Ricevuto il 2.1.2021 ‒ Accettato il 18.2.2021 Riassunto. Il disastro del Rana Plaza ha reso evidenti le violazioni dei diritti fondamen-tali sul lavoro che si verificano all’interno delle catene di subfornitura. Le possibili soluzioni per fronteggiare tale fenomeno vengono ricercate a tutti i livelli. Nei Paesi Bassi, in partico-lare, sono stati conclusi alcuni accordi commerciali internazionali per garantire una gestione responsabile della filiera: si tratta di accordi multi-stakeholder volti a far sì che le aziende promuovano il rispetto dei diritti fondamentali sul lavoro nelle loro catene di subfornitura.
Recenti studi hanno dimostrato che tali accordi aumentano la consapevolezza del rischio e migliorano la due diligence in vari settori, ma non è (ancora) possibile fornire una prova de-finitiva del fatto che essi contribuiscano anche a migliorare le condizioni nei Paesi di produ-zione. Ciò ha in parte condotto all’adozione della legge olandese sulla due diligence in tema di lavoro minorile, che obbliga le aziende a individuare le forme di lavoro minorile presenti all’interno delle loro catene di subfornitura e ad adottare le misure necessarie per contrastar-le. Attraverso l’assunzione volontaria di obblighi in un contesto settoriale, gli stakeholder possono adempiere agli oneri loro imposti dalla legge. Ciò porta a concludere che gli accor-di olandesi potrebbero rappresentare quel collegamento ad oggi mancante tra le accor-disposizioni di soft law esistenti e le normative legali vincolanti.
Parole chiave: Sostenibilità; Diritti fondamentali sul lavoro; Accordi olandesi; Smart-mix;
Legge olandese sulla due diligence in tema di lavoro minorile.
Abstract. The Rana Plaza disaster has shown that fundamental labour rights in supply chains are violated. Solutions are sought at all levels. In the Netherlands, international re-sponsible business agreements or covenants have been concluded, multi-stakeholder agree-ments aimed to ensure that companies promote compliance with fundamental labour rights in their supply chains. Recent evaluations have shown that there is a strong indication that covenants increase awareness of risk and improve due diligence in various sectors, but de-finitive proof that they contribute to improved conditions in production countries cannot (yet) be provided. This has partly led to the realization of the Dutch child labour due
dili- Associate Professor, Leiden University, Department of Labour Law, Steenschuur 25, 2311 ES Leiden. E-mail: m.y.h.g.erkens@law.leidenuniv.nl. The literature regarding the covenants and the due diligence legislation in the Netherlands referred to in this article is inevitably in Dutch. When possible, reference is made to sources available in English.
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gence act, that obliges companies to detect child labor in their supply chain and to take measures against it. By voluntarily entering into obligations in a sectoral context – such as covenants – stakeholders can meet the legal obligations imposed on them by the act. This leads to the conclusion that the Dutch covenants could very well be a missing link between existing soft-law frameworks and binding statutory regulations.
Keywords: Sustainability; Fundamental labour rights; Dutch covenants; Smart-mix; Dutch child labour due diligence act.
1. Introduction and research question. 2. The Dutch Covenants or sustainable business agreements. Legal design. 2.1. Organization. 2.2. Substance. 2.3. Compliance. 3. Standards in other carriers of fundamental labour rights. Introduction. 3.1. Tripartite Declarations of Principles concerning Multinational Enterprises and Social Policy (ILO MNE Declaration).
3.2. OECD Guidelines. 3.3. The United Nations Guiding Principles on Business and Human Rights. 3.4. Overview of standards. 3.5. Comparison of standards. 4. “Together towards sus-tainable chain impact”. 5. Dutch child labour due diligence act. Introduction. 5.1. Defini-tions and scope. 5.2. Compliance and sancDefini-tions. 5.3. Date of entry into force. 5.4. Conclu-sions. 6. Concluding remarks.
1. In April 2014 the Social and Economic Council of the Netherlands (hereafter SER) published an advisory report on Sustainable business Agreements or Cove-nants1. The main message included in the report was that businesses can be more effective in dealing with the risk of violations of fundamental rights (including la-bour rights) in global supply chains if they enter into joint agreements. On the one hand, it is more likely for businesses to find solutions when they act together; on the other hand, businesses need assistance to detect and combat violations of fun-damental rights in their supply chains2. A Sector Risk Analysis was conducted to determine in which sectors the social risks were the highest3. The first Sustainable Business Agreements were drawn up for those sectors. As of 2 July 2019, there are ten Agreements that are supported by the Social economic council of the Nether-lands (SER): Garments and Textile (July 2016), Banking (October 2016), Sustain-able Forest Management (March 2017), Gold Sector (June 2017), Food Products Sector (June 2018), Insurance (July 2018), Pension Funds (December 2018), Trustone Initiative (May 2019), Metals Sector (July 2019) and Floriculture (July 2019)4.
