Soft law regulation and labour rights reporting: a deficit in moral legitimacy?

ABSTRACTThis paper compares and contrasts British and German transnational corporations’ (TNCs) reporting on the labour rights of workers in their global value chains (GVCs) for the years 2012 and 2018, using the Global Reporting Initiative (GRI) guidelines – an initiative that comes under the category of soft law regulation. Between these dates, regulatory changes took place in Britain and in the EU which had relevance to the reporting of labour rights issues more generally. Simultaneously the GRI reporting guidelines shifted to more flexible requirements in the transition from G3.1 to G4. This paper examines the consequences of these changes and finds that, in combination, these changes did not lead TNCs to improving the labour rights reporting. The paper suggests that even though reporting to international guidelines tends to be context-based, there was some convergence in this broadly negative outcome. This all suggests that there was an element of regulatory capture in the shifts to softer regulatory regimes. Conceptually, this points to a reduction in substantive disclosures and leads to a deficit in moral legitimacy and its displacement by more pragmatic legitimacy.KEYWORDS: British TNCsGerman TNCslabour rights reportingmoral legitimacypragmatic legitimacyregulatory capture AcknowledgementsWe would also like to thank two anonymous reviewers for their constructive comments, suggestions and also thank the Editors for their valuable inputs. We wish to gratefully acknowledge the financial support of the British Academy's charitable trust (BA/Leverhulme Small Research Grants – SRG 2012–2013 Round).Disclosure statementNo potential conflict of interest was reported by the author(s).FundingThis work was supported by Leverhulme Trust: [Grant Number SRG 2012-13].Notes1 “Soft” laws denote agreements, principles and declarations that are not binding (Abbott & Snidal, 2000). GRI reporting guidelines/standards are regarded as soft law.2 While globalisation and its neo-liberal forces promote investors’ interests (Sikka & Stittle, Citation2019) and TNCs promote private governance mechanisms (in parallel with neo-liberalism) (Bartley, Citation2018), social governance mechanisms (such as independent national/international NGOs) are best placed to help uphold labour rights along GVCs (Parsa et al. Citation2018). Given GVCs’ exposure to different national and political contexts (Pasquali et al., 2021), social governance mechanisms need to interact with and secure the support of national governments (Mayer et al., Citation2017). In reality, however, such supports are weak to non-existent (Siddiqui et al., Citation2020), making international audiences that could monitor and protect labour rights weak.3 Despite the rising international awareness of labour rights issues within GVCs, the prevalence globalisation and its neo-liberal forces (Sikka & Stittle, Citation2019) has meant that to this day there has been no international governance mechanism that would exert pressures on companies to report details (Parsa & Werner, Citation2023). Hence, national audiences are likely to remain as the key audiences.4 The largest global public limited companies (https://www.forbes.com/sites/andreamurphy/2016/05/25/how-we-crunch-the-numbers/#b7bf3d87467b).5 By the year 2018, 16 British and 3 German TNCs abandoned reporting to GRI. 3 British and 3 German TNCs switched to GRI standards. There was only one minor revision to one of the Human Rights indicators in the transition from GRI G4 to GRI Standards. This change did not affect our data collection.6 Under the GRI G3.1, companies were required to use their GRI index table to indicate if they had reported on all sub-categories (i.e., full disclosure) or on some of them (i.e., partial disclosures) or they had no disclosure (Parsa et al., Citation2018).7 The Equal Remuneration Convention, 1951, No.100; The Discrimination Convention, 1958, No.111.8 Over decades, there have been many international efforts, such as UN and ILO Conventions, for the elimination of child labour (Cunningham & Viazzo, Citation1996), forced labour (Ollus, Citation2015) and freedom of association (Caraway, Citation2006).Additional informationFundingThis work was supported by Leverhulme Trust: [Grant Number SRG 2012-13].