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Poll: Regulation is the Biggest Obstacle to Responsible Supply Chains

At the Organization for Economic Cooperation (OECD) Forum on Due diligence in the Garment and Footwear Sector last month, attendees identified inconsistent regulation as the aspect most responsible for the gap between the implementation of successful due diligence practices in supply chains and the current state of practices throughout the industry.

The secretary general for the OECD, Angel Gurria, agreed, saying that uneven regulations can have the effect of allowing brands to “pick and choose” a selective human rights standard that lacks the comprehensive protection of an international labor standard, like the OECD’s own “Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector.”

To begin improving due diligence practices and to better match international standards, the OECD and Gurria said brands should be aware of three main issues facing the footwear and apparel sector’s supply chains: exploitative purchasing practices, abuse of foreign migrant workers and environmental and climate impacts.

For example, the OECD said poor purchasing factors, including late orders, power imbalances between buyers and suppliers, short lead times, last-minute changes and aggressive price negotiations can have the effect of lowering worker’s wages by up to 22 percent. Often, the pressure on labor in the areas where footwear and apparel brands manufacture can be so great that this imbalance can lead to human rights abuses and corruption, according to speakers at the forum.

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Studies have shown that weak regulations and inconsistent due diligence reporting can increase pressure on the lowest tiers of the supply chain, increasing the prevalence of modern slavery, human trafficking and corruption.

Sedex, a non-profit dedicated to ethical supply chain management and a participant in the forum, suggested that brands take a proactive approach to improving due diligence in their own supply chains as investors begin to expect more from corporate human rights reporting.

For example, by simply supporting the right of workers to freely associate, brands can help to create better conditions in their supply chains.

“The Forum emphasized the importance freedom of association unions can have on better wages and working conditions,” Sedex said in a statement. “Freedom of association is the right of workers to join and form trade unions and bargain collectively. Collaborating with workers’ representatives helps to provide broader views and can help increase broader morale and productivity. Freedom of association and collective bargaining is a fundamental human right, even though many countries still restrict workers from forming unions.”

Brands should constantly consider the impact of their decisions on suppliers, Sedex said, noting that responsible pricing can swing the needle for workers in the opposite direction, resulting in wages almost 10 percent higher. Good relationships with suppliers and realistic production demands and timelines are the first step in that direction, Sedex added.

When it comes to the environment, the Forum agreed the apparel industry has a long way to go. The OECD reported that garment and footwear production currently accounts for between 5 percent and 10 percent of global pollution impacts and an estimated 8 percent of global climate change impacts.