Towards Mandatory Human Rights Due Diligence: Assessing its Impact on Fundamental Labour Standards in Global Value Chains
23 Pages Posted: 19 Jul 2022
Date Written: July 7, 2022
Human Rights Due Diligence (HRDD, or nowadays CSDD) is the main process through which companies can assess and address negative human rights impacts. It originated in the context of the voluntary UN and OECD instruments. In recent years, however, mandatory HRDD requirements are increasingly seen as a more effective way to persuade more companies to better address human rights risks in their global value chains (GVCs). This study investigates whether such mandatory legislative initiatives - like for instance the proposed Corporate Sustainability Due Diligence Directive (CSDDD) - can positively impact workers’ rights in GVCs as an essential part of those human rights that should be addressed in HRDD. The study provides an in-depth analysis of the legal framework of workers’ rights in GVCs. Afterwards, it uses the French Vigilance law as a case study to empirically investigate the effects of a mandatory HRDD duty for companies using a simple difference-in-differences analysis with data from the Refinitiv database from 2014-2020. The study shows that there are indications that the French Vigilance law positively impacts corporate human rights conduct. This finding particularly holds for the practices of companies that can be considered ‘laggards’, which can imply that legislators need to step up the mandatory requirements to further improve responsible corporate conduct.
Keywords: corporate sustainability, Corporate Sustainability Due Diligence, HRDD, worker rights, global value chains (GVCs)
JEL Classification: K22, K31, K38
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