Global Value Chains’ Human and Environmental Costs through the Looking Glass: ‘Fast Fashion’ as Case in Point
As businesses have expanded their operations beyond national borders in pursuit of economic opportunities, via the deepening border-crossing integration of global value chains and the proliferation of transnational corporations, this has come at the cost of human rights violations and environmental harms committed abroad. Transnational corporations often rely on exploitative practices to operate their factories abroad, where workers receive extremely low wages, work long hours with little to no breaks, and are subjected to poor working conditions. Their operations are also environmentally harmful, as they depend on low-cost, non-renewable resources and involve burning polluting materials such as plastic and rubber.
For example, Shein, a transnational corporation that sells trendy, low-quality clothing, has become one of the biggest contributors of environmental harm in recent years. In 2024, Shein was considered one of the world’s largest apparel retailers, with its gross merchandise value rising to $45 billion in 2023. The corporation’s massive success is, in large part, due to its ability to release up to 10,000 items to its website each day at incredibly low prices. However, in producing such a high volume of clothing, Shein relies on synthetic fabrics and high oil consumption, which emits approximately 6.3 million tons of carbon dioxide per year. Shein’s operations also contribute to large amounts of textile waste and microplastic pollution. When fast fashion companies like Shein overproduce clothing to reach more consumers and maximize profits, workers across the entire textile supply chain bear the consequences. In 2021, an investigation by Public Eye, a Swiss advocacy group, found that Shein’s factories were crowded and unsafe, with blocked emergency exits and workers regularly working 75 hours per week at significantly low wages.
This begs the question: how can transnational corporations be held accountable for these harms? As a participant in the 2025 McGill SGI Transformative Business Law Summer Academy (TBLSA), I had the opportunity to engage with this question firsthand. The TBLSA Fellowship, held in Montréal at McGill’s Faculty of Law, is a week-long, intensive academic experience that takes an interdisciplinary and holistic approach to addressing pressing sustainability challenges. This year, it took place from May 4th to 9th, 2025, and focused on sustainable finance, corporate governance, ESG, human rights and democratic governance, and climate change. The six working groups explored the state-of-the-art developments in legislation, litigation and policy making in these areas, drawing on finance, economics, comparative law, postcolonial legal studies, and Indigenous Legal Traditions. I collaborated with students from various disciplines, such as law, environmental studies, and business, to research and co-author the 2025 McGill SGI Academy Impact Paper, titled “Contesting Sustainability,” a policy paper that directly addresses and proposes solutions to these critical sustainability issues. Throughout the Academy Fellowship, we had the privilege of attending lectures by world-renowned scholars to enrich our understanding of the topics addressed in the Impact Paper. As TBLSA Fellows, we also received ongoing mentorship from Faculty experts and professionals who guided us in our research and supported us in developing meaningful recommendations for the policy paper. I co-authored Chapter 6 of the Impact Paper, titled “ESG, DEI, Sustainability – And Then What?”, where I examined the challenges of holding transnational corporate actors adequately accountable and reflected on the future of transnational corporate liability. This post highlights key findings of the 2025 Academy Working Group on the topic and offers additional analysis in both Canadian and international contexts.
How Can Transnational Corporations Be Held Accountable?
It is challenging for nation-states to adequately control and regulate transnational corporations as their headquarters are usually located in one country, while their factories operate across several other countries, each with different jurisdictions. Additionally, transnational corporations often structure their global operations specifically to escape liability by, for example, outsourcing production, using complex supply chains and subsidiaries, or turning a blind eye to the human rights practices of their business relationships.
As highlighted in Chapter 6 of the 2025 Impact Paper, the international community leads the regulation of major companies that operate across different national jurisdictions. In 2011, the United Nations adopted the UN Guiding Principles on Business and Human Rights (UNGPs), which establish an overarching framework that requires corporations to respect human rights wherever they operate, regardless of their size or industry. In 2023, the Working Group on Business and Human Rights released an Information Note on Climate Change and the Guiding Principles on Business and Human Rights, aiming to build on the UNGPs by integrating climate-related impacts with other human rights impacts caused by or linked to business activities. Additionally, the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct encourage companies to make positive contributions to economic, environmental, and social progress while minimizing impacts associated with their business operations, and highlight human rights and the environment as key areas of responsibility. However ambitious these tools may be, they are insufficient to hold transnational corporate actors accountable for harms committed abroad, as international law is generally not legally binding or enforceable. As a result, transnational corporations often avoid fulfilling the responsibilities set out in these frameworks and continue their harmful operations.
An international tool that does have the ability to hold transnational corporations legally accountable for human rights violations is the International Accord for Health and Safety in the Textile and Garment Industry, formerly known as the Bangladesh Accord on Fire and Building Safety in Bangladesh. It is an agreement between garment brands and trade unions aimed at ensuring workers’ health and safety in the textile and garment sector. The agreement emerged following the 2013 collapse of the Rana Plaza garment factory in Bangladesh, which killed more than 1,100 workers due to unsafe working conditions and widespread labor rights abuses, and has since been signed by over 220 major brands. Despite this advancement towards protecting workers’ rights, many major brands remain resistant to reform. For example, transnational corporations, including IKEA and Amazon, have dodged signing the International Accord, while others, such as Gap and Walmart, announced their own safety programs instead, which have been rejected by Accord advocates as “corporate-driven schemes that shun trade unions.”
