OECD Secretary-General Angel Gurria and ILO Director General Guy Ryder at the preparatory G7 Conference in Berlin in March this year.
A new approach to labour conditions in global supply chains is fast emerging. Human rights and labour standards will be applied in global supply chains more effectively than today. This came clearly out from the recent (10.-11.3.) G7 Conference on sustainable supply chains, arranged in Berlin by the German Presidency.
The Rana Plaza disaster in Bangladesh opened our eyes to the inhuman working conditions in major supplier countries. Those that may have thought that this will be fast forgotten have been proven wrong.
If the German government gets its way, the changes could be closer than we may think. The G7 Presidency is a solid platform for launching the initiative. Having participated in the Berlin Conference, I have no doubts: The political leadership of Europe’s and the European Union’s leading economy is clearly committed to change.
The intention today is to keep the approach voluntary. If the business sector lives up to its obligations, it could remain so. If real change does not happen, we may well see more legislation, sanctions and other binding measures. This would surely be the case also when countries apply the UN Guiding Principles on Business and Human Rights.
During two days, stakeholders from leading schemes and initiatives joined NGOs, business associations, governments and others, altogether 300 participants, in discussing the best ways to approach challenges. Germany’s labour and development ministers Andrea Nahles and Gerd Müller, as well as many of their minister colleagues from other countries, participated personally much of the time, joined by top government officials.
Major developments are on their way.
In Berlin, the top leaders of the ILO, OECD and the World Bank sat in the same panel, for the first time ever. They committed their organisations to major roles in bringing about a social dimension to global supply chains.
Chancellor Angela Merkel took a personal interest and issued an important statement on the world economy and its social dimension, together with ILO Director General Guy Ryder, OECD Secretary-General Angel Gurria and World Bank President Jim Yong Kim.
Surprisingly few large brands and retailers were present. Those who were there included Carrefour, H&M and Ikea – not surprising perhaps, when one knows how seriously they approach their supply chain responsibilities. Otherwise the business community – unless I have missed someone – was represented only through organisations, and by a number of German small and medium enterprises who are really focused on sustainability.
To stay away from the meeting was not a good choice.
Most large German brands and retailers question the government’s plans to introduce a sustainability label for consumers. Until now they have tended to distance themselves from the national tripartite textile alliance, the “Textilbündnis”.
The Berlin conference may well change this reserved approach, and hopefully it will. It does not have to mean that the companies give up their substance reservations, and if they really want to promote them they would need to be present.
Brands and retailers also tend to think that they are unable to take responsibility for anything below their first level suppliers. They point at the complicated structures of supply chains and say they are impossible to monitor effectively.
Not only brands and retailers are to be blamed for a lack of concerted action.
Social campaigners and many trade union organisations like to say that buyer companies just want to shy away from their responsibilities, focusing on generating as much profits as they can from their supply chains.
This may be true at times, and surely is, but far from always. There is a clear commitment to decent supply chain standards also in the business community and if the right approaches are found, real improvements will come about.
Taking formal responsibility for a long and complicated supply chain is definitely a serious decision that cannot be made lightly. The same is true about consumer labels. If even advanced monitoring schemes such as the Fair Wear Foundation does not believe even in certifying factories, and SA8000 has decided not to use consumer labeling, then one can ask whether it is really possible to apply this on a general level.
Back to Berlin, business should have participated more actively in the conference. Also for those who have strongly divergent views it would have been better to have them around the table.
Business should indeed be careful and alert. There is a post Rana Plaza world which will not continue to tolerate an economy that allows and even relies on poor and dangerous working conditions and extremely low wages. If a consensus between governments and all stakeholders is not found, we will see political solutions and legislation.
Social campaigners and trade unions should reflect whether it is really smart to dismiss the relevance of multi-stakeholder and business driven CSR initiatives – or social auditing for that. Without the engagement and active participation of buying brands and retailers it will be very difficult to apply any standards. The Global Social Compliance Programme GSCP can be very effective and useful here, and I will surely take some initiatives at our forthcoming board and member company meetings in Los Angeles.
So, what will then happen now?
- The UN Guiding Principles on Business and Human Rights will be applied through national legislation in all major industrialised countries. There is no doubt about this. There will also be a legal dimension and home countries of buyer companies will require that obligations are respected.
- The OECD Guidelines for Multinational Enterprises will be more effectively applied and national contact points will play more of a role, this was made clear by Secretary-General Angel Gurria.
- The world Bank will substantially upgrade social conditions as part of its development projects and is adding to its dedicated staff in cooperation with ILO, as its President Kim told the Berlin meeting.
- Next year’s International Labour Conference will focus on global supply chains as a major issue.
I am further convinced that a living wage for all workers will soon be required all through the global supply chains.
When the G7 Presidency actively, openly and forcefully promotes environmental and social conditions in global supply chains, it would be smart to listen very carefully. We may well be witnessing the beginning of a new CSR era that brings a real change to the better for the supply chain workers and their families.