BEYOND COMPLIANCE: SUSTAINABLE
DEVELOPMENT, BUSINESS, AND PROACTIVE LAW
GERLINDE BERGER-WALLISER* AND PAUL SHRIVASTAVA†
ABSTRACT
Scholarly work shows that the existing legal framework for sustainable
development is insufficient, cautious, incremental, and incomplete. Despite
public and private efforts to address sustainable development, environmental
and social problems and conditions continue to worsen. This Article posits that
the status quo is a direct result of the systemic failure to recognize the potential for
a synergistic relationship between the private and public sectors to create a
comprehensive, yet effective, regulatory framework. Based on an analysis of the
current national and international legal framework and alternative regulatory
approaches in the “New Governance” literature, this Article aims to engage law,
science, and sustainable business to determine the best way to develop a
governance regime for sustainable development based on “Proactive Law.”
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II. BACKGROUND ON SUSTAINABLE DEVELOPMENT . . . . . . . . . . . . . .
A. A Short History of the Sustainability Paradigm . . . . . . . . . .
B. The “Three E’s” of Sustainability . . . . . . . . . . . . . . . . . . . .
III. BUSINESS AND SUSTAINABLE DEVELOPMENT . . . . . . . . . . . . . . . .
A. Economic Activity as Source of Ecological Crises . . . . . . . . .
B. Business-Wide Sustainable Development Initiatives . . . . . . .
IV. THE CONCEPT OF PROACTIVE LAW . . . . . . . . . . . . . . . . . . . . . .
A. History and Broad Application . . . . . . . . . . . . . . . . . . . . .
B. Relevance to Sustainable Development . . . . . . . . . . . . . . . .
V. LAW AND SUSTAINABLE DEVELOPMENT . . . . . . . . . . . . . . . . . . .
A. The Current Legal Framework . . . . . . . . . . . . . . . . . . . . . .
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* Assistant Professor of Business Law, School of Business, University of Connecticut.
† David O’Brien Distinguished Professor of Sustainable Enterprise, John Molson School of
Business, Concordia University (Canada) and Affiliate Faculty, ICN Business School (France). We
benefited from presenting versions of this Article at the 2014 Academy of Legal Studies in
Business Annual Conference, the Big Ten and Friends Business Law Research Seminar at Indiana
University, and the Impact of Law and Regulation on Transitioning to Business Sustainability
Symposium at Smeal College of Business, Pennsylvania State University. We are grateful to the
seminar participants, Stephen Park, Scott J. Shackelford, Kaisa Sorsa, and three anonymous
reviewers for their insightful comments, and to Helena Haapio for introducing us to the Proactive
Law Approach. We thank Patricia Pernes and Michael Thomason for their valuable research
assistance and editorial contributions. © 2014, Gerlinde Berger-Walliser & Paul Shrivastava.
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1. International Sustainable Development Law . . . . .
2. Sustainable Development Law in the United
States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Governance for Sustainability . . . . . . . . . . . . . . . . . . . . . .
1. Traditional Governance and Its Critics . . . . . . . . .
2. Market-Based Regulation . . . . . . . . . . . . . . . . . . . .
3. New Governance . . . . . . . . . . . . . . . . . . . . . . . . . .
VI. A PROACTIVE APPROACH TO SUSTAINABLE DEVELOPMENT
REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Participation and Collaboration . . . . . . . . . . . . . . . . . . . .
1. Stakeholder Participation . . . . . . . . . . . . . . . . . . .
2. Multi-Party-Collaboration. . . . . . . . . . . . . . . . . . . .
3. Shift from Adversarial to Win-Win Relationships . . .
B. Shared Power and Responsibility . . . . . . . . . . . . . . . . . . . .
1. Empowering and Public-Private Partnership . . . . .
2. Shared Expertise and Responsibility . . . . . . . . . . .
3. Decentralization, Competition, Pragmatism, and
Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C. Problem-Prevention and Value-Creation . . . . . . . . . . . . . . .
1. Problem-Prevention . . . . . . . . . . . . . . . . . . . . . . . .
2. Promotion and Value-Creation . . . . . . . . . . . . . . .
VII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I.
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INTRODUCTION
“Building a vision of international society as it might be if it were
governed by sustainability involves being bold, both intellectually and
philosophically. It starts by unlocking the complex relationship between
power, authority, rules and norms.”1
Sustainable development2 is an issue of fundamental importance in
the twenty-first century and is an important policy goal for the interna-
1. Rebecca M. Bratspies, Sustainability: Can Law Meet the Challenge?, 34 SUFFOLK TRANSNAT’L L.
REV. 283, 297 (2011).
2. The term “sustainable development” as used in this Article is based on the Brundtland
Report issued by the 1987 World Commission on Environment and Development (WCED), which
defines sustainable development as “development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.” U.N. WORLD COMM’N ON
ENV’T AND DEV., World Commission on Environment and Development: Our Common Future, U.N. DOC.
A/42/427 (Mar. 20, 1987), http://www.un-documents.net/our-common-future.pdf [hereinafter
Brundtland Report].
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tional community and national governments.3 In response, a growing
body of law addresses environmental concerns and promotes sustainable development on all levels from local development laws,4 via
industry self-regulation and other soft law instruments,5 to international treaties.6
However, despite these regulatory efforts, environmental problems
and conditions continue to worsen. Global carbon accumulations in
the earth’s atmosphere continue to rise each decade,7 despite the
promises of world governments signing the Rio Treaty in 1992 to
reduce CO2 accumulation by twenty percent of 1990 levels.8
Scholarly work in the field of law and sustainability demonstrates that
the existing framework for sustainable development is insufficient,
cautious, incremental, and incomplete.9 Some call for sustainable
3. See Press Release, The White House, Fact Sheet: U.S. Global Development Policy (Sept. 22,
2010), available at http://www.whitehouse.gov/the-press-office/2010/09/22/fact-sheet-us-globaldevelopment-policy; see also INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, CLIMATE CHANGE
2014: IMPACTS, ADAPTATION, AND VULNERABILITY (2014), [hereinafter IPCC], available at http://www.
ipcc.ch/report/ar5/wg2.
4. See generally JOAN FITZGERALD, EMERALD CITIES: URBAN SUSTAINABILITY AND ECONOMIC DEVELOPMENT (2010).
5. Soft law consists of rules, standards, principles, and norms articulated in the language of
law that are not legally binding but nonetheless are treated as having legal authority. Examples of
international soft law in the area of sustainability are the Stockholm Declaration on the Human
Environment, Report of the United Nations Conference on the Human Environment, U.N. DOC.
A/CONF.48/14, at 2 & Corr.1 (Jun. 16, 1972) and the United Nations Conference on Environment and Development, Rio de Janeiro, Braz., June 3-14, 1972, Rio Declaration on Environment and
Development, U.N. DOC. A/CONF.151/26 (Vol. I), Annex I (Aug. 12, 1992).
6. For numerous examples of sustainability related treaties, see Table of Treaties, in MARIECLAIRE CORDONIER SEGGER & ASHFAQ KHALFAN, SUSTAINABLE DEVELOPMENT LAW, PRINCIPLES, PRACTICES, & PROSPECTS 373-84 (2004).
7. Global carbon accumulation in the earth’s atmosphere is a surrogate measure for the
overall condition of the earth’s environment. The amount of carbon dioxide in the earth’s
atmosphere is the cause of climate change. Carbon dioxide in the earth’s atmosphere had
remained below 200 parts per million (ppm) until mid-1700s. It rose to 354 ppm by 1990. It has
grown to 394.45 ppm in March 2012 (Mauna Loa Observatory, 2012) and in 2013 at least one lab
reported over 400 ppm of carbon in the earth’s atmosphere. See Trends in Atmospheric Carbon
Dioxide, NAT’L OCEANIC & ATMOSPHERIC ADMIN., http://esrl.noaa.gov/gmd/ccgg/trends/#mlo_
full (last visited September 2, 2014); see also IPCC, supra note 3.
8. United Nations Conference on Environment and Development, Rio de Janiero, Braz.,
June 3-14 1992, Rio Declaration on Environment and Development, U.N. Doc. A/CONF.151/26/Rev.1
(Vol. I); see also, U.N. Framework Convention on Climate Change art. 4, May 9, 1992, available at
http://unfccc.int/essential_background/convention/background/items/1349.php.
9. Daniel J. Fiorino, Rethinking Environmental Regulation: Perspectives on Law and Governance, 23
HARV. ENVTL. L. REV. 441, 442 (1999); John C. Dernbach, Navigating the U.S. Transition to
Sustainability: Matching National Governance Challenges with Appropriate Legal Tools, 44 TULSA L. REV.
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development law to be more “hard” and enforceable.10 Others propose
an adaptation of new legal mechanisms, commonly grouped together
under the umbrella term “New Governance.”11 Such mechanisms
underscore the hybrid nature of sustainability through a polycentric,
multi-level approach.12 Widely absent from the discussions in the
existing legal literature, however, is the fact that sustainability is not
only a legal or moral issue, but is also a business issue. Business activity
is one, though arguably not the only, of the most important sources of
environmental degradation, social injustice, and economic development.13 Simultaneously, the private sector is increasingly impacted by
the economic costs of environmental degradation.14 Accordingly, chief
executives from the world’s largest corporations recently identified
sustainable development as the most significant issue facing their
organizations,15 and over the past two decades, corporations have
93, 94 (2008) (concluding that “the issue of an appropriate legal foundation for sustainable
development at the national level has received less attention than it deserves”); Bratspies, supra
note 1, at 290-91.
10. DEP’T OF ECON. AND SOC. AFFAIRS, ACHIEVING SUSTAINABLE DEVELOPMENT AND PROMOTING
DEVELOPMENT COOPERATION, 71 (2008), available at http://www.un.org/en/ecosoc/docs/pdfs/fina_
08-45773.pdf.
11. For an overview of the “New Governance” paradigm see generally Orly Lobel, The Renew
Deal: The Fall of Regulation and the Rise of Governance in Contemporary Legal Thought, 89 MINN. L. REV.
342 (2004) (identifying common traits to several “New Governance” approaches).
12. See generally Cinnamon P. Carlarne, Rethinking a Failing Framework: Adaptation and Institutional Rebirth for the Global Climate Change Regime, 25 GEO. INT’L. ENVTL. L. REV. 1, 2 (2012) (citing
the relevant literature in this evolving field with regard to climate change); Elinor Ostrom, Nested
Externalities and Polycentric Institutions: Must We Wait for Global Solutions to Climate Change Before
Taking Action at Other Scales?, 49 ECON. THEORY 353 (2012); Daniel H. Cole, From Global to Polycentric
Climate Governance, 2 CLIMATE L. 395 (2011); Elinor Ostrom, Polycentric Systems for Coping with
Collective Action and Global Environmental Change, 20 GLOBAL ENVTL. CHANGE 550 (2010); Elinor
Ostrom, A Polycentric Approach for Coping with Climate Change (World Bank, Policy Research
Working Paper No. 5095, 2009); Kenneth W. Abbott, The Transnational Regime Complex for
Climate Change (Nov. 2011) (unpublished manuscript), available at http://papers.ssrn.com/
sol3/papers.cfm?abstract_id_1813198; Joanne Scott, The Multi-Level Governance of Climate Change, 1
CARBON & CLIMATE L. REV. 25 (2011).
13. See infra Part III.A.
14. See Coral Davenport, Industry Awakens to Threat of Climate Change, N.Y. TIMES, Jan. 24, 2014,
at A1, available at http://www.nytimes.com/2014/01/24/science/earth/threat-to-bottom-linespurs-action-on-climate.html (noting the increasing awareness among American business leaders
of lower gross domestic products, higher food and commodity costs, broken supply chains and
increased financial risk due to global warming and specifically describing the efforts of Coca-Cola
and Nike); see also infra, Part III.A.
15. This finding was presented in a joint study published by Accenture and the United
Nations Global Compact in 2013. The United Nations–Accenture report interviewed 1,000 top
executives from 27 industries across 103 countries and assesses sustainable business practices in
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gradually internalized the importance of sustainable development
policies.16 Although frequently limited to economically justifiable projects, the private sector has become a driving force behind sustainability
initiatives.17
This Article aims to engage law and sustainable business to determine the best way to develop a regulatory structure based on the four
fundamental principles of Proactive Law and examines how these
relate to other proposals in the New Governance literature. The Article
further analyzes the current legal framework for sustainable development and explains why businesses act out of self-preservation when
creating a sustainable economic development strategy.
Part II of this Article defines the sustainable development paradigm
and briefly summarizes its historic development. Part III identifies
corporate sources of ecological crisis and environmental degradation
and provides examples of the private sector’s embrace of the sustainable development concept. Part IV introduces the concept of Proactive
Law and its relevance to the sustainable development paradigm. Part V
presents an overview of the current state of national and international
sustainable development law and its shortcomings. Part V then surveys
proposals in the “New Governance” literature to address some of the
deficiencies of the traditional legal system and how they apply to
sustainable development. Part VI analyzes Proactive Law as a novel
and complementary approach and provides examples for its practical
application to sustainable governance in the private sector. Part VII
concludes by suggesting that Proactive Law and other innovative regulatory concepts described in the previous sections could benefit from
each other to enhance sustainable governance and provides avenues
for further research.
tandem with global priorities. The report identifies how leading companies are adopting
innovative strategies to combine impact and value creation. See ACCENTURE, THE UN GLOBAL
COMPACT-ACCENTURE CEO STUDY ON SUSTAINABILITY 2 (2013), available at http://www.accenture.
com/Microsites/ungc-ceo-study/Documents/pdf/13-1739_UNGC%20report_Final_FSC3.pdf.
16. See generally Paul Shrivastava, Environmental Technologies and Competitive Advantage, 16
STRATEGIC MGMT. J. 183 (1995); Alex Markevich, The Evolution of Sustainability, 51 MIT SLOAN
MGMT. REV. 13 (2009) (describing six perspectives on sustainability potentially yielding competitive advantage for companies).
17. The Accenture study notes that one third of the CEOs believe the world economy is on
track to meet the needs of the world on a sustainable basis, but a majority feels a strong business
case can be made for sustainable development. See ACCENTURE, supra note 15, at 11.
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II.
BACKGROUND ON SUSTAINABLE DEVELOPMENT
There is no authoritative legal definition of sustainable development. The absence of a clear definition is sometimes seen as a contributing factor to the delay in effectively addressing environmental, social,
and economic concerns.18 The word sustainability or sustainable development is ubiquitous, and like any overused term, is in danger of being
watered down, misused, abused, and losing its original meaning.19
Various approaches to sustainable development exist and different
communities employ the term with different meanings depending on
the conditions and settings of where it is used.20
It is beyond the scope of this Article to attempt to define sustainable
development. It may not even be possible or desirable to find a clear,
static, and universal understanding of the term.21 Like democracy,
globalization, or justice, it is an evolving and disputed concept.22 But,
in order to better understand its significance, it is helpful to retrace the
term’s historic roots, differentiate between sustainability and sustainable development, and try to clarify its meaning in a way that makes it
workable for developing our regulatory approach later in this Article.
A. A Short History of the Sustainability Paradigm
Modern concern for the environment began with preservationists
who advocated that parts of the natural environment should be entirely
sheltered from any human intrusion.23 A competing view of environmentalism, advanced by the conservationist movement, emerged advocating that nature should be protected, but largely for human use. In this
18. J.B. Ruhl, The Seven Degrees of Relevance: Why Should Real-World Environmental Attorneys Care
Now About Sustainable Development Policy?, 8 DUKE ENVTL. L. & POL’Y F. 273 (1998).
19. See J.B. Ruhl, Law for Sustainable Development: Work Continues on the Rubik’s Cube, 44 TULSA
L. REV. 1 (2008). Merriam-Webster online dictionary defines “sustainable” as “able to be used
without being completely used up or destroyed.” MERRIAM-WEBSTER ONLINE, http://www.merriamwebster.com/dictionary/sustainable (last visited Nov. 22, 2014).
20. Jerrold A. Long, Realizing the Abstraction: Using Today’s Law to Reach Tomorrow’s Sustainability, 46 IDAHO L. REV. 341, 347 (2013). For a list of sustainability-related definitions by settings see
SCOTT T. YOUNG & K. KATHY DHANDA, SUSTAINABILITY: ESSENTIALS FOR BUSINESS 3-5 (2013).
21. See J. William Futrell, The Transition to Sustainable Development Law, 21 PACE ENVTL. L. REV.
179, 186 (2003) (“In designing the new sustainable development law, we should avoid the delay of
an effort to define the elusive concept of sustainable development. The analogy is to the law’s
approach to the elusive concept of justice.”).
22. See YOUNG & DHANDA, supra note 20, at 2.
23. See generally ALDO LEOPOLD, A SAND COUNTY ALMANAC (1949).
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view, nature does not itself have a value; instead, nature is valuable
because humans can harness it for their use and enjoyment.24
This dichotomy was the precursor for more alternative views of the
environment, which arose during the twentieth century. The preservationists emphasized that environmental degradation could be addressed only by fundamental changes in modern cultural values and
advocated for strict preservation policies.25 The conservationist movement emphasized the belief that nature can be harnessed or managed.26
Technological optimists suggested that technology and innovation
were the solution to environmental problems.27 Economists and other
social scientists advocated for collective policies to address environmental problems.28 Consequently, the theories articulate different perspectives on two important, yet diametrically opposed concepts: (1) the
natural environment and modernity’s fundamental commitment to
economic growth and (2) how this divide should be addressed.
Preservationists prefer the term “sustainability” and believe that the
phrase “sustainable development” is an oxymoron.29 Instead of altering
the nature of development in the direction of greater ecosystemic
sustainability, preservationist would prefer a fundamental realignment
of cultural values and practices associated with development (e.g.,
accumulation and mass consumption).30 Conservationists adopted the
term sustainable development and placed more emphasis on the
changing of technological processes to accommodate growth and
development in a manner compatible with the environment.
