Multiple Legislations May Exacerbate Duplicative Burden of Standards on Suppliers

The Guide says: "This document should not be construed as legal advice or a legal opinion on any specific facts or circumstances." But the content itself is about legal processes in US/EU/UK. So, de facto, the Guide is still about asking "suppliers" to adhere to laws and legislations in the US/UK/EU. Comments, please.
[The context: The reason suppliers are being asked to adhere to "Global North" laws is that the legislators operating in the "Global North" are proposing and/or passing legislation that will have knock-on effects on suppliers operating outside of those jurisdictions. This is true regardless of the contents of the report. The report is simply an attempt to help apparel suppliers who may not be aware of or have adequate in-house legal expertise to understand this landscape.]

Gauri, Ilishio, Vidhura and Kim: To your question about the content of the report: The resource is intended to provide an in-depth overview of some upcoming legislation to inform suppliers and encourage them to do further research and prepare. It does not include legal advice but shares knowledge of upcoming and potential legal changes within the sector. In other words, it is mainly research-based recommendations. We encourage suppliers to take this as a starting point and discuss internally with their legal teams for customised legal advice.

Leaving the Guide aside a bit. The 12 legislative initiatives put manufacturers in the Global South in a quandary. They now have to follow laws and regulations in their own countries, and have to tread a careful path while supplying to US/EU/UK. Without going into the merit or demerit of the laws, but all these do make life difficult for "suppliers," don't they?
Ilishio Lovejoy: Our concern is not the ‘difficulty’ but that upcoming legislation will lead to more duplication of paperwork and reporting rather than supporting improved supply chain partnership to address the industry’s salient social and environmental norms. 

Vidhura Ralapanawe (Epic Group): It is true the guide is asking “suppliers” to adhere to the law, because the law is written to encompass the supply chain. In principle, taking some level of responsibility for the supply chain is not an idea we are opposed to. 

However, for such legislation to be successful, they should address the fundamental relationships between brands and manufacturers (including commercial terms) that lead to behaviours (good or bad) to emerge. If the outcome of the legislation is significantly increased paperwork, and pushing responsibility to suppliers, we don't believe this would be successful. We have been trying this topdown approach for decades, and while it has led to the removal of excesses, it is not sufficient to shift to a really sustainable setting.

Kim van der Weerd: While it’s true that many of the legislative initiatives covered in the paper are likely to result in hidden burdens for apparel suppliers, I would instead emphasise the broader gap this report highlights: when it comes to global issues like sustainability, one government’s goals vis-a-vis sustainability will require action and support from entities that are not part of that government’s jurisdiction. I think the question this project raises is this: how do we build those bridges? How do we ensure that the entities, that will have to do much of the heavy lifting, help us achieve our collective goals are included in the legislative process, so that we increase our chances of success and impact. 

One of the key highlights mentioned in the Guide is this: "Increased focus on grievance mechanisms which may lead to conflicting requirements or duplication of work." Take this with another point: "Increased reporting requirements and data requests. This will require stronger data gathering and management capacity." Just these two together means that’s a lot of work for suppliers. How do you think they will manage?
Ilishio Lovejoy: Now that the research is out, we can start to have the conversation internally and with other suppliers, and hopefully with our brand customers. This will mean more work; so, now we need to try to manage this and remain focused on the outcomes, not drawing in processes, data collections and paperwork. 

In general, brands have much larger teams working to respond than suppliers do.

Vidhura Ralapanawe: I think the scale of the challenge would vary from company to company—but you are correct that this leads to an increased workload. While we cannot say how the industry as a whole will respond, everyone will need to build capacity and processes to meet the requirements (and likely based on how each brand would specifically ask).

Our intent is to give a heads-up to manufacturers so that they can start building the necessary systems and processes with understanding, rather than waiting for brand-specific direction which may still create exposure and may not come with sufficient lead time to implement.

Gauri Sharma: Yes, while the report does draw these conclusions, there were still some high-level takeaways that suppliers can look into to standardise or become proactive at their end. For example, aligning with OECD Due Diligence Guidelines and building grievance mechanism tools. This could protect suppliers from duplication if they have already built their own systems, but this does not guarantee that brands will not impose their own differential requirements on suppliers. The suppliers that are already sustainability-focused and have the resources to implement these solutions could then have a competitive advantage.

Kim van der Weerd: The points you raise are precisely why we also emphasised the importance of proactively reaching out to brand partners. If suppliers can support brands and retailers to align on how they interpret new legal requirements, this has the potential to significantly reduce conflicting requirements for suppliers, which will ensure that suppliers’ time, effort, and resources are invested in things that have meaningful impact rather than in managing multiple checklists or standards.

The next question is related. The ones who can afford to put mechanisms in place are necessarily big players like the ones who commissioned your study. Sooner or later, most SMEs who form the backbone of manufacturing in the Global South, will either have to simply close shop, or sell out to these big players. Comments, please.
Gauri, Ilishio, Vidhura and Kim: This is a concern and something we don’t feel lawmakers have considered well enough. Lots of these requirements are not designed to support SME operations. This is why the group of suppliers commissioning this work felt strongly that the resource should be publicly available rather than keeping the benefits of the work to ourselves. We hope this resource encourages suppliers to work collectively and encourages legislators to better include suppliers of all sizes, and likely not within their jurisdiction, in the legislative process as this is the only way to ensure meaningful impact. 

