Transnational sustainability laws and the regulation of global value chains: comparison and a framework for analysis
| Published date | 01 October 2019 |
| DOI | 10.1177/1023263X19871025 |
| Date | 01 October 2019 |
| Author | Mikko Rajavuori,Jaakko Salminen |
| Subject Matter | Articles |
Article
Transnational sustainability
laws and the regulation
of global value chains:
comparison and a framework
for analysis
Jaakko Salminen* and Mikko Rajavuori**
Abstract
Severalcorporate disclosure and due diligencelaws related to the social andenvironmental impacts of
globalized production have been enacted across the world over the last decade. While the emer-
gence, operation and impactof such ‘transnational sustainability laws’ have alreadybeen extensively
analysed, their legal operability remains poorly understood. This a significant omission because
transnationalsustainability laws form a novel and increasingly importantattempt to conceptualize and
govern the new logic of global production networks—global value chains—and their regulatory
infrastructure.Against this backdrop, this article deploysa comparison of eleven recent transnational
sustainabilitylaws and develops an analytical frameworkto probe legally-operativeconceptualizations
of global value chains. By analysing how transnational sustainability laws conceptualize the value
chain, the lead firm and adequate value chain governance, we argue, these instruments emerge as
proxies for a legally-operative framework that better delineates the emerging law of global value
chains. Thus,our analysis contributes to growingliterature on the potential and limitsof transnational
sustainability laws as well as to the development of nascent ‘global value chain law’.
Keywords
Transnational sustainability laws, global value chains, lead firms, value chain governance,
contractual organization, supply chain liability, corporate social responsibility, sustainability
regulation, comparative law, private law
* Faculty of Law, University of Turku, Turku, Finland
** Law School, University of Eastern Finland, Joensuu, Finland
Corresponding authors:
Jaakko Salminen, Faculty of Law, University of Turku.
E-mail: jaakko.salminen@utu.fi
Mikko Rajavuori, Law School, University of Eastern Finland.
E-mail: mikko.rajavuori@uef.fi
Maastricht Journal of European and
Comparative Law
2019, Vol. 26(5) 602–627
ªThe Author(s) 2019
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sagepub.com/journals-permissions
DOI: 10.1177/1023263X19871025
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1. Introduction
Several states have enacted laws pertaining to the social and environmental impacts of globalized
production over the last decade. A range of recent statutes in the European Union, the United States
and Australia, for example, require companies to report on the nature and scope of their operations,
their global supply chains and the impacts they have on issues such as transnational corruption,
trade in conflict minerals and human rights or sustainability more generally. These hard ‘transna-
tional sustainability laws’ have generated active academic and policy discussion in recent years,
but their legal operability remains poorly understood.
1
Which companies and sectors are covered,
and why? What kind of legal registers are used in regulation: accounting, corporate law, contract
law, criminal law or something else? What is the content of obligations? To what extent do the
obligations set out in the statutes extend to multiple tiers of subsidiar ies and suppliers? This
omission of a fine-grained legal conceptualization is understandable because we are dealing with
a new form of geographically and organizationally fragmented production—global value chains.
2
Even though global value chains have been at the centre of immense scholarly attention in
recent years, law has yet to conceptualize them in a meaningful way.
3
While there is momentum
towards developing a ‘law of global value chains’ that spans public international law, private
governance, soft law and court-led doctrinal developments of private law,
4
the contribution of
transnational sustainability laws is extremely significant because they provide authoritative exam-
ples of how national legislators are vying to conceptualize global value chains through local hard
laws. As such, a more nuanced view on the legal definitions and mechanisms that sustainability
laws utilize can directly help in developing the state-of-the-art of how global value chains can be
legally conceptualized. In view of this, we submit that a more comprehensive understanding of
transnational sustainability laws’ legal opera bility is needed for analysing their effectiveness,
potential improvements and significance for regulation of global value chain capitali sm more
generally.
1. We use the term ‘transnational sustainability law’ deliberately as a descriptive short-hand that covers various types of
instruments aimed at directly regulating the governance of social and environmental sustainability in transnational
production networks, i.e. global value chains. We acknowledge that other terms are also used in this context, but in our
view ‘transnational sustainability law’ better catches the current plurality of the examined national instruments, their
geographical reach and their likely future trajectory. We also acknowledge that ‘transnational sustainability law’ has
already been used to refer to transnational private ordering in relation to sustainability regulation. However, we posit that
private ordering, soft law, and the recent rise of hard transnational sustainability laws are all part of an intertwined
development related to the regulation of transnational production and thus all merit reference as transnational sus-
tainability laws. This approach is discussed in more detail in Section 2.
2. Concepts such as ‘value chain’, ‘supply chain’ and ‘commodity chain’ can all be used to describe the fragmentation of
production. While they may be used interchangeably, they stem from different research traditions and thus entail also
differences in approach and nuance. We use the term ‘value chain’ due to its conceptual openness and the descriptive
potential of the analytical governance typology of the so-called Global Value Chain theory. For a genealogy, see J. Bair,
‘Global Commodity Chains: Genealogy and Review’, in J. Bair (ed.), Frontiers of Commodity Chain Research (Stanford
University Press, 2009), p. 1–34. For a broad overview, see G. Gereffi, ‘Global Value Chains in a Post-Washington
Consensus World’, 21 Review of International Political Economy (2014), p. 9–37.
3. IGLP Law and Global Production Working Group, ‘The Role of Law in Global Value Chains: A Research Manifesto’, 4
London Review of International Law (2016), p. 57–79.
4. E.g. G. Holly, L. Smit and R. McCorquodale, ‘Making Sense of Managing Human Rights Issues in Supply Chains’,
British Institute of International and Comparative Law (2018), https://www.biicl.org/documents/1939_making_sense_
of_managing_human_rights_issues_in_supply_chains_-_2018_report_and_analysis_-_full_text.pdf?.
Salminen and Rajavuori 603
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