1 Sociaal Economische Raad, Advies 14/04, April 2014.
2 Sociaal Economische Raad, Advies 14/04, 14.
3 Conducted by KPMG, https://www.rijksoverheid.nl/documenten/rapporten/
2014/09/01/mvo-sector-risico-analyse. The following sectors have been qualified as high-risk sectors: construction, chemicals, retail trade, energy, financial sector, wholesale trade, metals/electronics, oil and gas, textile and garments and food products.
4 https://www.imvoconvenanten.nl/convenantenoverzicht?sc_lang=nl Floriculture was assisted by the SER at the formation stage, but the implementation secretariat is not part of the SER. Sustainable forest management was not formed with assistance from the SER, though the agreement is stated on the website.
Yvonne Erkens 21
Since the disaster in Rana Plaza, it is well known that there are major problems regarding compliance with fundamental labour rights in global supply chains. Prob-lems have only increased as a result of the Covid-19 pandemic. All the more reason to present and evaluate the Dutch response to combat violation of labour rights in global supply chains: sustainable business agreements or covenants. This paper ex-amines the covenants, compares them with other carriers of fundamental (labour) rights and it researches to what extent the covenants contribute to more sustainable business operations. In the context of the so-called smart mix, the question arises whether covenants can be a missing link between legislation and private initiatives.
In paragraph 2 the Dutch covenants will be described and explained. Which subjects are regulated in the covenants, what is the legal form and how binding are the covenants for the affiliated parties? Although the covenants include more than provisions relating to employment, this paper focuses on labour rights. The cove-nants are intended to support the implementation of the OECD Guidelines5 and the UN Guiding Principles on Business and Human Rights (UNGPs)6. Paragraph 3 compares the covenants with these soft-law instruments in the field of CSR and with the ILO Tripartite Declaration of Principles concerning Multinational Enter-prises and Social Policy (MNE Declaration)7. Paragraph 4 provides an overview of the main findings of recent evaluations of the covenants. Paragraph 5 describes the Dutch Child Labour Due Diligence Act and examines the extent to which the cov-enants fit into the so-called smart-mix, the combination of mandatory hard law and voluntary soft law initiatives in the field of international corporate social responsi-bility. The paper concludes with a few summarising remarks: what is necessary to stimulate and support companies in the transition to a more sustainable existence?
2. Ecclesiastically the noun “covenant” means a solemn agreement between the members of a church to act together in harmony with the precepts of the gospel8. In this sense, the term covenant is well-chosen: it is an agreement between different parties that commit themselves to each other, but do not aim for legal binding. The bond is an internal one. Therefore, many of the covenants contain the clause that what is included in the covenants is not legally enforceable.
“Not legally enforceable” is not the same as “not binding”. Obligations contained in the covenants are directly applicable to the signatory parties. Signatory parties to the covenants are the government, trade unions, industry organisations and civil soci-ety organisations. That’s why the covenants are referred to as “multistakeholder”.
Whether an individual company is a party or not depends on the degree of tion: if there is an organisation that can act on behalf of the companies, that
organisa-5 https://www.oecd.org/daf/inv/mne/48004323.pdf.
6 https://www.ohchr.org/documents/publications/GuidingprinciplesBusinesshr_eN.pdf.
7 Adopted by the Governing Body of the International Labour Office at its 204th Session (Geneva, November 1977) and amended at its 279th (November 2000), 295th (March 2006) and 329th (March 2017) Sessions. The latest revision added principles related to the Decent Work agenda of the ILO and, following the UNGPs, due diligence training was added.
8 https://www.dictionary.com/browse/covenant.
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tion can and will sign the covenant. By signing, the organisation commits itself to persuade the affiliated companies to comply with the covenant obligations9. Note that this is self-regulation too: being a member of an organisation that participates in a covenant does not effectuate legal binding. Businesses – if they are not a signatory party – can become ad adhering party. If they do so by signing in, obligations of the covenant become applicable to them. Each covenant specifies which obligations ap-ply to the adhering parties. The signatory parties determine the scope of the covenant, geographically and content wise. They also determine the sanctions for violating the obligations of the covenant (see paragraph 2.3).
