I am especially grateful to Thomas W. Dunfee for providing valuable guidance and assistance throughout the course of this project. I also thank Thomas Donaldson, Eric W. Orts, and Danielle Warren for their comments and advice at various stages in the development of these ideas. The positions expressed in this article do not necessarily reflect those of any of these people and all errors are mine alone. This article is an expansion on many of the ideas in “Social Reporting: A Reflexive Law Approach to Corporate Social Responsiveness,” Journal of Corporation Law 25 (1999): 41–84, which provides a further discussion on the use of reflexive law in this area.

¹ Most discussions of the meaning of social responsibility begin with Milton Friedman’s classic statement that being socially responsible means only to “make as much money as possible while conforming to the basic rules of society” (Milton Friedman, “The Social Responsibility of Business is to Increase Its Profits,” New York Times Magazine, September 13, 1970, at 32, 33) and then debating the merits of moving away from such a definition.

² Christopher D. Stone, Where the Law Ends: The Social Control of Corporate Behavior (1975).

³ The seminal writing on reflexive law is Gunther Teubner, “Substantive and Reflexive Elements in Modern Law,” Law and Society Review 17 (1983): 239 [hereinafter Teubner, Reflexive Elements]. On reflexive law generally, see also Gunther Teubner, “Autopoiesis in Law and Society: A Rejoinder to Blankenburg,” Law and Society Review 18 (1984): 291; Eric W. Orts, “Reflexive Environmental Law,” Northwestern University Law Review 89 (1995): 1227–1340; Ralf Rogowski and Ton Wilthagen, Reflexive Labor Law (1994).

⁴ Eric W. Orts, “A Reflexive Model of Environmental Regulation,” Business Ethics Quarterly 5: (1995): 779, 780.

⁵ Teubner, Reflexive Elements, supra note 2.

⁶ See Meinolf Dierkes, “Corporate Social Reporting and Auditing: Theory and Practice,” in Corporate Governance and Director’s Liabilities (Klaus Hopt and Gunther Teubner eds. 1985).

⁷ The following discussion is based on Teubner, supra note 2, at 252–57.

⁸ Teubner, Reflexive Elements, supra note 2, at 254.

⁹ Ibid., p. 239 (quoting from the abstract).

¹⁰ Orts, supra note 3.

¹¹ Cass R. Sunstein, “Paradoxes of Regulatory State,” University of Chicago Law School 57 (1990): 407, 412.

¹² Daniel J. Fiorino, “Rethinking Environmental Regulation: Perspectives on Law and Governance,” Harvard Environmental Law Review 23 (1999): 441, 442.

¹³ Orts, supra note 3.

¹⁴ Gunther Teubner (ed.), Juridification of Social Spheres, (1987).

¹⁵ Orts, supra note 3.

¹⁶ Orts, supra note 4, at 782.

¹⁷ Stone, supra note 2.

¹⁸ See Epstein, “The Corporate Social Policy Process and the Process of Corporate Governance,” American Business Law Journal 25 (1987): 361.

¹⁹ Ibid. at 361.

²⁰ Stone, supra note 2, at 120.

²¹ Gunther Teubner (ed.), After Legal Instrumentalism? Strategic Models of Post-regulatory Law 320, in Dilemmas of Law in the Welfare State (1986).

²² Clark C. Abt. The Social Audit for Management (New York: AMACOM), 1977.

²³ Neil W. Chamberlain, Social Strategy and Corporate Structure 81 (1982) (quoting Daniel Gray).

²⁴ Ibid.,p. 82.

²⁵ Business Week, “Social Auditing in the US Gets a Slow Start,” November 6, 1978, at 178.

²⁶ Thomas G. Marx, “Corporate Social Performance Reporting,” Public Relations Quarterly 37 (December 22, 1992): 38.

²⁷ Ibid.

²⁸ Chamberlain, supra note 23.

²⁹ Marx, supra note 26.

³⁰ ”The 1980s in some ways did not provide a conducive environment for the development of social auditing. It was a period when business was arguably given more of a ‘green light’ to set its own terms for engagement with society than at any other time in this century, certainly in the industrial world.” Simon Zadek, Peter Pruzan, and Richard Evans, Building Corporate Accountability 18 (1997).

³¹ Author email correspondence with Ralph Estes, October, 1999.

³² Author telephone interview of Alan Parker of SAAR Associates, April, 1998.

³³ Chamberlain, supra note 23, at 82.

³⁴ For a description of EMAS and its various provisions, see Orts, supra note 2, at 1287–1311.

³⁵ In addition, much work is being done at the Copenhagen Business School under the direction of Professor Peter Pruzan.

