In the United States, as in many othert states, monitoring and transparency have come to the forefront of bothcorporate governance reform efforts at the state level and as aregulatory method in its own right.  Backer, Larry Catá, Global Panopticism: States, Corporations and the Governance Effects of Monitoring Regimes. Indiana Journal of Global Legal Studies, Vol. 15, 2007.  The basic duty to monitor ongoing operations--not just collecting information in the context of a particular corporate transaction--has become a more central part of corporate governance.  Chancellor Allen's discussion in In re Caremark International Derivative Litigation, 698 A.2d 959 (Del. Cha. 1996) is worth remembering in this context: "But it is important that the board exercise a good faith judgment that the corporation's information and reporting system is in concept and design adequate to assure the boardthat appropriate information will come to its attention in a timely manner as a matter of ordinary operation, so that it may satisfy its responsibility."  Yet it must also be noted that at least in the United States, this development of a director's duty to implement and monitor a system of oversight does not necessarily translate into a system of liability for breach of that duty.  Corporate law tends to place great burdens on those seeking to prove that a breach of that duty can produce legal liability under corporate law standards.  See In re Citigroup Inc. Shareholder Derivative Litigation, 964 A.2d 106 (Del. Ch. 2009).  For all that, the imposition of a monitoring and transparency norm with respect to the ongoing operations of an enterprise, especially one that focuses on human rights, can be effective with respect to the social rights obligations of corporations, even if their breach does not always produce legal liability under state law.  What is clear, though, is that corporations can no longer argue convincingly that monitoring and reporting on an ongoing basis are tasks that are not part of the core practices of business.  Corporations know how to monitor.  They understand they must monitor.  States have increased the scope of mandatory monitoring.  Additional monitoring then adds a marginal burden to corporate activity that would be substantially offset by the value added resulting from better compliance with human rights obligations.

Larry Catá Backer
Penn State University