The Brundtland Report31 was a watershed event because it set the
stage for the establishment of the current sustainable development
paradigm. Issued in 1987 by the World Commission on Environment
24. John G. Robinson, Ethical Pluralism, Pragmatism, and Sustainability in Conservation Practice,
144 J. BIOLOGICAL CONSERVATION 958, 959 (2004).
25. See generally PETER G. BROWN & GEOFFREY GARVER, RIGHT RELATIONSHIP: BUILDING A WHOLE
EARTH ECONOMY (2009).
26. See generally ANDRES R. EDWARDS, THE SUSTAINABILITY REVOLUTION: PORTRAIT OF A PARADIGM
SHIFT (2005).
27. See generally ELIAS G. CARAYANNIS, CREATING A SUSTAINABLE ECOLOGY USING TECHNOLOGYDRIVEN SOLUTIONS (2013).
28. See generally HERMAN E. DALY, BEYOND GROWTH: THE ECONOMICS OF SUSTAINABLE DEVELOPMENT (1997).
29. See generally Michael Redclift, Sustainable Development (1987-2005): An Oxymoron Comes of
Age, 13 SUSTAINABLE DEV. 212 (2005).
30. See generally TIM JACKSON, PROSPERITY WITHOUT GROWTH: ECONOMICS FOR A FINITE PLANET
(2011).
31. See Brundtland Report, supra note 2.
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and Development (WCED),32 the Brundtland Report defines sustainable development and discusses its global importance.33 It was preceded by a number of environment and development discussions and
treaties briefly listed in the table below.
TABLE 1. PRE-BRUNDTLAND REPORT AGREEMENTS ON ENVIRONMENT AND
DEVELOPMENT34
1968
Biosphere, International Conference for Rational Use and
Conservation of the Biosphere by UNESCO.
1972
Conference on the Human Environment, the historical
Conference on Human Environment held in Stockholm
in June 1972.
1975
Convention on International Trade in Endangered Species
of Wild Flora and Fauna (CITES) was signed on March
3, 1973 in Washington.
1976
Habitat, the first global meeting to link human settlement
and the environment was held to highlight the
problems faced due to an increase in the population.
1981
World Health Assembly adopts a global strategy for health
for all by 2000.
1984
The International Conference on Environment and
Economics (OECD)
1987
Montreal Protocol on Substances that Deplete the Ozone
Layer
1988
The Intergovernmental Panel on Climate Change (IPCC)
was set up to assess the technical issues in climate
change.
The Brundtland Report assumes that concern for the environment
and economic development are indeed compatible and legitimizes
32. Id.
33. WORLD COMM’N ON ENV’T AND DEV., REPORT OF WORLD COMMISSION ON ENVIRONMENT AND
DEVELOPMENT: OUR COMMON FUTURE 40 (1987), available at http://www.un-documents.net/ourcommon-future.pdf.
34. Paul Shrivastava & Stephanie Berger, Sustainability Principles, 7 ORG. MGMT. J., 246, 248
tbl.1 (2010).
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growth in economic activity as essential.35 The report also illustrates the
feasibility of win-win solutions that are good both for the environment
and for economic growth—at least in the early stages. The reason for
this seemingly counterintuitive conclusion is that adoption of the
sustainable development perspective enabled the Commission to reconcile another dispute that pitted environmental advocates against those
concerned about human development and poverty in less developed
areas of the world.36 While environmentalists’ greatest concern centers
on overdevelopment, advocates for impoverished people and countries
around the world are most concerned with underdevelopment. The
Brundtland Report represents a compromise among these three competing concerns— economic, environmental, and human welfare.
B. The “Three E’s” of Sustainability
The Brundtland Report synthesizes sustainability in terms of the
“Three E’s”: environment, economy, and equity.37 Ecology is inherent
to the idea of sustainability. The sustainability movement explicitly
asserts that economic development and employment opportunities are
not antithetical to environmental concerns. Consequently, the movement extends sustainability to include social concerns over how environmentally sensitive development can be managed to enhance global
equity and equality of material well-being. Sustainability also incorporates political and cultural concerns in economic development, but to a
lesser extent than their primary focus. It supports development processes that preserve and respect longstanding diverse cultures, foster
development on a human-scale, and are conducive to politically stable
democracies.38
Corporate Social Responsibility (CSR) is a practical embodiment of
environmental economic and equity demands being placed on corporations. Companies often perceive sustainability as a way to implement
35. See generally Herman E. Daly & Kenneth N. Townsend, Sustainable Growth: An Impossibility
Theorem, in VALUING THE EARTH: ECONOMICS, ECOLOGY, ETHICS (Herman E. Daly & Kenneth
Townsend eds, 1993).
36. See generally PARTHA DASGUPTA, HUMAN WELL-BEING AND THE NATURAL ENVIRONMENT
(2001).
37. See generally ANDRES R. EDWARDS, THE SUSTAINABILITY REVOLUTION: PORTRAIT OF A PARADIGM
SHIFT (2005).
38. WORLD COMM’N ON CULTURE AND DEV., OUR CREATIVE DIVERSITY 48 (1996), http://unesdoc.
unesco.org/images/0010/001055/105586e.pdf.
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CSR.39 As such, the three legs of sustainable development— economy,
social equity, and environment— become part of corporate strategy.40
The so-called “Triple Bottom Line” becomes a tool for evaluating the
impact of corporate actions on different stakeholders and also makes
the sustainable development concept translatable for corporations.41
As part of a company’s broader CSR initiative, concern for the environment can go beyond cost reduction through technical improvements,
such as reducing the use of raw materials, using ecologically efficient
production methods, preventing pollution, using eco-friendly product
design and packaging, and managing waste.
For purposes of this Article, we define sustainable development as
development that balances economic development, social equity, and
environmental protection—the three competing interests articulated
in the Brundtland Report. Our analysis emphasizes the importance of
the regulation of economic activity and its ensuing impact on the
environment. However, we recognize that the sustainability concept
can be much broader and is far from being limited to business activity.
This Article generally favors the term sustainable development over
sustainability. This preference underscores the dynamic nature inherent to legal measures advancing sustainability goals and helps differentiate sustainable development from environmental protection, which is
more static, often preservationist, and restrictive in nature.42 With that
39. See Veronica Besmer, The Legal Character of Private Codes of Conduct: More than Just a
Pseudo-Formal Gloss on Corporate Social Responsibility, 2 HASTINGS BUS. L.J. 279, 283 (2006). Just as
with sustainable development no single, comprehensive, and universally applicable definition of
corporate social responsibility exists. See Edwin M. Epstein, The Corporate Social Policy Process and the
Process of Corporate Governance, 25 AM. BUS. L.J. 361, 374 (1987). From a business perspective, see
DANIELA EBNER & RUPERT J. BAUMGARTNER, THE RELATIONSHIP BETWEEN SUSTAINABLE DEVELOPMENT
AND CORPORATE SOCIAL RESPONSIBILITY (2006), available at http://www.crrconference.org/
downloads/2006ebnerbaumgartner.pdf; see also David L. Engel, An Approach to Corporate Social
Responsibility, 32 STAN. L. REV. 1, 6 (1979) (defining CSR as “the obligations and inclinations . . . of
corporations organized for profit, voluntarily to pursue social ends that conflict with the
presumptive shareholder desire to maximize profit.”).
40. See Paulette L. Stenzel, The Pursuit of Equilibrium As the Eagle Meets the Condor: Supporting
Sustainable Development Through Fair Trade, 49 AM. BUS. L.J. 557, 592 (2012); see also Michael E.
Porter & Mark R. Kramer, Strategy and Society: The Link Between Competitive Advantage and Corporate
Social Responsibility, 84 HARV. BUS. REV. 78, 88-89 (2006) (defining strategic CSR as the pursuit of
initiatives that both society and a company’s own competitiveness).
41. The “Triple Bottom Line” concept has been developed by sustainability activist John
Elkington. See JOHN ELKINGTON, CANNIBALS WITH FORKS: THE TRIPLE BOTTOM LINE OF 21ST CENTURY
BUSINESS (1997).
42. See generally John C. Dernbach, Creating the Law of Environmentally Sustainable Economic
Development, 28 PACE ENVTL. L. REV. 614 (2011). For an overview of environmental laws and
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said, sustainability is used to describe a status quo or goal to be
achieved.
III.
BUSINESS AND SUSTAINABLE DEVELOPMENT
Business activity is one of the most significant sources of environmental degradation and is thus at the forefront of regulatory activity
concerning sustainable development. To support the analysis of the
legal framework for sustainable development in Part V, this Part
outlines the significance of economic activity and the private sector, as
(1) a source of environmental degradation and (2) a key player in
sustainable development.
A.
Economic Activity as Source of Ecological Crises
Industrialization and its ensuing economic activity are frequently
cited as causes of environmental pollution. The nexus between these
two factors is increased levels of carbon emissions.43 Excessive carbon
in the earth’s atmosphere is responsible for global warming, which in
turn causes many harmful effects on agriculture, sea levels, and disease
vectors.44 For instance, over the recent decades atmospheric carbon
has increased proportionally to economic production.45 Data show that
carbon in the earth’s atmosphere reached a concentration of 387 parts
per million (ppm) in 2010, and, prior to 1850, carbon levels had
remained steady at around 180 ppm.46 Despite private and public
efforts to protect the environment, future Gross Domestic Product
(GDP) will increasingly rely on products and services that are even
more carbon intensive than in the past.47
The rise in ecological degradation has paralleled an increase in the
scale and severity of ecological crises caused by private-sector actions.
For instance, the 1984 Bhopal disaster, deemed the worst industrial
accident in history, left nearly 10,000 people dead and injured more
executive orders, see Laws and Regulations, ENVTL. PROTECTION AGENCY, http://www2.epa.gov/lawsregulations/laws-and-executive-orders (last visited Dec. 25, 2014).
43. See generally TIMO BUSCH & PAUL SHRIVASTAVA, THE GLOBAL CARBON CRISIS: EMERGING
CARBON CONSTRAINTS AND STRATEGIC MANAGEMENT OPTIONS (2011).
44. IPCC, supra note 3, at 3.
45. Id. at 11.
46. See generally R. J. Andres et al., A Synthesis of Carbon Dioxide Emissions from Fossil-Fuel
Combustion, 9 BIOGEOSCIENCES 1845 (2012), available at http://www.biogeosciences.net/9/1845/2
012/bg-9-1845-2012.pdf; see also IPCC, supra note 3.
47. Jorge Friedrichs & Oliver R. Inderwildi, The Carbon Curse: Are Fuel Rich Countries Doomed to
High CO2 Intensities?, 62 ENERGY POL’Y 1356 (2013).
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than 50,000. It caused long-term pollution of soil and ground water in
the region.48 Other examples of regional ecological crises are exemplified by toxic waste sites (e.g., Love Canal, Seveso,49 and Times Beach),50
urban pollution in most major cities (e.g., Beijing, Mexico City, New
Delhi, and Cubatao), and water pollution (e.g., Aral Sea and the
Ganges). Localized ecological crises with far-reaching international
ramifications have been triggered by nuclear accidents (e.g., Three
Mile Island in 1979,51 the Chernobyl Nuclear Accident in 1986,52 and
the Fukushima Reactor Meltdown in 2011),53 and industrial and transportation accidents (e.g., the infamous Exxon Valdez oil spill,54 and
the 2010 Macondo Well Deepwater Horizon oil spill).55
One way to conceptualize the private sector embrace of sustainable
development is as part of a social movement in the broader global
society. Many of the movements that were subsumed into the sustainable development paradigm (e.g., environmentalism, development
economics, community supported agriculture, etc.) have roots in resistance to modernity. Sustainable development is a form of cultural
resistance to late/postmodern societal conditions. In late/postmodern
capitalism, economic activity was characterized by globalization and an
explicit understanding of environmental externalities. Globalization
allows corporate actions to transcend both national boundaries and
national regulatory bodies. Investment capital, labor, goods, and environmental problems can flow freely and rapidly from one region of the
world to another. This mobility vastly extends corporations’ powers.
Savvy companies have historically exploited disparities in national
environmental laws, though disparities in environmental regulation
48. See generally PAUL SHRIVASTAVA, BHOPAL: ANATOMY OF A CRISIS (1987).
49. E. Homberger et al., The Seveso Accident: Its Nature, Extent and Consequences, 22 ANNALS OF
OCCUPATIONAL HYGIENE 327 (1979).
50. See generally Adeline Gordon, Love Canal: Science, Politics, and People, 82 MICH. L. REV. 849
(1984).
51. CHARLES PERROW, NORMAL ACCIDENTS: LIVING WITH HIGH-RISK TECHNOLOGIES (1999).
52. Ulrich Beck, The Anthropological Shock: Chernobyl and the Contours of the Risk Society, 32
BERKELEY J. SOC. 153 (1987).
53. Quirin Schiermeier & Jay Alabaster, Fukushima leaks 18 times worse than first thought,
NATURE, Aug. 29, 2013, available at http://www.nature.com/news/fukushima-leaks-18-times-worse-thanfirst-thought-1.13626.
54. PROCEEDINGS OF THE EXXON VALDEZ OIL SPILL SYMPOSIUM, AMERICAN FISHERIES SOCIETY
SYMPOSIUM 18 (S.D. Rice et al. eds., 1996).
55. Where to Find NOAA Information on the Deepwater Horizon Oil Spill, NAT’L OCEANIC AND
ATMOSPHERIC ADMIN., OFFICE OF RESPONSE AND RESTORATION, http://response.restoration.noaa.gov/
deepwaterhorizon (last visited Nov. 10, 2014).
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have begun to dissipate in recent years.56 Given the global impact of
ecological disasters and environmental concerns, sustainable development calls for international solutions. Consequently, and contrary to
other social issues, most regulatory activities have taken place not on
the national but international level through international treaties and
conventions. The effectiveness of these global regulatory initiatives, for
reasons we will discuss below, remains limited.
Industrial crises of the past reveal an immensely interdependent
system of corporate industrial actions. Industrial accidents occur in
highly complex socio-technical systems. These systems have thousands
of component parts, creating a complexity beyond the comprehension
of even the original designers. These systems are highly dependent on
one another, as well as environmental conditions, and human interventions. Many components of the technological system are riddled with
unreliability, scientific uncertainty, and are beyond the control of a
business.57 When an error occurs within some small subsystem it
transmits rapidly throughout the system, leading to a major crash and
significant damage to the environment and human life.58 These interdependent systems have been insufficiently addressed by both business
and law. They call for adaptive solutions and public-private collaboration because they require significant legal and technical expertise.
B. Business-Wide Sustainable Development Initiatives
In addition to the causal link between corporations and environmental degradation, the private sector controls a significant amount of
natural and financial resources.59 Thus, the nature and extent of the
involvement of the private sector will determine the success or failure
of sustainable development initiatives. However, private and public
sector initiatives seem to develop largely independent from each other,
thereby not taking full advantage of opportunities that stem from
potential synergies between corporate sustainability practices and regulatory design. The following section analyses how corporations have
increasingly, though, given the continuing ecological degradation,
insufficiently, integrated environmental and social concerns in corpo-
56. GEORGE SIEDEL & HELENA HAAPIO, PROACTIVE LAW FOR MANAGERS: A HIDDEN SOURCE OF
COMPETITIVE ADVANTAGE 8 (Gower ed., 2011) (specifically referring to OECD rules).
57. See generally CHARLES PERROW, NORMAL ACCIDENTS: LIVING WITH HIGH-RISK TECHNOLOGIES
(1999).
58. Paul Shrivastava et al., Understanding Industrial Crises, 25 J. MGMT. STUDIES 285 (2007).
59. See generally DAVID L. RAINEY, SUSTAINABLE BUSINESS DEVELOPMENT: INVENTING THE FUTURE
THROUGH STRATEGY, INNOVATION, AND LEADERSHIP (2006).
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rate decision-making.
While initially driven by a need for compliance with environmental
laws such as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)60 during the 1970s and 1980s, the
environmental concerns of the 1990s became engrained in corporate
“environmental management” policies, “sustainability” practices and
risk management.61 Insurance companies, customers, and investors
wanted clarity and explicitness on environmental stakes and risks. The
private sector began considering environmental outcomes in the context of their corporate strategies, and began public reporting on their
social and environmental performance. In 1992, the Security and
Exchange Commission (SEC) began requiring U.S. corporations to
disclose environmental liabilities in their financial statements to shareholders but, contrary to isolated developments in Europe, continues to
not require corporate sustainability reporting.62 Today, many companies are also making systemic changes by adopting ISO 14000 environmental management systems.63
The private sector has incorporated not only environmental concerns but also many related social concerns into corporate decisionmaking. This is evidenced by interactions between corporations and
environmentalists that are no longer exclusively mediated by governmental agencies.64 Some of the qualities of postmodern society that
have empowered corporations, such as technology, transportation, and
communication, have also empowered civil society to resist corporate
impacts. For example in the 1990s, non-governmental organizations
(NGOs), such as Rainforest Action Network and Greenpeace, joined
with indigenous peoples to stop MacMillen Bloedel from logging the
60. 42 U.S.C. §§ 9601-9675 (2012).
61. See ANDREW J. HOFFMAN, FROM HERESY TO DOGMA: AN INSTITUTIONAL HISTORY OF CORPORATE
ENVIRONMENTALISM (2001).
62. See Lucien J. Dhooge, Beyond Voluntarism: Social Disclosure and France’s Nouvelles Régulations
Économiques, 21 ARIZ. J. INTL. & COMP. L. 441, 443 (2004) (describing France’s Article 116
Nouvelles Régulations Économiques (NRE), requiring all French corporations listed on the
premier marché (and thereby possessing the largest market capitalizations) to annually report on
the social and environmental impact of their activities commencing with their 2003 annual
reports).
