Social Consulting Firms As Regulatory Intermediaries and the Respatialization of Rights in CSR Governance

This paper introduces and explores the work of social consulting firms as regulatory intermediaries in relation to a number of private, hybrid and state governance regimes. It argues that during the past decade of consolidation of CSR-related governance initiatives in the extractive and infrastructure sectors, social consulting firms are playing an important role in building a regulatory ecology based on the respatialization of claims for social and environmental justice.

Social consulting firms are private sector, for-profit enterprises which provide specialized advice, assessment, and operational assistance concerning local community issues for business clients operating in sectors with significant environmental and social impacts: chiefly the oil, gas, mining, energy, and infrastructure sectors. These firms emerged in the 1990s when concerns about the local impacts of natural resource and infrastructure projects began to attract increased attention from global civil society. This attention brought advocacy campaigns that led to the adoption of multiple governance schemes by private lenders, international financial institutions, the UN, and hybrid bodies.

The presence of this evolving ensemble (Perez 2011) of loosely connected CSR schemes has created a growing transnational market for specialized regulatory intermediaries able to translate their diverse regulatory requirements into operational plans and processes that satisfy both rule makers, rule takers and other important audiences. Social consulting firms have emerged and evolved along with this market and have come to play a vital role as regulatory intermediaries in these regimes. The key regimes include: the Equator Principles (EP), the Global Reporting Initiative (GRI), the UN Guiding Principles on Business and Human Rights (Guiding Principles), the Voluntary Principles on Security and Human Rights (Voluntary Principles), and domestic environmental assessment legislation of host countries.

In this paper, I examine the role that social consulting firms play as regulatory intermediaries in constituting and shaping the overall field of CSR-related regulatory regimes used by the extractive, infrastructure and energy sectors. I argue that social consulting firms play a key role in shaping the cluster of schemes identified above in ways that expand the market for their services and achieve the goals of their rule-taking clients. Social consulting firms exercise this influence through their involvement in developing and institutionalizing the set of common practices involved in compliance with these schemes including: impact assessment, social licensing, management systems design, participatory development planning, resettlement planning, security arrangements, and non-judicial grievance process design. Over time, these practices have come to constitute the content of the regulatory requirements set by rule-makers involved in these schemes. 

I emphasize in particular the influence of these intermediaries on the architecture of connections and interactions that has begun to emerge in these regimes, and with the wider regulatory environment. I argue that through a decentralized form of “orchestration from below”, social consulting firms help to shape this environment through practices that promote particular connections and disconnections among these schemes. In recent years, social consulting firms appear to be involved in developing a regulatory ecology in which desirable connections are promoted among an ensemble of “domesticated” CSR-friendly schemes, while “hostile” accountability-focused governance initiatives (such as transnational lawsuits, advocacy campaigns, and contentious politics) are kept at bay. This involves promoting through the ensemble of CSR schemes a respatialization of how claims for social and environmental justice are made, heard, processed, and conveyed to global audiences. The effect is to encourage the segregation of regulatory spaces in which local voices and local claims for justice are restricted to dispute processing institutions operating in the local sphere.

For example, social licensing agreements and development projects are often designed to separate local communities from alternative spaces for making justice claims. This can be done by making development benefits to communities contingent on maintaining a safe operating environment for the firm within and across communities (Zalik 2009). Similarly in a notorious case, the Canadian mining firm Barrick has developed a non-judicial grievance mechanism to compensate victims of rape by its security guards where entitlement to benefits depend on the waiver of the right to sue nationally or transnationally.

To date there is very little academic research on social consulting firms as regulatory intermediaries. The existing literature focuses on the degree to which social consultants are able to avoid capture by their rule-taking clients and exercise an independent influence on regulatory outcomes (Szablowski  2002, 2007). The approach taken here is inspired by recent work on regulatory interactions that examines the potential for developing increasingly comprehensive transnational forms of governance by linking up individual regulatory schemes into more powerful regime complexes or assemblages (Overdevest & Zeitlin 2013, Keohane & Victor 2011, Perez 2011). This scholarship reflects a move towards understanding schemes as elements of a larger aggregate regulatory environment that can either promote or complicate the achievement of social and environmental justice goals (Eberlein et al. 2013). This paper explores the influence of regulatory intermediaries on shaping the character of a regime complex on CSR in the extractive and infrastructure sectors.

Abbott, Kenneth, Philipp Genschel, Duncan Snidal, and Bernhard Zangl. “Orchestration: Global Governance through Intermediaries.” Accessed February 13, 2015. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2125452.

Eberlein, Burkard, Kenneth Abbott, Julia Black, Errol Meidinger, and Stepan Wood. “Transnational Business Governance Interactions: Conceptualization and Framework for Analysis.” Regulation & Governance8, no. 1 (2014): 1–21.

Keohane, Robert O., and David G. Victor. “The Regime Complex for Climate Change.” Perspectives on Politics9, no. 1 (2011): 7–23.

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Perez, Oren. “Private Environmental Governance as Ensemble Regulation: A Critical Exploration of Sustainability Indexes and the New Ensemble Politics.” Theoretical Inquiries in Law12, no. 2 (2011): 543–79.

Szablowski, David. Transnational Law and Local Struggles: Mining, Communities and the World Bank. Oxford: Hart Publishing, 2007.

Zalik, Anna, “Duty to Consult or License to Operate? Corporate Social Practice and Industrial Conflict in the Alberta Tar Sands and the Nigerian Niger Delta.” (2009) Unpublished manuscript, Faculty of Environmental Studies, York University, Canada.