Despite the OECD Guidelines, EU and national legislation is crucial to ensure that businesses in scope conduct human rights due diligence to address gender inequality in global supply chains. The importance of legislation, laws and policy cannot be overstated, as it is the best way to hold businesses accountable, set industry standards, level the playing field and take punitive action. Currently, many non-government organizations have created guidelines for supply chain due diligence, spanning many industries. The one globally used and also the basis for the upcoming EU due diligence regulation is the OECD Due Diligence Guidance for Responsible Business Conduct. These guidelines serve a great purpose of setting cultural standards, allowing businesses the opportunity to improve their practices and giving a sense of approval to those with good practices. However, it is not quite enough. Voluntary guidelines can contribute to the protection of human rights, but would be made stronger by hard international law. Law and policy is the best way to ensure that human rights are being upheld and that businesses are held responsible for the potential risks in their supply chain. We need to see gender equality being included and emphasized in these legislative acts.
Legislation can create accountability for the actions of businesses. Due diligence legislation puts the responsibility of the human rights affected by supply chains, onto the businesses. Due diligence refers to any process used by states, NGOs or companies to ensure that they do not contribute directly or indirectly to human rights abuses. There is an expectation that the state where the business is being operated is responsible for the human rights violations in their own country. This expectation has allowed businesses to avoid responsibility and accountability.
A benefit of legislation is that it levels the playing field for businesses by creating a standard. Currently, businesses have the ability to be ignorant towards their supply chain practices. They can choose not to monitor or engage with what is happening in their value chains. Some businesses, however, want to prioritize human rights due diligence. They are active, adhering to guidelines, promoting ethical supply chain practices. With good legislation, all businesses would have to follow the same rules and perform due diligence, meaning that they would all be operating on the same standard. Eventually becoming common practice to perform due diligence for future businesses as well.
With a lack of legislation, due diligence is not institutionalized. There is currently no punishment for businesses that do not perform any sort of human rights due diligence in their supply chains, particularly offshore. Laws allow for punitive action where necessary. When companies do nothing to address potential human rights violations in their supply chain, and get away with it, it encourages unethical behavior. By institutionalizing legislation, the state can regulate the behavior of their companies, even if they are sourcing from overseas.
There are some countries where this kind of legislation has already been passed. In Europe, France and Germany are quite ahead of the curve in terms of their human rights due diligence legislation. In 2021 Germany passed the Supply Chain Due Diligence Act (SDDA), which obliges major companies to minimize human rights and environmental risks in their supply chains. This was following the French Corporate Duty of Vigilance Act in 2017. In these cases the punishments can include large fines for companies, and in France you can take a major company to court for failing to uphold the standards. Whilst this legislation is progressive and forward thinking, there is still a disappointing lack of emphasis on gender equality. With the SDDA’s only mentioning gender one time along with many other marginalized identities. Gender equality must be seen as highly important when writing these policies. That being said, these legislative acts are trailblazing for human rights in global business and other countries are following suit. The Netherlands is in the process of passing a similar act, which looks to be the most in line with the OECD Guidelines. As these laws are relatively new, it is hard to judge the effectiveness in the long run, but we hope that human rights due diligence legislation will catch on and all governments will adopt it!