Volume 12, Issue 2 - Mapping the Hard Law/Soft Law Terrain: Labor Rights and Environmental Protection

Governance theories of regulation can be useful in describing and conceptualizing new forms of transnational labor regulation (TLR) that have emerged in a context of weak state regulatory capacity. This Article argues, however, that the prominent governance models that have been applied to TLR, namely systems theory, responsive regulation, and new governance are not suited to the exigencies of labor regulation in developing states. Accordingly, this Article proposes an alternative "integrative approach" to transnational labor regulation that draws upon the insights of governance theory, but that is committed to developing state capacity where the state has a comparative advantage over non-state regulation in realizing the goals of TLR.

In this Article we propose an analytical framework for allocating responsibility for the protection of worker’s rights in the global labor market. Since production and services have expanded globally, and the state’s ability to protect worker’s rights on the national level has been undermined, the main challenge today is to find the appropriate institutional arrangements that allocate responsibility in a manner that realizes basic labor standards. The Article argues that in the context of a global labor market, responsibility should be perceived in terms of "shared responsibility," whereby responsibility is shared by a complex network of agents and institutions that take part in global production and services. Within these global social networks and connections, labor relations generate a unique type of social connection which implies a special type of commitment and obligation towards workers. We propose four principles to guide the allocation of responsibility for remedying the unjust conditions of workers in the world, based on measures of connectedness (between people in joint activity), capacity (to relieve workers’ hardship), benefit (from the unjust conditions), and contribution (to bringing the hardship about).

This discussion offers a theoretical framework towards the discovery and amalgamation of conceptions within hard labor law and soft law initiatives which may spring from deliberately designed public-private initiatives as well as spontaneous market-driven responses. A case in defense of soft law is made for Malaysia on the basis of political realism. Agents of soft law initiatives are evaluated with a focus on public and private codes. I argue that for Malaysia, the stage is being set for divergent regulatory approaches to labor, with differing consequences and outcomes. Some of these outcomes, as will be illustrated, may not be consciously designed but are likely to occur spontaneously. The focus of the discussion will be on the changing nature of labor norms in individual employment law, the advent of human rights reasoning and the interdependence of the organic forces in a particular jurisdiction that drive the labor agenda. The discussion concludes with an argument in praise of soft law as a viable agent for driving change in hard labor law, whilst maintaining its soft law character, thus contributing to the varieties of hybrid labor regulation.

The past two decades have witnessed the emergence of corporateassociation- and standards-based forms of environmental selfregulation. Private environmental governance is commonly presented as being a market-driven phenomenon. Firms seek to manage their environmental impacts as a means of achieving cost-based or differentiation-based advantages. Yet, these innovations are necessarily embedded in the regulatory policies and institutions of nation states and thus subject to the dynamics of regulatory change. Historically, economic crises have stimulated significant regulatory changes that have, more often than not, resulted in an expansion of public regulation and a diminution of self-regulation. This Article considers the ramifications of the global financial crisis for the development of private environmental governance.

The implementation of transnational standards — in codes of conduct, certification, and monitoring initiatives — necessarily intertwines with domestic law and other types of rules. Yet much of the existing literature overlooks or obscures this fundamental point. Indeed, scholars often err either by treating private regulatory standards as transcendent or by viewing implementation as fundamentally a technical problem. This Article argues that understanding the operation of transnational private regulation requires attention to the layering of multiple rules (and the politics surrounding them) in a given location. It develops a framework for examining this layering and illustrates it by briefly looking at two major issues—community rights in sustainable forestry standards and freedom of association in fair labor standards — and their implementation in Indonesia. In various ways, these domains illustrate how conflict and complementarity between public and private standards structure the practice of private regulation.

