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Deconstructing Due Diligence: The Contested Politics of Corporate Sustainability in the EU

Political Economy
Agenda-Setting
Power
Policy-Making
Maria-Therese Gustafsson
Stockholm University
Maria-Therese Gustafsson
Stockholm University
Tim Bartley
Georgetown University

Abstract

In recent years, the EU has taken a pioneering role in adopting binding rules building on a Human Rights and Environmental Due Diligence (HREDD) approach. These policies have evoked varying reactions in the business community where some view them as unnecessary burdens, while others see them as opportunities to levelling the playing field and hold laggard competitors up to higher standards. This paper asks how businesses have shaped the development of one major HREDD policy–the EU’s Corporate Sustainability Due Diligence Directive (CSDDD)–and under what conditions they have supported or opposed it. Through a systematic analysis of written policy documents and qualitative interviews, our analysis yields three key findings. First, while many business actors accepted a partial hardening of voluntary standards, they also sought to weaken elements that they perceived as overly burdensome. Second, strong policy support emerged among companies that had prior experience with voluntary HREDD standards and/or faced the threat of more ambitious national HREDD legislation. Third, we found that businesses in countries with existing HREDD regulations used the CSDDD policymaking process as an opportunity to renegotiate and weaken their domestic laws, rather than advocating for the levelling up of these policies to the EU level. Amid a shifting political landscape, where global value chain regulations are increasingly framed as incompatible with economic competitiveness, business actors seeking to delay or dismantle the CSDDD have gained influence. It now appears that they will succeed in removing core components of the policy that many had hoped could contribute to transform the highly unequal structures of global trade.