MULTINATIONAL CORPORATIONS, TRANSNATIONAL LAW: THE UNITED NATION’S NORMSON THE RESPONSIBILITIES OF TRANSNATIONAL CORPORATIONS AS HARBINGER OFCORPORATE SOCIAL RESPONSIBILITY IN INTERNATIONAL LAWLarry Catá BackerPennsylvania State UniversityDickinson School of Law150 South College StreetCarlisle, PA 170-131-717-240-5243 (direct)1-717-241-3501 (fax)[email protected]://www.personal.psu.edu/lcb11ABSTRACT: This article considers the ramifications of current efforts to internationalize the regulation ofcorporate social responsibility. The primary focus will be on current United Nations efforts to regulate‘transnational corporations’ through the development of its “Norms on the Responsibilities ofTransnational Corporations and Other Business Enterprises With Regard to Human Rights.” The Normsare critically important for two reasons. First, the Norms themselves point to the evolution of fundamentalchanges in global thinking about corporations, the character and source of their regulation that together willhave significant ramifications for American domestic law. The Norms evidence an increasing taste, at theinternational level, for a shift from a private to a public law basis for corporate regulation. The corporatesocial responsibility debate is ultimately a debate about the fundamental character of corporations asprincipally private or public entities. Second, the development and continued life of the Norms and theideas it embodies illustrate the development of a mechanics of interplay between national, international,public and private law systems in allocating, and competing, for power to regulate. The regularization andinstitutionalization of these mechanics evidence transnational law coming into its own as a separate field ofpower. The article first briefly describes the traditional domestic context of the debates about so-calledcorporate social responsibility and its relation to basic issues of corporate governance. The article thenturns to the changing context in which the Norms were conceived. A critical analysis of the Norms in thiscontext points to potential critical changes in global consensus with significant ramifications for Americandomestic law. First, the Norms considerably alter the framework of the debate about corporate socialresponsibility. Corporations, seen as social, political, and economic actors, would serve not merely abroadened set of traditional stakeholders, but also the state and international community as well.Traditional constraints on action against shareholders, and especially corporate shareholders, would beeffectively disregarded for virtually all purposes. Second, the Norms enlist transnational corporations asagents of international law implementation, even against states that have either refused to ratify certaininternational instruments or have objected to the gloss advanced by international institutions. The Normscreate an effective system for the implementation of international law norms through private law. TheNorms are implemented through the law of contract between individuals rather than by treaty or stateaction. Because the Norms are based on a number of international instruments that have not been ratified byall states, the Norms use transnational corporations as a means of end-running states, and in the process,create the basis for the articulation of customary international law principles that will apply to states. Third,the Norms substantially alter the balance of power over corporate governance between inside stakeholders(shareholders, lenders, etc) and outside stakeholders (community, society, the state) by providing asubstantial role to NGOs to monitor TNC conformity to the requirements of the Norms. The article endswith a preliminary consideration of the Norms in a broader context. It analyses the Norms, not as substance,but as symptom of two great fundamental changes in the allocation of governance power in a global setting.First, it illustrates rearrangements in the relative power of systems of domestic, international, public andprivate systems of governance. Second, the Norms provide a template for the character and form ofinteraction and communication, among these systems of governance.COPYRIGHT 2005 © Larry Catá BackerMULTINATIONAL CORPORATIONS, TRANSNATIONAL LAW37 Colum. Hum. Rts. L. Rev. – (2005)Larry Catá BackerOctober 31, 20051Multinational Corporations, Transnational Law:The United Nations’ Norms on the Responsibilities of Transnational Corporations as aHarbinger of Corporate Social Responsibility in International LawLarry Catá Backer*This Article considers the ramifications of current efforts to internationalize theregulation of corporate social responsibility. The primary focus will be on the UnitedNations’ efforts to regulate “transnational corporations” through the development of itsNorms on the Responsibilities of Transnational Corporations and Other BusinessEnterprises With Regard to Human Rights.1 The Norms are unlikely to be adopted in anysort of binding form in the current round of negotiation respecting its final form.2 * Professor of Law, Pennsylvania State University, Dickinson School of Law. An earlierversion of this article was presented for the plenary panel on Corporate Social Responsibility:Reform and Race at the Second National People of Color Legal Scholarship Conference, GeorgeWashington University Law School, Washington, D.C., October 7, 2004. Special thanks to myresearch assistant Michael Davey (Penn State ’05) for his very able work on this project.1 U.N. Econ. & Soc. Council [ECOSOC], Sub-Comm. on Promotion & Prot. of HumanRights, Norms on the Responsibilities of Transnational Corporations and Other BusinessEnterprises With Regard to Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/L.8 (August 7, 2003)(draft resolution prepared by Alfonso Martínez et al.), available athttp://www.unhchr.ch/huridocda/huridoca.nsf/Documents?OpenFrameset. This document wassubsequently revised. See ECOSOC, Sub-Comm. on Promotion & Prot. of Human Rights, Normson the Responsibilities of Transnational Corporations and Other Business Enterprises WithRegard to Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (Aug. 26, 2003)
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