Responsible business conduct

OECD Due Diligence Guidance for

Responsible Supply Chains in theGarment and Footwear Sector

OECD Due Diligence Guidancefor Responsible Supply Chains in
the Garment and Footwear Sector

This work is published under the responsibility of the Secretary-General of the OECD. The opinions
expressed and arguments employed herein do not necessarily reflect the official views of the OECD orof the governments of its member countries or those of the European Union.
This document and any map included herein are without prejudice to the status or sovereignty over any
territory, to the delimitation of international frontiers and boundaries and to the name of any territory,
city, or area.

Please cite this publication as:OECD (2017), OECD Due Diligence Guidance for Responsible Supply Chains in the Garment andFootwear Sector.

© OECD 2017

FOREWORD

Foreword
The OECD Due Diligence Guidance for Responsible Supply Chains in
the Garment and Footwear Sector (hereafter “Guidance”) aims to help
enterprises to implement the due diligence recommendations contained in
the OECD Guidelines for Multinational Enterprises along the garment andfootwear supply chain in order to avoid and address the potential negative
impacts of their activities and supply chains. It seeks to support the aims of
the OECD Guidelines to ensure that the operations of enterprises in thegarment and footwear sector are in harmony with government policies tostrengthen the basis of mutual confidence between enterprises and thesocieties in which they operate. This Guidance will also support enterprises
to implement the due diligence recommendations contained in the UN
Guiding Principles on Business and Human Rights. The Guidance is alignedwith the International Labour Organization’s (ILO) Declaration on
Fundamental Principles and Rights at Work, relevant ILO Conventions andRecommendations and the ILO Tripartite Declaration of Principles
Concerning Multinational Enterprises and Social Policy. Together with its
modules on due diligence for specific risk areas, this Guidance provides
enterprises with a complete package to operate and source responsibly in thegarment and footwear sector.
This Guidance was developed through a multi-stakeholder process within-depth engagement from OECD and non-OECD countries, representatives
from business, trade unions and civil society and was overseen by theWorking Party on Responsible Business Conduct. A multi-stakeholder
Advisory Group, chaired by Germany, was established in March 2015 tosupport the development of this Guidance. This Guidance benefited from
regular input from members of the Advisory Group and other experts,
including during a Roundtable on Due Diligence in the Garment andFootwear Supply Chain, held on 1-2 October2015, as well as during a public
consultation held in February-March 2016. As a result, this Guidance isintended to be practically-oriented, with an emphasis on collaborative
constructive approaches to complex challenges.
This Guidance builds on the in-depth reports of the National Contact
Points (NCPs) of France and Italy on the implementation of the OECD
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

3

FOREWORD

Guidelines in the textile and garment sector and the leading initiatives ofBelgium, Canada, Denmark, the European Union, Germany, theNetherlands, Sweden, the United Kingdom and the United States. It seeks to
respond to statements made in June 2013 and 2014 by NCPs following the
tragic collapse of Rana Plaza. The Guidance was also developed in responseto the Ministerial Communiqué on Responsible Business Conduct adopted
on 26 June 2014 and the G7 Leaders’ Declaration adopted on 7-8 June 2015
in Schloss Elmau, which welcomed international efforts to promulgate
industry-wide due diligence standards in the textile and ready-made garment
sector.
This Guidance was approved by the OECD Working Party on
Responsible Business Conduct on 24 October 2016 and the OECD
Investment Committee on 14 January 2017.
An OECD Recommendation on the Guidance was adopted by theCouncil on 17 May 2017. While not legally binding, the Recommendationreflects the common position and political commitment of OECD Members
and non-OECD Member Adherents to the OECD Guidelines forMultinational Enterprises.
The OECD has also developed tailored guidance to help enterprises
build responsible supply chains in other sectors, specifically: minerals fromconflict-affected and high-risk areas; extractive; agriculture; and finance.

4

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORTABLE OF CONTENTS

Table of contents
Recommendation of the Council on the Due Diligence Guidancefor Responsible Supply Chains in the Garment and Footwear Sector ...................... 9
Terms used in the Guidance ......................................................................................... 13
Overview of the Guidance ............................................................................................ 17
Background ................................................................................................................. 17
Purpose of this Guidance ............................................................................................. 17
Target audience ........................................................................................................... 17
Basis for this Guidance ................................................................................................ 19
Legal compliance......................................................................................................... 19
Benefits ........................................................................................................................ 20
Structure of the Guidance ............................................................................................ 21
Introduction to due diligence under the OECD Guidelines and key concepts
for implementing due diligence .................................................................................... 23
Due Diligence under the OECD Guidelines ................................................................ 25
Meaningful stakeholder engagement ........................................................................... 27
Collaboration on due diligence .................................................................................... 28
Gender considerations when applying due diligence .................................................. 32
Section I
Core Due Diligence Guidance for the Garment and Footwear Sector
1. Embed responsible business conduct in enterprise policy
and management systems ........................................................................................ 37
2. Identify actual and potential harms in the enterprise’s own operations
and in its supply chain ............................................................................................. 46
3. Cease, prevent or mitigate harm in the enterprise’s own operations
and in its supply chain ............................................................................................. 68
4. Track ......................................................................................................................... 83
5. Communicate ........................................................................................................... 89
6. Provide for or co-operate in remediation when appropriate .............................. 93
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

5TABLE OF CONTENTS

Section II
Modules on sector risks
Module 1. Child labour .............................................................................................. 105
Module 2. Sexual harassment and sexual and gender-based violence (SGBV)in the workplace........................................................................................ 116
Module 3. Forced labour............................................................................................ 126
Module 4. Working time ............................................................................................ 134
Module 5. Occupational health and safety ............................................................... 138
Module 6. Trade unions and collective bargaining................................................. 146
Module 7. Wages......................................................................................................... 152
Introduction to environmental modules .................................................................... 159
Module 8. Hazardous chemicals ................................................................................ 161
Module 9. Water ......................................................................................................... 166
Module 10. Greenhouse gas emissions ........................................................................ 171
Module 11. Bribery and corruption ............................................................................ 176
Module 12. Responsible sourcing from homeworkers .............................................. 184

Tables
1. Information to be collected and stored for the purposesof conducting due diligence................................................................................... 45
2. Sector risks in the garment and footwear sector .................................................... 48
3. Factors that may affect the nature and extent of due diligence.............................. 52
4. Factors that may affect the nature and extent of due diligence in relation
to supplier assessments .......................................................................................... 63
5. Factors that may affect the nature and extent of due diligence in relation
to understanding the operating context .................................................................. 65
6. Relationship to harm and appropriate action ......................................................... 66
7. Factors that may affect the nature and extent of due diligence in relation
to preventing and mitigating harm in the enterprise’s supply chain ...................... 81
8. Core criteria of operational-level grievance mechanisms
and example components....................................................................................... 96
9. Risk factors for child labour in the garment and footwear sector ........................ 106
10. Sexual harassment and sexual and gender-based violence .................................. 118
11. Risk factors for forced labour in the garment and footwear sector...................... 127

6OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORTABLE OF CONTENTS

12. Description of anti-union policies and practices.................................................. 149
13. Example measures to reduce GHG missions and monitor improvements
at different stages of a product’s life cycle .......................................................... 173
14. External integrity risk factors .............................................................................. 178
15. Internal enterprise integrity risk factors............................................................... 179
Boxes
1. Competition law and responsible business conduct .............................................. 31
2. Policy on subcontracting and other due diligence processes ................................. 39
3. Mechanisms to assess and address risks of harm beyond tier 2(e.g. raw materials) ................................................................................................ 60
4. Prevent contribution to harm through responsible purchasing practices .............. 73
5. Implement control measures when sourcing indirectly ......................................... 76
6. Nature of due diligence in light of leverage .......................................................... 82
7. The role of the State to ensure access to effective remedy .................................... 94
8. Distinguishing between early warning systems and processes
to enable remediation ............................................................................................ 99
9. Organisation of multi-stakeholder grievance mechanisms .................................. 100
10. Discrimination and gender-based discrimination ................................................ 123
11. Factors that may drive excessive working hours at manufacturing ..................... 135
12. Recommendations for small-and-medium sized enterprises (SMEs) .................. 144
13. Protocol agreements ............................................................................................ 150
14. Identification of higher-risk sourcing countries .................................................. 157
15. Framework for preventing and mitigating human rights and labour abuses
when engaging homeworkers .............................................................................. 184

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

7

About the OECD Guidelines for Multinational Enterprises
The OECD Guidelines for Multinational Enterprises (OECD
Guidelines) are one of four parts of the 1976 OECD Declaration andDecisions on International Investment and Multinational Enterprises(hereafter “the Declaration”). In the Declaration, Adherents
recommend that multinational enterprises (MNEs) observe theprinciples and standards set out in the OECD Guidelines, which aim toensure an open and transparent international investment environment
and to encourage the positive contribution of MNEs to economic,
environmental and social progress. There are currently 46 Adherents
to the Declaration – all 35 OECD countries and 11 non-OECD
countries. The OECD Guidelines have been revised several times,
most recently in 2011. They are the most comprehensive set ofgovernment-backed
recommendations
on
what
constitutes
responsible business conduct (RBC). They cover nine major areas of
RBC: information disclosure, human rights, employment and industrial
relations, environment, combating bribery and corruption, consumer
interests, science and technology, competition and taxation. The
recommendations set out in the OECD Guidelines are addressed fromgovernments to MNEs operating in or from their territories.
Pursuant to the Decision of the Council on the OECD Guidelines forMultinational Enterprises, Adherents must set up a National Contact
Point (NCP) to further the effectiveness of the OECD Guidelines by
undertaking promotional activities, handling inquiries and contributing
to the resolution of issues that arise relating to the implementation of
the Guidelines in specific instances. The OECD Guidelines are thefirst international instrument to incorporate risk-based due diligence
into major areas of business ethics related to adverse impacts.

8OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORRECOMMENDATION OF THE COUNCIL

Recommendation of the Council on the Due Diligence
Guidance for Responsible Supply Chains in theGarment and Footwear Sector
17 May 2017
THE COUNCIL,
HAVING REGARD to Article 5 b) of the Convention on the
Organisation for Economic Co-operation and Development of 14December
1960;
HAVING REGARD to the Declaration on International Investment andMultinational Enterprises [C(76)99/FINAL], the Decision of the Council on
the OECD Guidelines for Multinational Enterprises [C(2000)96/FINAL as
amended by C/MIN(2011)11/FINAL] (hereafter the “Decision on the
Guidelines”), the Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions, the Recommendation of theCouncil on Due Diligence Guidance for Responsible Supply Chains ofMineralsfromConflict-Affected
andHigh-Risk
Areas[C/MIN(2011)12/FINAL, as amended by C(2012)93], the Recommendationof the Council on the Policy Framework for Investment [C(2015)56/REV1],
the Recommendation of the Council on the OECD-FAO Guidance for
Responsible Agricultural Supply Chains [C(2016)83] and the
Recommendation of the Council on the Due Diligence Guidance for
Meaningful Stakeholder Engagement in the Extractive Sector [C(2016)100];
RECALLING that the common aim of governments recommending theobservance of the Guidelines for Multinational Enterprises (hereafter the“Guidelines”) is to promote responsible business conduct;
RECALLING FURTHER that the Decision on the Guidelines
provides that the Investment Committee shall, in co-operation with National
Contact Points, pursue a proactive agenda in collaboration with stakeholders
to promote the effective observance by enterprises of the Guidelines withrespect to particular products, regions, sectors or industries;

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

9

RECOMMENDATION OF THE COUNCILCONSIDERING the efforts of the international community, inparticular the International Labour Organization, to promote responsible
supply chains in the garment and footwear sector;
RECOGNISING that building responsible supply chains in the garment
and footwear sector is critical to sustainable development, promoting
inclusive growth particularly for women who make up the overwhelming
majority in this sector, respecting labour and human rights, and meetinginternational standards on the environment;
RECOGNISING that governments, international organisations,enterprises and civil society organisations can draw on their respective
competences and roles to build responsible garment and footwear supply
chains that benefit society at large;
NOTING that due diligence is an ongoing, proactive and reactive
process through which enterprises can prevent and mitigate adverse impacts
related to human rights, labour rights, environmental protection, and bribery
and corruption in their own operations and in their supply chains;
HAVING REGARD to the OECD Due Diligence Guidance for
Responsible Supply Chains in the Garment and Footwear Sector[C(2017)63/ADD1] (hereafter “the Guidance”), that may be modified as
appropriate by the Investment Committee;
NOTING that this Guidance proposes a framework for due diligencedescribing the processes that enterprises should follow to identify, assess,mitigate and account for how they address the actual and potential adverse
impacts associated with their activities or business relationships andincludes detailed measures for preventing such impacts in relation to childlabour, sexual harassment and sexual and gender-based violence in theworkplace, forced labour, working time, occupational health and safety,
trade unions and collective bargaining, wages, hazardous chemicals, water,
greenhouse gas emissions, bribery and corruption, and responsible sourcing
from homeworkers.
On the proposal of the Investment Committee:
I.

10

RECOMMENDS that Members and non-Members adhering to thisRecommendation (hereafter the “Adherents”) and, where relevant, their National
Contact Points to the Guidelines (hereafter the “NCPs”), actively promote the useof the Guidance by enterprises operating in or from their territories with the aimof ensuring that they observe internationally agreed standards of responsible
business conduct in garment and footwear supply chains in order to prevent theadverse impacts of their activities and contribute to sustainable development;

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORRECOMMENDATION OF THE COUNCILII.

RECOMMENDS, in particular, that Adherents take measures to actively support
the adoption of the due diligence framework for responsible supply chains in thegarment and footwear sector set out in the Guidance by enterprises operating in orfrom their territories;

III.

RECOMMENDS that Adherents and where relevant their NCPs, with thesupport of the OECD Secretariat, ensure the widest possible dissemination of the
Guidance and its active use by enterprises (including raw material and fibre
producers, material manufacturers and processors, components manufacturers,
footwear and garment manufacturers, brands, retailers and their intermediaries),
as well as promote the use of the Guidance as a resource for stakeholders such asindustry associations, trade unions, civil society organisations, multi-stakeholder
initiatives, and sector-initiatives, and regularly report to the Investment
Committee on any dissemination and implementation activities;IV.

INVITES Adherents
Recommendation;V.

INVITES non-Adherents to take due account of and adhere to the present
Recommendation;

VI.

INSTRUCTS the Investment Committee to monitor the implementation of the
Recommendation and to report to Council no later than five years following its
adoption and as appropriate thereafter

and

the

Secretary-Generaltodisseminate

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

this

11

TERMS USED IN THE GUIDANCE

Terms used in the GuidanceAdverse impact

Impacts on matters covered by the OECD Guidelines which include
adverse impacts related to disclosure; human rights; employment
and industrial relations; environment; combatting bribery, bribe
solicitation and extortion; and consumer interests.

Business relationship

The term ‘harm’ is used throughout this Guidance to refer toadverse impacts.

Choke point“Choke points” include:

Includes relationships with business partners, entities in its supply
chain and any other non-State or State entity directly linked to its
business operations, products or services. Business relationships may
include any supplier or other business partner in an enterprise’s supply
chain. (OECD Guidelines, IV, Commentary 45)• key points of transformation in the supply chain• stages in the supply chain that generally include relatively few
actors that process a majority of the commodity• stages in the supply chain with visibility and control over thecircumstances of production and trade upstream.
Corrective action plan

Time-bound and actionable plan to prevent or mitigate harm. See
section 3.

Direct sourcing

An enterprise holds a direct contractual relationship with its supplier.

Discrimination

Any distinction exclusion or preference made on the basis of race,
colour, sex, religion, political opinion, national extraction or social
origin (among other characteristics), “which has the effect of nullifying
or impairing equality of opportunity and treatment in employment or
occupation”. (ILO Convention [No.111]).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

13

TERMS USED IN THE GUIDANCE

The process through which enterprises can identify, prevent, mitigate
and account for how they address their actual and potential adverse
impacts.

Due DiligenceDue diligence can be included within broader enterprise risk
management systems, provided that it goes beyond simply identifying
and managing material risks to the enterprise itself to include the risksof harm related to matters covered by the Guidelines. (OECD
Guidelines, II, Commentary 14)
Forced labour

All work or service which is exacted from any person under the
menace of any penalty and for which the said person has not offeredhimself voluntarily. (ILO, Forced Labour Convention, 1930 [No. 29])

Gender-based
discrimination

Any distinction, exclusion or restriction made on the basis of sex
which has the effect or purpose of impairing or nullifying therecognition, enjoyment or exercise by women, irrespective of theirmarital status, on a basis of equality of men and women, of humanrights and fundamental freedoms. This would apply to scenarios even
where discrimination was not intended. Identical or neutral treatmentof women and men might constitute discrimination against women if
such treatment resulted in or had the effect of women being denied theexercise of a right because there was no recognition of the pre-existing
gender-based disadvantage and inequality that women face. (UNConvention on the Elimination of all Forms of Discrimination against
Women)Harm

The term “harm” is used throughout this Guidance to refer to adverse
impacts.

Indirect sourcing

An enterprise sources products (e.g. raw materials or finished goods)
through an intermediary.

Leverage

When an enterprise has the ability to effect change in the wrongfulpractices of the entity that has caused harm. (OECD Guidelines, II,
Commentary, 19)

Meaningful
stakeholder
engagement

Engagement with stakeholders that is characterised by two-way
communication and depends on the good faith of the participants on
both sides. (OECD Guidelines, II, Commentary, 2)

Mitigation“Mitigation” refers to actions taken to diminish or eliminate harm if anegative event occurs. Mitigation measures may be taken before,
during, or after an event with the aim of reducing the degree of harm.

Prevention“Prevention” refers to actions taken to prevent harm from occurring or
re-occurring. In other words, prevention measures are taken before
harm occurs. This Guidance uses the term “prevent” broadly to include
any action that is intended to stop harm from occurring.

14

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORTERMS USED IN THE GUIDANCE

Remediation

The provision of remedy for adverse impacts.

Risk

Throughout this Guidance, “risk” refers to the risk of harm toindividuals, other organisations and communities in relation to humanrights, labour rights and the environment. This Guidance does not
focus on risks to the business itself.

Risk-based

The procedures that an enterprise implements to conduct due diligence
are proportionate to the severity of the harm.

Sector risks

Sector risks are risks that are prevalent in the sector. Sector risks in thegarment and footwear sector include, but are not limited to, thefollowing: child labour; discrimination; forced labour; excessive hours
of work; work-related and health; violations of the right of workers toestablish or join trade unions and representative organisations of theirown choosing and the right of workers to bargain collectively; noncompliance with minimum wage laws and wage levels that do notmeet the basic needs of workers and their families; discrimination;
hazardous chemicals; water consumption; water pollution; greenhousegas emissions; bribery and corruption. See Section II, Modules on
sector risks for targeted due diligence guidance for sector risks.

Stakeholder

Stakeholders include persons or groups who are or could be directly or
indirectly affected by the actions of the enterprise and its interlocutors.

Subcontracting

Subcontracting is when a person or enterprise performs a service or
activity necessary for the completion of another enterprise’s contract.

Sub-sector risks

Risks that are unique to a sub-sector of the garment and footwear
sector. Example sub-sectors include athletics apparel, footwear,
uniforms, etc.

Supplier

For the sake of simplicity, this Guidance uses the term “supplier” toinclude all business relationships that provide a product or service toan enterprise, either directly or indirectly. Suppliers” may therefore
include manufacturers, textile producers and farmers but may also
include intermediaries, such as buying agents, logistical providers andglobal commodities merchandisers and processors.

Traceability

The process by which enterprises track materials and products and theconditions in which they were produced through the supply chain.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

15

OVERVIEW OF THE GUIDANCE

Overview of the GuidanceBackgroundThe garment and footwear sector employs millions of low-skilledworkers, many of whom are women and acts as an entry point into theformal economy in many countries. As such, enterprises operating in the
sector have the potential to generate growth, employment and skill
development through their own operations and sourcing. However, humanrights and labour abuses and harm to the environment by enterprises areprevalent throughout the supply chain in this sector. While such impacts are
not new to the sector, the characteristics of modern global supply chains –such as stages of the production process spread across diverse countries,
short lead times and short term buyer-supplier relationships - can reduce
visibility and control over an enterprise’s supply chain and can create
challenges for enterprises to meet their responsibilities. Within this context,
the risks of human rights and labour abuses, of environmental damage andintegrity risks should be managed throughout the supply chain in order toensure that the positive impacts of this global industry are maximised.

Purpose of this Guidance
The purpose of this Guidance is to support a common understanding ofdue diligence in the garment and footwear sector aligned with the OECD
Guidelines. This Guidance provides recommendations for enterprises on
how to implement due diligence according to the OECD Guidelines in theirown operations and in their supply chains. Due diligence should be ongoing,
proactive and reactive and applied with flexibility and should not lead to a“tick the box” approach.

Target audience
This Guidance is relevant for all enterprises operating in the garment
and footwear supply chain seeking to implement the OECD Guidelines. This
includes but is not limited to raw material and fibre producers, material

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

17

OVERVIEW OF THE GUIDANCE

manufacturers and processors, components manufacturers, footwear andgarment manufacturers, brands, retailers and their intermediaries.
This Guidance is therefore also relevant for:•••

Enterprises operating at various points along the supply chain
including global commodities merchandisers, buying agents,
distributors, etc.
Small, medium and large enterprises operating in the sector alike.
While the expectation of due diligence is applicable to allenterprises regardless of their size, this Guidance does seek tohighlight instances in which a small and medium-sized enterprise
may choose to use different mechanisms to apply due diligence inlight of its resources, position in the supply chain and leverage.
See Introduction.
Enterprises that are privately owned, State-owned or mixed.

The OECD Guidelines are addressed to multinational enterprises.
However, in line with the OECD Guidelines, this Guidance reflects goodpractice for all and is not aimed at introducing differences of treatment
between multinational and domestic enterprises. 1
This Guidance can also serve as a reference for stakeholders tounderstand the measures enterprises are recommended to take with regard to
managing their impacts. It may be used by National Contact Points (NCPs)
to the OECD Guidelines to promote the OECD Guidelines. 2 Finally, the18

1.

A precise definition of multinational enterprises (MNEs) is not required forthe purposes of the OECD Guidelines. These enterprises operate in all
sectors of the economy. They usually comprise companies or other entities
established in more than one country and so linked that they may co-ordinate
their operations in various ways…The OECD Guidelines are addressed to all
the entities within the MNE (parent companies and/or local entities). (OECD
Guidelines, I, 4).

2.

In accordance with the Decision of the Council on the OECD Guidelines asamended in 2011, National Contact Points (NCPs) are set up to further theeffectiveness of the Guidelines by undertaking promotional activities,
handling enquiries and contributing to the resolution of issues thatariserelating to the implementation of the Guidelines in specific instances.
This Guidance may be used by NCPs to promote the OECD Guidelines but
is not intended to serve as a basis for the submission of specific instances.
See also OECD Guidelines, Commentary on the Implementation Proceduresof the OECD Guidelines for Multinational Enterprises, 25.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOROVERVIEW OF THE GUIDANCE

recommendations in this guidance are relevant for any third party, such as
sector-wide and multi-stakeholder initiatives, that facilitates collaboration onsome or all steps of the due diligence process.

Basis for this GuidanceThis Guidance is based on the principles, recommendations andstandards contained in the OECD Guidelines. As such, it is intended toclarify existing expectations under the OECD Guidelines in relation to due
diligence in the garment and footwear sector but is not intended to create
any additional expectations. In relation to human rights, the OECD
Guidelines and this Guidance are intended to align with the UN Guiding
Principles on Business and Human Rights (UNGPs) and the relevant ILO
Conventions and Recommendations.
This Guidance was developed through a multi-stakeholder processbuilding on the reports from the Italian NCP and the French NCP on
responsible supply chains in the textile and garment sectors. 3 Observance of
this Guidance is voluntary and not a legal obligation. 4

Legal complianceObeying domestic laws is the first obligation of enterprises. The OECD
Guidelines are not a substitute for nor should they be considered to override
domestic law and regulation. While the OECD Guidelines may be broader inscope than domestic laws and regulations in many areas, they should not andare not intended to place an enterprise in situations where it faces conflicting
requirements. However, in countries where domestic laws and regulations
3.

See, French NCP for the OECD Guidelines for Multinational Enterprises(2013), NCP Report on the Implementation of the OECD Guidelines in the
Textile and Clothing Sector, Ministry of Economy and Finance, Paris; Italian
NCP for the OECD Guidelines for Multinational Enterprises (2014), Report
on Responsible Business Conduct in the Textile and Garment Supply Chain,
Recommendations of the Italian NCP on Implementation of the OECD
Guidelines for Multinational Enterprises, Ministry of Economic
Development – General Directorate for Industrial Policy, Competitivenessand Small and Medium Enterprises (DGPICPMI), Rome.

4.

While this Guidance does not create legal obligations, some of the practices,
standards and principles set out in the Guidance may also be regulated bynational laws, for example, non-financial reporting requirements and due
diligence on bribery and corruption.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

19

OVERVIEW OF THE GUIDANCE

conflict with the principles and standards of the OECD Guidelines,
enterprises should seek ways to honour such principles and standards to thefullest extent which does not place them in violation of domestic law.

Benefits
This Guidance supports the aims of the OECD Guidelines of ensuringthat the operations of enterprises are in harmony with government policies,
strengthening the basis of mutual confidence between enterprises and thesocieties in which they operate and reducing the negative impacts of anenterprise’s activities.
This Guidance will also support enterprises in implementing the due
diligence recommendations contained in the OECD Guidelines and the
UNGPs and other relevant RBC standards – such as the Universal
Declaration of Human Rights, the International Labour Organization’s(ILO) Declaration on Fundamental Principles and Rights at Work, relevant
ILO Conventions and Recommendations and the ILO Tripartite Declarationof Principles Concerning Multinational Enterprises and Social Policy.
In addition, this Guidance may also help enterprises to satisfy regulatorycompliance for doing business in jurisdictions that require due diligence for
RBC, including reporting on non-financial risk. Finally, this Guidance may
support business in strengthening their relationships with government,
workers and civil society.
Other expected benefits to enterprises implementing this Guidance
include:

•
•
•

•

20

increased ability to meet expectations of customers and markets
regarding responsible supply chains in the garment and footwear
sectorimproved reputation of participating enterprises and of the sector
increased ability to manage global operations consistently across asingle set of RBC standards and across offices, sites, countries
and regions, thereby supporting greater uniformity of operational
outcomes and efficiency and effectiveness of compliance and insome cases leading to cost savings
decreased disruptions in the enterprise’s operations and in its
supply chain linked to risks on matters covered by the OECD
Guidelines in the long term.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOROVERVIEW OF THE GUIDANCE

Structure of the Guidance

Section I

Section II

Core Due Diligence Guidance
for the Garment
and Footwear Sector

Modules on sector risksThis section opens with a high-level
introduction to the expectations under theOECD Guidelines and factors that may
affect the nature and extent of due
diligence. Considerations for stakeholder
engagement, collaboration and gender –which may be applied throughout
Sections I and II – are also included.

This section provides information on
how enterprises may apply the due
diligence
recommendations
under
Section I to sector risks in the garment
and footwear sector. The modules under
Section II are not intended to act asstand-alone guidance, but rather should
supplement the Core Guidance under
Section I and provide enterprises withinformation on how to tailor their due
diligence approach when addressing
specific sector risks. Furthermore,
modules are not intended to provide
technical Guidance. Enterprises areencouraged to rely on existing guidance
where
italignswiththerecommendations in this Guidance.

The core of Section I is a set of guidanceon how enterprises in the garment andfootwear sector may conduct due
diligence in alignment with the OECD
Guidelines. Each sub-section corresponds
to a different step of the due diligenceprocess. The recommendations found in
the Core Due Diligence Guidance are
generally applicable to all risks that anenterprise may face in its own operations
and in its supply chain.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

21

INTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES

Introduction to due diligence under theOECD Guidelines and key concepts for
implementing due diligence

Expectations under the OECD Guidelines“Enterprises should…carry out riskbased due diligence, for example byincorporating it into their enterprise risk
management systems, to identify,
prevent or mitigate actual and potential
adverse impacts […] The nature andextent of due diligence depend on thecircumstances of a particular situation.”(OECD Guidelines, II, A10)
“Enterprises should…avoid causing orcontributing to adverse impacts on
matters covered by the Guidelines,
through their own activities andaddress such impacts when theyoccur.” (OECD Guidelines, II, A11)

“Enterprises should…seek to prevent or
mitigate an adverse impact where they
have not contributed to that impact,when the impact is nevertheless directly
linked to their operations, products orservices by a business relationship. This
is not intended to shift responsibility
from the entity causing an adverse
impact to the enterprise with which it
has a business relationship.” (OECD
Guidelines, II, A12)

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

23

INTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES AND KEY CONCEPTS…

Due diligence process and supporting measures for responsible supply chains
Embed responsible business conduct in enterprise policy andmanagement systemso•Adopt a policy that articulates the enterprise’s commitments to
responsible business conduct in its own operations and in its supply
chain.

•

Strengthen management systems in order to conduct due diligence onrisks of harm in the enterprise’s own operations and in its supply chain.

Due diligence process

Identify potential and actual harm in the enterprise’s own operations
and in its supply chain•

Scope the risks of harm in the enterprise’s own operations and in its
supply chain•••

Conduct a self-assessment of the enterprise’s own operations
Assess suppliers associated with higher-risks at the site-level
Assess the enterprise’s relationship to impacts

Cease, prevent or mitigate harm in the enterprise’s own operations
and in its supply chain••

Cease, prevent or mitigate harm in the enterprise’s own operations
Seek to prevent or mitigate harm in the enterprise’s supply chain

Track

•

Verify, monitor and validate progress on due diligence and its
effectiveness in iown operations*•

Verify, monitor and validate progress on due diligence and its
effectiveness in the enterprise’s supply chain

Communicate•

Communicate publicly on the enterprise’s due diligence processes,
including how the enterprise has addressed potential and actual harm

• Communicate with affected stakeholders
Provide for or cooperate in remediation when appropriate

*

24

•

Establish a process to enable remediation in the enterprise’s own
operations•

Commit to hearing complaints against the enterprise that are raised
through legitimate processes

The effectiveness of due diligence is measured by the extent to which actual and potential harmis prevented and mitigated in the enterprise’s own operations and in its supply chain.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORINTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES

Due Diligence under the OECD Guidelines
Due diligence is the process
through which enterprises canidentify, prevent, mitigate andaccount for how they address theiractual and potential adverse
Due diligence is
impacts. 5
conducted against the OECD
Guidelines
regardingspecific
adverse impacts (i.e. harm). An
enterprise is expected to conduct
due diligence on its own activities
and on its suppliers across its supply
chain
and
other
businessrelationships. Due diligence is an
ongoing exercise, recognising thatrisks of harm may change over timeas the enterprise’s operations andoperating context evolve. 6

KEY TERMS
Adverse impact - In the context of
the OECD Guidelines, “adverse
impacts” can be considered harmful
impacts on matters covered by theOECD Guidelines (e.g. child labour,
discrimination, hazardous chemicals,etc.). The term “harm” and “adverse
impacts” are therefore usedinterchangeably throughout this
Guidance.
Risk - Throughout this Guidance,“risk” refers to the risk of harm toindividuals, other organisations andcommunities in relation to humanrights, labour rights and theenvironment. This Guidance does not
focus on risks to the business itself.

Risk-based
Due diligence should be risk-based. In practice, this concept, which may
be applied throughout this Guidance, can be understood in the following
way:

•

•

The measures that an enterprise takes to conduct due diligenceshould be commensurate to the likelihood and severity of theharm. For example, if an enterprise is sourcing from a country
with a weak labour inspectorate, the measures that the enterprisewill need to take to prevent child labour, forced labour and otherlabour impacts will be more extensive than the measures anenterprise may need to take if sourcing from a supplier operating
in a jurisdiction with a strong labour inspectorate.
The enterprise may prioritise the order in which it takes action
based on the likelihood and severity of harm.

5.

OECD Guidelines, II, Commentary 14.

6.

OECD Guidelines, IV, Commentary 45.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

25

INTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES AND KEY CONCEPTS…

Factors that may affect the nature and extent of due diligence
All enterprises have a responsibility to conduct due diligence regardlessof their size or operating context. However, the nature and extent of due
diligence, such as the specific steps to be taken, appropriate to a particularsituation will be affected by factors such as the size of the enterprise, context
of its operations, the specific recommendations in the OECD Guidelines andthe likelihood and severity of its adverse impacts. 7 Furthermore, the specificsteps taken to conduct human rights due diligence may vary from due
diligence on other risk areas. This Guidance looks at how the size of anenterprise, the nature of its business and its sourcing models may affect thenature and extent of its due diligence. However, other factors may likewiseaffect the specific steps the enterprise takes to conduct due diligence.

•

Sourcing models: The organisation of an enterprise’s sourcing
may affect how it conducts due diligence. For example, if anenterprise is sourcing through buying agents, it may partner withits buying agent to assess suppliers. For the sake of simplicity, this
Guidance characterises sourcing models in the following ways.

− Direct sourcing: An enterprise holds a direct contractual
relationship with its supplier. 8− Indirect sourcing: An enterprise sources products (e.g. raw
materials or finished goods) through an intermediary.

•

•

26

Size of the enterprise: While the size of an enterprise does notchange its responsibility to conduct due diligence, how anenterprise goes about applying due diligence may be affected byits size. For example, the resources, knowledge and capacity to
implement due diligence may be more limited in small andmedium-sized enterprises (SMEs) compared to larger enterprises.
At the same time, SMEs often have smaller operations and fewer
suppliers.
Nature of the business: The nature of the enterprise’s business,whether it is a retailer, brand, buying agent, manufacturer, etc.,

7.

OECD Guidelines, II, Commentary 15.

