Turning Ambition into Practice:
Implementing Effective Due Diligence at the OECD Forum
Blogpost, 26 February 2024
This week, industry leaders convened for the OECD Forum on Due Diligence in the Garment and Footwear Sector to influence agenda-setting on critical topics including binding company-union agreements, climate adaptation, living wages, the role of retailers in fostering responsible supply chains, certifications, and grievance mechanisms. The common thread throughout the Forum was a profound understanding of the urgency to forge a future where due diligence is not just a recommendation or requirement, but an intrinsic part of how industry actors operate, both independently and collaboratively. This must be done while consistently engaging and integrating the perspectives and lived realities of workers.
Binding Company-Union Agreements: A Path to Fairness and Trust
The focus on stakeholder collaboration set the tone for the session 'Binding company-union agreements and their role in due diligence.' Dr. Bärbel Kofler of Federal Ministry for Economic Cooperation and Development (BMZ) emphasised how a mandatory legal framework fosters collaboration among brands, trade unions, and NGOs through meaningful stakeholder engagement. This collaboration aims to develop and implement practical solutions, ultimately benefiting workers on the ground. Atle Høie of IndustriALL Global Union stressed the importance of respecting freedom of association as a fundamental right in binding agreements, highlighting its role in building trust between companies and unions. Ken Loo from the Textile, Apparel, Footwear & Travel Goods Association echoed this sentiment by advocating for fair protection of all parties involved in upholding the contract. "We must instil faith and base it on a system where both parties can lean on [written agreements]", argued Loo. In contexts where trust is lacking, legally binding agreements can serve as a solution for fostering fair and responsible interactions.
Navigating Climate Adaptation Challenges
From left to right: Joy Roeterdink (Suitsupply), Tamar Hoek (Solidaridad), Laila Petrie (2050), Sophie Lavaud (OECD), Jason Judd (Cornell University)
The conversation broadened, and the focus shifted to addressing climate change challenges through due diligence. Jason Judd from Cornell University outlined the interconnected social and health risks posed by climate change, including extreme heat, flooding, water scarcity, worker safety, and business continuity challenges. BCWS’Kalpona Akter emphasised these challenges' disproportionate and gendered impact on women workers, especially when household responsibilities intersect with climate-related disruptions. She underscored the inconsistency in caring for women workers within factories versus neglecting their well-being in the private space of the household, advocating for systemic approaches to social due diligence that address broader societal issues. Akter continued to reiterate the necessity of involving various stakeholders, including trade unions, civil society organisations, NGOs, and factories, in adaptation discussions, emphasising the need for adaptation policies at both national and factory levels: "We demand that our voices are at the centre of the table because we are the ones most affected."
Pursuing Living Wages: Strategies for Action
In the session 'Brand due diligence strategies in living wages: adapting action to context’, Fiona Dragstra from WageIndicator Foundation highlighted the prevailing issue of companies failing to meet minimum wage requirements, let alone ensuring living wages. This aligns with the data from The Industry We Want's 2024 wage metric, which reveals a 49.5% average gap between minimum wages and living wage estimates across 28 garment-producing countries. Prathihka Kurian from SanMar emphasised the link between wages and responsible purchasing practices, and the importance of a partnership approach between companies and factories, stressing the importance of understanding factories’ operations within a mutually beneficial, long-term relationship. Filip Stefanovic from TUAC echoed this sentiment, emphasising the crucial need for worker empowerment and equitable social dialogue to drive wage increases and meaningful systemic change.
