Private Governance and Public Authority: Regulating Sustainability in a Global Economy

Businesses and civil society actors are creating private rulemaking instruments to govern corporate behavior, but when does a public authority intervene? Renckens develops a new theory of public-private regulatory interactions that depends on the economic benefits and the degree of fragmentation.

Format: Paperback / softback
Length: 328 pages
Publication date: 23 June 2022
Publisher: Cambridge University Press

The global economy faces significant concerns regarding its sustainability, prompting businesses to prioritize responsible corporate practices. Traditionally, states have been the primary rulemakers in this domain. However, businesses and civil society actors have taken on a more active role in creating private rulemaking instruments, such as eco-labeling and certification schemes, to govern corporate behavior. At what point does a public authority? authority intervene in such private governance and reassert the primacy of public policy?

Renckens presents a novel theory of public-private regulatory interactions, exploring when and how a public authority intervenes in private governance. He argues that the decision to intervene depends on the economic benefits generated by such intervention for domestic producers and the level of fragmentation in private governance schemes. Drawing from European Union policymaking on organic agriculture, biofuels, fisheries, and fair trade, Renckens highlights the political-economic conflicts between private and public rule makers and the strategic nature of regulating sustainability in a global economy.

The increasing engagement of businesses and civil society actors in creating private rulemaking instruments reflects a recognition of the limitations of traditional state-based rulemaking. Private rulemaking allows for more flexibility and responsiveness to market demands, as it can be tailored to specific industries or sectors. It also allows for the involvement of stakeholders in the governance process, promoting transparency and accountability.

However, private rulemaking also raises concerns about the potential for regulatory capture and the erosion of public policy objectives. When private interests dominate the rulemaking process, they may prioritize their own profits over public welfare. This can lead to the adoption of regulations that favor certain industries or undermine environmental or social standards.

To address these concerns, public authorities need to play a crucial role in monitoring and regulating private rulemaking instruments. They can do this by establishing clear guidelines and standards for the development and implementation of private rulemaking schemes, ensuring that they are consistent with public policy objectives and do not undermine the integrity of the market. Public authorities can also engage in dialogue with private stakeholders to promote transparency and accountability and ensure that the interests of all stakeholders are taken into account.

In conclusion, the relationship between public and private rulemaking is complex and multifaceted. While private rulemaking can provide flexibility and responsiveness to market demands, it also raises concerns about the potential for regulatory capture and the erosion of public policy objectives. Public authorities need to play a crucial role in monitoring and regulating private rulemaking instruments to ensure that they are consistent with public policy objectives and promote the sustainability of the global economy.

ISBN-13: 9781108748483