Bridging the governance gap? Corporate power, impunity, and the role of the EU’s corporate sustainability due diligence directive in addressing human rights violations in global value chains

Abstract

The emergence of the Business and Human Rights (BHR) debate in the 1990s, driven by globalization, liberalization, technological advancements, and innovations in corporate structures, has underscored significant governance gaps arising from the misalignment between the scope of economic activities and the capacity of political institutions to manage their adverse consequences. This study explores these governance gaps, as conceptualized by Ruggie (2008), through the lens of corporate power and impunity, particularly examining their real-world implications on human rights with a focus on the Guarani Kaiowá indigenous peoples in Brazil. It also assesses the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD), a recently approved legislative effort inspired by the UN Guiding Principles on Business and Human Rights (UNGPs), and its potential in addressing the governance gaps. The study first examines the evolution of corporate power and the mechanisms, such as limited liability and separate personality doctrines, that have facilitated corporate impunity. These mechanisms have enabled Transnational Corporations (TNCs) to evade effective oversight and accountability for their human rights and environmental impacts. In the study's second section, the analysis then shifts to the real-world implications of these mechanisms, using the Guarani Kaiowá case to illustrate how agribusiness power, intertwined with state interests, has led to systemic human rights violations. Thirdly, the study critically evaluates the CSDDD as a potential remedy for these governance gaps, highlighting its approach to mandatory human rights and environmental due diligence obligations. Despite its significance as the first regional legislation of its kind, the Directive faces limitations including a narrow scope, vague terms, and procedural challenges that hinder effective remedy for victims. In conclusion, while the CSDDD marks a pivotal advancement in corporate accountability, this study asserts that it represents only a preliminary step. Addressing corporate impunity effectively requires a comprehensive approach that harmonizes stakeholder interests and promotes gradual progress. Recognizing corporations as integral components of the global system alongside states is crucial for developing robust and enforceable regulatory frameworks capable of bridging the governance gap and safeguarding human rights against corporate abuses. Keywords: BHR, Governance Gap, Corporate Power, Corporate Impunity, Indigenous Peoples, CSDDD.