INTERNATIONAL BUSINESS PAGES
Civil society: The past five years has
seen an increase in third-party sustain-
ability and due diligence indexes and
benchmarks which seek to measure
company performance vis-à-vis their
supply chains. While indexes have tra-
ditionally been CSR focused, in recent
years there has been a shift towards
due diligence benchmarks, such as
Know the Chain, Fashion Revolution,
and the Corporate Human Rights
Benchmark. In addition, civil society
organisations (CSOs) have been ad-
vocating for the adoption of mandato-
ry due diligence legislation.ed to an uneven playing field. The ac-
tions taken by stakeholders to evalu-
ate, benchmark and monitor company
due diligence performance – in many
cases – primarily target larger brands
and retailers as well as companies al-
ready involved in sustainability initia-
tives. This has potentially created a
silo effect by which larger companies
and businesses (of all sizes) that are
voluntarily and actively engaged in sus-
tainability initiatives are potential-
ly being monitored and evaluated by
different actors, whereas those outside
of this group may be overlooked.
Investors: Investors are increasingly
assuming their role to seek to mitigate
environmental, labour, and human
rights risks in their underlying compa-
nies while recognizing the financial
materiality that such risks may bring.
This has been accompanied by a flour-
ishing of ESG products and bench-
marks directly targeting investors.
While traditionally ESG assessments
leaned strongly towards environmen-
tal performance, more recently social
– in relation to labour and human rights
– indicators have come under much
greater scrutiny.Producers in non-EU countries: Pro-
ducers have pointed to the discor-
dance in auditing standards and certi-
fication for years. Some producers
have noted that while setting due dili-
gence requirements for companies
through industry and multi-stakehold-
er initiatives can be a step in the di-
rection of broader harmonisation, there
remain numerous and significant dif-
ferences between the individual expec-
tations of companies towards their
suppliers across initiatives and even
within initiatives. For example, initia-
tives will often recognise or ‘give cred-
it’ to companies as long as they can
demonstrate that they are conducting
audits on a particular subject, but not
on whether those audits are duplica-
tive of existing assessments.Various perspectives
Brands, retailers and EU-based pro-
ducers: Businesses in the apparel sec-
tor raise concerns regarding the in-
creasing frequency of disclosure re-
quests and a lack of alignment on dis-
closure requirements across stake-
holders including governments, multi-
stakeholder and industry-led initiatives
as well as investors. Accordingly, rep-
resentatives of companies operating
across a number of EU member states
have requested stronger alignment and
cross-recognition between sector initi-
atives (such as AGT, PST, SAC) and
the various reporting frameworks. They
refer to the administrative burden of
using different tools for the assessment
of and reporting on due diligence im-
plementation, and to the diversion of
capacities away from the implementa-
tion of concrete measures, especially
measures aimed at impact.
Some companies have likewise point-Civil society: CSOs have pointed to
the challenge that not all due diligence
indicators are created equal and that –
in some cases – efforts to monitor due
diligence could be leading to a check
the box approach. CSOs have
stressed the need for ambitious mea-
sures by all brands and retailers oper-
ating in the European apparel sector
to prevent, mitigate and account for
adverse impacts in production coun-
tries. In order to ensure that all com-
panies in the garment and footwear
sector implement supply chain due dil-
igence, CSOs in different EU member
states have been advocating for the
adoption of mandatory due diligence
legislation at the EU level.
Governments: Against the background
NCM-MARCH 2020
59of various cross-sectoral legislation
and policies at the national level to pro-
mote due diligence implementation,
several EU member state govern-
ments see a need to promote a level
playing field with regard to supply chain
responsibility at the European level.
With view to the German EU Council
presidency in the second half of 2020,
discussions between EU member
states and the European Union on ad-
vancing this agenda have started. In
addition, the Dutch and German gov-
ernments have been supporting the
efforts undertaken by the AGT, PST
and SAC to stronger align their tools
based on the OECD Guidance.
The perspective of the AGT, PST and
SAC: The need for a harmonised
European approach to due diligence
In light of the above context, in the past
two years the AGT, PST and SAC have
been cooperating in order to move to-
wards a harmonised assessment
framework for company due diligence
that is aligned with the OECD Guid-
ance. In 2018/2019, the three initiatives
participated in the OECD Alignment
Assessment which aims at contribut-
ing to a common understanding of due
diligence in the garment and footwear
sector and enabling cross-recognition
between initiatives. The results and
recommendations of the OECD Align-
ment Assessments provide the basis
for further alignment between the three
initiatives. In addition, AGT, PST and
SAC have been exploring the poten-
tial for an European initiative aimed at
developing a harmonized assessment
and reporting framework for due dili-
gence implementation in the garment
and footwear sector.
Given the above context and especially
the European or even global reach of
many companies in the industry, a level
playing field and a common under-
standing that extends beyond the AGT,
PST and SAC – at the European level
– is needed. (Source: the Partnership
for Sustainable Textiles, the Dutch
Agreement on Sustainable Garments
and Textile and the Sustainable Apparel
Coalition)