' is conducted in the private arena, in the supply chain agreements between companies which often exceed legal provisions in a given country". The authors say that "contractual control will evolve as companies compete on ethical branding" and wish to avoid reputational damage that may emerge through their supply chains. We are certainly seeing greater requirements of large corporations to incorporate social and environmental provisions in procurement contracts, the apparel industry being one of the most prominent, though enforcement still requires greater focus. Indeed, a further chapter by Carole Glinski goes on to examine whether codes of conduct are a moral or a legal obligation, especially for transnationals operating in several countries, or with regard to human rights implications of corporate activities in developing countries.

Another chapter talks to the role of the Board of Governors, and the degree to which the Board has a free choice in the way it directs the firm, and to what extent the "contemporary structure of the board and legal doctrines create disincentives for the Board even to protect shareholders, let alone anybody else". Other chapters look at the role of the World Trade Organization and its role in defining trade measures and their impact on society, or the way in which the "new corporate law" protects employees' interests, or how NGO activity influences regulation, or the human rights aspects of corporations and the law, the significance of complicity, the Alien Tort Claims Act and how it is applied ( remember Royal Dutch Shell's $15.5 million payout to the Ogoni people in Nigeria? ), shareholder activism and much more. Another core concept is that of meta-regulation - "the proliferation of different forms of regulation, each regulating one another" - Christine Parker makes the argument for this emerging phenomenon and the extent to which regulation can drive process (i.e. regulating companies to have adequate CSR process) rather than prescribing activities or specifying targets. Meta-regulation thus becomes an "approach to legal regulation in which internal corporate conscience is externally regulated". And, I have merely skimmed the surface of other fascinating CSR law-related topics presented in this rich book.

All in all, the New Corporate Accountability serves to clarify many aspects of the way CSR interacts with law, and ultimately, proves the point that, if so far we have thought of CSR as a completely voluntary opt-in exercise at the full discretion of the CEO, the intricate fabric of relationships and pressures from different shareholder corners, as well as legislators, means that CSR may not just be such a free choice after all!

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Contact me via  on Twitter or via my website

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