Increasingly, governments are implementing binding due diligence legislation. Strong laws and public commitments for better working conditions, such as remuneration in supply chains create a level playing field in consumer countries. At the same time, this provides assurance to producing countries that they will not lose their competitive position. There is a role for various actors in and around the supply chain to advocate for better policies in consumer countries.
A strong legislative framework includes:
Note! The focus is on due diligence as an umbrella term covering laws that nudge companies to take responsibility for the practices in their direct and indirect supply chain, including the remuneration of workers. Due diligence is the process that companies undergo to identify social and environmental risks in their supply chain, mitigate those, monitor progress and provide access to remedy.
Governments can enable access to finance by funding development projects in third countries, simultaneously they have the ability to set ESG or due diligence requirements for financial institutions in favor of guaranteeing social and environmental policies, including living wages.
With a strong legal framework, governments can stimulate companies to improve transparency in their supply chains and take responsibility for the practices in it, such as the remuneration of workers.
With a strong legal framework, governments can stimulate companies to improve procurement practices and move towards long-term relations in the supply chain.
Various actors play a role in guaranteeing a strong legislative framework in consumer countries, including the notion of living wages. Get inspired by the following tips:
Recognize concerns that producer-country policymakers may have about raising minimum wages, such as threats to employment, export competitiveness, inflation or even social unrest.
Build upon and fully align with existing frameworks by OECD, UN & ILO when formulating due diligence legislation.
Respect the primacy of local actors – regulators, workers and employers – in determining what working conditions are in the country or sector in question.
Make sure to also emphasize the responsibilities of the top management for the due diligence process.
Make sure all companies, big and small, are in the scope of the legislation. Don’t forget to include regulations for the financial sector.
Support SMEs with practical tools.
Create an evidence base to make policy makers and citizens aware of human rights violations and low wages in supply chains.
Create effective awareness campaigns.
Cooperate at the national, regional and global level to stress the importance of adopting the UN Guiding Principles and implementing strong legislation in the area of due diligence.
Seek for effective multistakeholder collaboration.
Realize that advocacy does not need to achieve all objectives immediately. ‘Open-up’ discussions in case decision-makers have concerns about the implications of implementing new regulations.
Pledge for a clear legislative framework at national and regional level to achieve a level playing field.
Share information with policymakers to develop the evidence base for policies that enable better working conditions and living wages in the supply chain.
Engage with senior decision-makers in both producer countries and consumer countries to call for policy and legal reforms which are aligned with the achievement of living wages in supply chains
Send out a strong signal that there is agreement amongst companies about what constitutes better working conditions and a living wage.
Make and live-up to public commitments to reassure actors in producer countries that they are not at risk through efforts to improve working conditions and wages.
Encourage and work with peers to publicly express support for policies that articulate and define the responsibilities of all businesses in view of wages in their supply chains.
Back up words with action and work on better jobs and wages in your supply chain and in your own operations.
International frameworks for corporate due diligence include guidance on the inclusion of the gender perspective. It is important for governments to refer to gender in their policies and for companies to include the notion of gender equality in their due diligence processes. Learn more about gender in due diligence.
Since 2018, various actors in the Dutch food sector signed the International Responsible Business Conduct Agreement for the Food Sector. This is a voluntary commitment to ensure responsible business conduct in international production chains.
Read the whole story ›Ideally policies in consumer countries cover all supply chains and are not sector specific. However, OECD has created sector specific guidance documents.
OECD and FAO have joined forces to create specific guidance for agricultural supply chains. The guidance supports companies to identify risks in supply chains and adequately address those.
OCED has developed a guidance document for the textiles and footwear sector.
The OECD Guidelines for Multinational Enterprises are the only multilaterally agreed and comprehensive code of responsible business conduct that governments have committed to promoting.
The UN Guiding Principles on Business and Human Rights are a set of guidelines for States and companies to prevent, address and remedy human rights abuses committed in business operations.
The OECD/FAO Guidance on gender provides suggestions to include gender in due diligence policy.
The Living Wage Advocacy Initiative is a pilot project implemented in the banana-producing countries of Ecuador and Ghana. The aim is to create national consensus on living wage benchmarks in the banana sector.
The Global Reporting Initiative has developed a document for companies in agricultural supply chains to report about their efforts to mitigate risks in the supply chain.
If you need more inspiration or guidance for the implementation of ‘improve policies in consuming countires, or if you want to add a tip, sector consideration or case study send an email to the IDH living wage experts!
