Corporate Social Responsibility and MNCs: An Appraisal from Investment Treaty Law Perspective

Abstract

Recent investment treaties recognize corporate social responsibility (CSR) as a mechanism for regulating corporate behavior concerning the protection and promotion of human rights, social and environmental standards. These treaties often include a universally recognized soft law version of CSR developed by the International Labor Organization (ILO) and the Organization for Economic Co-operation and Development (OECD), considered prominent sources of CSR voluntary standards. This study analyzed significant advances in including such voluntary standards in investment treaty law, which led to implementing globally agreed norms regarding sustainable development into action. In addition to the inclusion of CSR standards in legally binding documents, this study argued that the practical issues involved in implementing the CSR standards should be addressed from the perspective of capital-dependent developing countries. To this end, this study adopted the due diligence test to apply CSR standards in cross-border investments better. For this purpose, theoretical analysis that combined descriptive and analytical approaches based on the available primary and secondary sources best suited current research. The study showed that applying CSR standards in capital-dependent developing countries was only possible when corporate, home state, and the host government took appropriate actions at the policy level. It concluded that such additional measures were needed to effectively implement CSR standards emphasizing prevention was better than cure and ensuring the appropriate due diligence process by the relevant parties. KEYWORDS: Corporate Social Responsibility, Investment Laws, Developing Countries.