Transnational Private Regulations for Sustainable Urban Development (New Frontiers in Regional Science: Asian Perspectives, 69) 9819914507, 9789819914500

Table of contents :
Preface
Contents
List of Abbreviations
List of Figures
List of Tables
Chapter 1: Introduction
1.1 Target of Research: TPRs
1.1.1 Background: Emergence of TPRs
1.1.2 Trans-Governmental Networks (TGNs) of Regulators
1.2 Value of Research and Missing Information
1.2.1 Background of Sustainable Urban Development
1.2.2 The Global REIT Market
1.2.3 Policy Challenges within Global Urban Development
1.2.3.1 Economic Issues of Global Urban Development
1.2.3.2 Environmental Issues of Global Urban Development
1.2.3.3 Social Issues of Global Urban Development
1.2.4 TPRs for Sustainable Urban Development
1.2.5 Transgovernmental Forums in the Global Property Market
1.3 Purpose
1.3.1 Research Objective
1.3.2 Research Questions
1.4 Research Methodology
1.5 Research Organization
References
Chapter 2: Framework for the Analysis of Transnational Private Regulations
2.1 Previous Studies and Key Literature
2.1.1 Previous Studies on the TPR Theory and Example of Cases
2.1.2 Global Regulatory Governance through the RIT Model
2.1.3 Global Regulatory Governance through the OIT Model
2.2 Re-examination of the Framework: Proposal of the ORIITO Model
2.2.1 Background of the Framework for the Analysis of the Mechanism of TPRs
2.2.2 Definition of the ORIITO Model
2.2.3 Reasons for Proposing the ORIITO Model
2.3 Demonstration of TPR Analysis Using the ORIITO Model
2.3.1 International Financial Reporting Standards
2.3.2 Good Agricultural Practice
2.3.3 International Business Management System Standards
2.4 Hypothesis on the Conditions for the Effectiveness of TPRs
2.4.1 Previous Studies on the Effectiveness of TPRs
2.4.2 Measurement Structure for the Effectiveness of TPRs
2.4.2.1 Independent Variables of the Effectiveness of TPRs
2.4.2.2 Indicators for Effectiveness of TPRs
2.5 Need for Case Studies on TPRs for Sustainable Urban Development
References
Chapter 3: Case Study of TPRs for Economic Issues in Urban Development
3.1 Introduction
3.2 Analysis of GRETI (Category I-1)
3.2.1 Background of GRETI
3.2.2 Mechanism of GRETI: ORIITO Stakeholders in GRETI
3.2.2.1 Relationship Between Orchestrator and Regulator
3.2.2.2 Relationship Between Regulator and Intermediary I
3.2.2.3 Relationship Between Regulator and Intermediary II
3.2.2.4 Relationship among Target, Organizer, and Other Stakeholders
3.2.3 Effectiveness of GRETI
3.2.3.1 Analysis of Independent Variables
Securing Legitimacy
Expertise and Public Commitment
Criteria for Membership
Decision-making Processes
Regulator Focality
Goal Similarity
Intermediary Availability
State Commitment
3.2.3.2 Analysis of the Indicators of Effectiveness
Transparent Engagement with Regulators and Other Stakeholders in TPR Implementation
Market Stakeholders´ Compliance Improvement
Rise in the Uptake of TPR Implementation
3.3 Analysis of the IVS (Category I-2)
3.3.1 Background of the IVS
3.3.2 Mechanism of the IVS: ORIITO Stakeholders in the IVS
3.3.2.1 Relationship Between Orchestrator and Regulator
3.3.2.2 Relationship Between Regulator and Intermediary I
3.3.2.3 Relationship Between Regulator and Intermediary II
3.3.2.4 Relationship among Target, Organizer, and Other stakeholders
3.3.3 Effectiveness of the IVS
3.3.3.1 Analysis of Independent Variables
Securing Legitimacy
Expertise and Public Commitment
Criteria for Membership
Decision-making Processes
Regulator Focality
Goal Similarity
Intermediary Availability
State Commitment
3.3.3.2 Analysis of Indicators of Effectiveness
Transparent Engagement of Regulators and Other Stakeholders in TPR Implementation
Market Stakeholders´ Compliance Improvement
Rise in the Uptake of TPR Implementation
3.4 Effectiveness of TPRs for Economic Issues in Urban Development
Chapter 4: Case Study of TPRs for Environmental Issues in Urban Development
4.1 Introduction
4.2 Analysis of the GRESB (Category II-1)
4.2.1 Background of the GRESB
4.2.2 Mechanism of the GRESB: ORIITO Stakeholders in the GRESB
4.2.2.1 Relationship Between Orchestrator and Regulator
4.2.2.2 Relationship Between Regulator and Intermediary I
4.2.2.3 Relationship Between Regulator and Intermediary II
4.2.2.4 Relationship among Target, Organizer, and Other stakeholders
4.2.3 Effectiveness of the GRESB
4.2.3.1 Analysis of Independent Variables
Securing Legitimacy
Expertise and Public Commitment
Criteria for Membership
Decision-making Processes
Regulator Focality
Goal Similarity
Intermediary Availability
State Commitment
4.2.3.2 Analysis of Indicators of Effectiveness
Transparent Engagement with Regulators and Other Stakeholders in TPR Implementation
Market Stakeholders´ Compliance Improvement
Rise in the Uptake of TPR Implementation
4.3 Analysis of LEED (Category II-2)
4.3.1 Background of LEED
4.3.2 Mechanism of LEED: ORIITO Stakeholders in LEED
4.3.2.1 Relationship Between Orchestrator and Regulator
4.3.2.2 Relationship Between Regulator and Intermediary I
4.3.2.3 Relationship Between Regulator and Intermediary II
4.3.2.4 Relationship among Target, Organizer, and Other stakeholders
4.3.3 Effectiveness of LEED
4.3.3.1 Analysis of Independent Variables
Securing Legitimacy
Expertise and Public Commitment
Criteria for Membership
Decision-making Processes
Regulator Focality
Goal Similarity
Intermediary Availability
State Commitment
4.3.3.2 Analysis of Indicators of Effectiveness
Transparent Engagement with Regulators and Other Stakeholders in TPR Implementation
Market Stakeholders´ Compliance Improvement
Rise in the Uptake of TPR Implementation
4.4 Effectiveness of TPRs for Environmental Issues in Urban Development
Reference
Chapter 5: Case Study of TPRs for Social Issues in Urban Development
5.1 Introduction
5.2 Analysis of SURF (Category III-1)
5.2.1 Background of SURF
5.2.2 Mechanism of SURF: ORIITO Stakeholders in SURF
5.2.2.1 Relationship Between Orchestrator and Regulator
5.2.2.2 Relationship Between Regulator and Intermediary I
5.2.2.3 Relationship Between Regulator and Intermediary II
5.2.2.4 Relationship among Target, Organizer, and Other Stakeholders
5.2.3 Effectiveness of SURF
5.2.3.1 Analysis of Independent Variables
Securing Legitimacy
Expertise and public commitment
Criteria for membership
Decision-making processes
Regulator Focality
Goal Similarity
Intermediary availability
State commitment
5.2.3.2 Analysis of Indicators for Effectiveness
Transparent engagement with regulators and other stakeholders in TPR implementation
Market stakeholders´ compliance improvement
Rise in the uptake of TPR implementation
5.3 Analysis of the JCI (Category III-2)
5.3.1 Background of the JCI
5.3.2 Mechanism of the JCI: ORIITO Stakeholders in JCI
5.3.2.1 Relationship Between Orchestrator and Regulator
5.3.2.2 Relationship Between Regulator and Intermediary I
5.3.2.3 Relationship Between Regulator and Intermediary II
5.3.2.4 Relationship Among Target, Organizer, and Other Stakeholders
5.3.3 Effectiveness of JCI
5.3.3.1 Analysis of Independent Variables
Securing Legitimacy
Expertise and Public Commitment
Criteria for Membership
Decision-making processes
Regulator Focality
Goal Similarity
Intermediary Availability
State commitment
5.3.3.2 Analysis of Indicators of Effectiveness
Transparent engagement with regulators and other stakeholders in TPR implementation
Market stakeholders´ compliance improvement
Rise in the uptake of TPR implementation
5.4 Effectiveness of TPRs for Social Issues in Urban Development
Chapter 6: Conclusion
6.1 Conclusion
6.1.1 Mechanism of TPRs for Sustainable Urban Development
6.1.2 The Relevance of the ORIITO Model to Other Global Policy Issues
6.1.3 Conclusion Regarding the Effectiveness of TPRs
6.1.3.1 Conditions for the Effectiveness of TPRs
Securing Legitimacy Hypothesis
Expertise and Public Commitment
Criteria for Membership
Decision-Making Processes
Regulator Focality Hypothesis
Goal Similarity Hypothesis
Intermediary Availability Hypothesis
State Commitment Hypothesis
6.1.3.2 The Inter-Connection of Variables for the Effectiveness of TPRs
6.2 Considerations on TPRs for Sustainable Urban Development
6.2.1 Limitations of the Study Derived from the Case Studies
6.2.2 The Role of TPR Stakeholders for the Effectiveness of TPRs
6.2.3 The Governance Systems for the Effectiveness of TPRs
Reference
Appendix: Effectiveness and Outcome: Quantitative Analysis of the Global Real Estate Transparency Index (GRETI)
A.1 Introduction: GRETI Introduction in the Global Property Market
A.2 Quantitative Analysis of GRETI
A.2.1 Purpose of the Research
A.2.1.1 Hypothesis of the Research
A.2.1.2 Previous Research
A.2.2 Empirical Analysis
A.2.2.1 Data on Transparency in the Property Market
A.2.2.2 Data on Cross-Border Transaction Ratio in Property Markets
A.2.2.3 Data on the Exchange Rate
A.2.2.4 Summary Statistics
A.2.3 Estimation Model and Results
A.2.4 Conclusions of Quantitative Analysis
A.3 Conclusion: Outcome of GRETI for Sustainable Property Investment
References

