Corporate Social Responsibility and Duties of Directors

Abstract:

The aim of the paper is to determine whether the breach of rules of Corporate Social Responsibility (CSR) can lead to a sort of legal liability of directors. The analysis evaluates if social and ethical instances characterizing CSR may take a legal significance that is different from the mere granting of legitimacy to a stakeholder-oriented director's conduct. The contractual meaning of "company's interest", adopted in this paper due to its conformity with systematic legal framework, allows an expansion of the spectrum of enforceable situations. This argument lets us consider the duties of directors to act for the protection of interests other than those of shareholders as proper obligations.

The part of the paper dedicated to the comparison prospective shows the neutrality of the Italian legal framework on the issue of Corporate Social Responsibility. The British and American legal systems - through, respectively, the 2006 Company Act and the Statutes - indicate a more explicit and marked trend to leave the paradigm of shareholder value.

The final part of the paper is devoted to the comparison between the evidence regarding the identification of substantial obligation to protect stakeholders' interests and the business judgment rule as a response to the agency costs which liability rules produce. The comparison reveals under which conditions directors' liability takes place. Then we have hypothesized actual categories of violations: the first one results in the violation of the contractual obligation which requires the care of stakeholders' interests; the second one concerns the breach of procedural rules during the adoptions of the actual decision.

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