OECD Due Diligence Forum: new goals, new tools

OECD

Earlier this year several hundred leaders (government representatives, NGOs, fast-fashion labels, and others) converged in Paris for a two-day forum hosted by the United Nations Economic Commission for Europe. The event on Due Diligence in the Garment and Footwear Sector was called “Measuring Impact”, and it revolved around questions about the origin of the clothes we wear and their production.

Maria Teresa Pisani, UNECE’s acting head of Sustainable Trade and Outreach Unit, explained that this Forum aims to provide fashion companies and brands with effective tools to collect information about sustainability along their value chain, from raw material producers to the final consumer. Therefore, Pisani pointed out that despite many warning signs, fashion supply chains are still “overshadowed” both for the consumers and the brands. According to a recent survey involving 130 international brands, 50% of them resulted unable to trace where their clothes are produced up to the first tier. Companies often don’t know do not know where and how their raw materials are produced and processed – how could they be aware of their own impact?

Nowadays, fashion represents one of the most polluting industries, generating more than 1.7 million tons of CO2 and 90 million tons of waste annually. Adding the fact that merely 1% of our fashion products is finally recycled into new clothing, the picture gets much more troubling. A recent analysis (http://www.oecd.org/industry/inv/mne/responsible-supply-chains-textile-garmentsector.htm) involving more than 100 companies all around the world has shown that more than 65% of brands hold traceability in high esteem and believe that it can help earn the consumers’ trust and develop stronger networks with partners and stakeholders.

Moreover, even if the fragmentation of the value chain is certainly challenging, next gen technology (e.g. blockchain, bar codes, chips) is perceived as a key tool. Despite this optimism, however, only 34% of the participating companies reported to have implemented real traceability systems, and most of them can actually identify only their immediate suppliers. This means that a significant amount of information about their third and fourth level suppliers is lost. The same study also pointed out the relevance of policy and legislation to improve traceability along the value chain: compliance with local and global regulatory requirements, supported by an effective auditing system, emerged as a priority for 75% of respondents.

The companies also stressed the need for fiscal incentives (64%), training for skills development (61%), and support to R&D (54%). For this reason the OECD Due Diligence Forum organised a roundtable inviting policy makers from across key economies engaged in the garment and footwear sector in order to discuss policy options for promoting (and enabling) effective and responsible supply chains in the fashion industry. Based on these results, UNECE (plus ITC, the European Commission, ILO, academia, and other partners from the private sector) is now working on a “Decent Work and Transparency and Traceability Tool” whose aim is to help fashion companies make risk-informed decisions and operate within a frame of internationally agreed practices. The tool will include a Policy Recommendation addressed to governments and a Technical Global Standard for the traceability of sustainable value chains covering the entire lifecycle of fashion products.