63. See generally CASE STUDIES AND PRACTICAL EXPERIENCES (Ruth Hillary ed., 2000) (providing
a series of case studies demonstrating the practical reality of ISO 14000).
64. See SCOTT MERNITZ, MEDIATION OF ENVIRONMENTAL DISPUTES: A SOURCEBOOK (1980).
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old growth rainforest in Clayoquot Sound, British Columbia.65 The
activists collaborated with MacMillen Bloedel’s customers, including
News International, Kimberly Clark, and Scott Paper, which joined the
effort because they feared that their own customers—i.e., end-user
consumers—would boycott products made from old growth rainforests.66 These boycotts ultimately lead to negotiations between business
and stakeholders and resulted in a more sustainable land-use and
resource management decision-making process in Clayoquot Sound.67
Over the past two decades, corporations have gradually internalized
sustainable development. The World Business Council for Sustainable
Development (WBCSD) lists numerous ecological sustainability programs adopted by the world’s largest corporations.68 The WBCSD
highlights the transitions within the chemical, cement, and urban
infrastructure industries.69 For example, the Cement Sustainability
Initiative (CSI) is a:
“global effort by 24 major cement producers with operations in
more than 100 countries who believe there is a strong business
case for the pursuit of sustainable development. Collectively
these companies account for around 30% of the world’s cement production and range in size from very large multinationals to smaller local producers.”70
Similarly, General Electric has consolidated its global sustainability
initiatives under the umbrella term “Ecomagination Strategies.”71 This
65. John-Henry Harter, Environmental Justice for Whom? Class, New Social Movements, and the
Environment: A Case Study of Greenpeace Canada, 1971-2000, 54 LABOUR/LE TRAVAIL 83, 111-13
(2004).
66. Tara C. Goetze, Empowered Co-Management: Towards Power-Sharing and Indigenous Rights in
Clayoquot Sound, BC, 47 ANTHROPOLOGICA 247, 252 (2005).
67. See Brian J. Parai & Thomas C. Esakin, Beyond Conflict in Clayoquot Sound: The Future of
Sustainable Forestry, in NATURAL RESOURCE CONFLICT MANAGEMENT CASE STUDIES: AN ANALYSIS OF
POWER, PARTICIPATION AND PROTECTED AREAS (A. Peter Castro & Erik Nuelsen eds., 2003).
68. Overview, WORLD BUS. COUNCIL FOR SUSTAINABLE DEV., http://www.wbcsd.org/workprogram/sector-projects/cement/overview.aspx (last visited Sept. 7, 2014); see generally RESEARCH
IN CORPORATE SUSTAINABILITY: THE EVOLVING THEORY AND PRACTICE OF ORGANIZATIONS IN THE
NATURAL ENVIRONMENT (Sanjay Sharma & Mark Starik eds., 2002); Paul Shrivastava, GREENING
BUSINESS: PROFITING THE CORPORATION AND THE ENVIRONMENT (1996).
69. Overview, WORLD BUS. COUNCIL FOR SUSTAINABLE DEV., http://www.wbcsd.org/workprogram/sector-projects/cement/overview.aspx (last visited Sept. 7, 2014).
70. Id.
71. GE 2013 Global Impact, GEN. ELEC. CORP., http://www.ge.com/globalimpact2013/#home
(last visited Sept. 7, 2014).
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sustainability strategy initiated nearly a decade ago has unified GE’s
sustainability programs. The company invested $12 billion in R&D and
generated more than $160 billion in revenues. It also made sustainability a part of its competitive structure, reducing greenhouse gas emissions 32% from 2004 baseline, and freshwater use 45% from 2006
baseline, while realizing $300 million in savings.
Growing social and moral values associated with CSR policies have
contributed to corporate internalization of sustainable development
policies.72 Although not without failure, the private sector has become
a driving force behind sustainability initiatives, and today, corporations
are more willing to embrace the concept of sustainable development as
a strategic goal.73 Some firms perceive sustainability efforts as a source
of competitive advantage, cost savings, waste reduction, and reputation
improvement.74 These firms believe that sustainability efforts improve
their financial, social and natural capitals, through eco-efficiency,
socio-efficiency, eco- and socio-effectiveness, sufficiency, and ecological
equity.75 For example, McDonalds and Burger King developed ecoefficient packaging from recycled paper materials, moving away from
plastic-based food wrappers.76 Social efficiency is evinced in employersponsored programs such as car-pooling arrangements, onsite childcare services, and community volunteerism.77 Mining companies now
engage community stakeholders in dialogue to ensure ecological equity in their projects.78 These examples demonstrate how corporations
can enact meaningful sustainable development policies by understand-
72. See generally GLOBAL PRACTICES OF CORPORATE SOCIAL RESPONSIBILITY (Samuel O. Idowu &
Walter Leal Filho eds., 2009); EBNER & BAUMGARTNER, supra note 39 and accompanying text.
73. The United Nations–Accenture study notes that one-third of the CEOs believe the world
economy is on track to meet the needs of the world on a sustainable basis, but a majority feel a
strong business case for sustainability can be made for sustainable development. See ACCENTURE,
supra note 15, at 11.
74. Dov Seidman, Outgreening Delivers Sustainable Competitive Advantage, BLOOMBERG BUSINESSWEEK, Dec. 5, 2008, available at http://www.businessweek.com/stories/2008-12-05/outgreeningdelivers-sustainable-competitive-advantagebusinessweek-business-news-stock-market-and-financialadvice.
75. Thomas Dyllick & Kai Hockerts, Beyond the Business Case for Corporate Sustainability, 11 BUS.
STRATEGY AND ENV’T 130 (2002).
76. See MCDONALD’S: BETTER PACKAGING, ENVIRONMENTAL DEFENSE FUND, http://business.edf.
org/projects/featured/past-projects/better-packaging-with-mcdonalds (last visited Nov. 6, 2014).
77. E.g., The Body Shop has a global volunteering policy, offering a minimum of three paid
volunteering days a year to its staff. THE BODY SHOP, OUR VALUES, ACTIVATE SELF ESTEEM,
http://www.thebodyshop.com/values/SelfEsteem.aspx (last visited Nov. 19, 2014).
78. Richard A. Westin, Intergenerational Equity and Third World Mining, 13 U. PA. J. INT’L L. 181,
203 (1992).
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ing the power of coupling social mores with traditional business
strategy objectives.
To promote sustainable development in the absence of public regulation, the private sector has increasingly engaged in private rulemaking79
through actions such as the adoption of corporate or industry-wide
codes of conduct, clauses in supply chain contracts that relate to
environmental or social standards,80 and private-public rule-making.81
Some authors go as far as to suggest that “we are about to reach the
sustainability ‘tipping point’—the point at which the idea of sustainable development becomes a strategic business imperative— driven not
by regulation, but rather by pressure from virtually the entire spectrum
of corporate stakeholders.”82
While this is a welcome change, business practices in the sustainability area are frequently limited to economically justifiable projects. For
instance, corporate environmental efforts focus largely on technical
operations, such as reducing the use of virgin materials, using ecologically efficient production methods, pollution prevention, eco-friendly
product design and packaging, and waste management.83 Companies
are adopting environmental management programs that are technologically feasible and save costs.84 Some undertake environmental or
philanthropic projects for their publicity value in the hopes of gaining
legitimacy and attracting new customers.85 Such technical efforts are
79. This concept is sometimes referred to as “Political CSR.” See Andreas Georg Scherer &
Guido Palazzo, The New Political Role of Business in a Globalized World: A Review of a New Perspective on
CSR and its Implications for the Firm, Governance, and Democracy, 48 J. MGMT. STUDIES 900, 901, 903
(2010).
80. See Tracy M. Roberts, Innovations in Governance: A Functional Typology of Private Governance
Institutions, 22 DUKE ENVTL. L. & POL’Y F. 67, 74-75 (2012).
81. See Stephen Kim Park & Gerlinde Berger-Walliser, Corporate Social Responsibility and the
Global Commons: A Firm-Driven Approach to Global Governance, 52 AM. BUS. L. J. (forthcoming 2015),
available at http://ssrn.com/abstract⫽2503144 (introducing the concept of Corporate-Regulatory Feedback Loops).
82. Jeff Civins & Mary Mendoza, Corporate Sustainability and Social Responsibility: A Legal
Perspective, 71 TEX. B.J. 368, 368, 372 (2008); see also Porter & Kramer, supra note 40, at 10-11
(providing multiple examples for companies successfully integrating social and business issues).
83. See David Morrow & Dennis Rondinelli, Adopting Corporate Environmental Management
Systems: Motivations and Results of ISO 14001 and EMAS Certification, 20 EUR. MGMT. J. 159, 161
(2002).
84. See Jeffrey G. York, Pragmatic Sustainability: Translating Environmental Ethics into Competitive
Advantage, 85 J. BUS. ETHICS 97, 100 (2009) (describing 3M’s Pollution Prevention Pays (3P)
program).
85. See generally JACQUELINE OTTMAN, THE NEW RULES OF GREEN MARKETING: STRATEGIES, TOOLS,
AND INSPIRATION FOR SUSTAINABLE BRANDING (2011).
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substantive steps toward sustainability, however companies remain
reluctant to make large-scale, risky investments in sustainability ventures that would fundamentally transform corporate strategies and
operations.86 In turn, this reluctance contributes to the worsening of
environmental and social conditions.87
The conflict between a firm’s sustainability strategy and lackluster
regulatory structures results in private sector acceptance of the status
quo. The unfortunate irony of private sector complacency, is that the
status quo is a direct result of the systemic failure to recognize the
potential for a synergistic relationship between the private and public
sectors to create a comprehensive, yet effective, regulatory framework.88
IV.
THE CONCEPT OF PROACTIVE LAW
In this Article, we identify Proactive Law as an emerging concept for
a new regulatory approach to sustainable development, which takes
into account the private sector’s self-interest described above in combination with the public interest in sustainable development and thereby
enhances corporate sustainability. The following Part provides an
overview of the concept and history of Proactive Law, before comparing it to other regulatory approaches and applying it to sustainable
development in the final Part of this Article.
A.
History and Broad Application
Proactive Law originated in Scandinavia in the late 1990s, as an effort
to improve the contracting process in business dealings.89 Contract law
86. See generally SUSTAINABILITY STRATEGIES FOR INDUSTRY: THE FUTURE OF CORPORATE PRACTICE
(Nigel J. Roome ed. 1998).
87. See THE WORLDWATCH INSTITUTE, STATE OF THE WORLD 2013: IS SUSTAINABILITY STILL
POSSIBLE? (2013).
88. For a laudable exception to these disciplinary “silos,” see Timothy F. Malloy, Regulating by
Incentives: Myths, Models, and Micromarkets, 80 TEX. L. REV. 531, 536 (2002) (proposing a resourceallocation model to enhance the regulator’s choice in the area of environmental regulation).
89. Helena Haapio, Quality Improvement through Proactive Contracting: Contracts Are Too Important to Be Left to Lawyers!, in AMERICAN SOCIETY FOR QUALITY, PROCEEDINGS OF ANNUAL QUALITY
CONGRESS 243-248 (1998). According to definitions found in common English language dictionaries, the word proactive implies “acting in anticipation of future problems, needs, or changes.”
Proactive Definition, MERRIAM-WEBSTER ONLINE, http://www.merriam-webster.com/dictionary/
proactive (last visited Dec. 25, 2014); see also RANDY PAGE, FOSTERING EMOTIONAL WELL-BEING IN THE
CLASSROOM 50 (2003) (stating that “[t]he concept of proactivity emphasizes taking personal
responsibility for behaviour” based on values rather than “blam[ing] circumstances, conditions
or, conditioning for their behaviour”).
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remains the principle focus and field of application for the concept.90
Proactive Law has been extended across Europe to a variety of disciplines, including risk management, contract economics, tax law, outsourcing, and information technology.91 Proactive Law differs from
traditional adversarial legal concepts, command-and-control based concepts and state-centred regulation. Proactive Law regards the law as an
enabling instrument, which fosters the creation of economic value and
successful relationships.92 This contrasts with traditional philosophies
that typically consider the law to be a constraint on companies and
individuals, mandating compliance without regard to cost or administrative burden.93 At best, traditional perspectives view the law as means
to protect against harmful behavior of others.94
One of the main objectives of Proactive Law is to prevent problems
and litigation, and to use the law as a lever to create value for the
company, the individual, or society at large.95 Proactive Law challenges
traditional notions of the law that rely upon a failure-oriented approach.96 Proactive Law advocates for a paradigm shift from a system
based on rationality, separation, and power to one based on understanding, integration, and accommodation.97 The term “law” is employed in
90. See George J. Siedel & Helena Haapio, Using Proactive Law for Competitive Advantage, 47 AM.
BUS. L.J. 641, 667-84 (2010); Larry A. DiMatteo, Strategic Contracting: Contract Law As A Source of
Competitive Advantage, 47 AM. BUS. L.J. 727, 728 (2010).
91. See Gerlinde Berger-Walliser, The Past and Future of Proactive Law: An Overview of the
Proactive Law Movement, in PROACTIVE LAW IN A BUSINESS ENVIRONMENT 24 (Gerlinde Berger-Walliser
& Kim Østergaard eds. 2012) (citing Dag Wiese Schartum, Introduction to A Government-Based
Perspective on Proactive Law, 49 SCANDINAVIAN STUDIES IN L. 35 (2006); Jarl S. Magnusson, Proactive
Law—and the Importance of Data and Information Resources, 49 SCANDINAVIAN STUDIES IN L. 407
(2006)).
92. See NORDIC SCHOOL OF PROACTIVE LAW, http://www.proactivelaw.org (last visited November 6, 2014) (defining the Proactive Law Approach as “ . . . a future-oriented approach to law
placing an emphasis on legal knowledge to be applied before things go wrong. It comprises a way
of legal thinking and a set of skills, practices and procedures that help to identify opportunities in
time to take advantage of them, and to spot potential problems while preventive action is still
possible. In addition to avoiding disputes, litigation and other hazards, Proactive Law seeks ways to
use the law to create value, strengthen relationships and manage risk.”).
93. See Siedel & Haapio, supra note 90, at 647 (stating that managers tend to think about the
law as a “burden or obstacle rather than a source of competitive advantage”).
94. Berger-Walliser, supra note 91, at 16.
95. See NORDIC SCHOOL OF PROACTIVE LAW, supra note 92.
96. Berger-Walliser, supra note 91 at 16 (defining Proactive Law and differentiating it from
traditional legal approaches, which view law as a “constraint” as opposed to an “enabling
instrument”).
97. See generally THOMAS D. BARTON, PREVENTIVE LAW AND PROBLEM SOLVING: LAWYERING FOR
THE FUTURE 3 (2009) (providing a practical example for how power and control under the
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a broad sense, encompassing private and public rule-making.98 The
concept is deeply grounded in Scandinavian legal realism, where the
law pursues socially useful goals and takes into account the economic
and social consequences of court decisions.99
Proactive Law builds on the concept of Preventive Law, developed in
the 1950s in the United States.100 Preventive Law seeks to avoid legal
disputes by attempting to predict human behavior, emphasizing conflict management, embracing risk and making preventive legal services
available to clients.101 Preventive Law is premised on the assumption
that the most successful medical treatment is prevention, and seeks to
apply this common assumption from a medical to a legal context
through a three-step preventive legal strategy as illustrated in figure
1.102 Proactive Law enhances Preventive Law by adding a fourth,
promotive or enabling dimension seeking value creation for all stakeholders involved in the legal relationship, or in analogy to preventive/
promotive medicine, providing well-being and developing self-care
mechanisms for clients.103 Proactive Law advances four steps of “legal
health” as illustrated in Figure 1.104
A literature review reveals the following general principles of Proactive Law:105 First, Proactive Law is based on legal certainty, literacy, and
cross-professional collaboration.106 Environmental scandals are a good
traditional regime are replaced by changed attitudes and peer pressure in a more proactive
regime).
98. Mario Sepi & Martin Westlake, Opinion of the European Economic and Social Committee, The
Proactive Law Approach: A Further Step Towards Better Regulation at E.U. Level, 175 OFFICIAL J. EUR.
UNION 26, ¶ 1.1 (2009) available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri⫽OJ:
C:2009:175:0026:0033:EN:PDF [hereinafter EESC Opinion].
99. Soile Pohjonen, Proactive Law in the Field of Law, in A PROACTIVE APPROACH, 53, 55, 57
(Peter Wahlgren ed., 2006) (describing the emergence of Proactive Law in Finland and situating
it within Scandinavian legal realism).
100. See LOUIS M. BROWN, MANUAL OF PREVENTIVE LAW: HOW TO PREVENT LEGAL DIFFICULTIES IN
THE HANDLING OF EVERYDAY BUSINESS PROBLEMS (1950).
101. See Edward A. Dauer, Four Principles for a Theory of Preventive Law, in A PROACTIVE
APPROACH TO CONTRACTING AND LAW 13, 14-33 (Helena Haapio ed., 2008) (outlining four
principles that characterize preventive lawyering).
102. Id. at 24-27 (transposing the principles of preventive medicine to preventive legal risk
management through a three-step model).
103. See Helena Haapio, Introduction to Proactive Law: A Business Lawyer’s View, in A PROACTIVE
APPROACH 22, 24 (Peter Wahlgren ed., 2006) (introducing the wellness-analogy).
104. Adapted from Dauer, supra note 101, at 25.
105. The following section builds on Berger-Walliser, supra note 91, at 28-30.
106. SIEDEL & HAAPIO, supra note 56, at 21 (stating that Proactive Law is about “localizing the
mines and preventing them from exploding”).
