Beyond Trafficking and Slavery

Five steps to business accountability in global supply chains

Achieving business accountability in supply chains is incredibly difficult, but the building blocks needed to do so are plain to see.

Kate MacDonald
7 July 2016

Effective systems of business accountability to protect labour standards in supply chains require several elements to be in place.

1. Establish recognised standards

First, there is a need to establish widely recognised standards that clearly define business responsibilities for respecting and protecting labour rights, as well as for providing avenues for remedy when rights are violated. There are still some gaps in the international development and recognition of such standards. Generally speaking however, this is a step where significant international progress has been made, with both legal and voluntary standards contributing to the clarification and recognition of business obligations.

2. Support business capacity

Second, supply chain accountability systems cannot fully support labour rights unless businesses have the required capacities to fulfil their recognised responsibilities. Again, existing supply chain governance schemes have made some important contributions to building understanding and capacity in executive and operational staff, and in some cases also to supporting changes to internal corporate policies, procedures, and resourcing. Nonetheless, the level of understanding and capacity remains extremely uneven within and between companies engaged in global supply chains, and this continues to be an important area for ongoing change. Moreover, many businesses remain reluctant to engage and empower worker organisations and other external stakeholders within supply chain governance systems, despite extensive evidence suggesting that worker-oriented approaches can significantly increase the effectiveness (and legitimacy) of such systems.

3. Promote transparency

Third, effective supply chain accountability cannot be established in the absence of sufficient transparency. This is necessary for robustly monitoring business’ compliance with its responsibilities. For example, accountability may often require transparency with regard to factory locations or other features of sub-contracting arrangements, details of purchasing practices, internal monitoring systems, and so on. Transparency may be strengthened through the unilateral information sharing by business; via the development of standards codifying specific transparency obligations; or by the efforts of worker or human rights organisations to investigate and publicise relevant business behaviour. Governments can assist by mandating relevant disclosure obligations, or by providing direct support to local human rights and labour organisations. The availability and accessibility of effective grievance or complaint mechanisms can make a significant difference in enabling both individual and systemic violations to be brought to light, but effective and accessible supply chain grievance systems remain troublingly rare.

4. Create sources of leverage

Fourth, effective accountability systems require sufficient sanctions or other sources of leverage in order to compel or otherwise motivate businesses to comply with agreed responsibilities. Governments clearly have distinctive capacities in this regard, in view of the special powers of investigation and enforcement that they formally possess (though in practice all too often legal and administrative processes lack sufficient capacity to adequately perform such functions). Market pressure can sometimes provide a useful source of leverage to induce behavioural change amongst businesses, though such pressure is extremely uneven across different sectors and supply chains, and difficult to sustain over time.

Governments in the home countries of major investors or consumer markets can bolster relevant forms of leverage in a number of ways, including the provision of rewards or incentives for companies that can demonstrate compliance with recognised labour standards; the establishment and appropriate resourcing of transnational grievance systems; and the resourcing and endorsement of credible, multi-stakeholder supply chain governance schemes, in which labour organisations are empowered to work alongside businesses in monitoring and incentivising compliance. No one actor within complex global supply chains has sufficient leverage acting alone to induce compliance, meaning that cumulative pressure applied through multiple pressure points is required to bring about meaningful change.

5. Ensure advocates have the correct incentives

Fifth, actors who promote business accountability must themselves have the appropriate incentives to ensure that available accountability mechanisms operate in support of labour rights. Gaps in the effectiveness of both state and non-state business accountability systems result not only from the capacity deficits noted above, but also from the ways in which these institutions are influenced by coalitions of actors who perceive effective accountability systems to undermine their economic and political interests. Such coalitions often include the business subject to the accountability claims themselves.

‘Bringing the state back in’ to bolster corporate accountability can only achieve so much as long as relevant state agencies and actors are themselves ‘accountable’ to oppositional interests. This is an extremely difficult challenge to address – particularly for transnational players within global supply chains whose capacity (and legitimacy) to engage in local political processes is often constrained. Nonetheless, it is important to recognise the ongoing need for development of pro-accountability coalitions not only at the international level, but also at national and sub-national levels. Such coalitions may include not only labour organisations and their supporters, but sometimes also individual politicians, government officials or agencies, and/or local companies who are heavily exposed to external investor or consumer pressure, and thus motivated to support broad-based accountability systems that apply to both themselves and their competitors. 

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