Citation preview

New Frontiers in Regional Science: Asian Perspectives 69

Masanori Kobayashi

Transnational Private Regulations for Sustainable Urban Development

New Frontiers in Regional Science: Asian Perspectives Volume 69

Editor-in-Chief Yoshiro Higano, University of Tsukuba, Tsukuba, Ibaraki, Japan

This series is a constellation of works by scholars in the field of regional science and in related disciplines specifically focusing on dynamism in Asia. Asia is the most dynamic part of the world. Japan, Korea, Taiwan, and Singapore experienced rapid and miracle economic growth in the 1970s. Malaysia, Indonesia, and Thailand followed in the 1980s. China, India, and Vietnam are now rising countries in Asia and are even leading the world economy. Due to their rapid economic development and growth, Asian countries continue to face a variety of urgent issues including regional and institutional unbalanced growth, environmental problems, poverty amidst prosperity, an ageing society, the collapse of the bubble economy, and deflation, among others. Asian countries are diversified as they have their own cultural, historical, and geographical as well as political conditions. Due to this fact, scholars specializing in regional science as an inter- and multi-discipline have taken leading roles in providing mitigating policy proposals based on robust interdisciplinary analysis of multifaceted regional issues and subjects in Asia. This series not only will present unique research results from Asia that are unfamiliar in other parts of the world because of language barriers, but also will publish advanced research results from those regions that have focused on regional and urban issues in Asia from different perspectives. The series aims to expand the frontiers of regional science through diffusion of intrinsically developed and advanced modern regional science methodologies in Asia and other areas of the world. Readers will be inspired to realize that regional and urban issues in the world are so vast that their established methodologies still have space for development and refinement, and to understand the importance of the interdisciplinary and multidisciplinary approach that is inherent in regional science for analyzing and resolving urgent regional and urban issues in Asia. Topics under consideration in this series include the theory of social cost and benefit analysis and criteria of public investments, socio-economic vulnerability against disasters, food security and policy, agro-food systems in China, industrial clustering in Asia, comprehensive management of water environment and resources in a river basin, the international trade bloc and food security, migration and labor market in Asia, land policy and local property tax, Information and Communication Technology planning, consumer “shop-around” movements, and regeneration of downtowns, among others. Researchers who are interested in publishing their books in this Series should obtain a proposal form from Yoshiro Higano (Editor in Chief, [email protected]) and return the completed form to him.

