2.1. Methodological Inconsistency

This study has involved a variety of methods to understand the first two sites of contractual movement (indigenous-corporate mining agreements and conservation finance agreements) compared with the final area of study (environmental clauses in international business contracts). This is intentional and it is a product of the lopsided empirical base of existing environmental law scholarship. A significant empirical base already exists for the study of the environmental content of business contracts, developed through surveys, interviews, and desk analyses of existing contracts and codes of conduct. Such a base is largely lacking in other areas of environmental contracting. This reality is revealing of a deep scholarly fascination with the role of corporations in private environmental governance. Much less attention is directed to the efforts of other ‘privates’ and ‘publics’ engaged in norm diffusion through contract, such as conservation finance actors, NGOs, municipalities and other substate actors, and indigenous communities.

The result of this imbalance is that in order to illuminate the first two dimensions of contractual movement it was necessary to excavate contractual drafts, meaning, and transfers through detailed targeted interviews with those involved in contractual negotiations.Footnote ¹¹ This method was not required for the third area of study of environmental provisions in international business contracts. In the third area of study I rely on a review and analysis of surveys, contract samples and templates, and interviews produced by other scholars. Despite the resulting methodological inconsistency, it was critical to include this third dimension of contractual movement in this study as, until now, most authors have focused only on a single domain of environmental contracting. Part of the point of this study is to investigate the distinct contexts in which environmental norms relocate though contracting and, in so doing, to reveal how these processes of norm diffusion inform each other.

2.2. Situating Myself in this Work

Alongside methodological inconsistency, this study involves other limitations. As I developed an expertise in the case studies, through interviews and through the scholarly and policy writing that evolved out of those interviews, I was frequently asked to share ‘lessons learned’, as well as ‘best practices’ and detailed knowledge of the contracting practices and texts with local, national, and transnational audiences. There was a voracious appetite on the part of many communities to mimic the achievements that were secured through contract in the communities I had studied. I was asked to actively transmit aspects of these contractual experiences and texts into diverse new contexts and to mediate their translation as advocacy tools for other communities. In so doing, I occupied a self-reinforcing part in the construction of the transnational processes of norm transfer that I was researching. This means that I am reporting here on some of the same processes in which I had a role in creating.Footnote ¹²

2.3. The Challenge of Accessing Contracts

This study is also biased by its limited access to contractual texts. Public sources of business contracts, such as OneCleFootnote ¹³ and EDGAR,Footnote ¹⁴ rely on United States (US) Security and Exchange Commission (SEC) filings, which are selective in the materials made available and not representative of any wider sample of concluded contracts. They also reflect a bias towards public firm contracts and materials. Scholars adopt diverse strategies for addressing these barriers. Within the range of possibilities, avoiding the referencing of actual contractual texts is most frequent. More rarely, references will be made to select examples from available public sources,Footnote ¹⁵ relying heavily on a single or handful of available contractsFootnote ¹⁶ or standard form contracts;Footnote ¹⁷ experiences will be drawn from one’s own practice or advising work;Footnote ¹⁸ or industry actors will be interviewed about their contractual practices.Footnote ¹⁹ In other settings, the environmental content of investment contracts may become known through investment treaty arbitrationsFootnote ²⁰ or through NGO advocacy campaigns.Footnote ²¹

As a result of the challenges in accessing contracts, much of the literature on contracting now emanates from a partial sample and anecdotal coverage of that sample. For example, several scholars analyze codes of conduct as proxies for contractual provisions, drawing on evidence from companies’ self-reporting, review of standard form contracts, and interview-based studies as evidence that codes commonly make their way into contracts.Footnote ²²

The case studies I develop in this article are not included to advance a claim that they are generalizable, but rather to develop the sort of thick contextual description that offers a glimpse of the legal practices at stake here. This article attempts to sketch some of the broad horizon that contracting touches, but at the same time also offers a detailed picture of what this practice actually looks like and how contracting interacts with multiple other layers of law.Footnote ²³ The texts of contracts take on, in this way, an importance distinct from their original setting, and the interactional practices of how these contractual norms and templates are shared becomes an object of investigation.

