INTERNATIONAL BUSINESS PAGES
As companies seek to enter into
new markets: Conducting adequate
country-level due diligence in order to
understand the labour, human rights
and environmental context is critical
to being able to approach production
responsibly. Companies should con-
sider whether they are able to move
into a new sourcing market and uphold
labour, environmental and integrity
standards. Moving into new markets
may have an impact on the total lev-
els of production within the country. If
production cannot adjust quickly, this
may result in increased rates of sub-
contracting, increased overtime or,
potentially, increased reliance on mi-
grant workers. Ensuring that such prac-
tices do not contribute to labour abus-
es in the supply chain will be impor-
tant. Increased production, if not prop-
erly managed, can likewise have ad-
verse impacts on the environment.
As companies grow upstream pro-
duction within countries: Many free
trade agreements include specific
clauses on country of origin, which can
provide incentives for governments
and business to develop upstream
segments of the supply chain. Howev-
er, many upstream production process-
es, such as dying or tanning, hold
greater risk of environmental harm. As
such, strategically considering ways to
grow the sector in a way that attracts
responsible investment and the use of
best available techniques will be im-
portant. As companies and countries
seek to develop upstream production
processes, they are also well placed
to establish systems to enable trace-
ability early on, and thus facilitate due
diligence.
As companies consider whether to
disengage from countries or suppli-
ers: The OECD Due Diligence Guid-
ance for Responsible Supply Chains
in the Garment and Footwear Sector
supports continued engagement rath-
er than disengagement to the extent
possible. However, where disengage-
ment is the only option, companies
should do so responsibly. Within the
context of OECD due diligence guid-
ance, this includes complying withnational laws, international labour standards and the terms of collective bar-
gaining agreements; provide detailed information supporting the business deci-
sion to management and to the union, where one exists; and give the supplier
sufficient notice of the ending of the business relations.
While uncertainty remains a dominant theme persisting into 2020, uncertainty
is not new to the garment and footwear sector. In 2004, the International Trade
Centre published a paper titled “Textiles and Clothing uncertainties before and
after the quota phase-out”, which examined the end of the quota system for
international trade in the textiles and garment.
In 2008, companies in the apparel sector questioned the impact of the financial
crisis on production and demand. As companies continue operating in uncer-
tain times, embedding due diligence into company management systems and
ways of working will be increasingly important to ensure that companies have
the experience and processes in place to respond responsibly.
Alignment between initiatives at the European
level: Potential for scaling up due diligence im-
plementation in the garment sector
Ten years following the update of the OECD Guidelines for Multinational Enter-
prises and the launch of the UN Guiding Principles on Business and Human
Rights, there is growing consensus across governments, intergovernmental
organisations and other stakeholders that due diligence is at the core of re-
sponsible business conduct especially with regard to supply chain responsibil-
ity. The concept of due diligence draws from the recognition that the challenges
of modern and complex garment and footwear supply chains require a compre-
hensive and integrated approach to manage sector risks that clearly defines
the roles and responsibilities of brands, retailers, producers, governments, NGOs
and trade unions in this regard.
The OECD Due Diligence Guidance for Responsible Supply Chains in the Gar-
ment and Footwear Sector (OECD Guidance) provides the framework for this
comprehensive and integrated approach in the apparel sector. Since 2010, there
has been a wide range of responses by industry and multistakeholder initia-
tives, governments, civil society and investors to build capacity around, evalu-
ate and monitor company due diligence implementation (non-comprehensive
summary):
Initiatives: Some sustainability initiatives have started to systematically incor-
porate expectations on due diligence into their membership requirements and
have developed supporting tools, most notably for brands and retailers. In Eu-
rope, this currently applies to the government-backed multistakeholder initia-
tives in the Netherlands and Germany (the Dutch Agreement on Sustainable
Garments and Textile, AGT; and the Partnership for Sustainable Textiles, PST)
as well as to the Sustainable Apparel Coalition (SAC), each of which have
developed assessment and reporting frameworks based on the OECD Guid-
ance.
Governments: Governments are increasingly focused on the role of compa-
nies in addressing human rights, labour and environmental risks in their supply
chains. This has resulted in a rise of disclosure and due diligence legislation in
OECD countries including in California, France, the United Kingdom, the Neth-
erlands, and Australia. Some governments have likewise developed sustain-
ability labels – with the Green Button being amongst the first in the garment and
footwear sector to incorporate due diligence indicators.
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