An Analysis of the Ethical Trading Initiative

Schaller, Susanne: The Democratic Legitimacy of Private Governance. An Analysis of the Ethical Trading Initiative. Duisburg: Institute for Development and Peace, University of Duisburg‐Essen (INEF Report, 91/2007). Private actors increasingly influence global governance and generate transnational rules and regulations. By creating soft law, they adopt governance tasks that were traditionally in the responsibility of sovereign states. These modes of “private governance” are quite disputed. Some hope that by including private actors, democracy on a global level can be enhanced. Oth‐ ers fear that private governance circumvents democratically legitimated governments and that private regulation competes with national and international law. Thus, questions arise about the legitimisation of private actors and about the democratic legitimacy of private governance. This report explores whether private governance can be regarded as democratically legiti‐ mate. As a background, it discusses global democracy gaps and possibilities to conceptualise democratic legitimacy in relation to private regulation. The main part consists of a case study of the Ethical Trading Initiative (ETI), a private alliance of companies, non‐governmental organisa‐ tions and trade unions promoting the implementation of supply chain codes of conduct to im‐ prove labour standards. As a multi‐stakeholder initiative, ETI stands for a special form of pri‐ vate governance characterised by the cooperation of different actors. According to the analysis, ETI shows a relatively high degree of democratic legitimacy even though critical points can be observed. On the whole, ETI as an example of private governance neither poses a threat, nor can it fulfil all hopes in relation to global democracy. In a preliminary conclusion, the author identifies factors that potentially influence the democratic legitimacy of private governance, among others the organisational size, financial resources, the method of operation and specific characteristics of the sector in which private governance operates.