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FIGURE 1:
The Four Steps to Legal Health
example to show how integrated law and business are. It is not only
about compliance with the law; ethical standards and the reputation of
a company are at stake as well. Therefore, from a corporate perspective,
proactive legal strategy, in addition to avoiding lawsuits through compliance with regulations, encourages companies to engage in crossprofessional collaboration and group learning. Corporations need to
manage their compliance with the law and align it to business objectives. In order to be able to do this, not only do lawyers and regulators
need to know the law, but managers and other actors in society also
need to acquire a basic legal literacy, awareness, or “legal astuteness,”
which in the end can help them not only avoid litigation and the costs
related to it, but also enable them to use the law for competitive
advantage.107
107. See generally Siedel & Haapio, supra note 90, at 668; DiMatteo, supra note 90, at 728;
Constance E. Bagley, Winning Legally: The Value of Legal Astuteness, 33 ACAD. MGMT. REV. 378, 383
(2008) (introducing the term “legal astuteness”).
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Second, Proactive Law shifts the focus of attention from disputeresolution to prevention and legal risk management.108 The hypothesis
in Proactive Law is that if practiced correctly, there will seldom be need
for any dispute resolution mechanism at all.109 The objective of Proactive Law is to avoid getting to that stage of dispute, through careful
attention to legal clarity, early warning mechanisms, and enhanced
collaboration between business partners; or in the case of proactive
regulation, comprehensible, accessible, and enforceable legislation to
facilitate understanding and ultimately, compliance with the law.110
Third, Proactive Law seeks to create win-win relationships. It takes
into account the interests of all stakeholders involved to reach common
goals instead of favoring or protecting one-sided interests. Therefore
cross-professional collaboration between lawyers, managers and subject
matter experts is crucial to reach common goals and to avoid problems
and legal disputes.
Fourth, Proactive Law posits that preventing legal disputes is not
enough. Law and legal professionals should create economic value and
promote positive outcome. This requires outcome-orientation and
creativity from legal counsel.111 Proactive regulation is characterized by
pragmatic solutions that reflect real-life needs and allow easy implementation and acceptance by the regulated individuals or organizations.112
The importance of the Proactive Law approach was recently recognized by the European Union, in the Opinion of the European
Economic and Social Committee (EESC) on “The Proactive Law
Approach: a Further Step Towards Better Regulation at EU Level,”
published in 2009.113 However, the adulation received little attention
108. See also RICHARD SUSSKIND, THE FUTURE OF LAW: FACING THE CHALLENGES OF INFORMATION
TECHNOLOGY 25-27 (1996).
109. Berger-Walliser, supra note 91, at 30 (pointing out that this hypothesis is in need of
empirical proof).
110. See EESC Opinion, supra note 98 ¶ 3.4.
111. See Gerlinde Berger-Walliser et al., Promoting Business Success through Contract Visualization, 17 J. L. BUS. & ETHICS 55, 58 (2011) (noting that contracts should be roadmaps of
performance).
112. See EESC Opinion, supra note 98 ¶ 2.4 (requiring that “when drafting laws, the legislator
should be concerned about producing operationally efficient rules that reflect real-life needs and
are implemented in such a manner that the ultimate objectives of those rules are accomplished”),
¶ 2.5 (stating that “[t]he life cycle of a piece of legislation does not begin with the drafting of a
proposal or end when it has been formally adopted. A piece of legislation is not the goal; its
successful implementation is. Nor does implementation just mean enforcement by institutions, it
also means adoption, acceptance and, where necessary, a change of behaviour on the part of the
intended individuals and organisations”).
113. EESC Opinion, supra note 98 ¶ 4.2.
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in United States legal literature, which partly can be attributed to the
fact that Proactive Law is a European concept and early work on
Proactive Law was available in Finnish only. A notable exception is a
2010 article by Siedel and Haapio in the American Business Law Journal.114 The article introduces the concept to the American corporate
culture as a mechanism for companies to utilize the law to gain
competitive advantage.115 While Siedel and Haapio’s work concentrates on the use of Proactive Law for corporate strategic purposes and
focuses on contracting, this Article seeks to apply the four principles of
Proactive Law to generate a new approach to regulating enterprise
sustainability, and to integrate Proactive Law with existing New Governance theories to develop strategies for sustainable governance in the
private sector.
B. Relevance to Sustainable Development
“Proactivity” is a common element of sustainable management and
Proactive Law. Studies demonstrate the value of proactive corporate
strategies against global warming116 and illustrate how firms that adopt
proactive environmental management strategies become more efficient and competitive.117 Because of stakeholder activism and the
recognition of the social (and ecological) embeddedness of the
economy, corporations “increasingly adopt[] . . . organisational features designed to promote proactivity over mere reactivity in their
stakeholder relationship.”118 Similar to the corporate stakeholder perspective, which is based on practical considerations,119 Proactive Law is
equally outcome-oriented. For example, under Proactive Law, contract
partners work together in contract drafting—the original field of
application for proactive legal strategy—to achieve a common business
goal instead of focusing on securing their own interests by legal
means.120 With regard to sustainability, this approach would be particu-
114. See SIEDEL & HAAPIO, supra note 56 (applying Proactive Law to identify how firms can use
law as a source of competitive advantage).
115. See id. at 8.
116. Olivier Boiral, Global Warming: Should Companies Adopt a Proactive Strategy? 39 LONG
RANGE PLANNING 315, 316 (2006).
117. Michael A. Berry & Dennis A. Rondinelli, Proactive Corporate Environmental Management:
A New Industrial Revolution, 12 ACAD. MGMT. EXECUTIVE 38 (1998).
118. Jon M. Shepard, Michael Betz, & Lenahan O’Connell, The Proactive Corporation: Its
Nature and Causes, 16 J. BUS. ETHICS 1001 (1997).
119. Id.
120. Berger-Walliser, supra note 91, at 24.
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larly useful in international treaty negotiation and in bridging the
divide between the three competing elements of sustainable development: environment, economy, and equity.121
Proactive Law emphasizes conflict prevention rather than allocating
responsibility after a problem has occurred.122 Given the irreversible
impact of ecological crises, prevention is the only option to obviate the
worst ecological problems. Reactive cures are either impossible or too
expensive. The interdependence of ecological, social, and technological systems makes it difficult to precisely apportion responsibility
between one or more specific entities. All actors are responsible and
need to collaborate in order to prevent ecological crises and promote
sustainable development.
According to Proactive Law, the impact assessment of a given piece
of legislation would take into consideration not only economic, but
also social and ethical aspects.123 This approach mirrors the sustainability paradigm as it does not only take into account the economic
dimension, but also equally evaluates the interests of other stakeholders. The EESC Opinion expressly mentions consumers and civil society,
including the “voice of the anonymous citizen.”124 However, this enumeration could easily and fittingly be supplemented by the human and
natural environment as additional interest groups that the regulator
needs to take into account when measuring a piece of legislation’s
impact before its implementation.
These are only a few examples of the parallels between Proactive Law
and the sustainability concept. The concepts are similar in that they
both embrace other vectors than the law.125 The four steps to legal
health as illustrated in Figure 1 could equally be applied to sustainable
development. Proactive Law offers a promising perspective on how a
different approach to law can promote sustainability and help prevent
ecological disasters instead of allocating responsibility when it is too
late. In the remainder of this Article, we will analyze how both concepts
can be combined to advance sustainable development through proactive regulation. To support this analysis, the following Parts provide a
121. See ANDRES R. EDWARDS, THE SUSTAINABILITY REVOLUTION: PORTRAIT OF A PARADIGM SHIFT
(2005); see also supra Part II.B.
122. Berger-Walliser, supra note 91, at 30 (citing RICHARD SUSSKIND, THE FUTURE OF LAW 292
(1998)).
123. EESC Opinion, supra note 98 ¶ 2.6.
124. Id.
125. See MARIE-CLAIRE CORDONIER SEGGER & ASHFAQ KHALFAN, SUSTAINABLE DEVELOPMENT LAW:
PRINCIPLES, PRACTICES AND PROSPECT (2004).
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brief overview of the current state of the Sustainable Development legal
framework and its shortcomings.
V.
LAW AND SUSTAINABLE DEVELOPMENT
The following Part begins by offering a broad survey of the current
state of international sustainability law, with a specific analysis of
regulatory structures in the United States. It then addresses criticisms
of these structures and identifies avenues for reform.
A.
The Current Legal Framework
Unlike other legal disciplines, laws and regulations governing sustainable development are peppered across multiple practice areas, such as
environmental and natural resources law, human rights law, corporate
law, and economic and labor law. Since the effects of environmental
degradation do not stop at a nation’s border it is not surprising126 that
most broad-based sustainable development lawmaking has taken place
on the international level127 and in the area of environmental law.128
126. Daniel H. Cole, From Global to Polycentric Climate Governance (EUI Working Papers No.
2011/30, 2011), available at http://ssrn.com/abstract⫽1858852.
127. See generally CORDONIER SEGGER & KHALFAN, supra note 6; DUNCAN FRENCH, INTERNATIONAL
LAW AND POLICY OF SUSTAINABLE DEVELOPMENT (2005); Martin S. High, Sustainable Development: How
Far Does U.S. Industry Have to Go to Meet World Guidelines?, 14 ALB. L.J. SCI. & TECH. 131, 147 (2003)
(providing examples, including U.S. statutory law and voluntary industry actions). A legislative
study by the Food and Agriculture Organization of the United Nations (FAO) provides an
overview of the law of sustainable development with regards to food, animals, plants, agrobiodiversity, water, fisheries, land, gender, forestry, wildlife, and mountains—including examples
for international and national legislation, and case law. See FOOD AND AGRICULTURE ORG. OF THE
UNITED NATIONS, LAW AND SUSTAINABLE DEVELOPMENT SINCE RIO—LEGAL TRENDS IN AGRICULTURE
AND NATURAL RESOURCE MANAGEMENT (2002), available at http://www.fao.org/docrep/005/Y3872E/
y3872e00.htm#. Contexts that provide examples for international sustainable development law
include soft law instruments (such as the Rio Declaration from 1992, and U.N. Global Compact),
international treaties (such as the Kyoto Protocol, the Vienna Convention for the Protection of
the Ozone Layer, and the Aarhus Convention on Access to Information), public participation in
decision-making, and access to Justice in Environmental Matters. For an overview of U.S. state and
federal policy initiatives that effectively address climate change, see Thomas D. Peterson et al.,
Developing A Comprehensive Approach to Climate Change Policy in the United States That Fully Integrates
Levels of Government and Economic Sectors, 26 VA. ENVTL. L.J. 227, 237-245 (2008) (suggesting that the
federal legislature should adopt some of the more comprehensive state initiatives to address
climate change more effectively on a federal level).
128. See, e.g., Laws and Regulations, U.S. ENVTL. PROTECTION AGENCY, http://www2.epa.gov/
laws-regulations/laws-and-executive-orders (last visited Nov. 14, 2014).
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1.
International Sustainable Development Law
The most notable examples of international agreements include the
Economic Commission for Europe Convention on Long Range Transboundary Air Pollution and its Protocols,129 the Vienna Convention for
the Protection of the Ozone Layer and its Montreal Protocol,130 the
United Nations Framework Convention on Climate Change and its
Kyoto Protocol,131 the United Nations Convention on Biological Diversity,132 and the Convention on International Trade in Endangered
Species of Wild Fauna and Flora.133 The sheer number and variety of
international environmental conventions demonstrate the priority of
environmental issues to many countries. At the same time, they also
illustrate the fragmented responsibilities in international environmental law.
Despite international sustainable development law being more advanced than the domestic laws of many countries, the concept has not
developed into “hard law” on the international level. In other words,
there is no articulation of international law that may be applied by
courts of an individual nation to create an enforceable obligation for a
private or public party relating to sustainable development.
Other aspects of sustainable development law are less prominent and
cover isolated issues, such as equal remuneration for men and women,134
or are limited to non-binding documents.135 Generally, the three
pillars of sustainable development are addressed in different agree-
129. 1979 Economic Commission for Europe (ECE) Convention on Long-Range Transboundary Air Pollution, U.N. Doc. ECE/HLM.I/R.I (1979); PROTOCOL TO THE 1979 CONVENTION ON
LONG-RANGE TRANSBOUNDARY AIR POLLUTION ON THE REDUCTION OF SULPHUR EMISSIONS OR THEIR
TRANS-BOUNDARY FLUXES BY AT LEAST 30 PERCENT, http://www.unece.org/fileadmin/DAM/env/
lrtap/full%20text/1985.Sulphur.e.pdf.
130. Vienna Convention for the Protection of the Ozone Layer, Mar. 22, 1985, 26 I.L.M. 1529
(1987); Montreal Protocol on Substances that Deplete the Ozone Layer, Sept. 16, 1987, 26 I.L.M.
1550 (1987).
131. Kyoto Protocol to the United Nations Framework Convention on Climate Change, Dec.
10, 1997, U.N. Doc FCCC/CP/1997/7/Add.1.
132. Convention on Biological Diversity of the United Nations Conference on the Environment and Development, June 5, 1992, U.N. Doc. DPI/1307.
133. Convention on International Trade in Endangered Species of Wild Fauna and Flora,
Mar. 3, 1973, 27 U.S.T. 1087, 993 U.N.T.S. 243.
134. Equal Remuneration Convention, June 29, 1951, 165 U.N.T.S. 303; Discrimination
(Employment and Occupation) Convention (ILO No. 111), June 25, 1958, 362 U.N.T.S. 31.
135. See, e.g., United Nations Conference on Environment and Development, Rio de Janeiro,
Braz., June 3-14, 1992, Rio Declaration on Environment and Development, U.N. DOC. A/CONF.151/26
(Vol. I) (Aug. 12, 1992); U.N. GLOBAL COMPACT, http://www.unglobalcompact.org (which embraces all aspects of sustainability).
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ments, but rarely together in a binding treaty as suggested in the
Brundtland Report.136
An example for the lack of “hardness” of international sustainable
development law can be found in the often cited International Court of
Justice’s (I.C.J.) Gabcikovo-Nagymaros decision.137 This case concerning
a dam project between the Republic of Hungary and the Slovak
Republic acknowledges the concept of sustainable development.138
However, the I.C.J. refused to apply the concept with any legal force.139
In a more recent decision of a dispute between Argentina and Uruguay
over common freshwater resources and the impact of pulp mills on the
Uruguay River, the I.C.J. acknowledged environmental impact assessments as an international obligation, but did not clarify the status of the
concept of sustainability as a source of general international law.140
Furthermore, the I.C.J. did not determine that businesses had a legal
obligation to consult with the public prior to the implementation of the
project, despite the negative consequences on water quality, air pollution, odors, visual effects, public health, and local tourism.141
The absence of international “hard law” can also be attributed to the
fact that international environmental regulations bind governments
and do not create direct obligations or enforceable laws with respect to
companies or individuals.142 More troublesome is that the obligations
on governments are typically limited to vague declarations of intent
and lack effective enforcement mechanisms. It should come as no
surprise that international agreements impacting sustainable development ultimately fail to meet the expectations of their advocates and the
public.
136. The Copenhagen Accord could be viewed as an exception because it sets objectives for
climate change laws but also helps developing nations acquire the technology needed for
reaching these objectives.
137. Gabcikovo-Nagymaros Project (Hung. v. Slovk.), 1997 I.C.J. 7 (Sept. 25), available at
http://www.icj-cij.org/docket/files/92/7375.pdf.
138. Id. at 125.
139. Ruhl, supra note 19, at 291 n.53.
140. Pulp Mills on the River Uruguay (Arg. v. Uru.), 2010 I.C.J. 14, ¶¶ 113-120 (Apr. 20),
available at http://www.icj-cij.org/docket/files/135/15877.pdf.
141. Cymie R. Payne, Pulp Mills on the River Uruguay (Argentina v. Uruguay), 105 AM. J. INTL. L.
94, 100 (2011) (criticizing the I.C.J.’s jurisdictional limitation in the case).
142. Bradford Mank, Can Plaintiffs Use Multinational Environmental Treaties As Customary
International Law to Sue Under the Alien Tort Statute?, 2007 UTAH L. REV. 1085, 1095 (discussing how
international environmental treaties may be directly applied to private defendants as customary
international law under the Alien Tort Statute).
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Another inherent problem of international treaties is that treaties
take a long time to negotiate and often are not signed or ratified by all
countries. Because treaties are a function of consensus, they almost
always reflect a common minimum standard at the time they have been
drafted. As a result, this standard is typically insufficient to resolve the
issue, or it quickly becomes outdated due to technical or scientific
progress. A recent example is the Rio⫹20 Conference, which in June
2012 brought together representatives from more than 100 nations.143
Rio⫹20 is viewed by many as a failure because it repeated twenty year
old aspirational promises with no specific operational targets or enforcement mechanisms.144 Contrary to its predecessor twenty years ago, it
did not produce a declaration but an outcome document entitled, “The
Future We Want,” which could be interpreted as weaker than the
Declaration “Our Common Future,” resultant of the 1992 Rio conference.145 Rio⫹20 is only one of many examples evidencing the global
action problem that the international legislator faces in the area of
sustainable development law.
Due to the difficulties described above, there has been a noticeable
shift from traditional international law instruments like binding treaties to voluntary soft law instruments. There has also been a shift in the
importance of non-state actors (i.e. the private sector). These changing
dynamics have led some to reevaluate the necessity, or at minimum the
role, of international law in this area.146 Commentators have attributed
this trend to “the high level of normative and analytical uncertainty, the
complex nature of interrelated issues, and substantial costs associated
with any meaningful policy effort.”147 Reactions have been mixed.
While some commentators find voluntary action and soft law to be
more “in harmony with the cooperative spirit of climate change policy
143. United Nations Conference on Sustainable Development, Rio de Janeiro, Braz., June
20-22, 2012, Report of the United Nations Conference on Sustainable Development, U.N. Doc.
A/CONF.216/16 (June 22, 2012).
144. See generally Karen Morrow, Rio⫹20, the Green Economy and Re-orienting Sustainable
Development, 14 ENVTL. L. REV. 279 (2012) (contemplating the disappointment of the Rio⫹20
process and outcome).
