Linking policies could contribute to a more sustainable economic recovery

News

The COVID-19 pandemic has slowed down the efforts towards a global sustainable development. It has also highlighted weaknesses in international trade through global value chains. Closer cooperation between trade policy and the policy for responsible business conduct can, however, contribute to a more positive turn.

Contemporary trade is characterised by international value chains, where different parts of production and supply take place in different countries. Accordingly, trade policy needs to address negative sustainability consequences of such a setup. At the same time, trading companies play an increasingly important role in creating responsible and resilient value chains.

In a new report, two trade policy advisers from the National Board of Trade, Amelie Kvarnström and Karolina Zurek, explain why increased coherence between trade policy and the policy for responsible business conduct, RBC (previously known as corporate social responsibility, CSR), can contribute to more responsible, resilient and crisis resistant global value chains, and in turn a more sustainable economic recovery.

Responsible business conduct preserves trade in value chains

– Companies that actively engage in responsible business conduct show a higher adjustment capacity in face of disruptions, such as the COVID-19 crisis. Consequently, promoting responsible business conduct helps preserve trade in value chains, which is necessary to deal with the crisis and its consequences.

Policy for responsible business conduct aims at promoting and supporting the efforts of companies to guarantee sustainability in their value chains, which can be done through following international guidelines and standards.

– From the trade policy perspective, this is a welcomed development, as international standards for responsible business conduct help create a level playing field for trading companies. It allows companies to conduct ambitious sustainability policies without compromising their competitiveness and creating unnecessary trade barriers.

Sustainable integration of low-income countries in international trade

At the same time, the policy for responsible business conduct can benefit from a closer interaction with trade policy as well:

– Trade policy can include companies as important partners in implementation of sustainability provisions in trade agreements and link their agenda with broader efforts by international organisations or in the context of development cooperation. In the long run, it can support sustainable integration of low-income countries in international trade.

The intention of this report is to provide arguments why closer integration between trade policy and policy for responsible business conduct is necessary and why EU measures are preferred. How these measures can be designed will be analysed in an upcoming report.

Simultaneously, there is an ongoing trend towards increased regulation of responsible business conduct in the EU, which may encompass introduction of mandatory assessment by companies of human rights risks in their value chain, so called human rights due diligence.

– We will follow these developments and will analyse their impact in the context of the closer interaction between the two policy fields.

The report

Trade policy and policy for responsible business conduct – contributing to a sustainable economic recovery

Contacts

Amelie Kvarnström
firstname.lastname@kommerskollegium.se
+46-8-690 48 39

Karolina Zurek
firstname.lastname@kommerskollegium.se
+46 8-690 49 59