Advancing sustainability through supply chain legislation? A policy trilemma

Abstract

The European Union and governments of various economies in the world are currently developing supply chain legislation for businesses, aiming to protect the environment and human rights in supply chains. These laws regulate firms active on home markets in these countries, but in terms of environmental and human rights risks also apply to global supply chains. Legislative initiatives assume that firms have the ability to influence many suppliers and their conditions of production abroad. Illustrated by the urgent case of garment production exported to Europe, we conclude that current import–export relations could limit the scope and impact of such supply chain legislation. If patterns as visible in the garment sector hold more broadly, policymakers that are ambitious about the impact of supply chain legislation on environment and human rights face a policy trilemma: they must sacrifice one out of three current design features of such legislation: designing legislation unilaterally for their home markets, letting regulation apply to supply chains across the world, or giving firms the ability to freely choose their suppliers. We discuss the different combinations of design options that could advance sustainability in supply chains.