Supply Chain

There Is No Alternative to Direct Relationships in Company Supply Chains

On day one of this year’s UN Forum on Business and Human Rights, delegates agreed that close engagement with all tiers of company supply chains will be vital going forward.

Brand Provided | By Richard Howitt | Published 1 year ago | About a 6 minute read

Image: GoodSam Foods is built on direct-trade relationships. | GoodSam Foods

Supply chain responsibility has been a consistent theme in corporate action on human rights.

The new wave of human rights due-diligence initiatives worldwide — ranging from new guidance by the Japanese Government, modern slavery proposals in the US Senate; pending legislation in Australia; and, in the last stages of negotiation, for European Union countries — are putting increased significance on supply chain issues at the 12th annual UN Forum on Business and Human Rights, taking place this week in Geneva, Switzerland.

So, it was apt that the first day began with discussions about forming partnerships as “the answer” to creating resilient and responsible supply chains. New research undertaken by the Center for Business and Human Rights at NYU Stern School of Business was presented that suggests that companies cannot rely on indirect relationships with suppliers in the Global South, but are recommended to adopt a “direct relationship model.”

Payal Jain, Head of Social Impact at H&M, advocated that this is possible — explaining that for over 10 years, the company has published lists and applied its code of conduct to Tier One and now Tier Two suppliers and is already discussing with other companies how this can be extended to Tier Three.

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Abrar Sayem, founder and CEO of Bangladeshi apparel sourcing platform Merchant Bay, asked the Forum to recognise that companies do not complain about purchasing or other unfair practices from buyers, because they fear losing business if they do.

Both speakers agreed that demands on manufacturers must be matched by commitments from purchasing companies in the new partnerships formed.

“Don’t dump requirements; really listen — ensure it is a two- not a one-way partnership,” Jain said. “Shared responsibility is giving a fair price, offering tools, working on solutions and not in disengagement.”

Structure

How partnerships are structured are key to their success, it was argued.

Fernanda Carvalho, Brazil Director of the Global Fund to End Modern Slavery, suggested that there is a danger that workers could actually become more vulnerable in due-diligence efforts — which can only be overcome by putting trade unions at the heart of grievance mechanisms. She called on companies to engage and listen to survivors of modern slavery.

Speakers agreed there needs to be an honest broker in the partnership who can bring people together and hold partners to account. Dijana M. Zupanc, Deputy Human Rights Ombudsman for Slovenia, suggested that the convening role of Governments is an important part of achieving this. All speakers agreed that partnerships need to be inclusive, multi-stakeholder and long term.

Imbalances in relationships were highlighted by Steve Bell, founder of the Interfaith Centre, who commented: “It’s not shared responsibility which is needed, but shared power.”

Other participants pointed to the need for cost-sharing around compliance, certification and remediation — with companies recognising that structural changes in their business models are key to addressing the causes of human-rights violation.

Successful examples

Successful examples of partnerships cited in the debate that can act a model for others included the clothing and textile agreement brokered by the Social and Economic Council of the Netherlands, the Accord on Fire and Building Safety in Bangladesh, and the Roadmap to Zero Programme for hazardous chemicals.

Dan Rees, Director of Better Work at the International Labor Organisation (ILO), and research author Sanchita Saxena agreed that the new legislation will make all the difference.

“The new legislation means companies will be made accountable,” Saxena asserted. “Good partnerships will make good business sense. Both purchasers and suppliers have to agree their behaviors will not negatively impact human rights.”

“A sea-change is underway, with the move from soft to hard law on human rights due diligence,” Rees told the Forum. “Existing partnerships today are islands of good practice. They will now get driven through supply chains for the mass of companies.”

Other highlights

Other highlights of Day One of the Forum included:

An appeal from High Commissioner for Human Rights Volker Türk calling on companies to record pledges on “concrete actions” to advance human rights, as part of the 75th anniversary of the United Nations Declaration on Human Rights.
ILO Deputy Director-General Celeste Drake asked participants to use the organisation’s new Binding Guidance against Violence and Harassment in the workplace.
Amplifying victims’ voices is an important aspect of the Forum, but clearly difficult at an international event with thousands in attendance. Today saw an attempt to help overcome this difficulty with a series of film showings highlighting local communities affected by dam construction from Brazil to Indonesia.
Meanwhile, nine years after it was initiated, Sandra Epal-Ratjen from the International Commission of Jurists said big differences on scope, liability and jurisdiction remain on the proposed Binding Treaty on Business and Human Rights. However, she said the atmosphere was now optimistic and that “real negotiations have now begun.”
Novel wording of the day came in workshop on “environmental racism.” Quite simply, this discussed the fact that racially subordinated groups are more subject to environmental harms and to the impact of climate change. Not a new concept for Indigenous peoples’ groups, but this is perhaps an interesting shift in terminology which may attract new interest to the challenges identified.

Other issues were identified today which will continue throughout the week, including how intellectual property must range from the new risks created by artificial intelligence to the traditional knowledge of indigenous peoples; how ‘Just Transition’ identifies the need to integrate environmental risk into human rights due diligence; and how both conflict in the world and regression in work towards the UN Sustainable Development Goals bring even more urgency to this year’s deliberations.

They do.

Richard Howitt

Richard Howitt is a strategic adviser on Corporate Responsibility and Sustainability, Business and Human Rights. He is also a Board member, lecturer at Audencia Business School and host of the Frank Bold ‘Frankly Speaking’ responsible business podcast. Richard was Member of the European Parliament responsible for the EU’s first rules on corporate sustainability reporting and subsequently Chief Executive Officer of the International Integrated Reporting Council.

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