Supply Chain Responsibility of Multinational Enterprises: The Case for a Hybrid Regulatory Approach
The global supply chains of multinational enterprises have, in recent years, come into the negative spotlight due to cases of corporate irresponsibility at supplier factories. There is much talk of a so-called ‘regulatory gap’ of supply chains. Reports about gross human rights violations at the bottom of global supply chains have raised questions about the dominant private governance approach of multinational enterprises towards their supply chain responsibility.
Companies have been much criticised for working conditions within their supply chains. The so-called home states of multinational enterprises have recently sought to fill this regulatory gap through legislation. To date, these legislative approaches are predominately focussed on nonfinancial information disclosure duties such as the transparency in supply chains clause in the UK Modern Slavery Act 2015 or the national implementations of the EU’s so-called ‘CSR directive’. However, although these laws are a first step towards legally regulating CSR, they are facing strong criticisms for being too soft and calls for more stringent regulation are particularly made by representatives of NGOs. In this context, the French devoir de vigilance law of 2017 which imposes a human rights due diligence duty on companies is often mentioned as an example.
This paper will critically review recent legislative approaches towards supply chain responsibility by the home states of multinational enterprises. It will argue that due to the regulatory complexity of global supply chains neither private governance nor public legislation by home states of multinational enterprises alone will lead to greater corporate responsibility. Rather, it is time for a hybrid regulatory approach. Hybrid regulation means the confluence of different forms of regulation: public and private, soft and hard, national and international.
The paper will outline how law can play a part in such a regulatory mix. In doing so, it will discuss the contribution of different areas of law such as company law and consumer law. It will also discuss how, in this hybrid approach, different stakeholders such as consumers and the suppliers’ employees can contribute towards greater responsibility in global supply chains.