Implications for Global Supply Chains
After World War II, there have been increasing calls for the universal application of human rights. To achieve this goal, demands have also been voiced for several decades that not only states but also multinational corporations should strive to increase the positive impacts of their operations and minimize the negative impacts of their activities on human rights and environmental standards. International corporations that do not voluntarily adhere to human rights and environmental standards along their supply chain are criticized for taking advantage of weak and poorly enforced domestic regulations in emerging and developing countries, particularly in the Global South. This backdrop led to the adoption of the “United Nations Guiding Principles on Business and Human Rights” in 2011, which today represent the global soft law standard for preventing and managing the risk of negative impacts on human rights in connection with business activities. The need for companies to comply with these standards is demonstrated by the fact that, in terms of working conditions, the International Labour Organization estimates that 25 million people are victims of forced labour globally, and according to the UN, environmental damage is also steadily increasing around the planet. This background and the tragic collapse of the Rana Plaza factory in Bangladesh back in 2013, which claimed the lives of over 1,000 people, confirmed the need for European lawmakers to establish a binding and more stringent liability regime for corporate supply chains. Accordingly, the concept of mandatory human rights due diligence for companies is gaining momentum in Europe. Legislative initiatives at the EU Member States and EU level suggest that they pose significant challenges and potentially severe liabilities for companies procuring their products through supply chains from developing and emerging countries and sell them in Europe.
This article highlights how companies with global supply chains can maintain/achieve compliance with human rights and environmental standards and safely navigate this new hard law regulatory landscape in the EU Member States France, the Netherlands, Germany and at the EU level.
Implications for Supply Chains to India and South Asia
For several decades, there have been increasing demands that multinational corporations should strive to increase the positive effects of their activities and minimize their negative impact in India and South Asia. International corporations are criticized for developing international supply chains to avoid liability for their harmful impacts on local communities in South Asia, either by hiding behind the “corporate veil,” by exploiting weak and poorly enforced domestic regulations in South Asia or by the inappropriate use of the international investor-state arbitration regime. In terms of working conditions in India, for example, a government report found that workers in India mostly earn less than half of the accepted minimum wage, 71% do not have a written employment contract, 54% do not get paid leave and nearly 80% in urban areas work well beyond the eight-hour workday (48-hour week). The tragic collapse of the Rana Plaza factory in Bangladesh in 2013, which claimed the lives of over 1,000 people, confirmed for European lawmakers the need to establish a strict liability regime for corporate supply chains. Accordingly, the concept of mandatory human rights due diligence for companies is gaining momentum in Europe. These legislative initiatives suggest imposing significant challenges and severe liabilities on companies that procure their products through supply chains from India and South Asia and sell them in Europe.
This article highlights how companies with supply chains to India and South Asia can safely navigate this new regulatory landscape in the EU Member States France, the Netherlands, Germany and at the EU level.