145. DEP’T OF ECON. AND SOCIAL AFFAIRS OFFICE FOR ECOSOC SUPPORT AND COORDINATION,
DIALOGUES AT THE ECONOMIC AND SOCIAL COUNCIL, COMPILED IN COORDINATION, ACHIEVING SUSTAINABLE DEVELOPMENT AND PROMOTING DEVELOPMENT COOPERATION (2008), available at http://www.un.
org/en/ecosoc/docs/pdfs/fina_08-45773.pdf.
146. Jacob Werksman & Kirk Herbertson, The Aftermath of Copenhagen: Does International Law
have a Role to Play in a Global Response to Climate Change?, 25 MD. J. INT’L L. 109, 109-142 (2010).
147. Michael Mehling, Implementing Climate Governance: Instrument Choice and Interaction, in
CLIMATE CHANGE & THE LAW 11, 13 (Hollo, Kulovesi & Mehling eds., 2012).
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[or sustainable development law in general],”148 others criticize the
lack of enforceable “hard” law.149
2.
Sustainable Development Law in the United States
In the United States, the Brundtland Report was followed by a series
of top-down federal environmental lawmaking aimed at cutting down
on toxic waste, air and water pollution, and improving air and water
quality.150 Federal regulatory efforts include the National Environmental Policy Act of 1969 (NEPA),151 the Federal Water Pollution Control
Act (CWA),152 the Endangered Species Act of 1973 (ESA),153 the Solid
Waste Disposal Act (RCRA),154 the Clean Air Act (CAA),155 and the
Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA).156
More recently, alarmed by the 2007 Intergovernmental Panel on
Climate Change’s (IPCC) assessment of scientific evidence relevant to
climate change, the focus of the political debate has concentrated
on climate change law.157 As one commentator observed, in this area
all federal legislative proposals to date have failed, but state legislation,
administrative agencies, and court decisions increasingly address climate change based on existing legislation or common law.158
148. Id. (citing Martti Koskemsiemi, Breach of Treaty or Non-Compliance: Reflections on the
Enforcement of the Montreal Protocol, 3 Y.B. INT’L ENVTL L. 123, 147 (1992)).
149. Jon Birger Skjærseth et al., Soft Law, Hard Law, and Effective Implementation of International
Environmental Norms, 6 GLOBAL ENVTL. POL. 104, 110-11 (2006).
150. See John R. Nolon, The Law of Sustainable Development: Keeping Pace, 30 PACE L. REV. 1246,
1249 (2010).
151. 42 U.S.C. §§ 4321-4370f (2012).
152. 33 U.S.C. §§ 1251-1387 (2012).
153. 16 U.S.C. §§ 1531-1599 (2012).
154. 42 U.S.C. §§ 6901-6992k (2012).
155. 42 U.S.C. §§ 7401-7671q (2012).
156. 42 U.S.C. §§ 9601-9675 (2012). For a complete list of federal environmental laws and
regulations, see Laws and Regulations, U.S. ENVTL. PROTECTION AGENCY, http://www2.epa.gov/lawsregulations/laws-and-executive-orders (last updated Nov. 10, 2014).
157. INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE, IPCC FOURTH ASSESSMENT REPORT:
CLIMATE CHANGE (2007), http://www.ipcc.ch/publications_and_data/publications_and_data_
reports.shtml#1.
158. See Michael B. Gerrard & Gregory E. Wannier, National Laws: North America, United States
of America, in CLIMATE CHANGE LIABILITY: TRANSNATIONAL LAW AND PRACTICE 525, 592-94 (Richard
Lord QC et al. eds., 2012), available at http://policy-practice.oxfam.org.uk/publications/download?
Id⫽436651&dl⫽http://oxfamilibrary.openrepository.com/oxfam/bitstream/10546/191277/15/
bk-climate-change-liability-6-p2-north-america-031211-en.pdf (referencing California state law).
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In the landmark case Massachusetts v. EPA, the U.S. Supreme Court
held that the EPA had the authority to regulate Greenhouse Gas
Emissions (GHGs) based on the Clean Air Act.159 This decision enabled the EPA to begin researching ways to regulate GHGs. This initial
research led to the recent publication of four major and interrelated
climate regulations that form a nationwide system of carbon liability on
regulated sectors.160 Massachusetts v. EPA was followed by a number of
decisions across the county where courts considered climate change
under existing environmental laws such as NEPA, the ESA, land use
regulation or nuisance law.161
However, as with international sustainable development law, an
overreaching legal framework is missing because domestic law concentrates on environmental and natural resources regulation. While there
is an established, albeit dispersed, body of “hard” environmental law,
sustainable development at its current stage is rather an issue of
government policy and “soft law.” Governments, universities and companies establish mandatory sustainability policies for agencies like
NEPA, but otherwise there often is only a call for voluntary action,
which lacks any substantive judicial enforceability.
Also similar to international law, American law and its legal
practitioners have not embraced the “Three E’s” of the sustainability
paradigm.162 Perhaps it is because of the challenges of sustainability
governance that the U.S. Supreme Court has not yet employed the
concept of sustainable development, despite regular decisions impact-
159. Massachusetts v. Envtl. Protection Agency, 549 U.S. 497, 497, 500 (2007).
160. Id. at 565; see also, ROBERT MELTZ, CONG. RESEARCH SERV., R42613, CLIMATE CHANGE AND
EXISTING LAW: A SURVEY OF LEGAL ISSUES PAST, PRESENT, AND FUTURE (2013), available at http://www.
fas.org/sgp/crs/misc/R42613.pdf.
161. See MELTZ, supra note 160, at 3-17. See also CLIMATE CHANGE LITIGATION CHART, http://
www.climatecasechart.com (last visited Dec. 25, 2014) (providing an overview of climate change
related case law).
162. In contrast to the United States, sustainable development strategies of countries like
Germany and New Zealand, as well as the European Union incorporate the Brundtland definition
of sustainable development as “development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.” Bruntdland Report, supra
note 2. For instance, in Germany, the sustainable development strategy is based on optimization
between economic, ecological and social interests. PERSPECTIVES FOR GERMANY: OUR STRATEGY FOR
SUSTAINABLE DEVELOPMENT 4, available at http://www.bundesregierung.de/Content/EN/Statische
Seiten/Schwerpunkte/Nachhaltigkeit/nachhaltigkeit-2006-07-27-die-nationalenachhaltigkeitsstrategie.html?nn⫽393722 (last visited Sept. 7, 2014).
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ing environmental issues.163 These challenges are discussed in the
following Part.
B.
Governance for Sustainability
Legal scholars have identified common reasons for the legal system’s
failure to address sustainable development more effectively, but disagree as to how to overcome them.164 Early legal work describes
sustainable development as a political philosophy or principle of
governance, but not as an area of prescriptive law.165 Instead, subsets of
the sustainability concept are addressed separately, such as intergenerational justice, economic development, international trade and investment, labor law, or human rights. Some commentators believe that
sustainable development law is simply soft law while others would like
to abandon the concept altogether.166
Generally, the “lack of specificity,”167 inherent in the concept of
sustainable development, which “allows various parties with potentially
conflicting agendas to coexist under the same big tent,”168 is seen as
one of the main reasons for the law’s inability to address sustainable
development coherently.169 While some authors call for a “thicken[ing]” of the concept “to promote an acculturation process that has
real normative bite,”170 others regard its flexibility and accommodation
of seemingly conflicting interests as a beneficial policy-making tool.171
163. James R. May, Not at All: Environmental Sustainability in the Supreme Court, 10 SUSTAINABLE
DEV. L. & POL’Y 20 (2009).
164. See generally CONNIE PECK, SUSTAINABLE PEACE (1998), available at http://carnegie.org/
fileadmin/Media/Publications/PDF/Sustainable%20Peace%20The%20Role%20of%20the%20
UN%20and%20Regional%20Organizations%20in%20Preventing%20Deadly%20Conflict.pdf.
165. See John C. Dernbach, Sustainable Development as a Framework for National Governance, 49
CASE W. RES. L. REV. 1, 12 (1998).
166. See, e.g., James C. Kraska, Global and Going Nowhere: Sustainable Development, Global
Governance & Liberal Democracy, 34 DENVER J. INT’L L. & POL’Y 247, 248 (2006) (arguing that focus
on democracy-building better achieves goals of economic growth and environmental protection
than global governance model of sustainable development); Robert F. Blomquist, Against Sustainable Development Grand Theory: A Plea for Pragmatism in Resolving Disputes Involving International Trade
and the Environment, 29 VT. L. REV. 733, 733 (2005) (criticizing efforts to theorize sustainable
development and calling instead for more pragmatic “mood” in sustainability decision-making);
PECK, supra note 164, at 157.
167. PECK, supra note 164, at 157.
168. Douglas A. Kysar, Sustainable Development and Private Global Governance, 83 TEX. L. REV.
2109, 2117-18 (2005).
169. Id. at 2118.
170. Id. at 2118 n.51.
171. See PECK, supra note 164.
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Scholars have identified a number of basic principles for sustainable
governance, such as the precautionary principle, but have not outlined
comprehensive regulatory approaches to sustainability.172 Nevertheless, as the protection of the environment is one “leg” of sustainable
development, legal sustainable development scholars frequently rely
on the environmental governance literature to describe regulatory
strategies for sustainable development and propose avenues for improvement of what we would call “sustainable governance.”173
Through “sustainable governance”174 we understand the deliberate
adjustment of practices of governance by international, national and
state legislators, administrative regulators, and the courts to ensure that
economic development proceeds along the principles of sustainable
development.175
In the following Part— based on the rich literature on environmental
governance—we identify three approaches to sustainable governance:
(1) traditional regulation (also called command-and-control regulation); (2) market-based regulation; and (3) New Governance. The
advantages and disadvantages for each of these concepts have been
extensively discussed in environmental law literature. Therefore, we
172. See Robin Kundis Craig & J.B. Ruhl, Governing for Sustainable Coasts: Complexity, Climate
Change, and Coastal Ecosystem Protection, 2 SUSTAINABILITY 1361, 1367-1375 (2010), available at
www.mdpi.com/journal/sustainability (identifying eight principles: the polluter-pays principle,
the use of best available science, the precautionary principle, intergenerational sustainability,
transnational sustainability, accounting for ecosystem services, integrated decision-making, and
adaptive management. The authors explain how those principles can be applied to the sustainable
management of coastal ecosystems). An interesting tool of analysis is provided by the Food and
Agriculture Organization of the United Nations (FAO). On its website the FAO briefly describes a
framework to analyze the strengths, weaknesses, overlaps and gaps in the current substantive law
to positively regulate sustainable development. Introduction, FOOD AND AGRICULTURE ORG. OF THE
UNITED NATIONS, http://www.fao.org/docrep/005/Y3872E/y3872e02.htm#bm02.3.2 (last visited
Dec. 25, 2014).
173. Craig & Ruhl, supra note 172, at 1378 (referring to government-stakeholder network
structures, indirect governance mechanisms, and economic incentive programs as innovative
regulatory proposals for sustainable development).
174. This Article uses the terms sustainable governance and governance for sustainability
interchangeably.
175. This definition was inspired by Craig & Ruhl, supra note 172, at 1366 (citing Jill Jäger,
The Governance of Science for Sustainability, in GOVERNING SUSTAINABILITY 142-158 (Adger & Jordan
eds., 2009), which defines governance for sustainable development as deliberate adjustment of
practices of governance in order to ensure that human development proceeds along a more
sustainable trajectory). The definition was also impacted by the work of Timothy F. Malloy, The
Social Construction of Regulation: Lessons from the War Against Command and Control, 58 BUFF. L. REV.
267, 267 (2010) (stating that “legal rules are the products of political institutions engaged in
formal procedures—the legislature, the courts, and the regulatory agency”).
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will only briefly describe each of the concepts and its shortcomings,
before introducing Proactive Law as a complementary approach in Part
VI.176
1.
Traditional Governance and Its Critics
Traditional governance, or command-and-control governance, is
top-down regulation.177 It relies upon the government to compel
businesses to adopt sustainability into its business decisions. Noncompliance typically results in civil or administrative fines, or criminal
prosecution.178 Traditional governance uses two distinct regulatory
mechanisms to enforce its goal: (1) require companies to use a specific,
or best available, technology to reach pre-determined limits; or (2)
control the degree of pollution through a permit system.179 Examples
include catalytic converters in cars, air pollution permits,180 or the
EPA’s Significant New Alternatives Policy (SNAP) program enacted
pursuant to section 612(c) of the Clean Air Act.181
Existing literature has heavily criticized traditional approaches to
regulating sustainable development.182 Criticisms mostly evolve around
176. Our analysis is based on the premise that regulation has a role to play in making
companies more sustainable and that economic sustainable development cannot be left to
business alone. See Dennis D. Hirsch, Green Business and the Importance of Reflexive Law: What Michael
Porter Didn’t Say, 62 ADMIN. L. REV. 1063, 1086-89 (2010) (citing Michael Porter & Class van der
Linde, Green and Competitive: Ending the Stalemate, HARV. BUS. REV., Sept.-Oct. 1995, at 120, 128
(listing six reasons why regulation is needed)). We limit our analysis to government regulation
that is public as opposed to private, or self-regulation by the private sector without interference
from the government.
177. Eric W. Orts, Reflexive Environmental Law, 89 NW. U. L. REV. 1227, 1235 (1995)
(describing the two main approaches to environmental governance as “command-and-control”
and “market-based regulation”).
178. Id. (referring to criminal prosecution for violation of environmental laws).
179. Id.
180. Id.
181. 42 U.S.C. § 7671k (2012). The SNAP program requires the EPA to “publish a list of
acceptable and unacceptable substitutes for ozone-depleting substances.” SNAP Program Basic
Information, ENVTL. PROTECTION AGENCY, http://www.epa.gov/ozone/snap/about.html (last visited Sept. 7, 2014). The SNAP program “does not require that substitutes be risk- free to be found
acceptable.” Id. The EPA “interprets Section 612 as a mandate to identify substitutes that reduce
risks compared to use of Class I or II compounds and other substitutes for Class I or Class II
substances, rather than mandate to list as acceptable only those substitutes that are risk free.” Id.
182. Currently, the available literature mostly refers to environmental regulation, but its
arguments are equally valid for the more comprehensive concept of sustainable development.
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two aspects: inefficiency and insufficiency.183 Traditional regulation
relies heavily on the capacity and willingness of governments to regulate sustainable development, and in case of permit systems, requires
sometimes-heavy bureaucratic structures. Traditional regulation has
been criticized for being static because it is based on the technology
available at the time the regulation was made, and does not necessarily
reflect changing conditions or advancement in technology.184 Moreover, traditional regulation does not provide incentives for business to
do more than required, like, for example, search for innovative, more
sustainable products or processes that could protect the environment
and enhance a business’s competitiveness.
2.
Market-Based Regulation
Market-based regulation aims at discouraging environmentally harmful activities through policies like environmental taxes.185 Similar to
traditional regulation, market-based regulations are premised on current knowledge and technology and are not capable of quickly adapting to changing conditions. Market-based regulations also suffer from
the fact that an actor can always simply pay the tax and continue the
environmentally damaging activity.186 This mindset internalizes environmental costs but does not fundamentally change behavior.
In contrast to traditional regulation, market-based regulation relies
on external actors or institutions, such as consumers or investors, to
exert economic pressure on business.187 This creates incentives for
companies to use more sustainable processes or products. Mandatory
information disclosure regimes, such as environmental impact reporting or food labeling requirements, are prominent examples.188
183. The following summary of the criticisms of command-and-control regulation draws in
part from Orts, supra note 177, at 1235-41 and Hirsch, supra note 176, at 1086-90.
184. See Orts, supra note 177, at 1238 (citing Daniel A. Farber, Environmental Protection as a
Learning Experience, 27 LOY. L.A. L. REV. 791 (1994)).
185. See generally Orts, supra note 177, at 1241-52 (describing four economic approaches to
environmental regulation: taxes, expanding property rights in the natural environment, creation
of tradable pollution rights, and environmental marketing regulation).
186. Id. at 1243.
187. See Benjamin J. Richardson, Enlisting Institutional Investors in Environmental Regulation:
Some Comparative and Theoretical Perspectives, 28 N.C. J. INT’L L. & COM. REG. 247, 333-34 (2002)
(noting the use of market-based approaches through consumption charges, harvesting quotas,
environmental taxes, and emissions-rights programs).
188. See generally Allison M. Snyder, Holding Multinational Corporations Accountable: Is NonFinancial Disclosure the Answer?, 2007 COLUM. BUS. L. REV. 565 (2007); Terra Pfund, Corporate
Environmental Accountability: Expanding SEC Disclosures to Promote Market-Based Environmentalism, 11
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Ultimately, this mechanism remains questionable because of the
assumption that external actors will exert pressure on companies
without a guarantee that they will actually do so. Also, there is an
inherent danger that the effectiveness of market-based regulations may
be watered down through permissible activities such as labeling
processes or reporting schemes for impermissible purposes like
“greenwashing.”189
3.
New Governance
Unsatisfied with the preceding two approaches to sustainable governance, legal scholars have devised new ideas for alternative schemes.
Though very different in nature and objectives, for the purpose of this
overview we will categorize these innovative approaches as New
Governance.190
New Governance scholarship seeks to address many of the shortcomings of traditional regulation as discussed above. New Governance
proposes strategies that are flexible, integrative, consensus-oriented,
pragmatic, bottom-up, participatory, outcome-oriented, and less dependent on bureaucratic structures and the public regulator in general.191
New Governance is not limited to sustainable development, and, to our
knowledge, has not yet specifically addressed sustainable development,
focusing instead on environmental regulation. Besides environmental
regulation, New Governance scholars have written in areas such as
public school reform, “problem-solving courts,” health care reform,
workplace gender discrimination, equal protection, labor rights, community policing, community economic development, public law litiga-
MO. ENVTL. L. & POL’Y REV. 118 (2004); see also David Hess, Combating Corruption Through Corporate
Transparency: Using Enforcement Discretion to Improve Disclosure, 21 MINN. J. INT’L L. 42 (2012)
(analyzing incentives for companies to disclose information required by the Global Reporting
Initiative or other social reporting).