8.

The term “direct sourcing” should not be confused with the term “directly
linked” used in the OECD Guidelines. An enterprise does not have to be
directly sourcing from a supplier to be directly linked to adverse impacts in
its supply chain.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORINTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES

will likely affect how the enterprise conducts due diligence. For
example, the steps that a retailer takes to conduct due diligence on
the brands that it sells but does not own will likely be different
from the steps that it takes to conduct due diligence on its own
brands and products.

Meaningful stakeholder engagement
Enterprises should engage meaningfully with affected stakeholders aspart of the due diligence process. Such engagement should be two-way,
conducted in good faith and responsive. Stakeholders should be provided
with truthful and complete information and should be given opportunity toprovide input prior to major decisions being made that may affect them.
Stakeholders include persons or groups who are or could be directly or
indirectly affected by the actions of the enterprise and their interlocutors. In
the garment and footwear sector an enterprise’s stakeholders likely include:

•
•
•
•
•

the enterprise’s own employees, other workers performing work
on behalf of the enterprise and trade unions and representative
organisations of the workers’ own choosing
the workers and trade unions and representative organisations of
the workers’ own choosing in the enterprise’s supply chain thatare affected by the enterprise’s activities
the enterprise’s suppliers
community members that are affected by the enterprise’s
operations
governments of the jurisdictions that the enterprise operates in orsources from

Stakeholders should be involved – meaning that they should actively
participate in their design and implementation – in the following due
diligence processes:•

On-site supplier assessments. See section 2.3.

•

Development of corrective action plans. See section 3.

•

Verification, validation and monitoring of impacts. See section 4.

•

Design ofsection 6.1.

operational-levelgrievancemechanisms.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

See

27

INTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES AND KEY CONCEPTS…

In practice, this means that workers and trade unions and representative
organisations of the workers’ own choosing should be involved in the above
due diligence processes for labour risks.
Enterprises are also encouraged to consult stakeholders – meaningthat their input and feedback is requested – during the scoping of risks in theenterprise’s operations and its supply chain.
Practically, there are a number of ways in which enterprises may engage
with stakeholders. Together enterprises and stakeholders are encouraged to
identify methods for engagement that are effective for them. Industrial
relations can be considered an important form of stakeholder engagement inwhich management engages the workforce collectively. The enterpriseshould prioritise engaging with stakeholders, or their interlocutors, who aremost likely to be affected by the activities of the enterprise.

Collaboration on due diligence
Many of the recommendations in this Guidance may be applied incollaboration at a sector level, directly in partnership with trade unions or
through multi-stakeholder initiatives , and indeed collaboration is
encouraged throughout this Guidance. Collaboration does not alter the
responsibility of the individual enterprise to identify, prevent or mitigate
harm. However, collaboration can be used as a means of applying due
diligence. Further guidance is provided throughout Section I on wherecollaboration may be beneficial . Nonetheless, guidance on collaboration is
not comprehensive.

Sector collaboration
Sector collaboration can take a number of forms, but in general ispursued in order to pool knowledge, increase leverage and scale-up effective
measures.

•

•

28

Pool information – many enterprises in the garment and footwear
sector source from the same countries and suppliers. Sharing
information can therefore help increase the awareness of specificrisks in the sector and bring attention to emerging risks more
quickly than would be possible for most individual enterprises.
Increase leverage – leverage refers to the ability of an enterprise
to influence another enterprise. An enterprise’s leverage with its
suppliers is important when identifying, preventing and mitigating
harmful impacts associated with a supplier. However, there aremany reasons why an individual enterprise may lack leverage on
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORINTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES

its own, such as its small size or its relatively insignificant buying
power. Where a single enterprise may lack leverage, a group ofenterprises operating together may wield greater leverage, forexample by aligning on the activities, timelines and follow-up
measures included in a supplier’s corrective action plan.

••

Scale-up effective measures – collaborative initiatives can play arole in scaling up solutions (e.g. policy, training, capacity
building, etc.) that have been demonstrated to be effective as well
as avoid duplications in programming.9 Scaling-up can likewise
engage SMEs who may have limited resources to initially invest
in piloting solutions.
Increase sector transparency – collaboration can help to facilitate
the disclosure of aggregate information, for example, on supplierassessments, corrective action taken and measured improvements
and therefore increase the transparency of the sector broadly,
while enabling individual enterprises to communicate on site-level
information as they are ready.

Cost sharing and savings is often a benefit to sector collaboration. Thiscan be particularly useful for SMEs.
In addition to the above, in cases in which an impact is prevalent inmore than one sector within a particular region, cross-sector collaboration
can also facilitate the identification and scaling-up of more effective
solutions (rather than pushing the impact from one sector to another). For
instance, see Module 1, Child labour and Module 3, Forced labour.

Direct agreements with trade unions
Enterprises should involve workers and trade unions and representative
organisations of the workers’ own choosing in the due diligence process as
referenced in the section above. Enterprises may also directly enter into
agreements with trade unions: (i) to facilitate worker involvement in thedesign and implementation of due diligence processes, (ii) to implement9.

Duplication of supplier assessments and programming (e.g. training initiatives)
may create an unnecessary burden on suppliers without necessarily increasing
the quality of information collected or disseminated or the capacity ofsuppliers. Collaborative initiatives that focus on harmonising assessment
methodology and support recognition of such harmonised assessments could
reduce the burden placed on suppliers as well as increase the quality ofassessment, provided harmonised assessments conform to high standards.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

29

INTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES AND KEY CONCEPTS…

standards on workers’ rights and hold enterprises accountable to them, or(iii) to raise grievances against enterprises in relation to workers’ rights.
Collaboration may be legally binding or voluntary. Examples of direct
collaboration with trade unions include global framework agreements andfreedom of association protocol agreements. However, these examples are
not comprehensive.

•

•

•

Global framework agreements (GFAs) are agreements negotiatedat a global level between an enterprise and a Global Union
Federation. They serve to uphold the rights of workers across acompany’s operations and its supply chain by implementing
standards on trade union rights, health, safety and environmental
practices and quality of work principles, regardless of thestandards existing in a particular country. GFAs may be legallybinding.
Freedom of association protocol agreements establish a joint
understanding and commitment between trade unions andenterprises regarding the implementation of freedom of
association within industrial relations relating to a specificcontext. They may be established locally between a single brand,
supplier and trade union or at a regional or sector-wide level
between a group of buyers, suppliers and trade unions. Protocol
agreements may be legally binding. See Box 13.
Sector agreements between enterprises and trade unions at a
global level are agreements established to address specific sectorrisks in the garment and footwear sector through collaboration
between global trade unions and enterprises. These agreements
establish a common goal and framework for action that all
members agree to implement.

Multi-stakeholder initiatives
Enterprises may also collaborate through multi-stakeholder initiatives(MSIs). MSIs are often established to facilitate collaboration between
stakeholders to address specific sector risks or implement specific steps inthe due diligence process. While by definition MSIs include theparticipation of stakeholders, there is a wide variance in the members andobjectives of MSIs.

Potential challenges to collaboration
One of the challenges to collaboration is the ability of enterprises to
identify and share supplier information amongst those participating in the

30

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORINTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES

collaborative initiative. In order to facilitate collaboration, the sector isencouraged to work towards sharing information and a common approach toidentifying suppliers (e.g. common supplier registrars or ID codes).
The compatibility of collaborative initiatives with competition law is achallenge that is often raised in the sector in relation to collaboration for the
purposes of due diligence. However, competition law does not prohibit
collaborative activities by companies unless they affect importantparameters of competition. See Box 1 for more information.
Box 1. Competition law and responsible business conduct1
Competition law does not prohibit collaborative activities by companies unless theyaffect important parameters of competition.
In general, competition laws and policies prohibit: (i) hard core cartels/naked
restrictions; (ii) other anti-competitive agreements; (iii) anti-competitive unilateral
conduct that exploits or extends market dominance or market power; and (iv) anticompetitive mergers and acquisitions. Collaborative activities between
independent competitors are generally reviewed under i and ii.
In many cases – and perhaps most cases – enterprises can collaborate on
responsible business conduct and due diligence without breaching competition
law. However, where there are concerns, enterprises can take steps to avoid any
competition law issues. For example, enterprises – or the collaborative initiatives inwhich they are involved – are encouraged to:•

Seek the advice of competition authorities if they are in doubt as to whether
a particular course of conduct or co-operative activity may be viewed ascontrary to competition law and therefore raise regulatory risks.

•

Establish transparency around collaborative initiatives to mitigate
competition concerns. Competition authorities tend to be more sceptical of
initiatives or agreements amongst competitors if conduct is completely
private. Furthermore, transparency can help to bring to light potentiallyproblematic issues and thus ensure they are addressed quickly.

•

Establish anti-trust compliance programmes. Guidance documents on how
to best design and enforce compliance programs are often provided bycompetition authorities in specific jurisdictions. General guidance on bestpractices also exists.

1. For more guidance see Capobianco, Gillard and Bijelic, (2015), “Competition law andresponsible business conduct”, reference material for the session on Competition Law andResponsible Business Conduct of the Global Forum on Responsible Business Conduct,
OECD, Paris.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

31

INTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES AND KEY CONCEPTS…

Accountability
As stated above, enterprises retain individual responsibility for their due
diligence and should ensure that all joint work duly takes into consideration
circumstances specific to the individual enterprise. In practice this meansthat enterprises are encouraged to consider how they might contributetowards the effectiveness of collaborative initiatives. For example by:•••reporting instances of harm and emerging risks that it has
identified independently 10
sharing relevant information on the enterprise’s own operations or
suppliers (e.g. share list of suppliers confidentially to theinitiative)
providing technical assistance, where appropriate.

Furthermore, when an enterprise engages in an initiative in order tocollaborate on the steps of the due diligence process, the enterprise should
identify which aspects of due diligence the initiative is helping it to fulfil
and which components the enterprise will need to pursue on its own. It isalso recommended that initiatives which intend to facilitate collaboration ondue diligence:••

Clearly articulate which components of due diligence the initiativeis helping to facilitate (e.g. identification of sector risks,prioritisation of risks, etc.)
Demonstrate that its approaches align with the recommendationsin this Guidance. In this regard the initiative may seek to bereviewed by an advisory group of experts and stakeholders todetermine the extent to which the initiative supports due diligencein alignment with this Guidance.

Gender considerations when applying due diligence
Women account for a majority of the labour force in the garment andfootwear supply chain. Risks of harm often differ for men and women. For
example, women are more likely to be paid lower wages than men; womenare more often linked to precarious, informal or irregular employment; and10.

32

For example, a stakeholder may flag a change in the context on-the-groundwhich may increase the risk of harm to the enterprise. The enterprise shouldshare this with the initiative.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTORINTRODUCTION TO DUE DILIGENCE UNDER THE OECD GUIDELINES

low-income women workers are particularly vulnerable to harassment in theworkplace. The unique position of women within a particular context should
therefore be systematically considered at all stages of due diligence.
Enterprises are encouraged to:

•

•
•
•
•

Consider how women may be disproportionately affected by
impacts (e.g. migrant workers, minorities, young women, etc.).
For example, sexual harassment and sexual and gender- based
violence predominantly affect women in the sector.
Consider whether a programme or policy could have unintended
negative consequences for women.
Include women in the design of monitoring and evaluation
measures.
Assess whether grievance mechanisms are equally accessible to
all affected parties (e.g. women, men, migrant workers, etc.).
Ensure that the individual serving as the access point for agrievance mechanism is approachable regardless of thecomplainant’s gender, religion, etc. Special attention should be
paid to women from vulnerable groups.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

33

Section I
Core Due Diligence
Guidance for the Garment
and Footwear Sector

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

35

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

1. Embed responsible business conduct
in enterprise policy andmanagement systems
Expectations under the OECD Guidelines
The OECD Guidelines explicitly
recommend that enterprises
make policy commitments on
disclosure (II, 2d) and humanrights (OECD Guidelines, IV, 4;
OECD Guidelines, IV,
Commentary 44)
The OECD Guidelines also
recommend that “enterprises
express their commitment torespect human rights through astatement of policy that: (i) is
approved at the most seniorlevel of the enterprise; (ii) is
informed by relevant internal
and/or external expertise; (iii)
stipulates the enterprise’s
human rights expectations of
personnel, business partners
andother parties directly linked to its
operations, products or services;(iv) is publicly available andcommunicated internally andexternally to all personnel,
business partners and otherrelevant parties; (v) is reflected
in operational policies andprocedures necessary to embed
it throughout the enterprise”.
(OECD Guidelines IV,
Commentary 44)
While the OECD Guidelines do
not explicitly recommend thatenterprises establish a policy
commitment on matters beyond
disclosure and human rights, it
can be considered good practicewhich may be applied to all
chapters of the OECD
Guidelines.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

37

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

1.1 Adopt a policy on responsible business conduct that articulates theenterprise’s commitments to responsible business conduct in its own
operations and in its supply chain
The enterprise policy on responsible business conduct (hereafter RBC
policy):

•

•

•
•

11.

Should include commitments regarding its own activities andshould articulate the enterprise’s expectations of its business
partners – including suppliers, licensees and intermediaries –
across the full length of its supply chain.
Should cover matters covered by the OECD Guidelines. The
enterprise RBC policy should also commit to upholding
international standards on sector risks and sub-sector risks,
relevant to the enterprise and make explicit reference to relevantinternational standards. 11
Should include commitments to conduct due diligence on theenterprise’s most significant risks in its own operations and in its
supply chain. See section 2.1.
(Retailers, brands and other buyers) should include a commitment
to responsible sourcing practices, meaning that the enterprisecommits to seeking to prevent its contribution to harmful impacts
through its sourcing practices. See Box 4.

Sector risks in the garment and footwear sector include, but are not limited
to: child labour; discrimination; forced labour; hours of work; occupational
health and safety; the right to establish or join a trade union andrepresentative worker organisation and right to collective bargaining;
compensation; discrimination; hazardous chemicals; water consumption;water pollution; energy consumption and CO2 emissions; bribery andcorruption.
Examples of international standards include the OECD Guidelines forMultinational Enterprises, the UN Guiding Principles on Business and Human
Rights, the Universal Declaration of Human Rights and the ILO’s Declaration
on Fundamental Principles and Rights at Work. In all cases and irrespective of
the country or specific context of enterprises’ operations, reference should bemade to the internationally recognised human rights expressed in theInternational Bill of Human Rights. OECD Guidelines, IV, 39.

38OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

•

•
•
•

Should stipulate the enterprise’s expectations regarding the use of
subcontractors by direct suppliers, when relevant, including adefinition of “subcontract” and distinctions in subcontracted work
if they exist. See Box 2.
Should put forth the enterprise’s expectations regarding theoutsourcing to homeworkers and the use of handwork, where
relevant to the enterprise’s business models. See Module 12.
Should include a commitment to meaningful engagement withaffected stakeholders through the course of due diligence. See
Introduction to due diligence under the OECD Guidelines.
Is encouraged to include a commitment to hear and address allcomplaints against the enterprise regarding its own operations
regardless of how they are raised; and include a commitment tohear and address measured and substantiated complaints that theenterprise has caused or contributed to harms in its supply chainthat are raised through legitimate processes. See section 6.2.

Box 2. Policy on subcontracting and other due diligence processes
Subcontracting orders to third parties is a fairly common practice at many stagesof the garment and footwear supply chain. Subcontracting enables an enterprise torespond quickly to short lead times and changes in orders, to specialise in certain
tasks, such as design, or outsource specialised tasks that are not performed inhouse, for example screen printing. Outsourcing, however, can also decreasetransparency in the supply chain and has been demonstrated to increase the riskof human rights and labour abuses and environmental impacts in higher-risk
contexts. Therefore, when operating in higher-risk contexts and where there is ahigh likelihood of subcontracting, the due diligence measures that an enterpriseshould take to mitigate these risks should be increased.
As a component of due diligence, enterprises should establish clear expectations
for their direct suppliers operating in higher-risk contexts on whether
subcontracting is authorised or not and the corresponding expectations.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

39

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

Box 2. Policy on subcontracting and other due diligence processes (cont.)
Enterprise permits subcontracting
If the enterprise permits subcontracting, it should conduct due diligence on thesubcontractors in its supply chain or ensure that its supplier has done so. In
practice, this means that all steps of the due diligence process – including
measures such as developing and monitoring corrective action plans, as
appropriate – should be carried out on subcontractors. Collaborative initiatives canhelp to facilitate due diligence on subcontractors.
Additionally, the enterprise is encouraged to establish clear requirements ontransparency and on the selection of subcontractors. Example measures areprovided below.

• Prequalification of subcontractors: Subcontractors should be prequalified
through similarly rigorous processes to those used for direct contractors. See
section 3.2.2. It is recommended that this is a systematic process where
suppliers apply to be on a pre-approved subcontractor list. Approved
subcontracts may be reviewed on a semi-regular (e.g. annual) basis toremain approved. Workers of those sub-contractors should have access togrievance mechanisms, similar to those of direct contractors.

• Contract process: Direct suppliers may subcontract to previously approved
subcontractors. However, direct contractors should be prepared to disclose
the following:− intent to subcontract work;− selection of pre-approved subcontractor;− up-to-date information on subcontractor; and− size of contract allocation.

• Where feasible, manufacturers are encouraged to establish ongoing
relationships with their subcontractors and become actively involved in theestablishment and monitoring of corrective action, as relevant.
Enterprise does not permit subcontracting
If an enterprise chooses to prohibit subcontracting, the enterprise should put inplace additional measures to mitigate the risk that subcontracting continues tounauthorised suppliers or ensure that the placement of orders does not result inforced overtime or other labour impacts. For example, in instances in which theenterprise changes the specifications of orders, the lead time should likewise beamended to reduce the risk of unauthorised subcontracting. In other words, theenterprise should reduce incentives to subcontract work.

40

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMSNature of the policy
The enterprise RBC policy may consist of one single policy or several
stand-alone policies or be integrated into wider governance documents ofthe enterprise – such as the code of conduct or principles of business ethics.
The enterprise RBC policy may also build on existing policies andcommitments. 12

Adopting and updating the policy
The enterprise RBC policy should be developed with and informed byrelevant internal and external expertise and should be approved at the mostsenior level of the enterprise.
The RBC policy should not be a static document but should be updated
through an iterative process that builds on increasing knowledge about risksof harm in the enterprise’s supply chain and on input from internal andexternal stakeholders. For example, the enterprise may identify a gap in its
policy after scoping the risks of harm in its own operations and in its supply
chain. See section 2.1.

Communicating the policy
The enterprise RBC policy should be made publicly available andcommunicated to all employees, suppliers and other business partners andother relevant parties. See section 5.1.

Collaboration
The garment and footwear sector includes numerous sector initiatives, tradeunion agreements and multi-stakeholder initiatives that have developed
policies or codes of conduct for their members. Enterprises are encouraged toadopt or align their policies with such existing commitments in order tofacilitate sector collaboration on assessments against those policies.
However, the policies that the enterprise adopts should align with therecommendations in this Guidance. Sector initiatives, trade union agreements
and multi-stakeholder initiatives should have processes in place to review andupdate their policies to reflect changing circumstances and emerging risks.

12.

A gap analysis against the OECD Guidelines and this Due Diligence
Guidance, particularly in relation to the expectations of due diligence, canhelp to highlight areas in need of updating.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

41

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

Factors that may affect the nature of due diligence
All enterprises, regardless of their size, position in the supply chain andlocation should adopt an RBC policy. However, the enterprise’s policy shouldreflect the specific risks of harm in its own operations and in its supply chain –which in turn will be affected by its products, business models, sourcing
models and countries it operates in or sources from. Furthermore, enterprises
are encouraged to adopt policies that address their specific circumstancesand sourcing models. For example, an enterprise that uses third-party
recruitment or employment agencies is encouraged to establish a policy on
responsible recruitment and hiring.

1.2 Strengthen management systems in order to conduct due diligenceon risks of harm in the enterprise’s own operations and in its supply
chain
Oversight
The enterprise:

•

•
•
•

is encouraged to establish or strengthen corporate governance tooversee and support RBC, including assigning board and senior
management level accountability for guiding the enterprise’s
approach and implementation of RBC
should assign responsibility to senior staff with the necessarycompetence, knowledge and experience to oversee theimplementation of the RBC policy
should give adequate attention and support to due diligence onhuman rights, labour, environment and integrity risks and allocate
resources accordingly
Should secure adequate staff time and ensure that those who workon supply chain due diligence have the competence to performtheir duties.

Decision-making
The enterprise should incorporate due diligence into decision-making
processes. Examples include the following:•42

An enterprise is considering developing a new product that may
increase the risk of using hazardous chemicals due to theOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

recommended dye colours and materials. The enterprise includes
the cost and feasibility of conducting due diligence in the decision
making processes.

•

An enterprise is considering expanding its own operations to a
country with known human rights abuses. The enterprise includes
in the decision-making process the cost and feasibility of
conducting human rights due diligence to determine whether it
can operate in the country responsibly.

Functional alignment
The RBC policy, by its nature, will be relevant across several internal
departments (e.g. sourcing, design, etc.). As such, the enterprise isencouraged to establish alignment across teams and business units,
particularly when the incentives of one business unit do not align with the
RBC policy. Some examples of how an enterprise might promote functionalalignment include:•••

Facilitate feedback and learning on due diligence and the RBC
policy between business units
Ensure that information related to due diligence is provided to
relevant decision makers and is adequate and appropriate
Include multiple business units in making a decision that may
increase the risk of harm in the enterprise’s own operations or inits supply chain (e.g. sourcing from a new, higher-risk country).

For example, in the garment and footwear sector, the incentives ofbuying units may not align with the incentives of the business units
overseeing supplier human rights, labour and environmental performance. In
light of this, it is recommended that buying units have access to ongoing andupdated information such as: suppliers that are prequalified for sourcing;subcontractors that are prequalified for sourcing (if relevant); and supplierorder capacity.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

43

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

Information systems to support due diligence
The enterprise should develop information management systems that are
accurate and current and are capable of storing the full extent of informationnecessary to conduct due diligence. It is recommended that information be
stored for five years. Throughout this Guidance, reference is made to theidentification of the information included in Table 1 for the purposes of due
diligence. 13

13.

44

Much emphasis has been placed on supply chain mapping in the garment
and footwear sector. Identifying who the enterprise sources from and whereis an important process that facilitates aspects of due diligence, notably theidentification of actual and potential harm (see section 2) and the prevention
and mitigation of those impacts (see section 3). The enterprise should
identify its suppliers and other business relationships to the extent that isnecessary to conduct due diligence in accordance with this Guidance.
Importantly, while this Guidance does not specify to which tier in the supply
chain the enterprise should map, the enterprise is expected to justify how it
conducts due diligence (see section 5). In other words, an enterprise shouldbe able to explain how it identified and addressed risks in its supply chain.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 1. EMBED RESPONSIBLE BUSINESS CONDUCT IN ENTERPRISE POLICY AND MANAGEMENT SYSTEMS

Table 1. Information to be collected and stored for the purposesof conducting due diligence
Information

Reference inGuidance

Products that the enterprise buys and produces andthe general risks of harm associated with the
production and sale of those products

Section 2.1(For retailers) List of brands that the enterprise sells
and associated products

Table 3

(For retailers) Information on whether the brands thatthe enterprise sells conduct due diligence

Table 3

Countries from which the enterprise is sourcing where
the risk of harm is considered to be higher. This
includes countries that may be upstream in anenterprise’s supply chain, such as exporters of raw
materials

Section 2.1

The enterprise’s suppliers and other business partners
operating at stages or in sourcing countries where therisk of harm is considered to be higher

Section 2.3(Optional) Choke points in the supply chain for
products linked to severe harms upstream in theenterprise’s supply chain

Box 3

Stages in the supply chain (e.g. beading, embroidery,leather working) which have a higher likelihood of
employing homeworkers

Module 12

Stages in the supply chain which have a higher
likelihood of including subcontracting

Box 2

Findings of the enterprise risk-scoping exercise

Section 2.1

Findings of individual supplier assessments

Section 2.3

Supplier commitments under relevant corrective action
plans

Section 3.1

List of prequalified suppliers and subcontractors

Section 3.2.2

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

45

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

2. Identify actual and potential harms
in the enterprise’s own operations
and in its supply chain
Expectations under the OECD Guidelines
The OECD Guidelines put forth the
expectation that enterprises “identify
actual and potential adverse
impacts on matters covered by theOECD Guidelines.” (OECD
Guidelines, II, A10)
This includes impacts from theenterprise’s own activities (II, A11)
as well as “those that the enterprise
has not contributed to, but which
are nevertheless directly linked totheir operations, products orservices by a business relationship.”(OECD Guidelines, II, A12)

46

In the context of the OECD
Guidelines, “business
relationships” include “relationships
with business partners, entities in
its supply chain and any other nonState or State entity directly linked
to its business operations,products or services”. (OECD
Guidelines, IV, Commentary 43)

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

2.1 Scope the risks of harm in the enterprise’s own operations and inits supply chain
The enterprise should conduct a scoping exercise to identify the mostsignificant risks of harm in its own operations and in its supply chain. The
scoping should build on known sector risks and take into consideration
relevant risk factors. It should be periodic, informed and documented.
The enterprise is encouraged to draw from known sector and sub-sectorrisks to determine the likelihood of risks and severity of harm in its own
operations and in its supply chain based on the countries that the enterprise
operates in or sources from, the products that the enterprise produces or sells
and its business and sourcing practices. Each of these risk factors is
described below. The enterprise should consider general risk areas from raw
materials to retail. Based on all known information, the enterprise should
determine which risks of harm are (or are likely to be) the most significant
risks in its own operations and in its supply chain. Factors such as thenumber of product lines the enterprise has, the number of countries itsources from, etc. may affect how the enterprise scopes the risks of harm in
its supply chain. See Table 3.

Methodology
The enterprise may rely on desk research. Where gaps in information
exist, the enterprise is encouraged to engage with stakeholders and experts.
The enterprise may establish an external stakeholder advisory group, which
includes worker representatives, to provide inputs into the scoping process
and flag new issues as they arise. Issues raised through early warning
systems or grievance mechanisms may also provide information on patternsof impact.
The enterprise should review the findings of its scoping assessment on asemi-regular basis (e.g. every two years). However, due diligence is not a
static process. As such, the enterprise should continuously update theinformation feeding into its understanding of the risks of harm in its
operations and in its supply chain and should account for changing
circumstances – such as changes in the regulatory framework of a country –on an ongoing basis and be ready to respond to emerging risks.

Sector risks
Sector risks are risks that are prevalent in the garment and footwear
sector globally across product lines and geographies. Key characteristics ofthe garment and footwear supply chain – low skilled, labour-intensive,
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

47

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

dispersed production, short lead times – make it higher-risk for certain
labour and human rights impacts. Many of these risks exist at every level ofthe supply chain. Similarly, the materials themselves used in products andprocesses to develop products increase the risk of certain environmental
harms at various stages of the garment and footwear supply chain. For
example, wet processing is higher-risk for use of hazardous chemicals thancut-make-trim. The most common sector risks are well documented and arelisted below. Some sub-sectors (e.g. luxury goods, sports apparel, work
apparel, etc.) may face unique risks which are not included in Table 2 (suchas animal welfare), but should likewise be considered if relevant. 14
Table 2. Sector risks in the garment and footwear sector*
Human rights & labourrisks

Environmental risks

Integrity risksChild labour

Hazardous chemicals

Discrimination

Water consumption

Bribery andcorruption

Forced labour

Water pollution

Occupational health andsafety (e.g. worker related
injury and ill health)

Greenhouse Gas(GHG) emissions

Violations of the right ofworkers to establish or joina trade union and to
bargain collectively
Non-compliance withminimum wage laws
Wages do not meet basic
needs of workers and theirfamilies* Sector risks are not limited to the above

14.

48

Specific guidance regarding risks related to animal welfare, husbandry andland-rights is not included in this Guidance but may be relevant to someactors in the garment and footwear supply chain. The OECD provides due
diligence guidance on these issues in the OECD-FAO Guidance for
Responsible Agricultural Supply Chains.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Product risk factors
Some products hold a higher risk of impact than others due to theprocesses used to make them. For example, cotton products may hold ahigher risk of hazardous insecticides such as Parathion, Aldicarb andMethamidopho, whereas polyester products may hold a higher risk ofcontributing to greenhouse gas emissions. 15

Country risk factors
Country risk factors are conditions in a particular country or production
cluster, or within the industry within a particular country, which may makethe above sector risks more likely. These generally include governance,socio-economic and industry factors. For example, high rates of migrantlabour is a risk factor for child labour, forced labour, non-compliance withwage legislation and sexual harassment. 16 See Section II, modules forcountry risk factors across sector risks.

Business-model risk factors
The enterprise’s business model, such as the number of product linesthat it sells and how often those product lines are changed (i.e. seasons peryear), may affect the risk of harm in the enterprise’s supply chain. This isparticularly relevant for retailers and brands but may also be true for
manufacturers who produce a wide variety of finished goods. Some
examples of how an enterprise’s business model may affect risks of harm in
its own operations and in its supply chain are included below.

•

Enterprises with numerous and highly diversified product lines are
generally more exposed to a wider range of risks of harm in their
supply chain due to the variance in materials, production
processes, etc.

15.

The production of polyester fibre is an energy-intensive process (as high as
125 MJ/kg of fibre) which produces high levels of greenhouse gas emissions.
Muthu, S. (2014), Assessing the Environmental Impact of Textiles andClothing Supply Chain, Series in Textiles, Woodhead Publishing, Cambridge.

16.

While high rates of migrant labour may flag an increased risk for certain
human rights and labour abuses, enterprises are not encouraged to disengage
from suppliers simply because migrant workers are employed. Rather,enterprises should tailor their due diligence to ensure that the employment of
migrant workers is responsible.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

49

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

•••Enterprises with numerous product cycles or seasons per year
generally require that products are taken from design to production
on shorter time frames. Short response times increase the risk ofchanges in orders, rushed orders and other purchasing practices
which may contribute to labour and human rights abuses such as
excessive overtime, forced overtime and unauthorised outsourcing.
Numerous product cycles can likewise lead to increased use ofmaterials and resources by the enterprise and therefore an
increased carbon, water and waste footprint.
The extent of an enterprise’s foreign operations and the extent of
its control over those operations can increase its exposure tointegrity risks.

Sourcing-model risk factors
Similarly, the enterprise’s sourcing models – whether it sources from alarge range of suppliers, the nature of its contractual relationships andwhether sourcing is direct or indirect – may increase (or decrease) the risksof harm in its supply chain. Some examples are included below, although
this list is not comprehensive:

•

•

•
•

50

Large numbers of suppliers may increase the exposure to harm in theenterprise’s supply chain. Furthermore, a large number of suppliers in
relation to the size of the enterprise and its resources dedicated tosupply chain due diligence can be more difficult to control.
The volatility of an enterprise’s relationship with its suppliers may
affect its ability to identify, prevent or mitigate harm in its supply
chain. For example, short term relationships with suppliers may
mean that an enterprise does not have time to adequately preventor mitigate risks that have been identified during supplierassessments. It may also mean that the enterprise lacks leveragewith the supplier to prevent or mitigate any impacts that havebeen identified. Similarly the typical length of the enterprise’scontracts, whether long-standing orders or short term orders, may
decrease an enterprise’s leverage with its suppliers.
Enterprises that source indirectly (e.g. through buying agents) anddo not have an adequate selection process for these intermediaries
have limited visibility and control over their suppliers.
Enterprises that are operating in or sourcing from many countries –
relative to their size – may have an increased exposure to harm andtherefore may find preventing and mitigating harm more challenging.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Identify the enterprise’s most significant risks of harm
Based on all known information, the enterprise should determine whichrisks of harm are most significant – in relation to likelihood and severity ofharm – in its own operations and in its supply chain and prioritise thoserisks for action first. Severity of harm is judged on scale, scope andirremediable character.

•••“Scale” refers to the gravity of the adverse impact.
“Scope” concerns the number of individuals that are or will beaffected.
“Irremediable character” means any limits on the ability to restore
those affected to a situation at least the same as, or equivalent to,their situation before the adverse impact.

Given the complexity and diversity of issues within the garment andfootwear sector, determining the most significant risks of harm in theenterprise’s own operations and in its supply chain is likely to entail somejudgement on the part of the enterprise. The enterprise is encouraged toengage with stakeholders and experts in this process. In all cases, theenterprises should be prepared to justify how it determined and prioritised
risks. See section 5.
Collaboration
Enterprises are encouraged to share information publicly or at an industrylevel related to risks of harm linked to specific production processes,
countries, sourcing models, etc. Sharing of information at a sector level isparticularly important for identifying emerging risks of harm.

Factors that may affect the nature of due diligence
With a view to scoping general risks of harm across all product lines andsourcing countries, an enterprise may take a risk-based approach to
implementing the above Guidance. However, if it is brought to theenterprise’s attention (e.g. through reports, stakeholder engagement,
grievance mechanism etc.) that a product line or sub-component isassociated with particular risks, the enterprise should not discard thisinformation, but should consider it alongside other information gathered
during its scoping exercise.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

51

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Table 3. Factors that may affect the nature and extent of due diligence
Context

Recommendations

Enterprise has many
product lines

The enterprise is encouraged to examine the risks of harm
linked to product lines that are core to its business first or
product lines that are likely to hold the most severe risks ofharm. Once it has identified and addressed these risks it should
move on to identify and address risks linked to other productlines.

Enterprise sells complex
products

With a view to scoping the risks of harm across all subcomponents, the enterprise may first identify risks of harm
linked to the most significant component of a finished good. If
an enterprise sells leather jackets with zippers and studs, forexample, it may focus initially on its sourcing of leather, thedyeing and finishing process and the manufacturing of thefinished good.

