The NGO Clean Clothes Campaign (CCC) has published a study called “Why all companies need to be included in due diligence and corporate accountability legislation”.
The study analyses the Dutch textiles and garment sector as a whole and the companies participating in the Dutch Responsible Business Conduct (RBC) Agreement on Sustainable Garments and Textiles (AGT). Based on this assessment CCC concludes that any company size threshold would significantly limit the scope of the legislation and its effectiveness.
In the Netherlands, a draft law has been submitted that uses 250 employees as the lower limit. CCC’s analysis shows that a 250-employee threshold would exempt 95% of the companies in the textiles and garment sector from due diligence obligations in the Netherlands, since the vast majority of the Dutch companies in the above mentioned sectors are SMEs.
Such a limitation would impede the regulation from effectively reaching its objective, considering that SMEs can also face severe human rights and environmental risks in their value chain. This is particularly true for the textile and garment sector, where stories of exploitation and environmental damage are incessantly reported by civil society organizations and the media.
Clean Clothes argues that introducing a high threshold could create loopholes that enable businesses to escape from complying with due diligence obligations, by splitting their own assets or personnel across subsidiaries and holding companies. A universal obligation to conduct due diligence would instead bring about additional benefits, such as avoiding confusion on whether the company falls under the scope of the legislation or not. According CCC lawmakers should ensure that all companies conduct due diligence in a way that is proportional to their characteristics and the risks they have in the value chain. A general obligation would be necessary to encourage a behavior shift in the mindset of business owners and avoid human rights and environmental abuses across the globe.