Mandatory human rights and environmental due diligence (HREDD) policies seem to represent a pathbreaking shift from voluntary measures to binding rules for global supply chains. Yet these policies endorse a “smart-mix” of voluntary and mandatory measures, and risk over-reliance on questionable private-sector assurances. In this paper, we ask how businesses framed these private/voluntary efforts in the face of looming regulation, focusing on the EU's new Corporate Sustainability Due Diligence Directive (CSDDD). Through a systematic coding of policy positions, we find businesses (1) using voluntary initiatives to delegitimize mandatory measures, (2) seeking to institutionalize voluntary norms, (3) pushing for private assurances to signify legal compliance, or (4) endorsing mandatory measures to protect the competitive advantage of sustainability leaders. While frames (1) and (4) shaped the debate, we argue that frames (2) and (3) are more fully reflected in the final text of the Directive. We explore both theoretical and practical implications.
Policy implications
- Recognize varied business views: While some businesses argued that voluntary initiatives made mandatory regulation unnecessary, others took different approaches. Public support from sustainability frontrunners, who were experienced in applying standards voluntarily, was critical for legitimating the CSDDD. In ongoing efforts to renegotiate, transpose, or enforce the Directive, some pro-regulatory segments of the business community might be allies with policymakers and advocacy organizations seeking to ensure effective controls and respect for human rights and the environment in global value chains.
- Establish clear criteria for assessing private assurances: The CSDDD carves out significant space for private initiatives (including contractual codes, risk assessments, and industry and multi-stakeholder initiatives) to be used for a variety of purposes. It is important that the European Commission and national supervisory authorities develop stringent criteria on what sort of codes of conducts, contractual clauses, verification services, and AI tool companies are allowed to use.
- Enhance national supervisory capacities: National supervisory authorities need to be equipped with sufficient resources and expertise to be able to distinguish between genuine compliance efforts and tick-box approaches.
- Beware of companies seeking to outsource obligations: Proposals for “safe harbor” provisions, which would have allowed companies to fulfill obligations solely through participation in recognized voluntary schemes, were supported by only a limited segment of the business community and were not ultimately successful. Yet the significant space that the CSDDD grants to private, voluntary initiatives carries risks that companies will seek to effectively outsource their legal obligations rather than building supply chain due diligence into their operational routines and corporate cultures.
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