Global Supply Chain: Guiding Principles

World trades in intermediate goods are now greater than all other non-oil traded goods combined. This is due to the multiple times intermediate goods are imported, a step or two is taken in their processing, and then they get exported again as intermediate goods to the next step, where the cycle is repeated until the final assembly. About 80% of global trade is now linked to production networks of multinational firms. Thus trade is no longer simply arms length exchange between countries governed by international trade law and policy. Much of it takes place among corporate entities determined by their optimization strategies.

According to International Labour Organization (ILO) Report one out of seven jobs worldwide related to global supply chain in terms of orders of magnitude. The challenges of securing socially sustainable supply chains ranks high on the must do list.

The model of distributed production and service provision has transformed the world far better. In developing countries it has helped to bring more countries and people out of poverty. It has provided work opportunities that they lacked previously. In industrialized countries it has kept consumer prices low and helped keep inflation in check and it has generated extraordinary technological innovations across all spheres of the human experience.

Firstly, the Guiding Principles help companies to identify human rights risks along their entire supply chain, through an approach that reduces harm and creates social value. They do so by outlining the components of human rights due diligence process enabling companies to manage the adverse impacts on people of their own conduct and their business relationships. The components include companies assessing potential and actual impacts and acting on that information.

Secondly, the Guiding Principles highlight the many ways in which governments can incentivize responsible business conduct and perfect people from human rights abuse by business. This requires a mix of policies at the legislative and regulatory levels, as well as governments taking these factors into accounts when they support or otherwise do business with business.

Thirdly, the Guiding Principles identify key means through which both business and Governments need to ensure access to effective grievance procedures and remedy for the inevitable scenarios where people- typically the poorest and most vulnerable- suffer the results of abusive business practices. This involves judicial and non-judicial state based processes, as well as operational level grievance mechanisms companies can establish or participate.

In short the Guiding Principles   provide a road map for helping to bridge the governance gaps and imbalances that must be addressed for global supply chain and globalization itself to become socially sustainable.

Ms. Vijayalalitha Sivakumar

Assistant Professor