Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Sunday, September 27, 2009

Anderson on Global Corporate Citizenship

Law and Global Corporate Citizenship: A Research Agenda, by Rachel J. Anderson, William S. Boyd School of Law, UNLV, was recently posted on SSRN.  Here is the abstract:

The role and purpose of large transnational corporations is among the defining questions of our times. Large transnational corporations have economic, political, social, and legal influence that rivals that of some sovereign nations. Transnational corporations act in ways that protect and infringe upon human rights. Transnational corporations engage in activities that can destroy or preserve the environment. However, the regulation of transnational corporations does not adequately create incentives for transnational corporations to make decisions that adequately incorporate ethical and moral values. As a result, the acts of transnational corporations are not as beneficial to society as they could be and often they are downright harmful by violating human rights and damaging the environment.

How should transnational corporations be regulated? I argue that mechanisms based on economic assumptions alone are insufficient. Economic-based mechanisms do not fully make provisions for the dualistic nature of corporations and the transjurisdictional nature of foreign direct investment. Rather, law making and enforcement should take into consideration both the economic and social nature of corporations, their operation in public and private spheres, and the fact that transnational corporations have stakeholders and are stakeholders themselves. I suggest that understanding transnational corporations as global citizens furnishes a lens with which to develop a wider range of regulatory options.

This article is part of a larger project on law and Global Corporate Citizenship. In this series of articles, I identify gaps in the domestic and international regulation of transnational corporations, identify strengths and weaknesses of previous attempts to regulate transnational corporations, and propose options for the implementation of more comprehensive regulation. My first article in this series, Toward Global Corporate Citizenship: Reframing Foreign Direct Investment Law, is forthcoming in the Michigan State Journal of International Law. In that article, I argue that the asymmetry and fragmentation of foreign direct investment law encourages excesses by transnational corporations, and I propose developing a legal framework for Global Corporate Citizenship as part of a comprehensive reform of foreign direct investment law.

In this article, I begin to develop a legal theory of Global Corporate Citizenship and propose a new research agenda called Law and Global Corporate Citizenship. This article presents the case for and maps out this new research agenda in which I analyze ways to reform the regulation of transnational corporations. The purpose of this agenda is to critically analyze weaknesses in current regulation of transnational corporations, provide a framework for developing proposals for regulatory reform, and map out future research. I argue that Global Corporate Citizenship is an appropriate vehicle by which to delineate the ethical responsibilities of transnational corporations and the values that should guide their engagement with society. Further, I propose legal obligations for transnational corporations and explore new substantive rules addressing the role of transnational corporations in human rights, environmental protection, and globalization.

There are three question complexes that this research agenda seeks to answer. First, is there a deficit in domestic and international regulation of transnational corporations, why does this deficit exist, and what harms result from this deficit? Second, are there existing models that could be tweaked to close the gap or is a new model needed and, if so, are there prior efforts or initiatives that could inform the development of a new regulatory framework? Third, what would a new regulatory system based on theories of Global Corporate Citizenship look like and what forms could the implementation of a legal framework for Global Corporate Citizenship take?

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