Regulating Through Numbers: A Case Study of Corporate Sustainability Reporting
49 Pages Posted: 23 Aug 2011 Last revised: 24 Jul 2013
Date Written: August 23, 2011
Over the past two decades, there has been a drive to reduce complex concepts into simple numbers. Corruption, rule of law, human rights, and more have all been reduced to quantitative indicators. Under the theory that what gets measured gets done, international law has begun relying on these tools to operationalize global norms and assess compliance. In particular, private regulatory bodies are using indicators to claim scientific authority as they set global standards and shape domestic law. Yet legal scholarship has been largely silent about the implications of these statistical tools for governance.
In this Article, I analyze the prevalence of quantitative indicators as a regulatory tool, identify the limits of using these techniques to inform decision making, and offer recommendations on how to increase their legitimacy in domestic and global governance. The appeal of indicators lies in their ability to translate social phenomena into a numerical representation that is transparent, easy to understand, and comparable across actors. Yet I argue that there are potential costs of incorporating indicators in regulation - specifically, the promotion of box-ticking and superficial compliance, the dominance of technical experts over decision making, and the distortion of public values when converted to numbers. My analysis draws from an empirical study of the Global Reporting Initiative (GRI), based on personal interviews and participation in a GRI-certified training program. The GRI is a private transnational body that has produced the leading standard for sustainability reporting, used by more than three-quarters of the Global Fortune 250 companies. Its guidelines include 79 indicators for corporations to report on their social, environmental, and economic performance. Based on this study, I contend that the use of indicators can be fraught with problems, which are often overlooked due to the authoritative nature of numbers. In order to maximize their effectiveness, I recommend that government agencies and private actors design meaningful indicators, avoid data overload, require third-party verification, and expand participation by citizens and a broad group of experts.
Keywords: private regulatory bodies, global governance, corporate sustainability, indicators, administrative law
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