Mandatory due diligence legislation: a paradigm shift for the governance of sustainability in global value chains?

Abstract

Global value chains (GVCs) connect consumers in the Global North with producers in the Global South. Many of these value chains are coordinated by multinational enterprises (MNEs), which act as lead firms. Weak regulations in sourcing countries and suppliers’ negligence of human rights and environmental standards have led MNEs to increasingly govern the sustainability performance of their suppliers. This has largely occurred through the codification of social standards, which have been formulated by global brands or multiple stakeholders and imposed on suppliers, and their compliance has been monitored through regular factory audits. Several scholars have concluded, however, that this governance model, based on the ‘cascading’ of compliance requirements (Van Assche & Narula, 2023 ), has largely failed, as it mainly shifted responsibilities to emerging-market suppliers without fundamentally helping them to develop their capabilities (e.g., Amengual & Kuruvilla, 2020 ; LeBaron, 2021 ).

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