The potential role for corporate social responsibility reporting in trade agreements

Trade liberalisation is often blamed for creating and exacerbating many significant environmental and social problems. The weight of these issues is evident from the importance given to them in recent trade negotiations. This article considers the potential role of corporate social responsibility (CSR) reporting standards as mechanisms to help address some of the transparency and accountability concerns that come with trade agreements, and the corresponding potential of trade negotiations to serve as venues for refining reporting standards. Several free trade agreements (FTAs) already include provisions that encourage the disclosure and standardisation of financial reporting standards, and there is an increasing link between CSR and FTAs. The content of several recent FTAs is reviewed, demonstrating how the inclusion of CSR initiatives, including the promotion of CSR reporting, is gaining acceptance. A voluntary approach to CSR reporting (and other issues in FTAs) may have the support of developing countries that reject binding standards and fear exploitation. It may also have the support of developed countries that are looking for more actionable methods that will result in improved performance and that can also be agreed upon by partner countries that resist regulations. This article suggests that a CSR reporting link with FTAs represents an opportunity to add mechanisms of transparency and accountability that address some of the social and environmental concerns that come with FTAs.