Wednesday, July 01, 2020

Standardization Through Law; Internationalization and Capacity Building of Standards; and Targeted Implementation--the Foundations of the Legalization of Mandatory Human Rights Due Diligence From a European Perspective: A Discursive Analysis of Phil Hogan's 19 May 2020 Keynote Address to the OECD Global Forum on Responsible Business Conduct

Ludwig Passini - A church interior with women at the confessional, watercolor 1863

A 19 May 2020 keynote address by Commissioner Phil Hogan at OECD Global Forum on Responsible Business Conduct, was met with a certain amount of euphoria among civil society and administrative actors who have long sought to transform the markets based and societally oriented private governance sphere of the 2nd Pillar of the UN Guiding Principles for Business and Human Rights into a system of mandatory compliance related reporting within the domestic legal orders of (key, that is, rich and powerful Western) states, or in a pinch under provisions of international treaty law.  Here one had the European Commission Trade Commissioner invoking that rich and complex discourse of European moral-politics to broadly hint that functionaries within the European Commission were even then working toward achieving a state of compliance for business within the compliance state that is the European Union.  Bravo. 

The speech follows below in full.

My object here is to interrogate that language, the discursive forms that high European officials are taking, in the context of the very real problem of developing the principles and forms through which one might rationalize a coherent system of managing --in a principles way--the economic activities of public and private actors across (and within, hopefully) political borders. To that end it is necessary to extract the underlying language of compliance--and its data driven premises, from the good intention of official discourse. That is a language of valuation, it is a language of balancing, and it is a language of delegation, the consequences of which may not sit well, in the end, for many human rights and sustainability absolutists who might otherwise wish to hear in that language some forward movement toward the realization of their approach to regulation.

In addition, my object here is not to quibble with its intent, or its substance, but rather it is to engage with its language, with the way in which the words cobbled together into the speech produced  meaning for an OECD audience eager to confirm it.  That meaning, in turn, was one carefully built on a well conceived foundation of moral-political principles and cultural approaches to institutional risk taking and the inter linkages between the public and private sectors. None of this is true as such, but all of it becomes "facts" on which every collective is built (and which is used to distinguish itself from others). This is a semiotic exercise, one without regard to the value, necessity, form, or legality of the construction of a mandatory system of due diligence (embracing the discursive language of human rights and sustainability at least as such are themselves constructed within Europe).  Rather, the focus is on meaning making with legal effect--and its consequences--something about which adds value to any consideration of the merits of the project and its proposed form. 

This post is not for the pragmatist looking for an easy affirmation of moral positions; it is certainly not for the politician or the administrator (though the politician might be well advised to consider its implications) looking for a way of deflecting accountability for state failure to undertake its duty to protect human rights (even limited to those instruments to which it adheres). It is directed to those who cultivate both a  sense of humor, and a sense of irony; it is for those who understand the tragedy of farce even in the services of any historical moment's most celebrated causes. And lastly, it is meant as a primer for those interested in the meaning behind meaning making--at least in the context of constructing the structures of managing economic activity across (but not entirely within) borders. My interactions are embedded in the speech itself (and may be found in BLUE).

Introductory Remarks by Commissioner Phil Hogan at OECD Global Forum on Responsible Business Conduct

Thank you for your introduction Mathilde,

Deputy Secretary-General Kono, elected representatives, ladies and gentlemen, good afternoon.

I am grateful for the opportunity to participate in this forum. In my previous portfolio as European Commissioner for Agriculture and Rural Development, my team and I had very open and constructive two-way dialogue with the OECD, and I look forward to this continuing in my new role.
It is very timely and appropriate to host this forum, and I would like to thank the OECD for facilitating our discussion.
In speeches of this kind it is always necessary to underline connection--this is a world that resembles early 19th century society; one is nothing but the sum of one's connections. It is thus discursively necessary to establish one's place not merely within the hierarchies of the society which one is addressing but also the range of those connections as well. It is important to note that this embedding within society is so "natural" within this social group that one does not even think about it, even as one expects addresses of this kind to start with this pro forma identification. Recall as well that what follows is important precisely because it is uttered by someone higher up on the hierarchy of networked connection systems that than make the utterances worthy of note--and of attribution. As for everyone else, either their ideas are borrowed (usually without attribution) or they serve as the acknowledged "junior" generators who may be noted in passing. 