(i.e. numerous subcomponents)

Enterprise is operating inor sources from many
countries

Enterprises are encouraged to identify countries where the riskof impact is most significant and based on this risk assessment,
prioritise sourcing countries to be included in the scoping
exercise.

Enterprise does not havevisibility of the countriesof origin for its materials

Where information exists, the enterprise may identify tradeflows of raw materials to determine the likely country of origin of
raw materials being sold to material processors in their supply
chain (e.g. map where the majority of cotton is purchased forspinners operating in a given country). For commodities thatare traded by large multinational enterprises, enterprises may
seek to link to international commodities traders (e.g. cotton
traders) and ask for information on where they source their raw
materials that are then sold in the country where theenterprise’s material processors are located.

(e.g. raw materials)

Retailer

The enterprise should conduct due diligence on both its own
brands and the products that it sells that are not its own. The
specific steps that it takes may be different for each.
The enterprise should follow this Guidance for its own brands.
For the brands that are not its own, the enterprise may collectinformation on whether those brands conduct due diligence andthe extent of that due diligence. If the enterprise sells numerous
brands, it may prioritise the brands that represent the greatest
percentage of its merchandise first or products that hold thehighest risks of harm.
Over time, the enterprise is encouraged to establish systematic
measures to mitigate the risk of harm linked to the brands that it
sells that are not its own. For example, it could establish aprequalification process for brands that the enterprise sells that
includes a review of their due diligence practices.

52

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Context

Recommendations

Licensor

If an enterprise licenses its trademark to other enterprises fortheir use, it still has a responsibility to conduct due diligence on
the products on which its trademark is used, although thespecific steps that it takes may vary. For example, the licensor
may require that licensees conduct due diligence in accordancewith this Guidance. If licensees are small and medium-sizedcompanies, the enterprise is encouraged to help to build thecapacity of their licensees where necessary and appropriate to
conduct due diligence. The enterprise may also directly assist
its licensees in conducting due diligence in accordance with this
Guidance.
Over time, the enterprise is encouraged to establish systematic
measures to mitigate the risk of harm linked to the products on
which its trademark is used. For example, it could establish aprequalification process for licensees that includes a review of
their due diligence practices.

2.2 Conduct a self-assessment of the enterprise’s own operations
If the enterprise has identified a risk of harm within its own operations,
it should conduct an internal assessment to determine the extent of the risk
and actual impacts on the ground.

Methodology
Where available, the enterprise is encouraged to follow existing credible
guidance for employers. 17 Modules in Section II include supplemental
recommendations for sector risks and a non-exhaustive list of resourcesfrom governments and international organisations.
The enterprise should engage with potentially affected stakeholders –including its employees, workers and trade unions and representative
organisations of the workers’ own choosing – when identifying potential andactual harms in its own operations. This is a critical step. In addition to
engaging stakeholders, the enterprise should review its policies and systems
to assess the extent to which risks are being prevented or mitigated. The
following is a non-exhaustive list of example policies, systems and measuresthat the enterprise may review as part of its self-assessment.

17.

For example, the ILO has developed extensive guidance for employers on
how to identify and mitigate labour risks.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

53

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

•

Policies and messaging from the top-level management on
identified risks.

•

Purchasing practices and price setting. See Box 4.

•

Rules and procedures regarding risks•

Programmes in place to support compliance

•
•
•
•
•

Employee training, skills and knowledge of risks in theenterprise’s operations.
Financial controls, such as policies and procedures to track,
manage and report financial resources and transactions. See
Module 11 on Bribery and corruption.
Monitoring procedures including red-flag systems to identify risksof harm before they occur.
Whistle-blower channels and protections from retaliation for those
who report wrongdoing.
Processes to enable remediation for human rights and labour
impacts (e.g. operational-level grievance mechanisms)

The enterprise is encouraged to seek external support in conducting aself-assessment when:••

the impact may cause severe harm if not adequately prevented,(e.g. disposal of hazardous chemicals)
prevention measures require technical expertise that is notavailable in-house (e.g. fire, building, electrical safety).

2.3 Assess suppliers associated with higher-risk for harms at the site
level
Supplier selection (risk-based approach)
The enterprise should assess suppliers who are associated with higherrisks for harms prioritised during the enterprise’s scoping exercise. Suppliers
should be selected based on the risk of harm rather than where they are
positioned in the enterprise’s supply chain (i.e. assessing for impacts at tier-

54

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

one factories should not necessarily be prioritised over assessing moresignificant risks of harm at tier three). 18 However, some factors – such as theenterprise’s leverage with its suppliers, the size of the enterprise or thenumber of suppliers – may affect the specific steps that the enterprise may
take to assesses its suppliers. See factors that may affect the nature andextent of due diligence below.
Some considerations in determining suppliers that are higher-risk
include:•••The supplier operates in a country that holds higher risk.
The supplier is involved in a production process that is higher risk(e.g. wet-processing is high-risk for hazardous chemicals.
Harms or risks of harm were identified in a previous supplierassessment.

Content
For most risks of harm, the enterprise should seek to assess thefollowing during the supplier assessment:•••

the measures that the supplier has implemented to prevent harm(e.g. policy, training, facility upgrading)actual harm on-the-ground or risks of harm (e.g. unsafe handlingof chemicals)
the extent to which workers are aware of their rights in relation tohuman rights and labour rights.

Whether the supplier has established an operational-level grievancemechanism and if it has, the extent to which it meets the recommendationsin Table 8. Core criteria of operational-level grievance mechanisms andrecommendations.

18.

This approach is intended to move the industry away from focusing
exclusively on tier-one suppliers to focusing on the enterprise’s most severerisks, wherever those risks may lie.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

55

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Assessment approach & methodology

•

•

•

•

19.

56

The nature of the assessment (e.g. inspection, interviews, focus
groups) should correspond to the risk. There is no single form ofassessment that is suitable for all risks. For example, a technicalinspection is necessary to inspect the structural integrity and fireand building safety of a site, whereas off-site focus groups may beappropriate when assessing the risk of sexual harassment in theworkplace. For labour and human rights issues, assessments
should rely heavily on worker interviews and workers should be
involved in the design of assessments – either directly or throughtheir trade unions and representative organisations of their own
choosing. In some cases, traditional interviews may not beeffective at gleaning sensitive information due to fear of reprisal
or workers being trained to provide set answers. In these cases,
participatory methods of assessment may be considered. 19
Assessment should be built on a strong understanding of the local
context. A good understanding of the local operating context is a
critical step in designing assessments that are able to capturenecessary information. While a standard assessment may be used
as a starting point, it should be tailored to the local circumstances.
Assessment teams should consider power dynamics and cultural
norms in the design and implementation of assessments. See“Understand the operating context” below.
Corroboration of information: For risks of harm which require
subjective determinations – such as most human rights and labourrisks – multiple data points should be used to assess the situation.
Triangulation, which involves the convergence of data frommultiple data collection sources, helps ensure that findings are
credible and defensible.
The enterprise should adjust its assessment methodology when
actual findings do not correspond to expected findings. For
example, if a supplier is operating in a high-risk context forexcessive working hours and excessive working hours are notParticipatory methods of assessment are facilitation techniques that involve
the active participation of the stakeholder such as role play, showing a
picture, diagram or map and asking questions about it, asking for a narrative,
etc. See SIMPOC (2005), Manual on Child Labour Rapid Assessment
Methodology, ILO, Geneva, UNICEF.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

found, the enterprisemethodology.

shouldreconsider

theassessment

Assessment team
Those conducting assessments should be qualified, meaning that they
demonstrate the following competencies:•••

expertise including extensive knowledge of the relevant risks forwhich the enterprise is assessing (e.g. child labour, forced labour,etc.), including an understanding of the best methodology for
identifying actual and potential harms related to the risk within
the local context.
knowledge of international and national standards related to theadverse impact.
capability to conduct the assessment within the local context (e.g.
language skills).

It is not likely that those conducting the assessment will have all of theabove competencies across all risk areas and across all contexts. In light ofthis challenge, those conducting the assessment may include teams that
have, together, all of the above competencies.
In addition to the above competencies, given the predominance of
women in the sector and sensitivity surrounding some of the issues (e.g.
sexual harassment, forced labour, etc.) the enterprise should beconscientious as to whether the gender of the person conducting theassessment is important.

Frequency of assessment
Assessment fatigue is a concern in the garment and footwear sector.
Supplier assessments should be conducted when there are gaps in
information or when the context is likely to have changed. In other words,
supplier assessments should provide added value. Within this context,
enterprises are encouraged to observe the following guidance.

••

New suppliers should be assessed prior to the placement of orders.
The results of the supplier assessment should inform whether theenterprise is able to engage with the supplier responsibly. See
section 3.2.2 on prequalification.
Supplier assessments can be conducted by the enterprise or byrelying on existing credible assessments if such assessments haveOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

57

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

been conducted within a reasonable period of time (e.g. past year).
“Credible assessment” refers to assessments conducted bylegitimate assessment teams that meet the recommendations of
this Guidance with regards to processes for identifying real andpotential harm. If a credible assessment already exists, theenterprise is encouraged to review the findings and then focus its
due diligence activities on preventing or mitigating identified
harm and monitoring the situation on the ground. 20

•

•

20 .

58

In relation to existing suppliers, while enterprises should assess
their suppliers (or use existing assessments) assessment should
not take the place of ongoing monitoring. Monitoring includes theongoing tracking of the situation on the ground in relation to
specific risks with input from stakeholders. When effective,
monitoring is ongoing and can therefore provide a more complete
picture than individual assessments. Accordingly, for existing
suppliers, where possible, ongoing monitoring should be used totrigger where and when further assessment is needed. A balance
between monitoring and assessment should be maintained. For
example, through ongoing monitoring, workers may raise a redflag of child labour. This could then trigger a supplier assessment.
This is particularly relevant for human rights and labour risks that
may change quickly and are not easily assessed using quantifiable
metrics such as: child labour, forced labour, discrimination, some
aspects of occupational health and safety, the right to establish
and join a trade union and the right to bargain collectively. See
section 4 for more information on monitoring.
In some cases, risks of harm are so prevalent in a particularjurisdiction that assessing individual suppliers will not produce
any new information. For example, an enterprise may learn thatsexual harassment is prevalent in an export processing zone (EPZ)
through its stakeholder engagements. Recognising how difficult it
is to identify specific incidents of sexual harassment (i.e. without
effective grievance mechanisms already established and without
an initial investment in increasing the awareness of workers), theenterprise may choose not to assess suppliers first but rather to

There may be instances in which another assessment is necessary, forexample due to significant changes in the context since the last assessment.
In general, however, enterprises are encouraged to avoid duplicatingassessments and prioritise resources for prevention and mitigation.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

immediately partner with its suppliers to prevent sexual
harassment through trainings and establishing an effective
operational-level grievance mechanism. See Module 2 on Sexual
harassment and sexual and gender based violence.
Collaboration
As stated in section 1.1, in order to facilitate collaboration, the sector isencouraged to work towards a common approach to identifying suppliers (e.g.
common supplier ID codes) in order to facilitate the sharing of information oncommon suppliers with due regard for competition law.
Enterprises are encouraged to collaborate to harmonise assessment
methodology and support recognition, provided assessments conform to highstandards. Enterprises are likewise encouraged to collaborate on theassessment of suppliers when sourcing from the same region and supplierbase, to the extent feasible. However, the rigour of assessments should not
be compromised to support increased uptake. For example, throughout
Section II of this Guidance, enterprises are encouraged to rely heavily on
worker interviews, focus-group discussions and at times participatory methodsof assessment for human rights and labour risks. It is therefore important thata common assessment that can be shared amongst enterprises include
important qualitative information.

Collaboration
Enterprises are encouraged to collaborate, for example, through industry
initiatives or multi-stakeholder initiatives, to implement the above. This isparticularly important for the engagement of small and medium-sizedenterprises (SMEs). The following are example steps that an enterprise or
initiative may take to assess enterprises operating at choke points in the
supply chain:•

identification of actual or likely choke points in the supply chain.

•

traceability to enterprises operating at choke points.

•

verification (e.g. through management audits and random site-checks)
that enterprises operating at choke points are applying due diligence on
their upstream suppliers in accordance with the recommendations in this
Guidance.

•

directing sourcing towards enterprises operating at choke points in the
supply chain that are applying due diligence in accordance with this
Guidance.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

59

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Box 3. Mechanisms to assess and address risks ofharm beyond tier 2 (e.g. raw materials)
It may be difficult for an enterprise to identify and assess individual suppliers
operating upstream – for example at raw materials – due to a lack of visibility andleverage. This does not diminish the enterprise’s responsibility to identify harmful
impacts upstream. Enterprises are encouraged to establish mechanisms that are fitfor-purpose. Establishing traceability and/or assessing “choke points” are two
example mechanisms that may be used to evaluate whether risks linked to harms
upstream in an enterprise’s supply chain are being identified, prevented or mitigated.
This is an area where collaborative approaches may be appropriate and areincreasingly being used.
Traceability
Traceability is the process by which enterprises track materials and products and theconditions under which they were produced (in relation to matters covered by theOECD Guidelines) through the supply chain. It is important to note that traceability
as a tool may help an enterprise gain information on upstream actors, however, an
enterprise cannot stop at traceability. The following subsequent steps in this
Guidance – notably preventing and mitigating harm – are critical.
Engagement with “choke points”‘Choke points’ may be identified using a number of considerations, such as:••

key points of transformation in the supply chain•

stages in the supply chain with visibility and control over the circumstances of
production and trade upstream

stages in the supply chain that generally include relatively few actors thatprocess a majority of the commodity

By definition, an enterprise shares some of the same upstream suppliers as theenterprise operating at a choke point in its supply chain. However, the enterprise
operating at the choke point likely holds greater visibility or leverage over those
upstream suppliers. If an enterprise can reasonably determine that enterprises
operating at choke points in its supply chain are conducting due diligence on their
upstream suppliers, then the enterprise can likewise reasonably determine that risksof adverse impact linked to its own upstream suppliers have been identified,prevented and mitigated.

60

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Box 3. Mechanisms to assess and address risks ofharm beyond tier 2 (e.g. raw materials) (cont.)
The enterprise may:•

identify suppliers operating at choke points in its supply chain for products thatare linked to severe impacts upstream (i.e. beyond where the enterprise has
visibility)•

verify that enterprises operating at choke points are identifying, preventing
and mitigating harms linked to their suppliers

Example choke points in the garment and footwear supply chain may include:

•
•
•
•

global commodities merchandisers (e.g. for cotton and rubber)
exporters, processors, wholesalers (e.g. for fragmented supply chains)chemical plants (e.g. for synthetic fibres)
smelters and refiners (e.g. for metals)

Cost sharing
Implementing traceability and engagement with choke points requires financial
resources. This Guidance recommends that enterprises build into supplier contracts
an obligation to support supply chain due diligence of risks linked to upstream
production where appropriate (e.g. obligation to direct sourcing towards choke points
that have demonstrated effective due diligence mechanisms). However, this
Guidance does not recommend that enterprises mandate that suppliers engage in
specific initiatives unless the enterprise is willing to support the cost of the supplier’s
participation and any associated premiums. Rather, enterprises should recognise a
range of collaborative due diligence initiatives, tools, etc. that conform with this
Guidance.

Understand the operating context
The enterprise should seek to understand the context in which it isoperating in order to tailor supplier assessments appropriately – to ask theright questions in the right manner – and to have sufficient information toprevent or mitigate harm in the long term. Specifically, the enterprise isencouraged to:•Understand which population groups are most affected by theharm, local risk factors that could worsen harms, the underlying
causes of harm and the actors that are involved in the harm. When
determining which population groups may be most affected byharms, the enterprise may consider the following dynamics:

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

61

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

••−

inequalities between women and men (the different roles
assigned by society to women and men can lead to exclusionfrom decision-making opportunities and place women andgirls in particular at a disadvantage in the family andcommunity);−age (in certain societies, young and older people can beconsidered as having little to contribute and can beoverlooked);−ethnicity (in relation to more dominant groups or in relation tohost communities);−

social classification in relation to other workers or supervisors;−

religion (especially when a minority);−

health status (pregnant women, chronic illness, etc.);−

percentage of the workforce that are migrant workers;−

extent of home-based work employed;−

educational level (literacy, skills, including language skills,
non-school attendance).

Identify the availability of judicial and non-judicial grievancemechanisms, to the extent possible.
Identify and assess local and national initiatives focused on
preventing and mitigating harm. Mapping existing initiatives,
their objectives and their general impact (where information isavailable) will help an enterprise to understand whether these
initiatives can help it to identify, prevent, mitigate and account forharm in its supply chain.

The enterprise may rely on existing research where it is available. It may
also seek information from international and local non-governmentalorganisations NGOs (e.g. through interviews) and internationalorganisations 21, or engage with international trade unions that can provide
such context.
The above guidance may be most relevant for risks of human rights andlabour impacts, which are often complex and the nature of which may vary
21.

62

For example, the OECD, the United Nations, the ILO and the World Bank.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

widely from one context to the next. However, the above guidance is also
relevant for some environmental risks, such as water use. New information
should continually feed into the enterprise’s understanding of the context
that it is operating in or sourcing from.
Collaboration
Enterprises sourcing from the same sourcing country and production clusters
within countries are encouraged to collaborate on identifying the above
information and share any new information widely amongst the industry.

Factors that may affect the nature of due diligence
In some cases it may be difficult for an enterprise to assess higher-risk
suppliers – for example due to a lack of visibility and leverage. This does notdiminish the enterprise’s responsibility to identify harmful impacts in its supply
chain, but it does affect what an enterprise can reasonably do. See Table 4
for recommendations.

Table 4. Factors that may affect the nature and extent of due diligencein relation to supplier assessments
Context

Recommendations

Many high-risk suppliersWith a view of working towards assessing all existing higher-risk supplier, theenterprise may prioritise the assessment of higher-risk suppliers that are mostsignificant in terms of the size of the enterprise, percentage of product that theenterprise sources (or countries in terms of the percentage of sourcing); where
the gravity of impact is expected to be the most severe; or where harms may beirremediable.1 The enterprise should be prepared to justify its prioritisation.

Enterprise lacks leveragewith a direct supplier

There are many instances in which an enterprise may lack leverage with its
direct supplier, for example (a) the enterprise is smaller than its supplier; or (b)the quantity the enterprise sources from the supplier is limited. In such cases,
the enterprise has difficulty gathering information from the supplier, accessing
the facilities of the supplier, or convincing its supplier to participate in an a facility
assessment. Nonetheless, the enterprise holds a responsibility to conduct due
diligence. In this case, the enterprise may:•increase its leverage with its supplier, such as increasing orders, moving
towards longer-term contracts, publicising the supplier’s corrective actionplans, etc. (where feasible)•

pool leverage with other buyers sourcing from the same supplier, forOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

63

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Context

Recommendations
example by aligning on activities, timelines and follow-up measures
included in the supplier’s corrective action plan•over time, only prequalify and engage with suppliers that are willing toundergo assessments. See section 3.2.2 on prequalification. The
enterprise may also direct sourcing towards suppliers that have beenassessed by credible sector or multi-stakeholder initiatives.

If a high-risk supplier for severe harm is unwilling to undergo an assessment, theenterprise should consider disengaging from the supplier. See section 3.2.
Enterprise sources
through an intermediary(e.g. buying agent)

The enterprise has a responsibility to conduct due diligence even if it is sourcing
through an intermediary.
The enterprise may conduct due diligence in accordance with this Guidance, orthe enterprise may require that its buying agents assess the suppliers fromwhich they source. In this case, the intermediary may include the cost ofassessing suppliers in its pricing framework.
The enterprise may provide its support to its buying agents to assess suppliers;
for example, by facilitating introduction to sector-wide or multi-stakeholder
initiatives that assess suppliers.
See Box 5 for information on engaging with intermediaries.

Enterprise seeks toassess a tier-2 supplier

The enterprise may lack leverage with suppliers with which it does not have acontractual relationships. In such cases, the enterprise may experience difficulty
gathering information from the supplier, accessing the supplier’s facilities, orconvincing the supplier to participate in a facility assessment.
The enterprise may require its direct supplier (e.g. tier 1) to assess its suppliers(e.g. tier 2) and disclose the findings. The enterprise is encouraged to support
this process. For example, a brand may partner with its cut-make-trim (CMT)supplier to assess spinning mills.
The sector may also pool its leverage within a sourcing region (e.g. export
processing zone or production cluster) to assess suppliers.

Suppliers situatedupstream beyond tier-2
sourcing (e.g. raw
materials)

The enterprise may lack visibility into its suppliers operating upstream. The
enterprise is encouraged to establish mechanisms that are fit-for-purpose todetermine whether upstream suppliers are high-risk for severe harms. See Box 3
for example mechanisms.

1 In both of these examples, prioritisation is conducted through the lens of severity of harm. Prioritising suppliers
that are most significant in terms of percentage of product sourced or size of the enterprise can address the“scope” of harm, i.e. larger suppliers may indicate a larger scope of impact.

64

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Table 5. Factors that may affect the nature and extent of due diligencein relation to understanding the operating context
Context

Recommendations

The enterprise has
limited resources

In most cases, existing information is available through public
sources.
Where information does not exist, the enterprise is encouraged
to collaborate with other enterprises sourcing from the same
region to conduct an assessment. The enterprise may also
encourage its industry association to commission anassessment. If the enterprise is unable to gather information
through any of the above means, it is encouraged to either
reduce its cost of due diligence (e.g. by consolidating its
suppliers) or direct sourcing to countries that hold lower risk
until it is able to gather adequate information to source
responsibly.

The enterpriseseeks to expand
into a new market

The enterprise may: commission or conduct an on-the-groundassessment or collaborate with other enterprises sourcing fromthe same region to conduct an assessment. The enterprise
may also encourage its industry association to commission anassessment.
If the enterprise is seeking to source from a new market withknown severe human rights, labour or environmental issues butwhere insufficient information exists on the local operating
context and the enterprise is unable to determine suchinformation, the enterprise is not advised to enter into themarket.

2.4 Assess the enterprise’s relationship to impacts
Through the above processes, the enterprise has identified impacts in its
operations and in its supply chain. As a component of its due diligence, theenterprise should make good faith efforts to understand whether it hascaused, contributed to or is linked to the impacts that it has identified.
Identifying the enterprise’s relationship to impacts is a difficult andsometimes conceptual task. However, it is important in terms of the
expectations of its response (i.e. whether the enterprise is expected toprovide remedy).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

65

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

Table 6. Relationship to harm and appropriate action
Relationship

Appropriate Action

Enterprise caused theharm•

Stop action causing or contributing to the harm andmitigate remaining harm. See section 3•

Remedy the harm. See section 6•

Prevent or mitigate future harm. See section 3•

Stop action contributing to the harm. See section 3•

Remedy the harm. See section 6•

Prevent or mitigate the risk of contributing to theharm in the future. See section 3•

Use leverage to influence the entity causing theimpact to prevent or mitigate harm. See section 3.

Enterprise contributed tothe harm (relevant for theenterprise’s own
operations and its supply
chain)

Enterprise is linked to theharm (i.e. harm is in theenterprise’s supply chain)

66

Prevent or mitigate harm in the enterprise’s supply chain,for example, through internal measures and the use ofleverage to influence suppliers. See section 3.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. .2. IDENTIFY ACTUAL AND POTENTIAL HARMS IN THE ENTERPRISE’S OWN OPERATIONS…

How can an enterprise assess its relationship to impact(cause, contribute, directly linked)?
An enterprise should seek to determine its relationship to the impacts that it has identified
through its due diligence process. This relationship will determine the action that theenterprise should take in response. In the garment and footwear sector, an enterprise ismostly likely to cause harm in its own operations and contribute to harm in its supply chain.
Furthermore, an enterprise is most likely to be linked to harms that are caused by suppliers in
its supply chain.
Cause An enterprise “causes” an adverse impact if there is causality between the operations,products or services of the enterprise and the adverse impact.
Questions to consider
Q. Is an action of the enterprise directly responsible for an adverse impact?
Q. Is the enterprise’s failure to act directly responsible for an adverse impact?
Contribute An enterprise “contributes to” an impact if the actions of the enterprise cause,facilitate or incentivise another entity to cause an adverse impact. Contribution must be
substantial.1
Questions to consider
Q. “But for” the action or omission of the enterprise, would the entity have caused theharm?
Q. Has an action (or omission) of the enterprise enabled, made it possible or easier forthe supplier to cause an adverse impact?
Q. Has the action (or omission) of the enterprise encouraged or motivated the enterprise
to cause an adverse impact?
Q. If yes to any of the above, is there a reasonable causal link between the action of theenterprise and the action taken resulting in the adverse impact (e.g. by the supplier)?
Directly linked Linkage is defined by the relationship between the harm and the company’s
products, services or operations through another company (i.e. business relationship).
Directly linked is not defined by “direct sourcing”.
Question to consider
Q. Is there a harm in the enterprise’s supply chain that the enterprise itself did not cause
or contribute to?
1.

As such, a consideration of the degree or scale to which the enterprises causes, facilitates or incentivises theother entity to cause adverse impacts is also relevant.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

67

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

3. Cease, prevent or mitigate harmin the enterprise’s own operations
and in its supply chain
Expectations under the OECD Guidelines
When an enterprise causes or
may cause an adverse humanrights impact, it should take thenecessary steps to cease or
prevent the impact.” (OECD
Guidelines, IV, Commentary 42)“In the context of its supply chain,
if the enterprise identifies a risk of
causing an adverse impact, thenit should take the necessary
steps to cease or prevent that
impact.” (OECD Guidelines, II,
Commentary 18)

68“Enterprises should seek toprevent or mitigate an adverse
impact where they have notcontributed to that impact, when
the impact is nevertheless directly
linked to their operations,products or services by abusiness relationship. This is notintended to shift responsibility
from the entity causing anadverse impact to the enterprisewith which it has a business
relationship.” (OECD Guidelines,
II, A12)

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

3.1 Cease, prevent or mitigate harm in the enterprise’s own operations
The enterprise should stop any actions
that are causing or contributing to harm in
its own operations. The enterprise should
develop and implement a plan – often
called a corrective action plan (CAP) in
the garment and footwear sector – toprevent and/or mitigate future harm in its
own operations. This plan should detailwhat actions will be taken with clear
timelines for follow-up. The measures
pursued should be proportionate to theseverity of the harm.

Short term objectives of the CAP
In the short term, measures should betaken immediately to stop existing
impacts and prevent any immediate andcritical danger. In cases in which there isimmediate and critical danger to thehealth and lives of employees, theenterprise should ensure that workers are
removed from danger immediately, forexample, see Module 5, Occupational
health and safety. Similarly, if there isimmediate and critical danger to theenvironment, the enterprise should stop its
activities causing (or at risk of causing)
the harm until the danger can beaddressed.

IMPORTANT TERMS
Prevention -This Guidance
uses the term “prevent”
broadly to include any actionthat is intended to stop a harmfrom occurring. In otherwords, “prevent” does notnecessarily equate to riskavoidance. Furthermore,prevention may refer toactions an enterprise takes toprevent harm in its own
operations or the actions it
takes to prevent harms linked
to its supply chain (e.g.
supplier capacity buildingetc.).
Mitigation – “Mitigation”
refers to actions taken todiminish or eliminate theharm if a negative event
occurs. Mitigation measures
may be taken before, during
or after an event with the aimof reducing the degree ofharm. For example, a textile
mill adopts best available
technologies to reduce waterpollution.

Longer-term and outcome-oriented solutions of a CAP
In the longer-term, the enterprise should seek to develop outcomeoriented solutions meaning that the response leads to the prevention of harm.
In most cases, outcome-oriented responses meet the following criteria:
resources are prioritised where most effective, responses are proportionate torisk of harm, responses are sustainable and responses build on existing
evidence. See Figure 1.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

69

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

Figure 1. Criteria for outcome-oriented solutions
Recommendations

ExamplesPrioritise resources where mosteffective

Risk: Fire

Resources should be first allocated towhere the intervention will have thegreatest effect.
Proportionate to risk of harm
Most risks in the garment and footwear
sector are complex, meaning thatmultiple interventions are necessary toadequately prevent or mitigate harm.

Be sustainable
Long term solutions should lead to longterm outcomes. In many cases thismeans that processes should beembedded into management systems.

Example: The enterprise should firstprioritise making the workplace safe andthen focus on providing training forworkers on fire safety.
Risk: Non- compliance with wage
legislation
Example: The enterprise may provide
automated payments to workers. Thismay be accompanied by training forworkers on their legal rights in relation to
wages and benefits and how to read apay slip.
Risk: Handling and disposal ofhazardous chemicals
Example: Training for workers on how
to handle and dispose of chemicals
safely is incorporated into worker
orientation and ongoing refresher
courses.

Build on existing evidence

Risk: Water use

Where solutions exist, the enterpriseshould consider adopting or building on
those solutions

Example: The enterprise adopts best
available techniques as defined for thesector.

Components of a CAP for the enterprise’s own operations
Corrective action plans should have clear timelines for implementationand follow-up. They generally include a combination of policy, training,facility upgrading and strengthening of management systems.

•

70

Policy: The policy lays out the enterprise’s commitment to upholdinternational standards and is the foundation for further action,such as training, facility upgrades, etc.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

•

•

•

•

Training: While the objectives, audience and content of training
should be fit-for-purpose, training is a critical component of mostcorrective action plans. In most cases training should cover
information on the risk, the rights of the worker and the role of the
trainee on preventing or mitigating harms.
Facility upgrading: Some harm may only be prevented byinvesting in facility and equipment improvements. Suchinvestments may include: lighting, ventilation, access to fire exits,
new machinery, etc.
Management systems: Management systems may be strengthenedto (i) better track information and flag risks before harm occurs or(ii) establish systematic measures to mitigate risk of harm in thefirst place. For example, a spinning mill may strengthen its
prequalification of private labour recruiters in order to prevent
forced labour and child labour. For example, a factory may movetowards automated payments to prevent unfair deductions inwages.
Rights of workers: In relation to labour impacts, the enterpriseshould incorporate due diligence on the rights of workers to formand join a trade union and to bargain collectively into thecorrective action plan. Trade unions and representative
organisations of the workers’ own choosing play an important rolein preventing harmful impacts on-site through collective
bargaining agreements, ongoing monitoring and helping workers
to access grievance mechanisms, or providing a form of grievancemechanisms themselves. For this reason, these rights are
considered enabling rights.

Stakeholder engagement and expert consultation
Workers and trade unions and representative organisations of theworkers’ own choosing should be engaged during the development of thecorrective action plan, including the design of policies and programmes.
Workers should be provided with complete and accurate information andgiven the opportunity to raise concerns and provide input. Enterprises may
also partner directly with trade unions to facilitate worker input, see
Introduction. The enterprise should consider whether expert advice isneeded in developing the corrective action plan. The more complex the risk,
the stronger is the case for the enterprise to draw on expert advice indesigning a response.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

71

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

Factors that may affect the nature of due diligence
All enterprises, regardless of their size, sub-sector, position in the
supply chain and operating context should cease, prevent or mitigate
harmful impacts that may result from their activities. However, theenterprise may take a staged approach by which it addresses the most
severe impacts first.

3.2 Seek to prevent or mitigate harm in the enterprise’s supply chain
The enterprise should develop and implement its own plan to seek toprevent or mitigate future harm in its supply chain. This plan should detailwhat actions the enterprise itself will take with clear timelines for follow-up.
The measures pursued should be proportionate to the severity of the harm.
The enterprise’s plan may include the following measures, which areexpanded upon below:

•
•
•
•

Prevent contributing to harm in the enterprise’s supply chain. See
section 3.2.
Implement internal measures to mitigate risks in the enterprise’s
supply chain. See section 3.2.
Use leverage to influence the supplier to prevent or mitigate theharm. See section 3.2.
Support the supplier in the prevention or mitigation of harm. See
section 3.2.

•

Disengage from the supplier. See section 3.2.

•

Engage government. See section 3.2.

3.2.1 Prevent contributing to harm in the enterprise’s supply chain
If the enterprise identifies that it has contributed to harm it should
provide for or co-operate in the remediation of harm. See section 6.
If the enterprise identifies a risk of contributing to harm in its supply
chain it should develop and implement a plan to prevent its contribution. See
Enterprise Relationship to Impact for guidance in determining whether theenterprise has contributed to impacts in its supply chain. The measures
pursued should be proportionate to the severity of the harm. In most cases,
the plan should include the following elements:

72

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN•••

Supplier engagement: Seek supplier input on how the enterprisecontributed to harm and potential solutions.
Control measures: Implement measures that mitigate the risk ofharm. An effective policy, training of workers and management
are example control measures that the enterprise might take.
Red-flag systems: Identify red-flags, or indicators for risks andinclude procedures for the enterprise to follow if risks ofcontributing to harm are identified.

Box 4. Prevent contribution to harm throughresponsible purchasing practices
Recommendations for retailers, brands and their buying intermediaries
The purchasing practices of retailers, brands and their buying intermediaries have been
demonstrated to contribute to harmful impacts – such as excessive and forced overtimeand low wages – in some cases. This is most notably the case when orders arechanged, cancelled, placed late, rushed (particularly during peak times or holidays) or
when lead times are set shorter than feasible. Late or delayed payment for products may
also contribute to suppliers delaying payment of wages to their workers. An enterprise’s
price negotiations may contribute to cost-cutting and therefore labour, human rights orenvironmental impacts. The enterprise should strengthen its management systems toprevent contributing to harm through its purchasing practices. Specifically, the enterpriseis encouraged to assess whether its purchasing practices are contributing to harm,
implement control measures and track red-flags for risk of harm.

Assess whether purchasing practices are contributing to harm•

The enterprise is encouraged to engage with its supplier to understand if and how
its purchasing practices may be contributing to harm. Recognising that suppliers
may be reluctant to provide such feedback candidly, the enterprise may seek tocollect information from its suppliers anonymously (e.g. annual survey) or partnerwith a third party that aggregates the data and presents findings.

