Corporate supply chains will come under additional scrutiny this year, as governments around the world pressure companies to purge them of illegal or objectionable practices.
Companies already are doing a lot to ensure the integrity of their operations, and those of their suppliers around the world. But pressure is growing to push supply chain management even further beyond its present scope. New initiatives would make producers responsible for addressing broad social ills that may exist at some point in their extensive global supply chains, including child labor, forced labor, human trafficking and armed conflict.
Examples include the California Transparency in Supply Chains Act, efforts to address forced child labor in Uzbekistan and Brazil, and the Dodd-Frank law, which requires companies to disclose whether “conflict minerals” are used in their products.
These efforts seek to address systemic failures of governance or pervasive social problems. But a prescriptive approach does not tackle the underlying cause of the problem and is therefore doomed to failure. We need a clearer understanding of the mutual responsibilities of governments and companies in upholding internationally agreed standards of human rights.
Luckily, new guiding principles from the United Nations do just that. They ask companies to respect human rights, starting with legal compliance, and institute a due diligence process to “know and show” that they do.
But the U.N. guidelines also very clearly state that companies cannot — and should not — assume the responsibilities of governments, and that suppliers are themselves responsible for complying with national law and respecting human rights.
This is a sensible and responsible approach. Policymakers should use the U.N. principles as a model for ensuring appropriate action by companies to keep their supply chains clean, while maintaining pressure on local governments to live up to their fundamental responsibilities.