The role of responsible purchasing practices in human rights due diligence

The labour and environmental impacts of companies’ purchasing practices on their supplier sites has been highlighted in numerous studies and reports. Several projects have indicated that when brands identify and act against harmful purchasing practices, it results in positive outcomes for workers, from improved working hours to better wages.

ETI has worked closely with member brands and retailers to improve purchasing practices through multi stakeholder initiatives. Effective due diligence now requires a focused effort on purchasing practices, as they often form the basis for negative impacts within supply chains. The EU's recent agreement on the Corporate Sustainability Due Diligence Directive (CSDDD) underscores the crucial importance of responsible purchasing practices in today's global business landscape. As companies manage complex supply chains, prioritising improved labour standards within their operations is essential.

Recent panel discussions at the event "From Policy to Action: Collaborative Approaches to Raw Materials Due Diligence” on 11 April, organised by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and the Responsible Business Alliance (RBA), highlighted the critical role of responsible purchasing practices in meeting regulatory standards and frameworks such as the CSDDD.

So, why are purchasing practices important in relation to due diligence?

  • Responsible purchasing practices are central to new standards: Purchasing practices are closely intertwined with national regulations and frameworks like CSDDD, underscoring the need for companies to adapt to mitigate risks and ensure compliance with existing and emerging legislation.
  • Improvements create better outcomes: Companies are urged to conduct thorough analyses of their purchasing practices, to identify areas for improvement and gather feedback from suppliers. By examining the impact of purchasing decisions on human rights, companies can proactively minimise negative outcomes and uphold ethical standards.

How can companies start making improvements?

  • Adopt a risk-based approach: Advocates emphasised the importance of adopting a risk-based approach, wherein companies prioritise suppliers and supply chains based on associated risks. This targeted approach enables efficient resource allocation and facilitates tailored interventions where they are most needed.
  • Practice and promote collaboration and transparency: Collaboration with suppliers and stakeholders emerged as a key strategy for gaining insights into the implications of purchasing practices. By engaging in dialogue and fostering transparency, companies can better understand the challenges faced by their partners and work together to find sustainable solutions. Another recurring point highlighted was the significance of sharing expectations, ensuring clear communication, through collaborative efforts, and verifying their feasibility for suppliers.
  • Leverage resources and engage with experts: New research and emerging legislation has seen an exponential increase in literature and knowledge-sharing on responsible purchasing practices. There are multi-stakeholder initiatives (MSIs), like ETI, and other industry stakeholders driving progress in this area. By utlising these resources and expertise on purchasing practices companies can be better prepared to implement lasting and positive change for their business and workers in their supply chains.

The Common Framework for Responsible Purchasing Practices

These approaches underpin the common framework for responsible purchasing practices, serving as a strategic guideline for companies to engage with stakeholders and implement tangible improvements in their purchasing processes. By doing so, they not only enhance their due diligence efforts but also advance improved working conditions in their supply chains. For instance, the framework encourages companies to assess their own purchasing practices for better labour standards, such as ensuring collaborative production planning and sustainable costing. It also emphasises the need for social dialogue with suppliers and stakeholders to address challenges like unfair wages and health and safety issues. 

Investing in reviewing and refining purchasing practices and establishing strong partnerships with suppliers brings significant benefits to businesses. This includes a more stable supply chain and efficiency improvements in communication, planning, policies and purchasing processes. Importantly, these efforts will directly improve working conditions for employees, leading to fewer overtime hours, fair wages, and less dependence on temporary labour.

Responsible purchasing practices in fashion

The original common framework was developed by the Ethical Trading Initiative (ETI) in collaboration with partner organisations[1] for the apparel and footwear sector. It was based on an extensive benchmarking of literature on Responsible Purchasing Practices (RPPs), collating the themes and content to produce the ‘five principles’, and involved wide stakeholder consultation.

Out of the common framework's development, the Learning and Implementation Community (LIC) was formed as a platform for implementing its principles. A group of garment brands and retailers dedicated to improving purchasing practices gather as a peer-learning community within LIC. Members convene regularly, collaborating with supply chain partners to implement practical changes. Through this initiative, the principles outlined in the common framework are put into action, driving tangible improvements in the sustainability and ethical standards of the textile industry.

Responsible purchasing practices in manufacturing

ETI is now building a common framework for manufacturing industries, in collaboration with GIZ, within the purchasing practices: in manufacturing initiative. The initiative is aimed at exploring the applicability of the principles outlined in the framework to various manufacturing sectors. Specifically focusing on industries beyond textiles, the initiative seeks to identify and address challenges in implementing improvements within this diverse sector group. Through stakeholder surveys, group consultations, and direct advocacy with companies, the project aims to enhance collective understanding regarding the engagement levels of buyers and suppliers in purchasing practices, including awareness of their human rights impacts.

Responsible purchasing practices in food

All sectors benefit from responsible practices, which is why ETI, in consultation with partners, recently also developed the Common Framework for Food, giving an overview of what is meant by ‘responsible purchasing practices’ for the food industry. This framework acts as a core reference document, to provide a common language and structure for discussion and action, after which guidelines for different elements of the industry may be developed.

It's vital to emphasis the importance of responsible purchasing practices in meeting regulatory standards like the CSDDD. Prioritising shared responsibility, adopting a risk-based approach, and collaborating with stakeholders are essential steps for companies to manage supply chain complexities effectively and improving the lives of workers worldwide.

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[1] Partner organisations include Ethical Trade Norway, Fair Wear, the German Partnership for Sustainable Textiles (PST), and the Dutch Agreement for Sustainable Garments (AGT).

 

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ETI's blog covers issues at the intersection of business and human rights. We feature posts by, for and from our members and allies; we do not accept or offer payment for posts or publish content outside of these criteria. We welcome a range of insights and opinions from our guest bloggers, though don't necessarily agree with everything they say.