EFS Consulting

Global efforts to ensure fair supply chains

The number of laws requiring companies to better control and track the provenance of their products to ensure the respect of human rights along the whole supply chain is growing. 

The development of globalized production and trade in the last decades has brought huge benefits to consumers and producers worldwide. However, the real costs of production are often externalized – early stages of global supply chains are notorious for their prevalence of unsafe working conditions, environmentally detrimental practices, child labor, use of resources from conflict areas, etc. Despite many international guidelines aiming to keep certain standards (by United Nations, OECD, ILO, etc.), the achievement of fair supply chains on a global level still faces major hurdles. 

More and more countries are deciding to better regulate supply chains and impose on companies legal duties to track the provenance of raw materials and products they buy from their suppliers.  The goal is to ensure that at no stage of the production process human rights are violated.  There are already some regulations in place in Great Britain (Modern Slavery Act 2015), France (Plan national d’action pour la mise en œuvre des principes directeurs des Nations unies relatifs aux droits de l’Homme et aux entreprises) and Netherlands (Child Labour Due Diligence Law).  Also Germany is planning to pass a similar law (Lieferkettengesetz), however, the governing coalition is still discussing the details. 

No wonder that such legislative initiatives arouse controverses. On one hand, there is no doubt that the fairness and sustainability of global supply chains must be safeguarded. On the other hand, it is still unclear how to effectively implement such tracking duties and to what degree can companies be made liable for the actions of the suppliers of their suppliers which they cannot control. 

Anyway, it is almost certain that sooner or later these so far mostly moral obligations to strengthen the respect of human rights along the whole supply chain will become legally binding. Therefore, companies should already start to think about solutions to better control and track the provenance of their products. 

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