Over the last several years, the environmental regulatory system has undergone radical changes. Various private normative schemes, ranging from corporate codes to environmental management systems, environmental reporting standards, project-finance codes and green indexes, have assumed an increasingly important role in the regulatory arena. The emergence of private environmental governance as an important transnational phenomenon raises two interrelated puzzles: efficacy and legitimacy. Underlying the efficacy puzzle is a deep-seated suspicion toward "soft" legal instruments, which to some observers represent nothing but a coordinated form of "greenwash." The legitimacy question reflects a contrary concern — that these private regulatory structures represent new forms of global authority that are in need of distinctive legitimization. The Article begins with an outline of this new global terrain, exploring its historical evolution. It argues that the multiple links and cross-sensitivities between the different global private regimes have created a novel ensemble regulatory structure with positive enforcement and normative externalities. The Article then moves to examine the question of efficacy more generally, developing a nuanced understanding of the social dynamic of "soft-law" regulation, which rejects the binary logic underlying the "soft law"-"greenwash" narratives. Regarding the political dimension, the Article argues that this new ensemble network has brought about a new transnational political sphere which is associated with an extensive, cross-institutional quest for legitimacy. The Article then turns its focus to the field of sustainability indexes, focusing on the two leading global indexes: FTSE4Good Index Series and Dow Jones Sustainability Indexes (DJSI). These indexes are taken as a prototypical case of transnational private ordering. Drawing on a close analysis of the indexes’ guiding documents and on interviews with senior executives from both organizations, the Article considers the unique features of these indexes as forms of governance and the paths through which they claim to affect society. It then moves to explore the mechanisms of legitimacy employed by FTSE4Good and DJSI, highlighting their distinctive visions of legitimization. A close examination of sustainability indexes generates insights, I will argue, regarding the field of private global environmental governance as a whole. In particular, it highlights both the new political opportunities created by the evolving network of transnational governance and the limits this new structure sets for radical critique.

Much of the legal literature discusses regulation and regulatory forms with a seemingly implicit assumption that "those to be influenced" are inherently self-interested and thus motivated to comply with legal structures only when there are sufficient external incentives to do so. This view of the person is inconsistent with recent perspectives in the field of psychology. A law and morality perspective, coupled with insights from the field of psychology, asserts that influence, compliance, and motivation are far more complex than this legal literature would suggest. In this Article, we map the varying influence structures, motives, psychological needs, emotional mechanisms, and levels of moral reasoning that various forms of regulation, from hard law to soft law, might appeal to. We provide examples from global banking and one soft law initiative, the Equator Principles, to illustrate reasons psychology would suggest why soft law may be more effective in some circumstances in influencing behavior within the firm than hard law, while recognizing important limits to such influence.

The creation of a "market for virtue" and social responsibility is dependent on the flow of information from the corporation to the responsible agents. To achieve a free flow of information, excessive, missing and unreliable information must be avoided. More generally, a market for virtue should make it possible to create the appropriate means to signal true commitments and enable informed agents to know how to effectively use their limited resources for deploying market power that rewards and sanctions the corporations that deserve such responses. The underlying assumption of this query is that if corporations in fact compete among themselves in the dimension of social responsibility, then some corporations will identify ways of demonstrating credibility of both efforts and results. The purpose of publishing codes of conduct and annual Corporate Social Responsibility (CSR) reports would be to improve the level of information that is needed for the market for virtue to function. In order to assess the existence of a competitive market for virtue, the Article analyzes the codes and associated documents of sixteen multinational companies in three industries — textile, petrochemical and automobile. The Article finds some differences between labor and environmental norms, both within each of the sectors, as well as between sectors. However, the major finding casts doubt on the very assumption that labor and environmental norms are shaped by a market for virtue. Contrarily, the Article sheds new light on alternative reasons for developing social norms in corporations and rethinks the purpose of CSR reports.

In September 2010, the International Organization for Standardization adopted a new International Guidance Standard on Organizational Social Responsibility — ISO 26000. This Article, written by a participant in the process of developing the standard over a five-year period, considers the points of intersection between ISO 26000 and public policy, international law, democracy, and the role of the state. The Article is grounded in an analysis of the standard’s negotiating history. The concluding Part reflects on the implications of these observed facts for the development of appropriate descriptive and normative theoretical frameworks and proposes three innovations that could underpin a less problematic relationship between ISO, public policy and the role of the state.