Launch of the OECD Due Diligence Guidance for Responsible Supply Chains in Garment + Footwear Sector

Launch of the OECD Due Diligence Guidance for Responsible Supply Chains in Garment + Footwear Sector

On the 8th and 9th of February 2017, the OECD Roundtable on Due Diligence in the Garment and Footwear Sector (the “OECD Roundtable”) took place in Paris. As part of the roundtable, the 188 pages OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (the “OECD Guidance”) was launched.

The OECD Roundtable in 2017
The OECD Roundtable on Due Diligence in the garment and footwear sector is an annual event since the Rana Plaza tragedy in April 2013 which brings together more than 200 representatives of governments, businesses, trade unions and civil society from the currently 35 OECD member states but also non-OECD member states such as China or Cambodia.

Launch of the Due Diligence Guidance
During the OECD Roundtable 2017, the 188 pages OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector was launched.

I. BACKGROUND

A sector-specific guidance aligned with the OECD guidelines and other regulatory frameworks
This OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (the “OECD Guidance”) is a sector-specific guidance which supports enterprises in implementing the due diligence recommendations contained in the OECD Guidelines for Multinational Enterprises (“OECD Guidelines”), the UN Guiding Principles on Business and Human Rights (“UNGPs”), and other relevant Responsible Business Conduct (“RBC”) standards such as the Universal Declaration of Human Rights, the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, relevant ILO Conventions and Recommendations and the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.
It is the fourth sector-specific guidance after a guidance for Responsible Agricultural Supply Chains, Meaningful Stakeholder Engagement in the Extractive Sector, and Responsible Mineral Supply Chains. A fifth guidance for the Financial Sector is in development.

II. DUE DILIGENCE APPROACH

Ongoing, pro-/reactive and flexible
Due diligence should be ongoing, proactive and reactive, applied with flexibility and not lead to a “tick the box” approach. Due diligence is defined as the process through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts.

Risk based (“priorities first”)
The OECD Guidelines recommend carrying out risk-based due diligence, meaning that the level of due diligence applied corresponds with the level of risk. This ensures that the measures to prevent or mitigate adverse impacts are commensurate to the risks identified and resources are directed in accordance with priorities so that risks of severe adverse impacts receive the highest attention.
The procedures & measures that an enterprise implements to conduct due diligence are proportionate to the likelihood & severity of the harm.

Meaningful stakeholder engagement
Stakeholders should be involved—meaning that they should actively participate in design and implementation—in the following due diligence processes: on-site supplier assessments; development of corrective action plans; verification, validation and monitoring of impacts; design of operational-level grievance mechanisms.

“6 steps framework”
The core of the due diligence guidance is the description of a due diligence process which includes the following six steps:

  1. Embed responsible business conduct in enterprise policy and management systems
  2. Identify actual and potential harms in the enterprise’s own operations and in its supply chain
  3. Cease, prevent or mitigate harm in the enterprise’s own operations and in its supply chain
  4. Track
  5. Communicate
  6. Provide for or co-operate in remediation when appropriate

12 modules on sector risks
The guidance further includes 12 modules for the most common sector risk areas like occupational health and safety, wages, child labour, water, etc. The modules provide information on how enterprises may apply the due diligence recommendations (“the six steps”) to sector risks in the garment and footwear sector.

III. APPLICATION

Voluntary guidance but relevant for regulation and assessment by stakeholders
The observance of the OECD guidance is voluntary and not a legal obligation. Some of the practices, standards and principles set out in the OECD guidance may, however, also be regulated by national laws, for example, non-financial reporting requirements and due diligence on bribery and corruption. 
The OECD guidance may be used by National Contact Points (NCPs) to the OECD Guidelines to promote the OECD Guidelines. The OECD Guidance can also serve as a reference for other stakeholders to understand the measures enterprises are recommended to take with regard to managing their impacts.

Agreements make headlines, implementation makes change
While the development of the OECD Guidance was appreciated as great step, participants of the roundtable emphasized that only the proper and widespread implementation of the OECD Guidance will lead to actual change.

IV. BSD SUPPORT ON DUE DILIGENCE

BSD Consulting supports companies in all six steps of their on-going risk-based due diligence process and the implementation of the OECD guidance. We also offer workshops on due diligence in garment and footwear supply chains. If you are interested to learn more how BSD Consulting supports companies to improve their due diligence approaches, please contact us.

Contact:
Sophia Opperskalski, Sustainability Consultant for BSD located in the Berlin office: s.opperskalski@bsdconsulting.com
Martin Stäheli, Head Sustainable Supply Chain Manangement located in the Zurich office: m.staeheli@bsdconsulting.com