³⁶ Author telephone interview of Alan Parker of SAAR Associates, April, 1998.

³⁷ See Zadek et al., supra note 30; Simon Zadek, “Balancing Performance, Ethics, and Accountability,” Journal of Business Ethics 17 (1998): 1421.

³⁸ See, e.g., The Conference Board, “The Link Between Corporate Citizenship and Financial Performance,” Conference Board Research Report, New York 1999; Waddock, Sandra A. and Samuel B Graves, “The Corporate Social Performance-Financial Performance Link,” Strategic Management Journal 18 (1997): 303.

³⁹ See Thomas W. Dunfee, “Corporate Governance in a Market with Morality,” Journal of Law and Contemporary Problems 62 (1999): 129.

⁴⁰ Cynthia A. Williams, “The Securities and Exchange Commission and Corporate Social Transparency,” Harvard Law Review 112(1999): 1197, 1284.

⁴¹ Robert Gildea, “Consumer survey confirms corporate social action affects buying decisions,” Public Relations Quarterly 39 (1994/1995 Winter): 20.

⁴² Author email correspondence with Ralph Estes, October, 1999.

⁴³ Council on Economic Priorities, The Corporate Report Card (1998). The following description of the CEP’s reporting practices is based primarily on the information in the CEP’s online version of the “Corporate Report Card” available at <http://www.cepnyc.org/quicktakes.htm>.

⁴⁴ <http://www.cepnyc.org/criteria.html>.

⁴⁵ Williams, supra note 40.

⁴⁶ See “The Sunshine Standards” at <http://www.essential.org/capp/sunstds.html>.

⁴⁷ The following discussion of SA8000 is based on: Council on Economic Priorities Accreditation Agency, Social Accountability 8000 (1997) (copy on file with author); Andreas Sturm et al., SA8000: Corporate Social Accountability Management (1999), available online at <www.ellipson.com/sa8000>.

⁴⁸ See Zadek et al., supra note 30; Zadek, supra note 37. Since the time this article was submitted for publication there have been significant advancements in the field of SAAR. Most notably, the Institute of Social and Ethical AccountAbility published AccountAbility 1000 (AA1000) as a “foundation standard” for social auditing and reporting (for further information see <http://www.accountability.org.uk>). In addition, the Global Reporting Initiative (GRI) published guidelines on social reporting and recruited companies to pilot test the guidelines (for further information see <http://www.globalreporting.org>). Both are consistent with the principles discussed by Zadek et al., and appear to be consistent with the reflexive law approach discussed in this article.

⁴⁹ Zadek et al., supra note 30, at 41–44.

⁵⁰ See Orts, supra note 2, at 1324–27, for a discussion of potential incentives to encourage corporations to undertake environmental auditing.

⁵¹ See Chamberlain, supra note 23, at 88 (arguing for rewarding companies “whose social performance coincided most effectively with public objectives”).

⁵² See Zadek et al., supra note 30, at 42 (discussing the principle of inclusivity).

⁵³ For a discussion of the various stakeholder definitions, see Ronald K. Mitchell, et al., “Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts,” Academy of Management Review 22 (1997): 853, 855–63.

⁵⁴ This document was joint product of the Interfaith Center on Corporate Responsibility, The Ecumenical Council for Corporate Responsibility, and The Taskforce on the Churches and Corporate Responsibility.

⁵⁵ Ben and Jerry’s Homemade has experimented with these stakeholder groups but the report for 1997 used the groups of. workplace, operations, environment, franchise and retail operations, sales/marketing/international, philanthropy, and finance and shareholders. Ben and Jerry’s 1997 Annual Report, at 12–28.

⁵⁶ The Body Shop, Values Report 1997, at 108.

⁵⁷ See Zadek et al., supra note 30, at 42.

⁵⁸ The Body Shop, The Body Shop Approach to Ethical Auditing (1998), available online at <www.the-body-shop.com>.

⁵⁹ Ben and Jerry’s 1995 Annual Report.

⁶⁰ Richard Evans, “Accounting for Ethics: Traidcraft, pic” in Building Corporate Accountability 87 (Zadek et al. eds. 1997).

⁶¹ Thomas Jones and Leonard Goldberg, “Governing the Large Corporation: More Arguments for Public Directors,” Academy of Management Review 1 (1982): 603, 604–5 (arguing that due to the conflicting interests between the many corporate constituencies, improved social responsibility can be judged in terms of “greater procedural fairness rather than substantive fairness”).

⁶² See Zadek et al., supra note 30, at 43.

⁶³ The Body Shop, supra note 58, at 8.

