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The political economy of expectations in the context of due diligence legislation

Political Economy
Trade
Power
Sophia Carodenuto
University of Victoria
Janina Grabs
University of Basel

Abstract

The production of agricultural commodities such as coffee, cocoa, or palm oil is associated with persistent environmental and social problems, including deforestation, forced and child labor, and smallholder poverty. After decades of voluntary corporate sustainability efforts, mandatory human rights and environmental due diligence legislation has been introduced in a number of countries with the goal of initiating deep-reaching transformations toward supply chain sustainability. This conceptual paper argues that the likely success of such efforts relies crucially on how well supply chain actors coordinate in building more transparent and responsible value chains, which in turn is predicated upon their collective expectations about future regulatory enforcement and its consequences. It introduces the political economy of expectations - i.e., the strategic interactions between regulators and the regulated in managing each others' expectations about possible and likely futures - as a crucial and underexplored predictor of the success of transformative legislation. It uses a case study of EU Deforestation Regulation and its delayed enforcement to illustrate the argument, and sketches out a research agenda to empirically assess the applicability of the theoretical model. (This paper will be presented by Janina Grabs, who is sole author)