Accountability of Transnational Corporate Groups: The Role of Corporate Governance
The voluntary and non-binding nature of the obligations of multinational enterprises (MNEs) in the form of corporate social responsibility instruments can be contrasted with the legal fortress protecting their rights, made up of, for instance, an international trade and investment law regime entrenching the rights of shareholders and other investors. The normative asymmetry is thus undeniable. Nevertheless, in recent years, novel approaches to transnational corporate accountability have been emerging such as increased activist litigation against the parent companies of MNEs for the actions of their subsidiaries, the UN Guiding Principles for Business and Human Rights and their National Action Plans, the proposal for a new binding treaty on business and human rights together with the enactment of the UK Modern Slavery Act and the French ‘Duty of Vigilance’ legislation.
This paper argues that, however, for the most part, these initiatives fail to adequately clarify the crucial question as to whom or what corporations should be accountable. The dominance of the Anglo-American financialised model of corporate law and corporate governance makes it clear that the corporation is accountable to shareholders, the imperative being the maximisation of shareholder value. In light of this, the paper contends that if true social accountability of corporations is to be achieved, then it is vital for transnational corporate accountability activists and advocates to engage with the corporate governance reform agenda by fighting for an eco-system that allows for cultural change from the shareholder value imperative. In this respect, the article points to the significant role of legal and business education, in particular, in instilling that culture change.