Krajewski, Markus

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Effective Human Rights Due DiligenceTen Years After Rana Plaza?Markus Krajewski 2023-05-10T16:31:41When Amin Amirul Haque, leader of the Bangladeshi trade union National GarmentWorkers Federation (NGWF), won the International Nuremberg Human RightsAward in 2015 he came to Germany seeking support for his fight for better workingconditions in the garment industry in his home country. Two years earlier, thecollapse of the Rana Plaza building leading to the death of 1135 workers and morethan 2000 injuries sent shockwaves through Germany when clothes made forPrimark, Kik, or Benetton were found in the rubbles. Lawmakers and politicianspromised to do everything possible to improve the working conditions in globalsupply chains. The German Act on Corporate Due Diligence Obligations in SupplyChains (Lieferkettensorgfaltspflichtengesetz, LkSG) of 2021 was a result of thesepromises.Exactly ten years after the Rana Plaza disaster, Haque turned to Germany againand submitted a complaint on behalf of NGWF to the Federal Office for EconomicAffairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA)which oversees implementing the LkSG against two major international companies,IKEA and Amazon. The complaint was lodged with the support of two German non-governmental organisations, FEMNET and the European Center for Constitutionaland Human Rights (ECCHR), and argues that IKEA and Amazon failed to exercisedue diligence under the LkSG by refusing to sign the Accord on Fire and BuildingSafety in Bangladesh (Bangladesh Accord) and its successor, the InternationalAccord for Health and Safety in the Textile and Garment Industry (InternationalAccord). This first-ever publicly known complaint lodged under the LkSG raisesseveral key legal questions and provides the BAFA with the chance to set a strongprecedent for its supervisory duties.In this post, we explore the relationship between the Accord and human rights duediligence and argue that joining the Accord is essential for fulfilling the due diligenceobligations under the LkSG. We argue that Amazon seems to have violated theLkSG prima facie while IKEA’s claim would have to be assessed in-depth by BAFA.The Bangladesh Accord and its successorsThe Bangladesh Accord is a legally binding agreement between global brands,retailers, and unions to ensure safe and healthy working conditions for garmentworkers in Bangladesh. It was created in response to the Rana Plaza buildingcollapse in 2013 and numerous other deadly factory fires in Bangladesh with thegoal to create a safe working environment for workers. In order to achieve itsgoal, the Accord established and implemented mechanisms for conducting factory- 1 -inspections, monitoring remediation, providing safety training, and resolving safetycomplaints.After the expiry of the Bangladesh Accord in mid-2021, garment brands and globalunions agreed to the new and expanded International Accord which came into forceon 1 September 2021. Like its predecessor, the International Accord is a bindingagreement between companies and trade unions aimed at improving the health andsafety of workers in the textile and garment industry. The agreement incorporatesthe same components as the earlier Accord, including freedom of association,transparency, financial feasibility of remediation, safety committee training, workerawareness programs, and an independent complaints mechanism. The signatoriesof the agreement commit to the health and safety work already implemented by theRMG Sustainability Council (RSC) in Bangladesh and to expand the work to othercountries based on feasibility studies.The International Accord incorporates core features of human rights due diligencerequiring signatory companies to identify and manage the human rights risksassociated with their operations and to ensure the safety of their workers.  TheAccord facilitates an inspection program to identify risks and assess the adequacyof safety measures to ensure a safe workplace. The RSC is mainly responsiblefor carrying out initial inspections to assess fire, electrical and structural safetystandards, as well as follow-up inspections to monitor remediation and potentialnew issues. The RSC also conducts inspections in response to safety complaintsand incidents. As part of the remediation plan, the RSC’s Chief Safety Officer(CSO) identifies the corrective actions required to bring a factory into compliancewith building, fire and electrical safety standards. Once the corrective actions areidentified, signatory companies require their suppliers to implement these correctiveactions according to a defined schedule. The Accord also ensures that workers canraise concerns about health and safety risks safely and confidentially and includesprovisions for establishing a worker complaint process and mechanism. The RSCimplements the complaints mechanism. Finally, key aspects of the program arepublicly available and regularly updated online. This includes an aggregated list ofall suppliers in Bangladesh and sub-contractors, written Inspection Reports, publicstatements by the CSO, and quarterly Aggregate Reports summarizing industrycompliance data, findings, remedial recommendations, and progress on remediationand training.While the International Accord is not without flaws, it is generally agreed that itconstitutes best practice in the garment industries and may reduce adverse impactson human rights by improving the working conditions in the industry.Due diligence obligations under the LkSGThe LkSG requires all German companies with more than 3,000 employees (1,000as of 1 January 2024) to exercise due diligence with regard to