The Symbiosis between Corporate Governance & International Law

Abstract

International law and corporate governance share a special relationship: each can offer a way to address shortcomings in the other. International law offers potential solutions to negative externalities generated by corporate activity that harm consumers, employees, local communities, and a variety of non-shareholder parties. A variety of international agreements, customary international law, and non-binding recommendations address many of these externalities and can improve corporate conduct if adopted within corporate governance. The challenge is that international law norms are often under-enforced by state actors, thereby limiting their reach to corporate actors. However, corporate actors can address this shortcoming by directly incorporating international law into board oversight, management practices, and contract design. The incorporation of international law into corporate governance confronts both the corporate governance gap by addressing corporate externalities and the global governance gap by addressing international law’s enforcement challenge. This Chapter explained that a variety of stakeholder mechanisms apply international law norms to corporate governance and are therefore integral to making this symbiosis effective.

Keywords: ESG, CSR, stakeholders, corporate social responsibility, corporate purpose, international law, corporate governance