Supply chains, today, are the predominant form of organizing production and trade, and have brought
substantial economic development to many countries in the Asia-Pacific region. But it is in these very supply chains that the most brutal instances of human rights violations are witnessed, especially in the lower tiers. These tiers are often disconnected from a business’s human rights policies and are often located far away from any purview of conflict-based adjudication. They operate far from the sight of inspectors and social audits and under extreme cost-pressure from buyers.
Challenges and potential solutions for promoting responsible and sustainable business practices in the lower tiers of supply chains were discussed at a panel organized by United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) and the International Labour Organization (ILO). The panel discussion was held as part of the UN Responsible Business and Human Rights Forum and looked at the incentives for buyers and suppliers to ensure principles of responsible business conduct, both as a way to become more competitive and productive and to comply with emerging regulatory frameworks that require mandatory due diligence along the entire supply chain, including the lower tiers.
Also Read : Child Rights and Business in Asia Pacific
“A large part of jobs are linked to the global value chains of companies. However, this economic development hasn’t always gone hand in hand with social development. In some cases, particularly in the low tiers of the supply chain, this model of production has led both to the precariousness of jobs and environmental degradation,” ESCAP Economic Affairs Officer, Marit Nilses, said.
The low tiers of supply chains, which many panellists work with, are often populated by micro, small, and medium enterprises which face barriers much different than multinational companies. These businesses face difficulty in accessing the information on rules and regulations linked to responsible business conduct, corporate social responsibility, and also labour rights dimensions.
“This has a negative impact on the condition of workers in the MSMEs. But Covid-19 has brought forth an opportunity to rethink and redesign policy that supports business in lower tiers and ensures socially responsible labour practices. Responsible business conduct should be done to increase productivity and competitiveness,” ILO’s Fredy Guyacan added.
Briefing the panel about external and internal challenges, Krittika Wuttipat of Li & Fung Limited, a Hong Kong-based supply chain managing company, said, “It is harder to ensure a level of adherence to international standards of labour practice in lower tiers of supply chains. When it comes to the root causes of non-compliance, one can divide them into external and internal factors. The external factors include the ones not in the control of the manufacturers, such as environmental protection measures or absence of local law.”
She further added that enforcement of sustainable labour practices can also be weak due to the lack of a support system to make them active in the first place. A lack of structure in labour relations and the presence of untrained or poorly trained employees may also add to external factors of non-compliance.
“Those under the control of the manufacturer are known as internal factors of non-compliance, which can include lack of capability to manage, maintain, and improve compliance level. Lack of communication between different departments, such as production and sales, can also cause an excessive burden on workers, forcing them to spend long working hours,” she added.
Since a large number of low-tier supply chains are often based in the Asia Pacific, it has led to many instances of human rights violations being reported from the region. The collapse of the Rana Plaza building, a garment factory in Bangladesh, is one such instance. The 2013 crash in Dhaka led to the death of over 1200 workers who were engaged in the lowest tier of the global garment manufacturing chain. The incident was a turning point in how people viewed supply chains.
Also Read : Businesses Should be Made Accountable: Parliamentarians on NAP-BHR
Asif Ibrahim, Director, Bangladesh Garment Manufacturers and Exporters Association said that a number of initiatives have been taken up in the region after the incident, including an accord on fire safety, and the creation of Alliance For Bangladesh Worker Safety and the Garment Sustainable Council. “Every factory was audited for fire, structural and electrical safety. International brands and development partners also helped. Significant progress has been made in the area and Bangladesh’s garment industry now stands at #2 in QIMA’s ethical manufacturing index,” he added.
The rights and welfare policies of workers were also checked, with the national labor law being amended twice. The minimum wage in the country now stands at 94 USD/month, which is 281% higher than in 2010. “We still have some issues with lower levels of supply chains in factories, since buyers are usually connected with upper tiers. There are some factories located in the lower tiers which are not under direct surveillance, and we need to put effort into having them abide by international standards,” he said.
The panellists further suggested that companies should base their policies on where the supply chain is most at risk, and not where it is the easiest to access since lower tiers of supply chains don’t have direct relations with large buying companies, or similar funds and access to training.
The Danish Institute for Human Rights’ Tulika Bansal suggested using Human Rights Assessment (HRA) studies to gauge the condition of the same, guidelines for which have been detailed by the institute and are based upon the UN Guiding Principles on BHR. “HRA is a context-specific process of understanding the adverse impact of a business project and focuses on tier-1 employees, consumers, and workers in the supply chain. Studies like these cannot be conducted from the company desk, but require a detailed assessment from the ground,” she said. HRAs previously conducted by the institute have driven deep into the lower tiers of supply chains which host the most adverse impact on human rights. It is about risks and impacts to rights holders, not the ones easiest to reach.
“HRA requires time and resources from the company headquarters but also from suppliers involved in the middle. Also, an impact assessment is necessary to know if things have changed or if companies have addressed their concerns post the HRA,” she added.
(The panel, as featured on the UN RBHR Forum, was organized by the UN ESCAP & ILO. The Forum will be hosting seminars on the topic of Business and Human Rights in the Asia Pacific Region through June 1st to 4th. Delhi Post will be publishing stories on multiple perspectives presented during the seminar)