Join forces at EU level for sustainable international supply chains

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

European business and union leaders need to work together to foster sustainable international supply chains, write Petra Bolster-Damen, Piet Fortuin and Ingrid Thijssen. [Shutterstock | humphrey]

European business and union leaders need to work together to foster sustainable international supply chains, write Petra Bolster-Damen, Piet Fortuin, and Ingrid Thijssen.

Petra Bolster-Damen is the international secretary of the FNV union; Piet Fortuin is the president of the CNV union; Ingrid Thijssen is the president of the employers’ association VNO-NCW.

In the current debate on European due diligence legislation to foster responsible business conduct, policymakers risk losing sight of the end goal: reducing labour, human and environmental rights risks in international supply chains.

With a negative impact in supply chains continuing to occur and too few companies undertaking meaningful due diligence, it is clear that ambitious European due diligence legislation is paramount. Union leaders like Darwin Valdiviezo Rodriguez from Peru tell us how important European action is for them.

However, due to the complexity of international supply chains and the many actors involved, solely mandating the due diligence process steps will not be sufficient to improve circumstances in supply chains.

Legislation needs to be complemented by European sector agreements to foster collective action on prioritised risks, collective grievance mechanisms, support for production and sourcing countries, and governments leading by example.

Combine legislation with sectoral agreements

Business, labour unions and independent (academic) members in the Netherlands work together in the Social and Economic Council (SER), which is the most important advisory body for government and parliament on key social and economic issues.

In the advisory report “Effective EU due diligence legislation for sustainable supply chains” they jointly call for a European approach, which puts improving circumstances for people and the environment in the entire supply chain first and that combines due diligence legislation with joint action to address prioritised risks at the sector level.

This will enable companies to work on improving circumstances in supply chains together with local stakeholders, and help clarify expectations of companies through practical application.

The approach builds on the lessons and evaluations of the international responsible business conduct sector agreements that the Netherlands has been working on since 2016.

It takes the strong features of these agreements and further improves upon them by developing a new generation of sector agreements at the European level. These sectoral agreements should cover the entire supply chain, and support for producing countries is needed to make them effective.

Global supply chains are complex and EU companies individually often have limited leverage when it comes to improving human rights and environmental standards in the supply chain.

From an impact perspective, it makes sense to foster collective action and pooling of resources in addition to individual company obligations and to include SMEs in high-risk sectors in a proportional manner. They too can play an important role in avoiding a negative impact and creating a positive impact in their supply chains.

Work together at EU level

To have maximum impact on international supply chains, the SER proposes that businesses, unions and NGOs enter into sectoral agreements at the EU level so as to implement the due diligence steps (see figure), organize independent monitoring of progress and collective grievance mechanisms and develop best available techniques.

The European Commission should be given the power to recognise sectoral agreements and other international responsible conduct agreements, and to support their conclusion and implementation.

Once recognised, companies that have joined these agreements will be subject to lighter supervision, as long as the sector agreements perform well. They will thus not fall outside the scope of supervision -no safe harbours. Supervision at the EU level ensures the same rights and obligations for businesses in all member states.

Note that enforcement on the quality of due diligence steps is only possible after clarity has been given to companies covered by the due diligence legislation on what is expected and these companies have had sufficient time to implement the expected actions.

The legislation must follow the UNGPs and OECD Guidelines as closely as possible, including the proportionality concept therein.

Non-EU companies operating on the EU market should also meet the same statutory requirements. It is also in their interest not to harm people and the environment within their supply chains.

Include grievance mechanism

In order to enable access to remedy, European due diligence legislation should include an obligation to join a recognized independent grievance mechanism that can issue binding rulings.

Such an obligation ensures that companies are open to the concerns of their stakeholders, and it also provides information for the due diligence process. These mechanisms can work together with existing mechanisms, build on lessons learned and should be set up as part of European sector agreements.

Fulfil the state duty to protect

Legal incorporation of enterprises’ responsibility to respect human rights requires at least commensurate efforts by the European Commission and member states to fulfil their duty to protect human rights and lead by example.

That is expressed, for example, in implementation of sustainable procurement policy, raising human rights issues and the broad sustainability agenda in consultations with other governments, ensuring policy coherence in the areas of trade, development cooperation, the Green Deal and competition policy, and complementing due diligence legislation by partnerships with production countries.

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