•

The enterprise should track relevant indicators of actions that lead to harm.
Examples include: percentage of orders placed late, percentage of orders
changed after order is placed; number of days between the last change andshipment. Systems should be established to track such information on an ongoingbasis.1•

If the enterprise identifies through its tracking that the above practices (e.g.
changes in orders) are common, it should seek to identify why. Team members
responsible for the placement of orders should be included in the analysis.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR73

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

Box 4. Prevent contribution to harm throughresponsible purchasing practices (cont.)
Control measures to prevent contribution to harm•

The enterprise is encouraged to implement control measures to prevent
contributing to harm through its purchasing practices regardless of whether it has
identified specific contributions to harm.

•

The enterprise should develop pricing models that account for the cost of wages,
benefits and investments in decent work. The above considerations should bereflected in freight on board (FOB) prices together with traditional pricing
considerations such as quantities being purchased, cost of materials, skill
requirements, etc.

•

Additional control measures may include:− Set final order placement dates with the supplier.
− Communicate the deadlines to everyone in the purchasing teams.
− Share the purchasing plan with suppliers and communicate updates in a timely
manner.

− Improve

forecasting alignment, which involves coordination acrossgeographies, categories and product designs to get the right information anddecisions made at the right time.

− Optimise the sourcing base to handle fluctuations in capacity and to adopt andimplement the technologies needed to respond to the demand for emerging
styles and products.1

Red-flag systems
The enterprise should develop procedures for purchasing teams to follow in instances inwhich practices could contribute to harm. For example, in instances in which orders arechanged after order placement or orders are placed late, the enterprise may mitigate
risks by a) paying for rushed order delivery b) changing the delivery date or c) providing
a list of prequalified subcontracts to fill a portion of the order.
1. Recommendations are adapted from "Suppliers Speak Up, How Responsible Purchasing Practices
Can Improve Working Conditions in Global Supply Chains" (2014), IEH - Ethical Trading Initiative
Norway and Sustainable Trade, Oslo.

74

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

3.2.2 Implement internal measures to mitigate risks in theenterprise’s supply chain
Enterprises may implement internal measures to either avoid adverse
impacts (e.g. by engaging with suppliers that already have measures in place
to prevent impacts) or to prevent actual and potential impacts (e.g. by
supporting suppliers in their prevention and mitigation measures). Examples
of internal measures are listed below. Additional guidance is also provided
in Box 5 for enterprises that are sourcing through intermediaries.

Prequalify suppliers
The enterprise assesses a supplier prior to the placement of orders. The
purpose of the assessment is to determine whether the enterprise can sourcefrom the supplier while also preventing impacts in its supply chain. The
enterprise should only place orders if it can reasonably determine that either
the risk of harm is low (e.g. due to the supplier’s own measures to prevent or
mitigate harm) and/or the enterprise is willing to adequately engage with the
supplier in the prevention of harm (e.g. through capacity building, etc.). The
extent of the assessment may be risk-based, meaning that the depth of theassessment should be proportionate to the risk.

Consolidate suppliers
An enterprise with a very large number of suppliers may find it difficult
to prevent impacts across such a wide range of actors. Consolidating thetotal number of suppliers can help increase an enterprise’s control over its
supply chain and therefore concentrate its resources to prevent impacts witha limited number of suppliers. This measure is particularly relevant for
SMEs with limited resources.

Know your suppliersEnterprises that have longer-term relationships with their suppliers andunderstand the local operating context are more likely to understand therisks in their supply chain and be able to support their suppliers in pursuingoutcome-oriented solutions. Having local sourcing offices and visiting
suppliers in person contribute to the above.

Establish business incentives
It is recommended that the control measures implemented by theenterprise incentivise suppliers to comply with the enterprise RBC policy.
For example, the enterprise may:
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

75

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN••

integrate expectations of suppliers in line with the enterprise RBC
policy into supplier contracts.
build leverage with direct suppliers by increasing orders or giving
prospective orders to suppliers that perform well in relation toquality of production and responsible business conduct.

Box 5. Implement control measures when sourcing indirectly
The following recommendations are relevant in instances in which the enterpriserelies on a buying intermediary to assess and prevent impacts linked to suppliers.
For example, a brand may rely on a buying intermediary to conduct due diligenceon the manufacturers from which it sources on behalf of the brand. In such cases,
the enterprise should evaluate the capability of the intermediary to apply due
diligence in accordance with this Guidance.
Prequalification of buying agentsThe enterprise is encouraged to establish or implement a prequalification process
for its buying agents. The prequalification process may assess the intermediary’s
capability to conduct due diligence on its suppliers. The enterprise may seek tounderstand the following during the prequalification process:76•that the intermediary is a legitimate company with a proper license;•

whether or not the intermediary fulfils the contract or whether it outsources toanother company;•

the total number of suppliers that the intermediary sources from and thegeographic location of its suppliers;•

frequency with which the intermediary visits suppliers and the functions ofstaff members that visit suppliers;•

the average length of time the intermediary holds a relationship with its
suppliers;•

measures that the intermediary has in place to prequalify the suppliers that itsources from;•the intermediary’s track record for performance related to risk management,
including client references;•disclosure of family relations with any suppliers.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

Box 5. Implement control measures when sourcing indirectly (cont.)
Additional control measures The following control measures may be applied toprequalified intermediaries.

•

Integrate expectations of intermediaries in line with the enterprise RBC
policy into supplier contracts. Intermediaries should apply a prequalification
process to their direct suppliers and intermediaries.1•

The enterprise should be able to know at any time where its orders are
currently located. Intermediaries should be prepared to disclose thefollowing:− selection of pre-approved suppliers− up-to-date information on suppliers− results of most recent supplier assessment and corresponding prevention
measures1.

•

Intermediaries should alert the enterprise immediately when actual or
potential severe harms are identified.

•

Where feasible, intermediaries should establish long term relationships with
their direct suppliers to support the ongoing identification and effective
prevention or mitigation of harm.

•

The enterprise conducts assessments on a random sampling of preapproved suppliers.

The enterprise may prequalify a supplier through the same processes it employs for its direct
suppliers, or the intermediary may prequalify suppliers. In instances in which the intermediary itself
conducts the prequalification process for its suppliers, the enterprises should ensure that theprequalification process of the supplier aligns with this Guidance and the expectations of theenterprise.

3.2.3. Use leverage to influence the supplier to prevent or mitigate
the harm
The enterprise may use its leverage to influence its supplier to prevent or
mitigate the impact. Leverage is considered to exist where the enterprise has
the ability to effect change in the wrongful practices of the entity that hascaused the harm. The enterprise may use its leverage to encourage its
supplier to implement its corrective action plan.
In the garment and footwear sectors, enterprises do often hold leveragewith their direct suppliers. For example, a brand will often have leveragewith a garment manufacturer and in turn the garment manufacturer with its
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

77

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

spinners and weavers. The extent of that leverage is affected by a number offactors – such as the proportion of business the enterprise represents for the
supplier; whether the enterprise is directly sourcing from the supplier orsourcing through a buying agent and whether sourcing agreements are shortterm or long term. The enterprise’s reputation and the harm to the supplier’s
reputation if the enterprise were to disengage may also be a point ofleverage. An enterprise’s leverage is strengthened when it commits todirecting sourcing towards suppliers that demonstrate responsible businessconduct and follows-through with its commitment.
If an enterprise does not hold leverage with its supplier, it should seek toincrease that leverage. However, there may be instances in which theenterprise will not be able to increase its leverage with a supplier on its own.
Examples of this include:••

The enterprise is considerably smaller than its supplier andtherefore cannot increase orders to the extent that it would impact
the decision of the supplier.
The enterprise is many tiers downstream from the enterprise andtherefore lacks any form of direct commercial leverage over the
upstream supplier. For example, an individual garment
manufacturer is not likely to have influence over a cotton grower.

In the above cases, enterprises are encouraged to pool their leverage. For
example, a group of enterprises sourcing from the same supplier may use
their combined leverage to encourage the supplier to prevent impacts.
Enterprises may pool their leverage by setting joint timelines for corrective
action in partnership with shared suppliers. Enterprises may also choose to
jointly publish supplier assessments, corrective action plans and progressagainst those plans, which can likewise increase leverage. The sector may
also work on a broader sector-wide scale at either a global or regional levelto place pressure on suppliers that are larger than any individual supplier
and/or to place pressure on suppliers that operate at common choke points inthe sector supply chain. For example, the sector may pool its leverage toplace pressure on global commodities traders to address risks linked to
upstream raw material production.

3.2.4. Support the supplier in the prevention or mitigation of harm
The enterprise is encouraged to support its suppliers in preventing or
mitigating impacts when feasible. Support may take a number of forms andexamples include:

78

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

•
•
•
•
•

Partner with suppliers to develop corrective action plans that areoutcome-oriented.
Provide technical guidance – for example, in the form of training,
management systems upgrading, etc.
Facilitate participation in broader sector-wide initiatives orregional-initiatives to prevent impacts.
Facilitate linkages with local service providers.
Facilitate access to financing, for example, through direct
financing, low-interest loans, guarantees of continued sourcing
and assistance in securing financing.

3.2.5. Disengage from the supplier
Responsible disengagement is an option. Enterprises may disengage:•••

After failed attempts at preventing or mitigating impacts throughthe above measures, for example, when suppliers have not taken
corrective action within agreed upon timeframes.
Where the enterprise deems preventing or mitigating impacts not
feasible.
When the enterprise has identified severe harm. For example, in
relation to occupational health and safety risks, when immediate
and critical danger has been identified, the enterprise should
ensure that production does not take place at the affected
production site until the immediate and critical danger has beenadequately addressed. See Module 5, Occupational health andsafety.

If an enterprise determines the need to disengage, it should seek to do so
responsibly. Specifically, the enterprise should:•••

comply with national laws, international labour standards and theterms of collective bargaining agreements
provide detailed information supporting the business decision to
management and to the union, where one exists
give the supplier sufficient notice of the ending of the business
relationship.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

79

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

3.2.6. Engage government
It is the duty of government to protect against abuses by third parties,
including business enterprises, through regulation, policymaking,investigation and enforcement. In contexts in which the government is not
fulfilling its duty to protect and risks cannot be effectively or sustainably
managed through supplier engagement alone, enterprises may use theirleverage with government (local or national) to encourage the government toaffect change. Example sector risks which may necessitate government
engagement for their effective prevention and mitigation include inadequate
wages to meet the needs of the workers and their families, child labour,
forced labour, discrimination and water stress and pollution. Enterprises
should consider the following when determining whether to use theirleverage with governments to mitigate risks:

•
•
•
•
•
•

Is the adverse impact systemic to the country or region?
Could the adverse impact be mitigated through better government
regulations or controls?
Have international standards (e.g. fundamental or other ILO
Conventions) related to the risk been ratified?
Does the government demonstrate political will to establish
controls over the adverse impact?
Does the enterprise have leverage with the government, either
alone or in collaboration with other businesses and stakeholders?
Does the government participate in any relevant initiative orforum (e.g. intergovernmental or multi-stakeholder) where theseissues can be raised and possibly addressed?

Government engagement may include a number of measures, such as
open letters to the government, sharing of information, engagement throughmulti-stakeholder initiatives, participation in dialogues, etc. Engagement
often takes extensive time before the enterprise sees tangible results, such aschanges to regulation or increased enforcement of regulations. While
enterprises are encouraged to engage with government, enterprises are still
expected to account for how they are preventing being linked to impacts. In
most cases this will mean taking steps to prevent or mitigate harm in themedium-term – for example, in collaboration with the enterprise’s suppliers– until government assumes its responsibility. In cases of severe harms,
however, enterprises should suspend sourcing until harms can be prevented.

80

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

Table 7. Factors that may affect the nature and extent of due diligencein relation to preventing and mitigating harm in the enterprise’s supply chain
Context

Recommendations

Small and mediumsized enterprises(SMEs)

SMEs, like all enterprises, have a responsibility to conduct due
diligence. However, unlike larger enterprises, SMEs may have
limited resources to support their suppliers in implementing
CAPs and may lack leverage with suppliers. Nonetheless, SMEs
have a number of possibilities open to them. For example, an
SME may focus primarily on a robust prequalification process for
suppliers so that fewer resources are necessary in preventing
impacts once a supplier has been engaged. Over time, the SME
may also choose to consolidate the number of suppliers withwhich it engages.

Indirect sourcing

See Box 5 for information on engaging with intermediaries.

Leverage

An enterprise’s leverage with its suppliers will impact theapproach that the enterprise takes. See Box 6.

Impacts are severe

The more severe the adverse impact, the more quickly theenterprise will need to see change before it takes a decision onwhether it should end the relationship. (UN Guiding Principles,
Guiding Principle 19, Commentary)

Capacity of the
supplier toimplement a
Corrective Action
Plan

The enterprise and supplier should consider the cost andresources necessary to effectively prevent or mitigate future
harms. In cases in which the supplier does not have theresources to adequately prevent or mitigate harm, the enterpriseshould consider whether it will contribute financing. If funding is
not available, the enterprise should consider the severity of theharm and whether to continue the relationship. However, for as
long as the adverse impact continues and the enterprise remains
in the relationship, it should be able to demonstrate its own
ongoing efforts to mitigate the impact and be prepared to accept
any consequences – reputational, financial or legal – ofcontinuing the connection.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

81

I. 3. CEASE, PREVENT OR MITIGATE HARM IN THE ENTERPRISE’S OWN OPERATIONS AND IN ITS SUPPLY CHAIN

Box 6. Nature of due diligence in light of leverage
All enterprises have a responsibility to conduct due diligence regardless of theirdegree of leverage with their suppliers. However, the specific steps that anenterprise may take to implement due diligence may vary based on its leverage.
Enterprise’s leverage with supplierHigh
ExamplesThe enterprise:
•

•

•

Due
diligence82

has direct control over thebusiness relationship (e.g.
partial ownership)
has a long term business
relationship with the
supplier
represents a significant
portion of the supplier’s
business

Prevent & Mitigate
Enterprises may:
• Build RBC expectations into
contracts• Use leverage with business
relationships to prevent &mitigate adverse impacts;• Support training and capacity
building, facility upgrading andstrengthening of management
systems, as appropriate.
• Use leverage with government
where appropriate to address
systemic risks.
• Enter into partnerships toprevent and mitigate adverse
impacts at a sector-level
where feasible and effective• Work towards continuous
improvement on the above
and account for progress.

Medium-low
The enterprise:•••

does not have a directcontract with the supplier
has a short term business
relationship with the supplierdoes not represent asignificant portion of the
supplier’s businessPrevent & Mitigate
Enterprises may:
• Increase leverage with suppliers
and other business relationships• In the case of indirect sourcing,build due diligence expectations
into direct supplier contracts(e.g. intermediaries). In thiscase, ensure that intermediaries
are conducting due diligence.
• Support training and capacity
building, facility upgrading andstrengthening of management
systems, as appropriate.
• Enter partnerships to preventand mitigate adverse impacts
where leverage is insufficient• Use leverage with government
where appropriate to address
systemic risks• Work towards continuous
improvement on the above andaccount for progress.
• Consider disengagement

Low-noneThe supplier isremoved from theenterprise’s own
activities or operations(e.g. suppliers
operating beyond tier 2)

Prevent & Mitigate
Enterprises may:
• Use leverage withchoke points in the
supply chain toencourage them toconduct due
diligence on
upstream suppliers.
• Establish traceability;• Work towards
continuous
improvement andaccount for progress.
• Consider
disengagement

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 4. TRACK

4. Track
Expectations under the OECD Guidelines
The OECD Guidelines call for enterprises to account for how
impacts are addressed (OECD Guidelines, II, A10). Accounting for
impacts means both ensuring that the measures taken have beeneffective and communicating what steps an enterprise has taken andwhy.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

83

I. 4. TRACK

4.1 Verify, monitor and validate progress on due diligence and its
effectiveness in the enterprise’s own operations
To the extent possible and reasonable, the enterprise should seek
assurances that the actions that it has taken or is taking are preventing andmitigating harm in its own operations. 22
The enterprise should:••

Verify internally that the enterprise has carried out the actions towhich it has committed (for example, under the corrective actionplan) within the agreed-upon time period.
Monitor qualitative and/or quantitative indicators to track progressagainst goals.

− Indicators may be direct (e.g. the percentage migrant workers
whose passports are confiscated; water consumed; number ofhours worked) or indirect (e.g. the percentage of migrant
workers who understand their rights).

IMPORTANT TERMS
Verification - Confirmation that requirements have been filled. “Requirements” maybe agreed-upon actions under a corrective action plan and/or legal regulations.
For example, a building inspector may verify that fire exits align with fire safety
codes.
Monitoring - The ongoing tracking of the situation on-the-ground in relation to
specific risks and the measurement and tracking of indicators of success. Indicators
may be direct or indirect. Monitoring generally provides a more comprehensive
picture of the situation at the site-level than a one-time assessment.
For example, a factory may track the number of hours worked by workers in its
sewing and finishing departments during peak periods.
Validation - Determination of whether the actions taken to prevent impacts areindeed effective in preventing impacts. Verification and monitoring data feed into
validation. For example, an enterprise may seek to validate that its current training of
employees is preventing sexual harassment in the longer term.

22.

84

The more severe the risk, the greater the level of assurance the enterprisewill need that impacts have been or are being prevented.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 4. TRACK− While outputs, such as number of people trained, may be thesimplest indicator to monitor, enterprises are likewise
encouraged to monitor: knowledge levels of workers (e.g.
human resources manager knows how to calculate wages),
attitude (e.g. worker’s feel that grievance mechanisms arelegitimate and accessible), conditions of the workplace (e.g.
availability of drinking water) and implementation of systems(e.g. policy, prequalification of suppliers) in order to get a more
complete picture of whether harms are being prevented.
− The enterprise is also encouraged to monitor red flags that may
indicate a higher-risk of impact (e.g. changes in orders during
peak season).
− Workers should play an integral role in monitoring progressagainst goals. This is particularly true for human rights andlabour impacts, but is also relevant for environmental impacts
and integrity risks in many cases.

•

Draw on all known information, including data from ongoing
monitoring, internal periodic assessments, issues raised throughgrievance mechanisms, etc., to validate that the steps taken by theenterprise are preventing and mitigating impacts. 23

The enterprise may conduct all of the above internally. However, theenterprise is encouraged to seek external support in validating that impacts
have been prevented when:••

the impact may cause severe harm if not adequately prevented,(e.g. handling and disposal of hazardous chemicals, fire safety,
electrical safety, building integrity, etc.)
prevention measures require technical expertise that is notavailable in-house.

The enterprise may choose to communicate publicly on its progressagainst corrective action plans.
In addition to the above, enterprises are encouraged to monitor theeffectiveness of processes to enable remediation (e.g. operational-levelgrievance mechanisms). See section 6 for more information on processes toenable remediation.

23.

See United Nations Guiding Principle 20.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

85

I. 4. TRACK

Responding to negative findings
In instances in which harmful impacts have not been effectively
prevented or mitigated, the enterprise should seek to understand why this is
the case. There are a number of reasons why a harm may not have beeneffectively prevented or mitigated, including that the measures taken toprevent the harm were not in of themselves effective, insufficient time wasprovided to see progress, or inadequate resources were allocated to
implement the corrective action plan. The enterprise should update andimplement its corrective action plan. If the enterprise is unable to determine
why an impact has not been prevented or mitigated, it should seek externalguidance.

4.2 Verify, monitor and validate progress on due diligence and its
effectiveness in the enterprise’s supply chain
Enterprises should monitor and assess their own progress as well as thatof their suppliers. Enterprises should also assess whether the actions they
have taken are effective in preventing or mitigating harm.
Auditing-fatigue is a challenge in the garment and footwear sector. At
the same time, some form of validation is necessary to give the enterpriseconfidence that it is preventing harms in its supply chain. Enterprises should
therefore seek to balance between assessing suppliers and supporting
ongoing monitoring. Enterprises can hold to the general principle that themore severe the impact, the greater the level of assurance the enterprise willneed that impacts have been or are being prevented. The following includes
high-level guidance on the level of assurance to be applied – verification,
monitoring or validation – in various contexts.

•

•

24.

86

The timing of verification, monitoring or validation should
correspond to the severity and nature of the harm. Enterprises
should also consider the length of time necessary to implement
corrective action plans.
As above (5.1), where international or domestic standards exist on
how to prevent or mitigate harm, verification that such standards
are being followed is sufficient to assume that harm has also been
prevented. 24

See Section II Modules on sector risks for a selection of international
standards.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 4. TRACK

•

•

•
•

Whenever possible, the enterprise should monitor indicators –either direct or indirect – over time to validate that impacts havebeen or are being prevented. Where the risk of harm affects morethan one sector within a particular region, the enterprise isencouraged to coordinate and collaborate across sectors toharmonise indicators tracked. The sharing of data will provide
those operating in the region with a more complete picture andtherefore enable the enterprise to better target its prevention
measures.
Workers or their representatives should feed into ongoing
monitoring. This is particularly relevant for labour and humanrights impacts but is also relevant for environmental and integrity
risks.
If through monitoring, the enterprise determines that impacts are
not being addressed, the enterprise is encouraged to verify that theactions were taken in the first place.
As above (5.1), the enterprise is encouraged to engage external
experts to verify that corrective action measures were pursued or
to validate that harms have been prevented when:− the impact may cause severe harm if not adequately prevented, (e.g.
handling and disposal of hazardous chemicals, fire safety, electricalsafety, building integrity, etc.)− prevention measures require technical expertise that is not available
in-house•

If the enterprise relies on mid-stream suppliers operating at chokepoints to conduct due diligence on risks of severe harm upstream,
the enterprise is encouraged to conduct an audit of the mid-stream
suppliers due diligence practices against this Guidance.
Enterprises are encouraged to collaborate at a sector level on theauditing control points.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

87

I. 4. TRACK

Collaboration
Enterprises are encouraged to collaborate to support recognition ofverification, monitoring and validation provided assessments conform to highstandards. Enterprises are likewise encouraged to collaborate on theverification, monitoring and validation of suppliers when sourcing from thesame region and supplier base, to the extent feasible.
When collaborating to conduct due diligence (for example, through an industry
association or multi-stakeholder initiative), the collaborative initiative should
ensure that it’s due diligence processes and results are reviewed forconformity with this Guidance.

Factors that may affect the nature of due diligence
Context – Many high-risk suppliers
Recommendations – In cases in which the enterprise identifies risks across alarge number of suppliers (i.e. during the supplier assessment), it should prioritise
its follow-up engagement with suppliers – whether verification, monitoring, or
validation – where the risk of harm is the most severe.

88

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 5. COMMUNICATE

5. Communicate

Expectations under the OECD Guidelines
Enterprises should apply the specificrecommendations on disclosure andcommunication under each chapter of
the OECD Guidelines in addition to thegeneral recommendations contained inthis section.
Enterprises are encouraged tocommunicate additional information that
could include:a.

value statements or statements ofbusiness conduct intended for public
disclosure including, depending on
its relevance for the enterprise’s
activities, information on theenterprise’s policies relating tomatters covered by the Guidelines;b.

policies and other codes of conduct
to which the enterprise subscribes,
their date of adoption and thecountries and entities to which suchstatements apply;c.

its performance in relation to thesestatements and codes;d.

information on internal audit, risk
management and legal compliancesystems;e.

information on relationships withworkers and other stakeholders.

Enterprises are recommended to “carryout human rights due diligence. The
process entails assessing actual andpotential human rights impacts,
integrating and acting upon the findings,
tracking responses as well as
communicating how impacts are
addressed.”
Source: OECD Guidelines, III, 3 and IV, 45.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

89

I. 5. COMMUNICATE

5.1 Communicate publicly on the enterprise’s due diligence process,including how the enterprise has addressed potential and actual harms
Content
The enterprise should publicly communicate the following: 25

•

•
•

•
•
•

•

90

The enterprise’s RBC policy or policies. The enterprise should
likewise communicate any additional value statements to which
the company subscribes (e.g. through participation in sector
initiatives, agreements with trade unions or multi-stakeholder
initiatives).
The enterprise’s due diligence management systems, including
how due diligence is incorporated into decision-making processes
and information management systems to support due diligence.
The most significant risks of harm in the enterprise’s own
operations and in its supply chain. The enterprises should likewise
explain its processes for assessing those risks. Where theenterprise has prioritised some risks of harm for immediate
attention, it should justify its prioritisation process.
The components of the enterprise’s plan to prevent or mitigate
harm in its own operations and in its supply chain and theeffectiveness of those measures. 26
Where relevant, the enterprise’s intent in policy engagement aswell as the outcomes of the engagement itself.
The enterprise’s systems to provide access to remediation in its
own operations and its supply chain. Enterprises may also choose
to disclose cases that are brought against the enterprise and how
they were resolved.
How the enterprise engages meaningfully with its stakeholders.

25.

Enterprises should communicate with due regard for commercial
confidentiality and other competitive concerns. See Box 1 for more
information.

26.

The effectiveness of due diligence is measured by the extent to which actualand potential harm is prevented and mitigated in the enterprise’s own
operations and in its supply chain.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 5. COMMUNICATE•

If the enterprise is engaging with a sector or multi-stakeholder
initiative for the purposes of collaborating on due diligence andwhich specific components the enterprise is collaborating on (e.g.
collaboration on identification of risks, supplier assessments, etc.).

The enterprise should publicly communicate information annually at aminimum. Communication may take a number of forms. However, in allcases, information should be maintained and communicated in a way that isrelevant, accurate, current, clear and user-friendly and enable intended users
to access information. The enterprise is also encouraged to makeinformation available in plain language.
Increasingly, enterprises – particularly thosecollaborative initiatives – are choosing to disclose:•a list of their direct suppliers•

the assessment findings for their suppliers•

the corrective action plans of their suppliers•

participatinginthe grievances raised against them and how those grievances wereaddressed.

Expectations of non-financial disclosure in law
The enterprise may also have to respond to non-financial disclosure
obligations in law. For example, RBC reporting through regulatory
requirements are increasingly common (e.g. EU Directive 2014/95/EU on
Non-financial Reporting; UK Modern Slavery Act 2016; Article 173 of theFrench Law for the Energy Transition and Green Growth).

Instances of non-disclosure
There may be legitimate reasons for non-disclosure of information,
notably potential risks to affected stakeholders or staff (including arisingfrom the disclosure of personal information). In some cases, where it may
not be appropriate to communicate information immediately, an enterprise
may be able to communicate information after a period of time, for example
after a grievance or risk has been addressed.
Considerations of commercial confidentiality may also be a reason for
non-disclosure. See Box 1 for more information. Where an enterprise judges
it difficult to share information it may provide assurance through othermethods, such as inviting an independent third party to review theOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

91

I. 5. COMMUNICATE

enterprise’s due diligence processes and disclose their findings publicly or toa relevant collaborative initiative.

5.2 Communicate with affected stakeholders
In relation to human rights impacts, the UN Guiding Principles
elaborate, “in order to account for how they address their human rights
impacts, business enterprises should be prepared to communicate thisexternally, particularly when concerns are raised by or on behalf of affectedstakeholders. Business enterprises whose operations or operating contexts
pose risks of severe human rights impacts should report formally on how
they address them. In all instances, communications should:•••

be of a form and frequency that reflect an enterprise’s humanrights impacts and that are accessible to its intended audiences;provide information that is sufficient to evaluate the adequacy ofan enterprise’s response to the particular human rights impact
involved;
in turn not pose risks to affected stakeholders, personnel or tolegitimate requirements of commercial confidentiality.” 27

In relation to labour rights, the enterprise should communicate with its
workers and trade unions and representative organisations of the workers’
own choosing. The enterprise should engage with the stakeholders tounderstand what they deem to be material information.

Factors that may affect the nature and extent of due diligence
All enterprises regardless of size, sourcing context, or position in the
supply chain, should communicate on their due diligence practices.
However, the extent and nature of an enterprise’s communication will be
proportionate to the risks of harm within its own operations and in its
supply chain. For example, the communication of an enterprise thatsources from higher-risk countries for a severe human rights harm will be
more extensive than the communication of an enterprise that does not.

27.

92

See UN Guiding Principle 21.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

6. Provide for or co-operate
in remediation when appropriate
Expectations under the OECD Guidelines
As highlighted throughout this Guidance, a core purpose of conducting due
diligence is to avoid harm. However, enterprises should “provide for or cooperate through legitimate processes in the remediation of adverse humanrights impacts where they identify that they have caused or contributed tothese impacts.” (OECD Guidelines.IV.A6.)

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

93

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

While some situations do require co-operation with judicial or Statebased non-judicial mechanisms, the concepts in this section should be usedin the spirit of promoting responsible business conduct beyond legal
obligations. 28

6.1 Establish processes to enable remediation in the enterprise’s own
operations
The OECD Guidelines state that enterprises should have processes inplace to enable remediation in relation to human rights impacts. It is
recommended that the enterprise also establish processes to enable
remediation for labour and environmental impacts. Operational-levelgrievance mechanisms that meet the core criteria of legitimacy,
accessibility, predictability, equitability, compatibility with the OECD
Guidelines and transparency can be an effective means for providing forsuch processes. 29

Box 7. The role of the State to ensure access to effective remedy
As part of their duty to protect against business-related humanrights abuse, States must take appropriate steps to ensure, throughjudicial administrative, legislative or other appropriate means, thatwhen such abuses occur within their territory and jurisdiction, thoseaffected have access to effective remedy.1 However, if enterprises
choose to operate in countries where the State does not fulfil its Duty
to Protect, this does not absolve the enterprise of its responsibility toprovide remedy.
1.

94

Neither the OECD Guidelines nor the UN Guiding Principles are meant
to establish legal concepts around liability, including among enterprises.
Domestic courts will use their own concepts and tests in considering
accountability for harm and appropriate remedy.

28.

Neither the OECD Guidelines nor the UN Guiding Principles are meant toestablish legal concepts around liability, including among enterprises.
Domestic courts will use their own concepts and tests in considering
accountability for harm and appropriate remedy.

29.

OECD Guidelines, IV, 46.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

Operational-level grievance mechanisms
An operational-level grievance mechanism is a formalised means
through which individuals or groups can raise concerns about the impact anenterprise has on them – including, but not exclusively, on their humanrights – and can seek remedy. Operational-level grievance mechanisms
operate at the firm or site-level and are therefore often the first entry point
for a worker or community member to raise a concern. In addition toproviding processes for workers and community members to seek remedy ifthey have been harmed, operational-level grievance mechanisms act as an
early-warning system to raise concerns and thereby may prevent theescalation of issues.
Operational-level grievance mechanisms may take many forms,
including in-house worker complaint mechanisms, industrial relations andthird-party complaint systems, amongst others. In all cases, the core criteriaof legitimacy, accessibility, predictability, equitability, compatibility with
the OECD Guidelines, transparency and being dialogue-based with a viewto seeking agreed solutions should be met. 30 Table 8 provides examples of
how these criteria may be met in the garment and footwear sector; however,factors such as the audience of the mechanism and context may affect the
specific implementation procedures and therefore these examples are neither
intended to be prescriptive nor exhaustive.
Enterprises should facilitate but not interfere with civil or criminal
investigations or human rights examinations and legal waivers that preclude
access to judicial recourse for victims of gross human rights violations
should not be used in the context of enterprise grievance mechanisms.
Enterprises are encouraged to publish complaints and incorporate lessons
learned into policies and monitoring systems. Enterprises are encouraged toconsult the extensive guidance that exists on establishing operational-levelgrievance mechanisms in accordance with the OECD Guidelines and the UN
Guiding Principles.

30.

OECD Guidelines, IV, Commentary.46.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

95

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

Table 8. Core criteria of operational-level grievance mechanisms
and example components
Criteria

Example components

Legitimate
Enables trust from thestakeholder groups for whose
use they are intended and being
accountable for the fair conductof grievance processes

•
•

•

•

•

Accessible
Known to all stakeholder groups
for whose use they are intended
and providing adequate
assistance for those who may
face particular barriers to access.

•
•
•
•

•

•

96

Retaliation is prevented against complainants by guaranteeing
freedom from reprisals.
Affected stakeholders are involved in the design of the mechanism. In
the garment and footwear sector this generally means that workers
and trade unions and representative organisations of the workers’ ownchoosing are involved in the design of the mechanism.
The individual serving as the access point for the grievancemechanism is trustworthy, trained, knowledgeable and approachable
regardless of the complainant’s gender, religion, etc. This isparticularly important in the garment and footwear sector where up to
85% of the workforce is female and international and domestic migrant
workers make up a significant proportion of workers in many contexts.
Migrant workers are particularly vulnerable to threats and reprisals.
The mechanism may allow for complainants to remain anonymous, forexample by engaging with legitimate representatives. This isparticularly true in the garment and footwear sector where the victim
may fear reprisal (e.g. sexual harassment cases).
The mechanism provides for some form of escalation (i.e. in cases
where complainants are not satisfied). Escalation to local
mechanisms, where they exist and are trustworthy, may be mostappropriate. Where this is not effective or available, multi-stakeholder
initiatives or National Contact Points for the OECD Guidelines may act
as points of escalation. See section 6.2 for information on National
Contact Points.
Existence of the mechanism is well publicised.
Forms of registering a complaint are clear and simple.
Assistance in reporting a grievance is provided locally.
Due regard is given to education levels, notably literacy levels. This isparticularly true in the garment and footwear sector in contexts whereliteracy rates are low.
Language barriers are accounted for. This is particularly relevant in
the garment and footwear sector when migrant workers are employed
or workers representing minority groups speak a different language.
Several points of access to the mechanism are provided. Company
representatives are not the sole point of contact and at least one
independent point of access is available to complainants. If a tradeunion is a point of access, the process is open to non-members or
additional points of access are provided. This is particularly relevant in
the garment and footwear sector where large power imbalances exist
between workers and management.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

Criteria

Example components

Predictable
Provides a clear and known
procedure with an indicative timeframe for each stage and clarity
on the types of process andoutcome available and means ofmonitoring implementation.

