Catching up, pushing back: The politics of due diligence in global value chain regulation.

 

Over the past fifteen years, governments have begun to rein in the global economy in a way that once seemed unlikely: by introducing binding obligations forcompanies to respect human rights and the environment across their global supply chains. France, Germany, and eventually the European Union (EU) took the lead, replacing voluntary guidelines with enforceable rules that reach far beyond national borders. The 2024 EU Corporate Sustainability Due Diligence Directive(CSDDD) marked a milestone in this shift. Yet, just as this trend gained momentum, it is now facing a countermovement. Political backlash and calls for deregulation raise the question of whether the era of “catching up” through supply chain legislation is already giving way to a new phase of pushback

This pushback would mark a shift in the longer trend from soft law, such as non-binding guidelines or voluntary standards, to hard law – legally binding rules that companies must follow across borders. The trend towards hard law is remarkable for two reasons. Firstly, state regulation is largely entering uncharted transnational territory. Secondly, it appears to contradict broader developments in global politics, where powerful governments and economic actors have increasingly challenged and limited multilateral, rule-based trade policy. These developments have accordingly triggered strong political controversy and recent pushbacks. In Germany, implementation of the national due diligence law, in force since 2023, faces increasing opposition within the government and in the parliament. The EU’s move towards a harmonized CSDDD, after lengthy negotiations, could be significantly weakened compared to its initial ambition. In the U.S., a broader political backlash against sustainability regulation has gained momentum. While criticism of supply chain legislation in the EU primarily draws on arguments of competitiveness, the need to reduce bureaucracy and to ease the burden on small and medium-sized enterprises, there is also scepticism from other sides: Criticism has also been voiced in academic circles and by human rights and environmental organizations. While they usually see these laws as important steps towards better human rights and environmental protection, they have criticized them as insufficient and too corporate-oriented, reproducing power imbalances rather than strengthening rights holders. The options for rights holders to lodge complaints and take legal action are often limited. Some also argue that supply chain governance needs to be “decolonized” – meaning it should better reflect the perspectives and interests of countries and communities that are often shaped by histories of colonial domination and economic dependency . The long-term trend of catching up with a globalized economy through supply chain legislation and the recent tendency to push it back raises the question of how we can interpret these developments. Where are we heading in terms of the regulation of global production? Drawing on political and legal developments of recent decades, the chapter identifies key trends and conflict lines and provides general policy recommendations. 

The key point we emphasize is that the current policy of due diligence regulation does not mark the end of a debate or a mere technocratic adjustment but rather reflects a much broader social struggle over corporate responsibility, public authority and the regulation of the global economy. After a long evolution towards stronger legal regulation of global production, the new laws represent a long-fought compromise: while they introduce binding law on the regulation of human rights and the environment, their form is based on corporate supply chain management practices, i.e. risk-based, context-dependent duty of care rather than transnationally enforceable obligations to achieve specific results. The current counter-movement against these laws is a new trend. It remains to be seen whether this is just a short phase or the beginning of a more fundamental reversal of an increasingly rights- and rule-based global production [see Figure 1]. In short: supply chain regulation remains a fundamentally contested field of the global political economy.