Sustainable Trade, Investment and Finance
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Sustainable Trade, Investment and Finance

Toward Responsible and Coherent Regulatory Frameworks

Edited by Clair Gammage and Tonia Novitz

Sustainable development remains a high priority in international politics, as governments seek new methods of managing the consumption of resources while maintaining national economic growth. This timely book explores how the contours and facets of sustainability shape international laws and regulations that govern trade, investment and finance.'
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Chapter 5: Sustainable global supply chains: from transparency to due diligence

Kasey McCall-Smith and Andreas Rühmkorf

Abstract

In recent years, global supply chains have repeatedly been in the spotlight for gross violations of human rights at supplier factories. Those factories are often located in developing world countries with weak laws and/or weak law enforcement mechanisms. Due to public pressure and on reputational grounds, transnational corporations have, for some decades now, addressed those issues through voluntarily adopted private governance corporate social responsibility (CSR) initiatives. However, reports about gross human rights violations are recurrent. Therefore, discussions at both international and national level are now increasingly focusing on the topic of supply chain due diligence as a way to better promote responsible behaviour. Following international soft law approaches to addressing CSR in global supply chains, there are now different legislative approaches towards regulating supply chain due diligence in the home states of transnational corporations. This trend is partly due to the United Nations Guiding Principles on Businesses and Human Rights. These pieces of legislation have varying levels of stringency and varying effects on corporate behaviour. They range from transparency legislation such as the UK Modern Slavery Act 2015, the Sarbanes-Oxley Act on conflict minerals in the US and the EU Directive on non-financial information disclosure to the UK Bribery Act 2010. This chapter combines public international law perspectives on human rights due diligence in global supply chains with domestic private law and domestic corporate criminal law perspectives. The chapter interrogates the meaning and scope of the concept of due diligence in global supply chains. It then assesses due diligence from a public international law perspective, before critically engaging with how it has been implemented in domestic legislation. The chapter considers the effects of the UK Modern Slavery Act, the US conflict mineral legislation and the UK Bribery Act, comparing how companies address due diligence in the context of different forms of home state legislation. Policy suggestions are made for the way forward for regulation of human rights due diligence in global supply chains.

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