Legal incentives and obstacles to corporate social responsibility in Slovenia, the EU and globally

Abstract

Corporate social responsibility (CSR), or responsible business conduct as a tool of sustainable development (green transition) and respect for human rights in the economy is getting more and more legally based. In different countries, the legal levers of CSR are very diverse; since this creates unequal conditions in the global market, the harmonization of the CSR related rules is essential. Important for the legal regulation of CSR is the proposal for the EU Corporate sustainability due diligence directive, CSDDD); among other things, the proposal expands the due diligence of directors from acting in the best interest of the company, also to consider the risks that threaten sustainable development and human rights, and in this regard sharpens corporate liability for damages. Key shifts in CSR can only be ensured by binding corporate law rules on directors’ due diligence and corporate damage liability for sustainability and human rights violations. The integration of environmental, social and governance (ESG) factors into investments is an increasingly common feature of modern CSR concept. Only environmental and labor legislation alone are not sufficient for the implementation of sustainable development and CSR. Interventions in corporate legislation are needed. In the EU, the implementation of CSR has so far been voluntary; only sustainability (non-financial) reporting is mandatory. The proposal of the CSDDD is therefore ground-breaking, as it intervenes for the first time in corporate legislation in favor of sustainable development, namely in regulating the sustainability civil liability of companies and the due diligence of directors. However, political debates between the EC, the Council and the EP due to differences in views about the latter are still ongoing. Slovenia (the government or Parliament) must finally adopt the National Plan for the enforcement of corporate social responsibility, as stipulated by the EU Commission already in the Revised Strategy 2011. In the legislation governing the operation of corporations (ZGD-1), Slovenia must establish the obligation of sustainable due diligence, to determine the duty of adopting a social responsibility strategy in every company and to determine, as a duty of care of directors, also the consideration of sustainability goals and CSR.