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Brands Aren’t Serious About Human Rights if They’re Lobbing ‘Oppressive Terms’ at Suppliers

Promoting workers’ voices is no longer just a nice-to-have, experts say. Now more than ever, brands and retailers need to engage with their suppliers to overcome supply-chain challenges, build resilience and achieve their financial, social and environmental sustainability goals.

“It’s really together in collaboration and through dialogue that [buyers] can tap the really valuable insights suppliers have [on how] business might be conducted better,” Marsha Dickson, president of the Better Buying Institute, said in a virtual discussion last week.

Conversely, poor purchasing practices, such as high-pressure cost negotiations, canceled orders and delayed payments, can trigger an increase in management stress, worker layoffs and worker overtime, as well as a decline in worker productivity, she said.

The Texas nonprofit, which provides a platform for suppliers to communicate with their buyers about purchasing practices, collaborated with Ulula, a New York- and Toronto-based worker-voice technology firm, last November and December to survey 17 apparel, footwear and furniture factories in the supply chain of one buyer company in Vietnam. The organizations also reached out to 1,400 of their workers, 68 percent of whom were women.

Of the suppliers polled, more than 67 percent reported increased pressure on their profitability and economic sustainability since the contagion hit, and nearly 53 percent said they had greater difficulty providing good working conditions and wages. Most workers (73 percent) said they experienced more anxiety and stress than they did pre-pandemic. Safety at work (36 percent) was a top concern, followed by family safety (25 percent) and personal finances (24 percent).

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While the poll captures “one moment in time in the pandemic” and in one group of suppliers and their workers, Dickson said, it helps inform a general understanding of how changing purchasing practices can have knock-on impacts on workers further upstream.

Not everything changed for the worse, however. Two-thirds of the suppliers surveyed pointed out several buyer “best practices,” including flexibility with order shipment and delivery dates, on-time and early payment and not canceling orders. Because of these allowances, more than one-third (35.3 percent) of suppliers were able to follow social distancing guidelines, and 30 percent were able to retain workers, pay worker wages on time and in full, pay for workers’ social benefits or provide adequate personal protective equipment.

“These best practices didn’t just result in positive impacts as reported by suppliers, [but] they also had direct impacts on workers,” Dickson said. When suppliers reported fair payment practices, the report found, 8 percent of workers felt “most concerned” about personal finances and 7 percent more workers were paid on time, in quarantine or during sick leave.

Vietnam has weathered the fallout of the pandemic better than its counterparts in Bangladesh or Cambodia for several reasons, said Thomas Radal, Europe representative at Ulula. For one thing, the Southeast Asian country has “done well” in keeping the pandemic under control. For another, it has benefited from China’s “challenging sourcing situation,” in part due to forced-labor allegations in the Xinjiang Uyghur Autonomous Region, “so some of the businesses are moving to Vietnam,” he said.

At the same time, Vietnam has fewer migrant workers compared with neighboring countries such as Thailand and Malaysia. “We know this is a particularly vulnerable population in times of crisis,” Radal said. “So probably all these elements together can explain [why] the overall results are relatively better in Vietnam [when] focusing on the impact on the workers themselves.”

The project demonstrates the importance of connecting purchasing practices to both worker and supplier experience, Dickson said. “I don’t think that value can be understated especially as we emerge from the pandemic, and we hope it has helped you to better understand and proceed to address the challenges faced by suppliers and workers and give you some ideas of best practices in your own sphere of influence,” she added. “And also then flag some key areas for action.”

Workers’ rights have emerged at the forefront of recent discussions about mandatory human-rights due diligence legislation in Germany, the Netherlands, the United Kingdom and the European Union. Last month, the American Bar Association published a report on a proposed Model Contract Clauses to Protect Workers in International Supply Chains that would integrate the United Nations Guiding Principles on Business and Human Rights and the Organisation for Economic Co-operation and Development’s due-diligence guidance into international supply contracts.

With government agencies such as U.S. Customs and Border Protection taking growing measures to stop tainted goods from entering the U.S. market and supply-chain litigation, whether led by human-rights victims or Western consumers, on the rise, there can therefore be “little doubt that the face of global corporate accountability for human-rights abuses within supply chains is changing,” the report’s authors wrote.

“Aggressive contracting, characterized by unfairly one-sided or oppressive terms, tends to promote oppositional rather than cooperative buyer-supplier relationships,” they added. “This can generate undue commercial pressure on suppliers, exacerbate human-rights risks, and undermine the buyer’s ability to meet its own human rights commitments. On the other hand, better contracts and better contractual practices can generate better human-rights outcomes.”