Masanori Kobayashi

Transnational Private Regulations for Sustainable Urban Development

Masanori Kobayashi Tokyo, Japan

ISSN 2199-5974 ISSN 2199-5982 (electronic) New Frontiers in Regional Science: Asian Perspectives ISBN 978-981-99-1450-0 ISBN 978-981-99-1451-7 (eBook) https://doi.org/10.1007/978-981-99-1451-7 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

In the present economy, numerous goods and services transcend national boundaries, and regulatory tasks have become increasingly globalized. States have endeavored to manage global trade issues and governance of interstate externalities. However, with control over national legislation alone, state policymakers have been challenged to regulate transnational investors, markets, and issues, such as global warming, financial crises, food safety risks, deforestation, and cross-border business transactions. Intergovernmental organizations (IGOs), such as the World Trade Organization (WTO), the United Nations (UN), and the Organization for Economic Co-operation and Development (OECD), have promoted the revision and enforcement of regulations in the global economy. These legislative systems have expanded beyond traditional regulatory fields to address corporate demands of pursuing international harmonization of economic regulations that promote liberalization of transnational economic activities. Trans-governmental networks (TGNs) of regulators have assembled representatives and technical experts from national regulatory agencies, non-governmental organizations (NGOs), private firms, and business organizations. As private corporations become increasingly globalized, many forms of transnational private regulations (TPRs) have emerged since the 1990s for legislation, standard-setting, monitoring of compliance, and implementation of transnational rules, to respond to several challenges posed by the transformation of domestic and international regulatory environments. TPRs are self-regulated, non-state, market-driven regulations. The emergence of transnational private regulatory regimes (TPRERs) has been observable in various areas of political economics. Since the emergence of TPRs, the global rule-making landscape has become dynamic. Urban development and property investment have historically been viewed as local phenomena. Community development and real estate transactions are fundamentally local activities: the regulations and standards in this field have been established and enforced by the governments, local associations, and national

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professional bodies. However, as urban development and property investment have increasingly become global, the services, transactions, and investments by private firms have transcended national boundaries. As such, it has become difficult for states and IGOs to regulate global activities through existing national legislation or international regulatory systems. Demand for various urban development projects concerning infrastructure investments is growing rapidly, international institutional investors are investing in projects globally, and sustainable urban development issues have become complicated. Since the management of new transnational issues through collaborations between various actors is unpredictable, it is necessary to examine the mechanism of TPRs in global property investment. This book analyzes the mechanism of TPRs in the global property investment market and conditions of their effectiveness for sustainable urban development. I would like to express my gratitude to the following individuals and organizations for their invaluable support toward the completion of my research. First, I am extremely grateful to my supervisor, Professor Hideaki Shiroyama, who offered continuous guidance and encouragement for my Ph.D. study. Professor Shiroyama not only acted as my supervisor but also assisted me in many other endeavors, always providing support and critical comments. I will continue to admire his diligence, enthusiasm, and dedication to international public policy studies. My deep appreciation extends to my advisors, Professor Yee-Kuang HENG and Professor Hiroshi Ohashi, who provided thorough advice and insightful comments on my work. I would also like to thank the rest of my thesis committee: Professor Junji Nakagawa and Professor Toshiro Nishizawa, for their kind and generous support. I thank my colleagues and all participants at the workshop at Graduate School of Public Policy (GraSPP) of the University of Tokyo; their suggestions and criticisms helped me to improve the dissertation. Furthermore, I would also like to thank Dr. Jin Sato, Dr. Kentaro Maeda, Dr. Masayuki Nakagawa, Jason Watabe, Mark Kitabayashi, Dr. Leonard Meyer zu Brickwedde, Dr. Jane Murray, Jeremy Kelly, Jeff Jacobson, Amelie Delaunay, Yuto Ohigashi, Dr. Chihiro Shimizu, Yasuhito Kawamura, Jeff Foo, Sue Forster, Alexander Aronsohn, Dale A. Stinton, Janet L. Branton, Masato Ito, Ruben Langbroek, Tomoko Takagi, Andrew Mihno, Jing Wang, Noriko Nagazumi, Miki Mitsunari, Dr. Takeshi Katsumi, Yong Yean Chau, Victor Tan, Dr. Ong Seow Eng, James Kojima, and Yuki Kageyama who provided comments on various parts of this work at different stages of its development. I also thank those who were helpful in providing data and arranging interviews. I would like to thank Dr. Yasushi Asami and Yutaka Hirachi for providing assistance on the book project and Michelle Harding for editing the manuscript. I would like to thank my family and my extended family. They were the true foundation of this work. Without their support, not much of this would have come to pass. I thank my wife, Emiko Kobayashi, and my daughters, Aimi and Mioko, for their support and their confidence in me. They continue to inspire me with the desire to create a world that is kind, fair, and joyful. My family’s presence has constantly

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reminded me that better communities, regions, and countries are essential and that we must create them. And finally, I cannot end my appreciation without thanking my parents for supporting me spiritually throughout my Ph.D. study and my life in general. Tokyo, Japan

Masanori Kobayashi

Contents

1

2

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Target of Research: TPRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1 Background: Emergence of TPRs . . . . . . . . . . . . . . . . . . . 1.1.2 Trans-Governmental Networks (TGNs) of Regulators . . . . 1.2 Value of Research and Missing Information . . . . . . . . . . . . . . . . . 1.2.1 Background of Sustainable Urban Development . . . . . . . . 1.2.2 The Global REIT Market . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.3 Policy Challenges within Global Urban Development . . . . 1.2.4 TPRs for Sustainable Urban Development . . . . . . . . . . . . . 1.2.5 Transgovernmental Forums in the Global Property Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1 Research Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.2 Research Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Research Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 Research Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Framework for the Analysis of Transnational Private Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Previous Studies and Key Literature . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Previous Studies on the TPR Theory and Example of Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Global Regulatory Governance through the RIT Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.3 Global Regulatory Governance through the OIT Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Re-examination of the Framework: Proposal of the ORIITO Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 1 1 6 9 9 10 18 21 24 27 27 28 28 30 32 33 33 33 37 39 40

