For in house counsel, particular those concerned with legal compliance, self-regulation might seem like a nightmare. If you think it’s hard enough to get your corporate client to stay in compliance when the law says so, imagine trying to pull that same corporate tooth when the law doesn’t say so.
Fortunately, recent research shows that it could be in many companies’ best interest to not just self-regulate, but to also over-self-regulate. The idea is that by doing so, and doing so extra-transparently, companies can send a message to their consumers that they are honest, which should inspire more consumer confidence, which should translate into increased revenue.
Self-Regulation for Marketing
In short, a good way to look at over-self-regulation is as a form of legitimate greenwashing. By keeping everything transparent and holding your company to higher standards than legally required, you are signaling to consumers that you care. Notably, consumers rank corporate transparency rather highly when making purchasing decisions.
Unlike the greenwashing fad of years past, over-self-regulation is way to push legal compliance from just a legal requirement to becoming a marketing tool or feature. A prime example of this can be seen in the auto industry where companies routinely tout exceeding federal safety standards.
Self-Regulation for Less Regulation
In addition to the benefit of increased consumer confidence, if whole industries sign on to a standard way to regulate themselves, the need for increased government regulation may be obviated. For example, had the rideshare providers Uber and Lyft simply provided their drivers with commercial liability insurance policies from their inception, much of the local regulatory battles the companies have been fighting may have been sidestepped entirely.
For emerging industries where regulations haven’t quite caught up, self-regulating early on, and transparently, may help to influence regulations that do get passed from being too harsh, burdensome, or onerous.