We are still in the middle of dealing with the Covid-19 pandemic and policymakers have hugely important choices to make in the coming weeks.

This is a global problem which is affecting citizens everywhere. It is a public health crisis first and foremost, but equally an economic disaster of huge proportions. All sectors of the economy are being hit: demand has dropped, supply chains are disrupted, and investments are put on hold.

Many countries, including a number of EU Member States, have published their plans for phased easing of Covid-19 restrictions. It is important for our citizens and businesses to see light at the end of the tunnel.

However, as I told a meeting of G20 trade ministers last week, there remains an overwhelming need for coordinated action between countries and regions if the exit from Covid-19 is to be coherent and lasting.

The pandemic has proven that we rely on global supply chains to deliver vital goods like medicine and food to where they are needed.

So, solidarity between trading partners is the optimal route to exit - and ultimately recover from – this severe shock to our public and economic health.
The centering on COVID-19 provides an interesting re-affirmation of European values and sensibilities (which are also those of the American academic and globally connected intelligentsia, high level bureaucrats, and other members of the inter-connected vanguard).  It is most interesting as a pointed reminder of the distance between European and American approaches (discussed here).  Several of the points are worth noting.  

First is the embrace of a vague and contradictory hierarchy of challenge, with public health "first and foremost, but equally an economic disaster of huge proportions." The statement is both discursively marvelous and vaguely contradictory in that delightful language of the global administrator. It will be an interesting puzzle to understand the relationship between "first and foremost" and "but equally."  As one saw in the American context, failures to resolve the relationship between these two policy areas--related but distinct, can cause trouble (Simulating Politics in the Shadow of COVID-19: " 'like the school nurse trying to tell the principal how to run the school').     

Second, the answer to this puzzle  is coordination through multilateralism. And it is that reaffirmation of the fundamental importance of multilateralism as the organizing principle of political and economic affairs among states and other actors that marks the core perspective that then colors the analysis that follows.  Multilateralism is presented here as a tool.  But it is more than that--it is a value system that carries with it a substantial amount of baggage.  It is a re-affirmation of the principle of European organization, now internationalized (at one end point) and universalized beyond public institutions (at the other).  The essence of this structuring is administrative and compliance oriented: coherence, predictability, permanence, and non-discriminatory. 

Third, that re-affirmation of multilateralism then colors the approach to the resolution of the economic crisis of COVID-19.  Americans see in the disruption of global supply chains caused by border closing, a need to bring supply chains home (or at least within the borders of allied states bound together by aggregated bilateral arrangements).  Europeans look across the same terrain and see instead the need to improve multilateralism by adding a moral value to its constitution--solidarity ("We are one  human family whatever our national, racial, ethnic, economic, and ideological  differences. We are our brothers’ and sisters’ keepers, wherever they may be.  Loving our neighbor has global dimensions in a shrinking world. At the core of  the virtue of solidarity is the pursuit of justice and peace." US Conference of Catholic Bishops, "Solidarity"; see also here). But he also draws on a rich intellectual tradition in Europe that then is meant to reach out to embrace the world within its moral ordering transposed to the realms of law, politics and economics and (e.g., Hauke Brunkhorst, Solidarity: From Civic Friendship to a Global Legal Community (2005); for an example, see,The EU to the Rescue of the Cuban Economy? the Political Dialogue and Cooperation Agreement (PDCA)). Thus, in contrast to the Americans, he would reaffirm the European inclination, bound up in its own morality, the answer to supply chain disruption is greater solidarity between trading partners. 


The European Union recognises that some things will be different post-Covid-19; there will be a “new normal”. While an open trade policy will be vital for a successful economic recovery, we should also use the opportunity to address some of the shortcomings in the functioning and governance of global trade.

To give just a few examples:

Building strategic stockpiles of vital medical and protective equipment will make regions better prepared for future pandemics.

Diversifying and solidifying supply chains will make our economies less vulnerable and less exposed to power politics.

