The OECD said the guidance will help companies identify and prevent potential negative impacts related to human rights, labour, the environment and corruption in garment and footwear supply chains worldwide. It also offers comprehensive and government-backed recommendations to business that address risks they may face in both manufacturing and sourcing materials.
The collapse of the Bangladeshi Rana Plaza factory in 2013. with a loss of over 1,130 lives, brought global attention to the risks of severe adverse impacts in all aspects of the garment sector, according to the OECD. Roel Nieuwenkamp, chair of the OECD Working Party on Responsible Business Conduct wrote recently that Rana Plaza was a subcontractor to many garment companies, which meant that often companies did not place their orders directly with factories operating out of Rana Plaza. In some cases the subcontracting was illegal.
Nieuwenkamp wrote: “While there was already general agreement in the sector that companies should identify and address risks with direct suppliers, the complexities of Rana Plaza raised the question, whose responsibility is due diligence when we look beyond direct contractors and further up the supply chain?
“The OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights are clear: companies have a responsibility to identify, prevent, mitigate and account for adverse impacts in their supply chains. In June 2015 the G7 promoted international efforts to promulgate industry-wide due diligence standards in the textile and ready-made garment sector.”
The OECD guidance comes as a result of the initiative by the G7 and promotes a systematic and integrated approach to managing risk and purchasing, involving on-going, proactive and reactive processes, with a focus on progressive improvement. The OECD said that the guidance recognises both the diversity of the sector as well as the complexity of the challenges that the sector faces.
The guidance recommends that enterprises take a collaborative and risk-based approach to identify ways to address impacts of its operations and sourcing decisions and monitor progress over time, while encouraging ongoing engagement with business partners in developing economies. It calls on buyers to embed social, human rights and environmental considerations into their purchasing practices, and collaborate with common buyers to avoid supplier audit fatigue, so that companies can direct their resources towards prioritising the prevention of more severe impacts.
Nieuwenkamp highlighted that the OECD MNE guidelines – which 46 countries are signed up to – are backed up the National Contact Points (NCP) and there had already been cases brought to NCPs related to due diligence in the garment and footwear sector. The guidelines are relevant for companies within adherent companies but they are also relevant for any company operating in their global supply chains, Nieuwenkamp wrote.