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OFC-Due-Diligence-Report JM EcoTextilenews Template 06-Jan-17 4:02 PM Page 1ECOTEXTILESPECIAL BRIEFING 2017EDue diligence in textile sourcingSAMPLLooking beyond compliance to reduce risk and improve livesPublished byThe Environmental Magazine for the Global Textile Supply Chain

Contents JM Layout 1 05-Jan-17 4:08 PM Page 4ContentsIn the first of a series of advisory articles on due diligence in cotton sourcing,Simon Ferrrigno introduces the due diligence concept and discusses if it is morethan compliance and risk management.Part II. The environmentE713Part I. IntroductionPLPAGERegarding ecosystems, issues of biodiversity, soils, existing land cover,water resources and overall land value can sometimes be overlooked.Part III. Economy and societyM17After exploring some of the environmental considerations for due diligence in thetextile supply chain, we tackle economy and society, and how brands and retailerswill need to consider these issues down on the cotton farm. Key areas include labour,human rights, legal and regulatory regimes, business practices and even governanceand government policy in the cotton sourcing regions of the world.SAPart IV. Policy and governance23We take a wider look at government and policy issues, how these can impact onsourcing decisions, and how robust due diligence can take brands and retailersmuch further than some standards or certification programmes ever can.Recommendations284Due diligence is not something that should be taken lightly when developing acompany’s sourcing strategy, neither is it something that can be picked off theshelf and forgotten about, like relying on a textile standard to make claims onenvironmental performance or social compliance. We conclude this briefing withgeneral and environmental recommendations, as well as some practical steps forundertaking effective due diligence. Due diligence in textile sourcing - Special Briefing

Part-2 JM Layout 1 05-Jan-17 4:22 PM Page 14Due diligence might also suggest that a retailershould source cotton certified to a standard, joina membership body such as a multi-stakeholderinitiative, and paradoxically ask that you thencheck the performance of these, down todetermining indicators of your own such as soiltests, where the current indicators or impact datafrom promoters is insufficient, general or toovague. While joining an initiative might feel likereducing risk, due diligence literature as we sawin Part I of this series (Ecotextile News, October2016, pp 54 – 57) says that responsibility restswith the buyer or user of the raw material, while acheck on the standards will suggest there is nodata here, on soils, on carbon and GHGs.PLSoil leads us to the question of land – what landshould be farmed, and how? Should you – as abrand or retailer – ever condone clearing land, orforest, woods, or savannah? Should you farmcotton or raise sheep where there are watershortages for domestic needs, or food shortages?Can you in these cases improve the situation, andmake it OK to go ahead?Eallowing soils to degrade, to erode (beyond theircapacity to renew), to lose nutrients, or torelease carbon, methane and nitrogen is theopposite of sustainable – and this is somethingno textile standard or other scheme claiming tooffer sustainable cotton really measures. So it isclear that soil is a very good place forresponsible brands and retailers to start onproject due diligence, especially as with soil wecan also see the impacts on biodiversity andclimate change.MAPPING RISK IN ventAccountUniqueness (endemicspecies, scientific value)FragilityCurrent, proposedRefugesHabitat protectionWildlife corridorsHabitat destructionLand clearanceDisturbing food chainsReportsOnline databasesOpen access to datafor external partiesReduce run-off/spray driftImplement a low impactsfarming systemNo land clearanceMaintain land cover,native vegetationRequest expert reviewsof due diligence plansand reports to ensuregood performance andcivil society dialogueFertilityTest soils and adapt fertilitymanagement to build fertility, soilcarbon, water retention capacityOptimise soil fertilitymanagementExcessive use ofmineral fertilisersRegular soil testing,reporting via accreditedagency/consultancyErosionUse green manures and compostsetc.Post-harvest cover crops,Improve ploughing and tilling, ensure mulching.soil cover outside growing seasonPollutionImpacts on neighbouringecosystems (and from)MChemical useValue (economic,spiritual, community)ResilienceAssessSASoilsWaterLand cover and use14Carbon sequestrationand potentialBuild soil organic matter, ensureleast disturbance of soilExcess irrigationGroundwater depletionFreshwater pollutionMonitor and reportAvailabilityStressCurrent useCurrent usersNeedsSourcesRecharge and harvestingReduce use – optimal consumptionInvest in water managementInvest in water recharge/harvestingSupport access to water forimportant usesExcess irrigationGroundwater depletionFreshwater pollutionNitrate leachingMonitor and reportReforestationAgro-forestryRespect local users and usesBan land clearance anddeforestationNo land-grabsNo land deals in conflictareas and extreme carewith land deals incountries with poorgovernance or poorhuman rights recordsReport, monitor, consultlocal communities,ensure grievancemechanisms are in placeWork with and betransparent with civilsociety and human rightsorganisationsWooded areas (forest,woods, savannah)Existing farm landCurrent land uses Due diligence in textile sourcing - Special Briefing