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2.2.1

Background of the Framework for the Analysis of the Mechanism of TPRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.2 Definition of the ORIITO Model . . . . . . . . . . . . . . . . . . . . 2.2.3 Reasons for Proposing the ORIITO Model . . . . . . . . . . . . 2.3 Demonstration of TPR Analysis Using the ORIITO Model . . . . . . 2.3.1 International Financial Reporting Standards . . . . . . . . . . . . 2.3.2 Good Agricultural Practice . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 International Business Management System Standards . . . . 2.4 Hypothesis on the Conditions for the Effectiveness of TPRs . . . . . 2.4.1 Previous Studies on the Effectiveness of TPRs . . . . . . . . . . 2.4.2 Measurement Structure for the Effectiveness of TPRs . . . . . 2.5 Need for Case Studies on TPRs for Sustainable Urban Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40 44 47 52 53 59 62 65 65 67 74 77

3

Case Study of TPRs for Economic Issues in Urban Development . . . 79 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 3.2 Analysis of GRETI (Category I-1) . . . . . . . . . . . . . . . . . . . . . . . . 80 3.2.1 Background of GRETI . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 3.2.2 Mechanism of GRETI: ORIITO Stakeholders in GRETI . . . 84 3.2.3 Effectiveness of GRETI . . . . . . . . . . . . . . . . . . . . . . . . . . 89 3.3 Analysis of the IVS (Category I-2) . . . . . . . . . . . . . . . . . . . . . . . . 98 3.3.1 Background of the IVS . . . . . . . . . . . . . . . . . . . . . . . . . . 98 3.3.2 Mechanism of the IVS: ORIITO Stakeholders in the IVS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 3.3.3 Effectiveness of the IVS . . . . . . . . . . . . . . . . . . . . . . . . . . 104 3.4 Effectiveness of TPRs for Economic Issues in Urban Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

4

Case Study of TPRs for Environmental Issues in Urban Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Analysis of the GRESB (Category II-1) . . . . . . . . . . . . . . . . . . . . 4.2.1 Background of the GRESB . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Mechanism of the GRESB: ORIITO Stakeholders in the GRESB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.3 Effectiveness of the GRESB . . . . . . . . . . . . . . . . . . . . . . . 4.3 Analysis of LEED (Category II-2) . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Background of LEED . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Mechanism of LEED: ORIITO Stakeholders in LEED . . . . 4.3.3 Effectiveness of LEED . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Effectiveness of TPRs for Environmental Issues in Urban Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

113 113 113 113 114 119 126 126 131 139 150 151

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5

Case Study of TPRs for Social Issues in Urban Development . . . . . . 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Analysis of SURF (Category III-1) . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Background of SURF . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 Mechanism of SURF: ORIITO Stakeholders in SURF . . . . 5.2.3 Effectiveness of SURF . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Analysis of the JCI (Category III-2) . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Background of the JCI . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.2 Mechanism of the JCI: ORIITO Stakeholders in JCI . . . . . 5.3.3 Effectiveness of JCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Effectiveness of TPRs for Social Issues in Urban Development . . .

153 153 153 153 156 161 169 169 174 177 184

6

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 Mechanism of TPRs for Sustainable Urban Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.2 The Relevance of the ORIITO Model to Other Global Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.3 Conclusion Regarding the Effectiveness of TPRs . . . . . . . . 6.2 Considerations on TPRs for Sustainable Urban Development . . . . . 6.2.1 Limitations of the Study Derived from the Case Studies . . . 6.2.2 The Role of TPR Stakeholders for the Effectiveness of TPRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.3 The Governance Systems for the Effectiveness of TPRs . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187 187

Appendix: Effectiveness and Outcome: Quantitative Analysis of the Global Real Estate Transparency Index (GRETI) . . . . . . . . . . . . . . . . . A.1 Introduction: GRETI Introduction in the Global Property Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.2 Quantitative Analysis of GRETI . . . . . . . . . . . . . . . . . . . . . . . . . . A.2.1 Purpose of the Research . . . . . . . . . . . . . . . . . . . . . . . . . . . A.2.2 Empirical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.2.3 Estimation Model and Results . . . . . . . . . . . . . . . . . . . . . . A.2.4 Conclusions of Quantitative Analysis . . . . . . . . . . . . . . . . . A.3 Conclusion: Outcome of GRETI for Sustainable Property Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187 188 192 200 200 201 202 206

207 207 208 208 209 210 217 217 218

List of Abbreviations

AI ANREV APEC APREA ARES ASAF ASB ASBJ ASEAN BCA BCI BCBS BEAM BIS BOMA BPF BREEAM BRC BRI BSI CAC CARF CASBEE CASCO CCRC CDP

Appraisal Institute Asian Association for Investors in Non-Listed Real Estate Vehicles Asia-Pacific Economic Cooperation Asia Pacific Real Estate Association Association for Real Estate Securitization Accounting Standards Advisory Forum Appraisal Standards Board Accounting Standards Board of Japan Association of Southeast Asian Nations Building and Construction Authority of Singapore Better Cotton Initiative Basel Committee on Banking Supervision Building Environmental Assessment Method Bank for International Settlements Building Owners and Managers Association British Property Federation Building Research Establishment’s Environmental Assessment Method

British Retail Consortium Belt and Road Initiative British Standard Institution Codex Alimentarius Commission Commission on Accreditation of Rehabilitation Facilities Comprehensive Assessment System for Building Environmental Efficiency

Committee on Conformity Assessment continuing care retirement community Carbon Disclosure Project

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xiv

List of Abbreviations

CERCLA

Comprehensive Environmental Response, Compensation and Liability Act

CGBC CGF CL: AIRE CPPI CSC CSOs CSR DEVCO DGI EBA EC EEWH EFRAG EPA EPRA ESG EU FAO FASB FDI FSA FSB FSC GAAP GAI GAP GAPP GBCA GBCI GBCSL GCSi GDP GFC GFSI GLASS GLOBALG.A.P. GPIF GREFI GRESB GRETI GRI GRIHA

China Green Building Council Consumer Goods Forum Contaminated Land: Applications in Real Environments Commercial Property Price index Council Standing Committee Civil Society Organizations Corporate Social Responsibility Committee to Support Developing Countries Data Gaps Initiative European Banking Authority European Commission Ecological, Energy-saving, Waste-reducing, and Healthy European Financial Reporting Advisory Group Environment Protection Agency European Public Real Estate Association Environmental, Social, and Governance European Union Food and Agriculture Organization Financial Accounting Standards Board foreign direct investment Financial Services Agency Financial Stability Board Forest Stewardship Council Generally Accepted Accounting Principles Global Aging Initiative Good Agricultural Practices Generally Accepted Principles and Practices Green Building Council of Australia Green Building Certification Inc. Green Building Council of Sri Lanka Global Commons Stewardship Index gross domestic product global financial crisis Global Food Safety Initiative Group of Latin American Standard Setters Global Partnership for Good Agricultural Practices Government Pension Investment Fund Global Real Estate Fund Index Global Real Estate Sustainability Benchmark Global Real Estate Transparency Index Global Reporting Initiative Green Rating for Integrated Habitat Assessment

