Rethinking due diligence practices in the apparel supply chain

The OECD insights article explore the rethinking due diligence practices in the supply chain. She questions whether multinational enterprises (MNEs) can make the supply chain safe and healthy.

 Jennifer Schappert of the OECD’s Responsible Business Conduct Unit (@J_Schappert) discusses the . The article can be read from this link:

http://oecdinsights.org/2015/04/24/rethinking-due-diligence-practices-in-the-apparel-supply-chain/

“Two years ago today, the Rana Plaza building in Bangladesh’s capital Dhaka collapsed, killing over 1,100 people and injuring another 2,500. The dead and injured were garment workers, ordered to go back to work even though shops and a bank in the same building had closed immediately the day before when cracks appeared. The garment factories were indirectly supplying international retailers, highlighting the debate on whether multinational enterprises (MNEs) can make the apparel supply chain safe and healthy. Ensuing recommendations to MNEs have often focused on MNEs strengthening existing compliance mechanisms with individual suppliers. However, to transform the sector, we need to question whether the current approach to supply chain due diligence is the right one to begin with.

In the absence of strong regulatory frameworks in many producing countries, the traditional approach to compliance is for enterprises themselves to take on the role of monitoring and assessing each supplier against international standards, developing corrective action plans, and then using their leverage (for example through the incentive of future contracts) to influence suppliers to mitigate risks. It sounds fine in theory, but in practice the system breaks down.”

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