Nevertheless, in recent years, new efforts have emerged to hold corporate actors accountable for harms committed abroad. Domestic courts, for example, are increasingly holding transnational corporations legally responsible for harms committed through private governance systems that operate beyond the reach of state regulation. In Lungowe and Ors. v Vedanta Resources Plc and Konkola Copper Mines Plc [Vedanta], the UK Supreme Court held in 2019 that parent companies can be held liable for the actions of foreign subsidiaries, especially when they have assumed responsibility or control over the subsidiary’s operations. In 2021, the UK Court of Appeal’s decision in Begum v Maran (UK) Ltd [Begum] recognized that companies may be held accountable for human rights and environmental harms caused by third parties within their supply chains. In addition to these recent developments in case law, countries such as Australia, France, Germany, Norway, and Canada have introduced legislative efforts aimed at improving transparency and accountability for harms committed throughout transnational corporations’ supply chains. Taken together, these efforts underscore the evolving legal and legislative landscape of transnational corporate accountability and highlight the growing importance of corporate due diligence in preventing such harms.
Transnational Corporations in the Canadian Context
The issue of regulating transnational corporations has direct relevance and urgency in Canada as it is home to a significant share of the world’s largest extractive industries, many of which operate transnationally. Notably, approximately 75% of the world’s mining companies are headquartered in Canada, positioning the country as a leading mining nation. Canadian mining companies have long faced criticism for their involvement in human rights violations and environmental destruction, particularly in the Global South. For example, in 2011, seven Tanzanian villagers were shot and killed by police and security guards at Barrick Gold, a mining company headquartered in Toronto. As another example, Canadian mining companies across various countries in Latin America are causing serious environmental impacts by destroying glaciers, contaminating waters and rivers, cutting down forests, and forcibly displacing local communities.
In response to the harms committed by Canadian transnational corporations abroad, national tools and frameworks have emerged to prevent them from causing further harm. For example, the Canadian Ombudsperson for Responsible Enterprise accepts and reviews complaints concerning potential human rights abuses by Canadian companies operating abroad in the garment, mining, and oil and gas sectors. Additionally, Canada’s “Responsible Business Conduct Abroad Strategy” is a five-year plan designed to guide the Government of Canada in supporting Canadian companies to adopt responsible business practices. It expects businesses, regardless of their legal status, size, ownership, or sector, to contribute to sustainable development, minimize the adverse impacts of their operations, and acknowledge potential harms within their supply chains and business relationships.
Perhaps the most impactful development in Canada, however, has been the role of the Supreme Court of Canada (SCC) in defining the liability of transnational corporations and holding them accountable for harms committed abroad. In 2020, in Nevsun Resources Ltd. v. Araya [Nevsun], Eritrean refugees sued the Canadian parent company, Nevsun, which owned a 60% stake in a mining operation in Eritrea. The refugees alleged they were subjected to human rights violations while being forced to work there through Eritrea’s mandatory national service program. In this landmark decision, the SCC recognized that customary international law is enforceable within Canadian law. In other words, the Court opened the door for Canadian courts to hear and rule on the liability of Canadian corporations complicit in human rights abuses overseas, giving binding legal weight to the international frameworks discussed earlier.
Despite these positive advancements in Canada, full accountability for all Canadian transnational corporations is still not guaranteed. The Nevsun decision features a strong dissent, which heavily criticizes the majority opinion. The dissent held that international law is merely a source of Canadian law and should not be assumed, but rather considered on a case-by-case basis. As a result, the current approach to transnational corporate accountability under Canadian law remains vulnerable to change in future decisions. Additionally, no Canadian legislation currently clearly articulates a company’s obligation to avoid, address, and prevent human rights abuses and environmental harms abroad. Although Canada introduced the Modern Slavery Act in 2024, requiring certain entities to report on their efforts to prevent and reduce the risks of forced labor and child labor in their supply chains, the legislation is insufficient to account for all types of harms committed by transnational corporations. The law has also been heavily criticized for establishing reporting requirements without an effective due diligence component.
It is also important to recognize that Canadian transnational corporations, particularly those in the extractive sector, receive substantial support from the Canadian government due to their contribution to the country’s wealth. In 2023, Canadian mining companies operated in 95 foreign countries, with their mining assets abroad reaching $220.4 billion. Almost 60% of global mining companies are listed on the Toronto Stock Exchange, which, in 2015, accounted for over half of all capital investment in the mining sector, helping establish Toronto as a major global stock exchange. As a result, the Canadian government continues to support harmful transnational corporations through a loose regulatory regime, tax incentives, and diplomatic assistance, making it less likely that these corporations will be adequately held accountable. For example, in 2020, the Canadian government introduced a ban on the importation of goods produced using forced labor in supply chains, however, it has not enforced this ban to date.
What is the Future of Transnational Corporate Liability?
When considering the range of efforts aimed at holding transnational corporate actors accountable, including international and national initiatives, landmark decisions such as Vedanta, Begum, and Nevsun, as well as recent legislative developments, it becomes clear that there is a growing commitment among various actors to ensure transnational corporations are held responsible for harms committed throughout all stages and locations of their operations. Still, this marks only the beginning of meaningful corporate accountability. As discussed throughout the 2025 Impact Paper, nation-states will need to develop robust legal tools, working in collaboration with civil society actors and other nations, to create effective, lasting solutions that will prevent transnational corporations from committing further human rights and environmental violations.