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Iris H-Y Chiu
European Business Law Review
Volume 35, Issue 3/4 (2024) pp. 305 – 310
https://doi.org/10.54648/eulr2024020
Abstract
This short editorial introduces the collection of papers presented and discussed at the UCL Centre for Ethics and Law-European Corporate Governance Institute Symposium on the Boundaries of Corporate Responsibility, 10 November 2023, UCL, London. The Symposium brought together a collection of perspectives from corporate law, business and human rights enforcement as well as broader thoughts on soft law and the future of ‘Environmental, Social and Governance’ expectations for companies.
Keywords
Corporate due diligence, vicarious liability, duty of care, enterprise liability, extraterritorial liability, corporate ownership, business and human rights, ESG, corporate transparency, stewardship, sustainability, EU Corporate Sustainability Due Diligence Directive
Extract
Human rights due diligence (HRDD) regimes have been criticized for suffering from an accountability gap caused by the lack of effective enforcement mechanisms. In this respect, the upcoming EU Directive on Corporate Sustainability Due Diligence can be argued to be a fundamental step forward, as an infringement under the proposed Directive may result in substantial administrative fines. This article critically analyses the effectiveness of administrative corporate sanctions in the context of HRDD violations and suggests that morally light administrative sanctioning is not, as such, an appropriate mechanism in motivating impactful HRDD. Drawing on existing behavioural evidence on intrinsic and extrinsic motivational factors, the article argues that any HRDD regime should rely, with the most severe breaches, on a corporate sanction system addressing the morality of the intended corporate behaviour in order to signal the societal significance of corporate human rights obligations and to support related value internalization in corporations. In terms of regulatory design, this means applying a liability system, whether criminal or adminisrative, which takes a clear stance towards corporate culpability, blame and the moral condemnation of severe HRDD violations.