Early in 2022, the European Commission adopted a proposal for a directive of Corporate Sustainability Due Diligence. The proposed directive will require companies to carry out both environmental and human rights due diligence, ensuring that adverse risks are mitigated. This will cover companies’ own operations and corporate governance as well as those of their suppliers, meaning supply chains inside and outside of Europe will be impacted. The directive will be negotiated in the European Parliament during an upcoming JURI committee vote this month.
The garment industry is considered a high-risk sector due to the often poor and dangerous working conditions that face the 75 million people it employs worldwide. However, for workers to be able to voice their needs and stand up for their rights, the industry fragmentation and power imbalances prevalent across the supply chain must be redressed.
To drive these long-overdue changes forward, Fair Wear has developed a new policy and accompanying facilitation tool to aid brands with their implementation of human rights due diligence (HRDD). The aim is to protect garment workers’ human rights through the promotion of impactful HRDD, while also benefitting garment brands and their suppliers. As regulation that is risk-based can support this aim – by creating harmonised minimum requirements across the industry – Fair Wear strongly supports the development of effective due diligence legislation at EU level.
Fair Wear is advocating for several principles to be included in the directive.
- A risk-based approach with the OECD guidelines is at the directive’s core.
Aligning with an already proven and accepted international standard, the OECD guidelines, fosters alignment and consistency across global supply chains and industries, thereby creating a level playing field. Moreover, applying a risk-based approach is a feasible and lucrative investment for companies. Focusing resources where they are needed to prevent and mitigate the most salient human rights risks will help companies build more robust supply chains that are time- and cost-efficient. Fair Wear’s member brands have already begun paving the way to prove that impactful due diligence can not only advance better working conditions, it can do so profitably.
- SMEs are included amongst the companies within the scope of the directive.
SMEs account for approximately 90% of the garment sector and produce a share of around 60% of the European textile and clothing sector turnover. It is crucial, therefore, that due diligence legislation accounts for small companies in order to redress the fragmentation and power imbalances across the supply chain. If SMEs are not included, they will face conflicting guidance as large companies may be encouraged to cascade their codes of conduct down their value chains. This will ultimately exacerbate fragmentation, and impede industry-wide efforts in implementing meaningful due diligence.
- Grievance mechanisms must be part of remedy and stakeholder engagement.
Sectoral grievance mechanisms are an integral part of the due diligence process. Their involvement of various stakeholders provides buying companies with a reliable and comprehensive source of information. As such, buying companies can depend on first-hand and in-depth insights from (local) stakeholders to make their risk assessments accurate and sensible. Beyond informing risk assessments, sectoral grievance mechanisms also help to identify where and how to properly remedy. This saves companies both time and money. Moreover, sectoral grievance mechanisms facilitate ongoing exchange between stakeholders – fostering collaboration and promoting more proactive rather than reactive processes.
- Responsible purchasing practices are a core part of effective due diligence, and must be included in the directive.
In Fair Wear’s experience, because purchasing practices are the root cause of many infringements in the supply chain, scrutinising them is a matter of necessity. This interrogation process helps companies to assess the extent to which they contribute to or are linked to risks, thus playing an integral role in their HRDD efforts. Subsequent investments made to improve the company’s purchasing practices promote shared responsibility and mutual trust along its supply chains. This in turn makes the supply chain more stable and reliable – and yields long-term gains for the company. As such, for a truly level-playing field to be realised in the field of due diligence, purchasing practices must be taken into consideration.
All in all, the directive can aid Fair Wear’s mission of furthering meaningful industry-wide HRDD implementation. However, true impact for the garment industry can only be reached when the four points addressed here are included.