New due diligence laws: Is Bangladesh ready?

Around the world, the issue of human rights due diligence in global supply chains is rapidly rising up the agenda. But what does this mean and how will it impact garment manufacturers in Bangladesh?

For many years, fashion brands and retailers have been implementing their own, internal human rights and corporate social responsibility policies. These are designed to ensure that their garment suppliers and workers are treated fairly, paid appropriate minimum wages and so on.

Yet it has become clear that such policies are proving to be not always effective at addressing key human rights issues. Some fashion brands have very strong CSR policies and collaborate closely with their suppliers, while others are weak in this area. The industry needs a level playing field.

Thus, in the past five years, we have seen a shift towards binding laws around human rights due diligence, both at an individual country level and also at a broader level—such as within the European Union.

Last year, for instance, members of the European Parliament urged the European Union to push forward with rules on mandatory human rights and environmental due diligence in EU companies' global supply chains. They called for the EU to join United Nations negotiations for a binding treaty on business and human rights which, they say, "reflects the EU's own assessment that voluntary measures have failed to prevent companies from committing human rights violations and environmental harms, or hold them accountable for harm."

Later this year will see the introduction of legislation on mandatory sustainable due diligence for companies as part of the EU Commission's 2021 work plan and the European Green Deal.

Individual countries are also acting. The French Corporate Duty of Vigilance Law places the onus on large companies in France to identify and prevent risks to human rights and the environment that could occur as a result of their business activities in supply chains. These activities can include those of the company itself, of their suppliers or subcontractors, of companies they control and more. The law, in brief, requires companies to create and implement publicly-available vigilance plans for which they can be held accountable.

It is important to note that fashion brands, our customers, are also supportive of human rights due diligence proposals. Last year, ASOS—a major buyer from Bangladesh—called for the implementation of mandatory human rights due diligence legislation in the UK in order to strengthen the 2015 Modern Slavery Act (the UK's own due diligence legislation for supply chains).

What does this all mean for us as manufacturers?

There are several issues to consider here. Firstly, human rights due diligence legislation will mean that buyers need to become increasingly vigilant as far as supply chains are concerned. I expect a "fight to safety" by which I mean brands and retailers will move toward suppliers that are best in class.

The reason for this is that they could potentially face falling foul of the law in their own country—and face hefty fines—if violations are uncovered in their supply chains.

This, in turn, has major implications for RMG suppliers. They will be under increased scrutiny from brands to have systems and processes in place to ensure workers are being properly treated. This includes issues such as health and safety, wages, general worker rights. I expect brands could become increasingly vigilant in terms of audits to ensure suppliers are meeting expected requirements on these issues. Remember, brands will not want to expose themselves to risk here for it could land them in legal hot water. If there is a risk that a supplier may fail to meet expectations around human rights due diligence, that supplier faces losing out on business—the brand will simply shop elsewhere. That, I believe, is the harsh reality.

The other issue is one of transparency. Transparency is a central mechanism by which the fashion industry is seeking to gain greater control and oversight of global supply chains. In some cases, this means simply having a list of suppliers on their websites (this can be first or second tier suppliers, or sometimes even beyond).

The requirement for due diligence very much ties in with the transparency agenda. In the west, more and more consumers are demanding to know about the conditions in which their garments were made—regular surveys of consumers bear this out. They are shopping with fashion brands which can show them this. Bangladesh has to be ahead of the game on this issue.

I expect the fashion industry to further clamp down on this issue as regulations around due diligence become the norm over the next 18 months.

My takeaway point from all of this is that the RMG sector in Bangladesh should view human rights due diligence regulations as an opportunity to cement our place as a trusted partner of the global fashion sector.

We have made great progress on worker rights and—mentioning no names—I would certainly say some are ahead of most of our competitors in this area. So, let's embrace due diligence regulations as an opportunity to further improve the way we do business on the global stage.

Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).