Meta-Regulation: Legal Accountability for Corporate Social Responsibility

Abstract:     
The law is traditionally concerned with accountability - 'holding people to threshold criteria of good conduct and performance'. Responsibility goes beyond accountability to ask how much people 'care about their duties, ideals as well as obligations, values as well as rules' (see Selznick, The Communitarian Persuasion, 2002, 29). Traditional legal regulation of business is primarily concerned with accountability.

Recently, law and regulatory enforcement action are being used (by consumers, employees and NGOs as well as governments) to encourage and enforce corporate economic, social and environmental responsibility. The law is (directly or indirectly)requiring companies to implement governance measures such as compliance systems, whistle-blower protections, CSR reporting initiatives, stakeholder complaints and consultation processes etc, in order to build up their corporate conscience (to build values that transcend narrow self-interest into the practice and structure of the enterprise: Selznick, 101). This has been referred to as 'meta-regulation' - the regulation of self-regulation of responsibility (Parker, The Open Corporation, 2002).

This paper sets out and examines the character of these meta-regulating innovations in the use of law, and asks whether they can meet their aspirations to make companies accountable for responsibility? I will argue that rather than imposing rules and judgments on businesses through hierarchical law-making and an adversarial court system, meta-regulating law aspires to work proactively into a world which is rich with indigenous regulatory possibilities (including corporate governance), teaching businesses to become responsible for themselves (to ethically self-regulate within the framework of the law).

Meta-regulating law tries to turn itself inside out - it explicitly promotes responsible (and democratic) moral deliberation about values and obligations by business, rather than imposing its own rules and standards on business assuming they will be accepted as legitimate. But in turning itself inside out, metaregulating law faces the grave danger that it will hollow itself out into regulatory processes that lack substance. This paper will argue that this is in fact occurring, that legal regulation that seeks to encourage corporate responsibility often does little more than requiring businesses to put in place window-dressing that makes business appear more legitimate while avoiding fundamental social change to improve responsibility.

Keywords: corporate, responsibility, meta-regulation, regulation

JEL Classifications: K22

Accepted Paper Series