•
•
•
•

Equitable
Seeking to ensure that aggrieved
parties have reasonable accessto sources of information, advice
and expertise necessary toengage in a grievance process
on fair, informed and respectful
terms.

Ensures that those involved have access to relevant information and is
mindful of any imbalance in accessing information or expertise between theparties. This is particularly relevant in the garment and footwear sector
where large power imbalances exist between workers and management.

Transparent
Keeping parties to a grievance
informed about its progress andproviding sufficient information
about
the
mechanism’s
performance to build confidence
in its effectiveness.

•••

Dialogue-based

Seeks to resolve grievance through dialogue between the enterprise andthe affected party or their representatives.

Sets out an indicative timeframe upfront.
Keep complainants informed at each stage of the process.
Every complaint is treated seriously.
Agreement on provision for implementing agreed outcomes.

Keep complainants informed at each stage of the process.
Treat every complaint seriously.
Agree on provision for implementing agreed outcomes.

6.2 Commit to hearing and addressing complaints raised throughlegitimate processes
Enterprises are expected to provide for or co-operate in the remediationof adverse impacts where they have caused or contributed to that adverse
impact. 31
To facilitate this process in relation to its supply chain, the enterprise isencouraged to commit to hearing and addressing complaints that are raised
through legitimate processes – including through the provision of remedy –that it has caused or contributed to harm in its supply chain. Complaints
should be material and substantiated and assert that the enterprise caused orcontributed to an impact in its supply chain (as distinguished fromcomplaints that the enterprise is linked to harm in its supply chain).

31.

OECD Guidelines, IV, 6.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

97

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

Legitimate processes’ include processes that:•••allow for the affected stakeholders or stakeholder representatives
to raise a complaint against an enterprise;
do not undermine the role of local grievance mechanisms,
including judicial and non-judicial mechanisms and the role oftrade unions in addressing labour disputes; andare managed by trusted parties.

The following provide some examples for how an enterprise may do thisin practice:

•
•

•

•

98

Establishing an enterprise grievance mechanism by which tradeunions, civil society and impacted parties can raise a complaint
with the enterprise itself regarding its actions in its supply chain.
Engaging in multi-stakeholder initiatives (MSIs) that provide
supply chain grievance mechanisms (e.g. as a member) or agree toenter into mediation with any MSI that raises a legitimate
complaint against the enterprise (see below for more information
on MSIs).
Entering into agreements with trade unions, for example throughglobal framework agreements, to establish a process by which
trade unions can raise complaints to the enterprise that its
practices have caused or contributed to harm in its supply chain,for the purpose of providing remedy.
Agreeing to enter into mediation with the OECD National Contact
Points (NCPs) when the NCP has determined that the issue isbona fide under the procedures of the OECD Guidelines, see
below for more information.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

Box 8. Distinguishing between early warning systems andprocesses to enable remediation
It is important to differentiate between early warning systems andprocesses to enable remediation.

•

The objective of an early warning system is to identify risks (oractual impacts) in an enterprise’s own operations or in its
supply chain. For example, an enterprise might establish aworker hotline to provide an opportunity for workers to raise
concerns about building safety.

•

The objective of a process to enable remediation is to provide
remedy to people who have been harmed. For example, aworker may raise a complaint against management for unfair
firing. The worker and the enterprise are brought together todetermine an adequate remedy (e.g. reinstatement,compensation, etc.).

A single system – such as a grievance mechanism – can operate asboth an early warning system and provide processes to enable
remediation. When determining whether a system acts only as an
early warning system or is also a process to enable remediation, theenterprise should consider whether the party that is harmed is brought
together with the party that caused or contributed to the harm for the
purposes of providing remedy.

Mediation
The role of mediation is to assist the enterprise and the stakeholder inresolving a dispute. The mediator plays an active but neutral role in helping
the parties identify and evaluate options for resolution and settlement.
Mediation may be triggered on an ad-hoc basis, for example when bothparties request mediation, or it may act as a form of escalation when parties
cannot reach an agreement or where complainants are not satisfied with theresolution of their grievances. Mediation should be mutually acceptable byboth parties, legitimate, independent and confidential. It is important that themembers of the bodies entrusted with such functions are impartial and areseen as impartial.

Multi-stakeholder grievance mechanisms
The enterprise may engage with multi-stakeholder grievancemechanisms as a way of fulfilling its responsibility to hear and addresscomplaints that it has caused or contributed to impacts in its supply chain
and provide remedy.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

99

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

Multi-stakeholder initiatives that establish supply chain grievancemechanisms are increasingly common in the garment and footwear sector.
Such initiatives are often membership-based with members being
enterprises, trade unions and/or civil society. Multi-stakeholder grievancemechanisms may offer mediation between the stakeholder that has raised thecomplaint and the enterprise. Multi-stakeholder grievance mechanisms
should likewise meet the criteria of legitimacy, accessibility, equitability,
predictability, transparency and being dialogue-based.
It is important to note that some multi-stakeholder initiatives provide
early warning systems. While early warning systems can be beneficial as
monitoring mechanisms to identify impacts in an enterprise’s supply chain,such systems should not be confused with grievance mechanisms. See Box 8
for more information.

Box 9. Organisation of multi-stakeholder grievance mechanisms
The organisation of a multi-stakeholder grievance mechanism can limit
how it is able to meet the core criteria of legitimacy, accessibility,
predictability, equitability, transparency and being dialogue-based.
Enterprises and multi-stakeholder grievance mechanisms should beaware of these potential limitations and account for them to the extent
possible.

100•

Accessibility to the grievance mechanism may be restricted incases in which only stakeholders who are members of the MSI areable to raise a complaint against a member enterprise. Such
restrictions may exist to ensure that the MSI has adequate
resources to hear and address complaints. Enterprises canaccount for this limitation by being willing to engage (or hear
complaints from) a range of complaints mechanisms.

•

Accessibility may be restricted in cases in which only directly
impacted stakeholder (i.e. workers, community members, etc.)
can raise a complaint and not their representatives. Affectedstakeholders may be too far removed from the initiative to bothknow that the mechanism exists and understand how to use it.
Local contact points can help increase accessibility.

•

The effectiveness of a grievance mechanism may be restricted
in cases in which it is open to all complainants on any risk andagainst any enterprise. Given the wide scope of themechanism, resources may be constrained in communicating
information, making the grievance mechanism known andfollowing-up on complaints.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

National Contact Points for the OECD Guidelines
The OECD Guidelines have a built-in non-judicial grievance mechanism
through the National Contact Points (NCPs). NCPs are established by
Adherents to the OECD Investment Declaration. They have the mandate offurthering the effectiveness of the Guidelines by:••

Undertaking promotional activities and handling enquiries;
Contributing to the resolution of issues that arise relating to theimplementation of the Guidelines in specific instances. 32

Pursuant to the Decision of the Council on the OECD Guidelines forMultinational Enterprises, Adherents are required to set up an NCP. 33 The
Procedural Guidance to the OECD Guidelines states that NCPs will operatein accordance with the core criteria of visibility, accessibility, transparency
and accountability. In addition, “specific instances” (cases) should be dealt
with in a manner that is impartial, predictable, equitable and compatible
with the OECD Guidelines. Any individual or organisation can bring a
specific instance against an enterprise to an NCP regarding the company’s
operations anywhere in the world.
NCPs are required to issue final statements upon concluding the specificinstance processes. NCPs can also make recommendations based on thecircumstances of the case and follow-up on those recommendations. The
practice of making recommendations can have reputational impacts forenterprises and can encourage engagement of enterprises in the process. 34

6.3 Determine the appropriate form of remedy
Remedy can take a variety of forms and it is important to understandwhat those affected would view as effective remedy, in addition to theenterprise’s own view. This may be an apology, rehabilitation, restitution,
provisions to ensure the harm cannot recur, compensation (financial or32.

Specific instances is the term used in the Guidelines to describe practicalissues that may arise with the implementation of the Guidelines.

33.

Decision of the Council on the Guidelines for Multinational Enterprises, as
amended in 2011.

34.

For more information see OECD (2016), Implementing the OECD
Guidelines for Multinational Enterprises: The National Contact Points from2000 to 2015, OECD, Paris.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

101

I. 6. PROVIDE FOR OR CO-OPERATE IN REMEDIATION WHEN APPROPRIATE

other) for the harm, punitive sanctions, cessation of a particular activity or
relationship, or some other form of remedy agreed by the parties. 35 The
following are general principles for determining appropriate remedy:

•

•

•
•

The remedy should seek to restore the affected person or persons
to the situation they would be in had the harm not occurred(where possible) and be proportionate to the significance andscale of the adverse impact.
The remedy should meet national laws and internationalguidelines on remediation where available; where such standards
are not available, the remedy provided is consistent with thatprovided through similar cases.
The enterprise should engage with affected stakeholders in thedetermination of the remedy.
The enterprise should assesse the level of satisfaction of those
who have raised complaints with the process provided and its
outcome(s).

Collaboration
In instances in which there are numerous parties that have caused orcontributed to an adverse impact, the enterprise should seek to collaborate
with other parties. Collaboration with others does not absolve the enterprise of
any responsibility and the enterprise should provide, enable or support
remediation itself, to the extent of its contribution to the impacts.

35.

102

UN Human Rights Office of the High Commissioner (2012),The Corporate
Responsibility to Respect Human Rights, An Interpretive Guide, United
Nations, New York and Geneva.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

Section II.
Modules on sector risks
Module 1. Child labour
Module 2. Sexual harassment and sexual and gender-based violence in the workplace
Module 3. Forced labour
Module 4. Working time
Module 5. Occupational health & safety
Module 6. Trade Unions and Collective bargaining
Module 7. Wages
Introduction to environmental modules
Module 8. Hazardous chemicals
Module 9. Water
Module 10. Greenhouse gas emissions
Module 11. Bribery & corruption
Module 12. Responsible sourcing from homeworkers
The recommendations in these modules are not intended to act as stand-alone-guidance,but should supplement the Core Guidance and provide enterprises with information on how
to tailor their due diligence approach when addressing specific sector risks. Furthermore, thefollowing modules are not intended to provide technical guidance. Enterprises areencouraged to rely on existing guidance from credible organisations where such guidancealigns with the recommendations in these modules.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

103

II. 1. CHILD LABOUR

Module 1. Child labour
Embed responsible business conduct in enterprise policy andmanagement systems
PolicyWhen adopting a policy commitment regarding child labour, theenterprise should articulate its commitment not to tolerate child labour,
based on ILO Conventions 138 and 182, in its own operations and that of its
suppliers. The enterprise should state that the policy on child labour is valid
throughout the entire supply chain including at raw materials.

•••

Policies on child labour should align with domestic andinternational laws and contain descriptions on types of work
considered to be hazardous. 36
In cases in which national legislation is less stringent thaninternational standards, the enterprise should uphold international
standards (for example on hazardous child labour, worst forms ofchild labour and the minimum age). 37
In cases in which national law sets a higher standard thaninternational conventions, enterprises should defer to national law.

36.

In many countries hazardous child labour will be defined in national
legislation or through social dialogue involving workers' and employers'organisations and government. Where a list of hazardous activities does notexist, the enterprise is encouraged to consult the ILO, medical personnel orhealth and safety experts.

37.

In countries where domestic laws and regulations conflict with the principles
and standards of the Guidelines, companies should seek ways to honour suchprinciples and standards to the fullest extent which does not place them inviolation of domestic law. It is very unlikely that companies will be in aposition of facing conflicting requirements when observing minimum age
standards that go beyond national legal requirements.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

105

II. 1. CHILD LABOUR•

All standards should be equally applicable to girls and boys. 38

Identify potential and actual harm in the enterprise’s own operations
and in its supply chain
Scoping exercise
See Table 9 for example risk factors for child labour and their pertinence
to the sector.
Table 9. Risk factors for child labour in the garment and footwear sector*
Risk Factors

Explanation

Governance

The government indicates its intent to uphold
ILO standards on child labour by conforming
domestic laws with ILO conventions. This isa minimum assurance that the government
intends to protect children from child labour.

The laws of a country do
not conform with the ILO’s
standards regarding
minimum age and worst
forms of child labour.
Governance
The government does notenforce child labour laws.

38.

106

Child labour legislation is only as effective as
it is implemented. Indicators on enforcementof child labour laws are perhaps the mostimportant in determining whether child labour
is a high-risk within a jurisdiction. Indicatorsof the resources spent on enforcement ofchild labour laws and investigations ofviolations, legal cases against violators andenforcement of legal decisions can be
helpful in determining the above.1 Reports
from civil society, trade unions andinternational organisations can likewise be auseful resource.

Sector considerations

There continue to be significant
gaps in legal frameworks and law
enforcement capacity to combat
child labour in many garment andfootwear production and exporting
countries.

For example, in instances in which national legislation is lower thaninternational standards, enterprises should uphold international minimum
age standards. In cases in which national law sets a higher minimum age
than international standards, enterprises should defer to national law.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 1. CHILD LABOUR

Risk Factors

Explanation

Sector considerations

Governance

The risk of child labour is increased whenchildren are not able to attend school. Thismay be due to a lack of schools nearby orother barriers, such as school fees that areprohibitive or administrative hurdles such as
the requirements of birth certificates. School
systems may also lack a policy to reintegratechildren who were previously working into
school. Children of migrant workers may faceunique obstacles to accessing education.
For example, they may not speak the local
language.

Many of the countries where
garment and footwear
manufacturing, finishing and raw
material production are based
continue to face significant
obstacles in achieving universal
education.

Poor access to and/or
poor quality of education

In some countries where garment
supply chains exist, the compulsory
education age is below the minimal
age for work.

When the quality of education is poor,
parents may place greater value in sending achild to work than sending a child to school.2
Governance
The government does nothave adequate antidiscrimination in
education laws and/or
does not properly enforce
them.
SectorInformal employment

Discrimination and exclusion of certain(minority) groups, e.g. from access to
education, may increase the risk of childlabour.

In the garment and footwear sector,
children from minority groups orworkers, for example migrants, areless likely to go to school and end
up in child labour in some contexts.

Child labour is most prevalent in informal
sectors of the economy and formal sectors
might subcontract to informal unregulated
units with child labour.

Informal employment is common at
most stages of the garment andfootwear sector supply chain.
Cotton harvesting often employs
high rates of informal seasonal
workers.
Informal employment is particularly
prevalent in leather stitching andintricate handwork, such as
embroidery and beading.

SectorTasks are considered tobe better performed bychildrenIn some sectors there is a myth that children
are more highly skilled at performing certain
tasks.

In some contexts there is amyth that children are betterskilled at intricate sewing,
stitched leather, beading,embroidery, etc.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

107

II. 1. CHILD LABOUR

Risk Factors

Explanation

SectorChildren of seasonal migrants often migrate with
their parents and they are particularly vulnerable tochild labour. Seasonal work sites are often far
away from schools and other services and school
admission on a seasonal basis may beproblematic.

Migrant labour

Child migrants often experience maltreatment –including suffering from isolation, violence, substandard working conditions, non-payment ofwages and the threat of being reported to theauthorities.3
SectorWages do not satisfy
the basic needs ofworkers and theirfamilies;
SectorUse of apprentice
schemes
SectorSubcontracting

Cotton harvesting often
employs high rates of
informal seasonal migrant
workers;
In some contexts,
international migrant
workers account for 75%
of the workforce. Ruralurban migration is
likewise common in mostexporting countries.

Low wages and lack of access to decent work forother family members reduces household income
and provides economic incentives for children to
work.

Wage non-compliance is a risk at
all stages of the garment andfootwear supply chain that arelabour intensive and employ lowincome workers.

Children who are considered to be apprentices
may not receive adequate compensation and may
be subjected to long hours of work which interferewith their education.

Apprenticeship schemes are usedin many contexts of the sector

Use of subcontracting reduces visibility into labour
standards thus increasing the risk of child labour;

Manufacturing (including
Spinning)
Sub-contracting is a common
practice in cut-make-trim andfinishing (e.g. outsourcing toprinters) globally.

SectorUse of private
recruitment or
employment agencies

108

Sector considerations

The use of labour recruiters and their agents cancreate layers of separation between the employer
and the worker. Employers may be unaware of thehiring practices of their operations, leaving workers
exposed to exploitation.4

Manufacturing (including
Spinning)
Private recruitment andemployment agencies are often
employed to hire both domestic
and international migrant workers.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 1. CHILD LABOUR

Risk Factors

Explanation

SectorExistence of creditarrangements anddebt

The use of credit schemes or schemes to advancemoney when applied to children puts children at
higher-risk of forced labour, debt bondage,
precarious work and lack of adequate pay.

Sector considerations
Credit schemes are at times built
into apprentice schemes.
Use of credit may exist amongst
migrant workers hired through a
private recruitment or employment
agency.

1. Adapted from, Committee on Monitoring International Labor Standards National Research Council of
the National Academies (2004), Monitoring International Standards: Techniques and Sources ofInformation, the National Academies Press.
2. See Jensen, (2000), Development of Indicators on Child Labor, A Report to the International
Program on the Elimination of Child Labor, ILO, Geneva.
3. International Programme on the Elimination of Child Labour, Migration and Child Labour
website.
4. See US Department of State (2015).

Supplier assessment

•
•
•

39.

Supplier assessments should rely heavily on interviews withworkers (without management present), management and otherstakeholders.
Enterprises are encouraged to consult with workers and otherstakeholders as to whether assessments should take place only
within the workplace setting or also offsite.
In recognition that traditional interviews are not always effectivein engaging children and that children may be coached on their
responses, enterprises are encouraged to incorporate participatory
methods of assessment where high-risks of child labour are
flagged. 39

Example participatory methods of assessment include role-play; asking thechild to draw a picture and describe it; showing the child photographs toelicit comments; asking a child who knows how to write to share a narrativeor account; and showing the child a diagram or map and asking questions
about it (always remembering that diagram and map reading are also learned
abilities). See SIMPOC (2005).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

109

II. 1. CHILD LABOUR•

Where risks of worst forms of child labour are flagged, qualified
experts should be engaged in the on-site assessment to ensure thechild’s protection.

Understanding the local context
The elimination of child labour within a particular region requires
collaboration across a range of stakeholders including government, industry
and civil society. Significant attention and resources have been dedicated toaddressing child labour globally (both at the national and international
level), for example, in the formation of programmes to transition children toformal education, or the development of community monitoring of childlabour. In light of this context, the enterprise is encouraged to link its
corrective action plan with existing strategies on-the-ground to prevent childlabour where relevant and feasible. Furthermore, in recognition that childlabour is often prevalent across a number of sectors in a region (i.e. it is notunique to the garment and footwear supply chain), the enterprise isencouraged to identify other sectors which are likewise at risk for childlabour in the region in order to facilitate collaboration where appropriate.

Cease, prevent or mitigate child labour in the enterprise’s own
operations
If a child is engaged in hazardous work, the child should be immediately
removed from hazardous tasks.Enterprises are encouraged to implement
existing guidance on how to stop and prevent child labour in their own
operations. Example components of a corrective action plan include:•

Increase worker and management awareness – for example,
through training, resources (e.g. booklets), workshops andongoing support. Training and information provided to workers
may cover:− Enterprise policy against child labour− Definitions of child labour− Definitions of hazardous work (only relevant for children overthe legal minimum working age; children below this age should
not be working at all)− International and national norms and legislation− The negative impacts of child labour on the child

110

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 1. CHILD LABOUR− Where and how workers can report instances of child labour(e.g. to a child labour monitoring committee or otheroperational-level grievance mechanism)− The enterprise’s systems to prevent child labour and the role
workers, supervisors and management can play to prevent childlabour.

•••Establish management systems to mitigate the risk of noncompliance, for example by formalising worker contracts andestablishing a pre-qualification process for private recruitment andemployment agencies. 40 Provide training to those overseeing
recruitment and hiring on the enterprise’s policy against childlabour and systems for reducing the risk of child labour.
Eliminate hazardous child labour by identifying, preventing andmitigating workplace health and safety risks in the workplace,
preferably as part of comprehensive efforts to eliminate all childlabour 41. See Module 5.
In recognition that the most effective prevention measures often
require addressing systemic and root causes of child labour (e.g. lackof access to education), enterprises are encouraged to partner withexisting initiatives which have demonstrated impact in addressing
child labour (e.g. government initiatives, multi-stakeholder
initiatives, civil society initiatives). Such initiatives may provide
training, access to off-site grievance mechanisms, etc. 42

Prevent the enterprise’s contribution to harm (for retailers, brands
and their buying intermediaries)•

The enterprise should assess and prevent its contribution to harmthrough its price negotiations and purchasing practices.

40.

See Shift and IHRB, Employment and Recruitment Agencies Sector Guide on
Implementing the United Nations Guiding Principles on Business andHuman Rights, European Commission.

41.

See Preamble iii in Netherlands Ministry of Social Affairs and Employment(2016).

42.

See “Hard Question 5” in ILO-IOE (2015) for practical questions to consider
when evaluating the role that an MSI is intended and able to play inpreventing and mitigating adverse child labour.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

111

II. 1. CHILD LABOUR

•

•

•
•

•

43.

112

The enterprise is encouraged to support its suppliers to preventchild labour, where feasible, for example, by increasing supplierawareness on what constitutes child labour (where appropriate)and facilitating linkages to local service providers.
Regardless of whether specific incidents of child labour have been
identified, the enterprise should use its leverage to encourage its
suppliers to implement measures to prevent child labour if riskfactors for child labour have been identified in the sourcing region
and the supplier has not implemented adequate controls to
mitigate the risk.
In recognition of the links between wages and child labour, theenterprise is encouraged to conduct due diligence on wages. See
Module 7.
In recognition that child labour is rarely unique to a particularsupplier, the enterprise is encouraged to support a sector-wide
approach within a particular geographic location (e.g. productioncluster) and cooperate with other regionally operating communitybased anti-child-labour initiatives. In practice, this means that theenterprise operating in the sector has a harmonized strategy fortraining, capacity building, tracking of results and stakeholder
engagement across suppliers.
In recognition that child labour is rarely unique to one sector
within a particular geographic region, but is often found across a
range of sectors and that the removal of children from one sector
may increase the risk of the child simply finding employment inanother, the enterprise is encouraged to coordinate and collaborate
with other sectors operating in the same geographic region. For
example, in practice, this may mean that cross-sector regional
dialogues are established to address specific risks of child labour
within a particular geographic region. It may also mean, sharing
training resources, indicators and results across sectors. 43

See IOE and ITUC Child Labour Platform website.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 1. CHILD LABOUR

Tracking
Verify monitor and validate progress on due diligence and its
effectiveness in own operations
Workplace-based child monitoring committees may be an effective
method of monitoring child labour. Such committees can play a role intraining workers on child labour risks; acting as a first-point of access for an
on-site grievance mechanism; and monitoring to ensure that children are notengaged in hazardous work.
Where appropriate and feasible, workplace-based child monitoring
committees may coordinate with community-level child monitoring
programs and processes to enable remediation (where such programs areactive and effective).

Provide for or co-operate in remediation where appropriate
Operational-level grievance mechanisms
Children may not be able to access grievance mechanisms themselves.
Grievance mechanisms should therefore also be accessible to those who canraise concerns on behalf of the child, such as committees tasked with
monitoring child labour, trade unions, community members, procurement
staff, local civil society and government officials. 44 Outreach on the use ofgrievance mechanisms should include training to local civil society.
Enterprises should identify (or put in place) a mechanism to reportcrimes of worst forms of child labour to relevant authorities.

Determining the appropriate from of remedy•

44.

When a child is below the legal working age, the goal of
remediation should be to remove the child from the workplaceand ensure that alternatives, preferably formal full-time schooling,
are in place. The process of remediation should include dialogue
with the caregivers of the child and, where feasible, seek to enrol
the child in school without damaging the child’s welfare or that of
his/her family. Examples include:

See IDH (2012); Stop Child Labour (2015)

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

113

II. 1. CHILD LABOUR− The child is removed from the workplace and the employer pays
the school fees of the child while the child is enrolled in school(until the minimum ages of schooling)− The child is removed from the workplace and a member of thechild’s family is hired in his/her stead and is paid a wage thatmeets the basic needs of the worker and his/her family− The child is removed from the workplace and enrolled in atransitional schools for children who have fallen behind theirpeer group− The child is removed from the workplace and the child’s family
is enrolled in an existing program to help address root causes ofchild labour (e.g. income gaps).

•
•

•

•

Where they exist, the enterprise is encouraged to engage withcredible initiatives in the community to help children make thetransition from work to school.
If a child is engaged in hazardous work, the child should be
immediately removed from hazardous tasks. Worst forms of childlabour situations may be a crime that needs to be reported to
relevant authorities. The employer should consult external experts(e.g. doctors) to identify any physical harm (e.g. health impacts)
due to the child’s employment in hazardous tasks and harmshould be appropriately remedied.
In instances in which the child is at or above the legal working age
according to national law or international standards (whichever ishigher), the child should have the option to continue his or her
employment on appropriate tasks (i.e. the child may continue towork but should be removed from hazardous work immediately).
The enterprise is encouraged to monitor that the former childlabourer is adequately protected and has not returned to work or
been placed in a more precarious situation. 45

45.

See 5x5 Stepping Stones for Creating Child Labour Free Zones, Stop Child Labour,
Amsterdam.

114

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 1. CHILD LABOUR

Selected international instruments and standards• OECD Guidelines for Multinational Enterprises, Chapter IV, Human Rights andChapter V, Employment and Industrial Relations• ILO Convention concerning Minimum Age for Admission to Employment 1973
(No.138)• ILO Worst Forms of Child Labour Convention, 1999 (No. 182)
• UN Convention on the Rights of the Child 1989
Resources• Annual United States Department of State , Trafficking in Persons Report,
Washington, D.C.

• United States Department of Labour, List of Goods Produced by Child Labor or
Forced Labor, Washington, D.C.

• SIMPOC (2005), Manual on Child Labour Rapid Assessment Methodology,
ILO, Geneva, UNICEF• Shift and IHRBC (2012), Employment and Recruitment Agencies Sector Guide
on Implementing the United Nations Guiding Principles on Business and Human
Rights, European Commission• IDH (2012), Report 2010-2011 Business practices and lessons learned on
addressing child labour, UN Global Compact Labour Working Group• ILO (2007), Guide Two: How Employers Can Eliminate Child Labour, ILO,
Geneva• ILO-IOE (2015), Child Labour Guidance Tool for Business, ILO, Geneva• ILO-IPEC (2005), Guidelines for Developing Child Labour Monitoring
Processes, ILO, Geneva• IOE and ITUC Child Labour Platform website• Netherlands Ministry of Social Affairs and Employment (2016), “Roadmap forAchieving the Elimination of the Worst Forms of Child Labour by 2016”,
Outcome document from The Hague Global Child Labour Conference 2010
Towards a World without Child Labour Mapping the Road to 2016, Hague• For information on relevant ILO standards see the ILO Helpdesk• UNICEF, Children’s Rights and Business Principles• United States Department of State (2015), Trafficking in Persons Report 2015,
Washington, D.C.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

115

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE

Module 2. Sexual harassment
and sexual and gender-based
violence (SGBV) in the workplace
Embed responsible business conduct in enterprise policy andmanagement systems
PolicyThe enterprise is encouraged to adopt a zero-tolerance policy on sexualand gender-based violence and strict measures against sexual harassment in
its own operations. The enterprise’s RBC policy should articulate its
expectations of suppliers and other business partners to likewise adopt a
policy on sexual harassment and sexual and gender-based violence (asappropriate).
Enterprises are encouraged to include the following in their internal
policies•

a commitment to foster an environment at work free fromharassment, bullying and violence

KEY TERMS
Sexual harassment - Sexual harassment includes such unwelcome sexually
determined behaviour as physical contact and advances, sexually coloured remarks,
showing pornography and sexual demand, whether by words or actions. It is
discriminatory when the victim has reasonable grounds to believe that his or her
objection would disadvantage him or her in connection with employment, including
recruitment or promotion, or when it creates a hostile working environment. Men,
women, boy and girls may be victims of sexual harassment.
Violence against women - Any act of gender-based violence that results in, or is likely
to result in, physical, sexual or psychological harm or suffering to women and girls,
including threats of such acts, coercion or arbitrary deprivation of liberty, whether
occurring in public or in private life.

116

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE••

clear consequences for breaking the enterprise’s standards
a commitment to hear grievances, to provide a “reprisal-free”
complaints
mechanism(e.g.
operational-level-grievancemechanism) and to maintain the confidentiality of workers or
employees who raise complaints.

Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise
Women account for a majority of the labour force across many of thestages of the garment and footwear supply chain. Women who are lowincome workers, migrant workers and/or are employed informally areparticularly exposed to risks of sexual harassment and sexual and genderbased violence in the workplace. 46
During the scoping exercise, the enterprise is encouraged to seek tounderstand the extent to which sexual harassment and sexual and genderbased violence exists in the countries that it operates in or sources frombroadly (i.e. beyond the workplace). However, sexual harassment and sexualand gender-based violence can be particularly difficult to identify due to alack of reliable country-level and sector-level data. Within this context,
document reviews may not be sufficient. The enterprise is therefore
encouraged to make good faith efforts to identify high-risk sourcing
countries for sexual harassment and sexual and gender-based violence.
Where gaps in information exist, the enterprise is encouraged to consult
stakeholders and/or experts on the ground. For example, enterprises may
work with civil society or trade unions to conduct a series of focus-group
discussions with workers and consultations with trade unions andrepresentative organisations of the workers’ own choosing, civil society,government, etc. Enterprises should be aware that in many contexts cultural
norms may restrict women and men from discussing or reporting theirexperiences related to sexual harassment and sexual and gender-based
violence. Therefore, enterprises are encouraged to partner with trained
experts to engage with workers and/or community members in discussion onthese issues.

46.

Cruz, A. and Klinger, A. (2011)

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

117

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE

In the context of sexual harassment, enterprises should make theassumption that if sexual harassment is a high-risk in a particular sourcing
location, it is a high risk within the workplace.
Table 10. Sexual harassment and sexual and gender-based violence
Risk Factor

Sector considerations

Low-income employment

Workers at many stages of the garment and footwear
sector are predominantly low-income women and girls.

Workers in low-income employment are more
vulnerable to sexual favours in exchange for
employment opportunities
Precarious employment
Workers in precarious employment are more
vulnerable to demands for sexual favours in
exchange for employment opportunities.
Children and adolescents in the workplace
Children and adolescents in the workplace are more
vulnerable to sexual harassment and sexual andgender-based violence.
Limited upward mobility
Women are more vulnerable to sexual
harassment in workplaces where women make up
the majority of workers but hold very few jobs withactual decision-making power.

Short term employment contracts are common practice inmany sourcing regions. This is particularly true for
manufacturing and agriculture (i.e. raw materials).

Children and adolescents are often employed in thegarment and footwear sector.

It is common for women to comprise the majorityof low-skilled labour in garment and footwear
factories and hold very few management or
supervisor-level jobs.

Similarly, workers are more vulnerable in contexts
where line supervisors are predominantly men andare responsible for reporting each worker’s
productivity numbers and are also the ones whoreport a worker’s excused or unexcused absences,tardiness and conduct. Within this context,
supervisors have leverage to demand sexual
favours.
High turnover of workers
Workplaces with high turnover of young women
workers may be at higher-risk given that workers do
not have a network of co-workers whom they know
and trust;118

Garment and footwear factories often face very high rates
of turnover of workers.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE

Risk Factor

Sector considerations

Location of workplace in relation to homes

Export processing zones are often located far
away from where workers live.

Workplaces that are located far away from where
workers live can increase the risk to workers of
sexual harassment and violence on their returnhome from work.
On-site housing
Young non-married women workers often live in onsite dormitories that are overseen by malemanagement. Young workers are particularly
exposed to sexual harassment and violence within
this context.
Vulnerable minorities, including migrant workers
Minorities, including ethic, religious and caste
minorities, are often much more vulnerable toharassment and violence due to their “lower status”.
Minorities may also have more difficulty accessing
grievance mechanisms.
Migrant workers often lack networks of people
whom they trust and can seek help from. They
likewise often lack information on where to turn ininstances of harassment or violence.

The use of dormitories to house workers is common
practice in textile and garment manufacturing across anumber of countries

Minority women are vulnerable at all stages of garment
and footwear production.
Migrant workers are often employed in cotton production
and harvesting.
In many countries, garment and footwear
manufacturing is highly dependent on internal andinternational migrant workers. In a few contexts,
international migrant workers make up to 75% of
the workforce.

Supplier assessments
It can be difficult for an assessment to identify specific incidents ofsexual harassment in the workplace. Workers may fear reprisal or may notunderstand what constitutes sexual harassment and sexual and gender-based
violence. The enterprise should seek to understand the following during the
supplier assessment:•••

The extent to which workers understand what constitutes
harassment and violence.
The measures that the supplier has implemented to prevent sexual
harassment in the workplace.
Whether the supplier has established an operational-levelgrievance mechanism and, if it has, the extent to which it meetscore requirements. See Table 8. The possibility of remaining
anonymous, the possibility of submitting complaints throughOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

119

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE

multiple access points, at least one of which is non-management
and the principle of confidentiality are particularly relevant inrelation to sexual harassment and sexual and gender-based
violence where fear of reprisal may be high. 47
Worker interviews and focus-group discussions are critical components
of a supplier assessment. Enterprises are encouraged to seek input fromtrade unions and representative worker organisations.
In many cultures, women and men do not feel comfortable discussing
sexual harassment or sexual and gender-based violence. Enterprises are
therefore encouraged to engage with local experts (e.g. civil society
organisations) to tailor assessments so that they are appropriate within thecontext. Enterprises should likewise consider whether it is most appropriate
for those conducting the assessment to be women. In cases in which there isa high-risk that children have been sexually harassed or abused, those
conducting the assessment should be trained in engaging with children in a
way that does no harm.

