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EU ponders groundbreaking rules to help smallholder farmers

The EU institutions are negotiating a directive for due diligence by EU and non-EU companies. Strong rules aligning with global business and human rights standards ensure sustainable practices. Fairtrade urges EU member states to prioritise smallholder farmers' rights and perspectives.

Published on 12 July 2023 at 12:25

In today's world, running a business in a sustainable manner that respects human rights and the environment is paramount. It goes beyond just ensuring fair treatment of one's own workforce; it encompasses the entire supply chain and the communities affected by business operations. While international frameworks and guidance exist to steer companies in the right direction, their implementation remains incomplete, perpetuating human rights violations .

That’s why we need legislation. It should be mandatory for businesses of all sizes and across the entire value chain to assess their role towards major systemic problems such as poverty, deforestation, forced labour, pollution and workers’ safety. The companies must also act to prevent, mitigate and remediate their impacts.

So, how can we enhance business responsibility for human rights and the environment? This fundamental question is currently being addressed by the European Parliament, EU member states and the European Commission in the trilogue negotiations on the Corporate Sustainability Due Diligence Directive (CSDDD).

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At Fairtrade, we commend the stance that the European Parliament has taken. It goes the furthest in being aligned with the international guidelines on HREDD – Human rights and environmental due diligence (UNGPs and OECD guidelines) and this way is setting the highest level of ambition among these three institutions.

EU decision-makers have a clear choice: HREDD can become groundbreaking in advancing farmers and workers’ rights and environmental sustainability. Or it can become a piece of legislation which puts additional requirements, cascaded from big brands and retailers, on producers, without fair sharing of costs and consideration for the views and needs of smallholder farmers. The consequence being a legislation which runs the risk of worsening small producers’ livelihoods and hence not addressing the root causes of human rights violations and environment degradation.

Essential Elements of Due Diligence Legislation

HREDD is not a one-size-fits-all process. It varies depending on the size and nature of businesses, whether it's a small coffee producer organisation or a large retailer with thousands of supply chains. HREDD is about continuous improvement, transparency, collaboration, dialogue, respect, and fair cost-sharing. These foundational principles must be incorporated into the CSDDD, as per the European Parliament's position.

Meaningful stakeholder engagement is a central part of due diligence, and the most important stakeholder group are people whose rights may be affected by how companies operate. Companies must make a genuine effort to listen to the views of rightsholders at every step of the HREDD process.

Furthermore, companies' risk assessments need to include a thorough analysis of the impact of their purchasing practices on suppliers. Unfair purchasing practices, such as short lead times, last-minute order changes, and price pressures, have significant implications for suppliers' ability to ensure safe working conditions, fair wages, and sustainable production practices.

Businesses should bear the responsibility of contributing to an adequate standard of living throughout their value chains. This means living wage for employees and living income for smallholders and self-employed workers. Both living wage and living income are human rights, as outlined in the International Covenant on Economic, Social and Cultural Rights (article 7 and 11) and Universal Declaration of Human Rights (article 23 and 25).

The cost of due diligence should not be passed on to business partners in weaker positions. HREDD should not be about top-down requirements that impose costs solely on producers.

Lastly, the rules on how to end a business relationship need to take into account the impacts on rights holders. Disengagement should only be considered as a last resort after the company has made every effort in its power to prevent and mitigate adverse impacts.

Additional Support for Implementation

While robust HREDD legislation is crucial, it is equally important to provide support to businesses on the practical aspects of implementation.

The final legislation must outline the accompanying measures that can assist value chain actors in the implementation process, such as training, online resources, financial support, and partnerships. In designing these support measures, it is essential to incorporate the voices of rights holders.

This is why it is essential to collect much more information on the challenges, needs and costs that setting up a HREDD process requires from producers. Fairtrade Latin American and Caribbean Network of Fair Trade Small Producers and Workers (CLAC) is currently running pilot projects with four producer organisations in Latin America to put this data together.

The Role of Fairtrade in Advancing HREDD

Multi Stakeholder initiatives like Fairtrade play a vital role in supporting corporate due diligence efforts but they are not a substitute for companies’ own HREDD.

Through our standards, we expect Fairtrade-certified organisations to implement due diligence measures, including risk assessments, policies, and remediation work. We also provide ongoing guidance, training, and program-based support to farmers, workers, miners, and management at plantations and factories. Our tools for this work include the Fairtrade Risk Map.

Furthermore, we have developed comprehensive guides and resources for various stakeholders in the value chain, offering practical tools and content to facilitate the development of an effective HREDD process.

Recently we released a set of new HREDD advisory services for companies to support them in their due diligence journey. In particular, we can support risk prevention and mitigation, and meaningful engagement between companies and affected people.

In conclusion, achieving responsible business conduct requires robust legislation, and collaboration between businesses, governments, and civil society. The ongoing trilogue negotiations on the CSDDD provide an opportunity to set the right level of ambition and pave the way for groundbreaking advancements in protecting human rights and the environment.

We have a role to play, but so does every supply chain actor. And government.

Fairtrade calls for EU member states to demonstrate their dedication and ensure that we have a strong EU level HREDD law which has positive impacts on small-scale farmers and workers in value chains.

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