Submission on

DRAFT GUIDING PRINCIPLES FOR THE IMPLEMENTATION OF THE UNITED NATIONS ‘PROTECT, RESPECT AND REMEDY’ FRAMEWORK

with regard to

the corporate responsibility to respect human rights in the supply chain

This statement is meant to provide professor John Ruggie, UN Special Representative for Business and Human Rights, and his team with our view on supply chain responsibility. We support the objective of the Special Representative to provide clear guidance to companies to conduct due diligence in the supply chain as this is an essential element to prevent human rights abuses. However, operational criteria are needed to clarify the kind of action expected from enterprises. Although the draft Guiding Principles(GPs) do contain criteria for several elements of the framework (such as non-judicial grievance mechanisms) this is not the case for due diligence in the supply chain.Therefore we strongly request the Special Representative to include in the final version of the GPs operational guidance for due diligence in the supply chain.

Operational guidance for due diligence in the supply chain was explored in earlier stages of the mandate of the Special Representative. One of the results of this exploration is the Discussion Paper by John Ruggie, on the occasion of the OECD Roundtable on corporate responsibility[1]. We welcome the general outline of the action an enterprise should take as presented in this Discussion Paper and therefore we suggest that this paper, as well as the following comments could provide the needed guidance. Our suggestions are based on MVO Platform expert knowledge of supply chain management as well as abuses, through our research and direct contacts with partner organisations facing the effects of corporate misconduct in developing countries.

  1. Pro-active, real-time (during the relation) and if necessary remedial actions of buyer companies, are needed to prevent or correct abuses through the services or products they purchase. The Special Representative rightly states that reliance on contract clauses is insufficient especially if companies do not monitor implementation of the contract clauses. It should be part of due diligence to monitor implementation, especially when risks can be reasonably foreseen.
  1. In general we support the decision logic as presented in the Discussion Paper. It is especially important that enterprises use their leverage to mitigate abuses or seek to increase leverage to do so. Sector or industry associations can be advised to play a stimulating and/or co-ordinating role in creating common leverage on joint relevant issues.
  1. The decision to what extent a source partner is crucial or not, is left to the enterprise. An indication such as “no reasonable alternative source” leaves room for many interpretations still. We urge Ruggie and his team to clarify this formulationand look for operational criteria to define this concept and extend it, where possible, beyond present business practices of the particular company. Examples could be: sourcing outside own region or country when this is not already common, looking for different raw materials or (half)products with the same functionality, changing the production process etc.
  1. The decision logic is based on the principle that the amount of leverage the enterprise has towards its supplier is an important factor in determining the required steps. This is reasonablehowever this is one of the elements in the Discussion Paper which should be elaborated upon for it to serve as guidance. There are several ways leverage can be enhanced such as co-operating with other clients or buyers.We notice in practice that enterprises too often immediately take steps to end the relationship. Even in cases were leverage is low and/or the supply chain entity is not crucial to the enterprise a discussion can be started with the management of the company(supplier) to see if there is willingness to improve the situation. Considerable efforts are required and leverage has to be organized before the decision to end the relationship should be taken.
  1. The MVO Platform recommends the following steps to be undertaken by companies:
  2. Find out which other companies within the sector are active in the countries where human rights abuses have been identified;
  3. Jointly conduct research into violations of human rights abuses, the risks of abuses happening within the supply chain and possible successful efforts to tackle these or similar abuses; Also make use of existing research and available good practices of others.
  4. Discuss the results with other companies, industry associations and other stakeholders like NGOs, human rights organizations and labour unions;
  5. Draft a business code and implementation plan within the sector and/or with the specific supplier and set clear goals to be met within a reasonable time frame;
  6. Seriously consider to become a member of a multi-stakeholder initiative, especially when working in high-risk countries with respect to human rights abuses.
  1. The discussion paper is only focused on the (upstream) supply chain. Due diligence should also be conducted for the downstream value chain. That means that enterprises should have measures in place to prevent or mitigate adverse effect in the usage phase and in the waste phase. Well-known examples of abuses in the latter are the dumping of electronics and dismantling of ships.
  1. Companies should be transparent about the origin of their products and about how they deal with human rights problems occurring in their supply chains.Supply chain transparency and traceability canbe realised in a variety of ways:
  2. Statements in the annual sustainability report about the social and environmental circumstances under which productsand services are being produced by their suppliers;
  3. Givinginformation on the codes of conduct (basedon international human rights and other standards) and control and improvement systems or multistakeholder initiativesthat are applied, and describing the implementation thereof;
  4. Participation in verification and certification (processes), so that the consumer can obtain information on the nature and extent of a product’s sustainability. Examples include the FSC label for wood, the MSC label for fish, the Fairtrade mark and the EKO mark;
  5. Being pro-actively transparent about and accountable for human rights problems in which the company is closely involved. Furthermore, the company should indicate how it contributes to tackling the problem;
  6. Providing information, on request, to consumers, corporate customers and civil society organisations. For example: for those consumers that want to know under what conditions a product is made in order to take this into account in their choice of products, information on its human rights impact should be available.

Finally, due diligence, although of utmost importance, does not providesufficient guarantees for transnational corporations to respect human rights. The Ruggie framework/ GPs should encourage further steps governments should take in the case of abuses. It is necessary to legally anchor minimum requirements for supply chain responsibility in order to be able to tackle abuses andto counter free ridingcompanies. This implies supply chain liability of companies in certain defined cases. In cases where human rights are infringed upon due to corporate activities, victims should have better access to legal remedies, which include access to courts in the home state of the company involved.

[1]Submissions to 10th OECD Roundtable on Corporate Responsibility, “The corporate responsibility to respect human rights in supply chains”. Available at: