Corporate Negligence and CSR: Bridging the gap between Ethics and Accountability

Abstract: 

Corporate negligence is one of the biggest problems in today’s corporate governance. It  affects questions of safety, environmental risk and responsible supply-chain management. At  the same time, Corporate Social Responsibility (CSR) has moved from a voluntary, soft-law  matrix of ethical expectations to the very center of global governance, ethics and  sustainability expectations. This paper studies the relationship between negligence liability  and CSR integration, through an analysis of legal principles, judicial interpretations and the  increasing role of mandatory due-diligence legislation. It asserts that, while CSR frameworks  offer a vital form of ethical guidance, they do not, as a rule, translate into legally enforceable  duties, except when translated into statutory mechanisms. It concludes that turning CSR  commitments into binding due-diligence duties is a key institutional device for mitigating  corporate negligence, protecting stakeholders and enhancing credible corporate  accountability. 

Introduction: 

Corporate negligence refers to when companies fail to uphold reasonable standards of care,  ultimately resulting in harm towards individuals or the public. This can be widely witnessed  through environmental catastrophes such as oil spills, unsafe working conditions within  supply chains and failures in corporate oversight and risk management. With companies and  industries expanding overseas with their business prospects, it makes it such that the potential  for higher corporate negligence increases which raises concern for the need of regulatory  intervention and reforms.1 

While negligence litigation has been developing in the past several decades, Corporate Social  Responsibility (CSR) has been a prevailing theory as well as a practice that governs the way  in which corporations communicate their social and ethical obligations. In the past two  

1 Derry v Peek (1889) 14 App Cas 337 (HL)

decades, CSR expanded its application from charitable acts to holistic regulatory models that  help strengthen the human-rights, environmental protection, anti-corruption, as well as labor  standards.  

Nevertheless, there has been a disconnect between CSR and legal liability. The disconnect is  that many large corporate entities have voluntarily adopted CSR as a rhetorical tool to build  branding on sustainability without implementing internal controls. The superficiality of CSR  becomes apparent when negligence persists despite the practice of CSR.  

This article explores the disconnect of CSR. The thesis of this article is that CSR cannot  effectively regulate negligent behavior unless it is underpinned with due-diligence obligation,  reporting obligation, as well as enforceable implementation. 

Research Methodology: 

This article uses an analytical and doctrinal research methodology using statutory provisions  that regulate corporate negligence, case law establishing corporate liability, international CSR  frameworks, regulatory developments in EU and the UK as well as academic commentaries on corporate governance. 

Delving into Corporate Negligence and CSR: 

1. Existing Legal Frameworks 
2. Under Tort and Statutory law 

Corporate negligence often arises as a result of the failure to meet standards of reasonable  care, which ultimately causes foreseeable harm. Tort Law governs cases involving personal  injury, property damage or economic loss due to corporate misconduct. 

The following are a few statutory regimes addressing specific risks such as imposing wide ranging obligations in relation to occupational safety,2strict liability on defective products,

2 The Health and Safety at Work etc Act 1974 

3 The Consumer Protection Act 1987

prosecution of organizations following the death of individuals due to failure in the  management or organization of activities taken place.4 

In addition to the foregoing, various sector-specific rules and regulations may apply, for  example, in the context of financial services regulation, pharmaceuticals, construction or data  security. These may impose highly particular standards. These recognized standards, in  technical industries, reflect the higher degree of risk.

CSR through Voluntary Governance Frameworks  

Corporate social responsibility often pertains to the extent of ethical commitments made by  corporations. They focus on bringing about greater compliance to social expectations and  often include human rights, labor standards, anti-corruption practices, sustainability  reporting, etc.5 

The major frameworks that shape CSR are as follows: 

i) UN Guiding Principles on Business and Human Rights (UNGP)6 ii) OECD Guidelines for Multinational Enterprises7

Although these frameworks have an influential impact on raising CSR compliance, due to its  lack of direct enforceability i.e., their voluntary nature creates gaps in policies and their application.

Upcoming Mandatory Due diligence obligations 

Recently there has been efforts to push CSR enforcement into mandatory obligations and this  can be seen through the EU Corporate Sustainability Reporting Directive, proposed EU  Sustainability Due Diligence Directive, sector specific due diligence requirements and the UK’s Modern Slavery Act 2015 wherein s54 introduced mandatory reporting on supply-chain  risks thereby increasing transparency.

4 The Corporate Manslaughter and Corporate Homicide Act 2007 

5 Alex Solo,’ Corporate Social Responsibility (CSR) and Your Business: Understanding Legal Obligations  and Best Practices’ ( Sprintlaw, 29th July 2025) <https://sprintlaw.co.uk/articles/corporate-social responsibility-csr-and-your-business-understanding-legal-obligations-and-best practices/#Key_Legal_Areas_Relevant_to_CSR> accessed 27th November 2025  6 UN Human Rights Council, Guiding Principles on Business and Human Rights (2011) 7 OECD, OECD Guidelines for Multinational Enterprises (2011) 

8 Modern Slavery Act 2015, s54

1. Judicial Interpretation 
2. Corporate Liability Systems 

Courts have come to realize that negligence can primarily arise from systemic corporate  failures which include inadequate training, appropriate safety protocols or even inappropriate  supervision. It has become better understood that corporate negligence stems from systemic  failures and not individual conduct, thereby employing the organizational fault doctrine with  aligns with the CSR principles.

CSR Statements and Legal Liability 

There has been an increase in scrutiny of sustainability claims has increased significantly.  This has made courts hold corporations liable where CSR commitments such as published  sustainability reports, codes of conduct and advertising and/or marketing measures create  expectations among consumers, employees and investors. 

It has been scrutinized that companies must uphold their CSR policy in practice and not just  as a mere policy decision. 

There have been two landmark cases in the UK Supreme court which have expanded on  corporate accountability namely: 

1. i) Vedanta Resources PLC v Lungowe9
2. ii) Okpabi v Royal Dutch Shell plc10

Both cases have established that parent companies owe a duty of care to the individuals that  fall in harms way due to their subsidiary’s operations. This should be accounted for when the  parent company exercises significant control over internal operations, often though their CSR  policies.11 Thus, there must be compliance with the assumption of a CSR policy decision and  its enforcement. This is because courts view the corporations’ public claims to CSR  frameworks as an assumption of duty and oversight, thereby causing room for negligence if  

9 Vedanta Resources PLC v Lungowe [2019] UKSC 20 

10 Okpabi v Royal Dutch Shell plc [2021] UKSC 3 

11 Travers Smith, ‘Parent company liability: the Vedanta case’ ( Travers Smith)  

<https://www.traverssmith.com/knowledge/knowledge-container/parent-company-liability-the-vedanta case> accessed 27th November 2025

parent companies don’t enforce their policy decisions consistently throughout their  operations. 

1. Critical Analysis 

Although CSR frameworks are widely acknowledged there still lies a huge gap in its  enforceability. This often pertains to the symbolic nature that CSR is often interpreted as  without much legal backing. Corporations perceive CSR policies as ways of marketing rather  than societal betterment. This not only creates contradiction in policies and their  implementation in internal practices but also diminishes the moral obligation to serve the  community that builds them through the lack of transparency and exploitation of trust. 

CSR frameworks often lack supervision or monitoring of risk management. As these  frameworks require companies to conduct audits and assessments of risk management,  however these are often seen as superficial. The problem then occurs when organizations heavily rely upon the ideal of the policy decision on paper rather than taking measures to  appropriately foresee its application and compliance through consistent monitoring and risk  mapping. 

In recent years there has been an increasing concern with greenwashing i.e., misleading  environmental claims and bluewashing i.e., misrepresenting human rights commitments.  These acts lead to the masking of corporate negligence and require courts and regulators to  respond through the imposition of penalties for misleading statements, however even these  penalties aren’t consistently enforceable globally causing a lot of negligence to fall under the  radar.12 

There also poses the issue of supply chain complexities due to the multiple layers of  subcontractors that may be present in such operations. CSR frameworks are unable to delve  deep into the intricate levels of such frameworks and thus allow for negligence such as forced  labor, unsafe working conditions and environmental pollution to persevere despite of the  commitments promised. 

12Samuel Pryde and Justine Nolan, ‘What is greenwashing and bluewashing, and why should we care  about it?’ (Australian Human Rights Institute)  

<https://www.humanrights.unsw.edu.au/research/commentary/explainer-what-is-greenwashing bluewashing> accessed 27th November 2025

We can also investigate the issues posed by soft-law CSR standards. These standards create  for expectations but lack consistency in enforcement and consequence for noncompliance.13 Due to the major voluntary commitments made by corporations and their lack of legal  repercussion, corporations may neglect their responsibilities to work towards CSR  commitments unless pressured by third parties, investors, NGO’s or reputational concerns. Therefore, this lack of legal repercussion leads to a higher negligence of duty among  corporations. 

1. Recent Developments 
2. ESG Reporting Mandate 

It has become prevalent that many jurisdictions require sustainability disclosures to me made.  The EU’s Corporate Sustainability Reporting Directive and the UK FCA’s ESG require a  structured, comparable and verifiable reporting scheme. Sustainability disclosures are  increasingly structured and mandatory under EU law.14 This mitigates the risk of misleading  CSR policy statements and pushes companies to integrate CSR standards into their internal  functioning. 

2.Sway towards Binding Due Diligence 

Multiple countries including Germany, France, Netherlands and other members of the EU  have introduced binding due diligence laws as a result of the inadequacy of the voluntary  guidelines. 

3.Litigations upon Climate and Environmental risk management 

There has been a rise in litigation pressure to ensure risk management frameworks are  adopted. Courts are increasingly holding corporations responsible for climate or  environmental negligence, especially in scenarios where they fail to foresee or disclose any  environmental hazard. 

