Sustainable international value chains: The EU’s new due diligence approach as part of a policy mix

Summary:

A new family of regulatory approaches affecting international value chains has been initiated recently, mainly by developed countries, the Due Diligence Laws (DDLs). These new approaches are an addition to already existing (and partially) older trade measures that have already been adapted in the past to better incorporate sustainability goals. However, adding the DDLs on top of already existing other measures begs the question how all these measures fit together, how they interact and which areas would benefit from (improved) coordination.

In contrast to the already existing private and voluntary sustainability standards and the corresponding certification schemes (VSS), all of these new rules are legally binding and are using enforcement tools. However, the detailed elements of these DDLs can vary widely in terms of  objectives, products and enforcement measures. Improved coordination could help avoid contradictory requirements and ineffectiveness, thereby reducing compliance costs for both directly obligated companies and the authorities entrusted with monitoring and sanctioning.

At the same time, synergies for more indirectly affected actors along the value chains are important to minimise the burden, especially for small actors. Specifically in agriculture, very small actors can exist in developing countries and can bear the risk of not being able to meet the requirements – which is exacerbated as the number of different requirements increases.

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