The reality is that this legislation may result in consolidation of suppliers from brands, to minimise their risk, which will have an impact for smaller suppliers and their workforce. 

Smaller suppliers may have to work with brands which are based in countries without such tight regulation if they don’t have the capacity to comply.

Take two other points: "Brands may interpret and operationalize new legal requirements differently, this may lead to suppliers having to comply with multiple, conflicting standards." and "In some cases, EU Member States may interpret EU requirements differently." Summing them up only means one thing: chaos. Many would think it would be better to stop supplying to the Global North. Do you see that happening?
Ilishio Lovejoy: That would be an interesting shift and that may well happen for suppliers who do not have the capacity or willingness to take on the new requirements. In this case we may see suppliers opting to work with brands in other, less legislated, regions as discussed, but I don’t see that happening overall. Most will be pushed to find a way to comply with the—often differing—new requirements and reporting processes. 

Vidhura Ralapanawe: I do not think this will happen as long as there is a demand from the global North. This is not a process that will lead to manufacturing moving to the global North. Since the requirement is applicable irrespective of location, even manufacturers in the Global North will have the same reporting burden. 

We as manufacturers would love to work with unified standards because it just saves a lot of resources from our side that is spent on management and paperwork, as opposed to actual sustainability related work. The real work on the ground related to sustainability performance will actually suffer when we are buried with paperwork.

Gauri Sharma: Hard to say if a shift away from Global North will happen. This is another piece of research altogether! Maybe local production might increase, or regional preferences might change, but the EU and US are the main markets for exports, would be difficult to pivot. It’s also important to emphasise that suppliers want standardisation since, over the years, we have been subjected to multiple voluntary standards that have created audit fatigue. Such research papers are attempts to bring to light the repetitions and needs of standardisation across geographies.

The concern is that multiple legislations may exacerbate the duplicative burden on suppliers caused by multiple voluntary standards. It’s also important to acknowledge that additional due diligence or requirements come at a cost for suppliers, but that may not necessarily be accounted for in contracts or even within the legislative framework.

Kim van der Weerd: I think the point I would emphasise here is that there is a strong need for apparel suppliers to come together to collectively advocate for sustainability solutions that will have a meaningful impact. I hope that this resource catalyses some of that collaboration. 

From the 1992 Rio Summit to the COP27 in Egypt, it took the West 30 years to agree to something as fundamental as a loss and damage funding. And here too, the entire onus seems to be on the suppliers, as they were, in the Global South to spruce themselves up. Do you really think this (the 12 laws taken together) can work?
Ilishio Lovejoy: Only some of the laws are enacted and there are many more that the research wasn’t able to cover. Will these 12 legislations change the current operating landscape—yes. Will they fix the industry's human rights and environmental issues—I don’t think so in their current form. 

Much of the legislation seems to be focused on reporting outcomes, not root causes. And I don’t see genuine progress being made until root causes are recognised and addressed. 

Much of the legislation still encourages a topdown approach to supply chain management, which has led us to where we are now, so will doubling down on this approach lead us somewhere new? I hope legislators work to involve companies throughout the value chain so we can develop implementable legislation that tackles root causes and actual impacts.

Vidhura Ralapanawe: The real question is if those who draft legislation understand the real issues that delay or hinder action in the supply chains. Unless the legislation is geared to address these (in many cases in these legislation, we believe they aren't irrespective of their good intentions. 

Also, we must remember that legislation/regulation is just one of many things that influence action. We don't think legislation should be looked at as a panacea.

We believe that for us to make a significant shift on environmental and human rights issues, in addition to legislation in the Global North, many other things must happen. They include strengthening legal frameworks of implementation in manufacturing countries, addressing the power relations and purchasing practices of brands/manufacturers, shared ownership and responsibility of the value chain of the products we make. But the current transactional model of relationships that we have evolved into is not suited for this level of shared risk/ownership and collaboration.

Perhaps the challenges of the industry and the type of work needed may engender such relationships, but we believe that legislation as we have seen here is likely insufficient to make such a huge transition

Gauri Sharma: An acknowledgement and realisation on what these legislations mean for the suppliers is yet to happen in the industry, this paper is an attempt at creating that awareness. We need to have a real dialogue about whether such drastic transformation can happen without figuring out how the supply chain will make systemic changes without any change to the transactional nature of the industry. In the space of purchasing practices, there are currently only voluntary initiatives at a nascent stage—not much of this is acknowledged in legislation.

Kim van der Weerd: While it’s true that many of the legislative initiatives covered in the paper are likely to result in hidden burdens for apparel suppliers and that this needs to be more openly acknowledged and understood in public discourse, I would again emphasise the broader gap this report highlights: when it comes to global issues like sustainability, one government’s goals vis-a-vis sustainability will require action and support from entities that are not part of that government’s jurisdiction. I think the question this project raises is: how do we build those bridges? How do we ensure that the entities that will have to do much of the heavy lifting help us achieve our collective goals are included in the legislative process, so that we increase our chances of success and impact.