European Parliament should back transparency of global supply chains

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UK and Europe Programme Manager Klara Skrivankova on the European Parliament’s historic chance to pave the way for responsible international trade.

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8 September

On 12 September 2017, the European Parliament is set to vote on a resolution “on the impact of international trade and the EU policies on global value chains”. Anti-Slavery International urges MEPs to vote in favour.

The motion by the International Trade Committee (INTA) sets the EU in a position of leadership in debates on global supply chains. Previous European Parliament reports, such as those on corporate liability for serious human rights abuses in third countries (2016) and on the EU flagship initiative on the garment sector (2017) have demonstrated the growing cross-party consensus on many issues related to responsibility and accountability of companies for their impacts on society. The recommendations of INTA build on and strengthen these and follow the direction taken by United Nations, G7 and G20 in calling for accountability, responsibility and transparency in the supply chains of businesses operating in Europe and globally.

The recommendations of INTA are aligned with the increasing awareness and calls by European businesses for a level playing field and reduction of business risk and uncertainty through global transparency and due diligence requirements.

More and more European business executives favour mandatory supply chains disclosure regulation. The supply chain transparency provision in the 2015 UK Modern Slavery law was a direct result of actions by companies involved in the Ethical Trade Initiative and the British Retail Consortium who recognised that their efforts towards ethical practices were undermined by competitors who were able to undercut them by adopting exploitative labour practices, including slavery. Subsequent legislation in France and the Netherlands and the current debates in Australia indicate the change in discourse and approach by business executive

Businesses are becoming increasingly aware of the risks human rights abuses in their supply chains, but taking action down the supply chain is a challenge without the support of European regulation. Just last week, the India Committee of Netherlands published a report linking child labour and debt bondage in Indian quarries with stone used in granite kitchen worktops. Businesses from a number of EU Member states, including Belgium, Italy, Germany, Spain and the UK are named in the report. This latest exposure shows that business efforts alone cannot level the playing field. The recommendations of the INTA committee report for mandatory due diligence requirements would assist EU businesses in addressing these types of abuses in lower tiers of supply chains.

Whilst corporate responsibility approaches have their merits, smart regulation, which is supported by many businesses, is part of the mix towards responsible supply chains. More and more businesses not only recognise, but acknowledge publicly challenges in supply chains: Nestle, one of the largest global food and drinks companies publicly admitted that it found forced labour in their supply chains.

Anti-Slavery International works with many European businesses and the message we hear is clear: better supply chain regulation is not anti-business – on the contrary, it enables businesses to tackle human rights issues head on and collaborate with others in a pre-competitive space. We also hear supply chain due diligence is not a drain on business resources if underpinned by a smart mix of voluntary and regulatory measures as recommended by the INTA report. Already in 2013, UK Parliament Committee reported: “IKEA told us that ethical supply chains were “absolutely” more profitable, Tesco said that a good reputation “more than pays for itself” in the long run, and Marks & Spencer told us that trust was “a key part of [their] competitive advantage.”

The EU is the world’s largest single market, founded on the principles of democracy, human rights and rule of law. As such the European Union has considerable potential to transform the current political economy by proposing the enactment of pan-European legislation on global value chains. We therefore encourage all MEPs to vote in favour of the report as tabled to the European Parliament.

Update: September 12

On 12 September 2017, the European Parliament voted in favour of a resolution “on the impact of international trade and the EU policies on global value chains.” The resolution was tabled by Maria Arena, on behalf of the International Trade Committee (INTA), and was approved by a significant majority of 497 votes to 124, with 56 abstentions.

The report calls for the EU to reform global value chains in order to protect workers and the environment worldwide. Amongst other recommendations, it calls on the EU Commission to consider stipulating extensive ‘due diligence’ measures in supply chains, similar to those used for ‘conflict minerals’ and timber supply, something Anti-Slavery International has urged for several years. This aligns with the increasing calls by European businesses for a level playing field and reduction of business risk and uncertainty through global legislation.

Klara Skrivankova, UK and Europe Programme Manager at Anti-Slavery International, said: “This resolution is an important step in the direction of making trade and global value chains more sustainable and accountable. The European Commission should follow these recommendations and introduce binding regulations on transparency and human rights due diligence to ensure that EU businesses tackle human rights abuses head on, and all the way down their supply chains.”