Demanding Due Diligence:

The 9th OECD Garment and Footwear Due Diligence Forum

Written by Elizabeth Umlas

February 21, 2023

The foundation for the annual OECD garment and footwear forum, held last week in Paris, is due diligence. The term is one of the most widely used buzz phrases in the field of business and human rights; it is short-hand for the responsibility that companies – of all sizes, in all sectors – have to identify, prevent, mitigate and account for their adverse impacts on human rights. Due diligence is elaborated upon in the 2011 UN Guiding Principles on Business and Human Rights and is now being incorporated into emerging legislation (almost exclusively in Europe) that calls for mandatory human rights and environmental due diligence by companies: known in abbreviated form as “mHREDD” laws. 

The Forum brought together a diverse group of stakeholders. Participants included officials and representatives of brands and retailers, garment and textile suppliers, trade unions, governments, NGOs, academics, investors, consultants and business associations. The two-day event, preceded by three days of “side sessions”, covered multiple important topics, but three themes stood out for me.

  • As one participant put it, “We cannot audit our way out of problems”. Multiple speakers called on the industry to discard the failed, decades-old “compliance-based” or social auditing approach, in which companies hire external, private parties to conduct inspections of their supplier factories. The imperative now is to move toward a model based in human rights due diligence, which – done properly – would require the integral involvement of workers and trade unions. These calls are becoming more urgent as both countries and regions (for example, France, Germany and the EU) are passing or proposing mHREDD laws. 
  • The garment and textile sector is marked by deep imbalances of power that lead to unfair distribution of costs in global supply chains. These include imbalances between buyers and suppliers, between suppliers and workers, and between male and female workers. As panelists repeatedly made clear, brands and retailers hold the upper hand, profiting while pushing costs and responsibilities onto manufacturers, with workers paying the ultimate price in the form of low wages and poor or even dangerous working conditions. 

These fundamental imbalances are unjust but also unsustainable in a business sense. They have led to production countries bearing the brunt of negative environmental and social impacts of garment and footwear manufacturing. They have also fed worker protests and resulted, in some cases, in high-profile campaigns against brands that cancelled orders or whose suppliers shut down during the pandemic, leading to massive wage theft from factory workers. Some of the Forum sessions touched on initiatives that seek to address these imbalances and redistribute supply chain costs and profits more evenly. Notable examples include a push by manufacturers to get brands to cease abusive purchasing practices (the Sustainable Terms of Trade Initiative), and brand-trade union collaboration through the ACT initiative, which seeks to reach a living wage for garment workers through sectoral collective bargaining.

  • Numerous efforts are already underway to address these human rights gaps in garment supply chains, but more brands must step up and join these initiatives if they are to be viable – and if brands are to match promises with actions. Speakers pointed to examples of successful and promising collaboration between suppliers and buyer companies, between brands and trade unions, and between these and other entities, such as governments and NGOs. These initiatives are innovative precisely for their efforts to address power imbalances, reject failed mechanisms and pay workers a living wage. But relatively few companies participate in them. 

Indeed, the Forum could have delved more substantively into these examples, including those based on binding agreements (such as the International Accord for Health and Safety in the Textile and Garment Industry) and those explicitly targeting issues such as purchasing practices and living wage (such as ACT). Earlier in the week, I spoke on a virtual side session to the Forum that was devoted to collaborative initiatives between brands and trade unions and the need for “shared responsibility” – among companies, suppliers, governments, investors and labor – to address gaps in global supply chains such as a living wage and social protection for garment workers. It would have been instructive for the Forum to have more systematically connected the dots among these initiatives, which seek to shift the sector to new models, and enlightened its plenary audience on this bigger picture.   

One last impression that jumped out from the Forum, and which panelist Sarah Dadush, of Rutgers University, highlighted in the final session: Europe is well ahead of the U.S. in many areas needing fundamental change. This is the case, for example, for brand participation in binding agreements with trade unions, the passage of mHREDD laws and the willingness of business even to discuss rights-based approaches. And some of the forward-looking initiatives spotlighted in the conference involve not just European companies but also those from Japan and Australia. US business stands out for its refusal (with a few exceptions) to get on this train. As legislation spreads to cover entities that do business in countries with newly formed mHREDD laws, and not just companies based there, US multinationals’ behavior will increasingly fall afoul of these new regulations. 

Liz Umlas is a senior fellow at Croatan and senior advisor to IndustriALL Global Union.