And strengthening international rules and beefing up our toolbox to protect against unfair practices by others will keep the playing field level.
Having affirmed the moral basis of the European perspective--multilateral, solidarity based--it remains to suggest the broad contours of the principles and forms of realization in three points.  The first is biblical--the stockpiling of essential items against catastrophe (“There are to be seven years of great abundance in all the land of Egypt.  But seven years of famine will certainly arise after them, and all the abundance in the land of Egypt will certainly be forgotten, and the famine will exhaust the land. And the previous abundance in the land will not be remembered because of the famine afterward, for it will be very severe.  The dream was given twice to Pharʹaoh because the matter has been firmly established by the true God, and the true God will soon carry it out." Genesis 41:29-32).   

The second is the most interesting of the three.  It suggests the diversification of supply chains  This is both a pointed reference to the dangers of over dependence on a rising global power as the principal source of essential goods, but does so in a way that avid the American response of bringing supply chains home. However, the references to "vulnerability" (a European challenge) and "power politics" (something done by outside powers, eg, the US and China, perhaps Russia, to Europe) suggests a set of political presumptions that are worth interrogating.  Certainly, there are any number of EU Member States , for example, that might be inclined to view themselves as the vulnerable victims of the power politics of their richer and more powerful EU neighbors, even more than the more distant threats posed by outside powers.

The third returns to a discourse of legalization as the principal mechanism for the enhancement of solidarity (the moral base) in the deepening of principled multilateralism. But buried in the mellifluous language (and language whose tone and cadences are expected) are  a series of dissonances that undercut the discursive ideal evoked. These dissonances are the words of judgment without anchors--"strengthening," "beefing up," "protect against," "unfair," "others,"and "level (eg, the playing field) are all intensely subjective and political terms.  More than that, they can be measured only against a ruling ideology that represents a consensus of the ideal.  Here, the discourse advances as an undercurrent the notion that those are terms whose expression reach their highest level of development within the context of the European political-economic model.  That model, in turn, is the one that ought to serve as the basis for the ordering of the global space made for trade and economic activity.


And returning to the topic of our discussion today: we realise more than ever in the present crisis that it is important for businesses to integrate the interests of our workers, our society, and our planet into their operations.

Integrating better risk mitigation processes and good governance practices across their supply chains will generate a net advantage in the long-term.

Of course, many companies in the EU and beyond realize this and have already integrated these practices into their business models.

They have understood that it is not a burden, but a strategic choice that brings added value to their companies. Now is the right time to assess how we can support even more companies to make this transition.

With this and other priorities in mind, we are conducting an internal review of our European trade and investment policy.
The earlier discussion, then sets the stage for the principal point to be made in the address--the integration of stakeholder concerns--of corporate social responsibility (to use the more antique phrase)--into the calculus of business operation. But this is not just the integration of stakeholder interests, and the protection of stakeholder rights within a business--it is far ore than that; it is the notion that core or controlling business segments (autonomously legally constituted) are responsible for ordering, managing, and disciplining economic activity within vertically ordered supply chains. These are, of course, the very supply chains at the heart of the affirmation of the value of public multilateralism grounded in the oral notion of solidarity.  So here one sees a transposition of the core public values (and political authority) of Europe into the organization of private (and economic) power from Europe out through the world.  The discursive language within which this transposition is made to seem unremarkable is the by now almost cliched discourse of the business case for business social solidarity, grounded on values that are  essentially European but now naturalized within the discursive practices of public international bodies.  That is not a bade thing, but some might wonder if that, too, is an example of power politics (for all the right reasons of course).  If that s the case then fairness (a deliberately used subjective term here) might demand that this power politics be transparent, and perhaps subject to some substantial engagement.


They say there is an opportunity hidden in every crisis, and we are determined to use this unprecedented situation to update and enhance our trade priorities.

We will conduct a wide expert analysis with feedback from our Member States, from the European Parliament, and from all key stakeholders, including employers and trade unions.

I’m pleased to inform my fellow panellist Sharan from ITUC that my next appointment this afternoon is a meeting with ETUC to discuss this and many other important topics!

In line with our commitment to transparency and citizen engagement, we will also conduct a public consultation to hear the views and concerns of Europeans everywhere. I encourage all of you to take part in it.

