trends and future of sustainable development - TransEco

As the analyzed literature shows, the enforcement role of SCCs should be connected with the factthat transnational CSR regulation has predominantly a soft form and there are no internationalprocedures in place enabling effective enforcement thereof. A contract as a binding legal document thussubstitutes governmental enforcement power. The enforcement purpose of SCCs is achieved byenforcement processes available under a specific contract. This includes not only penalty clauses but alsorelational enforcement means, like self-assessment or auditing of suppliers, which seem to be thepreferred method securing compliance with ethical standards among supply chains.The strategic regulatory approach will allow to minimize the risks and to use the opportunities ofSCCs strategically. Under this approach, a company will employ its contractual power not only to secureits own compliance and motivate and enforce compliance of its suppliers but also to regulate importantissues, not dealt with in the existing regulation. Such SCCs will be often found in the main body of acontract specifying the contractual parties’ rights and obligations. This extension of contractual power isnot anticipated by the existing regulation for already mentioned reasons; however, is recognized by legalscholarship. The question is where the borderline between SCCs and regulation, especially selfregulation,lies. The regulatory purpose of SCCs is probably the most questionable one from theperspective of legal theory and, therefore, needs more attention of research in the future.6. ConclusionThe article presents a new approach to business contracts as a means of CSR. It suggests a conceptualframework under which effectiveness and potential of SCCs may be further examined. Using findings fromliterature review and analysis of existing CSR regulations, the framework classifies the SCCs according totheir legal purpose into four categories: defensive, motivational, enforcing, and regulatory. It is found thata legal purpose does not always correspond to the underlying business purpose. Only when these twoobjectives are harmonized, it is possible for a company to explore the full strategic potential of SCCs.The framework has certain limitations that could be, however, overcome by future research. Firstly,business purposes of SCCs should be examined empirically in order to establish more precise connectionbetween the legal and business objectives. Further, the framework does not provide link between legalpurpose and legal effects which may differ substantially. Here again, more research is needed to discoverthe real potential of SCCs in the CSR regulatory environment. I anticipate that the legal effects willdepend primarily on the regulatory and enforcement environment of the specific supplier’s location.Secondly, the use of SCCs is certainly influenced by a power distribution between the contractualparties. This article works with the assumption that a buyer has a greater power but it does not need tobe the case every time. In connection to this issue, also a mutual attraction between the contractingparties should be examined to realistically assess the SCCs’ impact.Despite the mentioned limitation, the proposed conceptual framework may help us to understandthe role and potential of sustainable contracts. It may serve as a starting point for future research in thearea of law as well as economics of sustainability. If a company realizes the legal purpose of SCCs’inclusion into contracts, it may optimize drafting of its contracts and targeting of complementarymanagement activities in order to harmonize the business and legal objective and thus to achieve theintended legal and business effects. The framework may also help regulatory bodies to direct better theirfocus in the future regulations and enforcement activities.382