Business

Environmental protection and Human Rights in supply chains

  • Laia Hoyos, 27/04/2021
  • 3 mins reading time
  • English
Supply Chain CSR Europe
CSR Europe Plenary Session. / Photo: Laia Hoyos

CSR Europe carried out a Plenary Session organized in the framework of the European SDG Summit 2020 to establish impactful partnerships.

CSR Europe carried out a Plenary Session organized in the framework of the European SDG Summit 2020 to establish impactful partnerships. As the talk began, speakers acknowledged that businesses have a key role to play in industry transition needed for climate action to succeed. As outlined in the CSR Europe 2030 Strategy, companies are well positioned to provide innovative solutions to meet present and future sustainability challenges in three focus areas: people, materials and markets.

Environmental protection and Human Rights due diligence in the supply chain brings all three priority areas together because we are tackling the type of products we are bringing to the market, the way we produce them and how this production affects people, communities, and their environments. Additionally, it also depends on the type of materials we use and how they can be further improved to drive industrial change.

Now, how can companies make sure that their efforts have a real positive impact on supply chain stakeholders at large? To answer this question, we have to look at the issue as twofold.

Industry perspective

Toyota also participated in the session showing that an average car takes about 25,000 parts, meaning that this could lead up to 30,000 suppliers. As an industry, they face huge challenges, and this could be solved by developing new supply chains: new sustainable materials and ensuring data collection of CO2 and greenhouse gases.

Sectoral cooperation as well as downstream and upstream collaboration are extremely important. This could simply be achieved by stepping up and making a real circular economy and respecting members and labours’ members and rights in the workforce.

Electrification, for instance, presents more challenges as it will require more sustainable supply chains. Because when it comes to new technologies, new materials and new suppliers need to be found, and this is not an easy task. Plus, the development of those materials is also quite a hassle, since batteries need cobalt, and cobalt needs to be mined, which practices are controversial.

In regards to the importance of the source of materials, Sun Lihui, director of the Chinese Chamber of Commerce brought up a wider perspective of industry’s accountability for sustainable management of resources. As Chairman of the Responsible Cobalt Initiative (RCI) created in the UN Forum on Business and Human Rights in 2016, he acknowledged that responsible management of cobalt is indispensable since it is a key raw material used in new energy sources. At least 20% of the world’s cobalt comes from artisanal mining and 60% of the global cobalt comes from the Democratic Republic of the Congo.

Now, the RCI guides companies towards the implementation of solutions and the prevention of the practice of terminating partnerships by reducing the risks of the supply chain and adopting the SDG (Sustainable Development Goals) through three main objectives: enhancing supply chain transparency and capacity building, promoting stakeholder cooperation and on-ground action in the DRC, and strengthening multi-stakeholder collaboration.

Due diligence from farmers’ perspective

Mariam Dao Gabala, from the Fair-Trade organization Solidaridad challenges the European Union to look at the other side of the supply chain and stresses the urgency to build clearer regulations for sustainable production.

Gabala pointed out that legislation can be a blessing for the European consumer because it gives them the comfort that the product is 100% sustainable and free of child labour, but many farmers do not benefit from it. This is because consumers are only partially willing to pay a fair price for these products and because companies don’t take on any share of the additional expenses.

The crux of the matter at hand is that despite the CSR having become a strong movement among companies, yet no systemic change has occurred. The risk of exclusion of artisanal and small-scale producers, such as small cocoa farmers, exists because they have to pay for certificates to use a specific pesticide, pay auditors to remain certified and store produce in certain conditions. All those requirements for the production to be more sustainable, don’t increase their revenues and no help is provided to maintain those changes. Hence, European due diligence is implemented with all good intentions, and may result in a clean supply chain linked to Europe, but without addressing the issue of producing countries.

Then, our question should move towards, how can we better organize a supply chain approach? The key answer is by being more inclusive: paying attention to small older farmers and miners (women, indigenous and youth), passing legislation in partnership with producing countries and their governments, addressing the issue of unequal value distribution, and adopting a mix of measures and policies. Moreover, when talking about inclusivity we are also talking about gender, since in many countries in Africa, women in agriculture cannot access land and finance, so if they want to have land to work on, they have to pay for it.

Scaling up…

We need an effective interplay between EU supply chain partners, producers and consumers to work together so that due diligence can provide a better future for producers of every product consumed. Still, companies must remember to disaggregate between those who have power and those who do not when we build systems to deliver due diligence in supply chains, creating networks and sharing best practices, people development and supply capacity.

More pressure is needed to push the system because if mining companies fail to observe high standards of environmental, social and governance performance, this has the potential to set back progress on some SDGs.

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