Takeaways for Responsible Business Due Diligence from the OECD Forum: What is effective engagement?

On 11^th and 12^th February, the OECD hosted their annual Forum on Due Diligence in the Textile and Garment Sector in Paris. The event consisted of panels and workshops across the two days, focusing on the various challenges within the responsible business and human rights due diligence process, its evolution in the current global climate, and how to respond to changing expectations.

A theme which ran throughout the Forum was the importance of meaningful engagement with the different stakeholders within and around a company’s supply chain, a term which also appears in the Corporate Sustainability Due Diligence Directive (CSDDD). When done well, meaningful engagement enables a company both to understand what is going on in its operations and to mitigate the likelihood and effects of any harms occurring. As due diligence legislation starts to come into force in the EU and supply chains grow ever more complex, this increased understanding becomes invaluable.

While the Forum focused on supply chains within the fashion sector, the due diligence learnings translate into many sectors. We have set out below what the different layers of engagement could look like and how they help a company carry out due diligence and understand conditions in its supply chain.

Worker voice

A recurring theme throughout the Forum was the need to engage directly with workers across the supply chain. With the increase in regulatory expectations relating to supply chain transparency, effective engagement with workers can be a powerful tool to aid risk prioritisation and mitigation. While audits continue to be a necessary part of the picture, they may not uncover hidden issues or workers’ concerns. Worker voice tools can help with a more nuanced understanding of on-site issues, giving companies a better chance to fix problems before they grow and potentially lead to more widespread challenges. 

Established grievance mechanisms can be another way of understanding supply chain issues. However, it is important that these are visible to workers and offered by the company without the workers fearing that there might be repercussions for raising issues. Trade union organisations at the Forum spoke of the success they have had working with companies to facilitate two-way discussions, leading to positive outcomes for both parties and changes in practice. 

Forum participants noted that an informed workforce may be less vulnerable, which reduces the risk of harm. Moreover, collaboration can help a company be confident that its operations are being managed fairly. This will become an increasing necessity as incoming regulation, such as the Forced Labour Regulation, will start to prohibit a company’s access to market for its products if forced labour is found. 

Local support

For those companies operating globally at scale, working with local organisations can be invaluable in facilitating worker engagement and understanding the context in which they work. Many Forum participants cited challenges in having visibility of the hard-to-reach, middle of the supply chain tiers where subcontracting and movement of work between factories is common. However, they found that they are able to create a more stable supply chain by turning to those who have more detailed knowledge of the operating environment of their factories or raw material sourcing. As companies begin to prepare for the CSDDD, this type of visibility and identification of risk will become increasingly important.

Collaboration[1]

For all companies – especially those without that level of resource or global scale – collaboration on the issues they identify can be more effective and cost-efficient than tackling problems alone. An example specific to the fashion sector – but likely to be true of others too – is that many brands share the same factories but are each individually carrying out their own due diligence and separately approaching the factory in respect of issues that arise. Not only is this inefficient for the brands, but it places an operational burden on the factories. 

Collaboration could be through formal initiatives or be less structured, such as keeping in touch with buyers or sustainability professionals at peer companies. In the garment sector, many brands were involved in initiatives such as the Ethical Trading Initiative, Better Work or Better Cotton, which facilitate collaboration to address issues in the industry and created more effective change than operators acting alone. 

In addition to being a useful tool for companies to address issues they find, there is also an expectation under the CSDDD for companies to collaborate with other entities to increase their ability to prevent or mitigate adverse impacts and to bring the harm to an end. Companies are free to choose how they collaborate, provided it doesn’t violate any other laws, so the choice between formal and informal structures will depend on the circumstances. 

Bringing it all together

As the regulatory landscape moves towards increased human rights due diligence obligations, companies are starting to see that having this level of engagement in place is in fact a competitive advantage. Building engagement from the workforce outwards and with the surrounding infrastructure will set a company up well to comply with its regulatory obligations, helping it to understand its operations, prevent human rights harms before they arise and mitigate the effects of any negative impacts.