Understand the operating context
As part of its efforts to understand the operating context under section
3.3, the enterprise is encouraged to identify judicial and non-judicial
grievance mechanisms that are external to an enterprise’s operational-levelgrievance mechanism and available to workers.

Prevent or mitigate harm in the enterprise’s own operations and in its
supply chain
Cease, prevent or mitigate harm in the enterprise’s own operations
Training and the establishment of operational-level grievancemechanisms are core components of any corrective action plan (CAP).
Workers are often unaware of what constitutes sexual harassment and sexualand gender-based violence. 48 Training should therefore raise awareness

120

47.

Those responsible for protecting workers are sometimes the ones initiatingharassment. Aggressors may be supervisors, colleagues or even tradeunionists.

48.

In a study conducted in the Dominican Republic, respondents were surprised
to learn that some behaviours they had always encountered in their places ofwork were considered harassment and that they could take action against it.
Even those who are familiar with the term have different connotations ofwhat it entails and what they are legally protected against. See Pantaleón, L.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE

amongst workers on what constitutes harassment and violence and should
inform workers on processes that are available to them to raise complaints
both within and outside of the workplace (where such channels exist).
Training should target women and men, workers, supervisors, management
and others who are in positions of authority. The participation of workers
and trade unions and representative organisations of the workers’ ownchoosing is important in implementing solutions that are tailored to the local
context.
Additional components of a CAP may include, but are not limited to, thefollowing:

•
•
•
•

the establishment of peer groups within the workplace to help
women access appropriate resources and/or grievancemechanisms
the provision of transportation to and from the workplace incontexts where women experience abuse on their way to and fromwork
partnership with local organisations working to prevent sexual
harassment and sexual and gender-based violence in thecommunity to provide training, resources, etc.
the incorporation of trainings into new-hire orientation forworkers and supervisors.

Enterprises are encouraged to support their suppliers in establishingmeasures to prevent sexual harassment and sexual and gender-based
violence in the workplace in high-risk contexts.

Track
Verify, monitor and validate progress on due diligence and its
effectiveness in the enterprise’s own operations
While maintaining confidentiality, the enterprise should collate records
about the type, pattern and incidence of all forms of workplace harassment
and violence in its own operations. It is recommended that data is collectedand Laboral Dominicana, F. (2003), “Rights for Working Women
Campaign, Sexual Harassment in the Export Processing Zones of the
Dominican Republic”, International Labor Rights Fund.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

121

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACEon all incidents, including both minor and potential incidents and that data isdisaggregated by age and sex.
To the extent possible, the enterprise should seek assurances that theactions that it has or is taking are preventing sexual harassment in its
operations. The enterprise may seek to monitor, for example through simple
surveys, peer discussions or other forms of worker engagement thefollowing:

•

•

•

the extent to which workers know what constitutes sexual
harassment and sexual and gender-based violence and theconsequences for breaking the enterprise’s policy against suchconductthe extent to which workers know how and where to report sexual
harassment, violence or threats of violence and feel they may do
so without fear of reprisal (i.e. including alternative avenues forfiling a complaint)
the extent to which workers believe that management will or did
respond appropriately if they report an incident.

Verify, monitor and validate progress on due diligence and its
effectiveness in the enterprise’s supply chain
Validating that sexual harassment is being prevented in an enterprise’s
supply chain is a challenging task. The enterprise should follow-up with its
suppliers to verify that corrective action plans are being implemented andthat they are embedded into ongoing systems. Beyond such verification, theenterprise is encouraged to partner with its suppliers, workers and tradeunions and representative organisations of the workers’ choosing to assess
whether corrective action measures are effective. For example, theenterprise may review the aggregate results of worker surveys with its
suppliers, or it may conduct focus-group discussions at periodic intervals
amongst workers across different suppliers within a sourcing hub todetermine whether prevention measures (e.g. training) are preventing
harassment in the workplace or whether further efforts are needed.

Provide for or co-operate in remediation where appropriate
Sexual harassment and sexual and gender-based violence are crimes insome contexts that need to be reported to relevant authorities.

122

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACEAs mentioned above, it is important that operational-level grievancemechanisms enable a worker to report harassment, violence or threats ofviolence:•

without fear of reprisal or criticism;•to points of contact beyond company and union representatives;•anonymously and confidentially.

Recognising that children may be victims of sexual harassment or sexualand gender-based violence, grievance mechanisms should also be accessible
to those who can raise concerns on behalf of the child in contexts in whichchildren are employed in the workplace.

Box 10. Discrimination and gender-based discrimination
Discrimination is defined under ILO Convention No. 111 as any
distinction exclusion or preference made on the basis of race, colour,
sex, religion, political opinion, national extraction or social origin(among other characteristics), “which has the effect of nullifying or
impairing equality of opportunity and treatment in employment or
occupation.”
Gender-Based Discrimination is defined by the Convention on the
Elimination of all Forms of Discrimination against Women as any
distinction, exclusion or restriction made on the basis of sex which has
the effect or purpose of impairing or nullifying the recognition,
enjoyment or exercise by women, irrespective of their marital status,
on a basis of equality of men and women, of human rights andfundamental freedoms. This would apply to scenarios even wherediscrimination was not intended. Identical or neutral treatment of
women and men might constitute discrimination against women if suchtreatment resulted in or had the effect of women being denied theexercise of a right because there was no recognition of the preexisting gender-based disadvantage and inequality that women face.
This module includes recommendations on carrying out due diligenceon sexual harassment and sexual and gender-based violence in theworkplace, both of which are forms of discrimination. However,discrimination reaches far beyond harassment and violence. This
Guidance does not provide comprehensive recommendations on how
to carry out due diligence on discriminatory policies or practices.
However, recognising that discrimination is often linked to wages,

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

123

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE

Box 10. Discrimination and gender-based discrimination(cont.)
occupational health and safety and working time, some considerations
on how to identify, prevent and mitigate discrimination in thesecontexts is incorporated into the relevant modules. Recognising theprevalence of discrimination in the sector, enterprises should commit
to not discriminate on the basis of race, colour, sex, religion, politicalopinion, national extraction, or social origin or sex, (among othercharacteristics) in their own operations and activities. Enterprises
should likewise seek to identify, prevent and mitigate against
discriminatory policies or practices in their own operations and in their
supply chains.
Examples of discriminatory policies and practices include:•

Pregnant workers are given short term contracts which areterminated before they become entitled to maternity benefits
under local laws••

Pregnancy tests are a condition of employment•

Workers are asked directly or indirectly about their HIV status.

Migrant workers are paid different wage rates than domestic
workers

Determine the appropriate form of remedy
In general, employers should provide for or contribute towards theprovision of remediation to victims of sexual harassment and sexual andgender-based violence. 49 In some contexts, employers may also be
mandated by law through vicarious liability to provide for such remediation.
For incidents of sexual harassment and sexual and gender-based
violence, it is generally recommended that counselling be incorporated as an
option into post-incident responses. Some victims, especially in the case ofviolent incidents, may need longer-term support. Depending on the specificsituation, such support may include extended professional counselling.50

124

49.

In some cases, if an employer can demonstrate that it has taken reasonable
steps to prevent sexual harassment and gender-based violence, its
contribution to remedy may be diminished.

50.

See Chappell, D. and Di Martino, V. (2006).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 2. SEXUAL HARASSMENT AND SEXUAL AND GENDER-BASED VIOLENCE (SGBV) IN THE WORKPLACE

Selected international instruments and standards

•
•
•
•

Equal Remuneration Convention, 1951 (No. 100)Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
1998 Declaration on Fundamental Rights and Principles at Work (ILO)
Declaration on the Elimination of Violence against Women, adopted by the United
Nations General Assembly (A/ RES/48/104), New York, 20 December 1993

• Committee on the Elimination of Discrimination against Women, General
Recommendation 19, Violence against women (Eleventh session, 1992), U.N. Doc.
A/47/38 at 1 (1993), reprinted in Compilation of General Comments and General
Recommendations Adopted by Human Rights Treaty Bodies, U.N. Doc.
HRI/GEN/1/Rev.6 at 243 (2003).

• Convention on the Elimination of All Forms of Discrimination against Women, New
York, 18 December 1979, United Nations• Equal Remuneration Convention, 1951 (No. 100);• Maternity Protection Convention, 2000 (No. 183) and its Recommendation, 2000
(No. 191).
Resources• Chappell, D. and Di Martino, V. (2006), Violence at Work, 3rd edition, ILO, Geneva.
• Cruz, A. and Klinger, A. (2011), “Gender-based violence in the world of work:
Overview and selected annotated bibliography”, Working Paper 3, ILO, Geneva.

• For information on relevant ILO standards see the ILO Helpdesk.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

125

II. 3. FORCED LABOUR

Module 3. Forced labour
Embed responsible business conduct in the enterprise policy andmanagement systems
PolicyEnterprises are encouraged to
KEY TERM
adopt a zero-tolerance policy for
Forced labour - The internationallyforced labour in their own operations
recognised definition of forced
and their supply chain. Enterprises arelabour is defined in ILO Convention
encouraged to establish additional
139 (No. 29) as “all work or service
which is exacted from any person
policies relevant to the nature of theunder the menace of any penalty
risk, for example, the enterprise may
and for which the said person has
adopt a policy on the use of private
not offered himself voluntarily.”recruitment
agenciesandsubcontracting as relevant. See Box 2
for information regarding policies on subcontracting.

Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise
Forced labour is complex, takes many forms and by nature is hidden.
Within this context, enterprises should consider the following guidance
when conducting their scoping exercise.

•

51.

126

Employees tasked with scoping risks of forced labour in theenterprise’s operations and in its supply chain should have an
understanding of what constitutes forced labour, common formsof forced labour, vulnerable workers and international standards. 51

See ILO(2015).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 3. FORCED LABOUR

•

•
•

•

Enterprises are encouraged to consult existing reports bygovernments, international organisations and credible institutions,
including civil society organisations, to identify materials andproduction processes associated with forced labour as well assourcing areas which have been flagged as higher-risk for forced
labour.
Enterprises are encouraged to seek information from stakeholders,international organisations, civil society organisations and experts
on higher-risk countries for forced labour.
Enterprises are likewise encouraged to cooperate at a sector-widelevel with governments, workers, international organisations,stakeholders, and civil society organisations operating on the
ground (as relevant) to identify higher-risk activities and areas forforced labour.
The lack of sufficient and accurate data remains a challenge inunderstanding the nature, scale and scope of forced labour in the
sector. Enterprises across the sector are encouraged to identify
gaps in data collection and work towards improved coordinationand collection of information.

See Table 11 for example risk factors for forced labour in the garment
and footwear supply chain.
Table 11. Risk factors for forced labour in the garment and footwear sector
Risk Factor
State-orchestrated forced labour
State-orchestrated forced labour iswhen the government itself forces
citizens to work in a particular sector.
Private recruitment & employment agencies
The use of labour recruiters and their agentscan create layers of separation between theemployer and the worker. Employers may be
unaware of the hiring practices of theiroperations, leaving workers exposed to
exploitation.1

Relevance to the sector
CottonIn some countries forced labour in cotton production is stateorchestrated. In these contexts, local authorities send government
and private business employees to pick cotton in order to meetcotton production quotas.
Private recruitment and employment agencies are often employed
to hire both domestic and international migrant workers ingarment, footwear and textile manufacturing.
Transportation
Workers are often employed through labour brokers or
employment agencies (e.g. seafaring transport). Within somecontexts, these jobs are viewed as favourable leading to highrecruitment fees and indebtedness.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

127

II. 3. FORCED LABOUR

Risk Factor

Relevance to the sector

Existence of credit-arrangements and debt

CottonIn some sourcing contexts it is common for farmers tofinish a crop cycle without enough money to purchase
inputs for the following year, leading them to take on
increasing loans with high interest rates.

A person provides labour to pay off his or her
debt. Interest rates often diminish the person’s
ability to pay the debt and the terms of payment
are often indefinite.

Manufacturing
Credit schemes are at times built into apprenticeshipschemes. Use of credit may also exist amongst migrant
workers hired through a private recruitment or employment
agency. Children and adolescents are also more likely tobe employed and exploited through apprenticeshipschemes.
Children and adolescents in the workplace
Children and adolescents in the workplace are
more vulnerable to forced labour.
Employment of migrant workers
Migrant workers are more exposed to certain
forms of forced labour, particularly those with anirregular status, whose vulnerability can be
exploited through coercion. For example,
migrant workers may be vulnerable to coercion
through the withholding of documents (e.g.
passports). The retention of these documents orother valuable personal possessions can beconsidered an indicator of forced labour if
workers are unable to access them at theirdiscretion and if they feel they cannot leave
employment without risking the loss of the
document.2 Migrant workers may also be more
vulnerable to debt-induced forced labour due torecruitment fees owed to labour brokers.3
Onsite housing of workers
Workers who live on-site are more at risk ofbeing physically confined to the workplace or toemployer-operated residences outside ofworking hours.4

128Children and adolescents are often employed at all stages of thegarment and footwear sector.

CottonIn some cases children migrate with their family to work incotton plantations. However, although children may
migrate voluntarily, they may be exploited upon arrival.
Manufacturing
In many countries, the garment and footwear sectors arehighly dependent on internal and international migrant
workers. In some contexts, international migrant workers
make up to 75% of the workforce.

The use of dormitories to house workers is very common across
many garment and footwear exporting economies.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 3. FORCED LABOUR

Risk Factor

Relevance to the sector

Prison labour

In some countries, prison labour is used to produce garments
including federal contracts for military uniforms, thus increasing
the risk of forced prison labour.

Involuntary work performed by prisoners who
have not been convicted in a court of law andwhose work is not supervised by a publicauthority is considered forced labour. Similarly,
involuntary work performed by a prisoner for the
benefit of a private undertaking is also
considered forced labour.5
Subcontracting
When not accounted for, the use of
subcontracting reduces visibility into the labour
standards of the supplier, thus increasing therisk of forced labour.
Informal workers
Workers employed in informal enterprises,
including home-based workers and those ingeographically remote rural regions, reconsidered to be particularly vulnerable toforced labour, notably debt-induced forced
labour.6
Production pressures
Workers that are working in labour-intensive
industries contexts with set production quotas
and fluctuating orders may be more exposed toforced overtime

1.
2.
3.
4.
5.

6.

Sub-contracting is a common practice in cut-make-trim andfinishing (e.g. outsourcing to printers) globally.

Informal employment is common at most stages of the garment
and footwear sector supply chain.
Cotton harvesting often employs high rates of informal seasonal
workers.
Informal employment is particularly prevalent in leather stitching
and intricate handwork, such as embroidery and beading.
Excessive overtime is common throughout garment andfootwear cut-make-trim. While not all overtime isconsidered forced-labour; forced labour does occur if
overtime is compulsory and exceeds the weekly ormonthly limits allowed by laws, irrespective of the reasonsfor such overtime.6

See US Department of State (2015).
See ILO (2015).
Debt-induced forced labour is also commonly referred to as debt bondage.
Workers should not be confined, imprisoned or in any way detained in the workplace or employer-operated residences,either during or outside working hours. Illegal restrictions on workers’ freedom of movement are prohibited. See ILO(2015).
Labour exacted from prison workers is not generally considered forced labour under international law. However, thecases referenced in Table 11 are considered forced labour. Therefore, prison labour should always be considered arisk for forced labour. The laws and enforcement of a specific jurisdiction will either increase or decrease this risk. See(2015), Combatting Forced Labour: A Handbook for Employers and Business, ILO for more information.
See ILO (2015).

Source: Primarily adapted from: Verité (2015), “Strengthening Protections Against Trafficking in Persons in Federal andCorporate Supply Chains” Amherst; Clean Clothes Campaign (2009), “False Promises, Migrant Workers in the Global
Garment Industry Discussion Paper”, Amsterdam.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

129

II. 3. FORCED LABOUR

Supplier assessments
Enterprises are encouraged to rely on existing guidance by credibleorganisations on how to assess forced labour, where such assessments takethe below into account.

•

•

•

•

In recognition that forced labour takes many forms, assessments
should be tailored to the sourcing context or production cluster
and to the particular forced labour risks. For example:−

In contexts in which apprenticeship schemes are common, thesupplier assessment should take into account the unique forced
labour risks (e.g. freedom of movement) associated with such
schemes in that region.

−

In cases in which private recruitment agencies are used,
enterprises should extend assessments to cover them and/or
should incorporate assessments of the supplier’s due diligenceof the agencies, as appropriate.

−

In cases in which suppliers employ migrant workers, thesupplier assessment should cover the unique forms of forced
labour which may face migrant workers, such as document
retention for foreign migrants.

In recognition that traditional document assessments are generally
insufficient in assessing forced labour, supplier assessments
should rely heavily on interviews with workers, management andother stakeholders.
Enterprises should take into consideration that some workers may
fear responding honestly to questions regarding forced labour andtake appropriate measures, such as conducting assessments offsite or using non-traditional methods of assessment such as focusgroup discussions and participatory assessment methods.
In cases in which forced labour is linked to upstream production
processes (e.g. cotton growing) enterprises should be able todemonstrate that upstream suppliers have been assessed. See
Box 3.

Cease, prevent or mitigate harm in the enterprise’s own operations
Extensive stakeholder engagement is likely necessary to determine themost appropriate methods to prevent forced labour. This module does notprovide technical guidance on how to prevent forced labour once a risk has

130OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 3. FORCED LABOUR

been identified. However, enterprises are encouraged to apply therecommendations and practices put forth in guidance published by credibleorganisations such as the ILO. In some contexts, international, federal andlocal government and civil society organisations may already have plans inplace to tackle forced labour. Enterprises are therefore encouraged to aligntheir strategies with existing strategies on-the-ground, where relevant.
Example components of a corrective action plan include:

•
•

•
•

Support trade unions and representative worker organisations tobuild awareness amongst workers on their rights in relation tocontracts, working hours, freedom of movement, etc.
Establish tailored training for management and staff involved in
the hiring of workers on national and international standards
regarding forced labour and importantly, the company’s policies
and processes to prevent forced labour.
Establish a prequalification process for private recruitment
agencies for employment (where relevant).
Support the right to establish or join a trade union for the purposeof collective bargaining within their workplace and supply chain.
Trade unions play a central role in monitoring and preventing
forced labour. See Module 6.

Seek to prevent or mitigate harm in the enterprise’s supply chain
The enterprise should adopt measures that are tailored to local
circumstances. Recommended measures include the following.

••Enterprises are encouraged to suspend orders (even in the context
of State-sponsored forced labour) if forced labour has been
identified until action has been taken to prevent forced labour.
Enterprises are encouraged to prevent forced labour in their
supply chain by building the capacity of theirs suppliers by:−building the awareness of suppliers on forced labour, including
what constitutes forced labour.

−

supporting suppliers to implement a corrective action plan−

supporting suppliers in improving production efficiency and, in
doing so, addressing the business driver for cheap labour.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

131

II. 3. FORCED LABOUR

•

•

•
•

•

•

132

The enterprise should develop pricing models that account for thecost of wages, benefits and investments in decent work. The
above considerations should be reflected in freight on board(FOB) prices together with traditional pricing considerations, suchas quantities being purchased, cost of materials, skill
requirements, etc. See Box 4.
If the enterprise identifies that forced labour may in some way belinked to their final product (and may or may not know how toprevent it), the enterprise is encouraged to raise awareness at asector level and invite enterprises within the sector to jointly work
towards preventing forced labour.
Industry associations may seek to form organised consultations
with trade unions and stakeholders to ensure a coordinated andholistic approach to tackling forced labour at a sector-level.
In recognition that forced labour, in some contexts, is prevalentacross sectors, enterprises are encouraged to co-operate with othersectors operating in the same country or region to support a coordinated strategy. This also reduces the risk that forced labour issimply transferred from one sector to another.
In recognition that in some cases, forced labour requires a multistakeholder approach to adequately address impacts, theenterprises is encouraged to make aggregate data and high-level
findings available to local and international human rights
organisations and international organisations (as relevant).
Enterprises should likewise seek to feed into existing effective
initiatives to reduce the risk of duplication.
In contexts in which forced labour is State-sponsored, for example
through regulatory frameworks and/or in instances in which thestate is not effectively upholding its duty to protect against forced
labour, the enterprise should consider engaging with government
either directly or through collaborative initiatives to communicate
the enterprise’s commitment to prevent forced labour in its supply
chain. See section 3.2.6 for information on engaging government.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 3. FORCED LABOUR

Track
Verify, monitor and validate progress on due diligence and its
effectiveness in the enterprise’s supply chain.
Forced labour is often hidden and therefore difficult to identify. A single
on-site assessment is unlikely to provide adequate information for theenterprise to determine whether forced labour is being prevented. Effective
ongoing monitoring is a crucial component of due diligence in high-riskareas for forced labour, for example through early warning systems.
Enterprises should partner with trade unions, suppliers and civil society todesign an effective monitoring mechanism. Trade unions themselves can act
as effective monitors of forced labour. Civil society and community
members can likewise act as important informants of forced labour.
However, community awareness is necessary for community-levelmonitoring to be effective.

Provide for or co-operate in remediation where appropriate
Many forms of forced labour are crimes. Enterprises should identify (orput in place) a mechanism to report crimes of forced labour to relevant
authorities. Where enterprises have caused or contributed to forced labour,
they should cooperate with relevant authorities to help provide appropriate
forms of remedy.
Selected international instruments and standards• ILO, Forced Labour Convention, 1930 (No. 29)• ILO, Abolition of Forced Labour Convention, 1957 (No. 105)
• ILO, Protocol of 2014 to the Forced Labour Convention, 1930 and Forced Labour(Supplementary Measures) Recommendation, 2014 (No. 203)
Resources• United States Department of State (2015), Trafficking in Persons Report 2015,
Washington, D.C.

• List of Goods Produced by Child Labor or Forced Labor, Department of Labor,
United States of America.

• Verité(2015), “Strengthening Protections Against Trafficking in Persons in Federal
and Corporate Supply Chains”, Amherst.

• ILO(2015), Combatting Forced Labour: A Handbook for Employers and Business,
International Labour Organization, Geneva.

• For information on relevant ILO standards see the ILO Helpdesk.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

133

II. 4. WORKING TIME

Module 4. Working time
Identify actual and potential harms in the enterprise’s own operations
and in its supply chain
Scoping exercise
For many enterprises operating in the garment and footwear supply
chain, the highest risk of excessive overtime is found at garment andfootwear manufacturing. While some countries may hold higher risks thanothers, excessive overtime is prevalent across most sourcing countries.
Excessive overtime may be increased where there are high rates of migrant
workers employed in the sector, however, this indicator should not be usedalone to determine high-risk contexts for excessive overtime.

Supplier assessments
Enterprises are encouraged to rely on existing guidance by credibleorganisations on how to assess working time where such assessments
incorporate the below.
The enterprise should assess supplier compliance with national
legislation and international standards. Specifically, the enterprise isencouraged to assess for:

•
•
•

52.

134

compliance with legal or collective bargaining agreements
regarding overtime conditions and limits
compliance with legislation or collective bargaining agreements
concerning personal leave, including sick leave and annual leavecompliance with legislation or collective bargaining agreements
on maternity leave, breastfeeding breaks and paternity leave. 52
Pregnant workers can also be at higher risk of being on shorter-

See Better Work, “Guidance Sheet 8, Working Time”, Better Work website.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 4. WORKING TIME

term contracts which are eventually terminated before the workers
become entitled to maternity benefits under local laws.
In addition to the above, the enterprise is encouraged to seek tounderstand the drivers of excessive working hours. See Box 11 forexamples.
Worker interviews should be a core component of supplier assessments.
Those conducting the assessment should mitigate the risk that workers
provide pre-prompted answer, for example through participatory interview
methods. 53
Box 11. Factors that may drive excessive working hours
at manufacturing
There are a number of factors which may contribute to excessive
working hours at the manufacturing stage of the garment andfootwear supply chain. Three of the most common factors are low
wages, inefficient production planning and poor purchasing practices.

53.

•

Low wages: in contexts in which workers earn very low wages,
they may prefer to work overtime in order to earn an extra
income. This is often the case for migrant workers who areresponsible for sending money home to their families.

•

Poor purchasing practices: In some instances the actions ofretailers or brands may contribute to excessive overtime.
Examples of this include last-minute style changes and thesetting of unreasonable lead times, notably for re-orders. See
Box 4.

•

Inefficiencies in production planning: Over-booking, poor
production planning and inefficiencies in production may also
result in excessive overtime. Overbooking remains a challenge
in the sector often due to the lack of consistency in orders.
Suppliers may be reluctant to expand their production capacity
without confidence that demand will remain high. To accountfor this uncertainty, in some cases, suppliers hire a limited
number of skilled workers as regular workers and then rely on
overtime hours, temporary contract workers and subcontracting
to manage the shifts in demand.

For example, workers may be asked to talk through their schedule over thecourse of an entire day.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

135

II. 4. WORKING TIME

Cease, prevent or mitigate harm in the enterprise’s own operations
Excessive overtime is a prevalent risk across the sector. Enterprises areencouraged to collaborate to identify practical solutions. Example
components of a corrective action plan (CAP) are included below.

•

•
•

•

•

As a first step, the enterprise is encouraged to track the number ofworking hours per worker. Human resource representatives may
then be given the responsibility to flag risks of excessive
overtime.
In instances in which low wages are driving demand for excessive
working hours, enterprises should conduct internal due diligenceon wages. See Module 7.
Workers should be trained on their rights in relation to working
hours, overtime, maternity leave and related compensation.
Enterprises are encouraged to incorporate training into orientationand periodic training. Trade unions and representative worker
organisations can play a key role in training workers.
The enterprise should establish a policy against any form of
discrimination. Discriminatory practices against pregnant women,
migrant women, ethnic minorities and other populations can leadto inadequate compensation for overtime, maternity leave, etc.
More efficient processes, such as changing the setup andengineering of the production system, may reduce overtime.

Prevent the enterprise’s contribution to harm in its supply chain

•
•
•

136

The enterprise is encouraged to support its suppliers, for example,
through technical guidance on the improvement of production
processes, where appropriate.
In instances in which low wages are driving demand for excessive
working hours, the enterprise may focus its attention on carrying
out wage due diligence, see Module 7.
See Box 4 on responsible purchasing practices.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. 4. WORKING TIME

Provide for or co-operate in remediation where appropriate
Determine the appropriate form of remedy
Compensation is often the most appropriate form of remedy; however,the process of providing remediation should meet the guidance insection 6.3. Enterprises are encouraged to review existing guidance oncompensation and back pay for workers who have not been fairly
compensated for their hours worked. The form of remedy in cases in which
a worker has been denied leave may be more difficult to determine but
should be agreed upon through dialogue between the enterprise and theworker.
Selected international instruments and standards

•
•
•
•
•
•
•

Hours of Work (Industry) Convention, 1919 (No.1)
Weekly Rest (Industry) Convention, 1921 (No. 14)
Forty-Hour Week Convention, 1935 (No. 47)
Holidays with Pay Convention (Revised), 1970 (No. 132)
Reduction of Hours of Work Recommendation, 1962 (No. 116)
Night Work Convention, 1990 (No. 171) and its Recommendation, 1990 (No. 178)
Maternity Protection Convention, 2000 (No. 183) and its Recommendation, 2000
(No. 191).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

137

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

Module 5. Occupational health and safety
Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise
Each stage of the supply chain in the garment and footwear sector holds
unique and well-documented health and safety risks. Enterprises are
therefore encouraged to review existing reports on known health and safety
risks for the sector and their subsector.
Unique country risk factors are particularly relevant when scoping
occupational health and safety risks. For example, quality of inspections,building height, the extent of urban planning, the quality of the air, etc.
greatly affect the health and safety risk characterisation. Questions that anenterprise may consider when determining country risk factors include:

•
•
•
•
•
•

138

Are regulations and codes related to occupational health andsafety adequately enforced?
Are inspections conducted by state inspectors and/or by third
parties?
If inspections are conducted by third parties, what are the checks
and balances placed on third-parties?
What are the qualification requirements of inspectors (either Statebased or third-parties)? How do these qualifications compare withinternational benchmarks?
What are the consequences to inspectors in cases of known
violations (e.g. acceptance of bribes) and are these requirements
enforced?
Are there reasonable risks of bribery in the country related togovernment inspections?

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

Supplier assessments
Enterprises are encouraged to collaborate within a sourcing area (e.g.
country, production cluster) to assess suppliers in order to promote a highquality standard for inspections across the industry and reduce the burden on
suppliers. 54
The risks assessed on-site should correspond with known risks within
the country and at the specific stage in the supply chain. Assessments should
likewise cover occupational health and safety risks that may affect someworkers disproportionately, such as children, pregnant women or lactating
mothers. For example, in cases in which chemicals are used, assessments
should likewise ensure that children are not employed in hazardous labour.
See Module 1, Child labour for more information.
For risks of severe harm:

•

•

•

The enterprise should ensure that the supplier has undergone aqualified inspection against national and international standards.
In some contexts, a government inspection is sufficient; however,in contexts in which government inspections are inadequate or
non-existent, enterprises should verify that the supplier has beenassessed by a qualified professional (e.g. structural engineers, fire
protection specialists, electrical engineers, safety, health andenvironment specialists for handling chemicals) with relevant
qualifications.
Supplier assessments should determine whether workers feel thatthey have the right to refuse unsafe work and are not discouraged
from reporting accidents. This requires worker interviews in anenvironment where the worker feels safe to respond honestly.
Assessments teams should also include participation from workers
and trade unions and representative organisations of the workers
own choosing.

For risks that do not pose severe harm to persons, communities or theenvironment:•

54.

Assessments may be conducted by trained professionals, but
assessments do not have to be independent. Assessments should

For example, see the Bangladesh Accord on Fire and Building Safety andthe Alliance for Bangladesh Worker Safety.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

139

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

include participation from workers and/or their representatives,
including women.

•

Enterprises may rely on existing guidance put forth by credibleorganisations on how to conduct supplier assessments.

Cease, prevent or mitigate harm in the enterprise’s own operations
The enterprise should respect all relevant ILO Health and Safety
instruments, even in countries that have not ratified them.
The enterprise should develop a corrective action plan (CAP) that details
actions to be taken with clear timelines and a financial plan following site
inspections that is signed off by upper management of the site anddeveloped with input from an expert.

•

•

•

•

•
140

In the short term, where there is severe and imminent danger,
action should be taken immediately to protect workers. In cases inwhich impacts or risks of impact cannot be isolated, this may
mean that the site is evacuated and that production is suspended
until the building is determined to be safe for re-occupancy.
In the long term, ongoing prevention and mitigation is reliant
upon an occupational and environmental health and safety
programme with documented procedures to protect workers which
are monitored by workers and trade unions and representative
organisations of the workers’ own choosing and management.
Such programmes should be aligned with international standards
and guidance.
Both immediate measures and long term programmes should be
supported by training of staff (including technical staff) andworker safety committees with democratically elected worker
representatives at the site. Extensive guidance for employers
exists on the above.
For risks of severe harm (e.g. structural integrity or electricalsafety and fire hazards, hazardous chemicals etc.) CAPs should be
developed in collaboration with qualified professionals (e.g.
structural engineers, fire protection specialists, electricalengineers, safety, health and environment specialist for handlingchemicals etc.).
Where children are employed on-site, CAPs should be designed toaddress the specific health and safety risks for children and should
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

take account of their level of technical understanding (e.g. in
relation to worker training).

Worker engagement
Worker engagement is critical to the prevention of occupational healthand safety harms. Enterprises should therefore establish worker management
committees. Such committees can facilitate the following worker
engagement.

•

•
•

•

Workers should have a complete understanding of work hazards,
including hazards that may affect children, pregnant women,
lactating women and other populations disproportionately.
Workers should receive the necessary education and training on
how to work safely and evacuate in case of dangerous situations(e.g. fire).
Workers should participate in the risk assessment and the design
and implementation of all occupational health and safety policies,
programmes, procedures and CAPs.
Workers should understand that they have a right to refuse unsafe
work or shut down all work believed to be unsafe without fear of
reprisals if exercised in good faith. Furthermore workers should
not feel discouraged from reporting accidents due to fear of
reprisal.
Workers should have a role in ongoing monitoring (whereappropriate) of risks of harm and should have recourse throughgrievance mechanisms to address instances in which risks ofsevere harm arise and require external qualified professional
attention.

Collaboration•

Enterprises are encouraged to collaborate – for example, within a
production cluster – to exchange information among workers andmanagement overseeing ongoing corrective action measures. For
example, this could include joint visits or regional safetycommittees.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

141

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

Seek to prevent or mitigate harm in the enterprise’s supply chain

•

•
•

•

When immediate and critical danger has been identified, theenterprise should ensure that production for them does not takeplace at the affected production site until the immediate andcritical danger has been adequately addressed.
The enterprise is encouraged to support its suppliers in theimplementation of CAPs.
The enterprise should develop pricing models that account for thecost of wages, benefits and investments in decent work. The
above considerations should be reflected in freight on board(FOB) prices together with traditional pricing considerations suchas quantities being purchased, cost of materials, skill
requirements, etc. See Box 4 on responsible purchasing practices.
In cases in which factory upgrades are necessary:‒ The enterprise is encouraged to facilitate access to financing,including but not limited to joint investments, provision ofloans, facilitation of access to donor or government support
and by offering business incentives, where feasible.
‒ In cases in which neither the enterprise nor the supplier cansecure adequate financing to prevent or mitigate the adverse
impact and/or in cases in which prevention is not feasible, theenterprise should weigh the risk of continuing to engage anddisengage if necessary.
‒ Disengagement is an option if a supplier refuses to prevent
impacts after a notice and warning process. See section 3.2.5.

