Private Law Theory

ABSTRACT
This Essay argues that there is no ‘law’ of corporate social responsibility (CSR) – it is a ‘legal nothing’ – and that debates pitting CSR against ‘shareholder primacy’ are legally inconsequential. Those who would harness market forces to achieve social good should look not to the law of corporate governance, but instead to contract, what I call elsewhere ‘contract social responsibility’ (KSR). Where corporate governance is largely discretionary and permissive, for example, contract can create legally-recognized and binding commitments and remedies for their breach. The Essay assesses model contract clauses developed by a working group of the American Bar Association that seek to achieve prosocial outcomes in supply chain agreements. It also cautions against exuberance for the use of business law mechanisms to achieve social goals, generally. While perhaps laudable, neither contract nor corporate social responsibility are complete substitutes for democratic accountability or the rule of law, even as they seek to account for shortcomings of both.

Lipson, Jonathan C, Against Corporate Social Responsibility (May 1, 2022), Temple University Legal Studies Research Paper No 2022-24.