Improving Human Rights Compliance in Supply Chains

Kishanthi Parella*

Corporations try to convince us that they are good global citizens: “brands take stands” by engaging in cause philanthropy; CEOs of prominent corporations tackle a variety of issues; and social values drive marketing strategies for goods and services. But despite this rhetoric, corporations regularly fall short in their conduct. This is especially true in supply chains where a number of human rights abuses frequently occur. One solution is for corporations to engage in meaningful human rights due diligence that involves monitoring human rights, reporting on social and environmental performance, undertaking impact assessments, and consulting with groups whose human rights they can harm. The challenge is how to encourage corporations to make these changes.

We often rely on two types of tools to improve corporate compliance: legal institutions and reputational mechanisms. However, each of these faces significant limitations when it comes to human rights compliance in the supply chain. This Article develops a strategy based on complementarity between the two so that each compensates for the limitations of the other. Specifically, reputational mechanisms can help create incentives for compliance with international legal institutions with weak or absent enforcement mechanisms. Alternatively, legal institutions can create “focal points” regarding corporate best practices that can improve reputational markets for corporate social responsibility.

The reputational typology developed in this Article offers three important contributions to policy and academic discussions concerning corporate misconduct. First, it allows us to create better human rights institutions by revealing the types of “carrots and sticks” that we should include to encourage corporate cooperation; this lesson is particularly timely because an international treaty on business and human rights is in development. Second, this typology illustrates how corporations may voluntarily undertake organizational change in response to a reputational crisis. Finally, this typology identifies drivers of cross-border compliance for transnational corporations.

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© 2019 Kishanthi Parella. Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.

*Associate Professor, Washington and Lee University School of Law. J.D., LL.M in International & Comparative Law, Duke Law School; M. Phil. in International Relations, University of Cambridge. I am grateful for feedback from participants at the following workshops and conferences: Yale/Stanford/Harvard Junior Faculty Forum at Yale Law School; National Business Law Scholars Conference at Berkeley Law School; ComplianceNet Conference at Villanova Law School; International Law Workshop at Duke Law School; 2018 ASIL Annual Research Forum at UCLA Law School; William & Mary Law School International Law Workshop; Institute for Global Law and Policy Conference at Harvard Law School; Global Capitalism and Law (GC&L) Colloquium at Northwestern University Buffet Center for Global Studies; faculty workshop at University of Virginia School of Law; YCC annual conference at Case Western University School of Law, and roundtable on international legal theory, annual meeting of the American Society of International Law; and BYU Winter Deals Conference 2019. I am particularly grateful for detailed feedback from Karen Alter, Curt Bradley, James Gathii, Larry Helfer, Ralf Michaels, Sam Moyn, and Jayne Huckerby. I would also like to thank the editors of the Notre Dame Law Review for excellent editorial assistance.