Over the last decade, the legislation that requires large companies to exercise due diligence for the social, environmental, and ethical risks in their business activities and to manage those risks efficiently has been rapidly expanding around the world. As a result, companies are increasingly including specific clauses on responsible business conduct into their contracts, in the form of sustainability clauses, CSR clauses, human rights due diligence clauses, or anti-corruption clauses. At the moment, requirements on the “cleanliness” of business ties include also the non-cooperation with the nationals of the aggressor state, the task to which the contractual clauses are quite up.

The article aims to elaborate on the contractual clauses on responsible business conduct as a new phenomenon in contract law and to identify their key features and implementation issues.

 Contractual clauses on responsible business conduct move corporate commitments from mere policy statements to the legal and operational level. Such clauses are still being regarded as a novelty, and their usage encounters difficulties. On the one hand, the wording of the clauses themselves suffers from typical shortcomings, like referring only to the general principles of responsible business conduct, using standard formulas without adapting them to specific business situations, imposing a disproportionate burden on the supplier alone, while the burden must also be borne by the seller. On the other hand, there is a lack of compatibility of such clauses with the classical contract law (their potential conflict with traditional commercial terms of the contract or their focus on the interests of stakeholders (employees, the general public, etc.), which are not identical to the parties).

The article looks into Model Contract Clauses 2.0, created by a working group formed under the auspices of the American Bar Association Business Law Section. MCCs 2.0 are the first model contract clauses that attempt to integrate the principles contained in the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance into business contracts. The author stresses that it doesn’t any longer suffice to view a contract as a purely private law instrument.

Bibliography

Journal articles

1. Hendrik Eller K, Salminen J, ‘Reimagining Contract in a World of Global Value Chains’ [2020] 16 (1) European Review of Contract Law 1–2 (in English).

2. Jä gers, N, ‘Sustainable Development Goals and the Business and Human Rights Discourse: Ships Passing in the Night?’ [2020] 42 (1) Human Rights Quarterly 145–73 (in English).

3. Ulfbeck V, Hansen O, ‘Sustainability Clauses in an unsustainable Contract Law?’ [2020] 16 (1) European Review of Contract Law 186–205 (in English).

4. Poiedynok V, ‘Korporatyvna sotsialna vidpovidalnist ta “biznes i prava liudyny”: spivvidnoshennia kontseptsii’ (2019) 8 Pravo Ukrainy 132–44 (in Ukrainian).

Reports

 5. Corporate Social Responsibility, Responsible Business Conduct, and Business & Human Rights: Overview of progress. SWD (2019) 143 final 4 <https://ec.europa.eu/docsroom/ documents/34482> accessed 5.05.2022 (in English).

 6. Ruggie, J, Regulating Multinationals: The UN Guiding Principles, Civil Society, and International Legalization. Regulatory Policy Program Working Paper RPP-2015-04 (Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School: 2015) (in English).

7. Report of the World Commission on Environment and Development: Our Common Future <https://sustainabledevelopment.un.org/content/documents/5987our-commonfuture. pdf> accessed 5.05.2022 (in English).

8. Sustainability Clauses in Commercial Contracts: The Key to Corporate Responsibility <https://resources.ecovadis.com/whitepapers/sustainability-clauses-commercialcontractskey-corporate-responsibility> accessed 5.05.2022 (in English).

Websites

9. Anti-corruption clause <https://www.kernel.ua/wp-content/uploads/2017/10/anticorruptionclause. pdf> accessed 5.05.2022 (in English).

10. Mars, Nestlé and Hershey to face child slavery lawsuit in US <https://www.theguardian. com/global-development/2021/feb/12/mars-nestle-and-hershey-to-face-landmarkchildslavery-lawsuit-in-us> accessed 5.05.2022 (in English).

11. Oreo-maker, Nestle, Pepsi face pressure from European employees over Russia <https://www.reuters.com/business/oreo-maker-nestle-pepsi-face-pressure-europeanemployeesover-russia-2022-04-14/> accessed 5.05.2022 (in English).