The Netherlands and Germany are leading the way with multi-stakeholder covenants to tackle human rights in the garment and finance industries
The international attention paid to the Netherlands has not been too flattering of late. A referendum initiated by the populist far-right last year threw a spanner in the works of the EU-Ukraine association agreement, while the "Dutch sandwich" corporate tax avoidance scheme, partner in crime to the Double Irish, has attracted negative headlines.
But when it comes to sustainability, the Dutch have shown real leadership, according to John Morrison, head of the Institute for Human Rights and Business. In 2014 the Dutch government's main advisory body on social and economic affairs, the Sociaal-Economische Raad (SER) brokered a multi-stakeholder Energy Agreement for Sustainable Growth, which was signed by over 40 Dutch organisations, pledging savings in energy consumption, an increase in renewables, and job creation.
This was followed by a pair of sectorial covenants with government, business, trade unions and NGOs on human rights issues in the garment and textiles industries and banking sectors – an idea that has been replicated in Germany for the textiles industry.
Morrison says such multi-stakeholder partnerships are a model other countries should consider for progressing business and human rights. “It’s not just business itself deciding what the due diligence threshold should be, and the mitigation and prevention that should be there, but business sitting with their competitors and other stakeholders. That’s really smart. Even if it results in legislation eventually, it will be better legislation,” Morrison said in a recent interview with Ethical Corporation.
The fact that they are working together at a pre-competitive stage, in the same way that academics will share data to open up a field of research before competing for funding, is key, he added.
Human rights in the textiles industry
The Dutch textile and garments covenant, signed last July, was originally signed by 75 parties, 55 of them companies, among them global player C&A and regional big names like Hema, Zeeman and Hunkemöller. With the UN Guiding Principles on Business and Human Rights (UNGPs), the OECD Guidelines for Multinational Enterprises and the core labour standards of the International Labour Organisation (ILO) underpinning the scope of the agreement, and the UN development agenda 2015 – 2030 inspiring its overarching goals, the Dutch covenant is, on paper at least, an ambitious and specifically targeted programme, filling 58 pages and setting itself a five-year time frame for implementation.
It is also open to newcomers, and aims to eventually represent 80% of the Dutch textiles and garments industry. However there have been delays in getting it up and running. Half a year after its inception details of the responsibilities of the parties have not yet been worked out.
Maarten Uri, spokesman for the SER covenants programme, said in an interview that the covenant was on track: "The signatories are starting up their due diligence processes. They will develop concrete annual action plans based on their findings. The first round of this delicate process is scheduled to be completed in July. In the following months these plans will be evaluated and, if necessary, amended. In the meantime, several working groups are studying specific issues named in the agreement, such as the living wage, child labour, and freedom of trade union affiliation."
In the autumn, the textiles convenant was followed up with a second covenant for the banking sector. According to the SER it will enable banks to do more to ensure respect for human rights in investment and financing matters, for example with regard to working conditions, freedom of association in trade unions, child labour and land use rights, and to be applicable throughout the international business activities of banks. Thirteen Dutch banks signed the covenant initially, among them major players ABN AMRO, ING and Rabobank.
Financial services collaboration
With a secretariat hosted by the SER and a steering group in place, the banking sector covenant is about to start working in earnest on implementation. The SER's Maarten Uri said four working groups have been formed: one tasked with setting up a matrix/database in which human rights information will be gathered and made publicly accessible; the second will conduct a first value-chain evaluation exercise, focusing on the cocoa value chain, a third will set-up a system of remedy as well as provide adequate access to it and a fourth group is developing a study on how to increase leverage when specific human rights situations occur.
While there has been some critical Dutch media coverage, questioning whether the covenant can deliver on its promises, ABN Amro CEO Gerrit Zalm defended it in an interview with the daily De Volkskrant in January. He said if a big customer continues to violate human rights, covenant signatories will part company with them: "Customers who take human rights considerations lightly will not take other obligations towards the bank seriously, either".
There is also a separate multi-stakeholder initiative by the Dutch Central Bank (DNB), which has just put together a Platform for Sustainable Finance addressing the challenges to the finance industry posed by climate change. The platform consists of the Dutch Financial Market Authority (DNB); the Dutch Ministries of Finance and of Infrastructure and the environment, as well the Dutch Pension Federation, the Association of Insurers, the Dutch Society of Banks and the Dutch Asset and Fund Management Association, and a leading NGO. Members will meet in April to set out a course of action.
It is this kind of coming together of pretty much all aspects of the financial services industry that makes the Netherlands "global sustainability leaders in finance and investment", says Marga Hoek, a leading Dutch entrepreneur involved in sustainable business and investment, and one of the negotiators of the Energy Agreement of 2014.
In Germany, the Partnership for Sustainable Textiles was initiated by the Ministry for Cooperation and Development (BMZ) in 2014 and has grown to 133 businesses, trade unions, NGOs and government departments. Another 50 more have membership applications pending.
It aims to achieve "continuous improvement of social, ecological and economic sustainability along the entire textile chain" and is currently undergoing its first review exercise. All members of the partnership were called to submit an individual roadmap for sustainability goals by the end of January. The roadmaps are now being vetted by an independent group of experts, which is due to present its verdict by the end of April. The 2017 exercise is voluntary but will become mandatory in 2018. The government, for its part, has announced a package of measures and has pledged to source at least 50% of its textiles sustainably by 2020.
In a recent parliamentary debate in the German lower house (Bundestag), one of the governing Christian Democrats' leading members on development policy, Jürgen Klimke, praised the partnership for covering 55% of the textiles market in Germany. He also suggested that it should be replicated for other industries, and said Germany will announce further initiatives in the context of its G20 presidency, which will be culminate in a summit meeting in Hamburg in July.
A spokesperson for BMZ said there is close cooperation between the German and Dutch initiatives: "Both countries are active supporters of the EU's Garment Initiative and have already co-organised two conferences on living wages." He added: "The Dutch covenant and our partnership are very similar in scope, depth and political ambition. Close cooperation is only logical and has begun with both secretariats coming together for a first meeting in November 2016."
The textiles partnership has come under fire from within the industry after some of the most notorious discount brands, such as Kik, whose factory in Pakistan went up in flames, killing 300 workers, four years ago, applied for membership. Luxury sportswear and leisure goods producer MDC accused the partnership of turning into a "greenwashing" exercise and left in protest last year.
More broadly, concerns have been voiced in both the Netherlands and Germany about multi-stakeholder platforms and the willingness of politicians to take the lead in progressing sustainable business in the current volatile political situation marked by Brexit, the sea-change in US policies and worries about the outcome of upcoming general elections in the Netherlands, France and Germany.
But Hoek says that by raising the bar on corporate behaviour through the “back door”, ie before regulation in one country, “it opens back doors in other countries because it gives a clear example of how to do it. And what I experienced from my work with the energy agreement, they [other countries] are very keen to find out how to do it."
This article is part of our in-depth briefing on how business is navigating the new B2G environment. See also Business called to top table to deliver SDGs, For B2G, you first need B2B, and Collaborating with governments in the cocoa sector
Institute for Human Rights and Business