List of Abbreviations

GSR GVCs G20 HC REITs HKGBC IAIS IADI IAS IASB IASC ICAEW ICAO ICT IEC IFIs IFOAM IFRS IFS IFSWF IGBC IGOs ILO IMF IMO INREV IOSCO IPF IPD ISC ISEAL ISO ISRA ISQua ITC ITU IVPB IVS IVSB IVSC JAREA JAREC JARECO

xv

Green and Sustainable Remediation Global Value Chains Group of Twenty Healthcare Real Estate Investment Trusts Hong Kong Green Building Council Limited International Association of Insurance Supervisors International Association of Deposit Insurers International Accounting Standards International Accounting Standards Board International Accounting Standards Committee Institute of Chartered Accountants in England and Wales International Civil Aviation Organization Information and Communication Technology International Electronic Commission international financial institutions International Federation of Organic Agriculture Movements International Financial Reporting Standards International Food Standard International Forum of Sovereign Wealth Funds Indian Green Building Council Inter-Governmental Organizations International Labor Organization International Monetary Fund International Maritime Organization European Association for Investors in Non-Listed Real Estate Vehicles International Organization of Securities Commissions Investment Property Forum Investment Property Databank Integrity Surveillance Committee International Social and Environmental Accreditation and Labelling International Organization for Standardization International Sustainable Remediation Alliance International Society for Quality in Health Care International Trade Center International Telecommunications Union International Valuation Professional Board International Valuation Standard International Valuation Standards Board International Valuation Standards Council Japan Association of Real Estate Appraisers Japan Association of Real Estate Counselors Japan America Real Estate Coalition Office

xvi

JCI JGF JICPA JISC JLL J-REIT JSBC LEED MGBC MIPIM MLIT MSC NAFTA NAR NAREIT NCREIF NFA NGOs NIC NOI NTWG NUPP NZGBC OCHA OECD OIT ORIITO PCA PHILGBC PPPs PRI PSTF QOL REIT RESCUE RI RICS RIT ROA ROE

List of Abbreviations

Joint Commission International Japan GAP Foundation Japanese Institute of Certified Public Accountants Japan Industrial Standards Committee Jones Lang LaSalle Japan Real Estate Investment Trust Japan Sustainable Building Consortium Leadership in Energy and Environmental Design Malaysia Green Building Confederation Marché International des Professionnels d’Immobilier Ministry of Land, Infrastructure, Transport and Tourism Marine Stewardship Council North American Free Trade Agreement National Association of Realtors National Association of Real Estate Investment Trusts National Council of Real Estate Investment Fiduciaries no further action letter Non-Governmental Organizations National Investment Center for Seniors Housing and Care net operating income National Technical Working Groups National Urban Policy Program New Zealand Green Building Council United Nations Office for the Coordination of Humanitarian Affairs Organization for Economic Co-operation and Development Orchestrator-Intermediary-Target Orchestrator-Regulator-Intermediary-Intermediary-TargetOrganizer Property Council of Australia Philippines Green Building Council Public-Private Partnerships Principles for Responsible Investment Private Sector Taskforce of Regulated Professions and Industries Quality of Life Real Estate Investment Trust Regeneration of European Sites in Cities and Urban Environments Responsible Investment Royal Institution of Chartered Surveyors Regulator-Intermediary-Target return on assets return on equity

List of Abbreviations

RPPI RSPO SCSC SDGs SEC SGBC SIB SPV S-REIT SURF TAG TCFD TGBC TGBI TGNs TBT TMB TPR TPRER TREES ULI UN UNCTAD UNDRR UNECE UNEP FI UNFSS UNGC UNIDO UNSCC USAID USGBC USPAP VGBC VSSs WEF WGBC WHO WTO WUF

xvii

Residential Property Price index Roundtable on Sustainable Palm Oil APEC Sub-committee on Standards and Conformance Sustainable Development Goals Securities and Exchange Commission Singapore Green Building Council Social Impact Bond Special Purpose Vehicles Singaporean REIT Sustainable Remediation Forum Technical Advisory Groups Task Force on Climate-Related Financial Disclosures Taiwan Green Building Council Thai Green Building Institute Trans-Governmental Networks Technical Barriers to Trade Technical Management Board Transnational Private Regulation Transnational Private Regulatory Regime Thai’s Rating of Energy and Environmental Sustainability Urban Land Institute United Nations United Nations Conference on Trade and Development United Nations Office for Disaster Risk Reduction United Nations Economic Commission for Europe United Nations Environmental Program Finance Initiative United Nations Forum on Sustainability Standards United Nations Global Compact United Nations Industrial Development Organization United Nations Standards Coordinating Committee United States Agency for International Development The US Green Building Council Uniform Standards of Professional Appraisal Practice Vietnam Green Building Council Voluntary Sustainability Standards World Economic Forum World Green Building Council World Health Organization World Trade Organization World Urban Forum

List of Figures

Fig. 1.1 Fig. 1.2 Fig. 1.3 Fig. 1.4 Fig. 1.5 Fig. 1.6 Fig. 1.7 Fig. 1.8 Fig. 1.9 Fig. 1.10 Fig. 1.11 Fig. 1.12 Fig. 1.13 Fig. 1.14 Fig. 1.15 Fig. 1.16 Fig. 1.17 Fig. 2.1 Fig. 2.2 Fig. 2.3 Fig. 2.4 Fig. 2.5 Fig. 2.6 Fig. 2.7

