Report on Asia deepens understanding of risks

02 April 2019

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The Leiden Asia Centre (LAC) today published a research report entitled ‘Tightening Belts: Two Regional Case Studies on Corporate Social Responsibility in Asia’.
The signatories to the Dutch Agreement on Sustainable Garments and Textile (AGT) have studied the report with great interest. The Secretariat has been interviewed regarding the case study that the LAC published about the textile sector.

Better understanding of general risks

The report ‘Tightening Belts: Two Regional Case Studies on Corporate Social Responsibility in Asia’ uses a novel method to provide insight into flows of goods between the China-North Korea border region and Europe. An analysis of import and export data provides a better understanding of the area / country / region where goods imported into Europe are produced, and as a result it can help to strengthen the due diligence process carried out by companies. The report emphasises the extent and seriousness of specific risks linked to doing business in the border region between China and North Korea. In this way, it contributes towards a greater understanding of the general risks in that region.

Developing the method further

Because it currently appears to be a very labour-intensive task to collect and process the necessary data about flows of goods, it would be interesting to investigate whether the method can be developed further so that companies will also be in a position to apply it.

Actions by the Secretariat

As is its practice, the Secretariat will bring the report ‘Tightening Belts: Two Regional Case Studies on Corporate Social Responsibility in Asia’ to the attention of all the companies that have signed up to the Agreement. It will highlight the innovative nature of the working method used in the study and the contribution that analysing flows of goods can make towards gaining a clearer picture of general risks that exist in a particular region.

The Secretariat is aware that some companies source goods from the region that is the subject of the study and it will actively point out to those companies the seriousness of the practices recorded, both in relation to the employment of North Korean workers in Chinese factories and to the outsourcing of production to North Korea by Chinese manufacturers. The Secretariat advises all companies that purchase goods in the region concerned to find out whether the abuses that have been established occur at their suppliers. Regardless of the outcome, it advises these companies to act on the report by, for example:

  • entering into a dialogue with their suppliers regarding the results of the study
  • finding out what monitoring procedures their suppliers use, such as audits and on-site quality checks, and improve those procedures where necessary
  • finding out what agreements they have made with their suppliers regarding subcontracting, and improving them where necessary.

When assessing the next action plans of the relevant companies, the Secretariat will pay particular attention to the ways in which the companies deal with these risks and what measures they take to ensure that there is no forced labour at their suppliers. This is part of due diligence (IRBC risk management).

Goal and working method of the Dutch Agreement on Sustainable Garments and Textile

Within the Agreement, parties work together to promote the transition that is necessary to make the garment and textile sector more sustainable. Participating companies are expected to make efforts to prevent, reduce and, where necessary, remedy negative effects in their supply chains. Through a process of due diligence, they should increase their understanding of their supply chain and on that basis, they should first of all identify the general risks of negative impact that are present in the area / country / region concerned, such as inadequate working conditions, environmental damage or poor animal welfare. Next, they need to identify the risks that exist in their own specific supply chains. Based on an assessment of the seriousness of the risks, they set out in an action plan what measures they are going to take to tackle the prioritised risks. Where possible, the parties to the Agreement assist the companies in their efforts.

Preventing the use of forced labour in the supply chain is one of the nine themes to which companies have committed themselves by signing the Agreement. In the view of the parties to the Agreement, the research results underpin the practice of advising the participating companies to make agreements with suppliers and producers on aspects of IRBC and to include these in their purchasing conditions. Part of such agreements should be that suppliers use only approved subcontractors, to prevent the risks associated with the use of unknown and unauthorised subcontractors.

Involved in the IRBC agreement

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