This chapter explores the embedding of the multinational corporation in new forms of global governance through the proliferation of transnational private regulatory and public–private regulatory instruments focusing on labour standards, human rights and the environment. It critically interrogates the relationship between such ‘privatization’ of governance and the political strategies of corporations.

The chapter first discusses the emergence of such modes of cross-border governance of production of mass consumer goods and commodities from the 1990s onwards. It then discusses how governance has led to concerns among academics, practitioners and critics about growth of multinational corporate power, social and environmental concerns becoming subject to corporate agendas, increasingly unaccountable decision making and the hollowing out of the state. Some of these concerns, the chapter argues, are justified, but at the same time the transnational private sustainability governance architecture is also evolving in such a way as to increasingly constrain the multinational corporation, while offering possibilities for governments, international organization, producers from developing countries and civil society organizations to influence conditions of production of global consumer goods and agricultural commodities. Because of this, the embedding of multinational corporations in new transnational governance should be understood to constitute a field of recurring political contestation about conditions of production, rather than as a manifestation of corporate power. And this means that various corporate political activities often treated separately in the literature are relevant when considered together, including influencing the organization of production through its market power and buying practices, its efforts in shaping markets, its lobbying towards regulators, and its attempts to negotiate and collaborate with civil society groups.

The Emergence of Transnational Private Sustainability Governance

Since the 1980s, the organization of mass consumer goods production has become geographically dispersed and functionally disintegrated. Labour-intensive manufacturing increasingly takes place in regions of the world characterized by relatively low wage levels and an abundant non-skilled labour supply. Agricultural commodities and raw materials for production are also sourced from developing countries in Africa, Latin America and Asia. Studies point to an overall asymmetry in power relations, advantaging Northern buyer corporations vis-à-vis Southern supplier corporations in these chains.