Track
For risks of severe harm:

•

•
142

Qualified independent professionals (e.g. structural engineers, fire
protection specialists, electrical engineers, safety, health andenvironment specialist for handling chemicals) should monitor
and evaluate the implementation of the CAP and verify corrective
actions have been taken within the agreed-upon timeframe.
Workers should participate in ongoing monitoring (as feasible) of
risks of harm. In cases in which workers, or other stakeholders,OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

raise allegations through a grievance mechanism, the supplier andenterprise should ensure that the grievance is inspected in a timely
manner by a qualified professional.
For risks that do not pose severe harm to persons, communities or theenvironment:••

The approach to monitoring should be systematic and should
correspond with the level of risk. In this regard, a monitoring planshould be developed at each site that is primarily implemented bymanagement and workers.
Workers should be trained to participate in conducting ongoing
monitoring as appropriate. Enterprises are encouraged to
implement existing technical guidance on how to establish
occupational health and safety monitoring.

Provide for or co-operate in remediation where appropriate
Where appropriate, enterprises should provide for remediation in-linewith the ILO Employment Injury Benefits Convention. Compensation isoften the most appropriate form of remedy for occupational health andsafety impacts. Examples include compensation for:•medical care and related expenses•

missed work time or other lost income•

pain and other physical suffering•

permanent physical disability or disfigurement•

loss of family, social and educational experiences•

emotional damages resulting from the above.

Enterprises may also collaborate to establish effective insurance
schemes for workers.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

143

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

Box 12. Recommendations for small and medium-sizedenterprises (SMEs)
All sites should comply with the same overall expectation of health andsafety irrespective of size, location or other factors.
SMEs generally share a number of characteristics that raise concerns
about the risks of accidents. For example: they generally have a lessformal operating structure than larger enterprises; they tend to employ
few engineers and safety specialists; and they tend to rely on business
partners and other outside sources for information related tooccupational health and safety.
SMEs may also have strengths which enable them to enact
recommendations. For example, they may be in a position to
implement procedural changes more quickly than larger companies
and they are more likely to have open communication channels.
Recommendations for SME manufacturers and producers
A multifaceted approach is needed to address the various concerns
and limitations of SMEs. SMEs should undertake to:•

Recognise the importance of safety as an integral part of theirbusiness operation and commit themselves to safe operations••

Actively seek information on safety••

Create “mutual aid” response groups with other enterprises

Enter into partnerships with public authorities and/or otherenterprises with the objective of improving safety
Join professional organisations

Buying enterprises and suppliers (where suppliers are not SMEs
themselves) should make an effort to assist SMEs in reducing risks ofaccidents, as may be needed, through provision of information,
guidance and assistance.
Recommendations for SME buyers
SMEs are encouraged to engage in sector initiatives, agreements withtrade unions and multi-stakeholder initiatives to implement this
Guidance which facilitate both a regional and sector-wide approach.
Source: Adapted from OECD (2003), Guiding Principles for Chemical Accident
Prevention, Preparedness and Response, Organisation for Economic Co-operation andDevelopment, Paris

144

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 5. OCCUPATIONAL HEALTH AND SAFETY

Selected international instruments and standards• Occupational Safety and Health Convention, 1981 (No. 155)
• Promotional Framework for Occupational Safety and Health Convention, 2006 (No.
187)

• Chemicals Convention, 1990 (No. 170)
Resources• OECD (2003), Guiding Principles for Chemical Accident Prevention, Preparedness
and Response, Organisation for Economic Co-operation and Development, Paris.

• World Health Organization (WHO) Human Health Risk Assessment Toolkit.
• IFC (2007), Environmental, Health and Safety Guidelines for Textile Manufacturing,International Finance Corporation, Washington, D.C.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

145

II. MODULE 6. TRADE UNIONS AND COLLECTIVE BARGAINING

Module 6. Trade unions
and collective bargaining
Embed responsible business conduct in enterprise policy andmanagement systems
PolicyThe enterprise should establish a clear policy that it will not tolerateanti-worker policies and actions in its own operations and in its supply
chain. This message should reflect an understanding of the context and be
explicit concerning the nature of the abuses of workers’ rights that arelikely.

Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise
Unlike other risks in the supply chain, risks related to the worker’s rightto establish or join a trade union and bargain collectively are generally notlinked to specific product-lines or stages of the supply chain. 55 Rather the
institutional and legal framework is likely to be the most important risk
factor when assessing the likelihood and severity of impacts. The primary
purpose of understanding the extent to which the state places restrictions on
the rights of workers to establish or join trade unions for the purpose ofcollective bargaining is to understand what the enterprise is able to dolegally to respect these rights.
In light of this, enterprises are encouraged to understand or identify thefollowing:

•
55.

146

the extent to which civil and political liberties are protected andexercised.

Note that some sub-sectors may be better protected than others within agiven country.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 6. TRADE UNIONS AND COLLECTIVE BARGAINING•••

the legal and institutional framework for industrial relations andthe extent to which trade unions function and collective
bargaining takes place
the extent to which legal protections for workers are enforced andthat judicial and non-judicial remedies for these workers’ humanrights are available and effective
the principal trade union organisations representing workers in the
sector and other organisations that may be able to provide
information concerning the exercise of these rights./

When seeking to understand the above, national laws that may restrict
the right to establish or join a trade union and representative organisations of
the workers own choosing can be considered a red flag.

•

•

•
•

Laws that require workers to become members of government-run
federations, that place extensive prohibitions on bargaining, orthat ban strikes altogether or in “essential” industries so as tosupport a particular national economic policy are red flags for alack of commitment to freedom of association and the right tocollective bargaining.
Laws that permit government interference, for example, byallowing the government to dissolve unions without legal
recourse, to impose burdensome union registration procedures,
limit the formation of national unions, prohibit or limit multiple
unions within a single plant (including minority unions), or
restrict who may serve as a union member, official or advisor.
Laws that restrict freedom of association for certain workers, e.g.
migrant workers.
National laws and constitutions that restrict unions’ politicalactivities, for example by establishing close relationships between
unions and political parties.

Additional indicators, or red-flags, for higher-risk countries may
include:••lack of adjudication bodies to support freedom of associationrights and provide effective remedy.
the extent to which union organisers are jailed or exiled by thegovernment, or fired, injured, or murdered without prompt andeffective prosecution on the part of the government.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

147

II. MODULE 6. TRADE UNIONS AND COLLECTIVE BARGAINING•••

the extent to which strikers suffer retaliation without prompt andeffective prosecution on the part of the government.
whether there are defects in the government’s complaint process,such as excessive delays or expenses, light penalties, or nonpunishment of offenders.
government actions to combat labour-related corruption (such as
control of unions by criminal figures for use as a protection racket
or for financial skimming) without prompt and effective
prosecution.

Special attention should be given to free trade zones where other labourlaws may apply.

Supplier assessment
The purpose of the supplier assessment is to identify whether anti-worker
policies and practices are being promoted by the supplier. Supplierassessments should rely predominantly on interviews of workers, management
and trade unions; traditional document assessments are insufficient.
Enterprises should take into account that some workers may fear
responding honestly to questions regarding anti-union policies and takeappropriate measures. Among possible techniques developed to address thisfear include conducting interviews away from the workplace and using nontraditional methods of assessment such as focus-group discussions.
Supplier assessments should include assessments of the following (seeTable 12 for examples of each):

•
•
•
•
•

148

intimidation of workers and anti-union behaviour.
the promotion of employer-dominated structures, worker
involvement mechanism and corrupt labour relations practices
the refusal to bargain in good faith
the effect of short term contracts and other forms of casual
contracts and informal employment on the ability of workers toorganisesystemic or organised employer opposition and hostility to tradeunionsOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 6. TRADE UNIONS AND COLLECTIVE BARGAINING

Table 12. Description of anti-union policies and practices
Anti-union policies and practices

Description

Intimidation of workers and anti-union
behaviour

Examples may include: physical intimidation; intimidation of workers bythreatening the loss of their livelihood; screening for trade union
supporters during recruitment; creating and using “black lists” of union
supporters; dismissal of union supporters; discrimination of union
supporters through demotions, less favourable assignments, lessfavourable conditions of work; reduction in wages, benefits, training
opportunities, transfers and relocation; non-extension of employment
contracts to union supporters on fixed term and temporary employment;interference in the process by which workers choose whether to be
represented by trade unions; actively pursuing legal and administrative
delays in the process by which trade unions obtain legal recognition;
anti-trade union campaigns including campaigns by employer
organisations and community leaders; isolation of workers from tradeunion representatives including where workers live on premises
controlled by the company or where work is performed in places where
access is restricted such as private business complexes or export
process zones.

The promotion of employer-dominatedstructures, worker involvement
mechanism and corrupt labour
relations practices

Where employers create workers committees or other structures for the
involvement of workers, there is a risk that they are creating barriers to
exercising the right to establish or join trade unions and to bargain
collectively. This is especially true for situations where genuine tradeunions exist even if their activities are restricted. Such structures should
not be treated as substitutes for trade unions and representative
organisations of the workers’ own choosing.

The refusal to bargain in good faith

The effect of short term contracts andother forms of casual contracts andinformal employment on the ability ofworkers to organise

Situations where enterprises refuse a genuine opportunity to bargain
collectively or where they refuse to bargain should be identified. The
right to bargain collectively encompasses a wide range of activity – itincludes all negotiations that take place between a trade union and abusiness enterprise to determine working conditions (including healthand safety), terms of employment and procedural matters. Collective
bargaining can involve multiple employers or employer organisations.
The outcome of collective bargaining is usually a written agreement
intended to be binding on both parties, whether or not it is enforceable
in courts. The failure to implement an agreement can mean that there
is also a failure to respect the human rights of workers. Although theoutcome of collective bargaining is voluntary for both parties, the rightto bargain collectively limited to workers and not enterprises.
The excessive use of short term contracts can prevent workers fromorganising due their precarious employment status.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

149

II. MODULE 6. TRADE UNIONS AND COLLECTIVE BARGAINING

Seek to prevent or mitigate harm in the enterprise’s supply chain

•

•
•

•

The enterprise should use its leverage with a supplier to prevent antiunion practices in its supply chain. However, if the supplier does notshow measureable improvement after a reasonable amount of time(e.g. 6-9 months), the enterprise is encouraged to suspend orders
until the supplier has demonstrated improvement.
The enterprise should address any of its own activities which may
contribute to or increase the risk of anti-union activities, such as itspurchasing practices. See Box 4 on responsible purchasing practices.
Enterprises may collaborate at a sector-level to increase leverage with
suppliers. Enterprises may also enter into direct agreements with tradeunions, such as through global framework agreements or freedom of
association protocol agreements to implement standards on tradeunion rights in the supply chain. See Introduction and Box 13.
In cases in which severe human rights impacts have been identified,such as violence against trade unionists, the enterprise should
disengage. See section 3.2.5 for information on responsible
disengagement.

Box 13. Protocol agreements
Freedom of association protocol agreements establish a joint understanding andcommitment between trade unions and enterprises regarding the implementation of
freedom of association within industrial relations within a specific context. They may
be established locally between a single brand, supplier and trade union or at aregional and sector-wide level between a group of buyers, suppliers and tradeunions. Protocol agreements may be legally binding.
If choosing to establish a protocol agreement, it is recommended that:•all parties enter the negotiation of the protocol agreements with best faithefforts;••

the protocol agreement take into consideration the local context;
brands and buyers provide business incentives for suppliers to comply in theform of longer-term sourcing contracts

The effectiveness of the protocol relies partially on the establishment of an
operational and effective dispute resolution mechanism. Protocols are therefore
encouraged to establish mutually acceptable protocols for resolving disputes
through, for instance, the appointment of private conciliators, mediators or
arbitrators.

150OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 6. TRADE UNIONS AND COLLECTIVE BARGAINING

Selected international instruments and standards• OECD Guidelines for Multinational Enterprises, Chapter IV. Human Rights• OECD Guidelines for Multinational Enterprises, Chapter V. Employment andIndustrial Relations• ILO Freedom of Association and Protection of the Right to Organise Convention,
1948 (No. 87)• ILO Right to Organise and Collective Bargaining Convention, 1949 (No. 98)• ILO Workers' Representatives Convention, 1971 (No. 135); Recommendation 1972
(no 143)• Universal Declaration of Human Rights Article 23• International Covenant on Civil and Political Rights Article 22• International Covenant on Economic, Social and Cultural Rights, Article 8
Resources• Freedom House (2010), The Global State of Worker’s Rights, includes an assessmentof the Freedom of Association in 165 countries.

• NAFTA Labor Secretariat has produced substantive analysis of workers’ freedom of
association in member countries.

• Committee on Monitoring International Labor Standards, National Research Councilof the National Academies (2004), Monitoring International Standards: Techniquesand Sources of Information, the National Academies Press.

• ILO Committee on Freedom of Association and Committee of Experts on the
Application of Conventions and Recommendations.

• For information on relevant ILO standards see the ILO Helpdesk.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

151

II. MODULE 7. WAGES

Module 7. Wages
The scope of due diligence on wages should include both wage
compliance with national law and alignment with the OECD Guidelines thatwages satisfy the basic needs of workers and their families. 56 This module istherefore divided into two sections: Wage Compliance with National Law
and Wages satisfy the basic needs of workers and their families.

Wage Compliance with National Law
Embed responsible business conduct in enterprise policy andmanagement systems
PolicyIn addition to adopting a policy commitment on wages, enterprises areencouraged to adopt policies on risk factors for non-compliance with wages(where appropriate), such as the recruitment and hiring of migrant workers,
sub-contracting, etc. See Box 14.

56.

152

The OECD Guidelines, V.4b state that “When multinational enterprises
operate in developing countries, where comparable employers may not exist,
provide the best possible wages, benefits and conditions of work, within theframework of government policies. These should be related to the economic
position of the enterprise, but should be at least adequate to satisfy the basic
needs of the workers and their families.” Reference should also be made to
Chapter V of the Guidelines, which recommends that enterprises respecthuman rights as expressed in the International Bill of Human Rights,
including ICESCR.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 7. WAGES

Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise
Wage non-compliance is a risk at all stages of the garment and footwear
supply chain that are labour-intensive and employ low-income workers.
Enterprises are therefore encouraged to focus their scoping exercise on
country risk factors. All countries that do not have strong regulatory
enforcement of wages or lack effective collective bargaining mechanisms
may be considered higher-risk for wage non-compliance.
Additional example risk factors include:•

Multiple rates for minimum wages.

•

Workers are paid piece-rate.

•

The sector employs high rates of migrant workers. 57•

The sector employs high rates of informal workers.

•

Workers live on-site. 58•••

Employers employ high rates of young workers and/or
apprentices.
Workers are paid in cash rather than electronically (or by othertraceable means).
Workers have high illiteracy rates and/or low-levels of education.

Supplier assessments
Enterprises may prioritise supplier assessments in sourcing countries
that hold higher-risk of non-compliance with minimum wage laws.
The supplier assessment should provide assurance of compliance withnational minimum wage. This may be difficult to ascertain in-practice as
57.

Migrant workers may lack knowledge of domestic laws and recourse to raisegrievances. Migrant workers are also vulnerable to wage discrimination.

58.

Deductions in payments for onsite housing may increase the risk thatworkers are not paid legal wage limits.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

153

II. MODULE 7. WAGES

suppliers are often reluctant to share the break-down of their expenses.
Independent third-parties that are trusted by both parties and are not engaged
in price-negotiations may help to alleviate fears that transparency in costs
will lead to changes in pricing. Enterprises are encouraged to rely on
existing guidance on how to assess suppliers for wage compliance. Those
conducting assessments should have a strong understanding of national
labour laws. 59
In addition to wage compliance with national laws, assessments should
also cover: whether workers are adequately informed of their wages,
payments are made on-time, workers are provided with clear wage statementsthat they can read; workers are free to choose how they spend their wages;
deductions are reasonable and in accordance with national law and collective
agreements; compulsory bonuses and/or allowances are provided, legallyrequired leave is paid including maternity leave, see Module 7, Working time;and all relevant social security contributions are paid, collected andsubmitted. 60 To the extent feasible, supplier assessments should likewise
cover wage discrimination and seek to assess whether workers are paid
different wage levels due to factors such as gender, race, nationality, etc.
Supplier assessments should include engagement with workers and tradeunions and representative organisations of the workers’ own choosing.

Cease, prevent or mitigate harm in the enterprise’s own operations
The enterprise should develop a corrective action plan (CAP) to prevent
non-compliance with wage legislation. Example components of a CAP
include:•Increase worker awareness – for example, through training,
resources (e.g. booklets), workshops and ongoing support.
Example training and information provided to workers may cover:− minimum wage requirements− how to read a payslip− how to calculate wages, benefits and other forms ofcompensation− procedures for wage adjustments (as relevant).

154

59.

See also the French NCP Report on Implementation of the OECD
Guidelines in the Textile and Clothing Sector.

60.

See Better Work, Guidance Sheet 5: Compensation.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 7. WAGES•

Establish management systems to mitigate the risk of noncompliance:− Provide training to human resources or other relevant staff
responsible for the payment of wages. Example topics include:
national laws and relevant collective agreements; rates forregular and overtime hours; calculation of benefits; how to
calculate deductions and ensure that deductions are reasonable
and compliant with national law; record keeping.
− Provide clear wage statements to workers.
− Establish clear, complete and accurate payroll records.
− Establish payment mechanisms which reduce the risk of fraud inpayments (e.g. automated payments).

•

Mitigate the risk of insufficient resources to provide minimum
wages by improving systems to plan production and establishingeffective financial management and planning systems.

Seek to prevent or mitigate harm in the enterprise’s supply chain

•
•
•

•

The enterprise should assess and prevent its contribution to harmthrough its price negotiations and purchasing practices. See Box 4
on responsible purchasing practices.
The enterprise is encouraged to direct sourcing towards suppliers
that comply with national minimum wages and negotiated wages.
The enterprise is encouraged to support its suppliers to prevent or
mitigate harm, where feasible, by providing technical guidance –for example on record keeping and financial management systems– and facilitating linkages to local service providers whereavailable and appropriate (e.g. to provide automated payments toworkers).
In recognition of the links between wages, collective bargaining
and working time, the enterprise is also encouraged to conduct
due diligence on these sector risks, See Module 4 and Module 6.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

155

II. MODULE 7. WAGES

Provide for or co-operate in remediation where appropriate
Determine the appropriate form of remedy
Compensation is often the most appropriate form of remedy; however,remedy should meet the Guidance in section 6.4.

Wages satisfy the basic needs of workers
and their families
Identify potential and actual harm in the enterprise’s own operations
and in its supply chain
Scoping exercise
The enterprise is encouraged to identify countries that it sources from in
its supply chain where wages do not meet the basic needs of workers andtheir families. See Box 14 below for recommendations on how to do this.
Enterprises should be aware of categories of workers who may be excluded
from minimum or negotiated wages and therefore vulnerable to wages that
do not satisfy basic needs. Examples of vulnerable workers include:•

workers employed in the informal economy•

international migrant workers 61•

workers paid through piece-rate versus hourly wages

Where feasible and reasonable, enterprises should prioritise further due
diligence in countries with the greatest discrepancy between the actual
wages and the wage necessary to satisfy basic needs.

Supplier assessments
In light of the fact that risk is prevalent across a sourcing country,
individual supplier assessments may not provide any new information.
Enterprises are encouraged to consult with stakeholders, most importantly
workers and trade unions and representative organisations of the workers’
own choosing, to understand the severity of the discrepancy between real
wages and wages that satisfy the basic needs of workers and their families.
61.

156

Wage rates may differ for international migrant workers and domestic
workers.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 7. WAGES

Box 14. Identification of higher-risk sourcing countries
Identifying countries that are higher-risk for wages that do not meet the basic
needs of workers and their families can be challenging in practice. Countries often
have several rates for minimum wages, which can vary by region, age of worker,
economic activity or professional occupation. This can make it difficult to estimate
one minimum wage level per country per sector. Furthermore, whether theapplicable wage rate satisfies basic needs of the worker and their families isdependent on the local cost of a basket of basic goods and services in the local
context and on the number of dependent family members.
The cost of living may be used to compute the cost for basic needs and thencompared with minimum wage levels in the sector. Enterprises may also compare
minimum wages to wages in the middle of the country wage spectrum (the socalled “median wage”). Median rather than mean earnings provide a better basis
for international comparisons as it accounts for differences in earnings dispersion
across countries. Another approach is to calculate a threshold wage (e.g. 60% of
the median wage in the country) and compare it with the minimum or negotiatedwage in the sector. Enterprises may consider the most relevant minimum wage,
which is defined as the rate applicable to the largest number of workers within the
sector in a given country.
The prevalence of excessive overtime in many cases is an indicator that wages
that do not meet the basic needs of workers and their families.
Given the complexity, enterprises are encouraged to collaborate at an industry
level with workers, trade unions and experts to identify high-risk countries.

Seek to prevent or mitigate harm in the enterprise’s supply chain
Bilateral engagement with suppliers may not be sufficient to increase
access to wages that meet the basic needs of workers and their families.
Within this context, enterprises in consultation (and collaboration whereappropriate) with trade unions and other enterprises, may consider engaging
at a national or sector-wide level to demonstrate support for effective wage
fixing and enforcement mechanisms.
Enterprises should consider the following factors in making thisdetermination:••

the severity of risk of wage discrepancy between actual wage andwage necessary to satisfy basic needs;
the political will of the government;

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

157

II. MODULE 7. WAGES••

the current effectiveness of existing wage-setting mechanisms;
the leverage of the industry broadly with government (e.g.
percentage of economy’s total merchandise exports).

Broader engagement may take a number of forms and the nature ofengagement should reflect the specific context. Example forms ofengagement include:•••

Collaborate with other enterprises to jointly indicate support forwages that satisfies the basic needs of workers and their families;
and/or industry-wide collective agreements to be registered andlegally enforceable under national laws;
Encourage suppliers to negotiate towards a wage that meets basic
needs;
Commit to continued sourcing in high-risk countries if wages arenegotiated and incorporated into national law to support wages
that meet basic needs.

Enterprises are encouraged to develop strategies for joint action in
relation to the above. However, engagement with government can be a longprocess. Enterprises should focus on compliance with national law and theright to establish or join a trade union and representative organisations of theworkers own choosing and the right to collective bargaining while
continuing to engage government on the above.

Selected international instruments and standards

158•OECD Guidelines for Multinational Enterprises, Chapter V, Paragraph 4.b.

•ILO Protection of Wages Convention, 1949 (No. 95) and Recommendation, 1949
(No.85).

•ILO Minimum Wage Fixing Convention, 1970 (No. 131) and Recommendation,1970 (No.135).

•

ILO Protection of Workers’ Claims (Employer’s Insolvency) Convention, 1992
(No.173) and Recommendation, 1992 (No.180).

•

UN Charter on Social, Economic and cultural rights, Article 7.

•

Universal Human Rights Declaration, Article 23.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. INTRODUCTION TO ENVIRONMENTAL MODULES

Introduction to environmental modules
The garment and footwear sector is highly diverse with end products
ranging from ready-made-garments to protective footwear to luxury goods.
Each stage of the supply chain has an impact on the environment. However,
due to the wide variance in processes, inputs and outputs, the extent andnature of that environmental impact varies greatly from one stage to thenext.
Modules 8-11 provide guidance on how to conduct due diligence on
environmental issues primarily found in the raw material production andmanufacturing stages of the garment and footwear supply chain. Issues
covered in these modules have been selected based on known environmental
risks in the sector; however, they are not comprehensive. When scoping
risks in its supply chain an enterprise may identify different environmental
risks from those included in modules 8-11.
A significant portion of product-related environmental impacts can be
influenced during the product design phase. Therefore, as a component ofdue diligence, enterprises should take steps to understand the environmental
risks linked to their products and adopt controls during the product designphase to reduce the environmental risk of their product lines. 62 In thisregard, enterprises should consider the environmental characteristics of a
product alongside other features, such as feasibility, cost and demand, whenassessing products for development. When determining whether to take aproduct from design to development considerations may include:••
62

Material choice: Over the full extent of production, somematerials hold greater risks of adverse impacts than others. This is
likewise true for the packaging of a product.
Use phase (e.g. wearing, washing, drying, ironing and repairing):
Many environmental impacts – notably water use and energy

The number of an enterprise’s product lines may affect the nature and extent
of due diligence.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

159

II. INTRODUCTION TO ENVIRONMENTAL MODULES

consumption – occur during the use of a product, specifically its
laundering.

•

End of life: The overall impacts of a product on the environment
are also affected by whether the product goes to landfill orwhether it can be reused or recycled and the ease of reuse andrecycling. Additionally, products with very short use phases (e.g.
worn for only 3-6 months), may contribute more to resource
depletion than longer-lasting products.

Generally, enterprises are encouraged to consider the environmental
impacts of a product across its full life cycle to the extent possible; however,
the enterprise may take a risk-based approach and prioritise the most severerisks.

160

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 8. HAZARDOUS CHEMICALSModule 8. Hazardous chemicals
This module focuses on the environmental impacts of hazardous
chemicals. For information related to health and safety risks, see Module 5,
Occupational health and safety.
Identify potential and actual harms in the enterprise’s own operations
and in its supply chain

Scoping
The enterprise should:

•

•

•
•

Scope the chemicals commonly used in the production of goods
within its sub-sector, with an emphasis on identifying harmful andhazardous chemicals and restricted chemicals. Enterprises areencouraged to rely on existing resources.
Identify higher-risk stages in its own operations and in its supply
chain for the use of harmful and hazardous chemicals andrestricted chemicals. For most enterprises operating in thegarment and footwear supply chain, the highest risk is found at
textile production and tanneries.
Identify higher-risk countries for the use of hazardous chemicals,
which include those that do not adequately regulate the use ofchemicals or enforce existing regulations.
Establish an inventory of chemicals being used in the production
and manufacturing of the enterprise’s products (taking a riskbased approach).
‒ As a starting point, the enterprise may identify the mostcommon chemical groups used in the production of its
products and systematically work towards a morecomprehensive inventory of chemicals.
‒ An enterprise with numerous and diverse product lines mayprioritise the assessment of products that are associated with

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

161

II. MODULE 8. HAZARDOUS CHEMICALS

higher-risk for hazardous chemicals first and systematicallywork towards establishing a more comprehensive inventoryof chemicals.

Supplier assessments

•

•
•
•

Enterprises should work towards identifying suppliers operating inhigher-risk countries at higher-risk stages (e.g. textile production
and tanneries) of the supply chain for harmful and hazardous
chemicals.
Enterprises may rely on existing guidance and may engage inexisting credible industry initiatives to assess suppliers.
Supplier assessments should include on-site visits, chemical tests
and quality certificates.
Where relevant, enterprises are encouraged to determine whether
printing or other processes that are higher-risk for use ofhazardous and harmful chemicals are conducted in-house by the
supplier or subcontracted.

Cease, prevent or mitigate harm in the enterprise’s own operations
As part of its corrective action plan (CAP), the enterprise is encouraged
to:

•

63.

Support the development of and adopt a common industry-wide
Manufacturing Restricted Substances List (MRSL) for the sector
based on a credible scientifically-based assessment of hazards(environmental risk assessment and health risk assessment). 63

An environmental risk assessment includes hazard identification, hazard
characterisation, exposure assessment and risk characterisation. The first two
steps are regarded as the process of hazard assessment. The methodology ofthe environmental risk assessment should align with OECD guidance. See
OECD Environmental Risk Assessment Toolkit.
A human health risk assessment also includes hazard identification, hazard
characterisation, exposure assessment and risk characterisation. The
methodology of the health risk assessment should align with the World
Health Organisation guidance. See International Programme on Chemical
Safety, WHO Human Health Risk Assessment Toolkit: Chemical Hazards.
Health risks are also addressed in Module 5, Occupational Health and
Safety.

162

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 8. HAZARDOUS CHEMICALS•Support the development of and adopt a common industry-wide
Research List for known harmful or hazardous chemicals thathave not yet been restricted through regulation and for which no
viable substitute has yet been found. Enterprises should not use
harmful or hazardous chemicals on the Research List indefinitely
but should aim to phase out chemical use as viable alternatives are
identified within a reasonable amount of time. Research Lists
should be communicated with chemical suppliers.

As part of its corrective action plan, the enterprise should:

•
•

•
•

•

64.

Stop using banned chemicals on the MRSL immediately.
Identify and use substitutes for chemicals on the MRSL based on
scientific data and internationally accepted methodology forassessing hazards. The enterprise may use existing credible
substitution lists. The enterprise should seek to ensure that tradeoffs with other potential impacts (e.g. water or energy) areevaluated before adopting substitutes.
Implement best available techniques (BAT) as defined by Best
Available Techniques Reference Documents for the sector or subsector. 64
Implement a robust chemical management plan at the site-level,
including safe chemical storage, labelling of chemicals, use of
personal protective equipment and the availability of safety data
sheets to anyone that handles chemicals. For example, where an
exposure pathway exists between the hazard and worker, prevent
harm first by elimination, substitution, or complete isolation
through engineering controls; secondly, if this is not possible
through control of the hazards through barriers, isolation, guards,
shielding, or effective local ventilation; and as a last resort,
through personal protective equipment. The enterprise isencouraged to rely on existing guidance and standards forchemical management.
Provide adequate training to management and workers on
chemical use, storage, etc.

See Integrated Pollution Prevention and Control, Best Available Techniques
Reference Document for the Textiles Industry, 2003).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

163

II. MODULE 8. HAZARDOUS CHEMICALSThe enterprise may assess if the business model in place provides
incentives for know-how exchange and resource efficiency, or rather
stimulates resource overconsumption and chemicals’ misuse. The enterprise
may choose to implement innovative business models (e.g. chemicalleasing) where appropriate to reduce the use of harmful chemicals.

Seek to prevent or mitigate harm in the enterprise’s supply chain
The enterprise is encouraged to:

•

•
•

•

•

Support the development of and adopt a common MRSL for thesector based on a credible scientifically based assessment of
hazards (environmental risk assessment and health risk
assessment).
Communicate the MRSL (and any additional expectations
regarding chemical use) to all suppliers operating at higher-riskstages of the supply chain, regardless of where they are located.
Identify substitutes for chemicals on the MRSL based on scientific
data and internationally accepted methodology for assessing
hazard and risk. The enterprise may use existing credible
substitution lists. The enterprise should seek to ensure that tradeoffs with other potential impacts (e.g. water or energy) areevaluated before adopting substitutes.
Support its suppliers in the implementation of corrective actionplans. While engaging with suppliers on chemical management,
enterprises are encouraged to designate a point of contact forchemical management and communicate it to the supplier. In
return, the supplier should establish a point of contact forchemical management with the enterprise.
Establish a policy on subcontracting, if common practice, tomitigate the risk of harm linked with subcontracted suppliers. See
Box 2 on subcontracting.

The enterprise is encouraged to continue to engage with its supplierduring the implementation of the CAP. However, if the supplier continues tonot comply with limits or usage bans for hazardous chemicals on the MRSL,
the enterprise should suspend orders or disengage until the supplier has
stopped using those chemicals.

164OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 8. HAZARDOUS CHEMICALS

Selected international instruments and standards•

OECD Guidelines for the Testing of Chemicals•

OECD Principles of Good Laboratory Practice (GLP)•

OECD Recommendation of the Council on Implementing Pollutant Release andTransfer Registers (PRTRs)•

OECD Guidelines for Multinational Enterprises, Chapter VI. Environment.

Resources•

Environmental Risk Assessment Toolkit, OECD.

•Enterprise-level indicators for resource productivity and pollution intensity,
UNIDO / UNEP RECP Programme.

•

World Health Organization (WHO) Human Health Risk Assessment Toolkit.

•

OECD (2011), “Chapter 2: SIDS, The SIDS Plan and the SIDS Dossier” in the
Manual for Investigation of HPV Chemicals, Organisation for Economic Cooperation and Development.

•

UN (2011), The Globally Harmonized System of Classification and Labelling ofChemicals (GHS), Fourth revised edition, United Nations, New York and Geneva.

•

OECD eChem Portal•

OECD Pollutant Release and Transfer Register•

OECD Portal on Perfluorinated Chemicals•

OECD, “OECD Substitution and Alternatives Assessment Toolbox (OECD
SAAToolbox),” Organisation for Economic Co-operation and Development, Paris.

•

European Chemical Substances Information System (ESIS)•

Environment and Climate Change Canada, Clearing House, Textile Mills andClothing Manufacturing•OECD, Emission Scenario Documents (ESD)•OECD Substitution and Alternatives Assessment Toolbox (OECD SAAToolbox)•

OECD, Frameworks and Guides for Substitution of Chemicals, OECD MetaReview (OECD)•

Chemical Leasing Programme (UNIDO)OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

165

II. MODULE 9. WATER

Module 9. Water
Water consumption
Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise••

In the garment and footwear supply chain, the most waterintensive processes are cotton growing, tanneries and textile
production (e.g. pre-treatment, dyeing/printing and finishing).
The enterprise should determine whether cotton growing, leather
tanneries and textile production (and all other water-intensive
processes) in its supply chain are occurring in water-stressed
areas, to the extent feasible. 65 Enterprises are encouraged to use
existing resources to identify water-stressed areas. 66

Supplier assessment•

166

Enterprises should prioritise suppliers operating at higher-riskstages and higher-risk countries or water-stressed areas. For many
operating in the garment and footwear sector, this means
assessing at cotton production, tanneries and textile production inhigher-risk countries or in water-stressed areas.

65.

Water stress occurs when the demand for water exceeds the available
amount during a certain period or when poor quality restricts its use. Water
scarcity, water quality, environmental flows and the accessibility of water
impact water stress.

66.

See OECD (2015).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 9. WATER•

It may be difficult to identify individual suppliers operating
upstream from the enterprise. Enterprises are encouraged to apply
the recommendations in Box 3.

