Corporations, Globalisation and the Law series
Chapter 5: Tort law and corporate social responsibility
It is possible that actions by companies which violate principles of Corporate Social Responsibility (CSR) also constitute torts. CSR and the law of torts overlap where tort law protects the interests that form part of the CSR principles such as the protection of the company’s employees, its consumers or the environment. Due to the protection that tort law offers for personal interests such as health and property, tort law has been identified as a possible means of promoting CSR. Private individuals could use civil claims based on tort to promote greater social responsibility of corporations. This chapter comprehensively analyses the use of tort law as an instrument for the promotion of CSR by addressing both the ability of tort law to promote greater socially responsible conduct of companies as well as the challenges of using tort law to that end. This chapter argues that English tort law already makes an important contribution to the promotion of CSR, as it provides several causes of action for the violation of CSR principles, for example, the health and property of some of the company’s stakeholders such as its employees. Tort law provides several groups that are, by definition, encompassed by CSR, with a remedy in tort for the violation of their interests (which overlap with CSR). Through the provision of legal remedies, tort law is therefore a means of enforcing CSR principles. However, the chapter also argues that tort law is restricted in its ability to enhance greater social responsibility of corporations in a number of ways. First, the right to action is limited to those persons whose property or other personal interests have been harmed. Secondly, tort law is primarily reactive and compensatory. Actions in tort are brought when the tort has already occurred and the main aim of tort is to compensate the tort victim for the injury sustained. Thirdly, the ability of private parties to make use of the potential of tort law as an instrument to promote greater CSR is limited due to the difficulty with accessing justice. This situation is down to the restricted availability of class actions in tort and recent changes to the funding of civil litigation. Finally, the particular challenge for using tort law in the context of CSR is that many companies operate corporate group structures in order to diversify their risk of incurring liability. It is argued that this situation is not fair for a tort victim of a subsidiary whose claim cannot be compensated by that subsidiary, particularly where subsidiaries are undercapitalised.
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