Bangladesh and Private Rule-Making

By | August 20, 2013

The fallout from the clothing factory collapse in Bangladesh – which caught media attention for a while – has subsided. However, it has left western industries scrambling for a solution and for very real and effective safeguards against this thing happening again. There’s commercial self-interest involved, sure.

Companies can’t afford the public opprobrium in ther key markets when their brands are associated with sub-standard condiditions in the developing world. There’s also general concern about trying to effect improvements in local conditions in low-cost countries where western goods are made.

The response has been to formulate a set of industry standards to which many manufacturers have signed on. The interesting thing about these standards is that they represent another example of what’s been called “private industry regulation”.

In fact, private standards with global impact have been around for many years. They are gathering momentum in today’s fast-paced, dizzying global economy, where commercial events move far too quickly for governments to keep pace.

Hence, the private sector often steps in. A good example is the development of standards of social (including environmental) responsibility under the CSR rubric. Many of these CSR norms and standards are industry-formulated and applied outside of governmental regulation or treaty.

The question raised by the Bangladesh tragedy is whether there is a role for governments – including some kind of intergovernmental agreement – to make sure these industry rules and norms are in accordance with the public interest.