7 Jul 2021

Voluntary Schemes and Due Diligence: Foes and Friends? Our latest position paper.

Costa Rica COOPECAÑERA Sugar
Voluntary schemes support the protection of human rights and the environment across the world.

Robust voluntary schemes make contributions to the protection of environmental and human rights across supply chains. However, they do not replace due diligence.

Fairtrade has published a position paper on the role of voluntary sustainability schemes in corporate human rights and environmental due diligence (HREDD). Whereas we very much welcome the HREDD laws in Germany and Norway, we also recognise they fall short in some respects when it comes to effective corporate due diligence legislation, notably when it comes to living wages.

In order to implement these laws effectively, robust Voluntary Sustainability Schemes (VSS) that align with the UN Guiding Principles on Business and Human Rights, can play a role, especially for small and medium-sized enterprises (SMEs).

Objective criteria must be established

To ensure that only robust schemes with credible verification systems are recognised as due diligence partners, government bodies should establish objective criteria. The Fairtrade position paper proposes as criteria that these schemes:

  • involve rights holders and civil society,
  • have inclusive and transparent standard setting,
  • have a credible assurance system with ISO17065 accreditation,
  • encourage all their partners to engage in HREDD and continuous supply chain improvement,
  • have processes in place to identify and address root causes of human rights and environmental violations, including disempowerment of rights holders and unequal distribution of profits in supply chains,
  • shoulder their responsibility to continuously deepen their impact and use independent impact research to develop their programmes.

Engaging with crucial stakeholders: the impact of working with sustainability schemes like Fairtrade

The paper also makes it clear that the responsibility for establishing and implementing due diligence processes always lies with the companies concerned. Fairtrade can, however, support business partners and suppliers at each step of the HREDD process, through expertise, advice, transparent standards on key human rights issues, programmes, and independent audits.

This is an added value especially for small and medium-sized enterprises that need external expertise. Bringing power to Fairtrade producers and workers and promoting dialogue between supply chain partners is a critical part of our approach.

"Voluntary sustainability schemes cannot do everything and not every scheme can do it " emphasises Melissa Duncan, Executive Director of Fairtrade International. "We invite companies to establish a dialogue and concrete ways of collaborating with those who are affected by possible violations, giving them voice and influence."

This is one of the core features of Fairtrade: 50% of Fairtrade's highest decision-making body consists of producers from the Global South. In addition, the Fairtrade standards and programmes are also developed with extensive participation of farmer and worker organisations and networks.

Voluntary schemes should also implement HREDD

Important for the credibility and effectiveness of voluntary schemes like Fairtrade is their own responsibility for HREDD. If VSSs cause or contribute to human rights or environmental damage, they themselves must contribute to remedying it.

Fairtrade also wants to take this into account. Last year, we announced our commitment to human rights and we are currently conducting an evaluation of our own human rights impacts. The Fairtrade Code sets out policies and procedures on ethical issues ranging from whistleblowing to the protection of children and vulnerable adults.

Where influence on corporate partners is limited, Fairtrade works to expand this through a variety of partnerships and policy advocacy. Last but not least, Fairtrade is a learning movement with the ambition to continuously improve impact and transparency.