Number of VSS and trend . . .. . . . .. . . . . .. . . . .. . . . . .. . . . . .. . . . .. . . . . .. . TPRs in trans-governmental networks (TGNs) of regulators . . .. . . Global property investment market size . . .. .. . .. .. . .. .. . .. .. . .. .. . .. Change in national market size (2018–2019) . . . . . . . . . . . . . . . . . . . . . . . Cross-border transaction ratio in Japanese real estate investment market . .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . Property investment amount in big cities (2015–2017: except for residential & lands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate investment total amount in Japan’s market . . . . . . . . . . . . Cross-border transaction amount in Japanese real estate investment market .. . .. . .. . .. . .. . . .. . .. . .. . .. . .. . .. . .. . .. . . .. . .. . .. . .. . Real estate investment total amount in the US market . . . . . . . . . . . . . Cross-border transaction amount in the US real estate investment market . .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . . . . . .. . . . . . . .. . . . . . . .. . . . . . .. . . Trend of real estate investment total amount in the Asia-Pacific . . . ESG investment in real assets market in the world (2014 and 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global governance in sustainable urban development . . . . . . . . . . . . . Global sustainable urban development cycle and regulatory landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TPRs ecosystem for sustainable urban development . . . . . . . . . . .. . . . TPRs study categories based on the concept of sustainable urban development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Typical regulatory framework: RT model . . . . . . . . . . . . . . . . . . . . . . . . . . Intermediaries in the regulatory framework: RIT model . . . . . . . . . . IGOs as agents and orchestrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Indirect governance through orchestration: OIT model . . . . . . . . . . . . Stakeholders in TPRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Typical private regulatory regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International regulatory regime by IGOs as orchestrators . . . . . . . . .

5 6 14 14 15 15 16 16 17 17 19 20 22 23 25 29 30 38 38 40 40 41 42 43 xix

xx

Fig. 2.8 Fig. 2.9 Fig. 2.10 Fig. 2.11 Fig. 2.12 Fig. 2.13 Fig. 2.14 Fig. 2.15 Fig. 2.16 Fig. 2.17 Fig. 2.18 Fig. 2.19 Fig. 2.20 Fig. 2.21 Fig. 2.22 Fig. 2.23 Fig. 2.24 Fig. 2.25 Fig. 3.1 Fig. 3.2 Fig. 3.3 Fig. 3.4 Fig. 3.5 Fig. 3.6 Fig. 3.7 Fig. 3.8 Fig. 4.1 Fig. 4.2 Fig. 4.3 Fig. 4.4 Fig. 4.5 Fig. 4.6 Fig. 4.7 Fig. 4.8 Fig. 4.9 Fig. 4.10

List of Figures

Transnational private regulatory regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research theory on TPR effectiveness: ORIITO model . . . . . . . . . . . Trend of MLIT annual budget for global urban development . . . . Change in urban administration of MLIT Kanto Regional Development Bureau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Governance structure for IFRS adoption . . . . . . . . . . . .. . . . . . . . . . . . . . . . IFRS standards and adoption jurisdictions by world regions . . . . . . Changes in IFRS adoption firms in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . Governance structure for GAP implementation . . . . . . . . . . . . . . . . . . . . Changes of GLOBALG.A.P. certificates in global market . . . . . . . . Changes of GLOBALG.A.P. certificates in Japan . . . . . . . . . . . . . . . . . Changes of JGAP & ASIAGAP certificates . . . . . . . . . . . . . . . . . . . . . . . . Governance structure for ISO implementation . . . . . . . . . . . . . . . . . . . . . Changes of ISO9001 & ISO14001 certificates in global market . . . Changes of ISO9001 certificates by region . . . . . . . . . . . . . . . . . . . . . . . . . Changes of ISO14001 certificates by region . .. . .. .. . .. . .. .. . .. .. . .. Study framework for analysis on the effectiveness of TPRs . . . . . . Measurement structure for the effectiveness of TPRs in the case study. Dependent variable for effectiveness of TPRs . . . . . . . . . . . . . . TPRs typology in global sustainable urban development . . . . . . . . . Global market transparency analysis factors in GRETI 2018 . . . . . TPR in property investment market transparency: Mechanism of GRETI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real estate investment and transparency trend in Asia-Pacific . . . . Japan’s transparency score Change (2004–2018) . . . . . . . . . . . . . . . . . . Japan’s transparency by topic area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Japan’s GRETI score in 2004 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . The US GRETI score in 2004 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . TPR in property valuation: Mechanism of IVS . . . . . . . . . . . . . . . . . . . . TPR in sustainable property investment: Mechanism of GRESB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GRESB participants trend (2010–2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Average GRESB scores of Asia-Pacific country’s participants . . . TPR in green building development & management: Mechanism of LEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Timeline of green building certification systems establishment . . . Comparative analysis on green building certification systems . . . . Change of LEED certificates in global market . . . . . . . . . . . . . . . . . . . . . Change of LEED certificates by 4 typologies . . . . . . . . . . . . . . . . . . . . . . Change of LEED certificates for building design and construction (BD+C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Change of LEED certificates for building operations and maintenance (O+M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43 45 50 51 56 58 58 60 61 61 61 63 64 64 65 68 71 76 82 85 95 95 96 97 97 102 116 124 125 128 130 130 131 134 143 148

List of Figures

Fig. 5.1 Fig. 5.2 Fig. 5.3 Fig. 5.4 Fig. 5.5 Fig. 5.6 Fig. 6.1 Fig. 6.2 Fig. 6.3 Fig. 6.4 Fig. A.1 Fig. A.2 Fig. A.3

TPR in Brownfield Redevelopment: Mechanism of SURF . . . . . . . Comparison of Brownfield Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Difference of Contaminated Site Policy and Regulation between US and Japan .. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . . . . . TPR in Continuing Care Retirement Communities (CCRC): Mechanism of JCI . .. .. . .. . .. .. . .. .. . .. . .. .. . .. .. . .. . .. .. . .. .. . .. . .. .. . Basic Data of First REIT and Parkway Life REIT (S-HC REITs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic State of J-HC REITs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Relevance of the ORIITO Model to Global Policy Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Analysis on Interconnection of Variables for the Effectiveness of TPRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pinwheel System for Global Sustainable Urban Development . . . . The Systems Approach for the Effectiveness of TPRs . . . . . . . . . . . . Number of countries in each transparency tier . . . . . . . . . . . . . . . . . . . . . Regional fixed effects . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . . .. . Period fixed effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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155 161 167 171 173 182 188 196 203 204 211 215 216

List of Tables

Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Table 2.9 Table 3.1 Table 3.2 Table 4.1 Table 4.2 Table 5.1 Table 5.2 Table 6.1 Table A.1 Table A.2 Table A.3

