10 Principles of Decent Work #10: Supply Chain Transparency

Supply chain traceability and transparency at a glance

As reflected in slavefreetrade’s human rights framework for decent work principle n.10, supply chain traceability and transparency can play a key role in addressing forced labour and modern slavery. As companies increasingly outsource goods and services abroad, supply chains risk becoming black boxes where forced labour can quietly proliferate [1]. Tracing supply chain and making it transparent help cast light on the line of production and reduce space for forced labour to hide. Indeed, traceability requires companies to monitor all levels of their value chain so that they are able to identify and reject instances of forced labour and modern slavery [2]. Disclosure of information on supply chains (i.e., transparency), instead, enables consumers to know companies’ performance at the ethical level - including respect of labour rights - and provides consumers with tools to make informed decisions on their purchases [3].

Normative framework on supply chain traceability and transparency

During the last decade, multiple initiatives to ensure supply chain traceability and transparency have been adopted at both the international, national and company level. They mostly consist of due-diligence regulations and codes of conduct with the end goal of tackling forced labour throughout supply chains.

a. International normative framework

At the international level, the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy of the International Labour Organization (ILO) is one such example. It requires that enterprises “carry out due diligence to identify, prevent, mitigate and account for how they address their actual and potential adverse impacts on internationally recognized human rights” [4]. In 2016, ILO also adopted a resolution recommending that governments establish due diligence procedures for state owned or controlled enterprises across their supply chains. Another key international regulatory framework is the recommending that governments establish due diligence procedures for state owned or controlled enterprises across their supply chains. Another key international regulatory framework is the United Nations (UN) Global Compact. The UN Global Compact sets out ten corporate sustainability principles, including in the fields of human rights and labour, and offers tools for their implementation. However, enterprises are merely “invited” to align to it [5]. The UN Guiding Principles on Business and Human Rights represents another international instrument according to which business enterprises should respect “internationally recognized human rights, which includes fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work” [6]. Accordingly, enterprises should “take adequate measures” for the prevention, mitigation and remediation of “adverse impacts” on such rights [7].

In 2011, the European Union (EU) Commission has also invited “EU Member States to develop by the end of 2012 national plans for the implementation of [such] Principles” [8]. Other initiatives worth of mentioning are the OECD Guidelines for Multinational Enterprises and the ISO 26000 Guidance Standard on Social Responsibility.. The UN Global Compact sets out ten corporate sustainability principles, including in the fields of human rights and labour, and offers tools for their implementation. However, enterprises are merely “invited” to align to it [5]. The UN Guiding Principles on Business and Human Rights represents another international instrument according to which business enterprises should respect “internationally recognized human rights, which includes fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work” [6]. Accordingly, enterprises should “take adequate measures” for the prevention, mitigation and remediation of “adverse impacts” on such rights [7]. In 2011, the European Union (EU) Commission has also invited “EU Member States to develop by the end of 2012 national plans for the implementation of [such] Principles” [8]. Other initiatives worth of mentioning are the OECD Guidelines for Multinational Enterprises and the ISO 26000 Guidance Standard on Social Responsibility.

Despite representing steps forward, such international initiatives have missed the target. The main causes relate to the nature of the issue at stake as well as the nature of the normative instruments adopted. Concerning the former, it bears noting that the transnational character of supply chains makes it complicated to draft a truly comprehensive and universal normative framework to ensure supply chain traceability and transparency [9]. As a result, the international normative framework remains highly fragmented. As to the latter, the non-binding nature of the regulatory instruments adopted has caused compliance gaps at the domestic level.

b. National normative framework

In response to a failure at the global level, public and private initiatives have started to multiply at the national one [10]. In this regard, some examples are worth mentioning. On the public side, the California Transparency in Supply Chains Act (2010) (CTSTA) is pioneer in this regard. It requires companies to disclose their “efforts to eliminate forced labour and human trafficking from [their] direct supply chain" [11]. However, it only applies to retail sellers and manufacturers that operate in California and reach a certain threshold in annual worldwide gross receipts (i.e., $100 million or more). Transnational sections of supply chains therefore remain out of reach. Concerning the US, other regulations on supply chain traceability and transparency have been adopted at the federal level, namely the Business Supply Chain Transparency on