2.1. The covenants are sectoral: they are concluded for specific business sectors (see paragraph 1). An important target group for the covenants is small and medi-um-sized businesses. These companies in particular have to do without a legal or compliance department and will therefore experience the benefits of working to-gether to tackle problems that are too difficult to solve on their own.
For the day-to-day administration, each covenant has a steering group that is supported by a secretariat. The steering groups include representatives of the par-ties involved and are chaired by an independent chairperson. They monitor compli-ance with the covenant and provide guidcompli-ance on its implementation. In most of the covenants, the steering group also has a dispute resolution function (see paragraph 2.3). Costs for the implementation of the covenant are covered jointly by the par-ties and the affiliated businesses, in some cases with government support. The cov-enants cover a period of three to five years in which the affiliated parties set them-selves the goal of achieving substantial improvements.
2.2. There is much variation in the substance of the covenants, but the template is more or less the same. Parties to the covenants commit themselves to achieving tan-gible results in the area of corporate social responsibility (CSR), based on existing objectives and standards of the UNGPs and the OECD Guidelines (see paragraph 3)10. All covenants contain the obligation to publish an annual progress report on the results achieved. One of the most important objectives is bringing about responsible supply chain management. The risks that are emphasized in this process vary per covenant. Besides the more generally formulated due diligence obligations, in ap-pendices to the covenants special projects are mentioned that tackle sector-specific problems. In the field of labour rights, these can be summarized as follows.
The Garment and Textile covenant specifically mentions discrimination and gender, child labour, forced labour, freedom of association and health and safety in the workplace. The Gold covenant emphasises that all forms of forced labour, the most serious forms of child labour and health, safety and working conditions are risks in the mining and processing of gold. The Banking covenant states that the parties to the covenant have the ambition to bring about respect for human rights,
9 In some covenants individual businesses are not a party, in some – such as gold, metals and trustone – they are.
10 Sociaal Economische Raad, Advies 14/04, 19.
Yvonne Erkens 23
including at the very least freedom of association and collective bargaining. Spe-cial projects in the Food Products covenant are related to effectuate a living wage, children’s rights are specifically mentioned in the Insurance covenant as an area that requires attention. In the The TruStone covenant several specific themes are formulated, including discrimination and gender, child labour, forced labour, living wage, the right to organise and the right to collective bargaining and health and safety. The Metals Sector covenant contains in Annex 2 an inventory of risks with-in the mwith-inwith-ing and processwith-ing of metals, subdivided with-into 82 subcategories, with-includwith-ing workers’ rights and working conditions. The Floriculture covenant states as specif-ic themes among other things living wage, women’s rights and health and safety when exposed to crop protection products.
2.3. Two compliance mechanisms can be found in the covenants.
First, all covenants contain reporting obligations for the affiliated parties, obvi-ously inspired by the monitoring system of the ILO. If a party does not report or reports are incomplete or otherwise inadequate, mediation and persuasion are ap-plied to try to get the party back in line. If the violation continues, the most far-reaching sanction is exclusion from the covenant. Exclusions are published on the website of the covenant (“naming and shaming”).
Secondly, the covenants have a system for dispute resolution, in most cove-nants designated to the steering group. The affiliated parties can bring disputes re-lated to obligations arising from the covenant before the steering group in its role as a dispute-committee. Before taking a decision, the committee tries to reach a so-lution through mediation. Only if that doesn't work, the steering group decides whether there has been a breach of any obligation from the covenant. As a conse-quence, the party must fulfil the obligation within a certain period of time, with ex-clusion as the ultimate remedy if the party remains negligent. Decisions are bind-ing on the parties but are not legally enforceable (see paragraph 2).
At present (December 2020), only the Textile covenant has an independent com-plaints and dispute committee to which all disadvantaged third parties – not just par-ties who are affiliated to the covenant – can turn. The dispute settlement system there-fore distinguishes between complaints and disputes. Disputes occur between parties to the covenant, complaints can be submitted by any interested party. An interested party is anyone who experiences harm as a result of a violation of the covenant by a compa-ny or in the supply chain11. The broad accessibility of the complaints procedure of the Textile covenant makes it fully-fledged, although it will have to be seen whether in-jured parties in the supply chain will be able to find their way to The Hague.
