Towards Mandatory Human Rights Due Diligence: Assessing Its Impact on Fundamental Labour Standards in Global Value Chains

Abstract

AbstractHuman rights due diligence (HRDD) is the main (voluntary) process through which companies can assess and address negative human rights impacts. In recent years, however, mandatory HRDD requirements are increasingly seen as a more effective way to persuade more companies to better address human rights risks in their global value chains (GVCs). This study investigates whether such mandatory legislative initiatives can positively impact workers’ rights in GVCs as an essential part of those human rights that should be addressed in HRDD. The study provides an in-depth analysis of the legal framework of workers’ rights in GVCs. It then uses the French vigilance law as a case study to empirically investigate the effects of a mandatory HRDD duty for companies using a simple difference-in-differences analysis with data from the Refinitiv database from 2014 to 2020. The study shows that there are indications that the French vigilance law positively impacts corporate human rights conduct. This finding particularly holds for the practices of companies that can be considered “laggards”, which can imply that legislators need to increase the mandatory requirements to further improve responsible corporate conduct.