In this essay, the Author provides an overview in Part I of some initiatives to require or encourage companies to produce specific ESG data, authored both by governments and by private standard-setters. In Part II, one disclosure initiative in particular will be discussed as an example of a transnational legal order (TLO), as defined by Professors Shaffer and Halliday,13 and that is the Global Reporting Initiative, which has become the benchmark corporate social disclosure framework. Part III identifies a number of significant questions about our knowledge of the real power of information strategies to change corporate behavior, as the GRI seeks to do, as well as questions about the efficacy of self-regulation generally.
Part IV then asserts that the “legality” aspect is a centrally-important element of the TLO framework advanced by Shaffer and Halliday. Particularly regarding transnational corporate responsibility, reliance has been placed almost exclusively on “new governance” initiatives, which are generally non-binding, voluntary, collaboratively developed standards for responsible behavior. New governance standards have fascinated academics from a wide range of fields, including this author, leading to an explosion of literature on the cognate topics over the last ten to fifteen years. Yet, during this same period of time, Bi-lateral Investment Treaties (BITs) and free-trade agreements, such as the North American Free Trade Agreement (NAFTA), have been negotiated throughout the world. These treaties generally permit private companies to challenge any government action—legislative, regulatory, or judicial—that is alleged to reduce the company’s future profits. These challenges are heard by private arbitrators and are not subject to judicial review.
The contrast is stark between new governance forms of collaborative, often industry-led, voluntary standards for responsible action, and the limits on sovereign regulatory authority being developed as a result of the expansion of the investorstate system for arbitration pursuant to BITs and trade agreements, leading this author to remember the line in the movie the Wizard of Oz: “pay no attention to the man behind the curtain.” To badly mix literary references, we may have fixed our collective attention on the construction of a transnational regulatory Potemkin village even as the man behind the curtain progressively undermines the capacity of the strong form of regulation, that of sovereign domestic law. It is in emphasizing the importance of legality and how transnational norms “touch down” in binding processes, court proceedings, contracts, or public proceedings that Shaffer and Halliday’s theory of Transnational Legal Orders reorients our thinking in a productive, and important, direction. Part V concludes.
Williams, Cynthia A.
"The Global Reporting Initiative, Transnational Corporate Accountability, and Global Regulatory Counter-Currents,"
UC Irvine Journal of International, Transnational and Comparative Law: Vol. 1
Available at: https://scholarship.law.uci.edu/ucijil/vol1/iss1/4