Traditionally businesses have looked to contractual terms, industry groups, legislatures, regulators and other conventional authorities to identify and manage commercial, legal, and compliance requirements and risks. In today’s interconnected, information rich, and reputation-conscious business world, this model is outdated and insufficient. It creates blind spots that can expose businesses to commercial, legal, and compliance risks from sources that traditional models ignore, misunderstand, or underestimate.
Democratization of Business Conduct Standards
In the same ways that the internet and social media have enabled non- “establishment” actors to communicate and amplify political messages, these and other tools of the information/new media age have enabled non-traditional actors to effectively influence business conduct standards. As a result, constituencies and issues that not so long ago were marginal or viewed as niche or inconsequential are now relevant, and for some businesses and industries they are integral.
Non-Traditional Actors Are Shaping and Enforcing Business Conduct Standards
Now more than ever, non-traditional actors like NGOS/policy advocacy groups, transnational policy setters (e.g., the OECD), and the public at large are playing influential roles in the development and enforcement of business conduct standards, such as those concerning responsible investment, ESG (environmental, social, governance), SCI (supply chain integrity), and general good governance and compliance. Some of these standards become or inspire national laws, or are adopted by countries as benchmarks of corporate conduct. Others materialize as non-legally binding business conduct standards that are privately enforced in two key ways. First, by and through the public at large, and most effectively in the context of consumer-facing business segments. And second, at the business-to-business level—particularly by influential, risk and reputation-conscious firms that are increasingly requiring business partners, counterparties, suppliers, and others in their orbits to adhere to business conduct standards that they have adopted.