Human rights abuse in supply chain exposed as virus leads to cancelled orders

Indian workers in clothing factory in Mumbai, India. Credit: iStock/paulprescott72

European manufacturers in sectors such as fashion and retail that have rapidly cancelled orders from suppliers in Asia – in some cases using force majeure to terminate contracts early because of the Covid-19 crisis – are failing to live up to their responsibility to ensure their use of supply chains does not violate human rights, according to the European Centre on Constitutional and Human Rights (ECCHR).

The ECCHR says that the current crisis strongly underlines the need for far stricter requirements on multinationals to take legal responsibility for their supply chains at both European Union and global level. The United Nations is already on the case with its open-ended intergovernmental working group on transnational corporations and other business enterprises with respect to human rights. The group is due this summer to prepare a second draft of an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.

The ECCHR and other groups believe that auditors of multinationals should also be legally responsible and liable for signing off the supply chain activities of their clients as being in line with human rights standards. This could be a serious game changer for the way supply chains are managed and used, so long as the virus crisis does not derail this process.

For now, however, the Berlin-based human rights group says that leading European brands and retailers are potentially breaking contract laws as well as compounding human rights abuses within their supply chains as they rapidly cancel and terminate orders.

“The response of brands and retailers to Covid-19 is the cancellation of orders. This means significant job losses without notice and/or redundancy pay due to manufacturer inability to pay. The resulting loss of income for workers in the absence of, or insufficient, functioning social protection systems, severely endangers garment workers’ ability to provide themselves and their families with adequate food and pay for their accommodation,” states a report published by the ECCHR last week.

“This leads to a violation of the right to food and housing. Reports already show that workers in India and Pakistan have to rely on NGOs and trade unions for food to survive. For instance, the Pakistani National Trade Union Confederation delivered hundreds of food bags for workers in various localities around and in Karachi. In India, tens of thousands of migrant garment workers are apparently stranded in factory hostels, sharing rooms with up to a dozen people. In the absence of health insurance, these workers are completely vulnerable to the spread of the pandemic,” continues the report.

“In many factories where production continues, workers’ right to safe working conditions is not guaranteed, as safety precautions to prohibit the spread of the coronavirus are not in place. Especially in the garment sector, where a piece of fabric travels through many hands, it is imperative that effective protective strategies are established. To ensure workers’ right to a safe workplace, they at a minimum would need to be provided with safe transportation to the workplace, the provision of personal protective equipment at the workplace, the assurance of safe distances and a premium pay for hazardous work,” it adds.

The report states that “years” of inadequate progress on workers’ social and economic rights, and weak human rights due diligence on the companies’ side have left garment workers vulnerable during the Covid-19 crisis. “Human rights due diligence processes are continuous, and learning is central. However, previous efforts of brands and retailers to improve working conditions in supplying factories generally, and specifically living wages and social protections, have rarely shown the necessary results,” it states.

The report says that brands and retailers have also proven to be unprepared for the human rights impacts of crises such as this. This, it says, has contributed or even caused the violation of workers’ rights to social insurance and an adequate standard of living, including the right to adequate food and housing.

“In response, brands and retailers should in the immediate step in and provide mitigating measures to the actual human rights impacts upon the workers making their clothes. The crisis requires urgent action. Besides mitigating immediate adverse human rights impacts, brands should step up and help lay the foundation for much-needed structural change, which would have comprehensive social protection for all workers as a basis,” explains the report.

The ECCHR advises that future human rights due diligence processes should take into account the human rights risks of garment supply chains highlighted by the current pandemic. When rebuilding more resilient supply chains, brands and retailers should ensure that suppliers pay workers living wages and social benefits. Brands and retailers will need to rethink and change the current pricing model and underlying business model, it argues.

The report points to Penn State academic Mark Anner, who states: “These changes include order stability that allows for proper planning, timely payments of orders, and full respect for workers’ rights. It also includes a costing model that covers all the costs of social compliance: living wages, benefits, severance pay, building safety etc. One way to cover some of these expenses is an additional charge levied on freight-on-board prices.” Outsourcing economic risks at all costs is incompatible with a serious human rights due diligence process, adds the report.

The ECCHR argues that, as the standards of serious human rights due diligence processes are obviously high and require the buy-in of many brands and retailers, there is a clear need for a level playing field. This requires action at EU level and action with teeth, it states.

“European governments and the EU must therefore introduce legislation making human rights due diligence obligatory for brands and retailers, and outlaw unfair trading practices. Government should ensure sanctions when these obligations are neglected. Also, those affected by human rights violations that are directly linked to, or have been caused by, a brand’s business activity, need the ability to bring claims,” states the report.

It also says the current guidance-based system has clearly failed to deliver. “Obviously, neither voluntary corporate social responsibility initiatives nor human rights due diligence processes without effective enforcement mechanisms have been able to ensure that brands and retailers fully respect the human rights of workers in their supply chain. If brands and retailers had started to seriously fulfil their human rights due diligence obligations five or ten years ago, and fundamentally changed their purchasing practices, workers would be in a different position today and much less vulnerable to the current crisis,” states the report.

The group also recommended in its recent response to the UN’s consultation on a potentially legally binding instrument to ensure that multinationals take responsibility for their supply chains, that auditors should also be made liable. “It would… be prudent to also elaborate a specific regime of state oversight and liability for audit companies to ensure adequate performance within the context of human rights due diligence,” states the group’s submission.