EXPLORING THE INTERCONNECTIONS BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE CRIME

We are delighted to announce the publication of the chapter “Exploring the Interconnections Between Corporate Social Responsibility and Corporate Crime,” authored by Costantino Grasso, Associate Professor in Law at the University of Exeter, and Stephen Holden, Lecturer in Law at De Montfort University. The work has been included as a contribution to the volume “The Emerging Law of Sustainable Corporations: Chronicles from a Course, a Colloquium, and a Symposium,” which has been edited by Maurizio Bianchini, Associate Professor in Commercial Law at the University of Padova, and Alan R. Palmiter, Professor of Law at Wake Forest University. The University of Padova Press has published the volume under an open-access policy, and it may be accessed online at https://www.padovauniversitypress.it/en/publications/9788869383335

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Grasso and Holden (2024) Exploring the Interconnections Between CSR and Corporte Crime.pdf

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The work represents an innovative study dedicated to exploring the complex and often paradoxical interconnections between Corporate Social Responsibility (CSR) and Corporate Crime. To analyze these intricate links, the authors employ a schematic conceptualisation, breaking down the relationship into three distinct temporal phases:

1. the 'pre-crime stage', which involves corporate actions taken before any specific wrongdoing occurs, aimed at influencing the legal and regulatory landscape;

2. the 'silent phase', which covers the period after a crime or misconduct has happened but before external detection, focusing on the internal management and potential concealment of the wrongdoing;

3. and the 'response phase', which addresses the corporation's actions after wrongdoing has been detected, particularly concerning how it shapes accountability processes and manages sanctions or liability.

This structured, phase-based analysis allows for a systematic investigation into how specific corporate behaviours, framed within or abusing CSR principles, can actively shape criminogenic environments and influence the detection and consequences of corporate crime. In the scheme of the work, these irresponsible behaviours are classified as CSIR (irresponsible corporate actions that may cause harm but are not necessarily illegal). CSIR actions are conceptually distinguished from corporate criminal conduct in that the latter are actions criminalized by law.

The outcomes of the study show that through CSIR, corporations may cynically manipulate Corporate Social Responsibility (CSR) to create environments conducive to crime. Instead of fostering ethical behaviour, companies can weaponize CSR initiatives across different stages.

For instance, in the pre-crime phase, they might publicly champion sustainability while, as exemplified by major food and beverage companies, privately lobbying against stricter plastics legislation, or fight anti-corruption measures like the Dodd-Frank Act's resource extraction payment disclosures, thereby shaping laws in their favour.

During the silent phase, after misconduct occurs but before public detection, corporations can manage internal investigations to control the narrative, potentially obscure the full extent of wrongdoing, and strategically self-report findings primarily to gain leniency rather than ensure full accountability, a mechanism whose limitations are implicitly highlighted by repeated compliance failures even under monitoring, such as at HSBC.

Finally, in the response phase, once caught, they can minimize consequences by using legal shields, aggressively fighting accountability as seen in the Chevron/Donziger case, or negotiating settlements like Deferred Prosecution Agreements (DPAs), which, as cases revealed by the FinCEN files suggest, may allow firms like HSBC to pay fines without admitting guilt or effectively preventing future offenses. The authors detail how corporations use CSR rhetoric to lobby against meaningful rules, implement superficial compliance, and obscure misconduct. This pattern highlights Corporate Social Irresponsibility (CSIR) – harmful actions that aren't necessarily illegal but facilitate crime.

Ultimately, the chapter presents whistleblowing as a crucial countermeasure. Whistleblowers act across all stages, piercing the veil of secrecy surrounding manipulative lobbying, internal cover-ups, and failures to reform. By exposing corporate misdeeds hidden behind a facade of CSR, whistleblowers, who are uniquely positioned to bridge the inherent information asymmetry between powerful corporations and regulators or the public, become essential for driving genuine transparency and accountability.

As insiders, whistleblowers possess the knowledge to act across all stages discussed, piercing the carefully constructed veil of corporate secrecy. They can expose the hypocrisy of pre-crime manipulative lobbying efforts that starkly contradict public CSR promises, reveal silent phase internal cover-ups or deliberately flawed investigations aimed at obscuring wrongdoing, and bring to light response phase failures where companies, even under sanctions like DPAs, continue illicit practices. By courageously exposing corporate misdeeds hidden behind a facade of CSR—often doing so despite facing significant personal risk and potential retaliation from employers (as starkly illustrated by the Barclays CEO's attempt to unmask an internal reporter)—they dismantle misleading narratives. Consequently, whistleblowers become essential agents, empowering regulators, stakeholders, and society at large, thereby driving the genuine transparency and accountability necessary to challenge corporate impunity where manipulated CSR actively undermines ethical conduct.

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