Smart mix or stupid assurances? Private standards in new supply chain regulations

How do companies position private standards in the face of looming government regulation? What types of companies are more likely to employ voluntary standards to resist or advocate for regulations? Transnational corporations often control or are embedded in complex global supply chains. Until recently, there had been few avenues to hold them accountable for human rights and environmental impacts that occur in the course of production. Since the 1990s, private standards have proliferated in an effort to address severe human rights and environmental problems. These voluntary measures have, however, often proven insufficient for preventing adverse impacts. As a response, in recent years, governments in the Global North have begun to adopt regulations that require companies to exercise human rights and environmental due diligence (HREDD). The shift from voluntary measures to binding rules is often described as a groundbreaking turn. Yet, these regulations often endorse a smart-mix of voluntary and mandatory measures and may depend on private assurances for enforcement. An extensive literature has analyzed the complex interactions between private and public regulations. However, we still know little about the extent to which this new wave of HRDD regulation will rely on, complement, supplant or institutionalize private regulatory instruments. To bridge this gap, we examine how companies position in the face of the European Union’s (EU) upcoming Corporate Sustainability Due Diligence Directive (CSDD). Based on a systematic coding of position papers submitted by companies and business associations to the EU and around 20 semi-structured interviews, we examine how companies frame voluntary norms and private regulatory instruments (e.g., certification and auditing) in this new regulatory order. Our preliminary analysis highlights four key framings: (1) voluntary standards as delegitimizing mandatory regulation; (2) institutionalizing voluntary standards in the leveling of the playing field processes; (3) private instruments as an infrastructure for demonstrating compliance; and (4) private standards as solidifying a pro-regulatory segment of the business community. We show that business actors vary considerably in their framing of voluntary instruments. Policy framings are linked to businesses’ position-takings vis-à-vis HREDD regulations – from rejection to support for a watered-down HREDD regime heavily relying on private regulatory instruments, to full support for a stringent HREDD regime. We show that company type (e.g. country of origin, size, sector, and whether the company position itself as a frontrunner in sustainability issues) plays a crucial role in explaining companies’ position-taking. Overall, our analysis contributes to advancing our understanding of how the new wave of HREDD regulations is likely to surpass or institutionalize private governance and ultimately enhance or weaken corporate accountability in global supply chains.