189. See Roberts, supra note 80, at 70 (citing Andrew Hoffman & Stephanie Bertels, Who Is
Part of the Environmental Movement?, in GOOD COP, BAD COP: ENVIRONMENTAL NGOS AND THEIR
STRATEGIES TOWARD BUSINESS 48, 62 (Thomas P. Lyon ed., 2010)) and defining “greenwashing” as
presenting misleading information to conceal an organization’s abuse of the environment while
publicly advertising its efforts to protect the environment).
190. For an overview of the “New Governance” paradigm, see generally Lobel, supra note 11
(identifying common traits to several “New Governance’ approaches); Bradley C. Karkkainen,
“New Governance” in Legal Thought and in the World: Some Splitting As Antidote to Overzealous Lumping,
89 MINN. L. REV. 471 (2004) (criticizing Lobel’s approach as excessive generalization and
differentiating and categorizing some of the New Governance scholarship).
191. See Karkkainen, supra note 190, at 474.
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tion,192 and governing the global commons.193 Although criticized for
lacking differentiation,194 a path-breaking article195 by Orly Lobel
identifies common traits in New Governance scholarship. Accordingly,
New Governance is characterized by organizing principles, which may
drive private sector business decisions to implement sustainability
policies.196 These organizing principles are: participation and partnership; collaboration; diversity and competition; decentralization and
subsidiarity; integration of policy domains; flexibility and noncoerciveness (which Lobel calls “softness-in-law”); fallibility, adaptability; dynamic learning; law as competence; and orchestration.197 The
most influential streams among the diverse approaches New Government has to offer are Reflexive Law and Polycentric Governance.198
In accordance with the Reflexive Law theory developed by German
social theorist Gunther Teubner, reflexive environmental law does not
prescribe “green” technologies, fix pollution limits or propose standards for environmental outcomes; nor does it leave the solution of
ecological concerns entirely to the market.199 Instead, it prescribes
environmental goals for companies to achieve internally through reflection mechanisms relying on information and communication.200 Companies remain free to choose how to achieve these goals, and, ideally,
goals are formulated that are flexible enough to adapt to changing
circumstances over time and stimulate innovation.201
Polycentric Governance has been described as a regulatory system
“characterized by multiple governing authorities at differing scales
rather than a monocentric unit.”202 Because of its decentralized nature, it is predisposed to overcome global action problems associated
192. Id. at 475 (with references for each category).
193. See Scott J. Shackelford, Governing the Final Frontier: A Polycentric Approach to Managing
Space Weaponization and Debris, 51 AM. BUS. L.J. 429, 468-69 (2014) (applying Polycentric Governance to space governance as global commons).
194. Karkkainen, supra note 190.
195. See Lobel, supra note 11, at 371-404 (identifying and describing the underlying principles of New Governance).
196. Id.
197. Id.
198. See Orts, supra note 177; Daniel J. Fiorini, Rethinking Environmental Regulation: Perspectives
on Law and Governance, 23 HARV. ENVTL. L. REV. 441, 445-50 (1999).
199. Gunther Teubner, Substantive and Reflexive Elements in Modern Law, 17 L. & SOC’Y REV.
239, 242 (1983).
200. See Fiorini, supra note 198, at 448; Hirsch, supra note 176, at 1112-14.
201. See generally Orts, supra note 177; Hirsch, supra note 176, at 1105-12.
202. Elinor Ostrom, Polycentric Systems for Coping with Collective Action and Global Environmental
Change, 20 GLOBAL ENVTL. CHANGE 550, 552 (2010).
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with sustainable governance. Applying Polycentric Governance to sustainable development recognizes that “a single governance unit”203
might not be able to cope with sustainability issues and that waiting for
all actors to coordinate will have irreversible consequences. On the
other hand, a decentralized system of Polycentric Governance risks
insufficiently addressing the hybrid nature of the sustainable development paradigm.
While acknowledging that these suggestions are of fundamental
importance and wishing to highlight the positive role these lines of
legal scholarship can play for sustainable development, the focus of this
Article is less on questions of regulatory design, and more on the
content of sustainable development law. The New Governance concepts
mentioned above and the Proactive Law approach are complimentary
with regard to sustainable governance. The following Part compares
and contrasts existing New Governance approaches and Proactive Law,
highlighting where these approaches overlap and where Proactive Law
offers a different perspective. Our analysis suggests that effective sustainable governance should be proactive in its content orientation while
using a reflexive or polycentric mechanism for its technical legislative
implementation.
VI.
A PROACTIVE APPROACH TO SUSTAINABLE DEVELOPMENT REGULATION
As discussed above, Proactive Law has been primarily used in the
context of business dealings,204 but legal scholarship suggests that the
concept can be applied to other fields.205 Most notably, the EESC
Opinion in 2009 suggested that Proactive Law could positively influence EU regulation,206 and since 2009, various regulatory initiatives in
the EU evidence a proactive approach.207 One of the core ideas of the
EESC Opinion is the enabling and empowering function of the law.
203. Id.
204. See Siedel & Haapio, supra note 90, at 641-42.
205. See generally Aslak Syse, Equality and Accessibility: A Proactive Approach to Strengthen the Legal
Status and Protection Against Discrimination of Persons with Disabilities, 49 SCANDINAVIAN STUDIES IN L.
368 (2006).
206. EESC Opinion, supra note 98 ¶ 4.2.
207. EESC Opinion, supra note 98 ¶¶ 6.6, 6.8 (listing proactive and negative examples of EU
legislation); see also David M. Trubek & Louise G. Trubek, New Governance & Legal Regulation:
Complementarity, Rivalry, and Transformation, 13 COLUM. J. EUR. L. 539, 550 (2007) (describing the
EU Water Framework Directive as an example for New Governance).
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Legislation should be “done by, with and for the users of the law,
individuals and businesses.”208
This suggests that in the area of sustainable governance, much could
be gained from collaborative approaches that make use of the private
sector’s self-interest in sustainability as described above in Part V.B. The
following analysis, based on the principles developed by the EESC and
Proactive Law scholars, draws on the potential positive role business
could play in regulating sustainable development, and analyzes how
Proactive Law could be made instrumental to enhance regulatory
models for sustainable development.
To make use of Proactive Law for the purpose of enhancing sustainable governance, it is important to understand the extent to which
Proactive Law and New Governance principles differ and overlap, and
how Proactive Law may address the challenges of governing sustainable
development to complement existing approaches.209 This also raises
the general question whether Proactive Law is an entirely new approach to sustainability regulation or a new sub-category of New
(environmental) Governance such as Reflexive Law or Polycentric
Governance mentioned above. Each of these issues will be discussed in
turn.
A.
1.
Participation and Collaboration
Stakeholder Participation
To make regulation more effective, New Governance models typically rely on stakeholder participation at all stages of the legal process:
from legislation and promulgation of rules to implementation and
enforcement. This stands in sharp contrast to the traditional or socalled New Deal regulatory model,210 which relies on experts and
centralized regulatory agencies like the EPA to design and enforce
rules. Participation by the regulated entities or those whose interests
the policy is intended to serve is seen negatively as lobbying, driven by
208. EESC Opinion, supra note 98 ¶ 1.5.
209. The following New Governance principles draw largely on Lobel, supra note 11, at
442-43.
210. For a detailed description of the New Deal Regulatory Model, see Daniel J. Gifford, The
New Deal Regulatory Model: A History of Criticisms and Refinements, 68 MINN. L. REV. 299, 300-04 (1983)
(explaining that the “Roosevelt administration employed two major regulatory mechanisms to
combat what it perceived as the two causes of the economic problems of the 1930s: establishment
of cartel mechanisms to increase returns for production and administrative fine-tuning to remedy
market malfunctions”).
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private self-interest and as a threat to the objectivity and legitimacy of
the regulatory process.211 In contrast, New Governance and Proactive
Law both seek to positively involve actors other than the regulating
entity, such as the private sector, through self-regulation, private accreditation, or certification schemes. Civil society, such as NGOs, are used as
“public attorneys” or “watchdogs,” private organizations (for example
private accreditation bodies, industry or consumer associations) or
individuals (such as consumers) evaluate and control corporate actions
instead or in addition to administrative agencies.212 According to New
Governance literature, decentralization and stakeholder participation
is believed to “ensur[e] the achievement of policy goals [and to
enhance] the ability of citizens to participate in political and civic
life.”213
Though not without flaws, privately administered sustainability reporting schemes such as the Global Reporting Initiative (GRI)214 are an
example of this type of stakeholder involvement and delegation of
public tasks to the private sector. The “GRI promotes the use of
sustainability reporting as a way for organizations to become more
sustainable and contribute to sustainable development” through a
privately administered self-reflection and reporting mechanism.215 One
of the GRI limitations is the fact that GRI reports publish many of its
indicators in isolation, with little or no integration of economic,
environmental and social integrators.216 To help enhance its effectiveness, several scholars suggest more integrated metrics,217 and the
211. See Lobel, supra note 11, at 372-73.
212. Id. at 374 (describing how third-party participation has led to a one-third per-capita
reduction in today’s body of federal employees compared to the period immediately after the New
Deal).
213. Id.; see also EESC Opinion, supra note 98 ¶ 1.5 (stating that Proactive Law “is done by,
with and for the users of the law, individuals and businesses; the vision here is of a society where
people and businesses are aware of their rights and responsibilities, can take advantage of the
benefits that the law can confer, know their legal duties so as to avoid problems where possible,
and can resolve unavoidable disputes early using the most appropriate methods”).
214. About GRI, GLOBAL REPORTING INITIATIVE, https://www.globalreporting.org/information/
about-gri/Pages/default.aspx (last visited Nov. 7, 2014).
215. What is GRI?, GLOBAL REPORTING INITIATIVE, https://www.globalreporting.org/information/
about-gri/what-is-GRI/Pages/default.aspx (last visited Sept. 7, 2014).
216. Alberto Fonseca, Barriers to Strengthening the Global Reporting Initiative Framework: Exploring
the Perceptions of Consultants, Practitioners, and Researchers, 5 CANADIAN SUSTAINABILITY INDICATORS
NETWORK (2010).
217. Id.
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business sector explores the potential of “integrated reporting” (IR).218
Another limitation is that although the GRI and IR processes encourage external verification or assurance, apart from shedding some light
on hiring these verification services, they say little about how to verify
the reports themselves.219
To remediate the shortcomings of existing stakeholder participatory
models like the GRI or other voluntary reporting schemes we suggest
integrating them with mandatory regulatory structures such as reporting obligations under U.S. securities law.220
2.
Multi-Party-Collaboration
Bridging conflicting interests is inherent to the concept of sustainable development.221 Similarly, in private contractual relationships
(the current focus of Proactive Law scholarship), each party pursues its
own interests, but the successful execution of the contract requires that
both parties fulfil their obligations and collaborate to reach the common goals specified in the governing documents.222 Effectuation of the
contract has the greatest chance for success when the parties clearly
define their respective interests and expectations from an early stage of
the negotiations.223 Success of the contract may also be driven by
greater incentives for performance and greater financial consequences
for non-performance. Similarly, proactive regulation requires true,
218. See About Integrated Reporting (IR), INTEGRATED REPORTING (IR), http://www.theiirc.org/
the-iirc/about/ (last visited Dec. 25, 2014) (defining integrated reporting as “a process founded
on integrated thinking that results in a periodic integrated report by an organization about value
creation over time and related communications regarding aspects of value creation”); see also
GLOBAL REPORTING INITIATIVE, THE SUSTAINABILITY CONTENT OF INTEGRATED REPORTS—A SURVEY OF
PIONEERS 5, 28, 30 (2013) (concluding that the majority of participating companies embark on
integrated reporting “because it just seems like the logical and natural thing to do when
sustainability is already embedded in their core business” and evidencing positive response from
stakeholders).
219. Fonseca, supra note 216 (critiquing the GRI); see also supra Part III.B.
220. See Park & Berger-Walliser, supra note 81, at 42 (suggesting that in the case of the
voluntary reporting mechanism under the German Sustainability Code “this integration could be
modeled after the German Corporate Governance Codex, which has been incorporated into
German securities law through the enforcement mechanisms of the German Stock Corporation
Act and general provisions in German criminal law”).
221. See supra Part I.B.
222. SIEDEL & HAAPIO, supra note 56, at 117 (suggesting that managers and lawyers working as
a team can create “good-quality contracts that help establish a strong foundation for business
success”).
223. See Berger-Walliser et al., supra note 111, at 58 (noting that contracts should be
“roadmaps of performance”).
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effective stakeholder participation during the entire regulatory process, not limited to the drafting period. Transposed to sustainable
governance, this means implication of all stakeholders in the preparation and execution of regulation in order to overcome conflicting
interests, set desired goals, align objectives, and create a shared vision
that supports successful implementation from the outset.224
Through active participation, which goes beyond lobbying or pure
consultation, stakeholders can become active players and the driving
force in the law-making process. This collaborative element in both
New Governance and Proactive Law is well represented in negotiated
rulemaking. The U.S. Department of Agriculture defines negotiated
rulemaking as:
[A] consensus-based process through which an agency develops
a proposed rule by using a neutral facilitator and a balanced
negotiating committee composed of representatives of all interests that the rule will affect, including the rulemaking agency
itself. This process gives everyone with a stake a chance to try to
reach agreement about the main features of a rule before the
agency proposes it in final form.225
The basic steps of negotiated rulemaking proceed as follows.226 First,
the proposing agency makes a threshold determination as to whether
negotiated rulemaking is suitable for the proposed rule. If the agency
determines that the proposed rule is suitable for negotiation, it then
assembles the stakeholders that will be impacted by the proposed rule
and selects a facilitator. Once this is done, the agency organizes the
negotiating committee, which actually negotiates the proposed rule in
committee meetings and prepares a report for submission to the
rulemaking agency.227 As articulated by the USDA, “[e]ach member
agrees to negotiate in good faith,” and “[t]he agency sponsoring the
negotiated rulemaking commits, consistent with its legal obligations, to
use a consensus agreement from the committee as the basis for, if not
the actual text of, a proposed rule.”228
224. EESC Opinion, supra note 98 ¶ 1.6.
225. U.S. DEPT. OF AGRIC., WHAT IS NEGOTIATED RULEMAKING? 1, available at http://www.ams.
usda.gov/AMSv1.0/getfile?dDocName⫽STELPRDC5089434.
226. Id.
227. Id.
228. Id.
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A practical example of this collaborative stakeholder approach to
sustainable governance is the Clayoquot Sound project mentioned in
Part III.B. above. During the first fifteen years of the dispute, principle
stakeholders used several consultative and participatory processes to
communicate their interests and to stop MacMillen Bloedel from
logging the old growth rainforest in Clayoquot Sound, British Columbia.229 However, solutions that ensured more equitable power sharing
came with formal changes to the land-use and resource management
decision-making process in Clayoquot Sound. This ensured that previously disempowered stakeholders, such as First Nations and activists,
received a more balanced negotiating position with corporations
through the creation of an institutional mechanism. It allowed all
parties to focus on developing solutions to the conflict rather than
searching for ways to disrupt their opponents.230
3.
Shift from Adversarial to Win-Win Relationships
The adversarial nature of legal systems, especially in the common law
system, is one of the many obstacles to a comprehensive sustainable
development law. Sustainable development requires the balancing of
conflicting interests, while the adversarial legal system requires one
party “to win,” which hinders the desire to create effective, collaborative solutions for sustainable development. Financial incentives for
lawyers on all sides enhance the conflict, and keep the conflict active
for longer periods than necessary. Therefore, calls for the greater use
of environmental alternative dispute resolution (ADR) mechanisms
multiply.231 Arbitration or mediation may be promising options to
overcome the conflicting interests between the environment and social
and/or economic interests. ADR is also beneficial in helping to find
fast and effective solutions that balance the interests and needs of all
parties.
A proactive application of alternate strategies would include their
use in the law-making process and not just at the dispute resolution
stage. Building on propositions in the proactive contracting litera-
229. See generally Parai & Esakin, supra note 67.
230. See generally John-Henry Harter, Environmental Justice for Whom? Class, New Social Movements, and the Environment: A Case Study of Greenpeace Canada, 1971-2000, 54 LABOUR /LE TRAVAIL 83,
112-13 (2004); see also Tara C. Goetze, Empowered Co-Management: Towards Power-Sharing and
Indigenous Rights in Clayoquot Sound, BC, 47 ANTHROPOLOGICA 247, 253-57 (2005).
231. See, e.g., Joseph A. Siegel, Alternative Dispute Resolution in Environmental Enforcement Cases:
A Call for Enhanced Assessment and Greater Use, 24 PACE ENVTL. L. REV. 187 (2007).
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ture,232 the collaborative rulemaking mentioned in the previous section233 could be taken a step further by adding elements of ADR to the
law-making process. For example, by adding a mediator to the negotiations, difficulties in reaching an agreement as to what regulatory
measure should be taken, and what its content should look like, may be
more easily overcome. In the sustainable development paradigm, we
imagine that the government regularly plays the role of a third party
between conflicting stakeholder interests. In doing so, the state or
international organization would become a facilitator, supervisor, or
partner of—and between—self-regulated entities rather than a topdown regulator.234
The Canadian Boreal Forest Agreement (CBFA)235 is a practical
example of this shift from adversarial to win-win solutions. It covers
more than seventy three million hectares of public forest licensed to
twenty-one forest companies, nine of which are international environmental organization, and to U.S. and Canadian organizations of the
Forest Products Association of Canada (FPAC).236 FPAC members
commit to the highest environmental standards of forest management
and conservation, while international environmental organizations
commit to global recognition of and support for FPAC members’
efforts.237 After signing the agreement the environmental organizations also suspended divestment and “do not buy” campaigns targeting
the FPAC companies.238 The participating companies in return suspended logging on nearly twenty-nine million hectares of Boreal
Forest, allowing intensive caribou habitat protection while maintaining
essential fiber supply for uninterrupted mill operations.239
232. See generally Camilla Baasch Andersen, Pre-Contractual Mediation, in PROACTIVE LAW IN A
BUSINESS ENVIRONMENT 155 (Gerlinde Berger-Walliser & Kim Østergaard eds., 2012).
