ETF and ITF outline demands for mandatory due diligence in reply to European Commission Consultation

8 Feb 2021

Modern supply chains are composed of multiple operators in different transport modes, often spread across various countries. Additionally, outsourcing and subcontracting of transport services is a common practice. In such complex relationships, with the companies ‘on top’, e.g. big retailers, always trying to cut costs, it is easy to turn a blind eye to the working conditions further down the chain. This is why ETF and ITF demand mandatory due diligence that will force companies to ensure that their supply chains are free of exploitation and abuse.

The European Commission has launched the initiative to consider introducing a European legal framework on sustainable corporate governance, covering due diligence and directors’ duty of care. In response to the Commission’s public consultation, ETF and ITF outlined their demands for mandatory due diligence.

In their reply, the two Federations outlined the current pitfalls that have proved detrimental to social, environmental and economic sustainability and underlined that existing Corporate Social Responsibility (CSR) schemes are not enough as they are not legally enforceable and lack accountability or legal predictability.

Mandatory due diligence is the only way.

Multiple studies show that without mandatory due diligence only a minority of companies conduct due diligence. In addition, most of them do not cover their entire supply chain – many companies are only applying their environmental and social standards to at best the first tier of their supply chains. In relation to the transport sector, this means that the conditions of significant groups of workers including delivery drivers, warehouse staff and agency workers as well as crews involved in shipping are not adequately addressed.

The complexity of global supply chains requires a comprehensive framework to prevent environmental harm and human rights abuses. It is in this vein that the ETF and ITF demand that European legislation covers all human rights stemming from international and European instruments, including workers’ rights.

This European legislation must focus on effective prevention of human rights violations and negative impacts of business operations, including global operations of companies established or operating in the EU, and on effective controls, sanctions and remedies. And as a general rule, the new legislation should all apply to businesses including multinationals, independently of their sizes, active in any sector.

The ETF and the ITF have laid out a due diligence process to be prescribed by European law:

  • Companies should map, identify and assess actual and potential adverse impacts of their operations on human rights, including workers’ rights.
  • Companies should act upon the findings. They should cease any operations, including in their business relationships, which are causing or contributing to adverse impacts that cannot be prevented.
  • The companies should ensure effective and transparent tracking and monitoring of the implementation of their due diligence plans.
  • Due diligence plans should include the establishment of an early alert mechanism to collect reports of existing and potential human rights and social and environmental standards violations and negative impacts about the abovementioned matters, as well as for any violation of the due diligence obligations and plan.
  • The EU initiative should require companies to publish an annual, specific and comprehensive public report on the verifiable progress of their due diligence plans and obligations, on the actions undertaken about both their operations and business relationships and on any violations or negative impacts which have materialised.
  • The initiative should also require companies to embed responsible and sustainable business conduct principles and considerations into their management systems and their business models.
  • Workers’ representatives and trade unions present in a company (and in the company’s supply and subcontracting chains) should be fully involved in the above-described due diligence process, from mapping exercise, through the preparation of the due diligence plans and early alert mechanism, to their implementation.

ETF and ITF’s reply to the consultation also includes recommendations for strong enforcement and company requirements.

For more information, please consult our response to the European Commission’s consultation here.

The ETF and ITF have also addressed a letter to Didier Reynders, European Commissioner for Justice to convey the urgent need for mandatory due diligence to protect the rights of transport workers.  Please consult our letter here.