Wednesday, March 13, 2024

CSDDD (Corporate Sustainability Due Diligence Directive)--"The End of the Beginning": Preliminary Thoughts on Post-Enactment CSDDD Challenges

 

Pix Credit here

 

In 2011, John Ruggie famously described the presentation of the draft of the UN Guiding Principles for Business and Human Rights  as the "end of the beginning, by establishing a common global platform for action, on which cumulative progress can be built, step-by-step, without foreclosing any other promising longer-term developments." (SRSG 2011 Report, ¶ 13).  

And, indeed, most stakeholders--especially civil society and the academics that sometimes provided the discursive and analytical fuel for their objectives, intentions, and designs--took the former SRSG up on his word. Combined with the happy alignment of three important trends:

(1) civil-society-based objectives to legalize the 2nd pillar corporate responsibility to respect, 

(2) state-based ambitions to recast liberal democracy away from its 18th century roots in electoral  representative democracy driven my popular elections toward an operational level system of techno-bureaucratic guidance of societal collective assets (including economic actors and their institutions), and 

(3) the transformation of the largest collective economic enterprises into private law based administrative platforms already adapting both to the operational sensibilities of public administration and embedding a privatized public policy within their own operations.

it became possible to think in more concrete terms about the structures of the platform necessary to effect transformation embedded within evolving normative expectations. The key drivers of each of these sectors, states, enterprises, and civil society, appear to have realized, in the alignment of public-private-and civil society ecologies within a legalized meta-structure of  techno-bureaucratically-managed due diligence, an important means of transforming the multi-tiered structures of social relations in new and quite interesting ways. 

Discursively, that arc of transformation has been made even more interesting for its use of  contemporary discursive tropes in new ways. Thus, for example, conservative and traditionalist discursive tropes have been a valuable tool for narrative management by by progressive elements of civil society (the ancient ropes of public legality as the highest form of authority and the greatest foundation for the assertion of the violence of power that they otherwise combat). At the same time, the language of democratic oversight has been usefully deployed by state officials in transforming the fundamental constitutional questions of administrative management and the privatization of public policy, into the narratives of the technologies of accountability, compliance, and enforcement. And of course and most well known, the extraordinary success of the tropes of "business cases" for transformations in the relationships between markets, private autonomy, and economic activity has reshaped the terrains of economic activity by offering the trope of making money and commodification of everything, including public policy.   

None of this is bad, mind you. And to some extent, all of this is inevitable, given decisions and predilections that have been operationalized with increasing focus since the fall of he Soviet Union and European Marxist-Leninism, made it possible to better align the technologies of Leninism with the ambitions of the European administrative state without the need  for justification and the risk of normative opposition of any consequence.  (Earlier thoughts on this trend here: 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)

To that end, the drive to enact a CSDDD (Corporate Sustainability Due Diligence Directive), already road tested in localized forms in France and Germany, provides the necessary next step in the transformative evolution of European governance, in general, and the recasting of the relationship between (and alignment of) public and private power structures within a coordinated techno-bureaucracy in Europe. And it may be good for business--the business of economic enterprises, as well as of the apparatus of the state and that of civil society.  

Yet, CSDD is also only the end of a beginning.  And given the traditional ambitions of European legality--in its contemporary forms embedded in the ideology of the Brussels Effect--the beginning is going to run up against headwinds.  Those headwinds will take the form of competing systems of outward projecting ideological and normative administrative organs the public policies of which may conflict with those ambitions for the world embedded in techno-bureaucratic instruments like CSDDD. 

In particular, these incompatibilities will in the first instance center on information, and its analytic consequences. One gets a sense of this from a news story fairly well buried within the reporting of the Wall Street Journal--Chun Han Wong, 'China Raises Fines on Due Diligence Firm Mintz,' Wall Street Journal 13 March 2024, at B6).

China imposed more fines on the Beijing arm of Mintz Group, saying the New York-based due-diligence firm failed to respond to earlier penalties meted out over allegedly unapproved statistical work. The increased fines came about a year after authorities raided  Mintz's Beijing office and detained all five Chinese nationals working there--a move that fueled international concern over a broadening security crackdown on companies that collect and manage data in China ***. Business executives who have consulted with Chinese authorities say  Beijing is seeking to more tightly control the narrative about China-s governance and development, and limit the information  collected by foreign companies such as auditors, management consultants and law firms that could influence how the outside world views China.

For CSDDD the beginning AFTER the end, then, will greet enactment with a significant challenge to the operationalization of its provisions--at least to the extent that data from, through, or in China is required to fuel its ideal implementation and produce its intended effects globally (my prior discussion here: (1) Due Diligence and Mandatory Human Rights Due Diligence Disjunctions: Liberal Democratic Markets-Compliance Based Legalities Versus Marxist-Leninist Constitution of Information as State Regulatory Property; (2) Information as Regulatory Assets, the National Security Stratagem, and Emerging Governance Consequences: Yintao Yu v. ByteDance, Inc. (CCGC-23-606246) (TikTok). That opens for a post-CSDDD Europe a number of options on the road from the end of the beginning to the transformation that necessarily follow as a sort of beginning of an end of this project;

(1) The EU, likely with hat in hand, may have to consider seeking to negotiate an arrangement with China respecting the harvesting and use of data to feed the CSDDD machinery; that will require a strategy and a normative position that is unlikely, at this stage, to be developed; time will work against the EU perhaps; it is not clear what price China will extract in these negotiations;

(2) The EU may require, or its Member States may drive, a process of exemptions and waivers form the requirements of CSDDD for or with respect to any of its elements that might require resort to data that is interdicted; that runs the risk of gutting CSDDD especially with respect to some of its most important targets;

(3) Either the EU or its Member States may have to create workarounds: at the top of the list may be programs of incentives to detach (in the common language de-risk) EU regulatory system tinged operations from China, perhaps by favoring other supply chain destinations in the area (Malaysia, Thailand, Indonesia, India); but the consequences for business may be quite difficult and any resulting negative economic effect may also be felt in future election cycles;

(4) The EU or its Member States will have to adapt by bifurcating its economic policies and its enforcement regimes to differentiate between Chinese coupled supply chains and the rest; the result would produce a regulatory and compliance system that roughly mimicked the Chinese policy of dual circulation; though whether it is feasible or politically palatable may be difficult to assess at the moment;

(5) Either the current or the next U.S. Administration may produce regulatory responses, especially respecting national security and data protection, that may pose challenges; tough this is not a great risk at the moment, the extent to which CSDDD becomes a trap for the unwary US enterprise for which a business case for compliance is not forthcoming, the pressure on the US government may be heightened and the political opportunity it represents too tempting to resist;

(6) The effects, political or normative, on the extended efforts to draft some sort of international instrument that also will purport to legalize the UNGP send pillar and perhaps the third (remedial) pillar as well, remains to be seen.

(7) The most likely alternative: do nothing; that serves a number of interests on all sides and as a cover to support other policy initiatives; and to some extent it permits recourse to the courts--as venues for decision making, and as an authoritative space within which narrative battles may be performed and memorialized--and as memorialized exploited  (more theoretically discussed in a general way here: Chroniclers in the Field of Cultural Production: Courts, Law and the Interpretive Process). 

 

No comments:

Post a Comment