13 OECD, Due Diligence Guidance for Responsible Business Conduct (2018) 

14 EU Corporate Social Reporting Directive (Directive (EU) 2022/2464)

Suggestions and Expectations 

1. Strengthening Due Diligence frameworks. 

Corporate Social Responsibility should transition from voluntary to mandatory frameworks.  Marking legal grounds for due diligence will not only allow for better justice to penalize  offenders but also identify and establish the due diligence measures in corporations so as to  uphold the human rights and sustainable development agenda. 

2. Uniformity of reporting 

It is essential that there is a standard in CSR reporting that must be upheld so as it ensures  uniformity in all proceedings. This will reduce selective disclosure and enhance  accountability among organizations.  

3. Legal Consequences 

There must be increased legal repercussions for misleading claims. If regulators can impose  penalties for such inaccuracy or lack of transparency, it will make for better business conduct  through reduced greenwashing and bluewashing. 

4. Strengthening Oversight 

Corporations need to adopt greater risk assessment schemes that can ensure consistency and  transparency in risk assessment reports, audits and supplier disclosures. Such type of  mandatory reporting ensures good conduct and will increase public confidence. 

5. Accessibility of Remediation 

The legal system should make remediation more accessible to the public to aid the  individuals of affected regions due to corporate misconduct. Allowing better remediation to  solve problems in relation to inaccessibility or long communication chains that deprive  affected individuals from remediation. 

6. Public Engagement and Awareness 

Civil societies can play a role in establishing campaigns to raise awareness about CSR and  the impacts of corporate negligence. This would help enhance awareness broadly and create  pressure for change. They can also lead the translation or simplification of financial date into  understandable terms for the general public and policy makers, thereby integrating evidence based decision making.

Conclusion 

Corporate negligence and the integration of CSR are two integral pillars of modern  commercial practices. Understanding these pillars establishes the fundamental ideals of  managing and executing obligations towards society. Analysis can me seen to make it so that  negligence law provides ways in which one can address harm, while the CSR frameworks  bring about ethical corporate conduct through voluntary commitments, ethical expectations  and incentives to better organizational reputation. However, there is still a large gap between  the ideals to be achieved and the reality in practice of the CSR statements in corporations. 

This gap in policy and enforcement leads to the reason as to which voluntary guidelines are  insufficient in its ability to establish corporate accountability and social responsibility. The  Judicial development of parent company liability and misrepresented claims further prove the  perception of CSR commitments as a mere policy or symbolic decision rather than necessary  commitments. These developments now carry potential legal consequences if corporations  fail to operate consistently and effectively with them. 

The significance of corporate negligence cannot be overstated as we live in an economy that  is characterized by complex supply chains, environmental vulnerabilities and stakeholder  scrutiny which all points to the issue of corporate negligence and its ability to put individuals,  communities and ecosystems at risk. 

It is essential to strengthen the CSR principles with legal obligations thereby ensuring ethical  commitments which are often neglected due to its voluntary nature. Establishing legal  repercussions for such negligence can create better conduct not only for individuals and  communities but also for the sustainability of the ecosystem. 

Overall, the future of ethical corporate behavior depends solely on the establishment of CSR  values and binding legal obligations through oversight, transparency and appropriate  remediation mechanisms. Therefore, upholding these principles not only shows ethical and  legal coherence but also establishes public trust through responsible action.

BIBLIOGRAPHY 

1) Derry v Peek (1889) 14 App Cas 337 (HL) 

2) Health and Safety at Work etc Act 1974 

3) Corporate Manslaughter and Corporate Homicide Act 2007 

4) UN Human Rights Council, Guiding Principles on Business and Human Rights  (2011) 

5) OECD, OECD Guidelines for Multinational Enterprises (2011) 

6) The Consumer Protection Act 1987 

7) Modern Slavery Act 2015, s54 

8) Vedanta Resources PLC v Lungowe [2019] UKSC 20 

9) Okpabi v Royal Dutch Shell plc [2021] UKSC 3 

10) OECD, Due Diligence Guidance for Responsible Business Conduct (2018) 11) EU Corporate Social Reporting Directive (Directive (EU) 2022/2464) 12) Solo A,’ Corporate Social Responsibility (CSR) and Your Business: Understanding Legal  Obligations and Best Practices’ ( Sprintlaw, 29th July 2025)  

<https://sprintlaw.co.uk/articles/corporate-social-responsibility-csr-and-your business-understanding-legal-obligations-and-best 

practices/#Key_Legal_Areas_Relevant_to_CSR> accessed 27th November 2025 13) Travers Smith, ‘Parent company liability: the Vedanta case’ ( Travers Smith)  <https://www.traverssmith.com/knowledge/knowledge-container/parent company-liability-the-vedanta-case> accessed 27th November 2025 14) Pryde S and Nolan J, ‘What is greenwashing and bluewashing, and why should  we care about it?’ (Australian Human Rights Institute)  

<https://www.humanrights.unsw.edu.au/research/commentary/explainer-what is-greenwashing-bluewashing> accessed 27th November 2025