3.1. Indigenous Community-Corporate Mining Agreements

Contractual agreements between indigenous peoples and mining corporations that address environmental protection and mining project monitoring are proliferating globally.Footnote ²⁴ These agreements provide mechanisms for indigenous communities to share in the wealth from mining on and around their lands, and to participate in decision making around how mines are developed, operated and monitored. They can also provide for specific environmental safeguards, as well as social and community benefits.Footnote ²⁵ The agreements go by different names, which include impact and benefit agreements (IBAs), participation agreements, local agreements, future acts agreements, community development agreements, access agreements, and environmental agreements. The project-specific arrangements to emerge out of these negotiated agreements are now the subject of growing scholarly interest.Footnote ²⁶ However, the movement of ideas, models and legal forms between distinct projects has yet to be elucidated.

Mining projects are traditionally viewed as hyper-localized legal spaces, often with project-specific regimes of regulation applicable to their development and operation.Footnote ²⁷ The legal frameworks underlying the negotiation of indigenous-corporate agreements (which sometimes also include governments) can be traced to specific national constitutional frameworks, statutory requirements including land claims and settlement agreements, regulatory requirements, and evolving case law on duties of consultation. Yet, the contents of these corporate-indigenous agreements are framed as private obligations – a model that obscures the multiple levels of government involvement and influence. The contexts in which mining projects are developed, in reality, have a public nature that suggests that these contracts carry a heavier burden than a private law framing immediately signals.

Acknowledging the public function of corporate-indigenous mining agreements, together with the relationships between these distinct agreements and the transnational forces that shape their emergence and dissemination, can assist in understanding their wider potential for norm creation.Footnote ²⁸ For example, scholars situate the spread of these agreements in the surrounding discourses of corporate social responsibility, sustainable development, and indigeneity, which are themselves products of transnational exchange.Footnote ²⁹ This section seeks to illuminate the ways in which the idea of these agreements as well as their content and processes are disseminated through both formal and informal transfers.Footnote ³⁰ These processes of legal transfer can be seen in scholarly work on the movement of legal structures; through examples of indigenous communities and their advocates sharing their contracting experiences and model contracts; and through legal consultancy work straddling multiple jurisdictions and communities, including the work of this author.

This section begins with a study of an environmental contract that emerges as a legal ‘innovation’ and a regulatory gap filler in relation to the Ekati Diamond Mine in Canada’s Northwest Territories, Canada’s first diamond mine. The dissemination of both the content and model of this agreement reveals how the idea of using contract to fill environmental regulatory gaps is transplanted into new contexts. The Ekati Agreement model itself has served as a template for later agreements. More significantly, in both Canada and Australia – two jurisdictions where natural resource activity frequently takes place on and around indigenous territories – the practice of incorporating environmental measures in project-specific contracts has now evolved to a place where project-specific agreements are widely accepted as ‘standard business practice’ for new mines.Footnote ³¹

3.2. The Ekati Agreement: A Canadian Legal Export

Similar to other project-specific agreements, the Ekati Environmental AgreementFootnote ³² was the product of its specific domestic legal setting, and yet emerged to ‘satisfy public duties and respond to constitutional and transnational rights owed to indigenous peoples’.Footnote ³³ This case study emerges from my first-hand experience of participating in local and transnational processes emanating out of a close study of an environmental contract governing the Ekati Mine, and my continued involvement with the community affected by that mine.Footnote ³⁴ The Environmental Agreement that emerged as part of the regulatory package governing the Ekati Mine development was heralded not only as a breakthrough for that project in particular, but it also signalled a wider movement towards the direct participation of indigenous communities affected by mining projects in negotiations previously limited to developers and states. A detailed discussion of the factors shaping the emergence of that agreement, and its substantive content, is published elsewhere.Footnote ³⁵

This analysis seeks to trace the ways in which the Ekati Environmental Agreement served as a normative template for later agreements and practices. This is evident in the ways in which the contract (which was made public) served as a model for other environmental protection measures, and for other contractual approaches, in later mining projects. This example thus speaks to how contracts can shape the content and imaginative possibilities of later contracts. It also illuminates another reality – that the ‘precedential value’ of contracts can be profoundly deeper and more nuanced than scholarship on standard-form contracting or boilerplate, or the replication of contractual models and templates, might suggest. This is evidenced by the fact that the Ekati Environmental Agreement produced not only a text but also a regulatory conversation about the possibility of using contract to fill spaces that detailed legislation or regulations might previously have been assumed to occupy naturally. Thus, the very concept of using a contract to fill regulatory gaps is a normative legacy of this mining project’s regulatory path.

