Social Public Procurement: Corporate Responsibility Without Regulation

Abstract

The growing perception in the developed world that multi-national corporations conduct social and environmental exploitation abroad raises numerous questions about corporate social responsibility. That those corporations would not get away with, nor probably even attempt, such exploitation in their home countries complicates the dialogue: to what extent are the home governments responsible for ensuring their native corporations act responsibly abroad? The E.U. answers this question affirmatively and takes an active role in promoting social responsibility. One major mechanism they use is socially responsible public procurement, which incentivizes good social outcomes by awarding contracts based, in part, on social criteria. Because the annual public procurement budget in the E.U. hovers around €1 trillion, this offers an incredibly powerful tool for positive change. This Essay explores the E.U.’s framework for achieving these social goals and suggests that the U.S. should undertake many of the same policies. In the U.S., public procurement accounts for over 10% of GDP. Therefore, using the marketplace rather than regulation to achieve positive change offers a powerful tool: the upside of social good without the downside of increased regulatory burden.