233. See supra Part VA.2.
234. See Jody Freeman, Collaborative Governance in the Administrative State, 45 UCLA L. REV. 1,
66 (1997) (noting that in negotiated rule-making, ultimately the role of government changes from
regulator to facilitator).
235. See THE CANADIAN BOREAL FOREST AGREEMENT, http://canadianborealforestagreement.
com/index.php/en/ (last visited Dec. 25, 2014).
236. See Why it is Important, THE CANADIAN BOREAL FOREST AGREEMENT, http://
canadianborealforestagreement.com/index.php/en/why-its-important (last visited Dec. 25, 2014).
237. Forest Products Association of Canada, Canadian Forest Industry and Environmental Groups
Signs World’s Largest Conservation Agreement, FOREIGN PRODUCTS ASSOCIATION OF CANADA, http://www.
fpac.ca/index.php/en/press-releases-full/440/ (last visited Dec. 25, 2014).
238. GREENPEACE, THE CANADIAN BOREAL FOREST AGREEMENT: ABRIDGED VERSION 10 (2010).
239. Fraser Los, Boreal Truce, CANADIAN GEOGRAPHIC, http://www.canadiangeographic.ca/
magazine/jf14/canadian-boreal-forest-agreement.asp (last visited Dec. 25, 2014).
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Similar agreements have been formed in the mining industry but on
a more regional basis. Impact and benefit agreements (IBAs) between
governments, local communities, and mining companies include profitsharing, employment, wider economic development opportunities,
greater transparency, and enhanced protection of environmental and
socio-cultural amenities.240 In addition, Good Neighbor Agreements
(GNAs) have also been formed in many different countries where
mining companies and the local communities have established partnerships. For example, the GNA in Montana, between the citizens of
Stillwater and Sweet Grass counties and the Stillwater Mining Company, established a process for citizens to regularly meet with company
representatives to address and prevent problems related to the impact
of mining, reclamation, wildlife, and other issues.241
B.
1.
Shared Power and Responsibility
Empowering and Public-Private Partnership
The examples of New Governance for sustainable development
mentioned above primarily make use of private entities and NGOs to
replace or support public government in pursuing sustainable development and make business accountable for its environmental and social
impact. In the same vein, but focusing on the participation of the
regulated entity itself,242 Proactive Law emphasizes enabling and
empowering users of the law.243 The responsibility for making and
enforcing the rules that regulate their behavior shifts from the public
regulator to the regulated entity. Instead of businesses or other regulated entities having to endure oppressive top-down regulation, firms
and individuals should become active players in governance. The
relationship changes from a system based on rationality, separation,
and power to one of understanding, integration, and accommoda-
240. Lindsay Galbraith et al., Towards a New Supraregulatory Approach to Environmental Assessment in Northern Canada, 25 IMPACT ASSESSMENT AND PROJECT APPRAISAL 27, 28 (2007).
241. SARAH M. ZUZULOCK & JAMES R. KUIPERS, THE GOOD NEIGHBOUR AGREEMENT: A PROACTIVE
APPROACH TO WATER MANAGEMENT THROUGH COMMUNITY ENFORCEMENT OF SITE-SPECIFIC STANDARDS
(2007).
242. See Roger C. Cramton, The Why, Where and How of Broadened Public Participation in the
Administrative Process, 60 GEO. L. J. 525, 526, 534-35 (1972) (focusing on participation of the
stakeholders whose interests the policies were intended to serve as opposed to participation of
the regulated entity); see also Lobel, supra note 11, at 373-74 (with references).
243. EESC Opinion, supra note 98 ¶ 1.5.
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tion.244 The hypothesis is that by doing so, the regulated firms or
individuals will take responsibility for their contributions and actions
rather than retrospectively blaming other parties, conditions, or circumstances for failures.245 As it relates to the regulatory process, Proactive
Law means self-regulation, co-regulation,246 and active participation
that rise above mere consultation.247 Proactive Law requires collaboration and partnership between government, business, and civil society in
the rule-making process. The idea is that this engagement in the legal
process increases the chances that the regulated entities will actually
follow the law.
Conflicting interests between different stakeholders, as they are
inherent to sustainable development when trying to reconcile the
conflicting interests between economy, ecology and social justice,248
should be resolved upfront during the rule-making process instead of
resulting in disputes after the rule is in place. The hope is also that
through active participation, the regulated entities will eventually
overachieve the standards that they have contributed to setting up
(when, for example, more developed technology allows them to do so),
instead of merely complying with the law, or worse, disregarding it. In
this respect, Proactive Law overlaps with New Governance theories, and
uses Reflexive Law mechanisms to better adapt to technological advances and encourage business to do more than the minimum required by law.249
Though often criticized for being misused for corporate “bluewashing” purposes,250 a partnership model along the principles of Proactive
244. THOMAS D. BARTON, PREVENTIVE LAW AND PROBLEM SOLVING: LAWYERING FOR THE FUTURE 3
(2009) (providing a practical example for how power and control under the traditional regime
are replaced by changed attitudes and peer pressure in a more proactive regime).
245. See PAGE, supra note 89, at 50.
246. EESC Opinion supra note 98 ¶ 6.12.
247. See PAGE, supra note 89.
248. See supra Part I.B.
249. See Ostrom supra note 202, at 552.
250. In line with the expression “greenwashing” the term “bluewashing” is used “to describe
corporations that participate in the United Nations Global Compact as a public relations exercise
with no intention of improving their ethical conduct.” Paul Harpur, New Governance and the Role of
Public and Private Monitoring of Labor Conditions: Sweatshops and China Social Compliance for Textile and
Apparel Industry/CSC9000T, 38 RUTGERS L. REC. 1, 25 n.176 (2011) (citing CORPORATE WATCH,
TANGLED UP IN BLUE (2000); Sean D. Murphy, Essay in Honor of Oscar Schachter: TAKING MULTINATIONAL CORPORATE CODES OF CONDUCT TO THE NEXT LEVEL, 43 COLUM. J. TRANSNAT’L L. 389, 413 (2005);
Alexis M. Taylor, UN Reports: the UN and the Global Compact, 17 N. Y. L. SCH. J. HUM. RTS. 975, 981
(2001)).
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Law is the United Nations Global Compact (UNGC).251 The UNGC was
created in 2000 to establish principles and guidelines for the private
sector in implementing sustainable development. It serves as a platform for business and non-business entities to network and engage in
areas of human rights, labor, environment, anti-corruption and the
U.N. goal of sustainable development.252 With over 10,000 participants
and stakeholders from 145 countries, it is the largest global CSR
initiative.253 The UNGC created the U.N. Principles for Responsible
Investing (UN-PRI) and the U.N. Principles for Responsible Management Education (UN-PRME). The Global Compact involves governments, companies, labor and civil society organizations, and the United
Nations as an authoritative convener and facilitator.254 By agreeing to
adhere to the UNGC, multinational corporations (MNCs) agree to
“embrace, support, and enact” the UNGC’s ten principles in the areas
of human rights, labor, the environment, and anti-corruption.255 A
company subscribing to the UNGC is expected to implement changes
to its operations, publicly advocate on behalf of the UNGC, and publish
an annual sustainability report regarding the steps taken to implement
its principles.256 By voluntarily aligning business goals and operations
with global sustainable development political goals under the UNGC,
businesses are able to collectively analyze and foresee future social and
ecological demands on them, and possibly forestall onerous regulation.257 The Principles place companies in an anticipatory (as opposed
to reactive) stance towards sustainable development.258
2.
Shared Expertise and Responsibility
New Governance scholarship has noted that today’s ecological problems are too complex to be resolved by government alone.259 Sustain-
251. OVERVIEW OF THE U.N. GLOBAL COMPACT, https://www.unglobalcompact.org/
AboutTheGC/index.html (last visited Nov. 7, 2014).
252. Id.
253. Id.
254. Georg Kell, The Global Compact: Origins, Operations, Progress, Challenges, 11 J. CORP.
CITIZENSHIP 35, 37-39 (2003).
255. See U.N. GLOBAL COMPACT, supra note 251.
256. Surya Deva, Global Compact: A Critique of the U.N.’s “Public-Private” Partnership for Promoting
Corporate Citizenship, 34 SYRACUSE J. INT’L L. & COM. 107, 115 (2006).
257. PRINCIPLES FOR RESPONSIBLE INV., BUILDING THE CAPACITY OF INVESTMENT ACTORS TO USE
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INFORMATION 4 (2013), available at http://d2m27
378y09r06.cloudfront.net/viewer/?file⫽wp-content/uploads/Capacity_Building_2013.pdf.
258. Id.
259. Ostrom, supra note 12, at 35.
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able governance is not only about the environment, but also about
addressing immensely interdependent issues. It demands scientific,
technical, business, and social expertise. Who other than the regulated
entities and concerned stakeholders themselves would better judge the
impact a regulatory measure will have on their interests, and predict its
potential influence on their behavior? A governance model that uses
this expertise will not only be more effective, but also be better
accepted by the regulated entities and thereby overcome enforcement
deficits.
The EESC Opinion on Proactive Law builds on the concept “that
compliance with laws is, generally speaking, voluntary and that recourse to legal proceedings is the exception—the ‘ultima ratio.’ Without the voluntary and widespread agreement of the public to comply
with the duties imposed by the rules, their effectiveness would be
irremediably compromised.”260 Accordingly, it is the regulator’s responsibility to make laws that “encourage people to observe them voluntarily and to comply with them spontaneously.”261 One way to achieve
this is implication of the regulated entity in the law-making process as
outlined in the previous Part; another pre-requisite for “good” lawmaking are laws that are comprehensible, accessible, acceptable, and
enforceable.262
Both theories, however, say little about what may motivate the
regulated entity to participate and take responsibility in the regulatory
process and enforcement. One of the principles of Proactive Law
provides useful guidance: Proactive Law fosters collaboration and
shared understanding between stakeholders to achieve common goals,
prevent problems, and subsequent legal disputes.263 In order to proactively identify and pursue these common interests in the area of
sustainability, this Article suggests relying on theories of sustainability
as a means for competitive advantage as identified in the management
literature and exemplified by corporate practice described in Part II.B.
The aforementioned literature suggests that, if the private sector
identifies the sustainability paradigm (or certain aspects of it) as being
in its self-interest, companies will be motivated to work alone (through
260. EESC Opinion, supra note 98 ¶ 3.2.
261. Id. ¶ 3.3.
262. See EESC Opinion, supra note 98 ¶ 3.4 (noting that “[u]nless these criteria are met, the
law tends to be rejected by those it is intended to apply to, is not implemented by those whose duty
it is to ensure it is observed and falls into disuse, with the ‘force’ of justice being unable to apply it
effectively”).
263. See supra Part IV.
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self-regulation) or in collaboration with local or international governments or civil society to pursue sustainability goals and/or respect or
even “overachieve” environmental standards set forth by private or
public regulation. Though there is need for empirical research to
prove the following hypothesis, applying Proactive Law principles to
sustainable governance suggests that a regulator who makes use of the
private sector’s self-motivation to pursue sustainable goals, cooperates
with companies, or encourages self-regulation is likely to be more
successful in reaching its policy goals. 264
A contemporary example of the empowering element of proactive
governance for sustainability is the German Sustainability Code (GSC),
which was launched by the German Council for Sustainable Development in 2011, and introduced a voluntary sustainability-reporting
scheme for German companies.265 Initiated as a reaction to the 2008
financial crisis, the primary objective of the GSC is to make sustainability reporting more transparent in order to provide investors with more
information regarding companies’ sustainability practices as well as to
help these companies to evaluate environmental, regulatory, and social
risks and opportunities.266 On a broader plane, the GSC is meant to
contribute to the “greening” of the German economy and to guide
public debate on sustainability.267
The GSC is the culmination of an unprecedented collective process
between the German government, the private sector, and stakeholders.268 It was drafted by a council of experts and civil society representatives, the so-called Rat fuer Nachhaltige Entwicklung (RNE). While the
RNE was established by the German government, and its members
were appointed by the German chancellor, the GSC itself was drafted
264. See Park & Berger-Walliser supra note 81, at 28-29 (describing a model of public-private
cooperation through corporate-regulatory feedback loops (CRFLs) based on MNC’s self-interest
to use CSR for competitive advantage and to confer legitimacy to MNCs and avoid conflicts
between state-based public regulation and privately-generated private regulation).
265. RAT FUR NACHHALTIGE ENTWICKLUNG, RECOMMENDATIONS OF THE GERMAN COUNCIL FOR
SUSTAINABLE DEVELOPMENT (2012), available at http://www.deutscher-nachhaltigkeitskodex.de/
fileadmin/user_upload/dnk/dok/kodex/RNE_The_German_Sustainability_Code_GSC_text_
No_41_January_2012.pdf [hereinafter GSC].
266. See id. at 20; see also Dieter Leuering & Philip Stein, Auf dem Weg zum Deutschen
Nachhaltigkeitskodex, 23 NEUE JURISTISCHE WOCHENSCHRIFT (NJW) 719, 719 (2011).
267. See GSC, supra note 265, at 2. In its recommendation for the implementation of the GSC,
the RNE recommends that the GSC be used by all companies independent of their size,
universities, non-profit organizations, foundations, NGOs, trade unions, the media, and public
authorities. Id. at 3.
268. See id. at 2-3.
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without participation from the government.269 Representatives from
the financial sector, the business community, and civil society actively
participated in its creation, including a “testing phase” and feedback
from the participating companies before its launch.270
By selecting a relatively small number of indicators, the GSC aims at
making sustainability reporting easier and more accessible to a larger
number of companies that previously had not made use of any available
reporting schemes due to their complexity.271 Here, the GSC exemplifies another claim of Proactive Law proponents in providing more
accessible, understandable, user-friendly law.272
Similar to reflexive environmental law, the GSC relies on regulation
through information.273 To comply with the GSC, a participating
company is required to describe how it fulfills each of the GSC’s twenty
criteria, or, if it cannot, the reason why.274 Such an approach relies on
internal reflexive processes to advance sustainable development objectives.275 The absence of the government in the code’s drafting process
and its voluntary nature shifts the responsibility for its implementation
from the regulator to the participating companies.
3.
Decentralization, Competition, Pragmatism, and Flexibility
Many of the examples mentioned above illustrate another commonality between New Governance and Proactive Law: preference for
decentralized, pragmatic regulation that can deliberately compete with
hard law or soft law initiatives, yet results in dynamic learning, adaptability, flexibility, and more effective regulation. Accordingly, the EESC
Opinion recognizes:
[T]hat rules and regulations are not the only way nor always the
best way to achieve the desired objectives; at times, the regulator may best support valuable goals by refraining from regulat-
269. See id. at 3 (stating that “the emergence of the German Sustainability Code is of political
significance as it marks the first time that a political stakeholder process has resulted in an
effective agreement without the involvement of the state. In terms of its content and practice, the
Code is a wholly new innovation . . . .”).
270. See id. at 18.
271. See id. at 17.
272. EESC Opinion, supra note 98 ¶¶ 6.5, 6.12.4.
273. See GSC, supra note 265, at 3.
274. Id. at 21.
275. Id. at 8; see also Park & Berger-Walliser, supra note 81, at 29-41(analyzing the GSC as an
example of a CRFL).
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ing and, where appropriate, encouraging self-regulation and
co-regulation. This being the case, the fundamental principles
of subsidiarity, proportionality, precaution and sustainability
take on new importance and a new dimension.276
This statement deliberately includes soft law or private regulation,
which may precede or co-exist with traditional “hard” law, thereby
creating a decentralized system. When private or soft lawmaking is
imbedded in formal public-private partnerships, these collaborative or
competing regulatory processes may create fruitful dynamic learning
opportunities. In turn, this will help to effect legal and regulatory
structures that are pragmatic, user-friendly, and take advantage of
stakeholders’ experience and self-interest. Ultimately, decentralized,
pragmatic regulations may lead to greater enforceability, particularly
on the international level, where enforcement deficits are widely
lamented.
The UNGC mentioned above is an example of this type of institutionalized international public-private partnership. Private organizations
can implement the UNGC principles through changes and improvements in their own organizations and their supply chains. In addition
to these internal changes, they can also engage in external actions
together with the U.N., public authorities and NGOs to enhance
sustainable development in their respective local communities, or
internationally.277 Through the latter, the UNGC not only helps companies or other private organizations to become more sustainable, but
also offers numerous opportunities for private organizations to engage
with the UNGC and share best practices with each other through the
institutionalized structure the UNGC provides.278 These opportunities
include calls for participation,279 practical collaboration between the
U.N. and individual companies on an ad hoc or continuous basis,280
276. EESC Opinion, supra note 98 ¶ 1.7.
277. See Deva, supra note 256, at 5. For examples of U.N. Global Compact partnerships, see
JAN MARTIN WITTE & WOLFGANG REINICKE, BUSINESS UNUSUAL: FACILITATING UNITED NATIONS
REFORM THROUGH PARTNERSHIPS 11-15, 17-41 (2005), available at http://www.unglobalcompact.org/
docs/news_events/8.1/bun_part1.pdf.
278. Engagement Opportunities, U.N. GLOBAL COMPACT, http://www.unglobalcompact.org/
HowToParticipate/Engagement_Opportunities/index.html (last visited Sept. 8, 2014).
