Voluntary Standards & Soft Law

“Many American and European businesses have adopted voluntary standards for labor conditions, environmental practices, and human rights; these are often institutionalized in corporate and industry codes, multi-stakeholder initiatives, and private standard-setting bodies, often with reporting and monitoring requirements. Private regulation, or “civil regulation” as it is described by David Vogel, attempts to fill the governance gap between the law and the market. It represents a dimension of what political scientists have characterized as the global privatization of regulation through increased reliance on market-based strategies and nongovernmental regulatory mechanisms. In one defined subset, which Benjamin Cashore labels as “non-state, market driven” (NSMD) governance systems, “rulemaking clout does not come from traditional Westphalian state-centered sovereign authority, but rather from companies along the market’s supply chain, who make their own individual evaluations as to whether to comply to the rules . . . of these private governance systems.” Thus, these programs appear to work because they generate potential compliance incentives (or disincentives) along supply chains, through price premiums, market access, or the prevention of negative boycott campaigns.”

Ira Feldman in Business & Industry: Transitioning to Sustainability