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Self-regulation is the means by which members of a profession, trade or commercial activity are bound by a mutually agreed set of rules often set out in a code of practice or conduct, which governs their relationship and the way they operate. Such rules may be accepted voluntarily or may be compulsory but will normally include a procedure for resolving complaints and for the application of sanctions against those who infringe the rules.

There are many types of self-regulation, from voluntary and unilateral requirements aimed at raising standards in individual rms to complex rules set within a statutory framework that apply across a commercial activity or profession. Self-regulatory schemes may or may not incorporate independent enforcement bodies with or without statutory authority.

Changing public attitudes are an important part of the adoption and application of self-regulatory codes. Companies can no longer ignore the impact of their activities on the environment.

Developments in global communications, which have enabled corporations to control production activities on an ever-widening scale, have also facilitated the international transmission of information about working conditions in their overseas suppliers, increasing public awareness and facilitating campaigning activities.

The growth of self-regulatory codes of conduct has tended to be concentrated in certain sectors, particularly trade, textiles, chemicals and extractive industries. Codes addressing labour issues tend to be concentrated in sectors such as garments, footwear, sports goods, toys and retailing, whereas environmental codes are more likely to be found in relation to chemical manufacturing, forestry, gas, oil and mining.

Self-regulating codes of conduct can be broadly divided into ve main types:

▪ Company codes;

▪ Trade association codes;

▪ Multi-stakeholder codes;

▪ Model codes; and

▪ Inter-governmental codes.

Codes vary considerably in scope and many do not even cover all of the International Labour Organisation’s core labour standards. Company codes and trade association codes often have a more limited scope than those developed in conjunction with other stakeholders.

Self-regulatory codes can generate positive benets for stakeholders. Examples where working conditions have improved show that those codes can provide inuence on company decision making. Furthermore, because of codes of conduct, rms are increasingly held responsible for the activities of their suppliers and partner organisations as well as their own subsidiaries.

 An inherent weakness of self-regulatory mechanisms is their voluntary nature, though a number of incentives, some more persuasive than others, exist for organisations to become involved in self-regulation initiatives. Reputation and credibility, for example, play an important role.

The advantages of self-regulation may be summarised in terms of expertise, cost-effectiveness and exibility and include:

▪ Self-regulatory rules are by denition developed by those directly involved in the industry or profession and so can be said to best reect the issues and needs of the particular sector;

▪ It can be quicker to achieve self-regulation than statutory regulation;

▪ Self-regulation can generate a sense of ownership amongst the profession or industry and so is more likely to secure a high level of compliance;

▪ It can harness common interest in maintaining the reputation of those involved in the activity;

▪ It can be easily adapted or updated to reect changing circumstances or industry developments;

▪ In some areas, especially the professions, it may be disproportionately expensive or difcult for government to acquire the specialist knowledge necessary to regulate effectively;

▪ Self-regulation can provide a quicker and cheaper means of redress; and

▪ It can harness the close relationship between the industry/profession and their clients.

Conversely there are a number of limitations or disadvantages associated with self-regulation, e.g.:

▪  All those who trade in the profession or sector will not necessarily operate within the self-regulatory rules;

▪ It may be difcult to ensure that consumers appreciate the implications of trading with those who operate outside the rules;

▪ Consumers may not be aware of who or what is covered;

▪ There is a danger of self-interest being put ahead of the public interest and self-regulation may lead to anti-competitive behaviour, especially in terms of restricting market entry beyond the restrictions required to protect consumers; and

▪ The organisations involved in enforcement may not be open and transparent about their processes and outcomes.

There may be a general lack of public condence in the ability of or the incentives for a self-regulatory body to provide effective consumer protection, and to impose appropriate sanctions when rules are broken.

Self-regulation is used in one way or another across a wide range of activities from medicine, accountancy and the law, to advertising, house building and most sports. It affects everybody, often without them being consciously aware of it.

Typically awareness of self-regulation is raised when something goes wrong, e.g. the misuse of the Mirror Group pension funds highlighted failings in a regulated system. When self-regulation fails, the implementation of amendments to improve the system is often the best solution for consumers and industry alike because of the exibility and expertise embodied in a regime that is ‘owned’ by those to whom it applies.

Origin and Goals of Voluntary