Relationship between IGOs, TGNs, and TPRs . . . . . . . . . . . . . . . . . . . . Global real estate transaction ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transnational property investment ratio history (2004–2019) . . . TPR stakeholders in global urban development . . . . . . . . . . . . . . . . . . . Comparative analysis on private regulatory governance framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Differences between RIT model and ORIITO model on TPRs . . Comparative analysis of TPRs regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TPR stakeholders comparative analysis . . . . . . . . . . . . . . . . . .. . . . . . . . . . Background of ORIITO model in global economy . . . . . . . . . . . . . . . TPRs legitimacy indicators .. . .. . .. . .. . .. .. . .. . .. . .. . .. .. . .. . .. . .. . .. Background of ORIITO model in global urban development . . . . Dependent and independent variables on TPRs effectiveness . . . Actors of ORIITO model in case study . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis on effectiveness of GRETI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis on effectiveness of IVS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis on effectiveness of GRESB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis on effectiveness of LEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis on Effectiveness of SURF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis on Effectiveness of JCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analysis on the Effectiveness of TPRs for Sustainable Urban Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Estimation results (estimates of η, αi, δt) . . . . . . . . . .. . . . . . . . . . . . .. . . . Estimation results (estimates of βt, γ t) .. . . . .. . . .. . . .. . . . .. . . .. . . . .. .

4 11 12 27 46 49 53 54 55 68 72 73 75 90 106 120 140 162 178 198 212 213 214

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Chapter 1

Introduction

1.1 1.1.1

Target of Research: TPRs Background: Emergence of TPRs

In the present economy, numerous goods and services transcend national boundaries, and regulatory tasks have become increasingly globalized. States have endeavored to manage global trade issues and governance of inter-state externalities. However, with control over national legislation alone, state policymakers have been challenged to regulate transnational investors, markets, and issues, including global warming, financial crises, food safety risks, deforestation, and cross-border business transactions. This trend is particularly seen in case such as deforestation, emission reduction, protection of biodiversity, food safety, financial stability, etc., wherein international regulatory cooperation is substantially needed to avoid “race to the bottom” between domestic regulations. Inter-governmental organizations (IGOs) (e.g., the World Trade Organization [WTO], the United Nations [UN], and the Organization for Economic Co-operation and Development [OECD]) have promoted the revision and enforcement of stipulations in the global economy that have historically been accepted. IGOs’ efforts to harmonize international economic regulations, institutions, and standards essential for facilitating communications and trade have historically contributed to a variety of fields, including telegraph and postal systems and intellectual property rights, through the formation of international treaties. The first category of international harmonization of economic regulations is (a) regulation aimed at liberalization and facilitation of transnational economic activities such as (1) telecommunication standards, (2) weights and measures, (3) postal systems, (4) standard certification systems for industrial and agricultural products, (5) rules of tariffs, (6) international commercial law, (7) professional qualifications, (8) international accounting standards, (9) international land valuation standards, etc. The second is © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 M. Kobayashi, Transnational Private Regulations for Sustainable Urban Development, New Frontiers in Regional Science: Asian Perspectives 69, https://doi.org/10.1007/978-981-99-1451-7_1

1

2

1 Introduction

(b) regulation to ensure fair competitive conditions in transnational economic activities, including (1) labor standards, (2) competition law and competition policy, (3) anti-dumping duty laws, (4) countervailing duty laws, (5) regulations relating foreign investment, (6) rules against bribery of foreign public officials, etc. For example, international harmonization of labor standards, largely centered on the International Labor Organization (ILO), has progressed since the post-World War I era. The third group is (c) the field of regulation that requires international harmonization to ensure regulatory effectiveness or prevent regulatory competition such as (1) financial regulation, (2) intellectual property rights law, (3) regulations to avoid transnational money laundering, (4) regulation of electronic commerce, (5) international tax law, etc. These examples of international harmonization of economic regulation can vary on normative or institutional levels, and it is difficult to clearly classify these regulatory categories. Since the end of the nineteenth century, while international regulations have been formulated for private law disciplines, international harmonization of regulations— related to commercial transactions, such as private and maritime law, and the sale of goods—has been implemented. General Postal Union (GPU) was established in 1874 (it was renamed as UPU in 1878); International Sanitary Council was established in 1838 in Constantinople, 1840 in Tangier, and 1881 in Alexandria; and International Commission on Agriculture (ICA) was established in 1891. These international co-governance systems were founded by competing powers on the bases of international postal policies, international river management administrations, international sanitary policies, and international agricultural administrations to deal with complex international relations after colonization by great powers competitions. These legislative systems have been expanded beyond traditional regulatory fields, in pursuit of international harmonization of economic regulations that promote liberalization of transnational economic activities to ensure fair competitive conditions. Over the past two decades, the world economy has rapidly integrated and experienced novel interconnectedness, due to globalization and technological advances. Consequently, responses to climate change, financial market stability, food safety, and societal sustainability have become increasingly complicated; however, IGOs’ ability to manage global challenges through international regulatory systems has been limited. Therefore, transgovernmental networks (TGNs) have assembled representatives and technical experts from national regulatory agencies, non-governmental organizations (NGOs), private firms, and business organizations. TGNs accomplish this by involving IGOs, supra-national entities (e.g., the European Commission [EC]), individual states, and networks, such as the UN Global Compact (UNGC), to facilitate multilateral cooperation through frequent interactions, rather than formal negotiations. As foreign direct investment (FDI) expands globally, private firms rely on crossborder transactions and the free flow of international capital, while global institutional investors seek worldwide diversification and investment opportunities. Although FDI gradually decreased, following the global financial crisis (GFC), many developed countries, such as Japan, have continued employing it, which has

