In a pivotal meeting hosted by the Organization for Economic Cooperation and Development (OECD) and the Sustainable Terms of Trade Initiative (STTI), an engaging discussion named "Leveraging Due Diligence Legislation to Promote Responsible Purchasing Practices – A Discussion Across the Supply Chain" was held in Paris in late February 2024, alongside the OECD forum. This successful gathering facilitated dynamic discussions among various stakeholders, including policy makers, brands, manufacturers, multi-stakeholder initiatives (MSIs), international organisations, associations and trade unions.
With existing due diligence legislation in some European countries and the Corporate Sustainability Due Diligence Directive (CSDDD) in its final stages at that time, the dialogue focused on creating a safe space for different stakehodlers to discuss how due diligence legislation and guidance can help transform current purchasing practices and stimulate collaboration to address Responsible Business Conduct (RBC) risks and impacts along the value chain. While initiatives like STTI and the Common Framework for Responsible Purchasing Practices (CFRPP) have made significant strides, the meeting aimed to further integrate responsible purchasing practices into the fabric of the industry's sustainable future.
The meeting unfolded in two distinct segments. The first segment centered on how current due diligence legislation and related guidance requires improved purchasing practices and the sharing of due diligence requirements and performance across the value chain. Voices were raised from different perspectives. From the policymaker’s point of view, there was a clear acknowledgment that purchasing practices are the cause of various risks. The use of model contract clauses emerged as an important tool because they address two key aspects of responsible sourcing under the CSDDD. While they help secure assurances from suppliers regarding their own CSDD obligations, they also emphasise the proactive responsibility of companies to manage human rights risks throughout their supply chains. From the supplier’s perspective, concerns and confusion were shared about the CSDDD, as there are limited resources that look at the impact on suppliers. Suppliers feared that each brand would implement the legislation differently, and ultimately place the burden and responsibility solely on the suppliers. From the MSIs, one key topic to promote responsible purchasing practices was shared responsibility. Currently, buyer-supplier relations are mostly based on compliance rather than collaboration, and regulation can help shift this mentality. Some smaller brands have already demonstrated excellent work in due diligence, and it can be the norm for the sector if the industry stakeholders come together.
In the second segment, the focus shifted to practical strategies for enhancing purchasing practices within the framework of due diligence legislation. It was pointed out that contracts relying on cost and risk shifting might be considered unsuitable under such legislation. Brands also shared insights that are making a positive impact. One example highlighted the development of a two-way code of conduct, triggering a comprehensive review of contractual terms. The discussion also touched upon a strategic approach to reducing inventory and unsold goods by introducing supplier flexibility, thus empowering them to shift power dynamics.
Comments from the round table discussion emphasised the need to define collective actions and involve suppliers in the process, steering away from an imposition approach.
The role of suppliers in consultations on laws and frameworks for responsible purchasing practices was seen as a critical aspect of creating effective and inclusive legislation. |
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