Until January 2021 two disputes were settled, both on 22 May 201912. In the first case (Manderley) the company had been halved in size and as a result there was insufficient manpower to be able to meet the increasing number of obligations
11 https://www.imvoconvenanten.nl/~/media/files/imvo/rules%20of%20procedure%20 of%20the%20complaints%20and%20dispute%20mechanism%20irbc.ashx.
12 https://www.imvoconvenanten.nl/kledingtextiel/agreement/complaints?sc_lang=nl.
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under the terms of the Covenant. The Committee found that it was understandable and fitting for this small company to withdraw from the covenant. In the second case (Vandyck bed- en badmode) the company itself indicated that it wanted to end its participation in the covenant because it did not want to fulfil the obligation to ask Turkish suppliers if they had hired illegal refugees from Syria. Ultimately, un-der pressure of the procedure Vandyck declared it would adhere to the obligations of the covenant, including this one.
In both cases one covenant party complained about the negligence of the other covenant party. The first external dispute has also arisen: July 2020 several NGO’s submitted a complaint against C&A Nederland on the grounds that one of C&A’s suppliers in Yangon, Myanmar, had failed to ensure freedom of association and collective bargaining at factory level13. According to the complainants C&A – as an important buyer and a member of the Textile Covenant – has an obligation to ensure that labour rights are respected by its supplier. By not taking any action, C&A has failed to use its influence to correct wrongful actions by the suppliers management. At the conclusion of the text of this paper the complaint is pending.
3. Since the 1970s, regulatory frameworks have existed at an international level that aim to prevent violations of fundamental rights by businesses.14 The best known and most commonly applied are the ILO MNE Declaration15, the OECD Guidelines16 and the UN Guiding Principles on Business and Human Rights (UNGPs)17. The covenants not only revert to these existing frameworks; they are intended to support the implementation of the OECD Guidelines and the UN Guid-ing Principles on Business and Human Rights. This paragraph compares the fore-mentioned frameworks with the covenants in order to determine how they relate.
3.1. The principles of the ILO MNE Declaration (1977) are intended to guide governments, employers’ and workers’ organisations of home and host countries and multinational enterprises18 in voluntarily taking measures and actions, and de-veloping social policies in areas such as employment, training, working conditions and industrial relations19. All principles build on international labour standards (ILO conventions and recommendations).
13 Stichting Onderzoek Multinationale Ondernemingen. SOMO: Klacht tegen C&A ingediend bij kledingconvenant. [Internet]. Available from: https://www.somo.nl/nl/klacht-tegen-ca-ingediend-bij-kledingconvenant/.
14 Erkens, 2019, 23-24; Rombouts, 2019, 10-17.
15 Adopted by the Governing Body of the International Labour Office at its 204th Ses-sion (Geneva, November 1977) and amended at its 279th (November 2000), 295th (March 2006) and 329th (March 2017) Sessions. The latest revision added principles related to the Decent Work agenda of the ILO and, following the UNGPs, due diligence training was added.
16 https://www.oecd.org/daf/inv/mne/48004323.pdf.
17 https://www.ohchr.org/documents/publications/GuidingprinciplesBusinesshr_eN.pdf.
18 “To serve its purpose the MNE Declaration does not require a precise legal definition of multinational enterprises”, ILO MNE Declaration, Aim and scope, point 3, 3.
19 ILO MNE Declaration, Aim and scope, point 4 and 7, 2-3.
Yvonne Erkens 25 The MNE Declaration consists of four chapters on employment, training, con-ditions of work and life and industrial relations, targeting both governments and multinationals. In the chapter on employment there are provisions on employment promotion, social security, elimination of forced or compulsory labour, abolition of child labour, anti-discrimination and security of employment. The chapter on con-ditions of work and life contain provisions about wages and safety and health. The chapter on industrial relations refers to the freedom of association and the right to organise, collective bargaining, consultation of workers and their representatives, access to remedy and examination of grievances and the settlement of industrial disputes. Annex I provides a list of international labour conventions and recom-mendations relevant to the MNE Declaration20.
3.2. In 1976 the member States of the OECD adopted the OECD Guidelines for Multinational Enterprises, the first international framework for corporate social re-sponsibility. The OECD Guidelines are recommendations from governments that are addressed to multinational enterprises operating in or from adhering countries21. They provide non-binding principles and standards for responsible business conduct in a global context consistent with applicable laws and internationally recognised standards22. Companies that subscribe to the Guidelines are obliged to observe them.
Governments of OECD countries are obliged to promote compliance with the
Governments of OECD countries are obliged to promote compliance with the