Enshrining Corporate Social Responsibility (CSR) in law

Government has recently begun the process of taking its Company Law Reform Bill through parliament. Not only is this a major reform of business regulation, it also represents a unique opportunity to enshrine corporate social responsibilities into law. As Amnesty International points out, globalisation means that British corporations often find themselves operating in environments where human rights are not respected and the environment barely protected.

One of four key themes of the Bill is enhanced shareholder engagement. The government wants to encourage shareholders to become more involved in the businesses they own in the hope this will lead to business decisions being taken with a longer term view – not just immediate return – in mind. But Shareholders aren’t the only people affected by business activities or with a stake in a business’s success or failure and the law already obliges directors to place shareholders’ interests (often interpreted as profit maximisation) above other stakeholders.

Amnesty’s joined forces with CORE, the Corporate Responsibility Coalition, to campaign to amend the Bill in three key areas. The amendments would compel companies to report against a comprehensive set of key social, environmental and economic indicators. Directors’ duties would be expanded to include a specific duty of care for both communities and the environment. Finally, communities adversely affected by the actions of UK corporations abroad, would be given some rights to seek redress in British courts.

An early day motion supporting these aims has attracted the signatures of enough MPs (181 at time of writing) to force the issue up the government’s agenda.
Contact Stephen Newton

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