The regulation of corporate behaviour has persisted in spite of peaks of neo-liberalism in many global jurisdictions, including the UK. This paradox is described as ‘regulatory capitalism’. Regulatory capitalism offers the vision of private wealth-creating corporations that are also legally and arguably, socially accountable. This paper examines recent trends in corporate regulation that seek to govern aspects of socially responsible behaviour, such as responsibility for human rights violations, supply chain governance, impact on regional conflicts where minerals are sourced and the imposition of norms in relation to anti-bribery and anti-tax evasion. We argue that the development of UK corporate regulation is an institution of ‘regulatory capitalism’ and the nature of such regulation is shaped importantly by an institutional account that can shed light on its achievements and limitations.
This institutional account also sheds light on more specific issues such as the achievements and limitations of new regulatory techniques such as ‘new governance’ that support such regulation. We seek to understand why ‘new governance’ techniques, which have been developed with much promise for governing corporate behaviour, have only been supported by a track record of mixed results.
Regulatory capitalism in the UK supports a liberal market economy and its tenets revolve around a private and market-focused company law, investor-focused securities regulation and business regulation that has been shaped by the trends and tides of business-government relations. We argue that upheavals after the global financial crisis 2007-9 have disturbed business-government relations and one of the ramifications is the introduction of more socially responsive corporate regulation that have the potential to change corporate behaviour in areas where long-standing critique have been made in the transnational sphere.
We examine the real impact of such corporate regulatory reforms and argue that whilst incremental changes have been made such as in procedural regulation of some internal corporate systems, there is still a lack in changes to the norms of corporate responsibility and liability, and marked delegation to corporations to reform their systems without necessarily engaging multi-stakeholder governance or scrutiny. The relative lack of ‘ethos’ change is however consistent with the nature of regulatory capitalism in a liberal market economy such as the UK.