To understand the initial need for a project-specific contract to govern a range of significant environmental aspects of this mining project’s operations requires an appreciation of the unique context in which Ekati, Canada’s first diamond mine, developed. The mine is located near Lac de Gras in the Northwest Territories, 200 kilometres from the Arctic Circle. In 1997, when the project was initially permitted, that region had little recent experience with large-scale industrial development. Regulatory and negotiation processes had to catch up with the evolving expectations of local Aboriginal peoples who would be affected by the mine, and legal and regulatory prototypes for a project of this magnitude in this region did not exist. As a result, significant aspects of the approval for the mining project were secured through negotiated agreements, such as the Environmental Agreement.

The Environmental Agreement was thus produced as a document very much tailored to its specific project setting and to the identified concerns of surrounding communities. These concerns included a lack of trust that the government would adequately monitor the environmental impacts of the mine, an insistence on the creation of an independent monitoring agency, and a perception that the mining company’s adaptive environmental management strategy would insufficiently address project impacts on caribou, water and fish. The Agreement emerged as a mechanism for filling gaps in the regulatory regime, and for formalizing commitments made by the company during the environmental assessment process. Its creation was described by one negotiator as akin to ‘a butcher making hamburger’.Footnote ³⁶ Every obligation that lacked another legal home was put into this contract.

It is thus useful to reflect upon these origins, and the intense time pressure that forced the creation of a random and highly site-specific ‘hamburger-style’ agreement, in thinking about what this agreement later became – a model for other communities contemplating the use of an environmental agreement to fill regulatory gaps. In the immediate aftermath of its signing, the Ekati Environmental Agreement served as both a contractual precedent and as a springboard for the negotiation of environmental agreements for two other neighbouring diamond mines: Diavik and Snap Lake. Conversations about the forms of monitoring agencies and the language of contractual commitments to govern both of those mining projects emerged with the Ekati model serving as the core template, the base model for what was possible.

Canadian non-profit groups, funded in part by the Canadian International Development Agency and a private foundation, worked to disseminate the experience of the Ekati mine agreements internationally.Footnote ³⁷ The Lutsel K’e Dene shared their experiences at Ekati with other communities facing the prospect of negotiations with BHP and other global mining companies over mines in their communities.Footnote ³⁸ On the corporate side, BHP has used the Ekati model as evidence that it successfully incorporates indigenous peoples in its mining operations.Footnote ³⁹

A significant point to come out of the diffusion of the Ekati Mine Environmental Agreement is that what was disseminated not only included contractual language and a contractual model, but also the very idea of using an agreement to address gaps in environmental regulation. Thus, in a context distinct from a mining development (the remediation of a contaminated mine site, the Giant Mine Remediation) the idea of using an environmental agreement was proposed and accepted as a legal structure through which to provide independent monitoring and oversight of the clean-up process. The Ekati Mine Environmental Agreement was an influential model in this discussion, as well as a ‘good neighbour’ agreement concluded between community organizations and the mining company operating the Stillwater Mine in Montana (US).Footnote ⁴⁰

The circulation of contractual models such as the Ekati Environmental Agreement is in some ways curious and counter-intuitive because of the very localized nature of the concerns addressed in that agreement. Reading the text of the agreement, the local distinctiveness of environmental issues is immediately evident and contrasts with the more generic nature of commitments contained in supply chain contracts or other agreements designed to operate in transnational business spaces. For example, a number of factors that were significant for the Ekati project might be non-transferable, such as:

1. • fear of giving the territorial government more power over wildlife monitoring and protection until land claims agreements are worked out;Footnote ⁴¹

2. • the bargaining context and time pressure which led groups to make strategic choices between, for example, air or wildlife protection, as they were not confident that they could succeed on both fronts; and

3. • the constitutional context in which the Canadian North is set up ‘like a colony’ by the federal government.Footnote ⁴²

One participant involved in the agreement negotiations indicated that air quality issues had to be addressed in the context of a mine-specific agreement as there is ‘no interest from Environment Canada [the federal environmental department] in doing something up here’.Footnote ⁴³ Moreover, the environmental issues that are addressed in the Ekati Agreement are also particular to the complex interactions of these agreements with Aboriginal rights systems and conceptions of the role of traditional knowledge that might not be transferrable to other contexts.Footnote ⁴⁴