279. See, e.g., CEO Statement of Support for the Women’s Empowerment Principles, U.N.
GLOBAL COMPACT, https://www.unglobalcompact.org/news/441-09-18-2013 (last visited Sept. 8,
2014).
280. For example, SUEZ, an industrial utilities provider, partnered with the U.N. Volunteers
(UNV) program to provide its uniquely skilled employees to UNV’s utilities-related projects in
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providing input and sharing experiences of how companies implement
the UNGC’s principles,281 and a blueprint for corporate sustainability
leadership launched at the U.N. Global Compact Leaders Summit in
2010.282
An example of competing sustainability regulation comes from the
multitude of social reporting schemes that have developed over the last
years and which are now slowly moving from private, voluntary schemes
to public and mandatory systems. A recent example is the European
Commission’s directive regarding disclosure of non-financial and diversity information by certain large companies and groups (the EU
Directive).283 The EU Directive amends two existing EU Accounting
Directives that mandate non-financial disclosure in limited liability
companies’ annual reports,284 but have been deemed insufficiently
clear and ineffective.285 If the EU Directive, after consideration by the
EU member states, the European Council, and the European Parliament, is adopted and enters into force, an EU company will be
required to include in its annual report a review of policies, results,
risks, and how it manages those risks in respect of environmental
matters, social and employee-related matters, human rights, anticorruption, and bribery, as well as diversity of its board of directors.286
The EU Directive was formulated with the experiences of correspond-
developing countries without access to drinking water, sanitation and electricity and waste
treatment. See Volunteering Employees to Improve Access to Water and Energy, U.N. GLOBAL
COMPACT, http://www.unglobalcompact.org/issues/partnerships/case_stories_and_examples/
Suez.html (last visited Sept. 8, 2014). The U.N. provides ideas for companies to assist the U.N. on a
range of global issues, many of which are related to sustainability and provides examples of how
companies have engaged with the U.N. See BUSINESS.UN.ORG, http://business.un.org/en (last
visited Sept. 8, 2014).
281. One example is the embedding of sustainability in supply chains. See Sustainable Supply
Chains: Resources and Practices, U.N. GLOBAL COMPACT, http://supply-chain.unglobalcompact.
org (last visited Sept. 8, 2014).
282. Global Compact LEAD is a platform for sustainability leadership and is intended to help
companies that have been identified as leaders in the area of sustainability to achieve higher levels
of corporate sustainability performance, give them proper recognition, and share the experience
of these companies with other U.N. Global Compact participants. See LEAD, Objectives, U.N.
GLOBAL COMPACT, http://www.unglobalcompact.org/HowToParticipate/Lead/objectives.html
(last visited Sept. 8, 2014).
283. Council Directive 2014 O.J. (L 330) 1. Member States are now required to implement it
into domestic law by December 6, 2016. Id. at 8. [hereinafter EU Directive].
284. Fourth Accounting Directive on Annual Accounts (EU), 78/660/EEC; Seventh Accounting Directive on Consolidated Accounts, 83/349/EEC (EU).
285. See EU Directive, supra note 283.
286. See id. at 3, 11.
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ing private voluntary reporting schemes in the minds of its drafters.287
Representatives of the GRI and the International Integrated Accounting Committee served as members of an expert group established by
the European Commission with the mandate to provide advice on the
impact assessment of disclosure of non-financial information by companies to the Commission.288 The meeting minutes of the European
Commission expert group show that among the issues under discussion
between the experts and European Commission officials was whether
existing voluntary reporting frameworks, such as the UNGC, ISO
26000, and the GRI should function as reference for the EU Directive.289 Accordingly, the preamble of the EU Directive expressively
makes reference to “experiences from already existing reporting
schemes.”290 Further, during the drafting phase, the European Commission commissioned a study of the state of current reporting practices in
the EU, which among other aspects reported on the use of voluntary
reporting schemes by European companies.291 In this respect, the EU
Directive illustrates how public and private regulatory schemes positively compete and influence each other.
The EU Directive further takes into account that once it enters into
force, companies may already use or want to continue to use existing or
future reporting frameworks. Consequently, it provides that to satisfy
287. Id. at 2 (stating that under the directive “[c]ompanies may use existing national or
international reporting frameworks”).
288. See EUROPEAN COMM’N, EXPERT GROUP ON NON- FINANCIAL DISCLOSURE BY COMPANIES,
Annex I-5 (2011), available at http://ec.europa.eu/internal_market/accounting/docs/11072011_
minutes_en.pdf.
289. See id. at 2.
290. Paragraph 11 of the EU Directive provides: “Paragraph 47 of the final declaration of the
United Nations Rio ⫹20 conference, ‘The Future We Want,’ recognises the importance of
corporate sustainability reporting and encourages companies, where appropriate, to consider
integrating sustainability information into their reporting cycle. It also encourages industry,
interested governments and relevant stakeholders with the support of the United Nations system,
as appropriate, to develop models for best practice and facilitate action for the integration of
financial and non-financial information, taking into account experiences from already existing
frameworks.” EU Directive, supra note 283, at 2.
291. According to this report, fifty-seven of the seventy-one companies whose practices were
reviewed made use of some kind of international or national framework for developing their
reports, primarily the GRI or the U.N. Global Compact, either on their own or in reference to
various national frameworks. See CTR. FOR STRATEGY & EVALUATION SERVS., FRAMEWORK CONTRACT
FOR PROJECTS RELATING TO EVALUATION AND IMPACT ASSESSMENT ACTIVITIES OF DIRECTORATE GENERAL
FOR INTERNAL MARKET AND SERVICES, DISCLOSURE OF NON-FINANCIAL INFORMATION BY COMPANIES,
FINAL REPORT, 14 (2011), available at http://ec.europa.eu/internal_market/accounting/docs/
non-financial-reporting/com_2013_207-study_en.pdf.
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the requirement of the directive, companies may rely on existing
frameworks such as national frameworks, the EU Eco-Management and
Audit Scheme (EMAS),292 or voluntary, CSR and soft law based international frameworks (e.g., the GRI, the UNGC, the U.N. Guiding Principles on Business and Human Rights, the OECD Guidelines for
Multinational Enterprises, ISO 26000, and the International Labour
Organization Tripartite Declaration).293 Companies that already prepare voluntary non-financial reports may continue to do so, and will
not be required to provide a special statement in their annual report to
satisfy the requirements of the EU Directive, as long as these private
reports cover the same timeframe and at least the content required by
the EU Directive,294 thereby providing companies flexibility and encouraging the continued use or future adoption of more comprehensive
voluntary schemes.
C. Problem-Prevention and Value-Creation
Proactive Law favors early involvement of stakeholders and their
expertise to prevent disagreement, disappointed expectations, and
other problems from materializing, and instead seeks to create value
for all stakeholders involved.
1.
Problem-Prevention
Problem-prevention is crucial for environmental regulation because
once an ecological disaster occurs, its effects are typically irreversible.
Subsequent litigation can determine liability and remediate financial
loss, but it cannot bring back human, animal, and plant life, or the
beauty of nature.
Traditional regulation is reactive to preexisting problems, and does
not effectively allocate responsibility or clarify roles for prevention
efforts. Laws are typically drafted after technological failures occur with
the hope that new legislation will prevent similar accidents from
happening in the future. For example, the U.S. Emergency Planning
and Community’s Right to Know Act was enacted in 1984,295 one week
292. See EMAS, EUROPEAN COMM’N, http://ec.europa.eu/environment/emas/index_en.htm
(last visited Dec. 25, 2014), for a discussion of EMAS; ANDREW GOULDSON & JOSEPH MURPHY,
REGULATORY REALITIES: THE IMPLEMENTATION AND IMPACT OF INDUSTRIAL ENVIRONMENTAL REGULATION 54-69 (1998); see also Orts, supra note 177, at 1227.
293. See Orts, supra note 177.
294. See id. at 10; EU Directive, supra note 283, at 5.
295. 42 U.S.C. §§ 11001-11050 (2012).
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after the Bhopal disaster in India. It was followed by technological and
operational transparency laws in many countries.296 It now imposes on
companies the obligation to file information about the chemicals they
use to aid local authorities in protecting the public from chemical
hazards,297 but does not provide collaborative processes on how to
prevent disasters from happening as a proactive approach would
suggest.
The preventative aspect, so important for effective environmental
regulation and central to Proactive Law, has also insufficiently been
addressed in the New Governance literature, which so far has been
more concerned about the effectiveness of the regulatory model and
achievement of public policy goals than pragmatic problem prevention. Therefore the EESC Opinion and scholars of Proactive Law call
for a paradigm shift. They urge the legal community to give up the
backwards-oriented approach to law and, instead of reacting to problems and failures, to focus on identifying and preventing the causes of
problems, and “serving the needs and facilitating the productive interaction of citizens and businesses.”298
In this regard, the EU Directive on safety of offshore oil and gas
operations from June 12, 2013,299 is an excellent example of a proactive
regulation. This directive seeks to prevent ecological disasters and
protect workers’ security. It obliges member states to enact legislation
requiring companies that operate offshore oil and gas platforms to
“ensure that all suitable measures are taken to prevent major accidents
in offshore oil and gas operations” and “are carried out on the basis of
systematic risk management.”300 To ensure that companies take these
preventive steps, the Directive couples the granting of operation licenses to the capabilities of applicants to meet the requirements.301
The directive is an example of Proactive Law because it forces companies to engage in the type of proactive self-interested risk assessment
that ultimately will benefit all stakeholders: the employees and the
environment. Companies stand to benefit by reducing conflicts, mitigating reputational damages, saving on legal costs, and establishing a
296. PAUL SHRIVASTAVA, BHOPAL: ANATOMY OF A CRISIS (2d ed. 1992).
297. See SIEDEL & HAAPIO, supra note 56, at 64.
298. EESC Opinion, supra note 98 ¶ 1.4.
299. Council Directive 2013/30, 2013 O.J. (L 178/66), available at http://eur-lex.europa.eu/
LexUriServ/LexUriServ.do?uri⫽OJ:L:2013:178:0066:0106:EN:PDF [hereinafter Offshore Oil and
Gas Operations Directive].
300. Id. art. 3.
301. Id. art. 4.
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collaborative stakeholder network.
2.
Promotion and Value-Creation
Finally, to the preventive dimension described above, Proactive Law
adds a promotive dimension.302 Proactive Law posits that problem
prevention is not enough, but that law should also be a positive force
and ultimately create economic value in addition to preventing legal
problems and disputes.303 The idea is that if people recognize the value
that law (in the form of private regulation, contracts, soft or hard law)
can provide to them, they will be more inclined to respect the law or
even overachieve the policy goal behind its implementation because it
is in their own (economic) interest.304 This approach goes beyond the
participatory or reflexive elements proposed by the New Governance
literature.305 Proactive Law identifies the economic self-interest of
companies and individuals as a positive, driving force that, if adequately
used by the regulator, can help them in reaching policy goals instead of
hindering them.306 Siedel and Haapio call this “reframing legal concerns as business concerns and opportunities.”307 They propose a
four-step procedure for companies to follow in order to use the law for
competitive advantage.308 The fourth step of what they call “The
Manager’s Legal Plan” reflects the promoting, value-creating principle
in Proactive Law.309 By understanding310 and analyzing the legal environment in which business operates, managers, together with their
legal counsel, are able to recognize new business opportunities, thereby
302. See Berger-Walliser, supra note 91, at 27 (stating that the main objective of Proactive Law
is promoting good behavior and helping stakeholders to reach their goals).
303. Id. at 29 (stating that, from an economic standpoint, legal prevention may save time and
money otherwise spent on legal proceedings, but that it does not create economic value).
304. See SIEDEL & HAAPIO, supra note 56, at 660-61 (citing Regulatory Focus Theory developed
by Tory Higgins, see Regulatory Focus, HIGGINS LAB, http://www.columbia.edu/cu/psychology/
higgins/research.html (last visited Sept. 8, 2014)).
305. See Lobel, supra note 11 and accompanying text.
306. See Bagley, supra note 107, at 623-29 (proposing a framework for firms to use “legal
astuteness” for competitive advantage).
307. See SIEDEL & HAAPIO, supra note 56, at 655 (referencing WILLIAM URY, GETTING PAST NO, 4
(1993) (stating that managers should “go to the balcony” to recognize the business opportunities
available to them once legal concerns have been reframed as business concerns)).
308. SIEDEL & HAAPIO, supra note 56, at 651-56.
309. Id. at 667.
310. Helena Haapio, Business Strategies and Problem Prevention Through Proactive Contracting, 49
SCANDANAVIAN STUD. L., 150, 169 (introducing the term “Legal Literacy”).
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procuring themselves a competitive advantage over rivals.311
While Siedel and Haapio’s concept of using Proactive Law for
competitive advantage312 is directed at companies, the inherent idea
that law should not only prevent problems, but create value and
promote positive behavior, can easily be transposed to governance
models for sustainable development. In application of the promoting
concept of Proactive Law, regulation is drafted in a way that rewards
good (sustainable) behavior, instead of “punishing” for bad (unsustainable) practices. Such a positive-oriented regulatory model creates
incentives for companies or individuals to not only comply with the
letter of the law, but to overachieve the regulatory requirements.
Ideally, companies compete to develop innovative, for example environmentally friendly, products or processes, thereby creating economic
value for themselves, and “doing good” for society at large.313 While the
Manager’s Legal Plan focuses on the first, economic dimension of
Proactive Law, proactive sustainable governance focuses on the second.
It deliberately uses companies’ economic interests to achieve sustainability goals.
VII.
CONCLUSION
This Article constitutes an initial attempt to explore ways to optimize
business self-interest in sustainable development for public policy goals
311. See SIEDEL & HAAPIO, supra note 56, at 655 (proposing that by reframing legal concerns as
business concerns firms “can perceive the [legal] process of searching for foreseeable uses [under
product liability law] as a form of market research,” leading to new product ideas); see also Robert
C. Bird, Pathways of Legal Strategy, 14 STAN. J.L. BUS. & FIN. 1, 31-38 (2008) (labeling this step
“transformation” providing the biggest advantage because it is the most difficult for competitors to
imitate).
312. See Larry DiMatteo, Strategic Contracting: Contract Law as Source of Competitive Advantage, 47
AM. BUS. L.J. 727 (2010) (differentiating between competitive advantage through “opportunism”
and more proactive approaches that emphasize collaboration).
313. See Sandra A. Waddock & Samuel B. Graves, The Corporate Social Performance—Financial
Performance Link, 18 STRATEGIC MGMT. J. 303, 311-314 (1997) (reporting on positive empirical
linkages between CSR and financial performance); Aneel Karnani, “Doing Well by Doing Good”: The
Grand Illusion, 53 CAL. MGMT. REV. 69, 70, 77 (2011) (critiquing the “Doing Well by Doing Good”
(DWDG) proposition as detrimental to shareholder interest); Pietra Rivoli & Sandra Waddock,
The Grand Misapprehension: A Response to Aneel Karnani’s “Doing Well by Doing Good”: The Grand
Illusion, 53 CAL. MGMT. REV. 112, 113 (2011) (supporting the DWDG approach as a reaction to
changing public expectations and distinguishing CSR from philanthropy). For a meta-analysis of
the relationship between social and financial performance, see Joshua D. Margolis et al., Does it Pay
to Be Good . . . And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and
Financial Performance (March 1, 2009) (working paper), available at http://ssrn.com/abstract⫽
1866371.
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through the use of Proactive Law. The urgency of the problem,
shortcomings of current sustainable development law, and corporate
practice outlined in this Article show the need to develop new regulatory regimes to further enhance sustainable development. The Article’s
examples evidence that sustainable governance according to the principles of Proactive Law holds promise to resolve many of the problems
that plague current attempts to regulate sustainable development. This
is because Proactive Law, if adopted and embraced by all stakeholders,
can help to bridge the gap between regulators and the private sector
and takes into account diverging, sometimes conflicting, interests.
Our presentation of Proactive Law alongside proposals in the New
Governance literature shows how both concepts differ and overlap, but
so far have largely developed separately. This is in part due to the fact
that Proactive Law is a European concept and early work on Proactive
Law, at the time Reflexive Law emerged in U.S. academic legal literature, was available in Finnish only. Both concepts favor decentralized
regulatory systems and stress the potential of self-regulation, stakeholder involvement, and public-private partnerships to achieve public
policy goals. While New Governance focuses on regulatory design,
Proactive Law suggests a paradigm shift in the content-orientation of
private and public regulation as it seeks to install a more proactive
stance towards problem-solving. The Article suggests that these and
other innovative regulatory concepts could benefit from each other to
enhance sustainable governance, and show the need for companies,
government regulators, and academics to look for insight regarding
the potential of new regulatory techniques beyond their national
borders and academic disciplines. This Article tries to integrate business, sustainable development, and law. The nature of sustainable
development issues, however, requires more in-depth analysis of the
potential interactions between science, business, and law.
The theoretical, doctrinal, and practical issues explored in this
Article lead to multiple avenues of future empirical research. The
primary focus of future research should be on more in-depth analysis of
the development and implementation of sustainability regimes that
incorporate Proactive Law principles. Though we would expect the
type of proactive, collaborative regulation described in this Article to
be better respected and more apt to overcome opposing interests than
traditional command and control-based regulation, this hypothesis
needs to be proved through empirical research. The collaboration
between business, regulators, and other stakeholders, especially in the
international legal environment, raises important normative and functional concerns, which need to be further explored.
2015]
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Finally, this Article takes a primarily legal perspective. However, the
issues raised would equally benefit from a managerial perspective
through explorations of how to integrate Proactive Law into corporate
strategy for sustainable development. Combining elements of organizational structures and policies with Proactive Law could offer a
promising framework for systematically studying Proactive Law in
organizational studies, thereby further bridging the gap between corporate sustainability and international governance.
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