Multinational corporations are shaping global policies that address social impact, sustainable development, and economic competitiveness by engaging with these agendas.
According to George Serafeim, by 2018, investors managing a combined capital of 80 trillion dollars had publicly committed to integrating ESG data into their investment analyses. These numbers reflect a growing trend where ESG factors are becoming essential in investment decision-making. In the same year, over 250,000 articles were published focusing on ESG issues, highlighting the increasing attention these topics have garnered in academia, the media, and public discourse.
Serafeim and Ioannis Ioannou also noted a significant rise in companies adopting governance processes to measure, analyze, and communicate their sustainability efforts. The proportion of S&P 500 companies with board-level sustainability committees increased from 5% to 24% in just five years, while the percentage of companies publishing sustainability reports grew from 20% to 80%.
These data demonstrate that, over the years, multinational corporations have faced growing pressure from various stakeholders to adopt transparent practices and demonstrate performance on ESG and CSR topics, known as Private Global Governance. As a result, there is a recognition that non-financial aspects such as reputation, stakeholder trust, employee satisfaction, and engagement can have a more substantial effect on a company's long-term value than purely financial considerations.
Private Global Governance, Human Rights and Business
This trend is further reinforced by incentives created by international organizations such as the United Nations (UN) and the International Labour Organization (ILO). The Sustainable Development Goals (SDGs), the UN Global Compact, the Guiding Principles on Business and Human Rights, and the Tripartite Declaration of Principles Concerning Multinational Enterprises are examples of initiatives that have placed Private Global Governance in the spotlight.
This movement characterizes a form of global governance directly associated with the increased involvement of multinational and transnational corporations in critical issues within the international system. This governance structure is relatively new, having gained corporate and academic recognition after the Cold War and the advent of
globalization—moments that reshaped how businesses organized themselves across different countries, particularly regarding issues with an impact on Human Rights.
Thus, contemporary global challenges—such as social inequality, climate change, public health crises (e.g., pandemics), and armed conflicts—further emphasize the relevance and influence of multinationals. They play a decisive role through investments and private governance mechanisms in the markets where they operate.
Corporate Social Responsibility as a control mechanism in private global governance
CSR emerges as a key tool, understood as a control mechanism aligning corporate practices with ethical and Human Rights values. Initially, CSR was viewed as voluntary initiatives linked to social projects. However, it has become a central component of corporate strategies, promoting transparency and accountability in the business sector.
In this context, it is crucial to understand the advancements, challenges, and limitations faced by these practices, as well as explore pathways to make these initiatives more effective and ensure true business sustainability. A critical perspective reveals an important analysis: while CSR, ESG investments, and the field of Business and Human Rights are promoted as tools that generate value for both companies and the countries in which they operate, how and to what extent are these investments genuinely aligned with the needs and realities of recipient countries? Moreover, to what extent do these recipients participate in creating these initiatives and evaluating their impacts?
Therefore, it is necessary to observe how these power dynamics are reinforced by Private Global Governance, underscoring the need for a critical reassessment of global corporate practices.
Third World approaches to a more participatory private global governance
The power dynamics surrounding Private Global Governance are shaped by the fact that countries that previously imposed exploitation and domination through colonialism actively participated in constructing the protective and universal Human Rights system as we know it today. However, although this system purports to be universal, it fails to incorporate plural forms of governance that address the specific issues of each nation it intends to serve.
This is one of the main arguments of Third World Approaches to International Law (TWAIL), which advocates for deconstructing and reconstructing the existing international system through critical mobilizations within central academic spaces.
From this critical perspective, the legal and administrative mobilizations of international organizations and multinational corporations' private governance tend to perpetuate a hegemonic pattern, rooted in an international legal framework centered on human rights and regulating universal protection systems.
Conversely, corporations can play a more significant role in the international arena by adopting a critical and participatory approach. The challenge lies in fostering a discussion within the corporate sector on developing governance practices aligned with each market's specific needs. This implies shifting from global and generic practices to specific and contextualized ones, considering the particularities of each recipient.
Therefore, this can only be achieved and made viable through the broad participation of local actors in constructing these governance mechanisms.