Our goal is to produce a document that will help us lead from the front in shaping a strong post-Covid global trade and investment environment, with a fit-for-purpose international rulebook underpinning it.
And yet, this remains very much a European project.  And like their Chinese and American counterparts, they also indulge (as a moral positive its seems) the notion that crisis--in this case the health and economic crisis of COVID-19--provides the perfect opportunity to press forward (while opposing forces may be weakened)  "to update and enhance our trade priorities" along the conceptual lines sketched out in the opening paragraphs of the speech. Again, this is not a bad thing, but it is a thing that may be worth some thought.  It is also to suggest that the most interesting element of this framing of the points made in the speech is to underline that Europe's greatest export at the moment might be its values ad governance model.  And that this very political objective is indeed a driving force behind the commitment to multilateralism, and to the shaping of the contours and practices of solidarity. And thus the plan of action that follows, the goal of which "is to produce a document that will help us lead from the front in shaping a strong post-Covid global trade and investment environment, with a fit-for-purpose international rulebook underpinning it."That project, in turn, is to be the product of a managed engagement coordinated by the bureaucracy, and involving networked intellectuals and experts (chosen for their project utility), interactions with civil society (as de facto representatives of the populace (on the issue of representation in this context, see,  Fractured Territories and Abstracted Terrains: Human Rights Governance Regimes Within and Beyond the State).


What we are advocating is a model of “Open Strategic Autonomy”: this simply means a coherent set of policies that achieve the right balance between a Europe that is “open for business” and a Europe that protects its people and companies.

Sustainable value chains and due diligence will be an important part of this work. A truly resilient economy is one that protects workers, companies and supply chains, while at the same time safeguarding international trade, keeping our markets open and discouraging import and export restrictions. So rebuilding the economy in an even more sustainable way is not just a plus, it is a necessity.

Keeping all this in mind, you will not be surprised to hear that Responsible Business Conduct will remain hugely important for our trade agenda. We are operating mainly on three fronts:

First, building and promoting international standards, through rule making and capacity building;

Second, using our trade agreements as a platform to engage with partner countries;

And third, developing specific initiatives such as EU legislation on due diligence or conflict minerals.
Every bureaucratic project requires an identifier, a name around which  a related set of objectives might be rationalized.   In this case it is "Open Strategic Autonomy." The term is effectively meaningless (the way that officials strike "the right balance" (again a set of subjective and value laden words) between fostering profitable economic activity, and protecting people and companies.  The protection part might strike one as odd.  One protects business by being "open for business" and one protects people by ensuring respect for their rights, including their rights to a health (and protection against pandemic.  But how does one protect companies except as against their own folly, the depredations of the state, or against the draining consequences of having to buy factor sin the production of wealth (including labor) or to pay for the use of resources and harms to all affected by their activity? And yet the discourse is beautiful. It sounds right; it invokes notions of caring, and of the assurance within the allusion to quantification. 

But it turns out that there is specificity here.  How does one protect companies? One protects companies first by aggregating the whole of their business relations within supply chains.  And then one creates a rule system that is meant to protect a company against itself.  The object of all of this, then, is to protect a company from itself.  That protection against a company's nature, then, is the essence of both the balancing, and the possibility of building economic relations that are sustainable within the meaning built into that term within the political-moral system of Europe. "A truly resilient economy is one that protects workers, companies and supply chains, while at the same time safeguarding international trade, keeping our markets open and discouraging import and export restrictions. So rebuilding the economy in an even more sustainable way is not just a plus, it is a necessity." This principle--of bringing out the better nature of people (and of economic institutions) by protecting them against their demons--is the essence of the European variant of multilateral globalization. These then provide the basis for the core three "fronts" of Responsible Businbess Conduct. 

