ESG, the Alien Tort Statute, and private regulation’s legitimacy trap

This chapter explores private regulation’s legitimacy trap by drawing a throughline from the backlash against human rights litigation under the Alien Tort Statute (ATS) to the backlash against ESG investing. Political forces that battled against the ATS are now attacking ESG. Tort lawyers, the attack goes, bring abusive litigation that bypasses democracy and threatens corporations and the economy. Similarly, ESG investors are woke capitalists who push an ideological agenda that bypasses democracy and threatens corporations and the economy. In drawing this throughline, this chapter makes three arguments. First, the ATS was not extraordinary: Its rise and fall looks like an ordinary battle over U.S. tort reform. Second, ESG investing does not look like the voluntary CSR initiatives embraced by corporations facing ATS suits. Third, private regulation has its own deregulatory politics in which opponents of regulation fault private regulators for not being government actors and mobilize state law against them.