3.3. Beyond Ekati: Disseminating Mining Contract Models and Templates

From the Ekati experience, and from the wider literature on diffusion of environmental norms between mining-impacted communities, the knowledge practices that allow norms to move through contract can be observed. The practice of relying on negotiated agreements, such as the Ekati Agreement, rather than on anonymized contractual templates as models, risks disguising the political dimensions of the negotiating processes. This includes the particular power given to the party who ‘holds the pen’.Footnote ⁴⁵ Another challenge of using concluded agreements as models is their frequent neglect of cumulative effects. Companies may be willing to negotiate with affected indigenous communities but can be less interested in working with other companies to address cumulative effects of multiple mines in a similar area.Footnote ⁴⁶ Llewellyn and Tehan point to relational contract theory to help in revealing how specific instances of agreements may not deliver the benefits that more generic templates, processes and formulas seem to promise in exactly these contexts.Footnote ⁴⁷

Coalitions between ‘local actors’ and ‘outside experts’ are common in the negotiation of these agreements, which also provides a mechanism for the transfer of experiences from other jurisdictions.Footnote ⁴⁸ A reason for illuminating scholarly and activist roles in circulating these agreements comes from the challenging context in which most but not all of these agreements contain confidentiality clauses. These clauses operate in a way that can even restrict the information that can be provided to community members.Footnote ⁴⁹ An understanding of the content and significance of these agreements has been significantly advanced by advisers and participants in these negotiations who have been able to draw on their personal experiences in agreement making.Footnote ⁵⁰ Thus, despite vigorous efforts to keep these processes confidential and localized, they filter both up to the policy level and across to other communities.Footnote ⁵¹

Transfer of legal models and forms between jurisdictions occurs through horizontal diffusion between mining-impacted communitiesFootnote ⁵² through advisers sharing experiences and advice to communities,Footnote ⁵³ through ‘best practice guides’ including those compiled by governmentsFootnote ⁵⁴ and the World Bank,Footnote ⁵⁵ and through toolkits developed by industry foraFootnote ⁵⁶ and corporate channels.Footnote ⁵⁷ Knowledge from international examples has also been collected by and for indigenous peoples themselves.Footnote ⁵⁸ Yet, these sources, even when viewed collectively, present a selective view of contracting practices because they only demonstrate where information has been offered up for use.

The transnational legal architecture of contracting, moreover, is not only visible in the final agreements themselves, but also in the templates and the use of ‘best practice’ models and norms. In the Australian context, Tehan and Godden document how early agreements served as models for later agreements in the native title process, and the cross-fertilization between these models.Footnote ⁵⁹ Model documents from even diverse jurisdictions have evolved with a striking resemblance, despite the lack of any explicit acknowledgement of a common ancestor.Footnote ⁶⁰

This section has demonstrated how project-specific contracts operate as a critical device for addressing environmental impacts of mines, as well as revealing a less obvious function of these agreements as they operate as a vector for transferring normative content between project contexts. These developments illuminate examples of the sorts of private legal transfer that offer rich empirical grounds for testing many of the hypotheses advanced earlier in the literature on legal transfer, transplant, and diffusion.Footnote ⁶¹ We see here that the predicted impossibility of ‘transplants’ succeeding out of transfers involving strikingly distinct legal cultures has not displaced the enthusiasm in practice of looking to such potential ‘misfits’ as contractual models.Footnote ⁶² The spotlight on this activity now moves from a context where agreements are transferred between distinct projects to one where new domestic legislation is introduced to service the demands of conservation contracting.

4.1. Conservation Finance’s Appetite for New Legal Forms and Reforms

A largely obscured, yet significant, role of contract is to provide a legal base for transformational legislative change in a jurisdiction. This is evident in the area of investment contracts, where contractual provisions on natural resource development, taxation provisions or transparency, and anti-corruption language may require changes to domestic legislation. However, this phenomenon is also transforming law in the conservation field where negotiated agreements directed at protecting endangered ecosystems usher in far-reaching legislative change. This section uses a study of a conservation contract aimed at marine protection to elucidate the practice and promise of contracting in instituting legal reform.