 It is based on first on the development of a normative order under the guidance of European institutions.  That is what is meant by the quite subjective prong of "building and promoting" standards, that are expressed as "international standards" memorialized as "rule making" (but here is the essential element of vanguard leadership, and thus the control of the process), all of this undertaken through "capacity building."  Standardization, of course, is at the core of the globalization project.  It is only logical that its sensibilities be extended to all aspects of the regulation of economic activity.  And, indeed there has been much engagement with these notions in this context through a standardized model of standardization--first standards developed at the international level, or in the private sphere, and most effectively through public-private engagements (the modern version of the ILO model), only then to be transposed to public law, and then internationalized. (For an example of the approach, see, e.g., Pavel Castka, and Michaela A. Balzarova, Social Responsibility Standardization: Guidance or reinforcement through certification? Human Systems Management 27 (2008) 231–242). But consider the meaning of capacity building--to build, one must first have a builder (Europe) and tools (a foundational normative vision) and a culture of seeing and approaching challenges (networked markets based liberal democracy with the state as the great clock maker and caretaker). Better put, a normative order established through law requires (in Western terms) a priesthood (the Leninist vanguard; the EU Directorates).  

It it based second on the internationalization of that rule based normative order.  Internationalization follows naturalization of the structures, assumptions and practices that define the normative order. Naturalization takes us back to capacity building.  This then ties the European effort to that pioneered by the international financial institutions (World Bank and International Monetary Fund) through conditional lending.  It also ties the effort to the great weavers of normative value that has become the Paris based Organization for Economic Cooperation and Development (OECD).  Both serve as the great armies of capacity building; both serve as part of the united front that can articulate the basic building blocks of political-moral culture (markets based liberal democracy structured through the elaboration of a central principal of human dignity expressed through the discourse of human rights), produce the measures against which these premises can be assessed, and then provide armies of staff to ensure that these sensibilities, that these cultural assumptions, can be embedded in the political cultures of states in the periphery.  And not just them--that army of capacity builders is augmented by an equally (and perhaps more) influential armny of academics charged with the socialization of the elite young.     

And it is based third on projects of internationalized rules-standards operationalization. That requires the translation of principle, and the actualization of capacity through the implement of targeted specific projects.  These projects, if well conceived, are then meant to advance the normative project by creating the "facts" and "relationships" necessary to "prove" the value of the project.  And they are designed to capture the public imagination.  This capturing, in turn, requires an alignment of social media, civil society. and the pres, in socializing home and host state masses to the principles on which cultural judgments are made. The operations of this self-reflexive public-private system is discussed in "Multinational Corporations as Objects and Sources of Transnational Regulation." And this takes us to the current projects for the advancement of this normative agenda--"EU legislation on due diligence or conflict minerals."


The EU has been a staunch supporter of international guidelines for responsible business conduct, including those developed by the OECD.

From the outset, we realised that capacity building is key – that is why the EU set up two €9 million training and outreach programmes with our key trading partners in Asia and Latin American, supported by the OECD, ILO, and UN.

Five years after the start of these projects, we see that policymakers and companies in the target countries are realising the importance of sustainability in supply chains for consumers, investors and thus for their business operation. The COVID-19 crisis now adds an extra resilience dimension to this.

For example, in the case of Vietnam, a concrete outcome of our engagement was an updated national textiles strategy that includes a chapter on responsible business.

Together with the OECD we are also supporting dialogue on purchasing practices in Bangladesh – a crucial topic to drive changes in the garment sector - based on the OECD garment guidelines. Of course, responsible business conduct also means ensuring decent and safe working conditions in the current Pandemic context.

EU trade deals and their Sustainable Development chapters support workers’ rights, environmental protection and our ambitious climate agenda as outlined in the European Green Deal. We need to build on this ambition and ensure that enforcement is effective.

In particular, our agreements actively promote the implementation of existing international guidelines on responsible business practices. Let me give you three examples of how this works in practice:

In the context of the EU-Central America Association Agreement, and with the close partnership of the ILO and the OECD, we have organised workshops on responsible business practices in 2017 in Costa Rica and in 2018 in Guatemala. The events brought together policymakers, business, trade unions and civil society, facilitating discussions on Corporate Social Responsibility, and helping to foster capacity-building.

Under the recent CETA agreement with Canada, we have encouraged cooperation between European and Canadian businesses on Sustainable Development guidelines for SMEs.

This focuses on implementing the OECD Guidelines, as well as a compendium on how companies can contribute to the Sustainable Development Goals (SDGs). This is important given that SMEs often lack the means and capacity to do this on their own.

During the first year of the EU-Japan agreement, we have already started discussions on a possible joint action to promote the uptake of Corporate Social Responsibility practices in Asia. We will look to support actions that help to build resilient supply chains following the COVID-19 pandemic.