Trafficking and Slavery Act (2014) and Executive Order 13627 Strengthening Protections Against Trafficking in Persons in Federal Contracts.An innovative national response to tackle forced labour in supply chains was developed by Brazil between 2004 and 2005. The Brazilian approach revolves around a national investigatory mechanism, the drafting of a “black” list of companies which have engaged in forced labour practices, and a voluntary multi-stakeholders Pact, whereby signatory parties commit themselves to not collaborate with blacklisted companies [12]. Canada also has adopted its own legislation on the matter. Notably, Bill S-216 (An Act to amend the Income Tax Act) imposes reporting obligations on entities doing business either nationally or internationally to fight against forced and child labour.

While the mentioned national initiatives address the domestic market as a whole there also exists a wide range of regional and national sector-specific regulations, that is, norms addressing specific market sectors deemed at high risk of forced labour [13]. The articulated normative framework just described is made even more complex by a variety of self-regulatory initiatives adopted at the enterprise level. To provide an example, in California, even before the CTSCA, many large retail companies had already adopted standards to ensure the ethical compliance of products throughout their supply chains [14]. In particular, they had required “certification on enforcing global compliance with basic human rights standards and stopping abuses through formal agreements with their suppliers" [15].

Conclusion

All in all, it is safe to say that countries and companies are aware of the risk that modern supply chains carry in terms of forced labour proliferation and have demonstrated the willingness to address it. Nevertheless, their efforts remain isolated and often disconnected from other stakeholders’ initiatives. The result is a constellation of single national and corporate responses gauged around supply chain specificities at the country or market level. Such existing framework, though useful in certain regards, seems overall ill-suited to address the global reach of the problem at stake.

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References

[1] Gold S., Trautrims A. and Trodd Z. (2015). Modern slavery challenges to supply chain management. Supply Chain Management, 20(5), 486.

[2] Norton T. and Conlon C. (2019). Supply Chain Visibility: Traceability, Transparency, and Mapping. BSR. Available on https://www.bsr.org/en/our-insights/blog-view/supply-chain-visibility-traceability-transparency-and-mapping

[3] Ibid.

[4] International Labour Organization (2017). Fifth Edition - March 2017 Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. .

[5] Decent Work Toolkit for Sustainable Procurement: Mitigate Risks and Advance Decent Work in Your Global Supply Chain. Available on https://www.unglobalcompact.org/take-action/sustainableprocurement

[6] Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, 2011, 13.

[7] Ibid.

[8] Communication from the Commission to the European Parliament, The Council, The European Economic and Social Committee and the Committee of the Regions: A renewed EU strategy 2011-14 for Corporate Social Responsibility, 2011, 14.

[9] Achieving decent work in global supply chains: Report for discussion at the technical meeting on achieving decent work in global supply chains, 2020, paras. 100-101. See also, Supply Chain Sustainability. Available on: https://www.unglobalcompact.org/what-is-gc/our-work/supply-chain

[10] Pickles J. and Zhu S. (2013). The California Transparency in Supply Chains Act. Capturing the Game Working Paper, 15(2), 2.

[11] State of California Department of Justice (2010). The California Transparency in Supply Chains Act. [12] Feasley A. (2015). Deploying Disclosure Laws to Eliminate Forced Labour: Supply Chain Transparency Efforts of Brazil and the United States of America, Anti-Trafficking Review, 5, 3-4.

[13] See, for instance, Ministerial Regulation No. 35/PERMEN-KP/2015 on System and Certification of Human Rights in the Fishing Industry (2015). Available on https://www.informea.org/en/legislation/ministerial-regulation-no-35permen-kp2015-system-and-certification-human-rights-fishing. See also The Dodd-Frank Wall Street Reform and Consumer Protection Act (2010). Available on https://www.cftc.gov/sites/default/files/idc/groups/public/@swaps/documents/file/hr4173_enrolledbill.pdf

[14] Pickles J. and Zhu S. (2013). The California Transparency in Supply Chains Act. Capturing the Game Working Paper, 15(2)

[15] Ibid.

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