human rights andenvironment-related risks in their supply chains. The due diligence obligationsinclude, inter alia, preventive measures and taking remedial actions. The obligationsgenerally only cover the company’s own operations and its direct supplier. However,- 2 -if the company has “substantiated knowledge” that violations of human rights-or environment-related obligations at indirect suppliers may be possible, the duediligence obligations also extend to indirect suppliers.As both IKEA and Amazon have subsidiaries or branch offices in Germany andemploy well over 3,000 employees the LkSG applies to them. The pertinent humanrights risks in the textile supply chain relate to the right to safe working conditionsand the collective labour rights as enshrined in the International Covenant onEconomic, Social and Cultural Rights as well as core ILO Labour Conventions whichare included in the Annex to the LkSG.In an open letter to IKEA and Amazon in November 2022 FEMNET and ECCHRstressed that the companies‘ failure to sign the Bangladesh Accord, despite itsproven effectiveness in improving workplace safety, can be considered a breach ofthe human rights due diligence under the LkSG. The letter also pointed to concretehuman rights risks in the supply chains of Amazon and IKEA and from not signingthe Accord. Based on this and the well-known facts about the situation in thetextile industry in Bangladesh, it is clear that Amazon and IKEA have substantiatedknowledge of the pertinent human rights risks and are therefore obligated to extendtheir due diligence activities to their indirect suppliers in Bangladesh.Section 6 LkSG specifies the duty to take appropriate preventive measures withoutundue delay. Vis-à-vis its suppliers, companies need to, inter alia, implement trainingmeasures and agree on appropriate control mechanisms to verify compliancewith the company’s human rights strategy. Companies also need to review theeffectiveness of the preventive measures regularly and if the circumstances requirea new assessment. If violations of human rights already occurred, companiesare under the obligation to adopt appropriate remedial actions to prevent, end orminimise the extent of this violation as spelled out in Section 7 LkSG. If violationscannot be ended in the foreseeable future, the company must adopt a concept toend or minimise the violation. Such a concept can include joining forces with othercompanies in sector initiatives and sector standards to increase the company’sleverage to influence the causes of harm. Considering that work-related humanrights violations in the Bangladeshi garment industry have occurred in the past andare likely to occur in the future, companies with suppliers in that industry are underan obligation to take both preventive and remedial measures.Joining the International Accord as preventive andremedial measures under the LkSGThe International Accord requires its member companies to adopt standards andpolicies which are also required under the LkSG. Joining the Accord can thereforebe seen as a preventive and remedial measure in the meaning of Articles 6 and 7LkSG. However, the legal question which is at the heart of the complaint againstIKEA and Amazon does not concern whether these companies could discharge theirduties under the LkSG by joining the Accord, but whether they have to do so as theAccord is the most effective measure available to global brands with supply chains in- 3 -Bangladesh. More generally, how much discretion and leeway do companies havein fulfilling their obligations? The key to the answer is that preventive and remedialmeasures need to be adequate and effective. If there is only one adequate andeffective measure available, the company is obligated to take this measure. In sucha case, the due diligence requirements are no longer obligations of conduct, but turninto obligations of result. BAFA would then need to impose the concrete measure onthe respective company.It is doubtful if BAFA will go this far in its first-ever case. Commentators have alreadyassumed that BAFA will not impose any concrete obligations on IKEA and Amazon.Nevertheless, it is hoped that BAFA develops some general standards which canbe applied if global companies refuse to join an internationally recognised collectiveagreement which provides adequate preventive measures and remedies. It couldbe argued that if such agreements exist, as in the case of the International Accord,there is a rebuttable presumption that joining the agreement is the only adequateand effective measure. Such a presumption could be rebutted if a company canshow that it implements alternative measures which are at least as effective. Inthe case at hand, IKEA claimed that its own standards go far beyond the Accordrequirements and that it wants to remain independent of international agreements.Amazon has not explained why it decided not to join the Accord. Based on thestandard suggested here, Amazon would therefore violate the LkSG prima faciewhile IKEA’s claim would have to be assessed in-depth by BAFA.ConclusionDo human rights due diligence laws contribute to a reduction of adverse humanrights and environmental impacts? While it may be too early to answer this questionempirically and thoroughly, it is clear these laws will deliver justice only if theimplementing authorities take some bold decisions and are ready to transform duediligence requirements into concrete obligations of result.- 4 -

Effective Human Rights Due Diligence Ten Years After Rana Plaza?

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Effective Human Rights Due Diligence Ten Years After Rana Plaza?

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