Corporate accountability in global supply chains

The purpose of the project, which is lead by Maria-Therese Gustafsson, is to examine the extent to which and under what conditions laws on human rights and environmental due diligence help to hold companies accountable for adverse impacts on human rights and the environment.

The European Union is the largest trading bloc in the world, and large quantities of products are imported from developing countries each year. It is not uncommon for products entering the European market to have been made in a way involving serious violations of human rights and environmental degradation, i.e. child labor, destruction of rain forest and environmental pollution. The risk is particularly great when companies operate in countries with poor governance and repression of advocacy groups. 

Since the 1990s well-known companies have developed various voluntary sustainability standards. Nowadays there is a general consensus, particularly in civil society and politics, but also in the corporate sector, that voluntary corporate initiatives do not suffice to create more sustainable global trade. In recent years European states have therefore enacted laws prohibiting the importation of products having serious adverse impacts on human rights and the environment. These regulations also enable states to hold corporations accountable for serious problems arising in the production process. 

Human rights and environmental due diligence laws have been highlighted as a potentially effective tool for states to regulate global trade. Due diligence is based on the UN guiding principles on business and human rights and the OECD guidelines for multinational enterprises. These laws require companies to have a due diligence process in place to identify and manage their risks and negative impacts on human rights and the environment.

Countries like France, Norway and Germany have already enacted laws, and the EU has passed one law and another is in the final phase of negotiations. Soon, therefore, all enterprises operating in EU markets will have to adapt to these requirements. Due diligence laws have been hailed as a milestone in promoting more sustainable global trade. Yet there is little research into the practical consequences of these law in terms of enhancing corporate accountability across borders.

The project is organized in three sub-projects. The first involves examining how 150 businesses in France, Norway and Germany in three high-risk sectors – clothing, food and energy – and also companies engaged in oil, gas, mineral exploration and ore mining (“extractive industries”) abide by the due diligence requirements. 

In the second sub-project the team will be analyzing how government agencies and  civil society actors monitor and seek to hold businesses accountable in the three countries. Lastly, the team will be carrying out a number of field studies focusing on how corporate due diligence processes in specific supply chains and producing countries. Taken together, the project will advance our knowledge about the opportunities and limitations of due diligence to foster more sustainable and socially just global trade.