G7: Sustainable value chains – Success factors for an internationally accepted binding standard

Excellencies,
Colleagues,

Thank you for the opportunity to participate. I am pleased to be able to present to you the recommendations of my Office’s report on how to achieve more sustainable value chains, as requested by the German Presidency of the G7.

The human rights impacts of global supply chains are clear: the use of precarious and informal employment is expanding at a rapid rate. Workers, especially migrant workers, are becoming ever more vulnerable, subject to a raft of human rights violations at the hands of their employers.

 This vulnerability has been further compounded by rising inequalities within borders, by the devastating effects of the COVID-19 pandemic, as mentioned by the Minister, and by shrinking civic space.

Instead of sitting back and watching, we have a window of opportunity. There could not be a more important moment for the G7 and other key international actors to demonstrate vision and leadership.

If we want to successfully achieve sustainable supply chains, the broad scope of human rights at risk must be addressed.  

We need to ensure we are putting the needs of the people most affected – the workers – first.

Accelerating efforts to advance implementation of the UN Guiding Principles on Business and Human Rights (UNGPs) in global supply chains is a crucial step forward to do this.

The UNGPs are a foundational tool to help us achieve progress towards the global goals on the climate emergency, sustainable development and recovery from the COVID-19 pandemic. And they can help ensure human rights are respected throughout global supply chains.

Right now, we are seeing unprecedented momentum behind reform efforts that will significantly shift how legal, regulatory and financial markets shape business practices in the future.

G7 leadership has the power to push for a steep increase in policy coherence. You have the influence to insist that international standards of responsible business conduct are adhered to, including in regulatory reform. You have the capacity to support measures to complement regulatory approaches; and to take the lead in development cooperation, assistance and finance; in private sector sustainable finance initiatives; and in investment and trade policy.

It is time to leverage that influence.

Excellencies,

We are seeing some progress. The development and roll-out of business and human rights legislation in many G7 countries and the EU is rapidly increasing. This is thanks to the wide recognition of international standards to provide authority to business conduct, including the UNGPs and the OECD Guidelines on Multinational Enterprises.

It is also thanks to a growing number of voices within business itself. They want greater legal certainty. They seek a more level playing field and increased leverage within value chains. They want a chance to build better-integrated risk management.

We need to provide active support to this momentum. It depends largely on political will to align legislation and regulations with international standards on business conduct.

Here, I agree that we need a smart mix of binding and voluntary measures.

This is where the G7 can play a crucial role. It can welcome and support further legislative developments on business and human rights.

Crucially, G7 member States can work individually and collectively to ensure that legislative momentum reflects the transformative nature of the UNGPs.

Legislation must push companies to proactively understand and identify their adverse impacts. It must not disincentivize the impetus to address impacts which they do not cause or contribute to. It must not incentivize reliance on only contractual arrangements with compliance audits.

 Our experience over the last two decades tells us that does not make a real difference in the lives of people.

Continued business, investor and NGO support for legislation in the area of business and human rights will depend on its alignment with the transformative power of the three pillars of the UNGPs. For this reason, we urgently need to also advance on implementing the UNGPs’ third pillar - access to remedy - where we face a continued lack of widespread, concrete progress.

On behalf of the millions of people adversely affected by business practices and operations, we have a responsibility to accelerate action. My Office’s Accountability and Remedy Project reports contain important recommendations in this regard.

I also encourage G7 member States to work together and individually to support small and medium sized enterprises. They too need guidance and support on challenges they face in pursuing their responsibility to respect human rights. As proposed by the UN Working Group on Business and Human Rights, G7 member States can coordinate with other States and the EU to create a capacity-building facility for all stakeholders to support SMEs in meeting their human rights commitments.

Additionally, G7 member States can support development finance institutions to integrate the UNGPs. These institutions have a key role to play to drive the implementation of the UNGPs though their lending and other activities, through their design and operation of grievance mechanisms and through their engagement with development agencies.

Finally, achieving sustainable supply chains will also require integration of international standards on responsible business conduct across investment and trade policy. Export credit agencies and export-import banks for example are key players involved in supporting parts of global supply chain operations. Yet their lack of multilateral engagement in recent years has had a negative impact on their capacity to   update and align their standards either to the UNGPs or to high-level commitments made by their own governments.

Improving the human rights performance of export credit agencies is an important lever for fostering sustainable supply chains. As an obvious first step, governments should heighten the obligations of the Export Credit Group’s Recommendation on Common Approaches regarding human rights and international standards on responsible business conduct.

Excellencies,

We can have all the robust legal and regulatory provisions we want at our disposal, but alone, they are not enough to create all the necessary shifts in business practices to ensure sustainable supply chains around the world.

We need your support to ensure they are implemented. Diplomatic missions and G7 representation abroad have the strong potential to play an important role in promoting and advancing implementation of the UNGPs in global supply chains.

A well-trained diplomatic corps in business and human rights would also help build credibility on the G7’s overall commitment to human rights.

The G7 has already taken on an important leadership role by outlining the goal of achieving genuinely sustainable supply chains.

Now is a unique opportunity to take it one step further and push for ambitious and comprehensive implementation of the UN Guiding Principles on Business and Human Rights.

Now is the time to pave the path towards meaningful change for people across the globe.

My Office is committed to supporting your efforts.

I wish you a fruitful and inspiring discussion ahead.

Thank you.