The Instrumental Value of Private Regulation: Evidence From the Case of Corporate Non‐Financial Reporting

ABSTRACT Critics of private regulation argue that voluntary standards often fail to meaningfully improve corporate conduct while simultaneously functioning as a stumbling block that prevents the development of more stringent, mandatory regulation by states. This paper complicates this view by illustrating the instrumental value of private regulation—that is, its potential to act as a building block that facilitates the development of new government regulation that serves the public interest. Through a combination of in‐depth interviews and analysis of publicly available documents, I examine the impact of voluntary corporate non‐financial reporting on public policy over the period 1997–2025. The analysis highlights the critical role that both businesses and civil society organizations have played in (1) expanding the regulatory space by developing voluntary standards in policy areas that state officials have been either unwilling or unable to address, (2) changing expectations for good corporate behavior by popularizing these standards, and (3) sharing responsibility for regulation with public policymakers through interlocking voluntary and mandatory rules. The analysis also demonstrates the importance of institutional complementarity as a scope condition of this three‐stage model.