Cease, prevent or mitigate harm in the enterprise’s own operations•••

The enterprise is encouraged to implement best available
techniques (BAT) as defined by Best Available Techniques
Reference Documents for the sector or sub-sector. 67
Where there is a risk of harm to the environment, the enterprise isencouraged to avoid reference to the lack of full scientificevidence as a reason for postponing cost-effective measures toprevent or minimise such damage, consistent with the scientificand technical understanding of the risks, taking into account risks
to human health and safety.
Enterprises may also rely on existing guidance on how to promotewater efficiency and/or reduced dependence on fresh water at
textile production, tanneries and cotton growing. Example
methods are likely to include: investment in water-saving
equipment; water re-use and reduction in water usage (forexample in dyeing). Policy and training should support any water
management plan.

Seek to prevent or mitigate harm in the enterprise’s supply chain

•

•

67.

The enterprise should determine whether it can source from water
stressed areas responsibly – for example, by promoting water
efficiency and/or reducing process dependence on fresh wateramongst its suppliers. When considering expansions, enterprises
should also consider ways of addressing net increase in water
demand.
In cases in which the enterprise cannot source from water-stressed
areas responsibly, it should direct its sourcing to regions that are
not water-stressed.

See IPPC (2003).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

167

II. MODULE 9. WATER••

In cases in which the enterprise determines that it can source fromwater-stressed areas responsibly, it is encouraged to support its
suppliers in the development and implementation of water
efficiency plans and/or reduce process dependence on fresh water.
Enterprises should communicate with their suppliers on why water
efficiency is important to the community and to their business.

Pollution and wastewater management
Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise••

The enterprise should identify stages in its supply chain that areassociated with higher-risk for water pollution and the need foradequate wastewater management. In the garment and footwear
sector, these are likely to be cotton growing and wet-processing(textile and leather).
The enterprises should determine whether wet processing islocated in higher-risk countries. Elements to consider include:− Does the country (or production cluster) have adequate
wastewater infrastructure?
− Does the country adequately enforce its wastewater regulations(i.e. are there credible inspections)?

•

•

68.

168

Country-level data may not be sufficient in determining the above.
Local-level conditions should be taken into account (e.g. risk ofleakage to soils and aquifers; the dilution capacity and thesensitivity of the receiving waters).
In relation to cotton, the enterprise should determine whether
cotton is grown in upper catchment areas and therefore poses
higher-risks of contaminating the water basin. 68

UNEP (2010), “Sick Water, The Central Role of Wastewater Management in
Sustainable Development; A Rapid Response Assessment”, United Nations
Environment Programme, Geneva.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 9. WATER•Enterprises should determine if cotton growing is occurring incountries with poor regulation and enforcement of chemical use(e.g. fertilisers and pesticides) in cotton growing.

Supplier assessment••

Enterprises should prioritise suppliers operating at higher-riskstages and higher-risk countries or higher-risk locations (e.g.
upper catchment areas). For many enterprises operating in thegarment and footwear sector, this means assessing at cotton
production, tanneries and textile production in higher-riskcountries or higher-risk locations.
It may be difficult to identify individual suppliers operating
upstream from the enterprise. Enterprises are encouraged to apply
the recommendations in Box 3.

Cease, prevent or mitigate harm in the enterprise’s own operations•••

The enterprise is encouraged to implement best available
techniques (BAT) as defined by Best Available Techniques
Reference Documents for the sector or sub-sector. 69
Where there is a risk of harm to the environment, the enterprise isencouraged to avoid reference to the lack of full scientificevidence as a reason for postponing cost-effective measures toprevent or minimise such damage, consistent with the scientificand technical understanding of the risks, taking into account risks
to human health and safety.
Enterprises may also rely on existing guidance, some of which areincluded below. Common components of a corrective action plan
(CAP) are likely to include:
Cotton Growing− responsible chemical management of fertilisers and pesticides− optimisation of water use, irrigation practices− implementation of best available techniques (where feasible)69.

See integrated IPPC (2003).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

169

II. MODULE 9. WATER− farmer training and capacity building
Wet processing (Textile and Tanneries)− responsible chemical use, see Module 8. Hazardous chemicals− effective wastewater management – effective, operation andmaintenance of effluent treatment plant (ETP)− technical training for operation and maintenance of ETP on
basic water flow within the factory, function of wastewater
treatment steps, measurement of wastewater and sample
collection and analysis.
− support of water management that results in zero liquid
discharge or water recycling (where feasible).

Selected international instruments and standards•

OECD Guidelines for Multinational Enterprises, Chapter VI. Environment.

•

OECD Principles on Water Governance

Resources

170•

OECD (2015), Stakeholder Engagement for Inclusive Water Governance,
OECD Studies on Water, OECD Publishing, Paris.

•

OECD (2015), “Securing Water, Sustaining Growth”, Report of the
GWP/OECD Task Force on Water Security and Sustainable Growth,
Organisation for Economic Co-operation and Development, Paris.

•

IPPC (2003), Best Available Techniques Reference Document for the
Textiles Industry, European Commission, Brussels.

•

IPPC (2013), Best Available Techniques Reference Document on theTanning of Hides and Skins, European Commission,, Brussels..

•

UNGC (2010), The CEO Water Mandate, Guide to Responsible Business
Engagement with Water Policy, United Nations Global Compact, Geneva.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 10. GREENHOUSE GAS EMISSIONS

Module 10. Greenhouse gas emissions
Climate change is an overarching challenge that concerns society as awhole. As important users of energy and large sources of emissions,enterprises in the garment and footwear sector have a role to play intransitioning to a low-carbon economy.
This module does not provide comprehensive guidance on how tomeasure and reduce an enterprise’s greenhouse gas (GHG) emissions.
Rather, this module is intended to highlight the issues related to greenhousegasses in the sector within the due diligence framework. Enterprises areencouraged to refer to existing guidance on how to measure, reduce, monitor
and report GHG emissions in their own operations and in their supply
chains.

Measure greenhouse gas emissions
Measuring GHG emissions is a critical first step to reducing the carbon
footprint of an enterprise’s activities. It helps an enterprise to assess its
impact on the climate and to design cost-effective emission reduction plans.
Enterprises can measure GHG emissions at a number of different levels.

•

Own operations: Enterprises are encouraged to work towards

KEY TERMS
CO2-e (or CO2 equivalent) - The universal unit of measurement to indicate theglobal warming potential (GWP) of each of the six greenhouse gases expressedin terms of the GWP of one unit of carbon dioxide. It is used to evaluate releasing(or avoiding releasing) different GHG against a common basis.
Greenhouse Gases (GHG) - The atmospheric gases responsible for causing
global warming and climate change. The major GHGs are carbon dioxide (CO2),methane (CH4) and nitrous oxide (N2O). Less prevalent – but very powerful –greenhouse gases are hydrofluorocarbons are hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). GHG emissions refers
to the release of GHGs into the atmosphere.
Source: OECD, Transition to a Low-carbon Economy: Public Goals and Corporate Practices, 2010

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

171

II. MODULE 10. GREENHOUSE GAS EMISSIONS

measuring the GHG emissions that are a result of their own
activities – these may include activities owned or controlled by
the enterprise that release emissions straight into the atmosphere(i.e. direct emissions), or the enterprise’s consumption ofpurchased electricity, heat, steam and cooling (i.e. energy indirectemissions).

••

Supply Chain: Enterprises can measure their full supply chain
emissions impact in order to focus their efforts on the greatest
GHG reduction opportunities, leading to more sustainabledecisions about the enterprise’s activities and the products theybuy, sell and produce.
Product: Enterprises can measure the GHG emissions andremovals associated with a specific product. GHG product life
cycle analysis enables an enterprise to make informed choices toreduce GHG emissions from the products they design,
manufacture, sell, purchase or use.

Enterprises with limited resources are encouraged to start by measuring
the GHG emissions that are a result of their own operations and activities.
Enterprises are likewise encouraged to share data on GHG emissions linked
with common materials and processes with other industry actors.

Reduce emissions
As with other issues in the enterprise’s supply chain, the enterprise may
take a risk-based approach to addressing its GHG emissions by focusing its
resources where GHG emissions are greatest. When seeking to reduce
emissions in their supply chain, enterprises are encouraged to use theirleverage with suppliers to encourage suppliers to reduce emissions and/or to
support suppliers directly in implementing measures to reduce GHG
emissions.
Enterprises are encouraged to avoid reference to the lack of fullscientific evidence as a reason for postponing cost-effective measures toprevent or minimise GHG emissions, consistent with the scientific andtechnical understanding of the risks.

172OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 10. GREENHOUSE GAS EMISSIONS

Table 13. Example measures to reduce GHG missions and monitor improvements at
different stages of a product’s life cycle
Risk Factor

Example measures to reduce GHG emissions and monitor improvements

Fibre selection

Consider the potential GHG emissions of a material alongside other features, suchas feasibility, cost and demand when designing a product.1 For example, synthetic
fibres often have comparatively high GHG emissions as a result of energy required
for raw material production. Conversely, plant fibres, such as cotton or linen, havecomparatively low GHG emissions from production, with linen having substantiallylower production-phase emissions, because of its comparatively low need forpesticides and fertilisers and irrigation.2

Textile finishing•

Establish an energy management plan at the site-level that includes
company-wide coordinated measures for energy management•

Implement best available techniques (BAT) as defined by Best Available
Techniques Reference Documents for the sector or sub-sector3•

Implement energy efficiency measures (e.g. energy conservation technology,
optimisation of steam generation and pressurised air, waste heat recovery
from waste water and waste gas, process optimisation, etc.)•

Implement energy conservation measures (e.g. implementation of energy
saving through improvements in the process and reaction conditions) 4•

Increase efficiencies and quality so as to reduce need for re-processing due
to failures•

Install and operate accurate meters and/or measuring software as afundamental step to benchmarking performance and to initiating efficiency
improvement•

Reduce the need for urgent airfreight by implementing responsible
purchasing practices as outlined in Box 4. Consider the location of
warehouses and distribution centres in relation to where products are
sourced and sold so as to reduce transportation needs.

•

Require freight transporters to track and communicate CO2 emissions data5•

Track emissions (in relation to transport) quarterly across business units (e.g.
manufacturing and assembly units, distribution centres and customer
centres)•

Reduce size of packaging•

Use resources which can be reused or recycled

Transportation

PackagingOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

173

II. MODULE 10. GREENHOUSE GAS EMISSIONS

Risk Factor

Example measures to reduce GHG emissions and monitor improvements

Use phase•

Use materials which can be reused or recycled6

The use phase is often
the largest contributor to
GHG emissions•

Design durable products that have a longer use phase•

Increase customer awareness on behaviour that reduces carbon emissions
such as: washing clothing less frequently (i.e. not after every use); washingclothing in cool water; using concentrated laundry detergents with lesspackaging; air-drying clothing; adjust drying processes based on fabric type7•

Consider the potential GHG emissions of a product alongside other features,such as feasibility, cost and demand when assessing which materials to use
in a product.8

Notes.
1.

The specific fibre type may also affect the use-phase. For example, some fibres, such as linen are more likely to beironed. Other fibres, such as polyester, may need less energy to dry.

2.

BSR (2009), Apparel Industry Life Cycle Carbon Mapping.

3.

See integrated (2003), Integrated Pollution Prevention and Control (IPPC), Best Available Techniques Reference
Document for the Textiles Industry, European Commission.

4.

In some cases it has been found effective to separately consider general management techniques for reducing energy
consumption and process-specific techniques to be developed in each specialised technical field. UNIDO and Ministryof International Trade and Industry (MITI) Japan, Output of a Seminar on Energy Conservation in the Textile Industry,(1992).

5.

While freight forwarders are increasingly tracking CO2 data, there remains a wide variance in the extent of data tracked
and communicated with customers.

6.

However, LCAs demonstrate that GHG emissions related to garment disposal are very small and generally result fromsmall amounts of methane created during decomposition of natural fibres. See BSR, Apparel Industry Life Cycle
Carbon Mapping, (2009).

7.

The OECD Guidelines reflect the expectation that companies “promot[e] higher levels of awareness among customersof the environmental implications of using the products and services of the enterprise”. OECD Guidelines, VI, 6c.

8.

The specific fibre type may also affect the use-phase. For example, some fibres, such as linen are more likely to beironed. Other fibres, such as polyester, may need less energy to dry.

174

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 10. GREENHOUSE GAS EMISSIONS

Communicate
The Greenhouse Gas (GHG) Protocol is the internationally recognised
standard for the corporate accounting and reporting of GHG emissions. 70
Collaboration
Enterprises are encouraged to collaborate in measuring, reducing, monitoring
and reporting GHG emissions. Example forms of collaboration include:•

Developing sector-wide tools for measuring and tracking GHG emissions onparticular fibres, products and production processes•

Sharing good practices for reducing GHG emissions•

Requesting a clear road map from governments on climate change.

Collaboration is particularly relevant for SMEs who may lack the resources toadequately measure GHG emissions across the full length of their products or
supply chain.

Resources•

Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting andReporting Standard•

Greenhouse Gas Protocol Product Life Cycle Accounting and Reporting Standard•(2003), Integrated Pollution Prevention and Control, Best Available Techniques
Reference Document for the Textiles Industry, European Commission.

•(2010), “NRDC’s Ten Best Practices for Textile Mills to Save Money and Reduce
Pollution”, Clean by Design, National Resource Defence Council.

•

Industrial Assessment Center as part of the US Department of Energy.

•

Hasanbeigi, A. (2010), Energy-Efficiency Improvement Opportunities for the
Textile Industry

70.

The GHG Protocol is a multi-stakeholder partnership convened by the WRI
and the WBCSD. The GHG Protocol develops internationally accepted GHG
accounting and reporting standards and tools and promotes their adoption inorder to achieve a low emissions economy worldwide.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

175

II. MODULE 11. BRIBERY AND CORRUPTION

Module 11. Bribery and corruption
This Module recognises that bribery and corruption are gateway crimes
for many other forms of wrongdoing addressed in this Guidance, including:child labour, forced labour, discrimination, violation of health and safety
standards and environmental standards. The OECD Anti-Bribery
Convention and 2009 Recommendation establishes legally binding
standards on States Parties to criminalise the bribery of foreign public
officials in international business transactions and provides for a host of
related measures that make this effective. It is the first and only internationalanti-corruption instrument focused on the “supply side” of the briberytransaction.

Embed responsible business conduct in enterprise policy andmanagement systems
Enterprises should consider the good practices put forth in the OECD
Good Practice Guidance on Internal Controls, Ethics and Compliance,
which include:

•

•
•

176

Strong, explicit and visible support and commitment from senior
management to the company's internal controls, ethics andcompliance programmes or measures for preventing and detecting
bribery, including the bribery of foreign public officials;
A clearly articulated and visible corporate policy prohibiting
bribery, including the bribery of foreign public officials; andOversight of ethics and compliance programmes or measures
regarding bribery, including the bribery of foreign public officials,
including the authority to report matters directly to independent
monitoring bodies such as internal audit committees of boards of
directors or of supervisory boards, is the duty of one or moresenior corporate officers, with an adequate level of autonomy
from management, resources and authority.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 11. BRIBERY AND CORRUPTION

Identify potential and actual harms in the enterprise’s own operations
and in its supply chain
Scoping exercise
When identifying bribery and corruption risks, the enterprise should
consider broad groups of risk – country, sectorial, 71 transaction, business
opportunity and business partnership. 72 It is also important that this exercise
looks at the nature and frequency of interactions with domestic or foreign
public officials and, perhaps most importantly, the enterprise’s existing andpotential types of business relationships. 73
Risk assessment should likewise look internally to examine the extent towhich internal structures or procedures may themselves add to the level ofrisk. Commonly encountered risk factors are included in Table 15. As partof this process, enterprises may assess the extent to which internal controls
are implemented in accordance with the OECD Good Practice Guidance on
Internal Controls, Ethics and Compliance.

71.

The OECD Foreign Bribery Report (Dec 2014), which analyses completed
cases of the bribery of foreign public officials from 1999 to mid-2014,shows that the Manufacturing Sector accounted for 8% of foreign bribery
cases during that period and the Agriculture Sector accounted for 4% ofcases. In addition, wholesale and retail trade accounted for 4% of such cases.
Other service activities, such as leasing, accounted for 1% of cases.

72.

See “Principle 3, Risk Assessment” of the UK Ministry of Justice (2010).

73.

The OECD Foreign Bribery Report (2014) shows that between 1999 andmid-2014, 71% of completed foreign bribery cases involved bribery using
intermediaries, including agents, legal advisors, corporate vehicles,
associates and accountants.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

177

II. MODULE 11. BRIBERY AND CORRUPTION

Table 14. External integrity risk factors
Risk Factor

ExamplesCountry factors

The enterprise is operating in high-risk jurisdiction for bribery andcorruption:

Sector risks•

perceived high levels of corruption in the public and/or private sector•

absence of effectively implemented anti-bribery legislation, including
bribery offences in the criminal law and absence of corporate liability
for such offences•

failure of foreign government, media, local business community andcivil society to effectively to promote transparent procurement andinvestment policies

The enterprise is linked to high-risk sectors. Relevant examples for the
garment and footwear sector include:

Transaction risks•

transportation and storage1•

wholesale and retail trade2•

manufacturing: inspections by local agencies in high-risk countries
may pose increased risk

When operating in a high-risk jurisdiction, certain transactions
involving public officials can give rise to higher-risks of bribery:•

public procurement, customs clearance, favourable tax treatment,
licenses and authorisations3•interaction with state-owned enterprise (SOE) officials, law
enforcement, customs, transportation, local government, environment
and procurement officials and tax authorities

Notes.
1.

See Transparency International “Corruption Perceptions Index” and the Transparency International “Bribe Payers
Index”.

2.

Wholesale and retail trade accounted for 4% of concluded cases of foreign bribery between 1999 and mid-2014. OECD
Foreign Bribery Report.

3.

Transportation and storage accounted for 15% of concluded cases of foreign bribery between 1999 and mid-2014.
OECD Foreign Bribery Report; Public procurement was involved in 57% of concluded cases of foreign bribery between
1999 and mid-2014. OECD Foreign Bribery Report.

178OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 11. BRIBERY AND CORRUPTION

Table 15. Internal enterprise integrity risk factors
Risk Factor
Policy &training

Transaction
risks

Businessrisks

Examples••••Lack of clear anti-bribery message from the top-level management••

Lack of rules and procedures regarding requests for facilitation payments from public officials.

••

Lack of clear rules on political and charitable donations.

•
•
•
•

Lack of clear controls for monitoring contract compliance.

•
•
•
•
•
•
•

Limited monitoring of contract compliance.

•

Gifts, meals and entertainment are provided to those with whom the enterprise does business in foreign
markets.

•

Unusual payment patterns, unusually high commission structures or special financial arrangements
involving the enterprise or its foreign subsidiaries and related third parties•

Business relationships with state-owned business enterprises, foreign governments (e.g. public-private
partnerships), foreign municipalities, foreign legislative bodies, foreign political parties and/or royalfamilies or families with close connections to the political elite•

Employment of foreign officials

Lack of clear message that bribery of foreign public officials is prohibited and not just bribery at home.
Limited policies and programmes are in place to support compliance with anti-bribery laws.
Deficiencies in relevant employee training, skills and knowledge of bribery risks in the enterprise’s
operations.

Lack of clarity in the organisation’s policies on and procedures for, gifts, meals and entertainment
provided to those with whom the enterprise does business in foreign markets.

Lack of clear financial controls (e.g. How are the enterprise’s bank accounts, petty cash fund andinventory monitored in foreign markets, particularly high-risk countries? What controls are in place withrespect to these assets?).

Lack of whistleblower channels and protections from retaliation for those who report wrongdoing.
Lack of training and awareness-raising for business partners.
Limited monitoring and associated controls of enterprise’s bank accounts, petty cash funds andinventory in foreign markets.

Categories of expenses in the company’s books and records that could be used to hide bribe payments.
Lack of an independent external audit.
Lack of control over business partners.
Retail outlets are maintained overseas.
Enterprise has limited control over foreign operations.
Apparent lack of qualifications or resources on the part of a joint venture partner or representative toperform the service offered.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

179

II. MODULE 11. BRIBERY AND CORRUPTION

Cease, prevent or mitigate adverse impacts in the enterprise’s own
operations and in its supply chain
Due diligence procedures to prevent or mitigate the risk of bribery
should be proportionate to the identified risk. Anti-bribery due diligencemeasures to prevent or mitigate risk should incorporate good practices as set
forth by the OECD Good Practice Guidance on Internal Controls, Ethics andCompliance. 74 Good practices include the following:•

ethics and compliance programmes or measures designed toprevent or detect bribery, including the bribery of foreign public
officials, applicable to all directors, officers and employees andapplicable to all entities over which a company has effective
control, including subsidiaries, on, inter alia, the following areas:− Gifts, hospitality, entertainment and expenses;75− customer travel;− political contributions;− charitable donations and sponsorships;− facilitation payments; 76− solicitation and extortion;− acceptance of goods; 77 and− personal investments and employment and related activities,
including but not limited to publishing seat on board of
directors and employment for spouses or other relatives.

•

180

ethics and compliance programmes or measures designed toprevent or detect bribery, including the bribery of foreign public

74.

Although the measures in the OECD Good Practice Guidance apply
specifically for the purpose of detecting and preventing the bribery of
foreign public officials, they can be applied equally to detect and prevent all
forms of bribery. However, it is important to explicitly state in relevant
documentation and in awareness-raising and training programs, that bribery
includes the bribery of foreign public officials, as this is not necessarily selfevident.

75.

Enterprises are encouraged to establish thresholds appropriate to the local
environment.

76.

OECD 2009 Anti-Bribery Recommendation

77.

See UNGC (2010).

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 11. BRIBERY AND CORRUPTION

officials, applicable, where appropriate and subject to contractual
arrangements, to third parties such as agents and otherintermediaries,
consultants,
representatives,
distributors,
contractors and suppliers, consortia and joint venture partners(hereinafter “business partners”), including, inter alia, thefollowing essential elements:− properly documented risk-based due diligence pertaining to thehiring, as well as the appropriate and regular oversight ofbusiness partners;− informing business partners of the company’s commitment toabiding by laws on the prohibitions against foreign bribery andof the company’s ethics and compliance programme or
measures for preventing and detecting such bribery; and− seeking a reciprocal commitment from business partners. 78

•

•

•

a system of financial and accounting procedures, including asystem of internal controls, reasonably designed to ensure themaintenance of fair and accurate books, records and accounts, toensure that they cannot be used for the purpose of bribery,
including the bribery of foreign public officials, or hiding suchbribery; 79
measures designed to ensure periodic communication anddocumented training for all levels of the company, on thecompany’s ethics and compliance programme or measures
regarding bribery, including the bribery of foreign public officials,
as well as, where appropriate, for subsidiaries 80
appropriate measures to encourage and provide positive support
for the observance of ethics and compliance programmes ormeasures against bribery, including the bribery of foreign public
officials, at all levels of the company

78.

For example, enterprises may incorporate anti-bribery or anti-corruption
compliance language in all third-party contracts and require that high-risk
suppliers have in place adequate procedures to prevent bribery.

79.

OECD 2009 Anti-Bribery Recommendation

80.

Face-to-face interaction, which provides opportunity for supplier personnel
to ask questions and provide feedback, is preferable, but when in-person
training is not cost-effective or practical, web-based training is a usefulalternative. See UNGC (2010), pg. 21.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

181

II. MODULE 11. BRIBERY AND CORRUPTION•

appropriate disciplinary procedures to address, among otherthings, violations, at all levels of the company, of laws against
foreign bribery and the company’s ethics and complianceprogramme or measures regarding bribery, including the briberyof foreign public officials. 81

In addition to the above, the enterprise is encouraged to:••

Implement a process to evaluate corruption risk prior to entering
into a customer supplier relationship (e.g. pre-qualification) when
operating in high-risk countries. The enterprise should establish
clear rules and procedures for choosing a supplier and forestablishing “preferred supplier” relationships.
Join and actively participate in collective anti-bribery initiatives
and multi-stakeholder processes at the sector level where
relevant; 82

Track
Enterprises may use a range of mechanisms to provide insights into
the effectiveness of procedures designed to prevent bribery andcorruption in their own operations and in their supply chain.

•

•
•

182

Staff surveys, questionnaires and feedback from training canprovide an important source of information on effectiveness and ameans by which employees and other associated persons caninform continuing improvement of anti-bribery policies. 83
Enterprises may also consider formal periodic reviews and reports
for top-level management. 84
Enterprises may seek some form of external verification or
assurance of the effectiveness of anti-bribery procedures. 85

81.

OECD 2009 Anti-Bribery Recommendation82.

For example, the Maritime Anti-Corruption Network is a network ofmaritime companies and their clients that promote good corporate practice inthe maritime industry for tackling bribes, facilitation payments and otherforms of corruption.

83.

See “Principle 6, Monitoring and Review” in UK Ministry of Justice (2011).

84.

Ibid. 8385.

Ibid. 83

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 11. BRIBERY AND CORRUPTION

Selected international instruments and standards•

The OECD Guidelines for Multinational Enterprises, VII. Combating
Bribery, Bribe Solicitation and Extortion.

•

The OECD Convention on Combating Bribery of Foreign Public Officials inInternational Business Transactions (the Anti-Bribery Convention)•

The OECD 2009 Recommendation of the Council for Further Combating
Bribery of Foreign Public Officials in International Business Transactions(the 2009 Anti-Bribery Recommendation)•2009 Recommendation on Tax Measures for Further Combating Bribery ofForeign Public Officials in International Business Transactions•

2006 Recommendation on Bribery and Officially Supported Export Credits•

United Nations Convention against Corruption (2000)

Resources•

OECD, Country Reports on the Implementation of the OECD Anti-Bribery
Convention.
www.oecd.org/corruption/countryreportsontheimplementationoftheoecdantibriberyconvention.htm•

OECD, Regional anti-corruption programmes
www.oecd.org/corruption/regionalanti-corruptionprogrammes.htm•

OECD (2006), OECD Risk Awareness Tool for Multinational Enterprises in
Weak Governance Zones, Organisation for Economic Co-operation andDevelopment, Paris.

•

OECD (2014), OECD Foreign Bribery Report: An Analysis of the Crime ofBribery of Foreign Public Officials, Organisation for Economic Co-operation
and Development, Paris.

•

OECD (2010), OECD Good Practice Guidance on Internal Controls, Ethics
and Compliance, Organisation for Economic Co-operation and Development,
Paris.

•UK Ministry of Justice (2011), The Bribery Action 2010 Guidance, UK
Ministry of Justice, London.

•

UNGC (2010), Fighting Corruption in the Supply Chain, A Guide for
Customers and Suppliers, United Nations Global Compact, Geneva.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

183

II. MODULE 12. RESPONSIBLE SOURCING FROM HOMEWORKERS

Module 12. Responsible sourcing
from homeworkers
This module is primarily targeted towards brands, garment and footwear
manufacturers and their buying intermediaries.
This module aims to minimise the risk of the marginalisation of
homeworkers, particularly the victims of extortion including throughformalisation and legalisation efforts with the objective of promoting
responsible supply chains while creating economic and development
opportunities for homeworkers. This Guidance recognises that there are noquick fixes and one-size-fits-all solutions. Governments, internationalorganisations, donors, enterprises in the supply chain and civil society
organisations may consider the opportunity to explore collaborative ways tomake use of these suggested options or other complementary approaches as
they deem appropriate in accordance with national laws.

Box 15. Framework for preventing and mitigating human rights
and labour abuses when engaging homeworkers
The following provides information on the broader framework necessary for theprevention and mitigation of human rights and labour abuses linked to homework.
Enterprises should feed into the below framework when designing their due
diligence processes, however, enterprises are not responsible for implementing allof the below recommendations on their own. Rather, the following may serve as areference to all stakeholders involved in the prevention of human rights abuses andlabour abuses when engaging homeworkers.
Homeworkers should be viewed as an intrinsic part of the workforce entitled toreceive equal treatment and therefore should be formalised in order to achieve goodterms and conditions of employment. In the context of this Guidance, formalisation is
the process by which workers are transitioned from informal to formal jobs. The
causes of informality are many and are generally unrelated to legality. For example,“self-employment status” can at times be used as a means of neglecting the
responsibility to provide more formalised contracts. In other cases, homeworkers

184OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 12. RESPONSIBLE SOURCING FROM HOMEWORKERS

Box 15. Framework for preventing and mitigating human rights
and labour abuses when engaging homeworkers (cont.)
may be coerced into homeworking in order to lower the financial cost to theemployer. Migrant workers may be particularly vulnerable due to employment
restrictions. It may be ineffective to pursue formalisation through legislative reform
alone; formalisation should be considered a process rather than a single step.1 This
formalisation process can be facilitated by:•knowing the reasons for the lack of formalisation in existing homeworker
production systems in order to identify the best strategies for incentivising andenabling formalisation;2••

acknowledging the diversity in the types and sizes of homeworker activity;•

creating and participating in collaborative initiatives to establish the modalities
and financing of support funds to assist with the formalisation process; and•promoting the legalisation of workers.

providing technical assistance to help formalise homeworkers and otherinformal workers;

Legalisation of operations
Legal identity and recognition of “worker status” and/or “entrepreneur status” areoften necessary first steps for the formalisation of workers; however this status
should not be used to exploit workers as described above.1 Enterprises, civil-society
organisations and the government can assist homeworkers to obtain contracts andother related authorisations through legitimate processes and consider otherregulatory measures to legalise operations of homeworkers. The legalisation of
homeworkers should not impose expectations for homeworkers that cannot be met
and therefore marginalise homeworkers further (e.g. the obligation to work in aparticular centre may marginalise homeworkers who can only work from home).
Organisation, representation and social dialogue
The organisation of homeworkers is an important step that provides them withvisibility and recognition and enables social dialogue in order to achieve good terms
and conditions of employment.1 Given the unique needs and circumstances ofhomeworkers, the organisation of homeworkers may look differently from otherorganised workforces. The first steps in organising is often taken by community or
women’s groups who are in a position to organise local groups which can later cometogether as a federation or trade union. Given the predominance of women
homeworkers in the sector, in many contexts organisers should be women.

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

185

II. MODULE 12. RESPONSIBLE SOURCING FROM HOMEWORKERS

Box 15. Framework for preventing and mitigating human rights
and labour abuses when engaging homeworkers (cont.)
Example forms of assistance that could be provided by trade unions and otheractors for homeworkers include awareness-raising and training on their legal rights,
legal aid, medical insurance, credit and loan schemes and the establishment of cooperatives. There is also a need to develop positive strategies to combat all forms of
discrimination, to which workers in the informal economy are particularly vulnerable.1
1. ILO (2008)
2. It is crucial that any formalisation scheme takes the local context into consideration. See ETI,
Homeworker Guidelines (2010).

Recommendations for enterprises
Identify potential and actual harms in the enterprise’s own operations
and in its supply chain•••

Homeworkers are found in many different supply chains in the
sector. While some are employed in traditional handicraft work,
such as embroidery and weaving, others are involved in morelabour-intensive processes such as machining garments. The
enterprise is encouraged to identify product lines and production
processes which may include the involvement of homeworkers.
The enterprise should identify sourcing countries where
homework is more prevalent and where homeworkers are athigher-risk of being exploited.
The enterprise should assess prioritised suppliers to determine
whether they have measures in place to source responsibly fromworkers. See example measures below.

Seek to prevent or mitigate harm in the enterprise’s own operations
and in its supply chain
The following includes example measures that an enterprise may take topromote responsible sourcing from homeworkers. Enterprises areencouraged to either implement the below measures themselves or toencourage and build the capacity of their suppliers to do so.

186OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

II. MODULE 12. RESPONSIBLE SOURCING FROM HOMEWORKERS•••

Establish a prequalification system for intermediaries/agents thatare involved in the contracting of work to homeworkers.
Intermediaries should be compliant with national law.
Establish internal protocols for the outsourcing of work to
homeworkers (e.g. verification that agents handling the contract
have been prequalified).
Move towards contractual relationships with intermediaries that
directly contract work to homeworkers and establish transparency
requirements. For example, intermediaries may be required to:− Keep a record of all those receiving work. All working
members of a family should be recorded as homeworkers. For
example, in some contexts, it is common for only the father orhusband to be recorded as a homeworker.
− Keep a record of the quantity of work distributed and payments
made. As homeworkers are usually paid on a piece-rate basis,intermediaries should record proper timings to ensure that piece
rate is set on the basis that it is possible to earn minimum
wages.
− Keep a record of any social security or health insurance benefits
being provided to homeworkers.

•••

Provide training to intermediary agents on their legal obligations
and the enterprise RBC policy.
Where appropriate, identify and partner with local initiatives
promoting the formalisation of homeworkers and their protection
against exploitation. Local initiatives may focus on a number ofareas including, but not limited to: rights training, skill straining,legalisation and service provision.
Engage with the local or national government to promote therights of homeworkers to access equal treatment under the law.
Examples include:− Indicate the enterprise’s support (or the industry’s support) forthe coverage of the law to extend to workers in the informal
economy.
− Draw attention to the underlying causes of informality andencourage the government to remove underlying barriers toentry into mainstream economic and social activities.
OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

187

II. MODULE 12. RESPONSIBLE SOURCING FROM HOMEWORKERS− Indicate the enterprise’s support (or the industry’s support when
operation in collaboration) for the extension of social security
coverage – by promoting access to health care and education –to informal workers, including homeworkers where not alreadyprovided for.

Selected international instruments and standards•

ILO Home Work Convention, 1996 (No. 177) and ILO Recommendation No.
204 Concerning the Transition from the Informal to the Formal Economy

Resources

188•

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals
from Conflict-Affected and High-Risk Areas, Annex•

ILO (2008), The Informal Economy: Enabling Transition to Formalization,
Background document to the Tripartite Interregional Symposium on the
Informal economy: Enabling Transition to Formalization, International
Labour Organization, Geneva

OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS IN THE GARMENT AND FOOTWEAR SECTOR

mneguidelines.oecd.org