And the best news of all is that promoting Responsible Business Conduct will be an even bigger priority going forward, as we strengthen our toolbox for implementation of our agreements.

When the situation is acute and public intervention is needed, we have also drafted the necessary legislation. This is the case for due diligence rules for minerals produced in conflict areas.

You know this very well, as we have been working very closely and successfully with the OECD on this in recent years.

The Conflict Minerals Regulation largely takes into account the requirements of the OECD Due Diligence Guidance and will be implemented early next year.

This is an interesting model for further reflection at EU level in relation to how legislation can be combined with international guidelines and existing schemes to ensure these are applied by all. This can help make supply chains cleaner in terms of labour rights and the environment.
This long section illustrates the realization of the principles and three prong project of European multilateral internationalization in the context of business and human rights. Here is woven together the strands that transform the abstract embrace of normative values into a self referencing complex network of administrative public and private organs all aligning their operations (and their need to maximize their respective production of value) to produce the proposed regulatory order. That includes the interlocking role of the OECD, the ILO, other UN organs, and European institutions, the internationalization of the developing normative order through EU treaty making and trade deals, and the mobilization of traditional legislation (the "hardening" of soft law) when conditions were right (in this case respecting conflict minerals).  Also interesting is the effort to recognize the value of alignment with the sustainability development Goals.  That might move the language of due diligence and corporate accountability from one based on human dignity and human rights discourse, to that of sustainability of human communities embedded within larger ecologies.

But it is the next part of the speech that then finally arrives at the target of this long elaboration: the development of a set of mandatory rules for the institutionalization of the UNGP's second (societal-markets) Pillar corporate responsibility to respect human rights within the domestic legal order of states--but managed through the norm making and international framework of aligning treaties and capacity building in the public and private sector.  As key European states begin to legislate some form or other of mandatory disclosure systems, the idea of a coordinated, and European values based, system of mandatory due diligence becomes more plausible (Human Rights Due Diligence Legislation -Options for the EU (24 April 2020)) .   To that end, disclosure rules are necessary.  To ensure accountability, disclosure rules must be embedded with the normative values  that are mean to frame both accountability and the measure of compliance.  And ultimately, it aligns the role of the state as the instrument through which multilateral normative values can be administered through public agencies overseeing the regulatory systems of private enterprises to which the obligation of police global production has been delegated.   


This brings me to my final point on the way forward. I will be working hard with my fellow Commissioners in the coming months to drive different initiatives in the context of the post-coronavirus recovery.

While they have their origin in different policy areas, such as corporate governance or the European Green Deal, they share a common view that due diligence can be part of the solution for our businesses.

Companies with due diligence policies in place are likely to build more long-term value and resilience – improving their prospects for recovery.

Commissioner Reynders is leading the work on examining options for regulating due diligence, both in companies’ own operations and through their supply chains. He presented the outcome of a due diligence study in the European Parliament a few weeks ago.

His preference is for a mandatory, horizontal due diligence legislation with possible sectoral guidelines. He indicated that subject to the results of consultations with stakeholders, the Commission would table legislative proposals in 2021 and I will work closely with him on this, given the strong trade dimension involved.

The Commission also launched a review of the reporting obligations of businesses under the Non-Financial Reporting Directive with a view to better integrating environmental and biodiversity criteria.

While horizontal work on due diligence is essential, we also need to be pragmatic and look at how to address the challenges facing specific sectors.

Looking ahead, some further possible actions involving a trade component could include how to implement the Commission’s “zero-tolerance on child labour” commitment. It is obvious that this topic requires a response well beyond trade! That said, there is a clear supply chain due diligence element to this.

I have a keen interest in working on the cocoa sector, which is a big market for the EU. The EU buys almost 64% of Ghana and Ivory Coast cocoa production, which enters duty free, quota free - thanks to the preferential access granted by our Economic Partnership Agreements.

Although the supply chain problems in this sector are not new, there is strong momentum for action at the moment, thanks to recent action by the governments of Ghana and Ivory Coast to support farmers’ income through a guaranteed minimum price for cocoa on domestic and world markets.