⁶⁴ See Zadek et al., supra note 30, at 44; Orts, supra note 2, at 1322–23 (discussing the verification requirements for a proposed American environmental audit scheme).

⁶⁵ Ben and Jerry’s Homemade, supra note 59, at 9.

⁶⁶ William C. Frederick, “From CSR1 to CSR2: the maturing of business-and society thought,” Business and Society 33 (1994): 150. See also Robert Ackerman and Raymond Bauer, Corporate Social Responsiveness: The Modern Dilemna [sic] (1976).

⁶⁷ Frederick, supra note 66.

⁶⁸ Thomas Donaldson and Thomas W. Dunfee, Ties that Bind: A Social Contracts Approach to Business Ethics (1999) [hereinafter Donaldson and Dunfee, Ties that Bind]. On ISCT generally, see also Thomas Donaldson and Thomas W. Dunfee 1995, “Toward a Unified Conception of Business Ethics: Integrative Social Contracts Theory,” Academy of Management Review 19 (1994): 252 [hereinafter Donaldson and Dunfee, ISCT]; Thomas Donaldson, and Thomas W. Dunfee, “Integrative Social Contracts Theory: A Communitarian Conception of Economic Ethics,” Economics and Philosophy 11 (1995): 85.

⁶⁹ Donaldson and Dunfee define a community as “a self-defined, self-circumscribed group of people who interact in the context of shared tasks, values, or goals and who are capable of establishing norms of ethical behavior for themselves.” Donaldson and Dunfee, ISCT, supra note 68, at 262.

⁷⁰ As norms between communities may come into conflict (i.e., a certain practice may affect multiple communities), there are priority rules to determine which norm should be followed. Donaldson and Dunfee, ISCT, supra note 68, at 268–70.

⁷¹ Donaldson and Dunfee, Ties that Bind, supra note 68, at 245.

⁷² This point comes from Alan Parker of SAAR Associates.

⁷³ Thomas W. Dunfee, “The Marketplace of Morality: First Steps Toward a Theory of Moral Choice,” Business Ethics Quarterly 8 (1998): 127.

⁷⁴ Gildea, supra note 41. This was a 1994 survey of 1,037 Americans.

⁷⁵ Ibid.

⁷⁶ Business Bulletin, Wall St. J., February 4, 1999, at Al.

⁷⁷ Del Jones, “Critics Tie Sweatshop Sneakers to ‘Air’ Jordan,” USA Today, June 6, 1996, at IB; “Protestors Rally for Nike Workers in Asia,” Chicago Tribune, June 16, 1996, at 9.

⁷⁸ Steven Greenhouse, “Nike Shoe Plant in Vietnam Is Called Unsafe for Workers,” New York Times, November 8, 1997, at Al.

⁷⁹ William Lewis, “Nike Under Fire on Conditions in Vietnam,” The Financial Times, November 10, 1997.

⁸⁰ John H. Cushman, “Nike Pledges to End Child Labor and Apply US Rules Abroad,” New York Times, May 13, 1998, at Dl.

⁸¹ Ibid.

⁸² See Dunfee, supra note 39.

⁸³ Thomas W. Dunfee, “On the Synergistic, Interdependent Relationship of Business and Law,” American Business Law Journal 34 (1996): 317, 319.

⁸⁴ Rob Gray, “The Practice of Silent Accounting,” in Building Corporate Accountability 201–217 (Zadek et al., eds., 1997). Gray took Glaxco Holdings pic’s 1994 annual report and produced a social report covering such issues as the company’s mission and policy, and the company’s impact on the community, environment, customers and employees. Ibid, at 205.

⁸⁵ Author email correspondence with Ralph Estes, October, 1999.

⁸⁶ Ralph Estes, among others, believes that this “an appropriate condition for participation in a free market system.” Author email correspondence with Ralph Estes, October, 1999.

⁸⁷ Rob Gray, “Social and Environmental Accounting Research,” available online at <http://www.dundee.ac.uk/accountancy/csear/briefing.htm> (last visited October 29, 1999). Gray argues that accounting practices are not as neutral and as objective as many people seem to believe. Gray states:

[T]here is a growing awareness that accounting, reflexively, also helps to construct the social reality. That is, the very essence of an organisation and its defining boundaries are increasingly synonymous with the accounting system; the way in which organisations are viewed and their success judged is through accounting. Thus society’s discourse over what is and what is not “an organisation”, what is and what is not “successful” and what is and what is not “rational”, “efficient”, “desirable” owes much to accounting practice.

⁸⁸ Quoted in Chamberlain, supra note 23, at 88.