Corporate Governance - Royal Dutch Shell, Terrorism and Reputational Risk
Business and Law
Law and Justice
In a time of financial turmoil corporations should pay particular attention to trends that affect their reputation, failure to do which could ultimately prove costly. The increasing use of legislation such as the Alien Tort Claims Act 1789 (USA) to raise corporate complicity in human rights abuses and the expanding compliance requirement of anti-terrorism initiatives require constant consideration by corporations. This paper looks at these two issues from a reputational risk perspective. The recent Royal Dutch Shell ligation in the United States of America highlights the growing risks associated with corporate activities where a failure to take account of potential reputational risk implications can spawn unexpected and costly litigation. Likewise the increasing impact of international and domestic initiatives to counter money laundering extends corporate responsibility. This paper highlights the need for corporations, including financial institutions, to look beyond initial profits and shareholder interests to consider the long term benefits that flow from being a good corporate citizen, by taking account of corporate activities that impact upon human rights whilst remaining cognisant of international efforts to curb money laundering.