From left to right: Ilishio Lovejoy (Simple Approach), Prathika Kurian (SanMar), Peter McAllister (ETI), Filip Stefanovic (TUAC), Fiona Dragstra (WageIndicator)
Retailers as Agents of Change in Responsible Supply Chains
The imperative for collaboration continued to seep into the session 'The role of retailers in building responsible supply chains'. The panel discussion strengthened the importance of transparency, standardisation, and collaboration for continuous improvement between buyers and retailers, alongside the role of regulation in providing a level playing field. Christian Smith from Zalando expressed that "for retailers, creating impact stems from taking the opportunity to identify our leverage points alongside the capacity of brands, and collaboratively seeking solutions together." A key challenge retailers face is gaining transparency within their partners’ supply chains and exerting meaningful influence over their operational and business strategies. For instance, addressing Responsible Purchasing Practices (RPP) issues, such as urging to amend their payment terms with suppliers, presents a complex challenge for retailers due to the indirect nature of their influence. The discussion continued to underscore that retailers possess a unique position to drive positive change by creating effective incentives that encourage their business partners to adopt and uphold the best Responsible Business Conduct (RBC) practices. Andrew Martin, Executive Vice President of Cascale and Executive Representative of The Industry We Want, likened legislation for the sector to a springboard rather than merely a compliance tool, emphasising its role in facilitating genuine improvement and industry transformation.
The Role of Certifications in Due Diligence
From left to right: Andrea Schill (OECD), Rebecka Sancho (G-Star RAW), Nikhil Hirdaramani (Hirdaramani Group), Sheela Ahluwalia (Transparentem), Anant Ahuja (Shahi Exports)
The opening session of day two, titled 'More than just paperwork? The role of certifications in due diligence,' delved into the significance of certifications in due diligence processes. Sheela Ahluwalia from Transparentem urged the necessity for structural changes, stressing that companies must ensure that workers’ freedom of association and legitimate representation, as “without these key components, audits will not be able to uncover the truth”. Anant Ahuja from Shahi Exports Pvt Ltd mirrored Ahluwalia's perspective, highlighting that audits offer merely a snapshot of a momentary situation. He emphasised that a robust due diligence process requires ongoing assessments and the extraction of insights to effectively identify, mitigate, and prevent risks. The panel collectively agreed that audits must be improved through a shared-responsibility approach of standardisation, transparency, liability, and regulation to maximise worker agency and reduce deception.
Access to Remedy: Ensuring Worker Protection
The session ‘Where to turn to? Exploring access to remedy for workers across grievance mechanisms’ addressed workers’ experiences of accessing remedy when filing complaints under different grievance mechanisms operating in the sector. There was overarching agreement that accessibility is key: workers and rights holders should be made aware of the existence of the grievance mechanism, and should be able to use it easily. Liselotte Goemans from Fair Wear Foundation highlighted that a way to do this is to rely on local teams, who play a vital role in facilitating effective communication and complaints by speaking local languages, thereby ensuring that workers can express themselves and complain in a language they are comfortable with.
From left to right: Maria Xernou (OECD), Kirstine Drew (International Accord), Markéta Svobodová (Ministry of Industry and Trade, Czechia), Liselotte Goemans (Fair Wear), Annabell Brüggemann (European Center for Constitutional and Human Rights)
Goemans underscored the need for effective access to remedy, acknowledging the challenges posed by numerous parallel systems that can confuse and hinder workers. Advocating for collaboration and integration among existing mechanisms, she emphasised centering workers' perspectives and feedback to determine acceptable remedies. Furthermore, Goemans emphasised integrating grievance mechanisms and access to remedy into a comprehensive Human Rights Due Diligence (HRDD) approach. By aligning mechanisms, audits, and assessments within a unified system, companies can enhance risk-management in their supply chains, ultimately promoting more effective outcomes for workers.
Shaping and upholding effective due diligence
As we conclude this Forum, it is evident that the time for action is now. The EU Corporate Sustainability Due Diligence Directive (CSDDD) stands as a crucial step towards enshrining these principles into law. It becomes unequivocally clear that engaging the voices of production countries, fostering collaboration, and ensuring transparency are key to deliver on industry transformation. We have the momentum to propel us toward a future where due diligence transcends aspiration, becoming a concrete reality intricately woven into the fabric of our global supply chains.