The central case study is of a ‘deal’ in Kiribati which began as an agreement with conservation finance sources in the US, and led to new legislation governing protected areas.

It follows the model of other conservation interventions, such as conservation concessions – management contracts between community landowners or governments and conservation-oriented ‘buyers’ – which have also required legislative change for their implementation. Such agreements have been used to compete with forest companies in bidding for timber licences. The conservation bidder, if successful, then acquires the licence and chooses to not cut down trees.Footnote ⁶³

These types of conservation transaction (the legal side of ecosystem services finance) are rarely captured in environmental law accounts. Lawyers tasked with the transactional work of creating commercial documents to put these agreements into place are blunt in describing their practice as essentially ‘commercial law not environmental law’.Footnote ⁶⁴ However, the same practitioners are cautious of the framing of these agreements as simply ‘market mechanisms’ – suggesting that such language is used to attract donor funding and is probably ‘overdone’.Footnote ⁶⁵

The ‘split personality’ nature of these agreements – in form they mimic any other commercial contract but their objective is to achieve conservation outcomes – creates tensions with regard to contractual enforcement. In practice, this means that some organizations, but not others, will be very informal and help to correct any failure in complying with the contractual terms.Footnote ⁶⁶ This highlights a dynamic evident across the three areas of contracting that this article canvasses – contracts are seen as attractive because of their ‘hard’, binding and enforceable nature; yet, in practice, litigation and formal remedies for contractual non-compliance are rarely sought.

The transactions discussed in this section are not widespread, and tend to cluster in jurisdictions where international conservation organizations and their funders have previous experience and relationships.Footnote ⁶⁷ Latin America is noted to be one of the most ‘mature’ regions in terms of experience in managing funds for conservation because of its long history with institutions originally established for debt-for-nature swaps.Footnote ⁶⁸ The reported success of individual agreements has also prompted a ‘multiplier effect’ where new agreements will repeat the model of a pioneering project in other jurisdictions. This has been the case with marine conservation agreements.Footnote ⁶⁹

As the number of legal counsel doing this sort of transactional work for conservation funds is small, counsel routinely consult past project documents and governance structures to use in the next project. Counsel also share their best practices through articulating common ‘quality standards for conservation trust funds’.Footnote ⁷⁰ The common use of templates and models also extends to applicable law clauses that tend to favour New York (US) and English law.Footnote ⁷¹

4.2. The Phoenix Islands Protected Area: Kiribati’s ‘Conservation Contract’

The experience of the New England Aquarium and Conservation International in working with the government of Kiribati to establish a protected area in the Phoenix Islands provides one example of how a conservation contract led to sweeping legislative change. Kiribati is an ocean nation in the Central Pacific, which includes a group of atolls and reefs, the Phoenix Islands, which are largely uninhabited. Early critical meetings between Greg Stone of the New England Aquarium and Kiribati President Anote Tong led to a joint commitment to take steps to preserve the unusual ecological value of these ecosystems. Conservation International joined the project to protect the area that is now known as the Phoenix Islands Protected Area (PIPA).Footnote ⁷²

In 2006 Kiribati announced that it was closing off some of its best coral reefs and fishing grounds to establish a marine protected area in the Phoenix Islands.Footnote ⁷³ The idea of creating the ‘reverse fishing licence’ or conservation agreement that would provide the funding base for this new protected area can be traced to the concession agreement experience of Conservation International, developed to protect forest resources in other countries. In return for the government protecting the biodiversity value of the Phoenix Island archipelago marine ecosystems, the government would receive compensation from a dedicated trust. The trust would reimburse the Kiribati government for reduced foreign licence fees from the closure of the commercial fisheries around the Phoenix Islands, and provide for management costs for the protected area.

This legal structure aims to create both a sustainable financing mechanism for the PIPA, as well as a mechanism for close oversight to ensure that the conservation goals of maintaining the marine protected area are being respected. For Conservation International and the New England Aquarium, the project would advance their goals of creating a significant marine protected area in the Pacific. For President Tong, this initiative created an unparallelled opportunity to draw international attention to Kiribati’s climate change plight. It would also address the fact that licence fees from distant water fishing nations comprised a significant portion of Kiribati’s national budget.

