INTERNATIONAL BUSINESS PAGES
the problems, including child labour,
further underground. By acknowledg-
ing the existence of production outside
primary factory facilities, oversight,
services and remedy can be extended
to workers who are currently invisible.
However, the opacity and shifting na-
ture and scale of the hidden supply
chain makes ongoing oversight through
to homeworkers challenging and cost-
ly for individual businesses. Partner-
ships with civil society and govern-
ments as well as widespread industry
collaboration will be necessary to cre-
ate a long-term solution to a problem
that goes beyond any individual com-
pany’s supply chain. Multi-stakehold-
er initiatives can play a key convening
role.
It is important to note that the hidden
nature of child labour, forced labour and
human trafficking in global supply
chains reflects both the complexity of
production processes and data limita-
tions. Data gaps, owing to the lack of
regular child labour and forced labour
national surveys in several countries,
and the difficulty of generating detailed
data on the prevalence of these phe-
nomena in specific suppliers operat-
ing in the upstream segments of glo-
bal supply chains, significantly limit the
ability of stakeholders to prioritize ar-
eas or industries where action is most
urgent, but these gaps should not be
used as a reason not to undertake due
diligence beyond immediate suppliers.
Within this context, governments can
play a role to collect better quality na-
tional data.
Supporting subcontracted workers, in
particular home-based workers who are
often isolated and vulnerable,is chal-
lenging and must be achieved in a way
that does not jeopardize their liveli-
hoods. Workers in the informal sector
need long-term access to and support
from civil society organizations and
union organizers to gain a greater un-
derstanding of their rights and increase
bargaining power.
Finally, child labour thrives where ac-
cess to education is limited. Govern-
ments, with the support of civil soci-ety organisations, can ensure access to education for vulnerable children in
these production communities, to address a root cause of child labour, and civil
society organisations have a key role to play in working with governments and
communities to change mind-sets around the value of education and ensure
adequate national-level support for comprehensive schooling opportunities.
(Source: GoodWeave International)
Reaching the 95%: Engaging SMEs to scale re-
sponsible business practices in the global gar-
ment & footwear supply chain
Small and medium-sized enterprises (SMEs) are vital to delivering sustainable
and inclusive economic growth. SMEs represent 99.8% of all enterprises in the
EU-28, and 99% of all enterprises in the garment and footwear sector are SMEs,
employing 99% of the workforce1 . See box for information on the classification
of SMEs. Beyond providing significant employment, SMEs also provide value
add. SMEs account for the majority of the increase in value add in the EU
(60%) in 2018/2019. Within the garment and footwear sector, SMEs can include
brands, retailers, exporters, manufacturers and agents, and there is increasing
fluidity in the sector (as noted by McKinsey2 ) with manufacturers moving out
of the traditional business to business (B2B) role and selling directly to the
consumer through their own branded ecommerce channels.
Research from the International Trade Centre (ITC)3 concludes that SMEs have
tremendous potential to make an impact on the SDGs through the employment
they generate, the business practices they choose to adopt, the sectors in
which they operate and their impact on innovation and diversification in the
economy. Clearly, engaging and providing the support that SMEs require is
imperative if we are to accelerate and embed responsible business conduct
throughout the entire value chain.
Classification of SMEs
Number of employees: Small and medium-sized enterprises (SMEs) are
non-subsidiary, independent firms which employ fewer than a given number
of employees. This number varies across countries. The most frequent up-
per limit designating an SME is 250 employees, as in the European Union.
However, some countries set the limit at 200 employees, while the United
States considers SMEs to include firms with fewer than 500 employees.
Small firms are generally those with fewer than 50 employees, while micro-
enterprises have at most 10, or in some cases 5, workers.
Financial assets: Financial assets are also used to define SMEs. In the
European Union, the turnover of medium-sized
enterprises (50-249 employees) should not exceed EUR 50 million; that of
small enterprises (10-49 employees) should not exceed EUR 10 million while
that of micro firms (less than 10 employees) should not exceed EUR 2
million. Alternatively, balance sheets for medium, small and micro enterpris-
es should not exceed EUR 43 million, EUR 10 million and EUR 2 million,
respectively.
Source: OECD Glossary of Statistical Terms, Small and Medium-Sized En-
terprises
To date, focus on due diligence has been weighted towards larger enterprises.
Frameworks on due diligence and responsible business practice have been
largely developed for multi-national enterprises. Furthermore, legislative efforts
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