Likewise, some leading companies in the sector have shown they are willing to lead the way.

This is why I am keen to support this positive momentum and ensure that the EU prioritises further improvements on child labour and deforestation policies in this sector. I will pursue this agenda in collaboration with fellow Commissioners.

I also want to engage more closely with the EU private sector in this regard, building on the many initiatives that already exist.

The OECD has done important work on due diligence.

I hope we can continue our joint efforts to ensure coherence and clarity of expectations for companies in relation to these initiatives, both in terms of the environmental impact but also in terms of human rights and other social dimensions.

I believe there is significant support from International Organisations, but also from individual European countries and businesses, to do more to achieve the Sustainable Development Goals within our economies.

Due diligence can be part of the solution. When due diligence policies are designed to ensure coherence, avoid red tape and avoid overlapping legislation, they can strengthen the sustainability of our supply chains and make companies more resilient, while at the same time avoiding damage to developing countries that depend on trade.

So, to build a better future we must pledge to keep trade open and transparent, and to make our supply chains more resilient and sustainable through ambitious global partnerships.
At last one comes to the expression of the abstract conceptual framework developed in the first part of the speech, and its articulation as the three part plan of the legalization of norms, and the normalization of the European driven values through capacity building, its internationalization through treaty, and its expression as specifically targeted programs. And the centerpiece of this great project is due diligence.  That is the central insight from which almost the entirety of the great business and human rights project that now animates public bodies (and civil society). To understand the great human rights project of the early part of this century, then, one must understand due diligence.

But due diligence is not merely a technique.  It is instead a cluster of related values, principles, and approaches that will transform not just modalities of governance but also the way in which power is divided among the great political, economic, and social actors emerging from out of pre-COVID globalization. That connection between due diligence--and the cultures of assessment linked to accountability, to risk mitigation it embodies--is worth unpacking.  The speech intimated four:

1.  The COVID-19 Accelerator and  legalized human rights due diligence. The pandemic augmented the challenges and fragilities of globalized economic activity at its margins, that is, at the starting points of supply chains mostly (but not always) in developed states.  That reality requires a mechanism for bridging the three part strategy (standards-internationalization-specific target applications) in ways that can be em,bedded within business cultures.  That is the role of due diligence--but only when it is understood as the expression of the obligation to comply--that is compliance requirements produce diligence and diligence is the expression of compliance.  Compliance through diligence then is the means by which the internationalized values of human rights harms in business is expressed within business operations. 

2. The nature of due diligence as a compliance mechanism, as the basis for compliance, and as a means of accountability through state policing and markets responses.   Compliance, then, is valuer laden--it is the expression of the standards (and the premises and principles they represent). As the tragedy expression of values (expressed through law and articulated through the mechanisms of diligence tied to transparency, diligence serves as well as the mechanism for accountability.  It provides a means for a corporation to account to itself (internalization of values expressed through standards-law). It provides a means for the corporation to account to others (the state, the market, those harmed). And it provides a mechanism for the management of risk.  Compliance through diligence injects the sensibilities of prevention-mitigation-and remedy--the essence of the risk avoidance central to stability enhancing private bodies to the activities of private economic actors.  That produces a contradiction that can only be resolved by changing, as well, the essence of the valuation system within which corporations measure success (and thus compliance used as a mechanism for attacks on the shareholder (or enterprise) welfare maximization principles of traditional corporate law).  But it does more than that--it permits the fracture of governance.  Government retreats from the executive function by delegating both the administration of rule systems that produce due diligence and its administration, to the private law rule making of enterprises throughout their supply chains.  Enterprises assume, then, the role of the administrative and regulatory state in order to effectively comply with due diligence requirements.  At the same time that delegation permits the state through the control of due diligence objectives, to manage the overall structures and normative constraints within which enterprises may elaborate private governance orders. 