New legislation was required to set up the PIPA trust fund.Footnote ⁷⁴ This was because there was no local law in place that could provide for an entity capable of managing an endowment such as that being envisaged to create and maintain the protected area. Counsel for the funders took the lead on negotiating and drafting a Conservation Agreement with the government of Kiribati, with a Boston-based commercial law firm drafting the governance rules for the trust fund. In exchange for commitment to a certain level of conservation tenure, the PIPA trust would provide financial support for management costs and for some lost fishing revenues.

The legal underpinnings of the regulatory regime for the protected area also required new legislation as there was no precedent in Kiribati law for the creation and management of marine protected areas. The Ministry of Environment, Lands, and Agriculture Development, working with the Cabinet and the Office of the Attorney General, thus revised Kiribati’s core environmental law, resulting in the Environmental (Amendment) Act 2007.Footnote ⁷⁵

The contractual structure of the underlying Conservation Agreement intends to protect two critical aspects of this relationship: (i) the government’s sovereignty over activities in the PIPA; and (ii) an assurance for the conservation investors that their funding is being used for its intended purposes. If the trust is not satisfied with the management plan or its implementation, then, under the terms of the contract, it will not be obligated to make payments or to renew the contract when it expires.Footnote ⁷⁶ Robust legal architecture for the protected area and the trust were seen as vital ‘legal scaffolding’ without which there would be no investment in the PIPA.Footnote ⁷⁷

The PIPA has been celebrated for many things, including its use of an ‘innovative conservation contract mechanism’,Footnote ⁷⁸ as this is the largest marine conservation effort of its kind by a United Nations (UN)-designated least developed country. For the purposes of this article, its significance lies further in two factors. Firstly, it reveals in a fine-grained way how contracts do not stand alone, but rather can require either revisions to existing legislation or completely new laws to facilitate their existence and operation. Secondly, it reveals the power of ‘model examples’. The PIPA is already framed as ‘a global model for large [marine protected area] design and implementation’.Footnote ⁷⁹ It is being actively promoted by global initiatives such as the Clinton Global Initiative,Footnote ⁸⁰ which seeks to bring attention to ‘concrete actions that will improve the world and all of humanity’.Footnote ⁸¹ Efforts to scale up the PIPA experience have been advanced by the Pacific Oceanscape Initiative.Footnote ⁸² The PIPA is thus credited with inspiring the announcement of marine protected areas for the Cook Islands and the New Caledonian Coral Sea.Footnote ⁸³ Further, the cooperation agreement signed between the Papahānaumokuākea Marine National Monument in the Northwestern Hawaiian Islands and the PIPA in Kiribati served as a model for the creation of a similar sister-sites agreement between the two large-scale marine protected areas in New Caledonia and the Cook Islands.Footnote ⁸⁴

The PIPA experience also reveals that predetermined scripts of transnational conservation processes being one-sidedly dominated by NGOs advancing their interests in the Global South are not the only narratives that apply. Lilian Mitchell’s interview-based study of this initiative reveals how President Tong leveraged NGO interest in establishing a protected area in the Phoenix Islands just as the scientific and conservation partners advanced their goal of creating a large marine protected area.Footnote ⁸⁵ Her work also usefully challenges conservation discourses that conceptualize large marine protected areas as ‘the final wilderness areas’, devoid of complicated social impacts and vested interests. Her interviews with I-Kiribati, instead, revealed a sense of ownership and corresponding loss at having this space closed to fishing, even if it was not an area the I-Kiribati personally inhabited.Footnote ⁸⁶

These reactions of the I-Kiribati highlight an easy to miss complexity that emerges as local, context-specific arrangements ‘go global’: the risk that the act of translating project-specific agreements into new normative benchmarks obscures customary and traditional knowledge and displaces opportunities for such knowledge to be reflected in emerging legislation and practice. This is a significant dynamic with which scholars examining the transnational and global regulatory implications of environmental norm dissemination will increasingly have to grapple. For example, the desire to replicate transnationally New Zealand’s legislative recognition of the legal personhood of the Whanganui River and Te Urewera mountain ranges must acknowledge and respect the fact that this personhood emerges from a Māori worldview.Footnote ⁸⁷

At this point, the article changes tack – abandoning the fine-grained project-specific case study focus of this section and the previous section to reveal a different dynamic of how business contracting practices operate to entrench private standards of environmental performance. This adds to an understanding of the widespread influence of contracting as it reveals that contracting does not just transfer norms from project to project (Section 3) and from project to national legislation (Section 4). Contracts also serve as legal ‘touchdown’ points for private environmental standards much more generally.Footnote ⁸⁸

