From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations

42 Pages Posted: 27 Mar 2008

See all articles by Larry Catá Backer

Larry Catá Backer

The Pennsylvania State University (University Park) – Penn State Law


It is well known that soft international law has begun to provide incentives for the management of a values-based behavior structure for multinational corporations. This paper will argue that hard international law can serve as a vehicle for the enhancement of a market environment in which corporate stakeholders, and principally consumers and investors, might incorporate information about corporate social behavior in their consumption and investment decisions. Specifically, a mandatory system of transparency and disclosure at the international level may provide an efficient means of creating incentives for moral behavior without the need to incorporate any one version of appropriate manifestations of social responsibility on corporate entities. International law can thus institutionalize, within a rule of law context, important incentives for appropriate behavior without incorporating any particular set of public values and provide a legal framework through which stakeholders can manage the public or social behavior of multinational corporations. The paper starts with a contextualization of the regulatory problem: the extent of the responsibility of corporate actors for the working conditions of indirect employees. Neither domestic nor international law has been much help. Law has taken only some very tentative steps to recognize or further the rise of this moral sense of obligation. The rise of the much-touted corporate social responsibility movement has resulted in the proliferation of a number of responses at every level of governance. Yet, virtually all of these responses have been in the form of soft law, usually voluntary codes that are not enforceable by any political organization, each reflecting the values of their proponents or stakeholders. Still, the obligation can be given legal effect through contract and enforced through regimes of monitoring and disclosure. The paper then considers the way in which hard international law might enhance this framework in which markets determine the substance of appropriate behavior which corporations are willing to embrace. For the purpose, the paper proposes the creation of a global system of disclosure and transparency. The object of these mandates would not be to establish a definitive set of behaviors, but rather to establish a framework within which corporate stakeholders-consumers, investors, labor, and others - could adjust their relationships on the basis of the behavior disclosed. The paper ends by pointing to the sources for such international lawmaking that already exist.

Keywords: corporate social responsibility, disclosure, monitoring, multinational corporaitons, transnational corporations, international law

JEL Classification: K22, K42, M14, O19, Z10

Suggested Citation

Backer, Larry Catá, From Moral Obligation to International Law: Disclosure Systems, Markets and the Regulation of Multinational Corporations. Georgetown Journal of International Law, Vol. 39, 2008, Available at SSRN:

Larry Catá Backer (Contact Author)

The Pennsylvania State University (University Park) – Penn State Law ( email )

Lewis Katz Building
University Park, PA 16802
United States

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