3. The need for alignment and coordination--the role of sectoral regulation. The speech was very clear that the application prong of the grand approach outlined requires specific targets.  The idea is simple: one can build an aggregated and comprehensive system of due diligence based private governance overseen by a super-regulatory state  that in turn manages the coordinated normative consensus of the community of nations by building a toolkit of specific applications.  In this case--the fixation on sector regulation is critical.  But it is not critical for the reasons proffered taken at face value.  "While horizontal work on due diligence is essential, we also need to be pragmatic and look at how to address the challenges facing specific sectors." It is critical because (1) sectoral regulation permits a methodical approach to the development of due diligence-compliance mechanisms, (2) it aids in the coordinated refining of the underlying normative-internationalizing-capacity building project, (3)  it permits an enhancement of the structures of stakeholder coordination among critical public actors (OECD; ILO) and states.  International public actors serve as the clearinghouse for the normative project tested through soft law mechanisms; states serve as the disciplinary mechanisms that provide a legal basis for imposing normative objectives, but consonant with the markets enhancing premises of economic globalization, and enterprises become the privatized administrative apparatus of a system of diffuse governance, whose risk aversion compliance architecture is then expressed through due diligence.  

4.  The administration of due diligence--data regulationBecause the ultimate objective of these initiatives is behavior management, compliance, and due diligence, is inherently quantitative.  But it is quantitative not in the fashion of the quantification of economic operations through financial statements.-  Rather, it is quantitative in a relational sense.  It is quantitative int he sense that conduct is measured against an ideal standard (and thus looping back to the accountability element of the form). Measured against an ideal (the quantitative expression of the internationalized normative model naturalized through compliance-due diligence mandatory system) due diligence must speak the language of ranking, and with ranking, of judgment. If, then, due diligence suggests both quantification and measurement against an ideal, then the ultimate function of due diligence systems is to generate data.  Compliance, then, enhances a movement toward data driven governance. Data provides both the basis for making judgments, and the means by which that judgment can be tested.  Data driven governance, of course, becomes the language of compliance in the private sector; it is the language of governance within production chains.  But it is the judgment itself--one inherently qualitative (good-bad; acceptable-in need of change), that is transmitted from the enterprise to the state. The essence of mandatory due diligence, then, is to delegate the operation of a data driven governance system (that translate the political-normative project into measurable terms) to private governance within enterprises, which then produces qualitative measures (the judgment or algorithmically derives assessment on a relational basis--in relation, that is to the ideal) to the state and in markets.  

In this way, "due diligence can be part of the solution."  They are the product of a three factor structure within which to approach to the design of due diligence "to ensure coherence, avoid red tape and avoid overlapping legislation." Due diligence, then, serves as a bridge between the public and private, and between the market and central planning.  The state intervenes in markets to supply its values (meant in both moral and economic terms). But those values are then meant to produce results within markets (through the choices of market participants). It also serves as a bridge between the national and the international--projecting consensus moral values performed through markets throughout a supply chain through both internationalization and capacity building (socialization) initiatives--to "strengthen the sustainability of our supply chains and make companies more resilient, while at the same time avoiding damage to developing countries that depend on trade." And that brings us back to the reason for due diligence--to implement the far more ambitious project of building a consensus based political morals exercised by economic actors within an internationalized legal regime developed one sector at a time. "So, to build a better future we must pledge to keep trade open and transparent, and to make our supply chains more resilient and sustainable through ambitious global partnerships. 

All of this is necessary in order to understand text and sub-text--the literal meaning of what was said, and the overtones and undertones--the semiotic meaning making, inherent in the way it was said. 

From here it "naturally" follows that the inherently societally founded principles of "due diligence, firmly embedded within the 2nd Pillar of the United Nations Guiding Principles for Business and Human Rights, ought to be made mandatory by their imposition through law.  Yet to get to this seemingly natural conclusion, it is necessary to understand and embrace the complex moral-political  initiative at the heart of the text of the speech.   True believers will find this both tedious and obvious.  Those who reject the foundational principles, and the normative perspective, will find the speech incomprehensible and perhaps tedious. To them the speech would suffer the deficiencies of sloganeering that are usually leveled at the equally complex and informatively embedded speeches coming from their Marxist-Leninist counterparts.  But that is a story for another day. 


The European Union stands ready to maintain its role of global leadership and build stronger partnerships around the world.

Thank you.

And here we end with the affirmation of the core principal of this exercise in case one misssed the point elsewhere in the speech--the role of the European Union, its cultural framework, and its moral-political system, as the vanguard element charged with the internationalization of its values through law.

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