5.1. The Role of Contracts in ‘Legalizing’ Private Environmental Standards

The significance of ‘private’ environmental governance – which includes standards and certification schemes for sustainable forestry products, fishery products, fairly traded goods, as well as various codes of conduct, guidelines, principles, best practices, and disclosure systems – is well-explored by scholars. The prevalence of such initiatives indeed leads to a concern that environmental law is bending too far towards an ‘environmentalism of the rich’.Footnote ⁸⁹ The ‘private’ framing of these standards, however, reflects a slippery use of this term. While the standards are usually created through non-state or private processes, they often closely intersect with national or international law standards of environmental performance.Footnote ⁹⁰

The link between environmental performance standards and contracting lies in the fact that global value chains serve as a mechanism for diffusing private standards far beyond the individual corporation where the performance standard may have originated. While contracts serve as vital legal linchpins in these relationships, they are curiously invisible in much of the global value chain literature.Footnote ⁹¹ This scholarly gap can probably be traced to the wider fact that while global value chains have emerged as a significant subject of study and activism, the role of law is frequently missed or obscured.Footnote ⁹² The engagement of law with sustainability contracting has often been restricted to questions of ‘bindingness’ and ‘enforcement’.

The allure of law in this context resides at least partially in the tempting vision that contractual incorporation of a corporate code of conduct or voluntary principle might somehow magically transform an obligation from a voluntary to a legally binding obligation. Mitkidis identifies this central hypothesis:

However, Mitkidis and others accept that inserting provisions into contractual texts does not instantaneously transform obligations into binding requirements.Footnote ⁹⁴ A range of factors, including the psychological significance of written commitments for suppliers, instead helps to explain the degree to which the contractualization of otherwise ‘voluntary’ commitments yields behavioural change.Footnote ⁹⁵

Contractual incorporation thus fails to become the critical dividing line between the legal and the non-legal. This reality allows one to conceptualize the legal relevance of contractually incorporating private environmental standards in ways that transcend the singular question of whether this makes them ‘more or less’ legal. Thinking about the normative impact of contractual environmental commitments unleashes a wider agenda for exploring how environmental norms move through business contracts, the transnational dimensions of this movement, the challenges of understanding such movements given the confidential nature of commercial contracts, and ways to overcome the hurdles in researching the impact of contractual clauses when such provisions rarely, if ever, reach courts or arbitral proceedings.Footnote ⁹⁶

A number of scholars have analyzed codes of conduct as proxies for corporate contracting practices and commitments.Footnote ⁹⁷ This work is important given the challenges of accessing ‘representative samples’ or just more than isolated samples of concluded contracts. McBarnet and Kurkchiyan, for example, argue that ‘best practice is increasingly being treated as setting up a contractual obligation on suppliers to meet CSR standards’.Footnote ⁹⁸ A study by the Conference Board of Canada of the incorporation of ISO 14001 and other private regulatory standards in 2012 further suggested that nearly 40% of the corporations in the Bloomberg ESG 3000 index claimed to impose environmental performance standards on supply chains through commercial contracts and procurement policies.Footnote ⁹⁹ The empirical investigations of Mitkidis led her to the conclusion that the use of such contractual clauses is now ‘widespread’.Footnote ¹⁰⁰ In a study of compliance with private regulatory standards Verbruggen emphasizes that, while in theory contractual incorporation allows for compliance through civil litigation before a court of law, that strategy is rarely invoked.Footnote ¹⁰¹ Poncibò has extended earlier analysis to investigate whether sustainability commitments can serve as implied terms in international business contracts.Footnote ¹⁰² Taken together, these studies provide a rich framework for taking contracts seriously in environmental law, and to a degree unmatched by scholarship on contracting in other domains of environmental law.

