The Challenges of Legislating for Sustainable Development in a Global Economy

The increased globalization of the world economy and the growth of powerful multinational corporations present a novel challenge to social and environmental regulation. While the current shift away from national regulation and towards global trade standards and international law certainly facilitates trade, is it really the best option for protecting society and the environment? The answer to that question is not a simple one.
When the British Standards Institution, a member of the International Standards Organization (ISO), proposed the development of an ISO Occupational health and safety standard in 1999, their efforts encountered strong international opposition. In this specific case, the opposition accused the ISO of trying to undermine similar work being done by the International Labor Organization (ILO). The underlying threats of such a standard are even more serious. Unlike the ILO, which is tripartite, representing the interests of labor, employers, and governments, ISO standards committees are made up of business representatives and government personnel. In other words, standards committees give virtually no voice to labor or NGOs, and their individual interests are presumably at odds with certain sustainable development goals. While this may not manifest itself in the standards themselves, which are generally not objectionable, the greater problem lies in the function of these standards in the global marketplace.
Under the World Trade Organization Agreement, member governments are obligated to adopt international standards when feasible, and businesses can make trade conditional upon adherence to ISO standards. So far so good, right? The problem is, though, that ISO standards are voluntary. Even worse, they can restrict governments’ ability to regulate, and replace enforceable law with voluntary corporate responsibility. What ensues, then, is a system in which large powerful corporations can force governments to satisfy their conditions, while they themselves can choose whether or not to comply with international standards.
So perhaps undermining the ability of strong, stable governments to regulate is a bad idea. But what about countries that have only a small or weak regulatory framework? Aren’t international standards better than nothing? And what about corporate social responsibility and companies’ responsibility to their consumers? This is where the problem gets really complicated. Orin Smith, ex-ceo and president of Starbucks, The says that the implementation of their sustainable CAFÉ (Coffee and Farmer Equity) Practice, involving fair pay, and environmental and social impact standards, has been limited by a lack of government support in developing countries.
“Implementation may be limited in countries where coffee can only be purchased through government agencies… and not directly through the farmer,” he says.
“We find the most challenging situations in developing nations where the regulatory apparatus is not strong. Given their poverty, these countries can be seduced by the monies that multinational companies can bring into their economy, which can led them to allow or turn a blind eye to environmental and social practices that would not be accepted in North America or Europe. Only stronger international governance mechanisms can help this.”
But can they? For the reasons stated above, international standards may only serve to institutionalize the kind of exploitation by corporations that Smith complains about.
More pertinent to finding as solution is what Smith implies to be the route of the problem: weak national regulatory systems. Rather than undermining and replacing national regulation with international standards, perhaps a more ideal solution would be to help countries develop stronger national regulatory frameworks. Of course, it’s anyone’s guess as to how that might best be achieved.