Combination of RBC legislation and sectoral cooperation is a prerequisite for sustainable impact in supply chains

Comprehensive legislation in the field of international responsible business conduct (RBC) and cooperation within sectors reinforce one another. Legislation to impose obligations combined with cooperation leads to the greatest impact within the supply chain to prevent and address risks to people and the environment. In both respects, this will require scaling up to ultimately the European level; ambitious efforts on the part of the Netherlands will help to achieve this.
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These are among the findings of the advisory report Working together for Sustainable Supply Chain Impact issued by the Social and Economic Council of the Netherlands (“SER”) at the request of the Minister for Foreign Trade and Development Cooperation, Sigrid Kaag. The Council’s President, Mariëtte Hamer, had this to say: “I am pleased that there is a lot of support both for optimising the current policy for international RBC and for additional policy. This is important, because international RBC contributes to achieving the United Nations’ Sustainable Development Goals (the “SDGs”). It’s only by working hard together that those goals can be achieved.”

The Ministry of Foreign Affairs has evaluated its policy on internationaal RBC and has published its new policy outline following the Dutch publication of the SER advisory report. The Minister asked the Council to advise on national and international as well as binding and non-binding instruments for future policy in this area.

Advantages of comprehensive due diligence legislation

Some companies have signed up to the International RBC Agreements and are working voluntarily to meet the requirements for due diligence so as to make their supply chains socially responsible with a view to people and the environment. Comprehensive due diligence legislation will oblige companies to identify risks to people and the environment and to take measures to prevent negative impacts following from their actions. This means that comprehensive legislation is more in line with the OECD Guidelines for Multinational Enterprises than thematic legislation. The Guidelines, like comprehensive legislation, cover a wide range of potential risks to people and the environment, thus creating maximum opportunities for identifying, preventing, and addressing those risks.

A more level playing field can also be created by obliging companies that are lagging behind as regards international RBC to make an effort to get their due diligence in order. The scale on which legislation is initiated is important: the larger the scale, the greater the likelihood of impact in the supply chain. It is only with consistent behaviour by a substantial part of the market, with trade unions and civil society organisations daring to address issues locally, and with governments jointly putting sustainable supply chains on the map, that customers and producers can be motivated to structurally improve conditions within the supply chain with respect for human rights and the environment.

Expanding sectoral cooperation

Cooperation per sector is complementary to legislation. Companies, trade unions, civil society organisations, and government can experiment and learn in dialogue with one another. Together they have greater leverage to tackle problems than individually. By improving and expanding this cooperation based on the lessons learned in recent years from the sector agreements for international RBC, it will be possible to offer support and customisation for enterprises. In this way, companies can gain experience on how to take account of the risks for different parties within the supply chain in practice.

Momentum at European level

The combination of legislation and sectoral cooperation at the European level will make it possible to achieve more impact in the supply chain. The incentives for international cooperation will be reinforced if enterprises in the Member States are obliged to comply with the same standards in the area of due diligence. The position of the Netherlands as a leader in the field of international RBC is important in this regard. The Netherlands can leverage that position in order to respond – together with like-minded countries – to the ambitions of the European Parliament and exert influence within Europe. After all, the timeframe and level of ambition will be decided during consultations between 27 countries. The European Commission is expected to present a comprehensive legal requirement for due diligence in the first half of 2021.

Ambitious national government needed

The business community, trade unions, and civil society organisations are ambitious about working together to prevent and address issues in international supply chains. To do so, they need a government that is at least as ambitious, that pursues a coherent policy, and that, as a partner, continues to invest in sectoral cooperation. In order to jointly exert influence on producing countries and address specific risks, government involvement is crucial.

Routes to impact

There are three possible routes for achieving the optimum combination of obligations and collaboration. The first is to focus Dutch efforts to the maximum extent on influencing European developments. The second possibility, in addition to the first, is to determine, when a new Dutch (coalition) Government takes office next year, whether sufficient progress is being made in Europe, and if that is not the case to initiate Dutch legislation and include it in the Coalition Agreement. The third option is to simultaneously strive to influence developments within Europe and to develop Dutch legislation further. It is up to the politicians to decide between these various routes.

About the advisory report

The advisory report was drawn up by the Council’s Committee on International Responsible Business Conduct, chaired by Prof. Katrien Termeer.