5.2. Corporate Environmental Standards: More than (Ac)Counting

While the extent to which corporate codes are incorporated in contracts attracts significant empirical investigation, the practice of contractual incorporation is not the magic on/off switch that determines whether environmental performance standards are meaningful. Curiously neglected is another line of inquiry which would investigate the substance and depth of the environmental commitments being made (and consider which environmental issues fail to be included). Analysis of environmental commitments routinely focuses on counting and sorting corporate environmental commitments rather than critically engaging with the content, scope, and depth of discussion of the environmental content of codes.Footnote ¹⁰³ Such an approach encourages ‘check the box’ compliance opportunities where ‘environmental’ criteria can be satisfied by providing inventories of environmental policies such as clauses indicating compliance with all applicable environmental laws.Footnote ¹⁰⁴

Increasingly, corporate sector claims of environmental performance (and claims against corporations) are premised on a notion of comparison – companies are performing better or worse than their peers, or better or worse than articulated standards which should bind them. These metrics and accounting frameworks well fit the ‘audit cultures’ of corporate environmentalism.Footnote ¹⁰⁵ Many of the substantive commitments being made are promises to count, commitments to collect data and, sometimes, to open up that data for comparison. Important counterfoils to this quantification, which reduces corporate obligations to lists of checked boxes and numbers, emerge through the sort of detailed ethnographic work identifying corporations as variously enacted, and subject to all sorts of potential identities – some visible, some less so.Footnote ¹⁰⁶

A qualitative study of environment and labour-related commitments in corporate codes across different sectors reveals that the norm of reporting on environmental issues is well developed in some sectors (such as the petroleum sector) and almost non-existent in others (such as the clothing sector).Footnote ¹⁰⁷ The authors attribute this differentiation to level of risk – both legal and extralegal – to which each sector is exposed. This study further reveals that corporations are themselves constrained by the standardization of environmental norms that has evolved within each sector as a result of corporate and social movement activity, resulting in less divergence among environmental commitments than was initially predicted.Footnote ¹⁰⁸

Such findings are consistent with the explanatory theories that tie the content of corporate codes to the influence of stakeholder pressures.Footnote ¹⁰⁹ They highlight again the limits of ambition of what contracts in this corporate arena set out to achieve. Contracts may ‘implement’ industry or corporate codes and add no new substantive requirements. This, in turn, explains the common finding that the environmental contents of codes within sectors are substantively similar even if the chosen wording varies.Footnote ¹¹⁰ It also means that the ‘regulatory scripts’ that these codes seem to follow are anchored towards global performance standards rather than addressing environmental issues particularly customized to local contexts and needs.Footnote ¹¹¹

For readers unfamiliar with codes of conduct, it is sobering to spend some time reading the contents of codes and their tendencies towards brevity and vagueness. The existence of a voluminous literature on codes of conduct in itself might tend towards overstating the significance of these codes, many of which do not venture far beyond legal compliance commitments.Footnote ¹¹² Tracing the enforcement of codes through contractual provisions may seem futile if the original commitment goes no further than Swarovski’s general statements that ‘all products used shall whenever possible be recycled and reused’ and ‘improving energy efficiency in all production processes shall constantly be aimed at’.Footnote ¹¹³ Existing interview-based studies further suggest that while many corporate codes of conduct include the possibility of terminating the agreement for non-compliance, in practice companies are reluctant to terminate relationships. Instead they assist suppliers in drafting plans to address sustainability-related shortcomings.Footnote ¹¹⁴

Ferrando writes of the legal homogenizing impact of corporate-created spaces, the physical and contractual occupation of space in national legal orders.Footnote ¹¹⁵ His analysis of the micro-mechanisms of legal reproduction, including codes of conduct as transported through supply chains, points to inadequacies in the way in which legal transplant theories have traditionally been imagined. The present study of contracting practices aims to extend this observation by demonstrating that transnational corporations are not the only actors to contractually occupy domestic legal space with transnational forms of legality applied through contract. It reveals that traditional theories of legal ‘transplants’ are as ill-equipped to illuminate the movements of environmental norms through contracts authored by indigenous communities and conservation finance actors as they are capable of defining private legal transfers by large multinational corporations.

This section adds to the existing literature by contributing an understanding of the specific role of contracts in communicating and entrenching environmental standards in commercial transactions. Contracts become a critical legal technology through which the ‘big business’ of corporate social responsibility – which includes principles, codes, disclosure systems, and monitoring and assessment systems – becomes legally embedded. Understanding the extent to which these contractual practices amount to a ‘reconstitution of law’Footnote ¹¹⁶ is still restricted by the partial view of contracting practices that is available.