Part-3 JM Layout 1 05-Jan-17 4:28 PM Page 19Special briefingMODERN SLAVERY ACT AND DUE DILIGENCEModern slavery act coverageRequirementsDue DiligenceSlavery, forced labour, bonded labour (e.g.,debt bondage), coercion, compulsion, etc.Disclosure (if turnover over 36 million) – slaveryand trafficking statementHuman Rights Due DiligenceMen, women, childrenSupply chain maps, policies, due diligenceprocedures, areas of risk, indicatorsMap supply chainReview existing actions, policies and proceduresRank and prioritise risksReview supply chain and assess partners and risksAssess level of contribution of the business to problem(s)EMitigate, remedy and/or preventMonitor performance, report, communicate (modern slaveryreport – slavery and human trafficking statement) steps takenSEDEX'S INDICATORS FOR MODERN SLAVERY - SEDEX (2016) GUIDANCEON OPERATIONAL PRACTICE AND INDICATORS OF FORCED LABOURRecruitmentEmployment Workers uninformed or misinformedabout terms of emplyment Workers not provided withunderstandable, legally compliantwritten contracts Fraudulently charging fees for travel,health checks, or work documentation Workers visa and work permit used to a single employer Requirement to stay in company or brokercontolled housing Monetary penalties or withholding of wages for earlycontract termination Workers unable to enter or leave thepremises freely Worker forced to pay for return travel to their home Identity documents confiscated or withheld Undocumented migrants threatened with notification ofauthorities if they leave employment Wage deductions used as a disciplinary measure Workers forced to pay financial deposits or “security” feesas “runway insurance” Physically abusive or humiliating discipline andtermination processMSource: Sedex Modern Slavery Briefing Excessive or illegal wage deductionsPL Workers charged illegal or excessiverecruitment feesExitPrinciples. Reporting on modern slavery – labourand human rights – is now a legal requirement formany brands.New rules of sourcingA Human Rights Impacts Assessment would alsolook at labour rights, as well as the specificproblems affecting women and children, howpeople are recruited, and by who, all the waydown to who collects the pay packet, or whoskims someone’s pay. Of course, all this will bedifficult if not impossible at first in informal ❱SAFurther questions will include who makes localplanning decisions? Is there proper democracy?Is there corruption? Proper oversight? Arebenefits and profits adequately shared withworkers, local people, workers and businesses?What livelihoods are affected, what other jobs?These days, you might also need to worryabout whether you are paying the minimum orliving wage, and investing in the community, orchecking what impacts your investments andsourcing is having on other needs, such asfood production, or water. Finally, as AgenceFrançaise de Développement (AFD) stresses,looking at the quality of contracts for landtenure is important.There are new tools and rules for brands tofollow, on top of the various OECD and AFDguidelines, legally binding ones such as theModern Slavery Act and a similar law inCalifornia, the EU non-financial reportingdirective and the voluntary UN GuidingAs with due diligence, the Modern Slavery Actrequires companies to go beyond only thoseparts of the supply chain under their directcontrol. It applies to everyone in the full supplychain. As with due diligence, it is not a bad ideato be working with external partners, including onrisk assessment, impacts assessments,monitoring and reporting. A good traceabilitysystem, with a requirement that suppliers takepart and map their own suppliers and contractorsis also a must.Due diligence in textile sourcing - Special Briefing 19