Dear Commissioners Reynders and Breton,
We – a group of human rights, labor rights and development organizations – welcome the European Commission’s commitment to ensuring that economic recovery is fairer and more sustainable out of this unprecedented health crisis. In this letter, we wish to stress the need to guarantee responsible purchasing practices by companies in order to ensure decent working conditions for workers in producing countries and a sustainable economic recovery after the crisis.
The COVID-19 crisis has highlighted the volatility and vulnerability of global supply chains. He demonstrated how companies are currently outsourcing risks and costs to weaker supply chain partners. These business models and purchasing practices in turn cause or contribute to negative impacts on the human rights of workers, smallholders, communities and the environment, both in the EU and in third countries.
We welcome the forthcoming Sustainable Corporate Governance (SCG) initiative, in particular the corporate duty pillar on human rights and environmental due diligence. However, for companies’ obligation to respect human rights and the environment to function effectively in globalized supply chains, it must address the issue of unfair purchasing practices. In addition, additional measures on purchasing practices should be taken to ensure the effectiveness of the SCG approach.
Extensive research conducted by the International Labor Organization has demonstrated the power imbalances and the effect of purchasing decisions of large corporations. ILO research has shown that major companies’ current processes for placing and paying for orders limit the ability of other supply chain partners to respect labor rights and minimize the environmental impacts of their business. The imbalance of power also results in weaker supply chain partners being afraid to challenge these customers, even in the case of illegal actions (such as breaches of contract) for fear of jeopardizing their relationship with their clients. customers and their future activities.
The ILO study shows how unfair purchasing practices affect several sectors, but concludes that these power imbalances and the resulting purchasing practices are particularly problematic in the clothing sector. Studies by Human Rights Watch and the Center for Global Workers Rights have also shown how bad buying practices are in this industry.
Indeed, the unfair purchasing practices of retailers and brands severely hamper the ability of their suppliers to respect and enforce the rights of their workers, communities and the environment. When leading companies fail to meet commitments made at an earlier stage of the purchasing process or engage in abusive purchasing practices such as very late confirmation of final order numbers, this can directly lead workers to make decisions. overtime, sometimes in dangerous conditions. Urgent last minute orders (or order changes) also often lead suppliers to outsource to unidentified / unauthorized suppliers where working conditions can be even more appalling. Unfair purchasing practices are therefore linked to a multitude of risks and impacts ranging from low wages and dangerous work environments to modern slavery and gender-based violence.
Given the endemic scale of this problem and the size of the clothing industry, the consequences are immense. It is estimated that up to 60 to 75 million people worldwide are employed in this sector. In addition, being the second largest clothing market in the world, the European clothing import market was valued at 177.3 billion euros in 2019.
These practices also undermine other efforts by brands and retailers (sometimes the same) to improve labor rights within their value chain as part of responsible business conduct. It is therefore not surprising that the OECD Clothing and Footwear Due Diligence Guidance highlights the need for companies to assess and change their purchasing practices to align them. on the expectations of responsible business conduct. Indeed, sustainable purchasing practices are essential to finance growing expectations in terms of compliance in the face of human and environmental impacts.
The European Commission already has extensive experience in tackling unfair trading practices, both in food and non-food value chains, through a Green Paper on Unfair Trading Practices.
Subsequently, in 2019, the EU took legislative measures, but limiting them to the food and agricultural sector. Similar, if not worse, price pressures persist in other sectors where there are significant and largely uncontrolled power asymmetries between buyers and suppliers.
Tackling unfair purchasing practices in all sectors through the HREDD process would significantly improve the ability of buyers and suppliers to achieve the expected results under the MCS initiative. We therefore believe that it is crucial to include purchasing practices in this initiative.
Indeed, the European Parliament’s legislative initiative report on due diligence and corporate responsibility rightly included purchasing practices as part of the due diligence process by suggesting that “companies should ensure that their purchasing policies do not cause or contribute to potential or real negative impacts on human rights, the environment or good governance ”(Art 4.8). We support this approach and call on the European Commission to require companies to specifically address purchasing practices at all stages of the HREDD process, and that these purchasing practices be explicitly reflected in reporting obligations. . This will lead to a tangible positive impact for rights holders in business supply chains.
In addition, it is important to introduce guidance on what are “harmful purchasing practices” in the CRS legislation itself. A more detailed description should also be included in a future delegated act. A good starting point for identifying “harmful purchasing practices” is contained in Directive 2019/633 on Unfair Commercial Practices in the Agri-Food Supply Chain.
In addition, to complement the policy objectives of the sustainable corporate governance initiative, the Commission should launch a parallel sectoral policy process to tackle unfair purchasing practices in specific sectors and link it to a mechanism for suitable application. In the case of the clothing and textiles sector, this could take place within the framework of the EU strategy for sustainable textiles.
We would be delighted to discuss more detailed proposals with you and your offices to ensure that this long-standing and well-known issue is resolved.
Clean clothing campaign
European Coalition for Business Justice
Fair Trade Promotion Office
Human Rights Watch
Traidcraft Exchange ILO, 2017, “Purchasing Practices and Working Conditions in Global Value Chains: Findings from the Global Survey”. Available at: http://ilo.org/travail/info/fs/WCMS_556336/lang–en/index.htm  See for example “Major farce: How global clothing brands are using the COVID-19 pandemic to stiffen up suppliers and abandon workers.” Available at: https: //www.ecchr.eu/fileadmin/ECCHR_PP_FARCE_MAJEURE.pdf  Human Rights Watch, “Paying a Bus Ticket and Expecting to Take a Plane: How Clothing Brand Buying Practices Lead to Work Abuse,” April 2019. Available at: https: //www.hrw .org / report / 2019/04/23 / paying-bus-ticket-and-wait-to-fly / how-the-buying-practices-of-clothing-brands-roll; Center for Global Workers’ Rights, “Abandoned? The Impact of Covid-19 on Workers and Businesses at the Bottom of Global Garment Supply Chains ”, March 2020. Available at: https: //www.workersrights.org/wp-content/uploads/2020/03/Abandoned-Penn-State-WRC- Report-27-March-2020.pdf  Know the Chain, 2021, “Reference in clothing and footwear”. Available at: https://knowthechain.org/wp-content/uploads/2021-KTC-AF-Benchmark-Report.pdf  European Commission, 2013, “Green Paper on Unfair Trading Practices in the Business-to-Business Food and Non-Food Supply Chain in Europe”. Available at: https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52013DC0037&locale=en  Directive (EU) 2019/633 on unfair trading practices in business-to-business relations in the agricultural and food value chain, April 17, 2019