The symbiosis between corporate governance and international law

International law and corporate governance can each address shortcomings in the other. International law offers corporate managers a way to address negative externalities generated by corporate activities that harm consumers, employees, local communities and others. A variety of international agreements, customary international law and non-binding recommendations address many of these externalities and can improve corporate conduct if adopted within corporate governance. The challenge is that international law norms are often under-enforced by state actors, thereby limiting their reach to corporate actors. However, stakeholders and corporate managers can overcome these shortcomings in enforcement by directly incorporating international law into board oversight, management practices and contract design by using a variety of stakeholder mechanisms. The incorporation of international law into corporate governance confronts both the corporate governance gap by addressing corporate externalities and the global governance gap by addressing international law’s enforcement challenge.