On Friday, September 30, Professor Kish Parella presented her work in progress, Catalyzing Institutional Change, at the American Society of International Law International Economic Law Interest Group Biennial Conference that was co-sponsored by the Institute for International Economic Law at Georgetown University Law Center. The biennial conference sought to integrate different sub-fields within international economic law, such as trade, finance, and investment, and to consider the expanded policy choices that result from such synthesis.
Parella’s research focuses on the interaction between public institutions and private ordering in transnational regulation. Her presentation summarized her current research on the effects of reputational sanctions on institutional change within industry associations. The abstract is below:
Abstract: One strategy for regulating the transnational conduct of global business actors, especially concerning environmental, social, and governance (ESG) issues, is to utilize international trade associations as intermediaries and disseminators of these public norms. International trade associations already undertake a range of private governance functions from standard-setting to policy advocacy to dispute resolution. They represent a promising avenue to address the “governance gap” created by the limits of state-based regulation and the realities of cross-border business. Unfortunately, private governance performed by many trade associations are often inadequate on ESG issues. The standards developed fall short substantively; sanctions for non-compliance are often lacking.
This Article argues that instead of abandoning trade associations as regulatory intermediaries, policy-makers should attempt to improve their governance by altering the institutional context in which these actors operate. This Article incorporates institutional analysis into the study of transnational regulation by drawing upon the institutional research of new institutional economics (NIE) and organizational theory. Legislative legal institutions (constitutions, statutes, regulations) and adjudicative legal institutions (criminal investigations, civil lawsuits) create two important side effects: regulatory uncertainty or a legitimacy crisis. Actors respond to one or both of these effects and their responses take the form of institutional change. Affected actors voluntarily create, revise, or otherwise improve other, non-legal institutions in their lives that also constrain their behavior, such as residential policies, corporate guidelines, or industry codes of conduct, thereby improving the regulatory potential of these other institutions.