From corporate social responsibility to supply chain liability: do we see a change in liability of corporations?
Purpose – the purpose of this abstract is to provide conceptual viewpoint on the current legal changes in the liability of the corporations for the so called – environmental and/or human rights abuses (hereinafter – ESG liability). This is particularly relevant because we face social transformations forcing classic corporate legal liability rules to change. More precisely, according to the author, the emerging trend of corporate social responsibility is moving to the direction where it can radically change the way we tend to understand fundamental corporate law principles and, in particular - liability of corporations. Design/methodology/approach – the analysis is based on comparative and teleological methods. Comparison is two-fold. First, the author investigates different legal systems – UK, France and Germany and compare how they generally tackle corporate liability for the torts, related to ESG matters. Then, once the “classical” approach to corporate tortious liability is identified, the author compares this “classical” approach to new, emerging “modern” approach (author’s definition) based on newly presented due-diligence obligations. Based on this comparative analysis, author moves to teleological analysis of these changes in the application of corporate liability and what are the legal grounds of such changes. Finding – the author argues that current changes in the application of liability of corporations for the ESG matters present a change in the fundamental understanding of cornerstone principles of corporate law. To be precise, while under “traditional” understanding of tortious liability of corporations, they are liable only when they intervene into the activities of its subsidiaries (since they are legally prohibited to manage subsidiaries), under “modern” approach, based on so-called due diligence obligations, corporations are obliged to intervene. Research limitations/implications – the analysis focuses on tortious liability of corporations (precisely – the one of parent companies) at the level of corporate group/supply chain. Practical implications – the practical implications of the topic are self-evident, especially looking at the recent case law – corporations are facing liability for the matters that could be considered distant from the perspective of classic “separability” principal. At the same time, by these new due-diligence obligations, corporations are being obliged to manage and oversee the operation of the whole supply chain. Originality/Value – even though there are many scholars who investigate the topic of corporate liability for ESG matters in general, the author provides a wider viewpoint on the possible changes in corporate liability i.e. the topic is not isolated on particular aspects ESG liability but rather looking at as changing the whole fundamental principles of corporate liability (legal separability and limited liability).