Vol. 19 No. 3 (March, 2009) pp.172-174

 

RESPONSIBLE BUSINESS: SELF-GOVERNANCE AND LAW IN TRANSNATIONAL ECONOMIC TRANSACTIONS, by Olaf Dilling, Martin Herberg and Gerd Winter (eds).  Oxford, UK, and Portland, OR: Hart Publishing, 2008.  376pp.  Hardback.  £45.00/$95.00.  ISBN: 9781841137797.  Paperback.  £22.50/$48.00.  ISBN: 9781841137803.

 

Reviewed by Fiona Marshall, School of Law, Queen’s University of Belfast, Northern Ireland. Email: f.marshall [at] qub.ac.uk.

 

In a world of increasing globalisation of markets, the dichotomy between this state of affairs and the nation state has become increasingly apparent in that state rules cannot, and do not, provide adequate regulation.  As the title suggests, the aim of RESPONSIBLE BUSINESS is to look at the role of self-governance arising from the increasing number of transnational business transactions, specifically what the editors, Olaf Dilling, Martin Herberg and Gerd Winter, term the “public” (p.vii) role of self-governance in relation to transnational environmental, consumer and worker protection, and the relationship these have with formal law.  A main argument of the book, therefore, is that, while the laws of states may not be wholly adequate to deal with increased economic globalisation, businesses themselves, in the form of “three constellations” (p.vii) of corporate responsibility, transnational corporate networks and non-governmental (NGO)/business partnerships, have stepped up to provide “relatively clear and calculable standards and guidelines of behaviour” (p.1). 

 

The contributors to the book are largely public law specialists and sociologists with the contributions arranged into four sections.  The first is entitled “Corporate Responsibility and the Law” and comprises three chapters.  Herberg’s chapter is an empirical analysis of emerging self-regulatory systems in relation to environmental protection in the German chemical industry.  He includes in this discussion corporate guidelines, auditing regimes and internal guidelines, highlighting how, in some instances the codes are written so as to “emphasise the document’s similarity to written law” (p.25).  In addition, he emphasises that these self-regulatory codes do not operate in a vacuum but interact with state law in a number of ways from the decisions of authorities which take the codes into account, thus embedding them in state law, to the codes themselves giving rise to claims for compensation arising from a company’s failure to meet their own standards. 

 

In Chapter Two, Carola Glinski investigates the potential legal ramifications of corporate codes which relate broadly to public health.  She considers three groups on whom the corporate codes can have legal effects: the author(s) of the codes, the group of corporations to whom the codes are addressed, including those who have not adhered to the code, and third parties.  She concludes from this that “a truly transnational regulative effect may ensue from private regulation” (p.63).  [*173]

 

In the final chapter in this section, Eva Kocher discusses empirical research on the function that corporate social responsibility (CSR) programmes may play in securing a minimum standard of workers’ rights on the global business scene.  She highlights the role the International Labour Organisation (ILO) has played in working directly with enterprises in promoting their standards and finally comments that “[b]y entering into the field of social standards, private codes of conduct . . . contribute to making international labour standards  legally binding in [national law]” (p.83).  

 

Part II deals with self-regulation in business networks (“Private Standards in Transnational Business Relations”) and commences with Dilling’s empirical research on the use of chemicals in the electronic industry and self-regulation in environmental standards.  Dilling argues that, while there may be a Delaware effect in production processes, with businesses seeking the state with the least restrictive legislation, the same is not true for product standards as “exporting corporations already complying with strict standards of importing countries are inclined to put pressure on their domestic jurisdiction to restore fair rules of competition by also raising environmental standards” (p.90).  He espouses a theory of “proactive compliance” whereby national regulators and corporations work in tandem, which is “characteristic of a changed relationship between state and private sector” (p.119).   In a similar vein, Alexandra Lindenthal’s essay examines the management of dangerous chemicals in transnational networks supplying the automotive industry. 

 

The final chapter in this section, by Oren Perez, discusses the environmental aspect of the phenomenon known as “green finance,” where non-financial concerns are considered in the financial world.  He highlights a number of codes on the need for environmental assessment adopted by development banks that have since been incorporated into the internal rules of large private banks.  However, he remarks that these were “uncoordinated phenomena” (p.155) and that this approach is now changing to one of public-private co-operation.  In addition to a proliferation in standards through programmes such as the United Nations Environmental Programme Financial Initiative (UNEP FI), and the Equator Principles from the World Bank, two of the primary stock index markets have also formulated their own codes: the Dow Jones Sustainability Indexes and the FTSE4Good Index Series.  Perez concludes by acknowledging the “dominant role played by non-state forces” (p.173) but suggests that while this dominance is likely to remain, governments will have more intervention in the future.

 

Part III, entitled “Consumer-based Private Governance and the Law,” as its title suggests, focuses on consumer based regulation.  Ralf Bendrath presents a survey on regulating privacy on the internet, through an exploration of the history of state based privacy laws and the rise of self-governance in the 1990s when it was recognised that “[d]ata protection . . . could only work if government supervision was combined with functioning self-regulation in the private sector” (p.193).  His essay highlights that, while privacy on the internet may have largely been self-regulating, governments still played a [*174] role in providing incentives for the implementation of privacy codes.  Increasingly, however, calls have been made for the state to get “back in” (p.215), and Bendrath concludes that the state’s role in regulating privacy has changed, in that it “is more an ‘enabler’ than an ‘enforcer’ and must work with all types of other agents, sometimes co-operating, sometimes enforcing, and sometimes enabling” (p.215).

 

Gralf-Peter Calliess continues the focus on the consumers’ regulatory role in the murky area of online shopping.  He identifies four regulatory mechanisms that play a part in ensuring consumer protection: online reputation, quality or trust marks, the availability of online dispute resolution and security of payment.  In particular he highlights the marketplace eBay, describing it as having a “private legal system” (p.239).  As a result, he argues that in virtual marketplaces, “private legal systems,” provided they are effective, have the potential to displace state consumer protection laws. 

 

The final two chapters of this section move away from consumer protection per se and instead look at environmental considerations that may impact upon consumer choice.  Errol Meidinger assesses global product certification schemes such as the Forest Stewardship Council (FSC) and organic labelling in the areas of agriculture and fisheries.  Cristiane Derani and José Augusto Fontoura Costa also focus on the FSC, specifically in relation to the Brazilian rainforests.  However, instead of certification arising from state law in Brazil it has been “induced by the weakness of state institutions and control mechanisms” (p.303).  In spite of this, they argue that certification is “a useful instrument but has its limits and must be complemented by other policies and regulations” (p.308). 

 

The final section considers “Transnational Self-governance in Perspective,” and in its solitary chapter Sol Picciotto argues that the state’s role has been changed rather than reduced.  It now interacts with governance on a number of private levels creating international regulatory networks.  He concludes that “[l]aw . . . plays a key role in global governance not because of its precision but because of its flexibility” (p.336).  It is this flexibility that in turn helps to legitimise private law.

 

In summary, the book is a timely, thought-provoking collection that covers a diverse range of topical and problematic subject areas.  The editors and authors clearly believe that official and private regulation can work in tandem, enhancing the overall impact of the regulatory aims and present compelling empirical and theoretical evidence to support this belief.   It would be an excellent addition to any library seeking to expand not just its regulation and governance titles, but also its international economic, environmental and socio-legal titles. 

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© Copyright 2009 by the author, Fiona Marshall.