South Carolina Journal of International Law & Business
In many industries, corporations have changed the organization of their production from a vertically integrated model to a model that is often characterized by outsourcing-shifting business activities to external parties -and offshoring, where production occurs at sites overseas. The global value chain (GVC) for an American corporation often involves several tiers of suppliers. One end of the GVC is often occupied by a multinational buyer (MNB), such as a large brand name corporation. At the opposite end of the value chain are the factories, farms, and other production sites that supply multinational corporations with their goods. This organization of production poses several risks to the different actors involved in a value chain. It is true that inclusion within these chains can offer developing countries and their citizens a range of benefits. A developing economy's integration into a value chain can provide it with a pathway to economic development and growth. However, value chains can also be sites for exploitation of workers from developing economies. In fact, many human rights violations occur in value chains, including forced labor, child labor, and environmental contamination.
This Article discusses three related approaches: codes of conduct, due diligence, and grievance mechanisms. Many corporations adopted each of these approaches, sometimes in collaboration with their stakeholders. Each of these approaches also helps to improve the flow of information between multinational buyers and their suppliers, facilitating the ability of corporations to do more to prevent abuses because they know more. These approaches can also improve the flow of information between corporations and consumers concerning conditions in the value chain.
Kishanthi Parella, Reforming the Global Value Chain through Transnational Private Regulation, 12 S.C. J. Int'l L. & Bus. 71 (2015).