This is a real lawyer’s book, based on a careful and close reading of cases and legislation from several jurisdictions, though with an emphasis on US and, to a lesser extent, UK law.

The book begins in Chapter 1 by examining the question of corporate liability under international law. It then moves on to consider different national approaches (primarily the US and UK) to the imposition of liability upon corporations for wrongful acts committed outside the country of incorporation. Chapters 2–5 provide step-by-step coverage of suits for corporate wrongs in the USA – establishing jurisdiction, statutory causes of action, the ‘law of nations’ as a cause of action and tort claims in the USA. The most notable feature of these chapters is the presence of many obstacles, covered in detail, which stand in the way of plaintiffs seeking redress for harms committed by US companies overseas. Chapter 6 examines similar obstacles standing in the way of plaintiffs seeking redress for torts committed by UK companies overseas. Chapter 7, while ostensibly dealing with customary international law as a cause of action outside the USA, deals primarily with UK law, combined with a cursory coverage of relevant cases and legislation in Ireland, Canada and France.

Possibly the most hopeful chapter in this book is Chapter 8, which examines the emerging role of voluntary codes and the UN Guiding Principles for Business and Human Rights in shaping corporate behaviour. It is these ‘voluntary’ rules that appear to be having most impact on the internal decision-making processes of multinational corporations as individual companies and whole sectors publicly subscribe to global standards. Signing up to the Global Compact or the Voluntary Principles on Security and Human Rights, or publicly declaring adherence to the UN Guiding Principles, means that companies are forced to turn their minds to the question of what it means to comply with such codes, and, in the case of the Global Compact at least, they need to make transparent how they are achieving such compliance.

Baughen does not attempt to assess the impact of voluntary codes on corporate behaviour, but merely notes their voluntary nature and the limitations this imposes upon their effectiveness. More cynical than optimistic in his treatment of voluntary codes, Baughen states that ‘The attraction of soft law as a protection against hard law, explains the decisions of US corporations to sign up to the Global Compact and the Voluntary Principles, despite their initial misgivings’ (p. 242), without really justifying such a conclusion. What the research seems to indicate, however, is that ‘corporations have more than one reason for adopting … responsible behaviour, and that ethical and economic reasons co-exist’.Footnote ¹

According to Baughen, ‘corporate adherence to non-binding norms’ all too often allows corporations to ‘end up investigating themselves’ (p. 244), with the only sanction in the event of non-compliance being ‘reputational’ (p. 243). While this may often be true, the emergence of independent monitoring mechanisms, both market based (e.g., the Dow Jones Sustainability Indices,Footnote ² the FTSE4Good Index SeriesFootnote ³ and the FTSE Johannesburg Stock Exchange Socially Responsible IndexFootnote ⁴ ) and non-market based (e.g., the Business and Human Rights Resource CentreFootnote ⁵ and the Mineral Policy Institute’s Mining MonitorFootnote ⁶ ) should have been acknowledged. So also should the significant impact of reputation on corporate profits, even corporate viability, have been recognized. The very worst offenders – BP, Dow Chemical Company, Nestle USA, ChevronFootnote ⁷ – it is true, have survived repeated corporate scandals, but mostly because of their sheer size, and at a cost. For other firms, loss of reputation has been terminal [Enron, Arthur Anderson (2001, 2002), WorldCom (2002)].

If Baughen sees any hope or future in voluntary principles at all, it lies in the prospect that ‘in some circumstances, companies may find that “soft” law has turned “hard”. This may happen when courts determine the scope of a parent company’s primary duty of care in respect of its subsidiary’s overseas activities. The courts might be persuaded to find a duty of care arising out of an assumption of responsibility through a company’s public statement that it has signed up to a voluntary code of conduct available, such as the Global Compact or the UN Guiding Principles’ (p. 248). The other way in which soft laws are ‘turning hard’ is when ‘voluntary’ codes of social and environmental conduct are built into the structure of national listing rules, such as in India where listing rules now require companies to spend a minimum of 2% of annual profits on social responsibility initiatives.Footnote ⁸ The importance of such developments is overlooked in this book.

While Baughen’s cynicism may be understandable, given his extensive knowledge of the many ways and wiles of lawyers and judges when denying plaintiffs relief or remedy for corporate wrongs, he fails to take into account evidence of a slow but gradual shift in corporate cultures. There is evidence that corporate ways of thinking and making decisions are changing, albeit slowly.Footnote ⁹ The UN Guiding Principles, for example, ask multinational companies to exercise ‘human rights due diligence’ in actively investigating and ensuring that suppliers and sub-contractors are not guilty of or complicit in human rights breaches. Moreover, the most effective instrument in bringing this shift about is less the threat of criminal punishment or sanction, but increased transparency and accountability in the court of public opinion.Footnote ¹⁰ The Global Compact, for example, requires each corporate member to submit annual Communications on Progress (detailing actions taken to ensure compliance with Global Compact standards), or risk having its name removed from the Global Compact list.Footnote ¹¹

Equally important are the Global Reporting Initiative (GRI) and the Equator Principles (EPs), each of which serves to improve standardization of reporting practices globally, particularly in the areas of social and environmental sustainability reporting. The EPs serve to ensure that environmental and social reporting standards in relation to major projects are overseen by some of the world’s largest financial institutions providing project finance.

Along with Global Compact reporting requirements and improved corporate reporting legislation at national level (e.g., US Dodd-Frank Act; UK Companies Act (2006) Strategic Report and Directors’ Report Regulations 2013: Baughen, pp. 222–27), the GRI has helped to enhance corporate reporting integrity throughout the world, yet does not even get a mention in Baughen’s book. Nor does the ISO’s 26000 Guidance on Social Responsibility rate a mention. The Equator Principles are only mentioned in passing, and not on their own account, but in relation to the extractive industry sector’s Voluntary Principles on Security and Human Rights. Noting that the Voluntary Principles are incorporated into the World Bank Group’s Performance Standards on Social and Environmental Sustainability, Baughen then adds that ‘These standards are also applied by the Equator Principles under which 40 banks have agreed to apply in project financings with total capital costs of $10 million or more’ (sic, p. 215). In fact there are now 87 Equator Principles Financial Institutions (not 40 banks), and the Principles now cover over 70 per cent of international project finance debt in emerging markets. The EPs, like the Global Compact, have also helped bolster the development of other responsible environmental and social management practices, including the Principles for Responsible Investment, the Climate Principles, the Principles for Responsible Management Education, and Business for Peace. While Baughen is correct to note the failings of current legal mechanisms and judicial remedies for corporate wrongs, he too easily dismisses the value of cultural, social political and economic changes that can be, and are being, brought about by these and similar ‘voluntary’ measures.

Where Baughen is also acutely correct is when he notes that relying on companies alone to fill the governance gap is never going to be sufficient (p. 256) – certainly not while profit, remuneration and shareholders remain at the top of corporate priority lists. As Baughen notes, ‘The “governance gap” involves three participants’ (p. 2). In addition to corporations themselves, ‘Host States where the wrongful acts occur’, and ‘home States where the corporations participating in wrongful acts are based’, both have responsibilities. In particular, Baughen concludes that:

It is extremely satisfying to read such a professionally crafted piece of legal analysis. Even if it is a rather US-centric and dispiriting read, Baughen’s book is an excellent legal reference on the law as it currently stands. Its other value for law makers is that it accurately highlights the enormous amount of work that remains to be done, even just to recover lost ground, if there are ever to be accessible legal avenues to justice for victims of corporate human rights abuses.