Corporate accountability: what is the human and environmental cost of doing business?

For decades, responsibility for protecting people and the environment was seen primarily as the task of governments. Companies were expected to comply with national laws, create economic value and generate profit for shareholders. Today, that view is rapidly changing. “In sectors such as mining, energy and food production, companies can have enormous impacts on people and the environment,” says Nadia Bernaz, Personal Professor of Law & Corporate Justice at Wageningen University & Research. “One frequently cited example is Shell’s operations in Nigeria. Oil pollution there not only caused major environmental damage, but also affected public health, fisheries and social relations within local communities. At that point, you can no longer maintain that a company exists solely to produce goods and generate profit.”

The growing attention to corporate accountability reflects a broader shift in the way companies are viewed. As supply chains have become more global and environmental and social challenges more urgent, the impacts of corporate activities can no longer be ignored. “The world has become highly globalised, while laws and regulations are still largely organised at the national level,” says political scientist Sylvia Karlsson-Vinkhuyzen. “Companies operate across borders and can move activities to places where regulations are weaker. Governments struggle to maintain control.”

According to her, this mismatch between global economic activity and national governance helps explain why calls for stronger corporate accountability have grown so rapidly in recent years. “Companies play a major role in global challenges related to climate, biodiversity and sustainability. If you leave them out of the equation, enormous gaps emerge in international governance.”

Historically, international law was largely built around states. Governments were responsible for protecting citizens and the environment, while companies were viewed primarily as economic actors operating within national legal frameworks. Multinational corporations, however, often operate across dozens of countries at once. While companies are protected through international investment treaties, communities affected by environmental or social harm frequently have far fewer options. “The international system has traditionally been structured in a very unequal way,” says Bernaz.

This imbalance is central to Bernaz’s research. In her book on business and human rights, she examines what she calls the corporate accountability gap: the distance between the global power of companies and the legal tools available to prevent or remedy harm. The book traces the historical development of the field, explores key events and cases, and analyses how international human rights law, international criminal law, private regulation and domestic law can all contribute to closing that gap.

One important turning point came with the adoption of the UN Guiding Principles on Business and Human Rights in 2011. “This is what we call ‘soft law’,” Bernaz explains. “These are international guidelines that are not legally binding, but that still shape policy and national legislation.” The principles established that companies have a responsibility to identify, prevent and address negative impacts on people and the environment. Their influence can now be seen in legislation such as the European Corporate Sustainability Due Diligence Directive (CSDDD; see Box 1).

This shift has not been without controversy. Supporters see it as an important move from voluntary commitments towards more concrete obligations. Critics raise concerns about administrative burdens and legal uncertainty. At the heart of the debate lies a fundamental question: how far should corporate responsibility go? “A company rarely operates alone in a region and therefore cannot be held solely responsible for everything happening locally,” Bernaz says. “But that does not mean companies have no responsibility. Large corporations often have enormous influence over suppliers, labour conditions and the use of natural resources.” According to her, the discussion is increasingly focused on where responsibility begins and ends, and how those boundaries can be translated into law.

An important reason why the debate has gained momentum is the growing role of human rights. “When we look at these legal frameworks, international human rights law provides a strong foundation,” says Bernaz. “It includes rights such as the right to health, clean water, safe working conditions and a healthy environment.” For Bernaz, human rights law offers more than legal instruments. “It also provides a language for understanding and discussing the consequences of environmental and social harm.”

Traditionally, legal debates focused on individual conflicts and court cases. Broader questions about power, inequality and societal impacts often remained in the background. “Framing these problems as human rights issues changes the conversation,” Bernaz explains. Her research shows how different legal routes, from international norms to domestic courts in the home countries of multinational companies, can be used to prevent harm and seek redress when violations occur.

Karlsson-Vinkhuyzen sees a similar development within international environmental governance. “The right to a healthy environment is increasingly recognised internationally as a human right,” she says. “That makes it harder to separate climate change, biodiversity loss and social justice, while also drawing greater attention to the role companies play in addressing these challenges.”

Legislation, however, is not a silver bullet. “Ultimately, you want companies to take responsibility without having to be forced by regulations,” says Bernaz. Accountability also requires changing norms and cultures within companies and society.

That is why education matters. At Wageningen University & Research, Bernaz and colleagues aim to train legal professionals who understand how closely business, government, human rights and sustainability are connected. Karlsson-Vinkhuyzen sees growing interest among students and researchers in how international agreements can drive societal change. WUR’s strength, Bernaz says, lies in its interdisciplinary approach. “You cannot separate human rights from climate change, biodiversity loss and changing food systems.”

Corporate accountability is gaining urgency just as international cooperation is becoming harder. “We see countries becoming more inward-looking,” says Karlsson-Vinkhuyzen, “focusing more strongly on national interests and short-term concerns.”

Yet accountability is not fading. It is finding new routes through courts, legislation and public pressure. Cases such as Urgenda and Milieudefensie show how human rights arguments and climate commitments can be used to challenge governments and companies. “Even outside formal international treaties, new ways are emerging to hold companies and governments accountable.”

For Bernaz and Karlsson-Vinkhuyzen, that makes research and education more important than ever. Their work shows that accountability is not shaped by one legal instrument or one institution alone, but through a growing combination of international norms, domestic law, public pressure and interdisciplinary research. In a fragmented world, the search for fairer and more sustainable responsibility is still moving forward.