Point de vue
From the corporate duty of vigilance to social procurement strategies
Ensuring a just transition along the supply chain
Article written by Céline Kochinyan, Lou Blanco, Jules Chaillé, Ema Darthiail and Eugénie Duféÿ from Sustainability team.
With over 2.8 million deaths per year related to professional activities in the world1 and 4.9 million victims of modern slavery in 2021², it has become impossible to ignore the hazardous nature of working conditions in some supply chains. New scandals regularly question the role of purchasers in improving the working conditions of their suppliers. Cases such as Foxconn (2010), the Rana Plaza accident (2013) or the exploitation of the Uyghur community (2019) have led lawmakers to impose new constraints in order to ensure the respect of labor and human rights worldwide. In this increasingly demanding environment, purchasers must accept their social responsibilities.
Addressing challenges related to the environmental transition of supply chains requires the Purchasing function to bear the responsibility of a just transition, which implies safeguarding the rights, means of subsistence and decent employment opportunities of all workers faced with the transformation of economies and ways of working.
Increasing regulatory pressures to address the challenges of a just transition in supply chains
The French law on the corporate duty of vigilance (2017) extended companies’ scope of responsibility to their entire supply chains. Henceforth, eligible companies have the legal obligation to prevent and stop any infringement of fundamental freedoms, health and security caused by their activities or those of their direct and indirect commercial partners. This regulation will soon be applied at the European level via the proposal for a European directive on the duty of vigilance3 submitted by the European Commission in February 2022. Meanwhile, the Commission sent purchasers a strong signal by suggesting, on September 14th, 2022, the prohibition of any product made from forced labor4 on the European market.
Furthermore, a European social taxonomy5 could soon establish a classification of companies’ activities to guide investments toward those that most contribute to Europe’s social goals, defined in three categories: decent work, adequate living standards and well-being, and inclusive and sustainable communities and societies.
Simultaneously, norms developed by the European Financial Reporting Advisory Group (EFRAG) in the context of the Corporate Sustainability Reporting Directive (CSRD)6 aim at enriching companies’ extra-financial reporting. From 2024 onward, eligible organizations will have to publish sustainability reports addressing several pillars of the just transition, including:
Efficient levers exist at each step of the purchasing process to mobilize the entire supplier panel in favor of a social procurement strategy. Purchasing categories should be mapped to prioritize the progressive deployment of relevant levers.
Definition of the needs and supplier sourcing
During this first phase of the purchasing process, purchasers may adopt various commitment levels. The most accessible consists in sharing their social strategy through requirements specifications and considering the specific social challenges related to the purchased good or service’s industry and country of origin. Purchasers may also invite potential suppliers to present their own social strategy during requests for proposals. Going further, purchasers may act to facilitate small businesses and social economy actors’ access to requests for proposals, through institutional partnerships (for instance in France, the “SMB Pact”) or public platforms. The “Inclusion Market” is a solid example of a platform developed by the French government that lists 8,000 inclusive businesses.
The French Ministry of the Economy and Finance published a guide dedicated to the social considerations of public orders
The French Ministry of the Economy and Finance has recently published the 2022 edition of its guide on the social considerations of public orders7, that is meant to help purchasers identify the most virtuous suppliers, especially considering support given to the occupational integration of people excluded from the workforce, fair trade and gender equality.
Supplier evaluation is a key step to review the supplier’s social performance and highlight its commitments. Following an impact measurement approach, purchasers may define relevant indicators and collect corresponding data to measure the social impact generated by projects, as well as include social criteria in suppliers’ performance evaluations. Going further, purchasers willing to support their partners may establish action and mitigation plans in order to align the supplier’s performance with the goals set in their social strategy. Engagement actions such as responsible suppliers trophies or creating links with social impact players tend to encourage suppliers’ skills acquisition on social challenges.
In October 2020, Air Liquide’s Group Purchasing Department organized its third “Business Meeting” for the adapted and protected work sector. Among the hundred guests, 10 organizations that provide assistance to people with disabilities in the workforce had the opportunity to introduce their achievements with the Group’s subsidiaries. Following this event, 80% of participating organizations have been able to initiate or renew their commercial relationship with the Group.
Our conviction: social procurement strategies are key to build resilient supply chains
Co-construction initiatives are especially relevant, not only to maintain a high level of standard regarding companies’ social performance and anticipate their regulatory compliance, but also to build strong relationships with partners, multiply the social impact of deployed projects and strengthen the resilience of supply chains. Purchasing is no longer a simple business relationship but a true long-term investment that involves many stakeholders.
Feedbacks show that developing social procurement strategies enable an improved understanding of supply chains and facilitate reporting. By supporting new actors’ access to requests for proposals, purchasers diversify their supplier panels, reduce shortage risks in their supply chains and capture potential innovations. Social procurement strategies hence become real vectors of performance.
1 International Labor Organization, XXI World Congress on Safety and Health at Work: Global action needed to tackle rising work-related injuries and diseases, ILO says, September 2017.
2 International Labor Organization, Forced labour, modern slavery and human trafficking (Forced labour, modern slavery and human trafficking) (ilo.org), September 2022.
3 1_1_183885_prop_dir_susta_en.pdf (europa.eu), February 2022.
4 European Commission, La Commission prend des mesures pour interdire les produits issus du travail forcé sur le marché de l'Union européenne (europa.eu), September 2022.
5 Plateform on Sustainable Finance, Final Report on Social Taxonomy (europa.eu), February 2022.
6 Efrag, Public consultation on the first set of Draft ESRS - EFRAG, April 2022.
7 Ministry of the Economy and Finance, Achats publics durables : publication de la nouvelle version du guide sur les aspects sociaux de la commande publique | economie.gouv.fr, September 2022.
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