Sustainable supply chains and decent work in international trade (Exploratory opinion at the request of the German presidency)

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EMSK arvamus: Sustainable supply chains and decent work in international trade (Exploratory opinion at the request of the German presidency)

Key points

Global supply chains (GSC) are key and complex in economic activities across the world and in global trade. Economic growth, job creation and entrepreneurship are also contested by evidence of negative implications for working conditions as well as for sustainability in some supply chains.

The COVID-19 crisis has unveiled the serious downfalls related to highly fragmented and undiversified supply chains. It exposed the vulnerability of workers' health and safety, and it highlighted violations of human rights. Trade will have to play a key role in promoting a sustainable economic recovery. However, stronger instruments need to deliver on a socially and environmentally responsible business, trade and investment agenda.

GSC need to become more resilient, diversified and responsible, and ambitious actions need to ensure they contribute to a fairer economic and social model, based on sustainability and decent work.

Many EU companies are positively engaged on the issues of Human rights, sustainability and Corporate Social Responsibility (CSR), implementing international guidelines and principles. These voluntary measures have led to some positive behavioural change, but action for improvement is needed.

It urgently requires a more effective and consistent regulatory framework to achieve decent work, respect for human rights and sustainability in global value and supply chains and to promote global and EU social and environmental objectives, fair competition between economic operators and to support European economic activities.

The EESC calls on the European Commission (EC) to develop a European Action plan on human rights, decent work and sustainability in global supply chains, building on social dialogue and a multi-stakeholder approach. As a general framework for both policy and legislative initiatives this action plan should:

  • be ambitious, comprehensive and transversal, recognising the complementary roles of the different actors;
  • cover a broad definition of human rights, including workers' and trade union rights, and build on a range of international instruments, most notably ILO conventions;
  • promote responsible business conduct, and ensure the respect of human rights and EU social and environmental objectives in business activities and their supply chains;
  • support businesses and SMEs in adopting a responsible business conduct approach, and ensure a level playing field for businesses.

The EESC sees the EU as uniquely placed to drive multilateral progress on this issue and deliver global policy coherence and calls for more effective and binding international instruments, in particular supporting a UN Binding treaty on business and human rights and an ILO Convention on decent work in supply chains.

A European Action Plan should have at its forefront a binding cross-sectoral legislative initiative on human rights due diligence and responsible business conduct with remedies and enforcement tools, covering all companies established or active in the EU, as well as the public sector, and be responsive to the specific needs of and constraints on SMEs. Due diligence should explicitly cover trade union and workers' rights, which form an essential part of decent work. Its specific features, including corporate liability, will be followed by a dedicated EESC opinion, due to be adopted at the same plenary session.

In terms of other EU legislative initiatives, the Action Plan should include most notably

  • an ambitious revision of the non-financial reporting directive;
  • legislative measures on board of directors' duties;
  • conditionality and incentives linked in all recovery instruments and EU funding tools;
  • public procurement procedures should indeed effectively support and promote human rights due diligence and responsible business conduct in business operations and their supply chains, including decent work;

The Action Plan should also comprise non-legislative EU measures, including initiatives to raise awareness of consumers, investors, and other stakeholders, and incentives to responsible businesses, which go beyond the legal obligations and specific support to SMEs to introduce due diligence policies.

European cross-sectoral and sectoral social dialogue and national social dialogue should assist its implementation. Workers and trade unions must be part of the solution.

Its specific trade elements should be reflected in the new EU Trade Strategy Review. Trade and investment policy can boost and ensure a more even implementation of standards by both investors and governments. Foreign investors should be required to comply with due diligence before they can benefit from an international investment agreement;

  • Free trade agreements (FTA) must promote best practices on how to include environmental and social criteria in public procurement, and in no way limit their application;
  • The new Chief Trade Enforcement Officer must have stronger instruments to enforce Trade and Sustainable Development (TSD) commitments;
  • A revamped Panel of experts should be able to trigger a treaty State-to-State dispute settlement mechanism, with possibilities for financial penalties or sanctions, and remedies for the aggrieved party;
  • An independent labour secretariat and collective complaint mechanism should complement enforcement of TSD chapters;
  • The impact of Domestic Advisory Group (DAG) recommendations on investigating TSD violations needs to be considerably strengthened;
  • Fresh approaches to labour disputes should look into remedies against non-compliant companies and in addition look into a system inspired by the EU Anti-Dumping measures to cover Social Dumping;
  • The EESC suggests linking tariff reductions with the effective implementation of TSD provisions; and
  • Finally, the EU should secure ILO ratifications from partners before their conclusion so that they may form integral part of the agreement. The "essential elements" clause should be extended to cover ILO fundamental and up-to-date Conventions ratified by all EU Member States and the ILO be included in the implementation monitoring of its Conventions in FTAs