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LAWS 8024


Readings for Week 9
Ethics, Human Rights and Corporate Social Responsibility
This weeks readings consider how ethics and human rights determine corporate
social responsibility (CSR), and influence corporate governance. A major theme in
the literature for the week is the relationship between business and morals; morality
being the common threads that binds the issues of ethics, human rights and
corporate social responsibility. The logical question then would be: should
businesses be concerned with morals?
Morality and Business
Business, in itself, has the characteristic of being non-moral as it cannot not fall into
the sphere of morality. It is only humans that can be immoral - through activities
carried out in the course of business which may be subject to value judgments. Du
Plessis rightly contends that there is disunity between business and ethics because
opinions as to the exact moral duties owed by company managers are divergent. 1
He however counters this disunity with the paradigm: moral judgments are
universalisable. While this is prima facie true, it fails to take into consideration the
social and individual contexts of morality. Because of the plurality of values,
although individuals may universalize their moral judgments, such judgments may
not be acceptable to the whole of society or to other members of their corporate
group. This however does not take away from the fact that corporate activities have
far reaching effects on the lives and rights of individual stakeholders.
A Stakeholders Responsibility to its Stakeholders
A second question to consider should be: what is the role of corporations with
regards to human rights? The introduction to the Guiding Principles for the
Implementation of the United Nations Respect, Protect & Remedy Framework 2
described business enterprises (which includes corporations) as specialized
organs of society which are required to meet the societal expectation to not
infringe on the rights of others. One implication of this description is that it adds to

1 Du Plessis et al, Principles of Contemporary Corporate Governance (Cambridge

University Press, 2nd ed, 2011) 14.2.2.
2UN Special Representative Report on human rights and transnational corporations, Guiding
Principles for the Implementation of the United Nations Respect, Protect & Remedy
Framework at:http://www.reports-and-materials.org/Ruggie-UN-draft-Guiding-Principles-22Nov-2010.pdf

LAWS 8024
the legal fiction surrounding the corporation. The first fiction is that it is a legal
person; the second is that it is an organ of the society hence, a stakeholder.
A follow-up implication is that it answers the question raised by Tom Campbell in his
paper,3 questioning what the scope of the human rights responsibility borne by
corporations should be. As an organ of the society, the human rights responsibility
of the corporation ought to equate to that of the state. And since it is regarded as a
corporate citizen, it ought to, in the words of Michael Sandel, 4 direct its activities
less to the pursuit of individual self-interest and more to the pursuit of the common
good. This new role of an organ of the society may as well provide the justification
for legitimizing corporate social responsibility.
The beneficiaries of the corporate social responsibility ought to be a corporations
stakeholders. Although Tom Campbell claims that the stakeholder theory fails to
legitimize CSR because it does not distinguish between the different stakeholders or
determine the weight of their respective claims, he admits, however, to overlooking
the concept of the social contract. Here, for instance, in an oil-rich developing
country, all the citizens have an undivided and equal claim to their natural
resources, and share the same expectations from a prospecting oil company.
Legal Rules as Mechanism?
Professor Michael Sandel criticizes the market and its culture of greed. He called for
a reconnection of the market with morals and values. 5 The question thus arises:
what is the limit of morals with regards to CSR and human rights. Should moral
ethical standards be proscriptive or prescriptive? If they prescribe some positive
corporate philanthropy, should liability follow from failure to adhere to such moral
prescription? Some form of legal enforcement could serve as the instrument to
connect business activities and the markets with moral values, responsibility and
trust. Tom Campbell counters this by states that CSR should have, at least, in
practice, some voluntarism internal mechanisms and cultural processes that
support a moral, rather than legal, approach to corporate responsibility. 6 Justine
3 Tom Campbell, The Normative Approach to Corporate Social Responsibility A
Human Rights Approach. D. McBarnet, A. Voiculescu, and T. Campbell, eds, The
New Corporate Accountability: Corporate Social Responsibility and the Law (2007:
Cambridge UP) pp 529-564.
4 M. Sandel, Markets & Morals (The Reith Lectures No1, 2009) full text at:
5 Ibid.
6 Ibid 557-558

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Nolan identifies voluntarism as Australias favoured approach. 7 The danger of
subjecting CSR and corporate governance as a whole, to voluntarism and internal
culture is reflected in the Japanese attitude to independent directors. 8 In the end,
negative corporate culture appears to yield to some form of normative codification,
represented in Shinto Abes Stewardship Code, and transnational corporate
Working Together
Transnational principles of corporate governance may not work across all borders.
Sometimes the market, and its principles of demand and supply, wins in the end.
This is demonstrated in the fate of Nike and its contractor, Lyric industries. By
simply being concerned with the publics moral evaluation of its image, Nike misses
the chance to collaborate with Lyric towards improving the rights and working
conditions its staff. Its withdrawal from the contract leaves Lyric industries staff
worse than Nike had made them.

7 J Nolan, Corporate Responsibility in Australia: Reality or Rhetoric? Australian

Journal of Human Rights (2006) Vol 12 (2) AJHR 78.
8 The Economist, Corporate governance in Japan: A revolution in the making, 3 May