1.1

Target of Research: TPRs

3

promoted cross-border activities. Since these global business cross-border transactions are expected to grow, regulatory differences have been anticipated to become more complicated than before and some countries have maintained their own sets of national standards. Differences of regulations or systems often added cost for private firms leading to increased complexity and risk for both public sector and private entities, including business associations. The state-centered Westphalian international order cannot cope with these transnational threats, so the introduction and promotion of multilateral collaboration involving international actors (such as NGOs) and private sector actors (such as professional experts and multinational companies) with states and IGOs are required. With the expansion of economic globalization in the fields of finance, food safety, and management systems, governments have been challenged to effectively establish adequate standards, due to the lack of technical expertise and financial resources necessary to manage complex and demanding global policy issues, which has reinforced the rapid privatization of global standard-setting in the world economy. There is a global consensus on the need for transnational governance that can address and regulate the discrepancies regarding global issues and systemic risks, such as climate change, financial crises, global health, and terrorism. Increases in global trade and technological innovations, combined with the growing concern for climate change and the environment, have led to appeals for new forms of cross-boundary regulations. International policy issues have made it difficult for states and policymakers to regulate both markets and investors through national legislation at the transnational level. Simultaneously, the growing need for expertise and the limitation of states and IGOs to secure budgets and personnel have exposed weaknesses in conventional public international law-making, and institutions. Moreover, inconsistencies exist between the stages of standard-setting and enforcement, and between administrative and judicial enforcement. As private corporations have become increasingly globalized for legislation, standard-setting, monitoring of compliance, and implementation of transnational rules since the 1990s, many forms of transnational private regulations (TPRs) have emerged, to respond to challenges posed by the transformation of domestic and international regulatory environments. In general, TPRs are believed to complement the states’ existing public regulations and enable private firms to tackle transnational issues across the globalized supply chain. TPRs are fundamentally self-regulated, non-state, and market-driven regulations, defined as voluntary standards to be applied by regulated entities at the transnational level—individually or collectively—to target beneficiaries, including consumers, food producers, financial companies, investors, environmental groups, and civil society organizations (CSOs). Thus, TPRs are entirely private, but their monitoring and implementation have been ensured by hybrid regulatory forms. Presently, the emergence of transnational private regulatory regimes (TPRERs) is observable in various areas of political economics. The emergence of TPRERs, which were initially developed as sector-specific regulations, has been driven by globalization, rapid growth of cross-border and international trade, and the complications of global value chains (GVCs [Table 1.1]). Technical standards, financial

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1 Introduction

Table 1.1 Relationship between IGOs, TGNs, and TPRs IGOs

TGNs

TPRs

Definition

IGOs rules are generally accepted between nations or by their membership. Rule-based and public international hard-law regimes are considered the minimum mandatory standards.

TGNs are informal and multilateral forums that facilitate multilateral cooperation on issues of mutual interest for the participants through frequent interaction rather than formal negotiation.

Organizational models

– IGOs (e.g., WTO, UN, OECD) – Supra-national entities (e.g., the European Commission)

Emergence background & characteristics

– Since the end of the nineteenth century, international rules have formed. Regarding private law disciplines, decentralization of IGOs and the international harmonization of regulations have been conducted relating to international commercial transactions, such as private international law, maritime law, and the international sale of goods. – International rulemaking under the centralized system has expanded beyond traditional regulatory fields to manage the post-world war II economic expansion, including the growing international trade in manufactured goods, post-war oil shock, and the event of the 1970s’ recession of the Western world.

– International forum and networks (e.g., WUF, UN/global compact) with supra-national entities (e.g., the European Commission), IGOs, national regulatory agencies, single states, NGOs, etc. – Over the past two decades, the world economy has integrated rapidly, and we have experienced a new interconnectedness due to globalization and technical advances. – TGNs bring together representatives from national regulatory agencies, NGOs, private firms, business organizations, or technical experts. – TGNs do this by involving IGOs, supranational entities, single states, and networks to facilitate multilateral cooperation through frequent interaction rather than formal negotiation, on issues of mutual interest within the authority of the participants.

TPRs are self-regulated and voluntary standards to be applied individually or collectively by regulated entities for the benefit of third parties that regulate the conduct of private actors across jurisdictional boundaries. This is achieved primarily through standards, codes, benchmarks, guidelines, etc. – A multi-stakeholder structure within the industry (e.g., RICS, BOMA, INREV, ANREV, ULI) – Business groups (e.g., NAREIT, NAR, EPRA, PCA) – Global standard setters (e.g., IVSC, GRESB, USGBC, SURF, JCI), private firms (e.g., JLL), technical experts, etc. – TPRs has emerged and have been driven by globalization, the rapid growth of cross-border business and international trade, and the complication of GVCs. – TPRs are driven by multiple actors, including private firms, NGOs, and independent experts. They have shifted from being rule-takers and the final beneficiaries of regulatory processes to being rule-makers.—as property investment market grows globally, rule-making has become dynamic through global stakeholders and TPR regulators. – Target properties continue to exist in the local market in each country. – Relatively strong involvement and coordination between states and domestic intermediaries of each country are required in the process of setting, monitoring, and implementing TPRs.

Source: A comparative analysis of transnational private regulation: legitimacy, quality, effectiveness and enforcement, Fabrizio Cafaggi 2014

1.1

Target of Research: TPRs

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markets, food safety, environmental concerns, private security services, e-commerce, data protection, and green buildings are some examples wherein TPRs are active. Such private regulations are also known as civil regulations, private authority, private standards, and soft laws. Voluntary Sustainability Standards (VSSs) are among the most effective TPRs for addressing transnational systemic risks, such as global food safety management and global deforestation. VSSs are “standards specifying requirements that producers, traders, manufacturers, retailers, or service providers may be asked to achieve, relating to a wide range of sustainability metrics, including respect for basic human rights, worker health and safety, the environmental impacts of production, community relations, land use planning, and others”. VSSs can be classified as one type of TPR, focusing mainly on voluntary private standards that are developed by commercial and non-commercial private bodies typically covering health, safety, environmental issues, economic issues, social concerns, animal welfare, and other global issues. Over the last two decades, the number of VSSs has increased, and the ratio of VSSs developed by non-OECD states has been increasing since the 1990s and has affected global governance. In general, VSSs have been developed by individual businesses, business associations, environmental or social NGOs, or through multi-stakeholder initiatives that manage the interests of several stakeholders. Some address global systemic risk, the advancement of global public goods, and important strategic policy issues such as the international promotion of sustainable production and consumption methods, energy or resource efficiency for cost savings, and sustainable competitiveness in global markets. The number of VSSs has increased significantly since the mid-1990s, due to various international issues in the spheres of political economics (e.g., food safety, protection of biodiversity and forestry) (Fig. 1.1). The Forest Stewardship Council 200 180 160

Total

non-OECD

140 120 100 80 60 40 20 0