The Rise of Corporate Social Responsibility

Enterra Solutions

Enterra Solutions

Corporate social responsibility (CSR) is a rising trendin business practices as consumers continue to demonstrate their preference for socially and environmentally conscious companies.[1] Though consumers, and their ethically use of buying power, are the predominant factor pushing companies towards socially and environmentally conscious practices, legal developments are also creating legally binding obligations for business to respect human rights. The most relevant developments in the field holding companies liable for human rights violations include mandatory disclosure laws, legislation to stop unfair business practices, and innovative use of contractual terms.

Mandatory disclosure laws are a legally binding obligation for companies to engage in a form of human rights due diligence. In the United States, the California Supply Chain Transparency Act mandates companies doing business in California with a revenue greater than 100 million dollars supply a statement describing how the organization verifies no human trafficking exists in its supply chain.[2] Similar legislation is currently being discussed in the United States’ Congress; if this law is passed this same disclosure mandate would apply to all companies doing business in the United States. The United Kingdom’s Modern Slavery Act[3] and the recently passed Duty of French Vigilance Law[4] are other disclosure laws that impose even greater obligations on business to respect and protect human rights. For example, the Duty of French Vigilance law imposes compensatory damages of up to 10 million euros for violation of the obligations in the act.[5]

Beyond mandatory disclosure laws, Section 17200 of the California Business and Professions Codehas been repeatedly used by California courts as legally binding precedent mandating companies respect and protect human rights.[6] In Doe v. Unocal, Burmese villagers suffered forced labor, rape, torture, and murder while working for the defendant, Unocal.[7] The company defendant ultimately settled after the California court held that Section 17200 supports claims “brought in California for injuries occurring outside of California as long as some of the wrongful conduct occurred within California.”[8] Furthermore, in Kaksy v. Nike, the California Supreme Court again interpreted the unfair business practices regulation widely, holding it to include “any unfair or fraudulent business act of practice.”[9]

Finally, human rights advocates, such as Corporate Accountability Lab,[10] are utilizing innovative ways to create contractual terms that hold companies to respect human rights. Some examplesof these contractual terms include ethical intellectual property licensing agreements and third-party beneficiary clauses.[11] Through ethical intellectual property licensing agreements, inventors who wish to ensure their property is not used for human rights violations can include specific legal clauses that prohibit the licensee from using their inventions in unethical ways.[12] If these terms are violated, the inventor will be entitled to liquidated damages that should be given to the victim of the human rights violation. Similarly, third-party beneficiary terms can be included alongside mandatory working conditions in manufacturing contracts.[13] These terms establish the workers of the factory as third-party beneficiaries to the contract, and if the labor standards are violated the factory workers have a right of action.[14]

Though CSR is predominantly advancing based on consumer pressure, some developments in the legal field are creating binding obligations for companies to respect human rights. Hopefully, human rights advocates can utilize both forms of pressure to promote and advance the fundamental human rights of citizens around the world.

Mallory Miller is a Staff Editor with the Denver Journal of International Law & Policy, and a 2L at the Sturm College of Law.

[1] Temasek, The Rise of the Conscious Consumer, Medium (July 7, 2017), https://medium.com/future-of/the-rise-of-the-conscious-consumer-bcc5235cb80d.

[2]Cal. Civ. Code § 1714.43 (West).

[3]The Companies Act 2006, c. 46 (Eng.)

[4]L. no. 2017-399, 27 Mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre[French Corporate Duty of Vigilance].

[5]Id.

[6]Roger Alford, The Future of Human Rights Litigation After Kiobel, 89 Notre Dame L. Rev.1749, 1758 (2013-2014).

[7]Doe I v. Unocal Corp., 395 F.3d. 932 (9th Cir. 2002).

[8]Alford, supra note 6 at 1759.

[9]Alford, supra note 6 at 1759.

[10]Our Mission, Corporate Accountability Lab, https://legaldesign.org/.

[11]Projects,Corporate Accountability Lab, https://legaldesign.org/projects/.

[12]Id.

[13]+Cal Employment Agreement Assignment Clause,Corporate Accountability Lab, https://legaldesign.org/assignment-clause.

[14]Id.

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