While corporate social responsibility (‘CSR’) is sometimes defined as voluntary corporate actions above and beyond legal obligations, Rühmkorf argues that many issues that are part of the CSR agenda are addressed by mandatory legislation or soft law regulation. Specifically, this book considers the influence of company/corporate governance law, contract law, consumer protection law and tort law on promoting CSR. While his focus is on English law, this work may have implications beyond the UK given that many supply chain contracts are governed by English law. This book may be useful as a reference tool for researchers interested in a detailed analysis of English private law, and its implications for CSR.
Chapter 2 linking CSR with company and corporate governance law begins with an overview of stakeholder theory, shareholder value theory, and enlightened shareholder value theory. UK company law is arguably based on the enlightened shareholder value theory. Rühmkorf suggests that this could lead to some overlap between company law and CSR. However, his deeper analysis of the legal provisions indicate that, beyond limited and ineffective reporting requirements, there is little to no practical promotion of CSR within the English company/governance legislation. CSR is subordinated below shareholder value as a legitimate priority of the firm, and neither shareholder engagement nor Board actions are likely to achieve much for the promotion of CSR. While Rühmkorf suggests that European Union directives could improve CSR reporting, this book was published in 2015 and thus the impact of Brexit on this possibility is not addressed.
Turning to contract law, Rühmkorf begins by explaining circumstances when English law and jurisdiction will be applicable to supply chain contracts. Thereafter he reviews the ways in which UK-based multinational corporations (MNCs) can incorporate CSR into their supply chain contracts. He provides a thorough explanation of the various legal mechanisms by which the firm’s or suppliers’ codes of conduct or responsible sourcing policy terms and conditions may be incorporated directly or by reference into supply chain contracts. Unfortunately, when direct suppliers sub-contract work to third parties, it becomes difficult for the lead MNCs to either impose contractual duties on third parties who were not subject to the original contract, or obtain any remedy for breaches of CSR terms in contracts. The expense of monitoring extensive supplier relationships also limits the degree that supply chain contracts can promote CSR. Despite these limitations, Rühmkorf concludes that contract law could promote CSR by making CSR codes of conduct contractually enforceable, although he cites no legal cases where this has occurred to support this premise. It is difficult to imagine the circumstances whereby a corporation would risk the negative publicity it would bring upon itself by attempting to sue its suppliers in a public court of law for violating CSR policies. Rühmkorf does not discuss the impact of arbitration/mediation clauses, but it seems likely that any such contractual disputes would be settled quietly out of the public eye. Thus the common law legal precedents that would be necessary to strengthen the contribution of English contract law to CSR may not be forthcoming.
As consumers significantly drive corporate CSR activities, Rühmkorf further addresses consumer protection law and its links to CSR. He provides an exhaustive explanation of English unfair trading regulations, and their remedy provisions. Unfortunately, the UK decided not to provide any private remedy provision in their unfair trading rules for consumers to obtain redress against companies for violations of CSR commitments in their codes of conduct. Likewise the English law on misrepresentation also limits possible remedies to cases where the misrepresentation is fraudulent or negligent. The burden of proof to establish fraud or negligence is high, and the likely remedy of misrepresentation would merely be the right to rescind the contract and/or obtain a discount or refund of the purchase price. Thus it is not surprising that Rühmkorf did not find a single case where a consumer sued for misrepresentation based on a firm’s breach of CSR commitments. For these reasons, the English consumer protection law is also deemed by Rühmkorf to be inadequate for promoting CSR in supply chains.
Next, Rühmkorf contemplates whether English tort law can effectively promote CSR. Tort law is the mechanism for providing a remedy for civil wrongs where one party harms or injures another, including causes of action for negligence, nuisance, libel, slander, trespass, assault and battery, and vicarious liability. Although promising as an avenue for promoting CSR, tort law also has a great number of obstacles that make it difficult for stakeholders harmed by corporate social irresponsibility to bring a civil action, establish damages, and obtain injunctions to prevent future irresponsible corporate behaviour. Rühmkorf provides a full explanation of each of these obstacles with regard to different stakeholder groups, citing cases where relevant. He also cites the 2012 case Chandler v Cape plc, which establishes a duty of care for parent companies that may open the door to holding firms accountable for actions in their network of suppliers. Given that English tort law develops incrementally through case precedent, perhaps future cases will expand the potential for tort law to promote CSR. Nevertheless, at the moment, the obstacles to redress and remedy for corporate social irresponsibility seem daunting.
Rühmkorf’s summary chapter (Chapter 6) is somewhat inconsistent with the rest of the book. In the preceding chapters, he carefully explained how the four areas of English private law (company law, contractual law, consumer protection law and tort law) are all limited and largely insufficient for promoting CSR. In the chapter providing a case study of the Rana Plaza building collapse, he details many of the failures of the current system of private law governing corporate supply chains. However, in his summary, Rühmkorf asserts that English private law ‘has made and can continue to make an important contribution to the promotion of CSR and could make an even better contribution if these limitations were addressed’ (p. 192). He does recognize the deficiencies in the law, most importantly the patchy coverage of the law and the weaknesses of private remedies. He also notes some overlaps between CSR and tort law and company law in particular. However, his argument that his analysis contradicts the common understanding of CSR as being voluntary and ‘above and beyond the law’ (p. 203) seems to fall flat. Unless and until the law: (a) consistently provides meaningful judicial access to hold firms accountable for social irresponsibility, (b) ensures sufficient remedy to make victims of corporate irresponsibility whole, and (c) provides mechanisms such as injunctions to prevent future corporate social irresponsibility, CSR is going to seem voluntary and ‘above and beyond the law’ (p. 203) to many stakeholders. Rühmkorf’s substantive recommendations to change English private law to improve its contribution to CSR are logical and sound.
